SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 30, 1994
Gottschalks Inc.
(Exact name of registrant as specified in charter)
Delaware 1-09100 77-0159791
(State or other juris- (Commission (IRS employer
diction of incorporation) file number) Identification No.)
7 Riverpark Place East, Fresno, California 93720
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (209)434-8000
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On March 30, 1994, the registrant, Gottschalks Inc.
(the "Company"), sold all of its accounts receivable arising
under its private label consumer revolving credit card accounts
(the "Accounts"), and entered into new loan agreements with Wells
Fargo Bank, National Association ("Wells Fargo") and Barclays
Business Credit, Inc. ("Barclays"). The Company applied the
aggregate proceeds of these transactions, approximately $81
million, to pay off the Company's revolving credit facility with
Wells Fargo, which was due to expire June 30, 1994, and its $11
million Senior Notes due 1996, which were held by Teachers
Insurance and Annuity Association.
Securitization of Receivables.
In connection with an asset-backed securitization
program, the Company sold all accounts receivable (the
"Receivables") (together with the rights to all collections and
recoveries on such Receivables) arising under the Accounts to a
wholly-owned special purpose subsidiary known as Gottschalks
Credit Receivables Corporation ("GCRC") for an aggregate of
approximately $40 million, and GCRC transferred and conveyed the
purchased Receivables to a newly-formed trust known as the
Gottschalks Credit Card Master Trust (the "Trust").
Subsequent to March 30, 1994, all Receivables arising
under all of the Company's Accounts will automatically be sold to
GCRC and conveyed to the Trust upon origination of the
Receivables by the Company until the termination of the Trust.
However, subject to the satisfaction of certain conditions, GCRC
has the right to remove certain randomly selected Accounts from
the program, to remove all Receivables associated with such
removed Accounts from the Trust and to reassign such Receivables
to the Company. In addition, subject to the satisfaction of
certain conditions, GCRC has the right to block the automatic
sale and transfer of Receivables arising under Accounts
established from and after a specified date.
The Company will continue to service and administer the
Receivables, but may be removed as servicer for various reasons
including breach of specified obligations. The Company receives
a monthly servicing fee as compensation for its services as
servicer.
On March 30, 1994, the Trust issued $40,000,000 7.35%
Fixed Base Class A-1 Credit Card Certificates (the "Fixed Base
Certificates") to two third-party investors. In addition, on
March 30, 1994, the Trust issued an Exchangeable Certificate and
a Subordinated Certificate to GCRC, which certificates represent
GCRC's retained interest in the Receivables. The Trust has also
been authorized to issue a $15,000,000 Variable Base Class A-2
Credit Card Certificate (the "Variable Base Certificate"). The
Variable Base Certificate has not been issued. Upon issuance,
the Variable Base Certificate will bear interest at a LIBOR-based
variable rate to be determined at issuance, in any event not to
exceed 12%. When issued, the Variable Base Certificate will rank
equal in priority with the Fixed Base Certificates and the
Exchangeable Certificate. The Subordinated Certificate is
subordinated to the Fixed Base Certificates and, upon issuance of
the Variable Base Certificate, will also be subordinated to the
Variable Base Certificate. In addition to the Fixed Base
Certificates and Variable Base Certificate, GCRC may, from time
to time, and upon the satisfaction of certain conditions, offer
additional series of certificates to be issued by the Trust.
As a special purpose entity, GCRC will not engage in
any activities except the purchase of Receivables from the
Company and the transfer of such Receivables to trusts formed by
GCRC, including the Trust. The sale of Receivables by the
Company to GCRC is intended to qualify for treatment as a "true
sale" of the Receivables for purposes of the United States
Bankruptcy Code. In addition, GCRC is required to be operated so
as to avoid substantive consolidation with the Company in the
event of a bankruptcy of the Company, and the assets of GCRC will
generally not be available to the creditors of the Company.
Barclays Loan Agreement.
The Company's loan agreement with Barclays provides for
the extension by Barclays to the Company of a senior secured
credit facility of up to $35 million due March 30, 1997, bearing
interest at a variable rate equal to LIBOR plus 3%. The
Company's obligations to Barclays are secured by a first priority
security interest in all of the Company's non-real property
assets (other than certain property, plant and equipment) and a
second priority security interest in certain real property assets
of the Company (including certain property, plant and equipment).
Wells Fargo Loan Agreement.
In connection with the foregoing transactions, the
Company terminated its revolving credit facility with Wells
Fargo. The Company's preexisting $18.6 million term loan with
Wells Fargo, which is due June 30, 1996, remains outstanding. In
addition, on March 30, 1994 Wells Fargo extended to the Company a
new term loan due June 30, 1994 in the original principal amount
of $6 million. The Company's obligations to Wells Fargo are
secured by a first priority security interest in certain real
property assets of the Company (including certain property, plant
and equipment) and by a second priority security interest in all
of the Company's non-real property assets (other than certain
property, plant and equipment).
Additional Long-Term Financings.
In connection with its loan agreements with Barclays
and Wells Fargo, the Company has agreed to enter into an
additional long term financing transaction prior to June 30, 1994
and to use proceeds of that financing to payoff the $6 million
Wells Fargo term note and to reduce by $5 million the Company's
outstanding indebtedness to Barclays. The Company anticipates
entering into a sale-leaseback transaction or other long-term
financing, but no definitive agreement has yet been reached.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits:
Exhibit 10.72 Receivables Purchase Agreement dated as of March
30, 1994 by and between Gottschalks Credit
Receivables Corporation and Gottschalks Inc.
Exhibit 10.73 Pooling and Servicing Agreement dated as of March
30, 1994 by and among Gottschalks Credit
Receivables Corporation, Gottschalks Inc. and
Bankers Trust Company
Exhibit 10.74 Series 1994-1 Supplement To Pooling and Servicing
Agreement dated as of March 30, 1994 by and among
Gottschalks Credit Receivables Corporation,
Gottschalks Inc. and Bankers Trust Company
Exhibit 10.75 Loan and Security Agreement dated March 30, 1994
by and between Barclays Business Credit, Inc. and
Gottschalks Inc.
Exhibit 10.76 Intercreditor Agreement dated March 30, 1994 by
and among Gottschalks Inc., Barclays Business
Credit, Inc. and Wells Fargo, National Association
Exhibit 10.77 Assignment and Acceptance by and between Wells
Fargo Bank, National Association and Barclays
Business Credit, Inc.
Exhibit 10.78 1994 Amended and Restated Credit Agreement dated
as of March 30, 1994 by and between Gottschalks
Inc. and Wells Fargo Bank, National Association
Exhibit 10.79 First Amendment to Second Amended and Restated
Security Agreement dated as of March 30, 1994 by
and between Gottschalks Inc. and Wells Fargo Bank,
National Association<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Gottschalks Inc.
(Registrant)
Date: April 14, 1994 By: /s/ Alan Weinstein
Alan Weinstein
Senior Vice President and
Chief Financial Officer<PAGE>
EXHIBIT INDEX
Exhibit Description
10.72 Receivables Purchase Agreement dated as of March
30, 1994 by and between Gottschalks Credit
Receivables Corporation and Gottschalks Inc.
10.73 Pooling and Servicing Agreement dated as of March
30, 1994 by and among Gottschalks Credit
Receivables Corporation, Gottschalks Inc. and
Bankers Trust Company
10.74 Series 1994-1 Supplement To Pooling and Servicing
Agreement dated as of March 30, 1994 by and among
Gottschalks Credit Receivables Corporation,
Gottschalks Inc. and Bankers Trust Company
10.75 Loan and Security Agreement dated March 30, 1994
by and between Barclays Business Credit, Inc. and
Gottschalks Inc.
10.76 Intercreditor Agreement dated March 30, 1994 by
and among Gottschalks Inc., Barclays Business
Credit, Inc. and Wells Fargo, National Association
10.77 Assignment and Acceptance by and between Wells
Fargo Bank, National Association and Barclays
Business Credit, Inc.
10.78 1994 Amended and Restated Credit Agreement dated
as of March 30, 1994 by and between Gottschalks
Inc. and Wells Fargo Bank, National Association
10.79 First Amendment to Second Amended and Restated
Security Agreement dated as of March 30, 1994 by
and between Gottschalks Inc. and Wells Fargo Bank,
National Association<PAGE>
EXHIBIT 10.72
EXECUTION COPY
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION
Purchaser
and
GOTTSCHALKS INC.
Seller
RECEIVABLES PURCHASE AGREEMENT
Dated as of March 30, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . 1
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions. . . . . . . 1
ARTICLE II
Conveyance of Receivables . . . . . . 2
SECTION 2.01. Conveyance of Receivables. . . . . . . . . 2
SECTION 2.02. Representations and Warranties of the
Seller Relating to the Seller and the
Agreement. . . . . . . . . . . . . . . . . 5
SECTION 2.03. Representations and Warranties of the
Seller Relating to the Receivables . . . . 9
SECTION 2.04. Repurchase of Receivables. . . . . . . . .10
SECTION 2.06. Customer Service Adjustments . . . . . . .16
ARTICLE III
Administration and Servicing of Receivables . .16
SECTION 3.01. Acceptance of Appointment and Other
Matters Relating to the Servicer . . . . .16
SECTION 3.02. Servicing Compensation . . . . . . . . . .17
SECTION 3.03. Allocations and Applications of
Collections and Other Funds. . . . . . . .17
ARTICLE IV
Other Matters Relating to the Seller. . . . . .17
SECTION 4.01. Merger or Consolidation of, or
Assumption, of the Obligations of
the Seller . . . . . . . . . . . . . . . .17
SECTION 4.02. Seller Indemnification of the Purchaser. .18
ARTICLE V
Termination . . . . . . . .19
SECTION 5.01. Termination. . . . . . . . . . . . . . . .19
<PAGE>
ARTICLE VI
Miscellaneous Provisions. . . . . . .19
SECTION 6.01. Amendment. . . . . . . . . . . . . . . . .19
SECTION 6.02. Limited Recourse . . . . . . . . . . . . .21
SECTION 6.03. No Petition. . . . . . . . . . . . . . . .21
SECTION 6.04. GOVERNING LAW. . . . . . . . . . . . . . .21
SECTION 6.05. Notices. . . . . . . . . . . . . . . . . .22
SECTION 6.06. Severability of Provisions . . . . . . . .22
SECTION 6.07. Assignment . . . . . . . . . . . . . . . .22
SECTION 6.08. No Waiver; Cumulative Remedies . . . . . .22
SECTION 6.09. Counterparts . . . . . . . . . . . . . . .22
SECTION 6.10. Third-Party Beneficiaries. . . . . . . . .22
SECTION 6.11. Merger and Integration . . . . . . . . . .23
SECTION 6.12. Headings . . . . . . . . . . . . . . . . .23
SECTION 6.13. Rule 144A Information. . . . . . . . . . .23
Schedule I List of Accounts<PAGE>
RECEIVABLES PURCHASE AGREEMENT, dated as of
March 30, 1994, between GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, a Delaware corporation, (the "Purchaser"), and
GOTTSCHALKS INC., a Delaware corporation, (the "Seller").
W I T N E S E T H:
WHEREAS, the Seller in the ordinary course of its
business finances the purchase of merchandise by consumers
pursuant to consumer revolving credit card accounts thereby
generating certain payment obligations;
WHEREAS, the Seller wishes to sell certain of
such existing and future payment obligations from time to
time to the Purchaser; and
WHEREAS, the Purchaser desires initially to sell
such payment obligations to the Gottschalks Credit Card
Master Trust, pursuant to a Pooling and Servicing Agreement
dated as of March 30, 1994 (as the same may from time to
time be amended, supplemented or otherwise modified, the
"Pooling and Servicing Agreement"), among the Purchaser, as
depositor, the Seller, as servicer, and Bankers Trust
Company, as Trustee .
NOW, THEREFORE, the parties hereto agree as
follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms
used herein but not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement.
In addition, the term "Agreement" means this Receivables
Purchase Agreement, as the same may from time to time be
amended, supplemented or otherwise modified.
SECTION 1.02. Other Definitional Provisions.
(a) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular
provision of this Agreement; Article, Section, Schedule,
and Exhibit references are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement
unless otherwise specified; and the term "including" shall
mean "including without limitation".
(b) The definitions contained in this Agreement
are applicable to the singular as well as the plural forms
of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables.
(a) By execution of this Agreement, the Seller does hereby
sell, transfer, assign, set over and otherwise convey,
without recourse (except as expressly provided herein), to
the Purchaser on the initial Closing Date, (a) all of the
Seller's right, title and interest in, to and under the
Receivables existing at the close of business on the Cut-
Off Date and all monies due or to become due and all
amounts received with respect thereto and all proceeds
thereof (including "proceeds", as defined in Section 9306
of the UCC as in effect in the State of California, and
Recoveries) and (b) all of the Seller's rights, remedies,
powers and privileges with respect to such Receivables.
Subject to Article V hereof, as of each Business Day prior
to the earlier of (x) the occurrence of a Liquidation Event
specified in Section 9.02(b) of the Pooling and Servicing
Agreement and (y) the Trust Termination Date (each, a
"Purchase Date"), the Seller does hereby sell, transfer,
assign, set over and otherwise convey, without recourse
(except as expressly provided herein), to the Purchaser,
all of the Seller's right, title and interest in, to and
under the Receivables (other than any Receivables created
in a Removed Account from and after the applicable Removal
Date, as provided in Section 2.06(c) of the Pooling and
Servicing Agreement) owned by the Seller at the close of
business on such Purchase Date and not theretofore conveyed
to the Purchaser, all monies due or to become due and all
amounts received with respect thereto and all proceeds
thereof (including "proceeds", as defined in Section 9306
of the UCC as in effect in the State of California, and
Recoveries). The foregoing sale, transfer, assignment,
set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do not
constitute, and are not intended to result in, the creation
or an assumption by the Purchaser of any obligation of the
Servicer, the Seller or any other Person in connection with
the Accounts, the Receivables or under any agreement or
instrument relating thereto, including any obligation to
any Obligors.
(b) In connection with such sale, transfer,
assignment, set-over and conveyance the Seller agrees to
record and file, at its own expense, a financing statement
on form UCC-1 (and continuation statements when applicable)
naming the Seller as "seller" and the Purchaser as "buyer"
thereon with respect to the Receivables now existing and
hereafter created for the sale of "accounts" (as defined in
Section 9106 of the UCC as in effect in any state where the
Seller's or the Servicer's chief executive offices or books
and records relating to the Receivables are located)
meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to
perfect, and maintain the perfection of, the sale and
assignment of the Receivables to the Purchaser, and to
deliver a file-stamped copy of such financing statements or
other evidence of such filing to the Purchaser on or prior
to the initial Closing Date, and in the case of any
continuation statements filed pursuant to this Section
2.01, as soon as practicable after receipt thereof by the
Seller. The Purchaser shall be under no obligation
whatsoever to file such financing statement, or a
continuation statement to such financing statement, or to
make any other filing under the UCC in connection with such
sales to the Purchaser.
(c) The Seller further agrees, at its own
expense, on or prior to the date on which each Charge
Account becomes an Account, to indicate in its computer
files that the Receivables created in connection with such
Account have been sold to the Purchaser pursuant to this
Agreement and sold to the Trust pursuant to the Pooling and
Servicing Agreement for the benefit of the Certificate-
holders and the other Beneficiaries and (b) not less than
weekly, to deliver to the Purchaser a computer file or
microfiche or written list containing a true and complete
list of all Accounts specifying for each Account (i) its
account number, (ii) the aggregate amount of Receivables
outstanding in such Account and (iii) the aggregate amount
of Principal Receivables in such Account. Such file,
microfiche or list, as supplemented from time to time,
shall be marked as Schedule I to this Agreement and is
hereby incorporated into and made a part of this Agreement.
(d) The purchase price (the "Purchase
Consideration") with respect to Receivables sold hereunder
shall be as follows: (i) on the initial Closing Date, an
amount equal to $40,000,000 less certain gross costs and
expenses related to such purchase and sale of Receivables
and the establishment of the securitization program with
respect thereto, plus capital contribution in the amount of
the balance of the Receivables transferred on such date and
(ii) on each Purchase Date thereafter, a price agreed to by
the Purchaser and the Seller at the time of such purchase
by the Purchaser; provided, however, that such price shall
not, in the opinion of the Purchaser, be materially less
favorable to the Purchaser than prices for transactions of
a generally similar character at the time of the purchase
taking into account the quality of such Receivables and
other pertinent factors; and provided, further, that such
consideration shall in any event not be less than
reasonably equivalent value therefor.
(e) The Purchase Consideration for Receivables
sold on the initial Closing Date and on each subsequent
Purchase Date shall be paid or provided for on the initial
Closing Date or each such Purchase Date, as the case may
be, in either of the following ways, or any combination
thereof: (i) by payment in cash in immediately available
funds; or (ii) in the event that the total Purchase
Consideration due on the initial Closing Date or each
subsequent Purchase Date is not paid in full in cash by the
Purchaser, the Seller shall be deemed to have made a
capital contribution to the Purchaser in an amount equal to
such cash shortfall.
(f) The Purchaser shall pay all amounts to be
paid in cash with respect to the purchases of Receivables
from the Seller on the date of each such purchase thereof.
All payments hereunder shall be made not later than the
close of business (New York City time) on the date
specified therefor in lawful money of the United States of
America in same day funds to the bank account designated in
writing by the Seller to the Purchaser from time to time.
Whenever any payment to be made hereunder shall be stated
to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
(g) Subject to Article V hereof, on each
Business Day, the Seller shall evidence the sale, transfer,
assignment, set over and conveyance of all its Receivables
not theretofore conveyed to the Purchaser by delivering to
the Purchaser a receivables transmittal (a "Receivables
Transmittal") specifying to the Purchaser the aggregate
outstanding balance of such Receivables.
Upon the receipt by the Seller on any Purchase
Date of the Purchase Consideration for the Receivables to
be sold by the Seller on such date, all the Seller's right,
title and interest in and to such Receivables shall have
been sold, assigned, transferred, conveyed and set over to
the Purchaser.
(h) The parties hereto intend that the transfers
of Receivables effected by this Agreement shall be and
shall be treated as a purchase by the Purchaser and a sale
by the Seller of the Receivables and not as a lending
transaction. In the event that, notwithstanding such
express intent of the parties, a court of competent
jurisdiction were to hold that this Agreement evidences a
loan rather than a sale, then the Seller shall be deemed to
have granted to the Purchaser as of the date hereof a
security interest (as defined in the UCC as in effect in
California) in, to and under the Receivables now existing
and hereafter created and arising in connection with the
Accounts, all monies due or to become due with respect
thereto (including all Finance Charge Receivables), all
proceeds of such Receivables and Recoveries, which grant is
enforceable with respect to Receivables and the proceeds
thereof upon execution and delivery of this Agreement, and
which will be enforceable with respect to such Receivables
hereafter created and the proceeds thereof, upon such
creation. If this Agreement constitutes the grant of a
security interest to the Purchaser in such property, upon
the filing of the financing statement described in this
Section 2.01 and in the case of the Receivables hereafter
created and proceeds thereof, upon such creation, the
Purchaser shall have a first priority security interest in
such property (subject to Section 9306 of the UCC as in
effect in California), except for Permitted Liens.
SECTION 2.02. Representations and Warranties of
the Seller Relating to the Seller and the Agreement. The
Seller hereby represents and warrants to the Purchaser
that, as of each Closing Date:
(a) Organization and Good Standing. The Seller
is a corporation duly organized and validly existing and in
good standing under the law of the State of Delaware and
has full corporate power, authority and legal right to own
its properties and conduct its business as such properties
are presently owned and such business is presently
conducted, and to execute, deliver and perform its
obligations under this Agreement.
(b) Due Qualification. The Seller is duly
qualified to do business and, where necessary, is in good
standing as a foreign corporation (or is exempt from such
requirement) and has obtained all necessary licenses and
approvals in each jurisdiction in which the conduct of its
business requires such qualification except where the
failure to so qualify or be in good standing or obtain
licenses or approvals would not have a material adverse
effect on its ability to perform its obligations hereunder.
(c) Due Authorization. The execution and
delivery of this Agreement and the consummation of the
transactions provided for or contemplated by this Agreement
have been duly authorized by the Seller by all necessary
corporate action on the part of the Seller.
(d) No Conflict. The execution and delivery by
the Seller of this Agreement, the performance by the Seller
of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof and thereof applicable to
the Seller, will not conflict with, result in any breach of
any of the 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 Seller is a
party or by which it or its properties are bound.
(e) No Violation. The execution and delivery of
this Agreement by the Seller, the performance by the Seller
of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof and thereof applicable to
the Seller, will not conflict with or violate any
Requirements of Law applicable to the Seller or give rise
to an adverse claim upon the Seller or the Receivables.
(f) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of the
Seller, threatened against the Seller, before any
Governmental Authority (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement,
(iii) seeking any determination or ruling that, in the
reasonable judgment of the Seller, would affect the
performance by the Seller of its obligations under this
Agreement, (iv) seeking any determination or ruling that
would materially and adversely affect the validity or
enforceability of this Agreement or (v) seeking to affect
adversely the income or franchise tax attributes of the
Trust and of the Investor Certificates under the United
States Federal or any State income or franchise tax
systems. There are no injunctions, writs, restraining
orders or other orders of any nature that would adversely
affect the performance by the Seller of its obligations
under this Agreement or the transactions contemplated
hereby.
(g) All Consents Required. All authorizations,
consents, orders, approvals or other actions of any Person
or of any governmental body or official required in
connection with the execution and delivery by the Seller of
this Agreement, the performance by the Seller of the
transactions contemplated by this Agreement, and the
fulfillment by the Seller of the terms hereof or thereof,
have been obtained.
(h) Enforceability. This Agreement has been
duly executed and delivered by the Seller and constitutes a
legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law
or in equity) and the availability of equitable remedies.
(i) Place of Business; Legal Name. (i) The
principal place of business of the Seller is located in
Fresno, California and the offices where the Seller keeps
its records concerning the Receivables and related
contracts are located in Fresno, California and there have
been no other such locations during the prior four month
period.
(ii) The legal name of the Seller is as set
forth in this Agreement, and the Seller has no tradenames,
fictitious names, assumed names or "doing business as"
names, except for "Village East".
(j) Use of Proceeds. No proceeds of the sale of
any Receivables will be used by the Seller to purchase or
carry any margin security.
(k) Record of Accounts. Schedule I to this
Agreement (as in effect on the date in question) is an
accurate and complete listing in all material respects of
all of the Accounts, 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.
(l) Tax Returns. The Seller has filed all
required tax returns on a timely basis.
(m) Compliance with Laws. The Seller has
complied with all applicable laws, rules, regulations and
orders in respect of the conduct of its business and the
ownership of its properties and purchased assets, and has
maintained all applicable permits, certifications, licenses
and other rights of whatever nature necessary for the
conduct of its business.
(n) Pension Plans. All pension or profit
sharing plans of the Seller and its consolidated
subsidiaries have been fully funded in accordance with the
Seller's applicable pension or profit sharing plan
agreements.
(o) Solvency. The Seller (i) is not insolvent
and will not become insolvent after giving effect to the
transactions contemplated hereby, (ii) is paying its debts
as such debts become due and (iii) after giving effect to
the transactions contemplated hereby, will have adequate
capital to conduct its business.
(p) Business Reasons for Sale. The Seller has
valid business reasons for selling the Receivables to the
Purchaser under this Agreement and is not obtaining a loan
secured by the Receivables as collateral. The Seller will
to the fullest extent permitted by generally accepted
accounting principles and by applicable law, record each
purchase hereunder as a sale on its books and records,
reflect each purchase in its financial statements and tax
returns as a sale and recognize gain or loss, as the case
may be, on each purchase hereunder.
(q) No Material Adverse Effect. There has been
no material adverse change with respect to the Seller's
operations, including its ability to perform its
obligations under this Agreement.
The representations and warranties set forth in
this Section 2.02 shall survive the transfer and assignment
of the Receivables to the Purchaser. Upon discovery by the
Seller or the Purchaser of a breach of any of the foregoing
representations and warranties, the party discovering such
breach shall give prompt written notice to the other party.
In the event of any breach of any of the
representations and warranties set forth in this Section
2.02 and if, as a result of any such breach, the Purchaser
shall be obligated to purchase the Investors' Interest
and/or the Depositor Interest pursuant to Section 2.03 of
the Pooling and Servicing Agreement, the Seller shall
repurchase such Investors' Interest and/or Depositor
Interest, as the case may be, and shall pay to the
Purchaser on the Business Day preceding the Distribution
Date on which such purchase of the Investors' Interest
and/or the Depositor Interest, as applicable, is to be made
by the Purchaser an amount equal to the purchase price
therefor as specified in Section 2.03 of the Pooling and
Servicing Agreement. The obligation of the Seller to
purchase such Investors' Interest and/or Depositor
Interest, as the case may be, pursuant to this Section 2.02
shall constitute the sole remedy against the Seller
respecting an event of the type specified in the first
sentence of this Section 2.02 available to the Purchaser
and to the Holders of the Investor Certificates and/or the
Holder of the Exchangeable Certificate (or the Trustee on
behalf of such Certificateholders).
SECTION 2.03. Representations and Warranties of
the Seller Relating to the Receivables. The Seller hereby
represents and warrants to the Purchaser as of the initial
Closing Date and each Purchase Date that:
(a) No Liens. Each Receivable sold hereunder
has been conveyed to the Purchaser free and clear of any
Lien (except for Permitted Liens) and the Purchaser has
received good title to each such Receivable.
(b) All Consents Required. All appraisals,
consents, orders, approvals, authorizations or other
actions of any Person or any governmental body or official
required in connection with the conveyance of each
Receivable hereunder to the Purchaser have been duly
obtained and are in full force and effect.
(c) Valid Sale. This Agreement constitutes a
valid sale, transfer, assignment, set-over and conveyance
to the Purchaser of all right, title and interest of the
Seller in and to the Receivables now existing and hereafter
created and arising in connection with the Accounts, all
proceeds of such Receivables and Recoveries and such
Receivables and all proceeds thereof will be held by the
Purchaser free and clear of any Lien of any Person claiming
through or under the Seller or any of its Affiliates except
for Permitted Liens.
(d) Account or General Intangible. The Seller
has taken no action to cause any Receivable sold hereunder
to be anything other than an "account" or "general
intangible" (each as defined in Section 9106 of the UCC).
The Seller has taken no action to evidence any Receivable
sold hereunder by any "instrument" or "chattel paper" (as
defined in Section 9105 of the UCC).
The representations and warranties set forth in
this Section 2.03 shall survive the transfer and assignment
of the Receivables to the Purchaser. Upon discovery by the
Seller or the Purchaser of a breach of any of the
representations and warranties set forth in this Section
2.03, the party discovering such breach shall give prompt
written notice to the other party.
SECTION 2.04. Repurchase of Receivables. In the
event any representation or warranty under Section 2.03 is
not true and correct as of the date specified therein with
respect to any Receivable or Account and the Purchaser is,
as the result of any such breach, required to accept a
reassignment of such Receivable or all Receivables in such
Account pursuant to Section 2.04(c) of the Pooling and
Servicing Agreement, then, within thirty (30) days (or such
longer period as may be agreed to by the Purchaser) of the
earlier to occur of the discovery of any such event by the
Seller or the Purchaser, or receipt by the Seller or the
Purchaser of written notice of any such event given by the
Trustee or any Enhancement Provider, the Seller shall,
unless a Liquidation Event has occurred, repurchase the
Receivable or Receivables of which the Purchaser is
required to accept reassignment pursuant to the Pooling and
Servicing Agreement on the Business Day preceding the
Determination Date on which such reassignment is to occur.
The Seller shall purchase each such Receivable
pursuant to this Section 2.04 by making a payment to the
Purchaser in immediately available funds on the Business
Day preceding the Distribution Date on which such
reassignment is to occur in an amount equal to the Purchase
Consideration for such Receivable. Upon payment of the
Purchase Consideration, the Purchaser shall automatically
and without further action be deemed to sell, transfer,
assign, set over and otherwise convey to the Seller,
without recourse, representation or warranty, all the
right, title and interest of the Purchaser in and to such
Receivable and all monies due or to become due with respect
thereto and all proceeds thereof. The Purchaser shall
execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably
be requested by the Seller to effect the conveyance of such
Receivables pursuant to this Section. The obligation of
the Seller to repurchase any such Receivable shall
constitute the sole remedy respecting the event giving rise
to such obligation available to the Purchaser and to the
Certificateholders (or the Trustee on behalf of
Certificateholders).
SECTION 2.05. Covenants of the Seller. So long
as the Purchaser shall have any ownership interest in any
Receivables sold by the Seller or until a termination date
pursuant to Section 5.01 shall have occurred, whichever is
later, the Seller covenants that:
(a) Receivables to be Accounts or General
Intangibles. The Seller shall take no action to cause any
Receivable sold hereunder to be evidenced by any
"instrument" or "chattel paper" (as defined in Section 9105
of the UCC). The Seller shall take no action to cause any
Receivable sold hereunder to be anything other than an
"account" or "general intangible" (each as defined in
Section 9106 of the UCC). In the event that any Receivable
sold hereunder shall, at any time, be evidenced by any
"instrument" or "chattel paper", the Seller shall indicate
or cause to be indicated on such "instrument" or "chattel
paper" a legend stating that such Receivable has been
conveyed to the Purchaser pursuant to this Agreement and
conveyed to the Trust pursuant to the Pooling and Servicing
Agreement for the benefit of the Certificateholders and
other Beneficiaries.
(b) Negative Pledge. Except for the conveyances
hereunder, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur,
assume or suffer to exist any Lien (other than Permitted
Liens) on any Receivable sold hereunder, whether now
existing or hereafter created, or any interest therein; the
Seller will immediately notify the Purchaser of the
existence of any Lien on any Receivable sold hereunder; and
the Seller shall defend the right, title and interest of
the Purchaser in, to and under the Receivables sold
hereunder, whether now existing or hereafter created,
against all claims of third parties claiming through or
under the Seller.
(c) Charge Account Agreements and Financial
Guidelines. The Seller shall comply with and perform its
obligations under any Charge Account Agreement to which the
Seller is a party that relates to the Accounts and the
Financial Guidelines except insofar as any failure to
comply or perform would not materially and adversely affect
the rights of the Trust or any of the Beneficiaries.
Subject to compliance with all Requirements of Law, the
Seller may change the terms and provisions of such Charge
Account Agreements or the Financial Guidelines in any
respect (including the calculation of the amount or the
timing of charge-offs and the rate of the finance charges,
if any, assessed thereon) only if such change (i) would
not, in the reasonable judgment of the Seller, cause a
Early Amortization Event to occur and if the Seller owns a
comparable segment of revolving credit card accounts which
have characteristics the same as, or substantially similar
to, the Accounts that are the subject of such change, such
change is made applicable to such comparable segments of
accounts or (ii) the Seller shall reasonably determine that
such change is necessary in order to satisfy any
Requirement of Law.
(d) Conveyance of Accounts. The Seller
covenants and agrees that it will not convey, assign,
exchange or otherwise transfer any Account to any Person
prior to the termination of this Agreement.
(e) Compliance with Laws, Etc. The Seller shall
comply in all material respects with all applicable laws,
rules, regulations and orders applicable to the Receivables
sold hereunder, including, without limitation, rules and
regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy, where failure
to so comply could reasonably be expected to have a
material adverse effect on the amount of Collections
thereunder.
(f) Preservation of Corporate Existence. Except
as provided in Section 4.01, the Seller shall preserve and
maintain in all material respects its corporate existence,
corporate rights (charter and statutory) and corporate
franchises.
(g) Access to Certain Information Regarding the
Receivables. The Seller shall provide to the Purchaser and
its agents access to the documentation regarding the
Accounts and the Receivables, such access being afforded
without charge but only (i) upon reasonable request,
(ii) during normal business hours, (iii) subject to the
Seller's normal security and confidentiality procedures,
and (iv) at offices designated by the Seller. Nothing in
this Section 2.05(g) shall derogate from the obligation of
the Purchaser to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the
failure of the Seller to provide access as provided in this
Section 2.05(g) as a result of such obligation shall not
constitute a breach of this Section 2.05(g).
(h) Keeping of Records and Books of Account.
The Seller shall maintain and implement, or cause to be
maintained or implemented, administrative and operating
procedures reasonably necessary or advisable for the
collection of all such Receivables, and, until the delivery
to any Successor Servicer appointed pursuant to the Pooling
and Servicing Agreement, keep and maintain, or cause to be
kept and maintained, all documents, books, records and
other information reasonably necessary or advisable for the
collection of all such Receivables.
(i) Performance and Compliance with Receivables
and Charge Account Agreements. The Seller shall at its
expense take all actions on its part reasonably necessary
to maintain in full force and effect its rights under all
Charge Account Agreements to which the Seller is a party.
(j) Location of Records. The Seller shall keep
its chief place of business and chief executive office, and
the offices where it keeps the records concerning the
Receivables and all underlying Charge Account Agreements
(and all original documents relating thereto), at 7 River
Park Place East, Fresno, California 93720 or upon prior
written notice to the Purchaser, at such other locations in
a jurisdiction where all action required by Section 2.05(m)
shall have been taken and completed and be in full force
and effect. The Seller shall at all times maintain its
principal executive office within the United States of
America.
(k) Furnishing Copies, Etc. The Seller shall
furnish to the Purchaser (i) upon the Purchaser's request,
a certificate of the chief financial officer of the Seller
certifying, as of the date thereof, that no termination
event described in Section 5.01 has occurred and is
continuing and setting forth the computations used by the
chief financial officer of the Seller in making such
determination; (ii) as soon as possible and in any event
within five days after the occurrence of any such
termination event or incipient termination event, a
statement of the chief financial officer of the Seller
setting forth details of such termination event or
incipient termination event and the action that the Seller
proposes to take or has taken with respect thereto; and
(iii) promptly following the Purchaser's request thereof,
such other information, documents, records or reports with
respect to the Receivables sold hereunder or the underlying
Charge Account Agreements or the conditions or operations,
financial or otherwise, of the Seller, as the Purchaser may
from time to time reasonably request.
(l) Obligation to Record and Report. The Seller
shall to the fullest extent permitted by generally accepted
accounting principles and by applicable law, record each
purchase hereunder as a sale on its books and records,
reflect each purchase in its financial statements and tax
returns as a sale and recognize gain or loss, as the case
may be, on each purchase hereunder.
(m) Continuing Compliance with the Uniform
Commercial Code. The Seller shall, without limiting the
requirements of Section 2.05(o), at its expense, preserve,
continue, and maintain or cause to be preserved, continued,
and maintained the Purchaser's valid and properly protected
title to each Receivable sold hereunder, including, without
limitation, filing or recording UCC financing statements in
each relevant jurisdiction.
(n) Collections of Receivables. The Seller
shall cause all Collections in respect of Receivables sold
hereunder to be processed in accordance with the collection
arrangements set forth in Section 4.03 of the Pooling and
Servicing Agreement.
(o) Further Action Evidencing Purchases.
(i) The Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further
instruments and documents, and take all further action,
that may be necessary or desirable or that the Purchaser
may reasonably request, to protect or more fully evidence
the Purchaser's ownership, right, title and interest in the
Receivables sold by the Seller and its rights under the
Charge Account Agreements with respect thereto, or to
enable the Purchaser to exercise or enforce any such
rights. Without limiting the generality of the foregoing,
the Seller will upon the request of the Purchaser (A)
execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or
notices, as may be necessary or, in the opinion of the
Purchaser, desirable, (B) indicate on its books and records
(including, without limitation, originals and copies of
sale slips and billing statements, to the extent
practicable) that Receivables have been sold and assigned
to the Purchaser, and provide to the Purchaser, upon
request, copies of any such records and (C) contact
customers to confirm and verify Receivables.
(ii) The Seller hereby irrevocably
authorizes the Purchaser to file one or more financing or
continuation statements, and amendments thereto, relative
to all or any part of the Receivables sold by the Seller,
or the underlying Charge Account Agreements with respect
thereto, without the signature of the Seller where
permitted by law.
(iii) If the Seller fails to perform any of
its agreements or obligations under this Agreement, the
Purchaser may (but shall not be required to) perform, or
cause performance of, such agreements or obligations, and
the expenses of the Purchaser incurred in connection
therewith shall be payable by the Seller.
(p) Change in Business. The Seller shall not
make any change in the nature of its business as conducted
on the date hereof that could reasonably be expected to
have a material adverse effect on the value or
collectibility of the Receivables.
(q) Account Allocations. In the event that the
Seller is unable for any reason to transfer Receivables to
the Purchaser, then the Seller agrees that it shall
allocate, after the occurrence of such event, payments on
each affected 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 the terms of the Pooling and
Servicing Agreement. The parties hereto agree that Finance
Charge Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the
Purchaser and by the Purchaser to the Trust shall continue
to be a part of the Trust notwithstanding any cessation of
the transfer of additional Principal Receivables to the
Purchaser and Collections with respect thereto shall
continue to be allocated and paid in accordance with
Article IV of the Pooling and Servicing Agreement.
(r) Operations of Seller. The Seller agrees
that it shall conduct its operations in such a manner that
the Purchaser would not be substantively consolidated into
the bankruptcy estate of the Seller or have its separate
corporate existence disregarded in the event of a
bankruptcy of the Seller.
(s) Compliance with Certain Provisions of the
Pooling and Servicing Agreement. The Seller agrees that it
shall comply with and observe the provisions of Section
2.07 of the Pooling and Servicing Agreement. The Seller
further agrees that it shall comply, as Seller, with the
meet and confer requirements set forth in Section 8.06(b)
of the Pooling and Servicing Agreement.
SECTION 2.06. Customer Service Adjustments. The
Seller may accept a return of goods for full or partial
credit or make a daily adjustment in the principal amount
or finance or other charges accrued or payable with respect
to the account of a customer who has purchased merchandise
or services on credit under a Charge Account Agreement,
provided that such adjustment is permitted under the
Seller's applicable Financial Guidelines. The aggregate
amount of all such adjustments made by the Seller during
any Collection Period shall be payable to the Purchaser by
the Seller and shall be due no later than the Determination
Date that occurs during such Collection Period.
ARTICLE III
Administration and Servicing
of Receivables
SECTION 3.01. Acceptance of Appointment and
Other Matters Relating to the Servicer. (a) The Seller
agrees to act as the Servicer under this Agreement and the
Pooling and Servicing Agreement, and the Purchaser consents
to the Seller acting as Servicer. The Seller, as Servicer,
will have ultimate responsibility for servicing, managing
and making collections on the Receivables and for holding
such Receivables in trust for the benefit of the Purchaser
and the Trust. The Seller, as Servicer, will have the
authority to make any management decisions relating to such
Receivables, to the extent such authority is granted to the
Servicer under this Agreement and the Pooling and Servicing
Agreement.
(b) The Seller, as Servicer shall service and
administer the Receivables sold hereunder in accordance
with the provisions of the Pooling and Servicing Agreement.
(c) In the event that a Successor Servicer is
appointed pursuant to the Pooling and Servicing Agreement,
such Successor Servicer shall act as Successor Servicer
under this Agreement and the Purchaser consents to the
appointment of such Successor Servicer hereunder.
SECTION 3.02. Servicing Compensation. As full
compensation for its servicing activities hereunder and
under the Pooling and Servicing Agreement, the Seller, as
Servicer, shall be entitled to receive the Servicing Fee on
each Distribution Date. The Servicing Fee shall be paid in
accordance with the terms of the Pooling and Servicing
Agreement.
SECTION 3.03. Allocations and Applications of
Collections and Other Funds. The Seller, as Servicer, will
apply all Collections with respect to the Receivables sold
hereunder and all funds on deposit in the Collection
Account as described in Article IV of the Pooling and
Servicing Agreement.
SECTION 3.04. Other Actions Taken by the Seller.
The Seller hereby agrees that upon the occurrence of an
event described in Section 10.01(e) of the Pooling and
Servicing Agreement with respect to the Seller, the Seller
hereby agrees to cause its customer service employees to
distribute envelopes to Obligors for mail-in payments
rather than accepting In-Store Payments at the customer
service window.
ARTICLE IV
Other Matters Relating
to the Seller
SECTION 4.01. Merger or Consolidation of, or
Assumption, of the Obligations of the Seller. The Seller
shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) immediately after giving effect to any such
transaction, the consolidated tangible net worth of the
surviving person shall not have materially decreased,
determination to be made on a pro forma basis after giving
effect to the proposed transaction; and
(b) the corporation formed by such consolidation
or into which the Seller is merged or the Person which
acquires by conveyance or transfer the properties and
assets of the Seller substantially as an entirety shall be
a corporation organized and existing under the laws of the
United States of America or any State thereof or the
District of Columbia and, if the Seller is not the
surviving entity, such corporation shall expressly assume,
by written agreement supplemental hereto, executed and
delivered to the Purchaser, in form satisfactory to the
Purchaser, the performance of every covenant and obligation
of the Seller hereunder and shall benefit from all the
rights granted to the Seller; and
(c) the Seller shall have delivered to the
Purchaser and the Trustee (i) an Officers' Certificate
signed by a Vice President (or any more senior officer)
stating that such consolidation, merger, conveyance or
transfer complies with this Section 4.01 and that all
conditions precedent herein provided for relating to such
transaction have been complied with and (ii) an Opinion of
Counsel that such supplemental agreement is legal, valid
and binding and that the entity surviving such
consolidation, conveyance or transfer is organized and
existing under the laws of the United States of America or
any State thereof or the District of Columbia;
(c) the Seller shall have delivered notice to the
Rating Agencies of such consolidation, merger, conveyance
or transfer and the Rating Agency Condition shall have been
satisfied; and
(d) Consent of Certificateholders shall have been
obtained, which consent shall not be unreasonably withheld
in the event that the Rating Agency Condition shall have
been satisfied.
provided, however, that notwithstanding the provisions at
this Section 4.01, the Seller shall not merge into or
convey or transfer its properties and assets substantially
as an entirety to the Purchaser.
SECTION 4.02. Seller Indemnification of the
Purchaser. The Seller shall indemnify and hold harmless
the Purchaser, from and against any loss, liability,
expense, claim, damage or injury suffered or sustained by
reason of any acts, omissions or alleged acts or omissions
arising out of activities of the Seller pursuant to this
Agreement (including, without limitation, as Servicer
hereunder) or arising out of or based on the arrangement
created by this Agreement and the activities of the Seller
taken pursuant thereto (other than collection losses on the
Receivables or amounts due with respect thereto, unless
such collection losses arise from a breach of a
representation or warranty by the Seller), including 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 Seller shall not
indemnify the Purchaser if such acts, omissions or alleged
acts or omissions constitute fraud, gross negligence or
willful misconduct by the Purchaser; and provided, further,
that the Seller shall not indemnify the Purchaser for any
liabilities, cost or expense of the Purchaser with respect
to any Federal, state or local income or franchise taxes
(or any interest or penalties with respect thereto)
required to be paid by the Purchaser in connection herewith
to any taxing authority. Any indemnification under this
Article IV shall survive the termination of this Agreement.
ARTICLE V
Termination
SECTION 5.01. Termination. This Agreement will
terminate immediately after the Trust terminates pursuant
to the Pooling and Servicing Agreement. In addition, the
Purchaser shall not purchase Receivables if (i) a
Liquidation Event occurs or (ii) the Seller shall become an
involuntary party to (or be made the subject of) any
proceeding provided for by any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or relating to all
or substantially all of its property (an "Involuntary
Case").
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Amendment. (a) This Agreement
may be amended from time to time by the Seller and the
Purchaser without the consent of any of the Certificate-
holders to:
(i) add to the covenants of the Seller for
the benefit of the Certificateholders, or to surrender any
right or power conferred upon the Seller herein; or
(ii) cure any ambiguity, to correct or
supplement any provision herein which may be defective or
inconsistent with any other provision herein or in any
Certificate;
provided, that such action shall not adversely affect in
any material respect the interests of any Certificateholder
or the Holder of the Exchangeable Certificate.
(b) This Agreement may also be amended from time
to time by the Purchaser and Seller with the consent of the
Holders of Investor Certificates evidencing more than 50%
of the aggregate unpaid principal amount of the Investor
Certificates of each materially adversely affected Series
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 or waiving any of the provisions
of this Agreement or of modifying in any manner the rights
of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of or
delay the timing of any distributions to be made to
Certificateholders or deposits of amounts to be so
distributed with the amount available under any Enhancement
without the consent of each affected Certificateholder,
(ii) change the definition of or the manner of calculating
the interest of any Certificateholders without the consent
of each affected Certificateholder, (iii) reduce the
aforesaid percentage required to consent to any such
amendment without the consent of each Certificateholder or
(iv) adversely affect the rating of any Series or Class by
any Rating Agency without the consent of the Holders of
Investor Certificates of such Series or Class evidencing
more than 50% of the aggregate unpaid principal amount of
the Investor Certificates of such Series or Class. Any
amendment to be effected pursuant to this subsection (b)
shall be deemed to materially adversely affect all
outstanding Series, other than any Series with respect to
which such action shall not adversely affect in any
material respect the interests of any Holder of Investor
Certificates of such Series. The Trustee may, but shall
not be obligated to, enter into any such amendment which
affects the Trustee's rights, duties or immunities under
this Agreement or otherwise.
(c) Promptly after the execution of any such
amendment or consent (other than an amendment pursuant to
subsection (a) above), the Seller shall furnish
notification of the substance of such amendment to the
Trustee, each Certificateholder, each Enhancement Provider
and each Rating Agency.
(d) It shall not be necessary for the consent of
Certificateholders under this Section 6.01 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) Notwithstanding anything in this Section
6.01 to the contrary, no amendment may be made to this
Agreement which would adversely affect in any material
respect the interests of any Enhancement Provider without
the consent of such Enhancement Provider.
SECTION 6.02. Limited Recourse. Notwithstanding
anything to the contrary contained herein, the obligations
of the Purchaser hereunder shall not be recourse to the
Purchaser (or any person or organization acting on behalf
of the Purchaser or any affiliate, officer or director of
the Purchaser), other than to any assets of the Purchaser
not pledged to third parties or otherwise encumbered in a
manner permitted by the Purchaser's Certificate of
Incorporation; provided, however, that any payment by the
Purchaser made in accordance with this Section 6.02 shall
be made only after payment in full of any amounts that the
Purchaser is obligated to deposit in the Collection Account
pursuant to the Pooling and Servicing Agreement.
SECTION 6.03. No Petition. The Seller hereby
covenants and agrees that it will not at any time
institute, or join in instituting, against the Purchaser
any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law.
SECTION 6.04. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
SECTION 6.05. Notices. All demands, notices and
communications hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at
or mailed by registered mail, return receipt requested, to
the parties at such addresses specified in the Pooling and
Servicing Agreement.
SECTION 6.06. Severability of Provisions. If
any one or more of the covenants, agreements, provisions or
terms of this Agreement shall for any reason whatsoever be
held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or
of the Certificates or rights of the Certificateholders.
SECTION 6.07. Assignment. Notwithstanding
anything to the contrary contained herein, this Agreement
may not be assigned by the Seller without the prior consent
of the Purchaser and the Trustee. The Purchaser may assign
its rights, remedies, powers and privileges under this
Agreement to the Trust pursuant to the Pooling and
Servicing Agreement.
SECTION 6.08. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Purchaser or the Seller, as the case may be,
any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege
under this Agreement 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 6.09. 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 6.10. Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon
the parties hereto, the Certificateholders and the other
Beneficiaries and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement,
no other Person will have any right or obligation
hereunder.
SECTION 6.11. 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 6.12. Headings. The headings herein are
for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision
hereof.
SECTION 6.13. Rule 144A Information. For so
long as any of the Investor Certificates of any Series or
Class are "restricted securities" within the meaning of
Rule 144(a)(3) under the 1933 Act, the Seller agrees to
cooperate with the Purchaser to provide to any
Certificateholders of such Series or Class and to any
prospective purchaser of Investor Certificates designated
by such Certificateholder, upon the request of such
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 1933 Act.
IN WITNESS WHEREOF, the Seller and the Purchaser
have caused this Receivables Purchase Agreement to be duly
executed by their respective officers as of the day and
year first above written.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION,
as Purchaser
By:__________________________
Name:
Title:
GOTTSCHALKS INC.,
as Seller
By:__________________________
Name:
Title:
<PAGE>
SCHEDULE I
List of Accounts
The list of all Accounts specifying for each
Account, (i) its account number (ii) the aggregate amount
of Receivables outstanding in such Account, and (iii) the
aggregate amount of Principal Receivables in such Account
has been delivered in the form of computer tape. Such tape
is incorporated herein by this reference.
EXHIBIT 10.73
EXECUTION COPY
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION
Depositor
GOTTSCHALKS INC.
Servicer
and
BANKERS TRUST COMPANY
Trustee
_________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of March 30, 1994
_________________________________________
GOTTSCHALKS CREDIT CARD MASTER TRUST
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . 23
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables . . . . . 24
SECTION 2.02. Acceptance by Trustee . . . . . . . 26
SECTION 2.03. Representations and Warranties of
the Depositor Relating to the
Depositor and this Agreement. . . . 27
SECTION 2.04. Representations and Warranties of
the Depositor Relating to the
Receivables; Reassignment . . . . . 32
SECTION 2.05. Covenants of the Depositor. . . . . 35
SECTION 2.06. Removal of Accounts . . . . . . . . 39
SECTION 2.07. Discount Option . . . . . . . . . . 40
SECTION 2.08. Block Period; Supplemental
Accounts. . . . . . . . . . . . . . 41
ARTICLE III
Administration and Servicing
of Receivables
SECTION 3.01. Acceptance of Appointment and
Other Matters Relating to the
Servicer. . . . . . . . . . . . . . 43
SECTION 3.02. Servicing Compensation. . . . . . . 45
SECTION 3.03. Representations, Warranties and
Covenants of the Servicer . . . . . 46
SECTION 3.04. Reports and Records for the
Trustee . . . . . . . . . . . . . . 51
SECTION 3.05. Annual Servicer's Certificate . . . 52
SECTION 3.06. Independent Public Accountants'
Servicing Report. . . . . . . . . . 53
SECTION 3.07. Tax Treatment . . . . . . . . . . . 55
SECTION 3.08. Notices to the Seller . . . . . . . 55
SECTION 3.09. Adjustments . . . . . . . . . . . . 55
Section 3.10. Fidelity Bond and Errors and
Omissions Insurance.. . . . . . . . 56
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Rights of Certificateholders. . . . 57
SECTION 4.02. Establishment of the Collection
Account . . . . . . . . . . . . . . 57
SECTION 4.03. Collections Arrangements. . . . . . 58
SECTION 4.04. Collection Allocations. . . . . . . 59
ARTICLE V
Distributions and Reports to
Certificateholders
SECTION 5.01. Distributions and Reports to
Certificateholders. . . . . . . . . 60
ARTICLE VI
The Certificates
SECTION 6.01. The Certificates. . . . . . . . . . 60
SECTION 6.02. Authentication of Certificates. . . 61
SECTION 6.03. New Issuances . . . . . . . . . . . 61
SECTION 6.04. Registration of Transfer and
Exchange of Certificates. . . . . . 63
SECTION 6.05. Mutilated, Destroyed, Lost or
Stolen Certificates . . . . . . . . 67
SECTION 6.06. Persons Deemed Owners . . . . . . . 67
SECTION 6.07. Access to List of Registered
Certificateholders' Names and
Addresses . . . . . . . . . . . . . 68
ARTICLE VII
Other Matters Relating to the Depositor
SECTION 7.01. Liability of the Depositor. . . . . 69
SECTION 7.02. Limitation on Liability of the
Depositor . . . . . . . . . . . . . 69
SECTION 7.03. Depositor Indemnification . . . . . 69
ARTICLE VIII
Other Matters Relating
to the Servicer
SECTION 8.01. Liability of the Servicer . . . . . 71
SECTION 8.02. Limitation on Liability of the
Servicer. . . . . . . . . . . . . . 71
SECTION 8.03. Servicer Indemnification of the
Trust and the Trustee . . . . . . . 71
SECTION 8.04. Merger or Consolidation of, or
Assumption of, the Obligations of
the Servicer. . . . . . . . . . . . 72
SECTION 8.05. The Servicer Not to Resign. . . . . 74
SECTION 8.06. Access to Certain Information
Regarding the Receivables; Meet
and Confer. . . . . . . . . . . . . 74
SECTION 8.07. Delegation of Duties. . . . . . . . 74
SECTION 8.08. Examination of Records. . . . . . . 75
ARTICLE IX
Early Amortization Events
SECTION 9.01. Early Amortization Events . . . . . 75
SECTION 9.02. Additional Rights Upon the
Occurrence of Certain Events. . . . 76
ARTICLE X
Servicer Defaults
SECTION 10.01. Servicer Defaults. . . . . . . . . 78
SECTION 10.02. Trustee to Act; Appointment of
Successor. . . . . . . . . . . . . 81
ARTICLE XI
The Trustee
SECTION 11.01. Duties of Trustee. . . . . . . . . 83
SECTION 11.02. Certain Matters Affecting the
Trustee. . . . . . . . . . . . . . 85
SECTION 11.03. Trustee Not Liable for Recitals
in Certificates. . . . . . . . . . 87
SECTION 11.04. Trustee May Own Certificates . . . 87
SECTION 11.05. The Servicer to Pay Trustee's
Fees and Expenses. . . . . . . . . 87
SECTION 11.06. Eligibility Requirements for
Trustee. . . . . . . . . . . . . . 88
SECTION 11.07. Resignation or Removal of
Trustee. . . . . . . . . . . . . . 89
SECTION 11.08. Successor Trustee. . . . . . . . . 89
SECTION 11.09. Merger or Consolidation of
Trustee. . . . . . . . . . . . . . 90
SECTION 11.10. Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . 90
SECTION 11.11. Tax Returns. . . . . . . . . . . . 92
SECTION 11.12. Trustee May Enforce Claims
Without Possession of Certificates 93
SECTION 11.13. Suits for Enforcement. . . . . . . 93
SECTION 11.14. Representations and Warranties of
Trustee. . . . . . . . . . . . . . 93
SECTION 11.15. Maintenance of Office or Agency. . 94
ARTICLE XII
Termination
SECTION 12.01. Termination of Trust. . . . . . . . 94
SECTION 12.02. Final Distribution. . . . . . . . . 95
SECTION 12.03. Depositor's Termination Rights. . . 97
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.01. Amendment. . . . . . . . . . . . . 97
SECTION 13.02. Protection of Right, Title and
Interest to Trust. . . . . . . . . 99
SECTION 13.03. Limitation on Rights of
Certificateholders . . . . . . . . 100
SECTION 13.04. No Petition. . . . . . . . . . . . 102
SECTION 13.05. GOVERNING LAW. . . . . . . . . . . 102
SECTION 13.06. Notices. . . . . . . . . . . . . . 102
SECTION 13.07. Severability of Provisions . . . . 103
SECTION 13.08. Assignment . . . . . . . . . . . . 103
SECTION 13.09. Certificates Nonassessable and
Fully Paid . . . . . . . . . . . . 103
SECTION 13.10. Further Assurances . . . . . . . . 104
SECTION 13.11. No Waiver; Cumulative Remedies . . 104
SECTION 13.12. Counterparts . . . . . . . . . . . 104
SECTION 13.13. Third-Party Beneficiaries. . . . . 104
SECTION 13.14. Actions by Certificateholders. . . 104
SECTION 13.15. Rule 144A Information. . . . . . . 105
SECTION 13.16. Merger and Integration . . . . . . 105
SECTION 13.17. Headings . . . . . . . . . . . . . 105
<PAGE>
EXHIBITS
Exhibit A Form of Exchangeable Certificate
Exhibit B Form of Daily Report
Exhibit C Form of Officer's Certificate (Annual
Servicer's Statement)
Exhibit D Form of Distribution Date Statement
Exhibit E Form of Trustee's Reassignment of
Receivables to the Depositor
Exhibit F Form of Officer's Certificate of Depositor
with regard to addition of Supplemental
Accounts
Exhibit G Form of Officer's Certificate of Depositor
with regard to removal of Removed Accounts
Exhibit H-1 Form of Certificate legend regarding 1933
Act
Exhibit H-2 Form of Certificate legend regarding
excluding transfer to ERISA Plan
Exhibit I Form of Receivables Purchase Agreement
Exhibit J Form of Local Deposit Account Agreement
Schedule I List of Accounts
Schedule II Collection Account
Schedule III List of Local Deposit Accounts<PAGE>
POOLING AND SERVICING AGREEMENT dated as of March
30, 1994, among GOTTSCHALKS CREDIT RECEIVABLES CORPORATION,
a Delaware corporation, as Depositor, GOTTSCHALKS INC., a
Delaware corporation, as Servicer, and BANKERS TRUST
COMPANY, a New York banking corporation, as Trustee.
In consideration of the mutual agreements herein
contained, each party agrees as follows for the benefit of
the other parties and the Beneficiaries to the extent
provided herein:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in
this Agreement, the following words and phrases shall have
the following meanings:
"Account" shall mean each Charge Account existing
on the Cut-Off Date and each Charge Account originated by
the Seller in the normal operation of its credit card
business after the Cut-Off Date; provided, however, that a
Charge Account originated by the Seller during the
continuance of a Block Period shall not constitute an
Account hereunder until and unless the Charge Account
subsequently constitutes a Supplemental Account; provided
further, that any Charge Account that constitutes a Removed
Account shall not constitute an Account hereunder from and
after its Removal Date.
"Account Information" shall have the meaning
specified in Section 2.02(c).
"Adjusted Invested Amount" shall mean, as of any
date with respect to a Series, an amount equal to the
Invested Amount of such Series, plus any cash on deposit in
any principal reserve or retention account established
pursuant to any Supplement.
"Adjustment Payment" shall have the meaning
specified in Section 3.09(a) hereof.
"Affiliate" shall mean, with respect to any
specified Person, any other Person controlling or
controlled by or under common control with such specified
Person. For the purposes of this definition, "control"
when used with respect to any specified Person means the
power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to
the foregoing.
"Agreement" shall mean this Pooling and Servicing
Agreement, as the same may from time to time be amended,
modified or otherwise supplemented, including with respect
to any Series or Class, by the related Supplement.
"Applicants" shall have the meaning specified in
Section 6.07 hereof.
"Appointment Date" shall have the meaning
specified in Section 9.02 hereof.
"Authorized Newspaper" shall mean any newspaper
or newspapers of general circulation in Fresno County,
California customarily published on each Business Day,
whether or not published on Saturdays, Sundays and
holidays.
"Available Subordinated Amount" shall mean, with
respect to any Series at any time of determination, an
amount equal to the available subordinated amount specified
in the related Supplement at such time.
"Beneficiary" shall mean any of the Certificate-
holders and any Enhancement Provider.
"Block Period" shall have the meaning specified
in Section 2.08(a) hereof.
"Bondable Persons" shall mean those officers and
employees of the Servicer directly responsible for handling
funds, documents and computer systems directly relating to
any of the servicing functions delegated to the Servicer
hereunder and performed by the Servicer at its headquarters
in Fresno, California.
"Business Day" shall mean any day other than (a)
a Saturday or a Sunday, or (b) another day on which banking
institutions or trust companies in the States of New York
or California are authorized or obligated by law, executive
order or governmental decree to be closed.
"Certificate" shall mean any Certificate issued
pursuant to a Series Supplement or the Exchangeable
Certificate.
"Certificate Rate" shall mean, with respect to
any Series or Class, the certificate rate specified
therefor in the related Supplement.
"Certificate Register" shall have the meaning
specified in Section 6.04(a) hereof.
"Certificateholder" or "Holder" shall mean (x) a
holder of any Investor Certificate or (y) a Person (other
than GCRC or any Affiliate thereof) in whose name a
Subordinated Certificate is registered or (z) a Person
(other than GCRC or any Affiliate thereof) in whose name
the Exchangeable Certificate is registered or, upon the
pledge of the Exchangeable Certificate by GCRC or any
Affiliate thereof, the pledgee of the Exchangeable
Certificate. The purpose of the exclusion of GCRC or any
Affiliate thereof from this definition is to prevent such
entities from exercising the rights, whether voting or
otherwise, of a Certificateholder hereunder.
"Certificateholders' Representative" shall mean,
unless otherwise provided in a Supplement, a representative
appointed by Consent of Certificateholders.
"Charge Account" shall mean a consumer revolving
credit card account originated by the Seller pursuant to a
Charge Account Agreement.
"Charge Account Agreement" shall mean an
agreement with the Seller pursuant to which a Person is
obligated to pay for purchased merchandise or services
under a credit plan that permits such Person to purchase
merchandise and services on credit, together with any
finance charges and other charges related thereto, as such
agreement may be amended, modified or supplemented from
time to time.
"Class" shall mean, with respect to any Series,
any one of the classes of Certificates of that Series.
"Closing Date" shall mean, with respect to any
Series, the Closing Date specified in the related
Supplement.
"Collection Account" shall have the meaning
specified in Section 4.02 hereof.
"Collection Period" shall mean, with respect to
any Distribution Date, the calendar month preceding the
month in which such Distribution Date occurs.
"Collection Servicer" shall mean an institution
(other than the Servicer) reasonably acceptable to the
Trustee and Certificateholders, as evidenced by a Consent
of Certificateholders, which shall have been appointed to
perform the functions specified in Section 3.03(x)(D)
hereof; provided, however, that Bank of Fresno is hereby
preapproved to serve as Collection Servicer hereunder.
"Collection Servicer Agreement" shall have the
meaning specified in Section 3.03(x)(D) hereof.
"Collections" shall mean, without duplication,
all payments by or on behalf of Obligors received by the
Servicer in respect of the Receivables, in the form of
cash, checks, wire transfers or any other form of payment
as provided in such Obligor's Charge Account Agreement.
"Consent of Certificateholders" shall mean, with
respect to any proposed action or inaction, the written
consent of Certificateholders representing not less than a
majority of the Adjusted Invested Amount of each Series
then outstanding, or if a Series shall have more than one
Class, of each Class within any said Series.
"Contractually Delinquent" with respect to an
Account, shall mean an Account as to which the required
minimum payment set forth on the related billing statement
has not been received by the due date thereof.
"Corporate Trust Office" shall mean the principal
office of the Trustee in The City of New York, 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 Four Albany Street, New York,
New York 10006, Attention: Corporate Trust & Agency Group,
Structured Finance Team.
"Cut-Off Date" shall mean the close of business
for the Seller's retail stores on March 29, 1994.
"Daily Report" shall mean a report setting forth
the computations reflected in the form thereof attached as
Exhibit B hereto.
"Dedicated Zip Code" shall mean the dedicated zip
code, or similar arrangement, to which Obligors are
instructed to mail their payments in respect of
Receivables, and any successor arrangement to which the
Consent of Certificateholders shall have been obtained.
"Defaulted Amount" with respect to any
Determination Date shall mean an amount (which shall not be
less than zero) equal to (a) for all the Accounts included
in the Pool, the amount of Principal Receivables which
became Defaulted Receivables during the immediately
preceding Collection Period minus (b) the full amount of
any such Defaulted Receivables which are subject to
reassignment or assignment to the Depositor or the Servicer
in accordance with the terms of this Agreement; provided,
however, that, if an Insolvency Event occurs with respect
to the Depositor the amounts of such Defaulted Receivables
which are subject to reassignment to the Depositor shall
not be included in clause (b) and, if an Insolvency Event
occurs with respect to the Servicer, the amount of such
Defaulted Receivables which are subject to assignment to
the Servicer shall not be included in clause (b).
"Defaulted Receivables" shall mean, with respect
to any Collection Period, all Receivables which are charged
off by the Servicer as uncollectible in respect of such
Collection Period in accordance with the Servicer's
customary and usual servicing procedures for servicing
Obligor receivables comparable to the Receivables which
have not been sold to third parties. A Principal
Receivable shall become a Defaulted Receivable on the day
on which such Principal Receivable is recorded as charged
off on the Servicer's computer master file of Accounts but,
in any event, shall be deemed a Defaulted Receivable no
later than the earlier of (i) the day on which it becomes
180 days Contractually Delinquent unless the Obligor has
made a payment with respect to the Account which satisfies
the Servicer's criteria for curing delinquencies and (ii)
the day which is 30 days after the day on which the
Servicer receives notice of any of the following events:
(A) the Obligor has filed for bankruptcy (B) the Obligor
has had a bankruptcy petition filed against it or (C) the
Obligor is deceased. Ineligible Receivables shall not be
considered Defaulted Receivables hereunder.
"Deposit Account Agreement" shall mean a letter
agreement entered into by and among the Servicer, the
Trustee and a financial institution at which a Local
Deposit Account is maintained for the purpose of receiving
Collections, substantially in the form of Exhibit J hereto.
"Depositor" shall mean GCRC, and its successors
in interest to the extent permitted hereunder.
"Depositor Exchange" shall have the meaning given
in Section 6.03(c) hereof.
"Depositor Interest" shall have the meaning
specified in Section 4.01(a) hereof.
"Determination Date" with respect to any
Distribution Date shall mean the day that is two Business
Days prior to such Distribution Date.
"Discount Portion" shall mean the portion of
Principal Receivables that shall be treated as Finance
Charge Receivables pursuant to Section 2.07(a) hereof.
"Discount Rate" shall have the meaning specified
in Section 2.07(b) hereof.
"Distribution Date" shall mean the 15th day of
each month or, if such day is not a Business Day, the next
succeeding Business Day.
"Distribution Date Statement" shall mean, with
respect to any Series, a report prepared by the Servicer on
each Determination Date for the immediately preceding
Collection Period in substantially the form set forth in
the related Supplement.
"Duff & Phelps" shall mean Duff & Phelps Credit
Rating Co., or its successors.
"Early Amortization Event" shall have the meaning
specified in Section 9.01 hereof and, with respect to any
Series, shall also mean any Early Amortization Event
specified in the related Supplement for that Series.
"Early Amortization Period" shall mean, with
respect to any Series, the period beginning at the close of
business on the day on which an Early Amortization Event
occurs or is deemed to have occurred, and in each case
ending upon the earlier to occur of (a) the payment in full
to the Certificateholders of such Series of the Invested
Amount with respect to such Series, (b) the Termination
Date with respect to such Series, and (c) termination of
the Trust.
"Eligible Account" shall mean, as of any time of
determination, each Charge Account owned by the Seller:
(a) which was created in accordance with the
Financial Guidelines of the Seller at the time of
creation of such Charge Account;
(b) which is payable in U.S. Dollars;
(c) which has in full force and effect a Charge
Account Agreement that has been duly authorized and
which constitutes the legal, valid and binding
obligation of the Obligor enforceable against such
Obligor in accordance with its terms and is not
subject to any dispute, offset, counterclaim or
defense whatsoever, including defenses arising out of
violations of usury laws, (except the discharge in
bankruptcy of such Obligor);
(d) which has in full force and effect all
consents, licenses, or authorizations of, or
registrations with, any governmental authority
required to be obtained or given in connection with
such Charge Account;
(e) which has not been closed at the request of
the Obligor;
(f) which has not been identified by the Seller
in its computer files as having an Obligor that is (i)
deceased, (ii) a minor under the laws of his/her state
of residence or (iii) not competent to enter into a
contract or incur debt;
(g) which has not been sold or pledged to any
Person other than the Depositor or the Trust, as
applicable, and which does not include Receivables
which have been sold or pledged to any other Person;
(h) the Receivables of which the Seller has not
charged off in its customary and usual manner for
charging off Receivables in such Charge Accounts
unless such Charge Account is subsequently reinstated;
(i) under which a credit card is outstanding
that has not expired or been identified by the Seller
or the Servicer as lost or stolen;
(j) which has not been identified by the Seller
or the Servicer in its computer files as a Charge
Account as to which the Seller or the Servicer has any
confirmed record of any fraud-related activity by the
Obligor thereunder;
(k) which has been identified by the Servicer in
its computer files as having an Obligor that has
provided as his/her most recent billing address an
address located in the United States or its
territories or possessions or Canada; and
(l) which has not been identified by the
Servicer in its computer files as having an Obligor
that is involved in a voluntary or involuntary
bankruptcy proceeding; and
(m) under which no Receivable arising therefrom
has been classified as an Ineligible Receivable.
"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 or trust company
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) having corporate
trust powers and acting as trustee for funds deposited in
such account subject to regulations on fiduciary funds on
deposit substantially similar to 12 C.F.R. 9-10(b).
"Eligible Institution" shall mean a depository
institution (which may be the Trustee) or trust company
organized under the laws of the United States of America or
any one of the states thereof, or the District of Columbia
(or any domestic branch of a foreign bank) which at all
times (i) has a long-term unsecured debt rating of A2 or
better by Moody's, A or better by Standard & Poor's, A or
better by Duff & Phelps or A or better by Fitch or such
other rating that is acceptable to each Rating Agency, as
evidenced by a letter from such Rating Agency to the
Trustee and (ii) is a member of the FDIC.
"Eligible Investments" shall mean book-entry
securities, negotiable instruments or securities
represented by Instruments in bearer or registered form in
each case having original or remaining maturities of thirty
(30) days or less, but in no event maturing later than the
Distribution Date next succeeding the Trustee's acquisition
thereof which evidence:
(a) obligations of, or obligations fully
guaranteed as to timely payment by, the United States
of America:
(b) demand deposits, time deposits or
certificates of deposit of any depository institution
or trust company incorporated under the laws of the
United States of America or any state thereof,
including the District of Columbia (or any domestic
branch of a foreign bank) and subject to supervision
and examination by Federal or state banking or
depository institution authorities; provided, however,
that at the time of the Trust's investment or
contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of
which is based on the credit of a person or entity
other than such depository institution or trust
company) thereof shall have a credit rating from each
Rating Agency in the highest investment category
granted thereby;
(c) commercial paper having, at the time of
the Trust's investment or contractual commitment to
invest therein, a rating from each Rating Agency in
the highest investment category granted thereby;
(d) investments in money market funds
having as their sole investments any of the
investments described in clauses (a), (b) and (c)
above and having a rating from each Rating Agency in
the highest investment category granted thereby and
which seek to maintain a constant net asset value;
(e) bankers' acceptances issued by any
depository institution or trust company referred to in
clause (b) above; and
(f) repurchase obligations with respect to
any security that is a direct obligation of, or fully
guaranteed as to timely payment by, the United States
of America or any agency or instrumentality thereof
the obligations of which are backed by the full faith
and credit of the United States of America, in either
case entered into with (i) a depository institution or
trust company (acting as principal) described in
clause (b) above or (ii) a depository institution or
trust company the deposits of which are insured by
FDIC.
"Eligible Receivable" shall mean any Receivable
that, at the time of determination:
(a) exists under an Eligible Account;
(b) constitutes an "account" or "general
intangible" as defined in Article 9 of the UCC as then
in effect in the Relevant UCC State;
(c) does not contravene any laws, rules or
regulations applicable thereto (including, without
limitation, rules and regulations relating to truth in
lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection
practices and privacy) or the Charge Account Agreement
that could reasonably be expected to have an adverse
impact on the amount of Collections thereunder;
(d) has in full force and effect all
consents, licenses, or authorizations of, or
registrations with, any governmental authority
required to be obtained or given in connection with
the creation of such Receivable;
(e) is free and clear of all Liens and
security interests arising under or through the
Depositor (other than Permitted Liens);
(f) as to which all obligations required to
be fulfilled by the Seller or the Depositor, as
applicable, have been fulfilled;
(g) as to which neither the Seller nor the
Depositor, as applicable, has taken any action which
would impair, or failed to take any action necessary
to avoid impairing, the rights of the Trust or the
Certificateholders therein; and
(h) is not more than 120 days past due, or
shall not have been classified by the Servicer as non-
performing for a period of more than 120 days.
"Eligible Servicer" shall mean the Trustee (other
than a Successor Trustee) or an entity which, at the time
of its appointment as Servicer, (a) is servicing a
portfolio of consumer revolving credit card accounts, (b)
is legally qualified and has the capacity to service the
Accounts, (c) has demonstrated the ability to
professionally and competently service a portfolio of
similar accounts in accordance with high standards of skill
and care, (d) is qualified to use the software that is then
currently being used to service the Accounts or obtains the
right to use or has its own software which is adequate to
perform its duties under this Agreement, and (e) shall have
been the subject of a Consent of Certificateholders and
shall have satisfied the Rating Agency Condition.
"Enhancement" shall mean the rights and benefits
provided to the Certificateholders of any Series or Class
pursuant to any letter of credit, surety bond, cash
collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, tax protection
agreement, interest rate swap agreement or other similar
arrangement. The subordination of any Series or Class to
any other Series or Class or the Exchangeable Certificate
or of the Depositor Interest to any Series or Class or the
Exchangeable Certificate shall be deemed to be an
Enhancement.
"Enhancement Agreement" shall mean any agreement,
instrument or document governing the terms of any Series
Enhancement or pursuant to which any Series Enhancement is
issued or outstanding.
"Enhancement Provider" shall mean a Person
providing any Enhancement, other than any Certificateholder
(including any Holder of the Subordinated Certificate)
whose rights under a Certificate are subordinated to any
Series or Class.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Plan" shall have the meaning specified in
Section 6.04(e)(ii) hereof.
"Excess Balance Test" shall mean, with respect
to any Determination Date, whether the Pool Balance for
each day within the preceding twelve months shall have
exceeded the Required Pool Balance by at least 15%.
"Exchange" shall have the meaning given thereto
in Section 6.03(c) hereof.
"Exchange Date" shall have the meaning given
thereto in Section 6.03(c) hereof.
"Exchange Notice" shall have the meaning given
thereto in Section 6.03(c) hereof.
"Exchangeable Amount" shall mean the amount
specified in the related Supplement.
"Exchangeable Certificate" shall mean the
certificate substantially in the form of Exhibit A and
exchangeable as provided in Section 6.03 of this Agreement.
"FDIC" shall mean the Federal Deposit Insurance
Corporation or any successor entity thereto.
"Finance Charge Collections" shall mean
Collections under the Receivables other than Principal
Collections; provided, that all Recoveries shall be Finance
Charge Collections.
"Finance Charge Receivables" shall mean, with
respect to any Account, all amounts billed to the related
Obligor in respect of interest and all other finance
charges (including, without limitation, late fees), and all
amounts resulting from any designation of a Discount
Portion or application of a Discount Rate pursuant to
Section 2.07 hereof.
"Financial Guidelines" shall mean the written
policies and procedures relating to the operation of the
consumer credit card business of the Seller, including,
without limitation, the written policies and procedures for
determining the creditworthiness of credit card customers,
the extension of credit to credit card customers, and the
maintenance of credit card accounts and collection of
credit card receivables, as such policies and procedures
may be amended from time to time in conformance with all
Requirements of Law.
"Fitch" shall mean Fitch Investors Service, Inc.
or its successors.
"GCRC" shall mean Gottschalks Credit Receivables
Corporation, a Delaware corporation, and its successors in
interest to the extent permitted hereunder.
"Gottschalks" shall mean Gottschalks Inc., a
Delaware corporation, and its successors in interest.
"Governmental Authority" shall mean the United
States of America and any state or other political
subdivision thereof and any entity exercising executive
legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Independent Certified Public Accountants" shall
mean any of (a) Arthur Anderson, & Co. (b) Deloitte &
Touche, (c) Ernst & Young, (d) KMPG Peat Marwick, (e) Price
Waterhouse and (f) Coopers & Lybrand; provided such firm is
independent within the meaning of the Securities Act of
1933, as amended.
"Ineligible Account" shall mean a Charge Account
that at the time of determination is not an Eligible
Account.
"Ineligible Receivable" shall mean any Receivable
that at the time of determination is not an Eligible
Receivable.
"Initial Holder" shall mean each of The
Prudential Insurance Company of America and Business Men's
Assurance Company of America.
"In-Store Payments" shall mean any payment made
by an Obligor with respect to a Receivable by personal
delivery of cash, check, money order or any other form of
payment to a cashier or other employee of the Seller at a
retail premise.
"Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended.
"Invested Amount" shall mean, for each Series,
the aggregate Invested Amount for each Class of such
Series.
"Investor Certificates" shall mean any one of the
certificates executed by the Depositor and authenticated by
the Trustee, substantially in the form attached to the
related Supplement, other than the Exchangeable Certificate
and any Subordinated Certificate.
"Investor Exchange" shall have the meaning
specified in Section 6.03(c) hereof.
"Investors' Interest" shall have the meaning
specified in Section 4.01 hereof.
"Investors' Servicing Fee" shall mean the portion
of the Servicing Fee allocable to the Holders of Investor
Certificates of a Series pursuant to the terms of the
related Supplement.
"Lien" shall mean any mortgage, deed of trust,
pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), preference,
participation interest, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title
retention agreement and any financing lease having
substantially the same economic effect as any of the
foregoing.
"Liquidation Event" shall have the meaning
specified in Section 9.02(b) hereof.
"Local Deposit Account" shall mean any Eligible
Deposit Account that is maintained pursuant to a Deposit
Account Agreement for the purpose of receiving Collections.
"Local Deposit Account Bank" shall mean a bank
that holds one or more Local Deposit Accounts for receiving
Collections pursuant to a Deposit Account Agreement.
"Minimum Depositor Interest" shall have the
meaning given thereto in any Supplement.
"Miscellaneous Payments" shall mean, with respect
to any Collection Period, the sum of (a) Adjustment
Payments and Transfer Deposit Amounts and (b) all
Collections in respect of Receivables previously written-
off.
"Monthly Servicing Fee" shall mean, with respect
to any Series, the amount specified therefor in the related
Supplement.
"Moody's" shall mean Moody's Investors Service,
Inc. or its successors.
"1933 Act" shall have the meaning specified in
Section 6.04(f) hereof.
"Notice Date" shall have the meaning specified in
Section 2.08(d) hereof.
"Notices" shall have the meaning specified in
Section 13.06 hereof.
"Obligor" shall mean a Person obligated to make
payments with respect to a Receivable arising under a
Charge Account.
"Officer's Certificate" shall mean, with respect
to any corporation, unless otherwise specified in this
Agreement, a certificate signed by the Chairman of the
Board, Vice Chairman of the Board, President, any Vice
President, Treasurer, any Assistant Treasurer, Secretary or
any Assistant Secretary of such corporation.
"Opinion of Counsel" shall mean a written opinion
of counsel, in form and substance satisfactory to the
Trustee, who may be counsel for, or an employee of, the
Depositor or Gottschalks, and who shall be reasonably
acceptable to the Trustee.
"Outstanding Balance" shall mean, with respect to
a Receivable on any day, the aggregate amount owed by the
Obligor thereunder as of the close of business on the prior
Business Day (net of returns and adjustments).
"Permitted Lien" shall mean, with respect to the
Receivables: (a) Liens in favor of the Depositor created
pursuant to the Receivables Purchase Agreement assigned to
the Trustee pursuant to this Agreement; (b) Liens in favor
of the Trustee pursuant to this Agreement; and (c) Liens
which secure the payment of taxes, assessments and
governmental charges or levies, if such taxes, assessment
and governmental charges or levies are either (x) not
delinquent or (y) being contested in good faith by
appropriate legal or administrative proceedings and as to
which adequate reserves in accordance with generally
accepted accounting principles shall have been established.
"Permitted Transaction" shall have the meaning
specified in Section 2.05(f) hereof.
"Person" shall mean any legal person, including
any individual, corporation partnership, association,
joint-stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.
"Pool" shall mean, at any time of determination,
all Accounts with respect to which the related Receivables
have been transferred to the Trust pursuant to Section 2.01
hereof.
"Pool Balance" shall mean, at any time of
determination, the aggregate of Principal Receivables
constituting Eligible Receivables in the Pool at such time.
"Principal Collections" shall mean Collections of
Principal Receivables.
"Principal Receivables" shall mean, for any day
with respect to any Account, amounts shown on the
Servicer's records on such day as Receivables (other than
such amounts which represent Finance Charge Receivables)
payable by the related Obligor; provided that Principal
Receivables shall not include the Discount Portion.
"Principal Terms" shall mean, with respect to any
Series:
(a) the name or designation;
(b) the initial principal amount or
invested amount (or method for calculating such
amount);
(c) the Certificate Rate (or method for the
determination thereof);
(d) the payment date or dates and the date
or dates from which interest shall accrue;
(e) the method for allocating Collections
to Certificateholders;
(f) the designation of any Series Accounts
and the terms governing the operation of any such
Series Accounts;
(g) the Monthly Servicing Fee, and the
Investors' Servicing Fee, if any;
(h) the identity of the Enhancement
Provider and the terms of any form of Enhancement with
respect thereto, if any;
(i) the terms on which the Investor
Certificates of such Series may be exchanged for
Investor Certificates of another Series, repurchased
by the Depositor or remarketed to other investors;
(j) the Termination Date;
(k) the number of Classes of Investor
Certificates of such Series and, if more than one
Class, the rights and priorities of each such Class;
(l) the extent to which the Investor
Certificates of such Series will be issuable in
temporary or permanent global form (and, in such case,
the depository for such global certificate or
certificates, the terms and conditions, if any, upon
which such global certificates may be exchanged, in
whole or in part, for definitive certificates and the
manner in which any interest payable on a temporary or
global certificate will be paid);
(m) whether the Investor Certificates of
such Series may be issued in bearer form and any
limitations imposed thereon;
(n) the priority of such Series with
respect to any other Series;
(o) whether such Series will be part of a
group;
(p) the Required Series Pool Balance for
such Series;
(q) any other terms of such Series; and
(r) the Minimum Depositor Interest.
"Purchase Price" shall mean, with respect to any
Receivable for any date on which such Receivable is to be
purchased (a) an amount equal to the principal amount
payable by the Obligor in respect thereof as reflected in
the records of the Servicer as of the date of purchase,
plus (b) late charges and interest, if any, accrued thereon
at a per annum rate equal to the rate being charged to the
Obligor under the Charge Account Agreement based on the
actual number of days elapsed over a year of 360 days.
"Rating Agency" shall mean, with respect to any
outstanding Series or Class, each statistical rating
agency, if any, selected by the Depositor to rate the
Investor Certificates of such Series or Class.
"Rating Agency Condition" shall mean, with
respect to any action, that, after the required notice has
been given to the applicable Rating Agencies, each such
Rating Agency shall have notified each of the Depositor,
the Servicer and the Trustee in writing that such action
will not result in a reduction or withdrawal of the rating
of any outstanding Series or Class with respect to which it
is a Rating Agency.
"Reassignment" shall have the meaning specified
in Section 2.06(b) hereof.
"Receivables" shall mean, with respect to any
Obligor, all right to payment for money due or to become
due under a Charge Account Agreement arising in an Account
from a sale of merchandise, services or credit life
insurance, and includes the right to payment of any
interest or finance charges (including, without limitation,
late fees) and other obligations of such Obligor with
respect thereto. Each Receivable includes, without
limitation, all rights of the Seller and obligations of the
Obligor under the applicable Charge Account Agreement.
Each increase in the Outstanding Balance of any Receivable
(other than any such increase resulting from the accrual of
interest or finance charges or other fees with respect to
such Receivable) shall, for purposes of Article II,
constitute a separate Receivable.
"Receivables Purchase Agreement" shall mean the
agreement between Gottschalks and the Depositor, in
substantially the form attached hereto as Exhibit I, dated
as of the date hereof, governing the terms and conditions
upon which the Depositor is acquiring the initial
Receivables transferred to the Trust on the Closing Date
and all Receivables acquired thereafter, as the same may
from time to time be amended, modified or otherwise
supplemented.
"Record Date" shall mean, with respect to any
Distribution Date, the last day of the month preceding the
month in which such Distribution Date occurs.
"Recoveries" shall mean, with respect to any
Distribution Date, any amounts received during the Related
Collection Period by the Servicer with respect to Defaulted
Receivables (net of reasonable recovery expenses).
"Related Collection Period" shall mean, with
respect to any Determination Date or any Distribution Date,
the Collection Period ended on the last day of the calendar
month preceding such date.
"Related Documents" shall mean, collectively, the
Receivables Purchase Agreement and, with respect to any
Series, any applicable Enhancement Agreement and any
applicable certificate purchase agreement.
"Relevant UCC State" shall mean each jurisdiction
in which the filing of a UCC financing statement is
necessary to perfect the security interest of the Trustee
established under the Agreement.
"Removal Date" shall have the meaning specified
in Section 2.06(b) hereof.
"Removal Notice" shall have the meaning specified
in Section 2.06(b) hereof.
"Removed Accounts" shall have the meaning
specified in Section 2.06(a) hereof.
"Required Pool Balance" shall mean, at any time
of determination, the sum of the Required Series Pool
Balances for all outstanding Series at such time.
"Required Series Pool Balance" shall have the
meaning specified in the related Supplement.
"Requirements of Law" for any Person shall mean
the certificate or articles of incorporation and by-laws or
other organizational or governing documents of such Person,
and any law, treaty, rule or regulation, or determination
of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such
Person is subject, whether Federal, state or local
(including usury laws, and the Federal Truth in Lending Act
and the Equal Credit Opportunity Act).
"Responsible Officer" shall mean any Vice
President, Assistant Vice President, Assistant Secretary,
Assistant Treasurer, and any other officer of the Trustee
customarily performing functions within the corporate trust
department and also, with respect to a particular matter,
any other officer to whom such matter is referred because
of such officer's knowledge of and familiarity with that
relevant subject.
"Revolving Period" shall mean with respect to any
Series, the period specified as such in the related
Supplement.
"Seller" shall mean Gottschalks.
"Series" shall mean any series of Certificates
issued pursuant to a Supplement.
"Series Account" shall mean any deposit, trust,
escrow, reserve or similar account maintained for the
benefit of the Certificateholders of any Series or Class,
as specified in any Supplement.
"Series Allocation Percentage" shall mean a
percentage, expressed as a fraction, the numerator of which
is the Adjusted Invested Amount for such Series, and the
denominator of which is the Adjusted Invested Amounts for
all Series.
"Series Cut-Off Date" shall mean, with respect to
any Series, the date specified as such in the related
Supplement.
"Service Transfer" shall have the meaning
specified in Section 10.01 hereof.
"Servicer" shall initially mean Gottschalks, in
its capacity as Servicer under this Agreement, and after
any Service Transfer, the Successor Servicer.
"Servicer Default" shall have the meaning
specified in Section 10.01 hereof.
"Servicing Fee" shall have the meaning specified
in Section 3.02 hereof.
"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.
"Special Interest Receivables" shall mean, with
respect to an Account, Receivables arising under special
promotional programs pursuant to which the accrual of
finance charges with respect to such Receivables is waived,
reduced or deferred.
"Standard & Poor's" shall mean Standard & Poor's
Corporation or its successors.
"Subordinated Certificate" shall have the meaning
specified under a Supplement.
"Successor Servicer" shall have the meaning
specified in Section 10.02(a) hereof.
"Supplement" and "Series Supplement" shall mean,
with respect to any Series, a Supplement to this Agreement,
executed and delivered in connection with the original
issuance of the Investor Certificates of such Series
pursuant to Section 6.03 hereof, and all amendments thereof
and supplements thereto.
"Supplemental Accounts" shall mean, as of the
applicable Supplemental Addition Date, each Charge Account
designated by the Depositor pursuant to Section 2.08(b) or
(c) hereof.
"Supplemental Addition Date" shall mean, with
respect to a Charge Account originated by the Seller during
the continuance of a Block Period, the first Business Day
on which Receivables arising under such Charge Account are
to be transferred to the Trust as specified in the notice
provided pursuant to Section 2.08(d)(i) hereof.
"Tax Opinion" shall mean, with respect to any
action, an Opinion of Counsel (which shall not have been
issued by an employee of the Depositor or Gottschalks) to
the effect that, for Federal income tax purposes, (a) such
action will not adversely affect the characterization as
debt of the Investor Certificates of any outstanding Series
or Class that were characterized as debt at the time of
their issuance, (b) such action will not cause or
constitute a taxable event with respect to any
Certificateholders or the Trust, (c) in the case of Section
6.03(b) hereof, the Investor Certificates of the new Series
will properly be characterized as debt and (d) such action
will not cause the Trust to be treated as an association
(or publicly traded partnership) taxable as a corporation.
"Termination Date" shall mean, with respect to
any Series, the termination date specified in the related
Supplement.
"Termination Notice" shall have the meaning
specified in Section 10.01 hereof.
"Termination Proceeds" shall have the meaning
specified in Section 12.02(c) hereof.
"Transfer Agent and Registrar" shall have the
meaning specified in Section 6.04(a) hereof.
"Transfer Date" shall mean, with respect to each
Receivable, the Business Day after the Cut-Off Date and
prior to the earlier of (i) the occurrence of a Liquidation
Event, and (ii) the Trust Termination Date, on which such
Receivable was created and transferred to the Trust
pursuant to Section 2.01 hereof.
"Transfer Deposit Amount" shall mean, with
respect to any Receivable reassigned or assigned to the
Depositor or the Servicer, as applicable, pursuant to
Section 2.04(c) or Section 3.03 hereof, the amounts
specified in such Sections.
"Trust" shall mean the Gottschalks Credit Card
Master Trust created by this Agreement, the corpus of which
shall consist of the Trust Assets.
"Trust Assets" shall have the meaning specified
in Section 2.01 hereof.
"Trust Liquidation Proceeds" shall have the
meaning specified in Section 9.02(c) hereof.
"Trust Termination Date" shall have the meaning
specified in Section 12.01 hereof.
"Trustee" shall mean Bankers Trust Company, a New
York banking corporation, not in its individual capacity
but solely as Trustee hereunder, or its successor in
interest, or any successor trustee appointed as herein
provided.
"UCC" shall mean the Uniform Commercial Code, as
amended from time to time, as in effect in any specified
jurisdiction.
"Vice President" when used with respect to the
Depositor and Servicer shall mean any vice president
whether or not designated by a number or word or words
added before or after the title "vice president".
"Village East" shall mean the Village East
women's apparel division of Gottschalks.
SECTION 1.02. Other Definitional Provisions.
(a) All terms defined in 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 in this Agreement and in any
certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any
such certificate or other document to the extent not
defined, shall have the respective meanings given to them
under generally accepted accounting principles. To the
extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or
other document shall control.
(c) Any reference to each Rating Agency shall
only apply to any specific rating agency if such rating
agency is then rating the Investor Certificates of any
outstanding Series.
(d) Unless otherwise specified, references to
any amount as on deposit or outstanding on any particular
date shall mean such amount at the close of business on
such day.
(e) The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement
are references to Articles, Sections, Schedules and
Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including
without limitation".
(f) The definitions contained in this Agreement
are applicable to the singular as well as the plural forms
of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables. By
execution of this Agreement, the Depositor does hereby
sell, transfer, assign, set over and otherwise convey,
without recourse (except as expressly provided herein), to
the Trustee, on behalf of the Trust, for the benefit of the
Beneficiaries, (a) all of Depositor's right, title and
interest in, to and under the Receivables existing at the
close of business on the Cut-Off Date, and all monies due
or to become due and all amounts received with respect
thereto and all proceeds thereof (including "proceeds", as
defined in Section 9306 of the UCC as in effect in the
State of California, and Recoveries) and (b) all of the
Depositor's rights, remedies, powers and privileges under
the Receivables Purchase Agreement. As of each Transfer
Date, the Depositor does hereby sell, transfer, assign, set
over and otherwise convey, without recourse (except as
expressly provided herein), to the Trustee, on behalf of
the Trust, for the benefit of the Beneficiaries, all of the
Depositor's right, title and interest in, to and under the
Receivables (other than any Receivables created in a
Removed Account from and after the applicable Removal Date,
as provided in Section 2.06(c) hereof) owned by the
Depositor at the close of business on such Transfer Date
and not theretofore conveyed to the Trustee, on behalf of
the Trust, for the benefit of the Beneficiaries, all monies
due or to become due and all amounts received with respect
thereto and all proceeds thereof (including "proceeds", as
defined in Section 9306 of the UCC as in effect in the
State of California, and Recoveries). Such property,
together with all monies on deposit in, and Eligible
Investments credited to, the Collection Account or any
Series Account and all monies as are from time to time
available under any Enhancements shall collectively
constitute the assets of the Trust (the "Trust Assets").
The foregoing sale, transfer, assignment, set-over and
conveyance and any subsequent sales, transfers,
assignments, set-overs and conveyances do not constitute,
and are not intended to result in, the creation or an
assumption by the Trust, the Trustee or any Beneficiary of
any obligation of the Servicer, the Seller, the Depositor
or any other Person in connection with the Accounts, the
Receivables, or under any agreement or instrument relating
thereto, including any obligation to any Obligors. The
foregoing sale, 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 sale, transfer, assignment, set-over and conveyance
shall be construed accordingly.
In connection with such sale, transfer,
assignment, set-over and conveyance, the Depositor agrees
to record and file, at its own expense, a financing
statement on form UCC-1 (and continuation statements when
applicable) with respect to the Receivables now existing
and hereafter created for the sale of "accounts" (in each
case as defined in Section 9106 of the UCC as in effect in
any state where the Depositor's or the Seller's chief
executive offices or books and records relating to the
Receivables are located) meeting the requirements of
applicable state law in such manner and in such other
jurisdictions as are necessary to perfect, and maintain the
perfection of, the sale and assignment of the Receivables
to the Trust, and to deliver a file-stamped copy of each
such financing statement or other evidence of such filing
to the Trustee on or prior to the first Closing Date, and
in the case of any continuation statements filed pursuant
to this Section 2.01, as soon as practicable after receipt
thereof by the Depositor.
The Depositor further agrees, at its own expense,
(a) on or prior to the date on which each Charge Account
becomes an Account, to cause the Seller to indicate in its
computer files as required by the Receivables Purchase
Agreement, that the Receivables created in connection with
such Account have been sold to the Depositor in accordance
with the Receivables Purchase Agreement and sold to the
Trust pursuant to this Agreement and (b) no less frequently
than weekly, to deliver to the Trustee (or cause the Seller
to do so) a computer file or microfiche or written list
containing a true and complete list of all Accounts
specifying for each Account, (i) its account number (ii)
the aggregate amount of Receivables outstanding in such
Account, and (iii) the aggregate amount of Principal
Receivables in such Account. Such file, microfiche or
list, as supplemented from time to time, shall be marked as
Schedule I to this Agreement and is hereby incorporated
into and made a part of this Agreement. The Trustee shall
be under no obligation whatsoever to verify the accuracy or
completeness of the information contained on Schedule I
from time to time.
It is the intention of the parties hereto that
the arrangements with respect to the Receivables shall
constitute a purchase and sale of such Receivables and not
a loan. In the event, however, that a court of competent
jurisdiction were to hold that the transactions evidenced
hereby constitute a loan and not a purchase and sale, it is
the intention of the parties hereto that this Agreement
shall constitute a security agreement under applicable law.
In this regard, Depositor hereby grants and transfers to
the Trustee a first priority security interest in all of
the Depositor's right, title and interest in, to and under
(i) the Receivables now existing and hereafter created and
arising in connection with the Accounts, all monies due or
to become due with respect thereto (including all Finance
Charge Receivables) and all proceeds of such Receivables,
(ii) the Receivables Purchase Agreement and (iii)
Recoveries, 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 thereon at the related Certificate
Rate.
SECTION 2.02. 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 Depositor in and to the property, now existing and
hereafter created, conveyed to the Trust pursuant to
Section 2.01 hereof and declares that it shall maintain
such right, title and interest, upon the trust herein set
forth, for the benefit of the Beneficiaries. The Trustee
further acknowledges that, prior to or simultaneously with
the execution and delivery of this Agreement, the Depositor
delivered to the Trustee the computer file or microfiche or
written list relating to the Accounts existing on the Cut-
Off Date described in Section 2.01 hereof.
(b) 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.
(c) 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
or written lists delivered to the Trustee or the bailee of
the Trustee by the Depositor pursuant to this Agreement
("Account Information") except as is 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 10.02, any
successor trustee appointed pursuant to Section 11.08, any
co-trustee or separate trustee appointed pursuant to
Section 11.10 or any other Person in connection with a UCC
search or as mandated pursuant to any Requirement of Law
applicable to the Trustee. The Trustee agrees to take such
measures as shall be reasonably requested by the Depositor
to protect and maintain the security and confidentiality of
such information, and, in connection therewith, shall allow
the Depositor to inspect the Trustee's or the bailee of the
Trustee's security and confidentiality arrangements from
time to time during normal business hours. In the event
that the Trustee is required by law to disclose any Account
Information, the Trustee shall use its best efforts to
provide the Depositor with written notice no later than
five days prior to any disclosure pursuant to this
subsection 2.02(c), unless such notice is prohibited by
law, of any such request or requirement so that the
Depositor may request a protective order or other
appropriate remedy.
SECTION 2.03. Representations and Warranties of
the Depositor Relating to the Depositor and this Agreement.
(a) The Depositor hereby represents and warrants to the
Trust and to the Trustee as of each Closing Date that:
(i) Organization and Good Standing. The
Depositor is a corporation duly organized and validly
existing and in good standing under the law of the
State of Delaware and has full corporate power,
authority and legal right to own its properties and
conduct its business as such properties are presently
owned and such business is presently conducted, and to
execute, deliver and perform its obligations under
this Agreement, each Supplement, and the Related
Documents to which it is a party, and to authorize the
Trustee to execute and deliver the Certificates on
behalf of the Depositor. The Depositor's legal name
is Gottschalks Credit Receivables Corporation, and it
has no tradenames, fictitious names, assumed names or
"doing business as" names other than "Village East".
The Depositor has no subsidiaries.
(ii) Due Qualification. The Depositor is
duly qualified to do business and, where necessary, is
in good standing as a foreign corporation (or is
exempt from such requirement) and has obtained all
necessary licenses and approvals in each jurisdiction
in which the conduct of its business requires such
qualification except where the failure to so qualify
or be in good standing or obtain licenses or approvals
would not have a material adverse effect on its
ability to perform its obligations hereunder.
(iii) Due Authorization. The execution and
delivery by the Depositor of this Agreement, each
Supplement, each Certificate and the Related Documents
to which it is a party, and the authentication and
delivery by the Trustee of the Certificates on behalf
of the Depositor, and the consummation of the
transactions provided for or contemplated by this
Agreement, each Supplement and the Related Documents
to which the Depositor is a party, have been duly
authorized by the Depositor by all necessary corporate
action on the part of the Depositor.
(iv) No Conflict. The execution and
delivery by the Depositor of this Agreement, each
Supplement, the Related Documents to which it is a
party and the Certificates, the performance by the
Depositor of the transactions contemplated by this
Agreement, each Supplement and the Related Documents
to which it is a party and the fulfillment of the
terms hereof and thereof applicable to the Depositor,
will not conflict with, result in any breach of any of
the terms and provisions of or constitute (with or
without notice or lapse of time or both) a default
under, any indenture contract, agreement, mortgage,
deed of trust, or other instrument to which the
Depositor is a party or by which it or its properties
are bound.
(v) No Violation. The execution and
delivery by the Depositor of this Agreement, each
Supplement, the Related Documents to which it is a
party and the Certificates, the performance by the
Depositor of the transactions contemplated by this
Agreement, each Supplement and the Related Documents
to which it is a party and the fulfillment of the
terms hereof and thereof applicable to the Depositor,
will not conflict with or violate any Requirements of
Law applicable to the Depositor or give rise to an
adverse claim upon the Depositor or the Receivables.
(vi) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of the Depositor, threatened against the
Depositor before any Governmental Authority (i)
asserting the invalidity of this Agreement, any
Supplement, any of the Related Documents or the
Certificates, (ii) seeking to prevent the issuance of
the Certificates or the consummation of any of the
transactions contemplated by this Agreement, any
Supplement, any of the Related Documents or the
Certificates, (iii) seeking any determination or
ruling that, in the reasonable judgment of the
Depositor, would materially and adversely affect the
performance by the Depositor of its obligations under
this Agreement, any Supplement or the Related
Documents to which it is a party, (iv) seeking any
determination or ruling that would affect the validity
or enforceability of this Agreement, any Supplement,
any of the Related Documents or the Certificates or
(v) seeking to affect adversely the income or
franchise tax attributes of the Trust and of the
Investor Certificates under Federal or state income or
franchise tax systems. There is no injunction, writ,
restraining order or other order of any nature that
adversely affects the Depositor's performance of this
Agreement and the transaction contemplated hereby.
(vii) All Consents Required. All appraisals,
authorizations, consents, orders, approvals or other
actions of any Person or of any governmental body or
official required in connection with the execution and
delivery by the Depositor of this Agreement, each
Supplement and the Related Documents to which it is a
party, the execution and delivery by the Trustee of
the Certificates on behalf of the Depositor, the
performance by the Depositor of the transactions
contemplated by this Agreement, each Supplement and
the Related Documents to which it is a party, and the
fulfillment by the Depositor of the terms hereof and
thereof, have been obtained.
(viii) Enforceability. This Agreement, each
Supplement and the Related Documents to which it is a
party have been duly executed and delivered, and each
constitutes a legal, valid and binding obligation of
the Depositor, enforceable against the Depositor 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
generally and except as such enforceability may be
limited by general principles of equity (whether
considered in a suit at law or in equity) and the
availability of equitable remedies.
(ix) Solvency. The Depositor is not
insolvent and will not become insolvent after giving
effect to the transactions contemplated hereby; the
Depositor is paying its debts as they become due; the
Depositor, after giving effect to the transactions
contemplated hereby, will have adequate capital to
conduct its business.
(x) Record of Accounts. Schedule I to this
Agreement (as in effect on the date in question) is an
accurate and complete listing in all material respects
of all the Accounts, 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.
(xi) Place of Business. The principal place
of business of the Depositor is in Fresno, California,
and the offices where the Depositor keeps its records
concerning the Receivables and related contracts are
in Fresno, California and there have been no other
such locations during the prior four months; provided
that in the event that the Depositor shall have
changed its place of business in accordance with
Section 13.02(c) hereof, all references herein to
"Fresno, California" shall thereafter be to such new
place of business.
(xii) Use of Proceeds. No proceeds of the
issuance of any Certificate will be used by the
Depositor to purchase or carry any margin security.
(xiii) Not an Investment Company. The
Depositor is not an "investment company" or
"controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as
amended, or is exempt from all provisions thereof.
(xiv) Compliance. All applicable laws,
rules, regulations and orders with respect to the
Depositor, its business and properties and purchased
assets have been complied with. All applicable
permits, certifications, etc., have been maintained.
The Depositor has filed all required tax returns on a
timely basis.
(xv) Limited Purpose. The Depositor engages
in no activities other than those pursuant to this
Agreement and the transactions contemplated hereby.
(xvi) Sale Treatment. The Depositor will
treat the investments in the Receivables as a purchase
of Receivables, rather than a loan, for financial
reporting purposes.
The representations and warranties set forth in
this Section 2.03 shall survive the transfer and assignment
of the Receivables to the Trust and the issuance of the
Certificates. Upon discovery by the Depositor, the
Servicer or the Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such
breach shall give prompt written notice thereof to the
other parties and to any Enhancement Providers.
(b) In the event that any of the representations
and warranties set forth in subsections (viii), (ix), (xii)
and (xiii) of this Section 2.03 have been breached, and
such breach has a material adverse effect on the value of
the Receivables or the interests of the Certificateholders,
then either the Trustee or the Certificateholders
evidencing not less than a majority in aggregate unpaid
Invested Amount and Depositor Interest of all outstanding
Certificates of each Series by notice then given in writing
to the Depositor (and to the Trustee, any Enhancement
Providers and the Servicer) may, unless a Liquidation Event
has occurred, direct the Depositor to purchase the
Depositor Interest and/or Investors' Interest on a
Distribution Date within sixty (60) days of such notice (or
such longer period as may be specified in such notice), and
the Depositor shall be obligated to make such purchase on a
Distribution Date within such 60-day period on the terms
and conditions set forth below; provided, however, that no
such purchase shall be required to be made if, by the end
of such 60-day period (or such longer period as may be
approved by the Trustee), such breach shall have been
satisfied in all material respects, and any material
adverse effect on the Investors' Interest and/or the
Depositor Interest, as applicable, caused thereby shall
have been cured.
In the event the Depositor is so directed, the
Depositor shall deposit in the Collection Account in
immediately available funds on the Business Day preceding
such Distribution Date, in payment for such purchase, an
amount equal to the sum of the amounts specified therefor
with respect to each outstanding Series, as applicable, in
the related Supplement. Notwithstanding anything to the
contrary in this Agreement, such amounts shall be
distributed to the Certificateholders as applicable, on
such Distribution Date in accordance with Article IV hereof
and the terms of each Supplement. If the Trustee or the
Certificateholders give notice directing the Depositor to
purchase the Investors' Interest and/or the Depositor
Interest as provided above, the obligation of the Depositor
to effect such purchase pursuant to this Section 2.03(b)
shall constitute the sole remedy respecting all events of
the type specified in this Section 2.03(b) available to the
Certificateholders and/or the Holder of the Exchangeable
Certificate (or the Trustee on behalf of such
Certificateholders).
SECTION 2.04. Representations and Warranties of
the Depositor Relating to the Receivables; Reassignment.
(a) Representations and Warranties. The
Depositor hereby represents and warrants to the Trust and
to the Trustee as of each Transfer Date that:
(i) Each Receivable conveyed hereunder has been
conveyed to the Trust free and clear of any Lien,
except for Liens permitted under Section 2.05(a)
hereof, and the Trust has received good title to each
such Receivable.
(ii) All appraisals, authorizations, consents,
orders, approvals or other actions of any Person or of
any governmental body or official required in
connection with the conveyance of each Receivable
hereunder to the Trust have been duly obtained and are
in full force and effect.
(iii) This Agreement constitutes either (A) a
valid transfer, assignment, set-over and conveyance to
the Trust of all right, title and interest of the
Depositor in, to and under (i) the Receivables now
existing and hereafter created and arising in
connection with the Accounts and all proceeds of such
Receivables, (ii) the Receivables Purchase Agreement,
and (iii) Recoveries, and such Receivables and all
proceeds thereof will be held by the Trust free and
clear of any Lien of any Person claiming through or
under the Depositor or any of its Affiliates except
for Permitted Liens or (B) a grant of a security
interest (as defined in the UCC as in effect in
California) in, to and under (i) the Receivables now
existing and hereafter created and arising in
connection with the Accounts, all monies due or to
become due with respect thereto (including all Finance
Charge Receivables), and all proceeds of such
Receivables, (ii) the Receivables Purchase Agreement,
and (iii) Recoveries, which grant is enforceable with
respect to the existing Receivables and any
Receivables arising hereafter and the proceeds thereof
upon execution and delivery of this Agreement, and
which will be enforceable with respect to such
Receivables hereafter created and the proceeds
thereof, 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 2.01 and in
the case of the Receivables hereafter created and
proceeds thereof, upon such creation, the Trust shall
have a first priority perfected security interest in
such property (subject to Section 9306 of the UCC as
in effect in the State of California), except for
Permitted Liens.
(b) Notice of Breach. The representations and
warranties set forth in this Section 2.04 shall survive the
transfer and assignment of the Receivables to the Trust and
the issuance of the Certificates. Upon discovery by the
Depositor, the Servicer or the Trustee of a breach of any
of the representations and warranties set forth in this
Section 2.04, the party discovering such breach shall give
prompt written notice thereof to the other parties and to
any Enhancement Providers. The Trustee shall provide,
promptly after receiving notice thereof, written notice to
the Rating Agencies of any such breach.
(c) Reassignment. In the event any
representation or warranty under subsection (a) of this
Section 2.04 is not true and correct as of the date
specified therein with respect to any Receivable or
Account, and such breach has a material adverse effect on
the Investors' Interest or the Depositor Interest in any
such Receivable or Account, then, within thirty (30) days
(or such longer period as may be approved by the Trustee)
of the earlier to occur of (i) the discovery of any such
event by the Depositor or the Servicer, or (ii) receipt by
the Depositor or the Servicer of written notice of any such
event given by the Trustee or any Enhancement Provider, the
Depositor shall accept a reassignment of such Receivable
or, in the case of such an untrue representation or
warranty with respect to an Account, all Receivables in
such Account, on the Determination Date immediately
succeeding the day of such discovery or notice (or such
other Determination Date as may be agreed to by the
Trustee) on the terms and conditions set forth in the next
succeeding paragraph; provided, however, that no such
reassignment shall be required to be made with respect to
such Receivable if, by the end of such 30-day period (or
such longer period as may be agreed to by the Trustee), the
breached representation or warranty shall then be true and
correct in all material respects and any material adverse
effect caused thereby shall have been cured.
The Depositor shall accept a reassignment of each
such Receivable by directing the Servicer to deduct,
subject to the next sentence, the portion of such
reassigned Receivable that is a Principal Receivable from
the Pool Balance on or prior to the end of the Collection
Period in which such reassignment obligation arises. If,
following such deduction, the Pool Balance would be less
than the Required Pool Balance then, unless a Liquidation
Event has occurred, not later than 12:00 noon (New York
City time) on the day on which such reassignment occurs,
the Depositor shall deposit in the Collection Account in
immediately available funds the amount (the "Transfer
Deposit Amount") by which the Pool Balance would be less
than the Required Pool Balance (up to the principal amount
of such Receivables); provided, that if the Transfer
Deposit Amount is not deposited as required by this
sentence then the Principal Receivables shall only be
deducted from the Pool Balance to the extent that the Pool
Balance is not reduced below the Required Pool Balance and
the Principal Receivables which have not been so deducted
shall not be reassigned to the Depositor and shall remain
part of the Trust. Any Transfer Deposit Amount deposited
in the Collection Account shall be considered Collections
of Principal Receivables and shall be applied in accordance
with Article IV hereof and the terms of each Supplement.
Upon reassignment of such Receivable, but only after
payment by the Depositor of the Transfer Deposit Amount, if
any, the Trust shall automatically and without further
action be deemed to sell, transfer, assign, set-over and
otherwise convey to the Depositor, without recourse,
representation or warranty, all the right, title and
interest of the Trust in and to such Receivable and all
moneys due or to become due with respect thereto and all
proceeds thereof. The Trustee shall execute such documents
and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by the
Depositor to effect the conveyance of such Receivables
pursuant to this Section 2.04. The obligation of the
Depositor to accept a reassignment of any such Receivable
and to pay any related Transfer Deposit Amount shall
constitute the sole remedy respecting the event giving rise
to such obligation available to Certificateholders (or the
Trustee on behalf of the Certificateholders).
(d) Account or General Intangible. The
Depositor has taken no action to cause any Receivable sold
hereunder to be anything other than an "account" or
"general intangible" (each as defined in Section 9106 of
the UCC). The Depositor has taken no action to evidence
any Receivable sold hereunder by any "instrument" or
"chattel paper" (as defined in Section 9105 of the UCC).
SECTION 2.05. Covenants of the Depositor. The
Depositor hereby covenants that:
(a) No Liens. Except for (i) the conveyances
hereunder or (ii) as provided in subsection (c) of Section
6.03 hereof, the Depositor shall 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, or the Depositor's rights, remedies, powers or
privileges with respect to the Receivables under the
Receivables Purchase Agreement, or the Exchangeable
Certificate or the Depositor Interest, and the Depositor
shall defend the right, title and interest of the Trust in,
to and under the Receivables, whether now existing or
hereafter created, and such rights, remedies, powers and
privileges, against all claims of third parties claiming
through or under the Depositor; provided, however, that
nothing in this Section 2.05(a) shall prevent or be deemed
to prohibit the Depositor from suffering to exist upon any
of the Receivables any Permitted Lien.
(b) Account Allocations. In the event that the
Depositor is unable for any reason to transfer Receivables
to the Trust when required in accordance with the terms of
this Agreement, then the Depositor agrees that it shall
allocate, after the occurrence of such event, payments on
each affected 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 the terms of this Agreement.
The parties hereto agree that Finance Charge Receivables,
whenever created, accrued in respect of Principal
Receivables which have been conveyed to the Trust shall
continue to be a part of the Trust notwithstanding any
cessation of the transfer of additional Principal
Receivables to the Trust and Collections with respect
thereto shall continue to be allocated and paid in
accordance with the terms of this Agreement.
(c) Delivery of Collections. In the event that
the Depositor or the Seller receives payments in respect of
Receivables, the Depositor agrees to turn over or cause to
be turned over to the Servicer all payments received
thereby in respect of the Receivables as soon as
practicable after receipt thereof, but in no event later
than two (2) Business Days after the receipt by the
Depositor or the Seller.
(d) Notice of Liens. The Depositor shall notify
the Trustee promptly after becoming aware of any Lien on
any Receivable other than Permitted Liens.
(e) Compliance With Law. The Depositor hereby
agrees to comply with all Requirements of Law applicable to
the Depositor in connection with the performance of its
obligations hereunder, the failure to comply with which
would have a materially adverse effect on the interests of
the Beneficiaries.
(f) Activities of the Depositor. The Depositor
will not engage in any business or activity of any kind or
enter into any transaction other than:
(i) the businesses, activities and transactions
contemplated and authorized by its Certificate of
Incorporation and by-laws, this Agreement or the
Related Documents;
(ii) acquiring, selling, financing, holding,
assigning, pledging and otherwise dealing with
wholesale and retail receivables arising out of the
sale of consumer products and related activities and
transactions;
(iii) transferring such receivables to trusts
pursuant to a pooling and servicing agreement or
similar agreement or arrangement;
(iv) authorizing, selling and delivering any
class of certificates or other securities of any such
trust; and
(v) engaging in any activity and exercising any
powers permitted to corporations under the laws of the
State of Delaware that are related or incidental to
the foregoing and necessary, convenient or advisable
to accomplish the foregoing (such businesses,
activities and transactions, collectively, "Permitted
Transactions").
(g) Indebtedness. Except for the issuance of
any Series hereunder pursuant to Section 6.03 hereof, the
Depositor will not create, incur or assume any indebtedness
(other than the Subordinated Notes, and ordinary operating
expenses incurred in connection with the operation of its
business as permitted hereunder) or issue any securities or
sell or transfer any receivables to a trust or other Person
which issues securities in respect of any such receivables,
unless the Consent of Certificateholders shall have been
obtained.
(h) Guarantees. Except as provided in its
Certificate of Incorporation and by-laws, the Depositor
will not become or remain liable, directly or contingently,
in connection with any indebtedness or other liability of
any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or
collection in the ordinary course of business), agreement
to purchase, agreement to supply or advance funds, or
otherwise, except in connection with Permitted
Transactions.
(i) Investments. Except as provided in its
Certificate of Incorporation or by-laws, or the Receivables
Purchase Agreement, the Depositor will not make or suffer
to exist any loans or advances to, or extend any credit to,
or make any investments (by way of transfer of property,
contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any Affiliate provided,
however, that the Depositor shall not be prohibited under
this Section 2.05(i) from declaring or paying any dividends
in respect of its common stock.
(j) Stock; Merger. The Depositor will not (i)
sell any shares of any class of its capital stock to any
Person (other than the Seller) or enter into any
transaction of merger or consolidation unless (A) the
surviving Person of such merger or consolidation assumes
all of the Depositor's obligations under this Agreement,
each Supplement, the Related Documents and the
Certificates, (B) the Depositor shall have received the
Consent of Certificateholders with respect to such
transaction and the Rating Agency Condition shall have been
satisfied and (C) such merger or consolidation does not
conflict with any provisions of the certificate of
incorporation of the Depositor, or (ii) terminate,
liquidate or dissolve itself (or suffer any termination,
liquidation or dissolution), or (iii) acquire or be
acquired by any Person (other than as permitted pursuant to
clause (i) above), or (iv) otherwise make (or suffer) any
material change in the organization of or method of
conducting its business.
(k) Agreements. The Depositor will not become a
party to, or permit any of its properties to be bound by,
any indenture, mortgage, instrument, contract, agreement,
lease or other undertaking, except this Agreement, the
Related Documents and any document relating to a Permitted
Transaction, or amend or modify its certificate of
incorporation or cancel, terminate, amend, supplement,
modify or waive any of the provisions of the Receivables
Purchase Agreement or any of the other Related Documents or
request, consent or agree to or suffer to exist or permit
any such cancellation, termination, amendment, supplement,
modification or waiver.
(l) Separate Business. Other than with respect
to In-Store Payments, the Depositor will not permit its
assets to be commingled with those of the Seller, and the
Depositor shall maintain separate corporate records and
books of account from those of the Seller, shall observe
all corporate formalities, and will not amend its charter
unless the Rating Agency Condition shall have been
satisfied. The Depositor will conduct its business and all
business correspondence solely in its own name and will
cause the Seller to conduct its business solely in its own
name so as not to mislead others as to the identity of the
entity with which those others are concerned. The
Depositor will provide for its own operating expenses and
liabilities from its own funds, except that the initial
expenses of the Depositor may be paid by the Seller. The
Depositor will not hold itself out, or permit itself to be
held out, as having agreed to pay, or as being liable for,
the debts of the Seller. The Depositor will cause the
Seller not to hold itself out, or permit itself to be held
out, as having agreed to pay, or as being liable for, the
debts of the Depositor. The Depositor will be operated
such that it would not be substantively consolidated in the
bankruptcy estate of the Seller and its separate existence
disregarded in the event of the Seller's bankruptcy. The
financial statements of the Seller will reflect the
separate corporate existence of the Depositor. The
Depositor will maintain two independent directors as
provided in its Certificate of Incorporation.
(m) Performance of Obligations. The Depositor
punctually will perform and observe all of its obligations
and agreements contained in the Receivables Purchase
Agreement. If any officer of the Depositor has knowledge
of the occurrence of a breach or default by the Seller or
the Depositor under the Receivables Purchase Agreement, the
Depositor promptly will notify the Trustee of such breach
or default, and the Trustee will provide copies of such
notice to the Rating Agencies. Any such notice will
specify the action, if any, the Depositor is taking in
respect of such breach or default. Without the Trustee's
prior consent, the Depositor may not waive any material
breach or default under, or amend, the Receivables Purchase
Agreement.
(n) Servicer Default. If any officer of the
Depositor has knowledge of a Servicer Default, the
Depositor promptly will notify the Trustee of such Servicer
Default, and the Trustee shall provide copies of such
notice to the Rating Agencies.
SECTION 2.06. Removal of Accounts. (a) On each
Determination Date on which the Excess Balance Test has
been satisfied, the Depositor shall have the right to
remove from the Trust all of the Trust's right, title and
interest in, to and under the Receivables then existing and
thereafter created, all monies due, or to become due, and
all amounts received with respect thereto and all proceeds
thereof in or with respect to those Accounts designated by
the Depositor (the "Removed Accounts") in an aggregate
amount not greater than such excess.
(b) Such removal of Removed Accounts shall not
be effective unless the following are satisfied prior to
the proposed effective date of such removal (the "Removal
Date"):
(i) on or before the twentieth (20th)
Business Day prior to the Removal Date (the "Removal Notice
Date"), the Depositor shall give the Certificateholders,
the Trustee, each Rating Agency and the Servicer written
notice of the proposed action, which shall specify for each
Removed Account, (i) its account number, (ii) the aggregate
amount of Receivables outstanding in such Removed Account
on the Removal Notice Date, and (iii) the aggregate amount
of Principal Receivables in such Removed Account on the
Removal Notice Date;
(ii) the Depositor shall have delivered to
the Trustee an Officer's Certificate substantially in the
form of Exhibit G hereto; and the Trustee may conclusively
rely on such certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and
shall incur no liability in so relying; and
(iii) the Rating Agency Condition shall have
been satisfied.
(c) Upon satisfaction of the conditions set
forth in subsections 2.06(a) and (b), the Trustee shall
execute and deliver a written reassignment substantially in
the form of Exhibit E hereto (the "Reassignment") to the
Depositor, the Depositor's Interest will be reduced by an
amount equal to the Purchase Price, and the Receivables
from the Removed Accounts shall no longer constitute a part
of the Trust as of the related Removal Date.
SECTION 2.07. Discount Option. (a) The
Depositor may, at any time, upon thirty (30) days' prior
written notice to the Servicer, the Trustee and each Rating
Agency, designate a fixed percentage, not to exceed 10% of
the amount of Collections in respect of Special Interest
Receivables arising in the Accounts on and after the date
of such designation that otherwise would be treated as
Principal Collections to be treated as Finance Charge
Collections. Such designation will become effective on the
date specified therein only if the Depositor shall have
delivered to the Trustee an Officer's Certificate, dated
the date of such designation, to the effect that the
Depositor reasonably believes that such designation will
not result in an Early Amortization Event or have a
material adverse effect on the Certificateholders.
(b) The Depositor may, at any time, upon thirty
(30) days prior written notice to the Servicer, the Trustee
and each Rating Agency, designate a percentage (the
"Discount Rate") to be subtracted from the price at which
Receivables are conveyed to the Trust after a specified
date; provided that in the event that the Discount Rate
exceeds 2.5%, the Rating Agency Condition shall have been
satisfied; provided, further, that in the event such
increase is made for the purpose of avoiding the occurrence
of an Early Amortization Event and the Discount Rate
exceeds 3.0%, the Consent of Certificateholders shall also
have been obtained. The Depositor may give any number of
such written notifications during the life of the Trust but
only one such notification with respect to any Collection
Period. Such notification shall be given prior to the
first day of such Collection Period, and shall be effective
as of the first day of such Collection Period.
(c) In addition to any Discount Rate which may be
designated pursuant to subsection (b) above, the following
shall apply: (i) the Discount Rate shall be 0% with
respect to Receivables conveyed to the Trust on the initial
Closing Date and 1.0% with respect to Receivables conveyed
to the Trust thereafter until such time as the Depositor
shall notify the Trustee in writing of a new Discount Rate,
in accordance with the terms of this Section 2.07, and (ii)
during July and November of each year, the Discount Rate
shall automatically increase an additional 1.5% to take
into account the effects of reductions in the Pool Balance
resulting from the Seller's "Secret Sales" promotional
campaigns, unless and until the Servicer shall have given
written notice to each of the Trustee, the Depositor and
the Rating Agencies that the Seller has discontinued its
"Secret Sales" promotional campaigns. The Depositor hereby
confirms that no "Secret Sales" campaign or similar
promotional campaign shall have an adverse effect on the
Investor Certificates of any Series that is not compensated
for by (x) the 1.5% automatic increase in the Discount
Rate, and (y) the payments, if any, required to be made as
a result thereof pursuant to Section 3.09(a) hereof.
SECTION 2.08. Block Period; Supplemental
Accounts. (a) On any Determination Date on which the
Excess Balance Test is satisfied, the Depositor may, at its
option, discontinue, indefinitely or for a specified period
(the "Block Period"), inclusion of Charge Accounts
originated by the Seller during such Block Period as
Accounts. The Depositor may, at its option, terminate a
Block Period upon which all Receivables in all Accounts
shall thereafter be conveyed to the Trust pursuant to
Section 2.01 hereof.
(b) In connection with the termination of any
Block Period, the Depositor may designate any Charge
Account that was originated by the Seller during such Block
Period for inclusion as Supplemental Accounts.
(c) If on any Determination Date during any
Block Period the Pool Balance is less than the Required
Pool Balance, the Depositor shall designate additional
Charge Accounts for inclusion as Supplemental Accounts in
an amount sufficient to increase the Pool Balance to the
Required Pool Balance. Receivables from such Supplemental
Accounts shall be transferred to the Trust on or before the
third (3rd) Business Day following such Determination Date.
(d) The commencement or termination of a Block
Period, or the designation of Supplemental Accounts, shall
not be effective, and no transfer pursuant to Section
2.08(c) effected, unless the following are satisfied prior
to the proposed effective date of any such action:
(i) on or before (A) the thirtieth (30th)
Business Day prior to the commencement of any
Block Period, (B) the third (3rd) Business Day
prior to the termination of a Block Period, or
(C) the fifth (5th) Business Day prior to the
proposed effective date with respect to additions
pursuant to Section 2.08(b) or (c) (as
applicable, the "Notice Date"), the Depositor
shall give the Trustee, each Rating Agency and
the Servicer written notice of the proposed
action, which in the case of (x) the commencement
of a Block Period shall set forth in reasonable
detail computations evidencing satisfaction of
the Excess Balance Test, and (y) additions
pursuant to Section 2.08(b) or (c) shall specify
the proposed effective date of the action (the
"Supplemental Addition Date") and, for each
Charge Account to be designated as a Supplemental
Account, (I) its account number, (II) the
aggregate amount of Receivables outstanding in
such Supplemental Account on the Notice Date and
(III) the aggregate amount of Principal
Receivables in such Supplemental Account on the
Notice Date;
(ii) in the case of additions pursuant to
Section 2.08(b) or (c), the Depositor shall
deliver to the Trustee an Officer's Certificate
substantially in the form of Exhibit F hereto;
and
(iii) the Rating Agency Condition shall
have been satisfied.
ARTICLE III
Administration and Servicing
of Receivables
SECTION 3.01. Acceptance of Appointment and
Other Matters Relating to the Servicer. (a) The Servicer
shall service and administer the Receivables, collect
payments due under the Receivables and charge-off as
uncollectible Receivables, all in accordance with
procedures that are customary and usual in the industry for
servicing receivables comparable to the Receivables and to
the extent not inconsistent with the foregoing, exercise
the same degree of skill and care as that used in servicing
receivables for its own account. The Servicer shall have
full power and authority acting alone or through any party
properly designated hereunder, to do any and all of the
foregoing in connection with such servicing and
administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing and
subject to Section 10.01 hereof, the Servicer is hereby
authorized and empowered, unless such power and authority
is revoked by the Trustee on account of the occurrence of a
Servicer Default pursuant to Section 10.01 hereof:
(i) to instruct the Trustee to make withdrawals
and payments from the Collection Account and any
Series Account as set forth in this Agreement and,
with respect to any Series Account, the related
Supplement;
(ii) to instruct the Trustee to take any action
required or permitted under any Enhancement Agreement;
(iii) to execute and deliver, on behalf of the
Trust for the benefit of the Beneficiaries, 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 Requirements of Law, to
commence enforcement proceedings with respect to such
Receivables;
(iv) to make any filings, reports, notices,
applications, registrations with, and 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 laws or reporting requirements; and
(v) to delegate certain of its servicing,
collection, enforcement and administrative duties
hereunder with respect to the Accounts and the
Receivables to any Person who agrees to conduct such
duties in accordance with the Financial Guidelines and
this Agreement; provided, however, that the Servicer
shall notify the Trustee, the Rating Agencies and any
Enhancement Providers in writing of any such
delegation of its duties which is not in the ordinary
course of its business, that no delegation will
relieve the Servicer of its liability and
responsibility with respect to such duties and that
the Rating Agency Condition shall have been satisfied
and the Consent of Certificateholders obtained. With
respect to any such delegation the Trustee shall
execute any limited powers of attorney and other
documents prepared by the Servicer which are
reasonably necessary or appropriate to enable the
Servicer to carry out its servicing and administrative
duties hereunder.
(b) In the event that the Depositor is unable
for any reason to transfer Receivables to the Trust in
accordance with the provisions of this Agreement (including
by reason of the application of the provisions of Section
9.02 hereof or any court of competent jurisdiction ordering
that the Depositor not transfer any additional Principal
Receivables to the Trust) then, in any such event, the
Servicer agrees (i) to give prompt written notice thereof
to the Trustee, any Enhancement Providers and each Rating
Agency and (ii) that it shall allocate, after the
occurrence of any 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
Section 4.02 hereof. The parties hereto agree that Finance
Charge Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the Trust
shall continue to be a part of the Trust notwithstanding
any cessation of the transfer of additional Principal
Receivables to the Trust and Collections with respect
thereto shall continue to be allocated and paid in
accordance with the terms of this Agreement.
(c) The Servicer shall not, and any Successor
Servicer shall not be obligated to, use separate servicing
procedures, offices, employees or accounts for servicing
the Receivables from the procedures, offices, employees and
accounts used by the Servicer in connection with servicing
other receivables comparable to the Receivables.
(d) The Servicer shall comply with and perform
its servicing obligations with respect to the Receivables
in accordance with the Charge Account Agreements relating
to the Accounts and the Financing Guidelines, except
insofar as any failure to so comply or perform would not
materially and adversely affect the rights of the Trust or
any of the Beneficiaries. Subject to compliance with all
Requirements of Law, the Servicer (or if it is not then
acting as Servicer, the Seller) may change the terms and
provisions of the Charge Account Agreements or the
Financing Guidelines in any respect (including the
calculation of the amount or the timing of charge-offs and
the rate of the finance charge, if any assessed thereon),
only if (i) as a result of such change, in the reasonable
judgment of the Servicer (or the Seller, as the case may
be) no Early Amortization Event will occur, or (ii) the
Servicer (or the Seller, as the case may be) shall
reasonably determine that such change is necessary in order
to satisfy any Requirement of Law.
SECTION 3.02. Servicing Compensation. (a) As
full compensation for its servicing activities hereunder
and reimbursement for its expenses as set forth in
subsection (b) below, the Servicer shall be entitled to
receive the Servicing Fee, payable in arrears, on each
Distribution Date on or prior to the Trust Termination
Date. The "Servicing Fee" shall be the aggregate of the
Monthly Servicing Fees specified in the Supplements. The
Servicing Fee shall be payable to the Servicer solely to
the extent amounts are available for payment in accordance
with the terms of the Supplements.
(b) The Servicer's expenses include the amounts
due to the Trustee pursuant to Section 11.05 hereof and the
reasonable fees and disbursements of independent
accountants and all other expenses incurred by the Servicer
in connection with its activities hereunder, and including
all other fees and expenses of the Trust not expressly
stated herein to be for the account of the
Certificateholders but not including any federal, state or
local income or franchise taxes, if any, of the Trust or
the Certificateholders. 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. The Servicer will be solely responsible for all fees
and expenses incurred by or on behalf of the Servicer in
connection herewith, and the Servicer will not be entitled
to any fee or other payment from, or claim on, any of the
Trust Assets (other than the Servicing Fee).
SECTION 3.03. Representations, Warranties and
Covenants of the Servicer. (a) The Seller as Servicer
hereby makes, and any Successor Servicer by its appointment
hereunder shall make, on each Closing Date (and on the date
of any such appointment) the following representations,
warranties and covenants, on which the Trustee has relied
in accepting the Receivables in trust and in authenticating
the Certificates:
(i) Organization and Good Standing. Such
party is a corporation duly organized, validly
existing and in good standing under the applicable
laws of the state of its incorporation and has full
corporate power, authority and legal rights to own its
properties and conduct its receivable servicing
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 and any Supplement.
(ii) Due Qualification. Such party is duly
qualified to do business and is in good standing as a
foreign corporation (or is exempt from such
requirements) and has obtained all necessary licenses
and approvals in each jurisdiction in which the
servicing of the Receivables as required by this
Agreement requires such qualification except where the
failure to so qualify or be in good standing or obtain
licenses or approvals would not have a material
adverse effect on its ability to perform its
obligations hereunder.
(iii) Due Authorization. The execution,
delivery, and performance of this Agreement and any
applicable Supplement has been duly authorized by such
party by all necessary corporate action on the part
thereof.
(iv) Binding Obligation. This Agreement and
any Supplement have been duly executed and delivered
by such party, and each constitutes a legal, valid and
binding obligation of such party, 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 and except as such
enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or
in equity) and the availability of equitable remedies.
(v) No Violation. The execution and
delivery of this Agreement and any Supplement by such
party, the performance of the transactions
contemplated by this Agreement and any Supplement and
the fulfillment of the terms hereof and thereof
applicable to such party will not conflict with,
violate, result in any breach of any of the 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 such party or any
indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which such party is a
party or by which it is bound.
(vi) No Proceedings. There are no
proceedings or investigations, pending or, to the best
knowledge of such party, threatened against such party
before any Governmental Authority (i) seeking to
prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated
by this Agreement and any Supplement, (ii) seeking any
determination or ruling that, in the reasonable
judgment of such party, would affect the performance
by such party of its obligations under this Agreement
and the applicable Supplement, or (iii) seeking any
determination or ruling that would materially and
adversely affect the validity or enforceability of
this Agreement and any Supplement.
(vii) Compliance with Requirements of Law.
Such party shall duly satisfy all obligations on its
part to be fulfilled under or in connection with the
Receivables and the Accounts, will maintain in effect
all qualifications required under Requirements of Law
in order to service properly the Receivables and the
Accounts, and to conduct its business generally, and
will comply with all Requirements of Law in connection
with servicing the Receivables and the Accounts, and
the conduct of its business generally, the failure to
comply with which would have a materially adverse
effect on the interests of the Beneficiaries.
(viii) No Rescission or Cancellation. Such
party shall not reschedule, revise, defer, cancel or
settle payments due on any Receivable, except as
expressly provided herein or in accordance with the
Financial Guidelines and sound industry practices for
servicing receivables comparable to the Receivables.
(ix) Protection of Beneficiaries Rights.
Such party shall take no action, nor omit to take any
action, which would materially impair the rights of
Beneficiaries in the Receivables.
(x) Servicer Accounts. (A) Schedule III
hereto contains a true and complete list of all
accounts maintained for the purpose of receiving
Collections (each, a "Local Deposit Account"). In the
event that any Local Deposit Account shall be held in
the name of a party other than the Trustee, on or
prior to the initial Closing Date, such party shall,
with respect to each such Local Deposit Account, (i)
cause such Local Deposit Account to be transferred
into the name of the Trustee and enter into a Deposit
Account Agreement in respect of such account, or (ii)
terminate such Local Deposit Account.
(B) Such party shall not establish any new Local
Deposit Accounts unless such party shall have first
given notice to the Trustee of such new Local Deposit
Account (which notice shall constitute an amendment of
Schedule III hereto) and entered into a Deposit
Account Agreement in respect of such account.
(C) Each Local Deposit Account shall be in the
name of the Trustee and bear a designation clearly
indicating that the funds deposited therein are held
for the benefit of the Beneficiaries.
(D) On or before the date hereof, such party
shall have entered into an agreement (a "Collection
Servicer Agreement") with a Collection Servicer who
shall act at the instruction of the Trustee. Each
such Collection Servicer Agreement shall provide that
each day Collections are received in the Dedicated Zip
Code, such party shall cause one of its employees (who
shall at all times be covered by a fidelity bond and
errors and omissions policy substantially similar to
that referred to in Section 3.10 hereof) to deliver
the contents thereof to the Servicer for processing,
remain on the premises of the Servicer while such
Collections are processed, and upon completion of such
processing to deposit all such Collections into a
Local Deposit Account. The Collection Servicer
Agreement with the Bank of Fresno, dated March 25,
1994 between the Servicer and the Bank of Fresno, is
hereby preapproved. In the event of the termination
thereof, the Servicer shall forthwith establish a
successor Collection Servicer Agreement, in form and
substance satisfactory to the Certificateholders as
evidenced by a Consent of the Certificateholders.
(E) On or before the date hereof, such party
shall cause its Dedicated Zip Code to be transferred
into the name of the Trustee. The Servicer shall
cause the terms of each Charge Account to provide that
all payments made by mail shall be addressed to the
Servicer at the Dedicated Zip Code. The Servicer
shall not change said address or payment instructions
without the Consent of Certificateholders, not to be
unreasonably withheld.
(xi) Negative Pledge. Except for the
conveyances under the Receivables Purchase Agreement
and under this Agreement, the Servicer will not sell,
pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any
Lien (other than Permitted Liens) on, any Receivable,
whether now existing or hereafter created, or any
interest therein, and the Servicer 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 Depositor or the
Servicer.
(xii) Receivables Not To Be Evidenced by
Promissory Notes. Except in connection with its
enforcement or collection of a Receivable, the
Servicer will take no action to cause any Receivable
to be evidenced by an instrument or chattel paper (as
defined in the UCC as in effect in the State of
California).
(xiii) All Consents Required. All appraisals,
authorizations, consents, orders, approvals or other
actions of any Person or of any governmental body or
official required in connection with the execution and
delivery by the Servicer of this Agreement, each
Supplement and the Related Documents to which it is a
party, the performance by the Servicer of the
transactions contemplated by this Agreement, each
Supplement and the Related Documents to which it is a
party, and the fulfillment by the Servicer of the
terms hereof and thereof, have been obtained.
(b) Notice of Breach. The representations and
warranties set forth in this Section 3.03 shall survive the
transfer and assignment of the Receivables to the Trust and
the issuance of the Certificates. Upon discovery by the
Depositor, the Servicer or the Trustee of a breach of any
of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice
thereof to the other parties and any Enhancement Providers.
The Trustee shall give written notice to the Rating
Agencies promptly upon receipt of such notice.
(c) Purchase. In the event the Depositor or the
Servicer receives written notice from the Trustee or any
Enhancement Provider that any covenant under clause (vii),
(viii) or (ix) of subsection (a) above has not been
complied with and such noncompliance has not been cured
within thirty (30) days thereafter (or such longer period
as the Trustee may permit) and has a material adverse
effect on the interests of the Certificateholders then,
unless a Liquidation Event has occurred, the Servicer shall
purchase such Receivable or if such non-compliance is with
respect to any Account, all Receivables in such Account,
and the proceeds therefrom shall be applied in accordance
with the terms of Article IV hereof.
(d) Payment of Purchase Price; Etc. Upon each
payment by the Servicer of the Purchase Price for the
Receivables to be purchased from the Trust pursuant to
subsection (c) above, the Trust shall automatically and
without further action be deemed to sell, transfer, assign,
set over and otherwise convey to the Servicer, without
recourse, representation or warranty, all the right, title
and interest of the Trust in, to and under such Receivables
and all monies due or to become due with respect thereto
and all proceeds thereof. The Trustee shall execute such
documents and instruments of transfer or assignment and
take such other actions as shall reasonably be requested by
the Servicer to effect the conveyance of any such
Receivables pursuant to this Section 3.03. The obligation
of the Servicer to purchase such Receivables and to make
the deposits required to be made to the Collection Account
as provided in subsection (a) above, shall constitute the
sole remedy respecting the event giving rise to such
obligation available to the Certificateholders (or the
Trustee on behalf of the Certificateholders).
SECTION 3.04. Reports and Records for the
Trustee. (a) Daily Records. Upon reasonable prior notice
by the Trustee or a Certificateholders' Representative, the
Servicer shall make available at an office of the Servicer
(or other location designated by the Servicer if such
records are not accessible by the Servicer at an office of
the Servicer) selected by the Servicer for inspection by
the Trustee or its agent and a Certificateholders'
Representative on a Business Day during the Servicer's
normal business hours a record setting forth (i) the
Collections on each Receivable and (ii) the amount of
Receivables for the Business Day preceding the date of the
inspection. The Servicer shall, at all times, maintain its
computer files with respect to the Receivables in such a
manner so that the Receivables may be specifically
identified and, upon reasonable prior request of the
Trustee or a Certificateholders' Representative, shall make
available to the Trustee or its agent and a
Certificateholders' Representative, at an office of the
Servicer (or other location designated by the Servicer if
such computer files are not located at an office of the
Servicer) selected by the Servicer, on any Business Day of
the Servicer during the Servicer's normal business hours
any computer programs necessary to make such
identification.
(b) Daily Report.
(i) On each Business Day the Servicer shall
prepare a completed Daily Report for the preceding
Business Day (or, in the case of a Daily Report
delivered on the Business Day following a Saturday,
Sunday or other non-Business Day, the aggregate
activity for such preceding Business Day and such
preceding non-Business Days).
(ii) The Servicer shall deliver to the
Trustee the Daily Report by 9:00 a.m. (Los Angeles
time) on each Business Day.
(iii) Upon discovery of any error or receipt
of notice of any error in any Daily Report, the
Servicer, the Depositor and the Trustee shall arrange
to confer and shall agree upon any adjustments
necessary to correct any such errors. If any such
error is material, the Servicer or the Trustee, as the
case may be, shall retain all Collections (or such
lesser amount as the Trustee and the Servicer shall
agree to be necessary to cover any such error) in the
Collection Account until such material error is
corrected. Unless the Trustee has received notice of
any error or discrepancy, the Trustee may rely on each
Daily Report delivered to it for all purposes
hereunder.
(c) Distribution Date Statement. On each
Determination Date, the Servicer shall, prior to 9:00 a.m.
(Los Angeles time) on such day, deliver to the Trustee and
to the Rating Agencies the Distribution Date Statement for
the related Collection Period substantially in the form of
Exhibit D hereto. The Trustee shall be under no duty to
recalculate, verify or recompute the information supplied
to it under this Section 3.04 or such other matters as are
set forth in any Distribution Date Statement.
SECTION 3.05. Annual Servicer's Certificate.
The Servicer will deliver to the Rating Agencies, the
Trustee and any Enhancement Providers on or before April 15
of each calendar year, beginning with April 15, 1995, an
Officer's Certificate substantially in the form of Exhibit
C hereto stating that (a) a review of the activities of the
Servicer during the preceding calendar year 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 performed in all material respects
its obligations under this Agreement throughout such year,
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 copy of such
certificate may be obtained by any Certificateholder by a
request in writing to the Trustee addressed to the
Corporate Trust Office.
SECTION 3.06. Independent Public Accountants'
Servicing Report. (a) On or before the second monthly
anniversary of the initial Closing Date, and thereafter on
or before the 120th day following the end of each of the
Servicer's fiscal years, beginning with the fiscal year
ending in 1995, the Servicer shall cause a firm of
Independent Certified Public Accountants (who may also
render other services to the Servicer or the Depositor) to
furnish a report to the Trustee, any Enhancement Provider
and each Rating Agency, to the effect that such firm has
made a study and evaluation in accordance with generally
accepted auditing standards of the Servicer's internal
accounting controls relative to the servicing of Accounts
under this Agreement, and that, on the basis of such
examination, such firm is of the opinion (assuming the
accuracy of any reports generated by the Servicer's third
party agents) that the system of internal accounting
controls in effect on the last day of the first monthly
anniversary of the initial Closing Date or such fiscal
year, as the case may be, relating to servicing procedures
performed by the Servicer, taken as a whole, provided
reasonable assurance that internal control system was
sufficient for the prevention and detection of errors and
irregularities and that such servicing was conducted in
compliance with such provisions of this Agreement of which
such accountants can reasonably be expected to possess
adequate knowledge of the subject matter, which are
susceptible of positive assurance by such accountants and
for which their professional competence is relevant, except
for such exceptions as they believe to be immaterial and
such other exceptions as shall be set forth in such
statement. A copy of each such report will be sent to each
Certificateholder and a copy of the initial such report
shall be sent to each Rating Agency by the Servicer.
(b) On or before the 90th day following the end
of each of the Servicer's fiscal years, beginning with the
fiscal year ending in 1995, the Servicer shall cause a firm
of Independent Certified Public Accountants (who may also
render other services to the Servicer or the Depositor) to
furnish a report to the Trustee, any Enhancement Provider
and each Rating Agency to the effect that (i) they have
compared the mathematical calculations set forth in the
monthly certificates forwarded by the Servicer pursuant to
subsection 3.04(c) during the period covered by such report
(which shall be the prior fiscal year, or for the initial
period, from the Closing Date until the Servicer's fiscal
year ending in 1995) with the Depositor's computer reports
which were the source of such amounts and that on the basis
of such comparison, such amounts are in agreement, except
for such exceptions as they believe to be immaterial and
such other exceptions as shall be set forth in such report
and (ii) such firm has examined certain documents and
records relating to the servicing of the Receivables and
the reporting requirements with respect thereto and that,
on the basis of such examination, such servicing and
reporting requirements have been conducted in compliance
with this Agreement, except for (x) such exceptions as such
firm shall believe to be immaterial and (y) such other
exceptions as shall be set forth in such statement. A copy
of such report may be obtained by any Certificateholder by
a request in writing to the Trustee addressed to the
Corporate Trust Office. In addition, on or before the
first Distribution Date, the Servicer shall cause the
aforementioned report to be prepared for the period from
the initial Closing Date to such Distribution Date and
following the preparation thereof, to distribute such
report to the Trustee, any Enhancement Provider and each
Rating Agency.
(c) On or before the 30th day following the last
day of each fiscal quarter of the Servicer, beginning with
the fiscal quarter ending in July 1994, the Servicer shall
cause a firm of Independent Certified Public Accountants
(who may also render other service to the Servicer or the
Depositor) to prepare a report to the effect that based on
certifications, representations and such other written and
factual evidence that they deem reasonable under the
circumstances, they have no reason to believe that the
Servicer has failed to comply with the requirements of
Section 3.03(a)(x) hereof; provided that from and after the
first anniversary hereof in the event the Consent of
Certificateholders shall have been obtained (which consent
shall not be unreasonably withheld), no report shall be
required in respect of the second and fourth quarters of
each year.
(d) Annual Audited Financial Statements. Within
ninety (90) days after the close of each fiscal year of the
Depositor, the Depositor shall deliver to the Holders of
Investor Certificates the statement of financial condition
and the statement of stockholder's equity of the Depositor
as at the end of such fiscal year and the related statement
of financial position for such fiscal year, in each case
certified by a firm of Independent Certified Public
Accountants.
SECTION 3.07. Tax Treatment. The Depositor 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 of the Depositor. The Depositor,
the Servicer and each Holder of Investor Certificates agree
to treat and to take no action inconsistent with the
treatment of the Investor Certificates (or beneficial
interest therein) as indebtedness of the Depositor for
purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by
income. Each Holder of Investor Certificates, by
acceptance of its Certificate, agrees to be bound by the
provisions of this Section 3.07. Furthermore, the Trustee
shall treat the Trust as a security device only, and shall
not file tax returns or obtain an employer identification
number on behalf of the Trust.
SECTION 3.08. Notices to the Seller. In the
event the Seller is no longer acting as Servicer, any
Successor Servicer appointed pursuant to Section 10.02
hereof shall deliver or make available to the Seller, as
the case may be, each certificate and report required to be
prepared forwarded or delivered thereafter pursuant to
Section 3.04, Section 3.05 or Section 3.06 hereof.
SECTION 3.09. Adjustments. (a) If the Servicer
adjusts downward the amount of any Principal Receivable
because of a rebate, refund, credit adjustment or billing
error to an Obligor, or because such Receivable was created
in respect of merchandise which was refused or returned by
an Obligor, or if the Servicer otherwise adjusts downward
the amount of any Receivable without receiving Collections
therefor or without charging off such amount as
uncollectible, then, in any such case, the Pool Balance
will be automatically reduced by the amount of the
adjustment. Furthermore, if following such a reduction the
Pool Balance would be less than the Required Pool Balance
on the immediately preceding Determination Date (after
giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution
Date immediately following such Determination Date) then,
unless a Liquidation Event has occurred, the Depositor
shall be required to pay an amount equal to such deficiency
(up to the amount of such adjustment) into the Collection
Account on the Business Day on which such adjustment or
reduction occurs (each such payment an "Adjustment
Payment").
(b) If (i) the Servicer makes a deposit into the
Collection Account in respect of a Collection of a
Receivable and such Collection was received by the Servicer
in the form of a check which is not honored for any reason
or (ii) the Servicer makes a mistake with respect to the
amount of any Collection and deposits an amount that is
less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the
amount subsequently deposited into the Collection Account
to reflect such dishonored check or mistake. Any
Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid.
Section 3.10. Fidelity Bond and Errors and
Omissions Insurance. The Servicer shall maintain, at its
own expense, a blanket fidelity bond and an errors and
omissions insurance policy, with broad coverage with
responsible companies on all Bondable Persons. Any such
fidelity bond and errors and omissions insurance shall
protect and insure the Servicer against losses, including
forgery, theft, embezzlement, fraud, errors and omissions
and negligent acts of such persons and shall be maintained
in a form and amount that would meet the requirements of
prudent institutional consumer credit card servicers. No
provision of this Section 3.10 requiring such fidelity bond
and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set
forth in this Agreement. The Servicer shall be deemed to
have complied with this provision if one of its respective
Affiliates has such fidelity bond and errors and omissions
policy coverage and, by the terms of such fidelity bond and
errors and omission policy, the coverage afforded
thereunder extends to the Servicer. The Servicer shall
cause each and every sub-servicer for it to maintain a
policy of insurance covering errors and omissions and a
fidelity bond which would meet such requirements. Upon
request of the Trustee, the Servicer shall cause to be
delivered to the Trustee a certification evidencing
coverage under such fidelity bond and insurance policy.
Any such fidelity bond or insurance policy shall not be
cancelled or modified in a materially adverse manner
without ten (10) days' prior written notice to the Trustee
and the Rating Agencies.
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Rights of Certificateholders. The
Investor Certificates shall represent fractional undivided
interests in the Trust Assets, which, with respect to each
Series, shall consist of the right to receive, to the
extent necessary to make the required payments with respect
to the Investor Certificates of such Series at the times
and in the amounts specified in the related Supplement, the
portion of Collections allocable to the Holders of Investor
Certificates of such Series pursuant to this Agreement and
such Supplement, funds on deposit in the Collection Account
allocable to the Holders of Investor Certificates of such
Series pursuant to this Agreement and such Supplement,
funds on deposit in any related Series Account and funds
available pursuant to any related Enhancement
(collectively, with respect to all Series, the "Investors'
Interest"); provided, that the Investor Certificates of one
Series or Class shall not have any interest in any Series
Account created, or Enhancement provided, for the benefit
of any other Series or Class. The Exchangeable Certificate
shall represent the ownership interest in the remainder of
the Trust Assets not allocated to the Investors' Interest
(or to any Subordinated Certificate) pursuant to this
Agreement or any Supplement, including the right to receive
the Collections with respect to the Receivables and other
amounts at the times and in the amounts specified in this
Agreement or in any Supplement (collectively, the
"Depositor Interest"). Each Subordinated Certificate shall
represent only such rights and interests as shall be
specified in any Supplement relating thereto.
SECTION 4.02. Establishment of the Collection
Account. The Servicer, for the benefit of the
Beneficiaries, 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 for the benefit of the
Beneficiaries (the "Collection Account"). The Trustee
shall possess all right, title and interest in all funds
from time to time on deposit in, and all Eligible
Investments credited to, the Collection Account and in all
proceeds thereof. The Collection Account shall be under
the sole dominion and control of the Trustee for the
benefit of the Beneficiaries. If, at any time, the
Collection Account ceases to be an Eligible Deposit
Account, the Servicer shall establish a substitute Eligible
Deposit Account as the Collection Account, instruct the
Trustee to transfer any cash and/or any Eligible
Investments to such new Collection Account and, from the
date any such substitute account is established, such
account shall be the Collection Account. Pursuant to the
authority granted to the Servicer in Section 3.01 hereof,
the Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purposes of
carrying out the duties of the Servicer or the Trustee as
specified in this Agreement.
All Eligible Investments shall be held by the
Trustee for the benefit of the Beneficiaries. Funds on
deposit in the Collection Account shall, at the written
direction of the Servicer, be invested by the Trustee
solely in Eligible Investments that will mature so that
such funds will be available at the close of business on or
before the next Business Day. Each Business Day, all
interest and other investment income (net of losses and
investment expenses) earned on funds on deposit in the
Collection Account shall be credited to the Collection
Account. Schedule II, which is hereby incorporated into
and made part of this Agreement, identifies the Collection
Account by setting forth the account number of such
account, the account designation of such account and the
name of the institution with which such account has been
established. If a substitute Collection Account is
established pursuant to this Section 4.02, the Servicer
shall provide to the Trustee an amended Schedule II,
setting forth the relevant information for such substitute
Collection Account.
SECTION 4.03. Collections Arrangements.
Obligors shall at all times hereunder be instructed to make
payments on the Receivables only (i) to the Dedicated Zip
Code or (ii) as In-Store Payments. All Collections on
Receivables received in the Dedicated Zip Code will,
pending remittance to the Collection Account, be held for
the benefit of the Trust and shall be deposited into a
Local Deposit Account as promptly as possible after the
processing of such Collections. In-Store Payments shall be
deposited in a Local Deposit Account as promptly as
possible after the date of processing of such Collections,
but in no event later than the next Business Day following
such date of processing.
SECTION 4.04. Collection Allocations. (a) Each
day's Collections will be allocated by the Servicer at the
commencement of business on the next succeeding Business
Day to each Series from and after the Series Cut-Off Date
for such Series, as specified in this Section 4.04, and
Collections so allocated will be recorded as such in the
Collection Account ledger maintained by the Trustee
promptly after receipt of and in accordance with the Daily
Report. Amounts allocated to any Series will not, except
as specified in the related Supplement, be available to the
Investor Certificates of any other Series. In addition,
Collections received during a Business Day will be
allocated by the Servicer at the commencement of business
on the next succeeding Business Day between Investor
Certificates, the Exchangeable Certificate and any
Subordinated Certificate as specified in the relevant
Supplement. Amounts so allocated to Investor Certificates
will not be available to the Holder of the Exchangeable
Certificate or any Subordinated Certificate, and amounts
allocated to the Exchangeable Certificate or any
Subordinated Certificate will not, except as specified in
the related Supplement, be available to the Holders of
Investor Certificates. Allocations among the Holders of
Investor Certificates of a Series and among the Classes in
any Series shall be made as set forth in this Agreement and
in the related Supplement or Supplements.
(b) Finance Charge Collections, Principal
Collections and Miscellaneous Payments received during a
Business Day shall be allocated to each Series by the
Servicer at the commencement of business on the next
succeeding Business Day based on the Series Allocation
Percentage. Thereafter, for each Series, the Servicer
shall allocate to the Holder of the Exchangeable
Certificate an amount equal to the product of (A) the
Exchangeable Holder's Percentage (as defined in each
Supplement) and (B) the aggregate amount of such
Collections allocated to the Series for such Business Day.
Collections allocated to a Series and not otherwise
allocated to the Holder of the Exchangeable Certificate
shall be retained in the Collection Account for further
disposition as specified in the Supplement for such Series.
Unless specified in any Supplement (with respect to a
retained amount account, reserve account, spread account or
other cash retention account), the Servicer need not retain
amounts allocated to the Exchangeable Certificate pursuant
to any Supplement, and shall instead pay such amounts as
collected to the Holder of the Exchangeable Certificate.
Miscellaneous Payments shall be treated as Finance Charge
Collections. Any Discount Rate or Discount Portion arising
in any Collection Period under Section 2.07 will be
deducted from Principal Collections each day that such
Collections are allocated hereunder.
ARTICLE V
Distributions and Reports to
Certificateholders
SECTION 5.01. Distributions and Reports to
Certificateholders. Distributions shall be made to, and
reports shall be provided to, Certificateholders as set
forth in the related Supplement.
ARTICLE VI
The Certificates
SECTION 6.01. The Certificates. (a) The
Investor Certificates of any Series or Class shall be
issued substantially in the form of the respective exhibit
attached to the related Supplement. The Exchangeable
Certificate shall be issued in registered form, and shall
be executed, authenticated and delivered as provided in
Section 6.02 hereof. Investor Certificates shall be issued
in minimum denominations of $1,000,000 and in integral
multiples of $100,000 in excess thereof. The Exchangeable
Certificate shall be a single certificate and shall
represent the entire Depositor Interest.
(b) Each Certificate shall be executed by manual
or facsimile signature by the Depositor. Certificates
bearing the manual or facsimile signature of an individual
who was, at the time such signature was affixed, an officer
of the Depositor shall not be rendered invalid in the event
such individual ceased to be an officer of the Depositor
prior to the authentication and delivery of such
Certificates. No Certificates 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 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 that such Certificate has been duly authenticated
and delivered hereunder. Unless otherwise provided in the
Series Supplement pursuant to which any Certificates are
issued, all Certificates shall be dated the date of their
authentication.
SECTION 6.02. Authentication of Certificates.
The Trustee shall authenticate and deliver the Certificates
of each Series and Class that are issued upon original
issuance to or upon the written order of the Depositor
against payment to the Depositor of the purchase price
therefor. The Trustee shall authenticate and deliver the
Exchangeable Certificate to the Depositor simultaneously
with its delivery of the Certificates of the first Series
to be issued hereunder.
SECTION 6.03. New Issuances. (a) The Depositor
may, from time to time, direct the Trustee, on behalf of
the Trust, to issue one or more new Series of Investor
Certificates pursuant to a Supplement. Except as otherwise
provided in the related Supplement, the Investor
Certificates of all outstanding Series, each Subordinated
Certificate issued pursuant to any Supplement and the
Exchangeable Certificate shall be equally and ratably
entitled to the benefits of this Agreement without
preference, priority or distinction, all in accordance with
the terms and provisions of this Agreement and the related
Supplement.
(b) On or before any Series Issuance Date, the
parties hereto shall execute and deliver a Supplement which
shall specify the Principal Terms of the new Series and
shall not adversely affect any Series then outstanding.
The terms of such Supplement may modify or amend the terms
of this Agreement solely as applied to such new Series.
The obligation of the Trustee to issue the Certificates of
such new Series and to execute and deliver the related
Supplement is subject to satisfaction of the following
conditions:
(i) on or before the fifth Business Day
immediately preceding the Series Issuance Date, the
Depositor shall have given the Trustee, the Servicer,
each Rating Agency and any Enhancement Provider
written notice of such issuance (which notice shall
specify, among other things, the applicable initial
principal amount and interest rates of the
Certificates to be issued) and the related Series
Issuance Date;
(ii) the Depositor shall have delivered to
the Trustee the related Supplement, in form
satisfactory to the Trustee, executed by each party
hereto other than the Trustee;
(iii) the Depositor shall have delivered to
the Trustee any related Enhancement Agreement in form
reasonably satisfactory to the Trustee, executed by
each of the parties thereto, other than the Trustee;
(iv) the Depositor shall have delivered to
the Trustee (x) an Officer's Certificate to the effect
that the Excess Balance Test has been satisfied as of
the last Determination Date, and in the case of the
issuance of a New Series of fixed based certificates,
that the Excess Balance Test has been satisfied
calculated on a projection basis, and setting forth in
reasonable detail computations evidencing such
satisfaction, or (y) the Consent of Certificateholders
approving said new issuance; provided that each
Certificateholder by its acceptance of its
Certificates shall be deemed to have agreed that its
consent to any issuance of a new Series hereunder
shall not be unreasonably withheld;
(v) the Rating Agency Condition shall have
been satisfied with respect to such issuance;
(vi) the Depositor shall have delivered to
the Trustee a certificate of a Vice President or more
senior officer, dated the Series Issuance Date, to the
effect that the Depositor reasonably believes that
such issuance will not result in the occurrence of an
Early Amortization Event;
(vii) the Depositor shall have delivered to
the Trustee a Tax Opinion, dated the Series Issuance
Date, with respect to such issuance; and
(viii) the Trustee shall have approved said
issuance; provided, however, that the Trustee agrees that
such consent shall not be unreasonably withheld.
Upon satisfaction of the above conditions, the Trustee
shall execute the Supplement and any Enhancement Agreement,
and the Depositor shall deliver to the Trustee the executed
Certificates of such Series for authentication and delivery
by the Trustee upon the written order of the Depositor.
(c) In connection with any new Series, The
Depositor shall tender the Exchangeable Certificate to the
Trustee in exchange for (i) one or more newly issued Series
of Certificates and (ii) a reissued Exchangeable
Certificate (any such tender a "Depositor Exchange"). In
addition, to the extent permitted for any Series as
specified in the related Supplement, the Holders of
Certificates of such Series may tender their Certificates
and the Depositor may tender the Exchangeable Certificate
to the Trustee pursuant to the terms and conditions set
forth in such Supplement in exchange for (i) in the case of
the Certificateholders of such Series, one or more newly
issued Series of Certificates and (ii) in the case of the
Depositor, a reissued Exchangeable Certificate (an
"Investor Exchange"; a Depositor Exchange and Investor
Exchange are referred to collectively herein as an
"Exchange"). The Depositor may perform an Exchange by
notifying the Trustee, in writing, at least five days in
advance (an "Exchange Notice") of the date upon which the
Exchange is to occur (an "Exchange Date"). Any Exchange
Notice shall state the designation of any Series to be
issued on the Exchange Date and the Principal Terms with
respect to such Series of Certificates. Upon satisfaction
of such conditions, and those set forth in Section 6.03
hereof, the Trustee shall cancel the existing Exchangeable
Certificate or applicable Certificates, as the case may be,
and issue, as provided above, such Series and/or a new
Exchangeable Certificate, dated the Exchange Date.
SECTION 6.04. Registration of Transfer and
Exchange of Certificates. (a) The Trustee shall cause a
register (the "Certificate Register") to be kept at its
office or agency in which a transfer agent and registrar
(the "Transfer Agent and Registrar") shall record the
issuance of the Certificates and the Exchangeable
Certificate, including the identity of the Registered
Holder, and each transfer, pledge and exchange of such
Certificates as herein provided. The Transfer Agent and
Registrar shall initially be the Trustee and any
co-transfer agent and co-registrar chosen by the Depositor
and acceptable to the Trustee. Any reference in this
Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context
requires otherwise.
(b) The Transfer Agent and Registrar shall
maintain at its expense, an office or agency in The City of
New York where Certificates may be surrendered for
registration of transfer or exchange.
The Trustee or the Transfer Agent and Registrar,
as the case may be, shall not be required to register the
transfer or exchange of any Certificate for a period of
fifteen (15) days preceding the due date for any payment
with respect to such Certificate. In addition, the Trustee
or the Transfer Agent and Registrar shall not subdivide
Certificates into units smaller than the minimum initial
amount specified in 6.01 hereof.
(c) Upon the surrender of any Certificates for
registration of transfer or exchange, the Trustee may
execute, on behalf of the Depositor, and shall authenticate
and the Transfer Agent and Registrar shall deliver one or
more new Certificates of the same series or class in
authorized denominations of like aggregate amount and tenor
to the Certificateholder or designated transferee(s).
Every 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 or the Transfer Agent and Registrar duly executed
by the Certificateholder or its attorney-in-fact duly
authorized in writing.
All Certificates surrendered for registration of
transfer, exchange or payment shall be canceled and
disposed of in a manner satisfactory to the Trustee.
The Depositor shall deliver to the Trustee
executed 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.
(d) 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 recover any tax or governmental charge
that may be imposed in connection with any such transfer or
exchange.
(e)(i) Registration of transfer or exchange of
Certificates containing a legend to the effect set forth on
Exhibit H-1 hereto shall be effected only if such transfer
or exchange is made pursuant to an effective registration
statement under the 1933 Act, or is exempt from the
registration requirements under the 1933 Act. In the event
that registration of a transfer is to be made in reliance
upon an exemption from the registration requirements under
the 1933 Act, the transferor or the transferee shall, at
its expense, deliver to the Depositor, the Servicer and the
Trustee prior to registration an investment letter from the
transferee, substantially in the form of the respective
exhibit attached to the related Supplement.
Certificates issued upon registration of transfer
of, or exchange for, Certificates bearing a legend shall
also bear such legend unless the Depositor, the Servicer,
the Trustee and the Transfer Agent and Registrar receive an
Opinion of Counsel, satisfactory to each of them, to the
effect that such legend may be removed.
Whenever a Certificate containing the legend
referred to above is presented to the Transfer Agent and
Registrar for registration of transfer, the Transfer Agent
and Registrar shall promptly seek written instructions from
the Servicer regarding such transfer and shall be entitled
to receive and conclusively rely upon instructions signed
by a Servicing Officer prior to registering any such
transfer. The Depositor 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 relation to any such instructions
furnished pursuant to this clause (i).
(ii) Registration of transfer or exchange of
Certificates containing a legend to the effect set forth on
Exhibit H-2 hereto shall be effected only if such transfer
or exchange is made to a Person that is not an employee
benefit plan or individual retirement account subject to
Title I of ERISA or Section 4975 of the Internal Revenue
Code, or any trust established under any such employee
benefit plan or individual retirement account (or
established to hold the assets thereof), or any
"governmental plan" (as defined in section 3(32) of ERISA
or Section 414(d) of the Internal Revenue Code) organized
in a jurisdiction having prohibitions on transactions with
such governmental plan similar to those contained in
Section 406 of ERISA or Section 4975 of the Internal
Revenue Code (each such employee benefit plan, individual
retirement account and trust, an "ERISA Plan"). No part of
the funds used by any Person (other than the Initial
Holder) to acquire any Certificate may constitute assets
(within the meaning of ERISA and any applicable rules and
regulations) of an ERISA Plan. By accepting and holding
any Certificate, the Holder (other than the Initial Holder)
thereof shall be deemed to have represented and warranted
that it is not an ERISA Plan and that such Certificate was
not acquired with the assets of an ERISA Plan.
(f) In addition to any limitation in Section
6.03(g) below, the Exchangeable Certificate may not be
transferred, assigned, exchanged, pledged or otherwise
conveyed unless the conditions set forth in (i) and (ii)
below have been satisfied:
(i) the Rating Agency Condition shall have
been satisfied in connection with the proposed action;
and
(ii) the Depositor shall have delivered to
the Trustee a Tax Opinion, dated the date of such
exchange (or transfer or exchange as provided below),
with respect to such exchange.
The Trustee shall not register the transfer of
the Exchangeable Certificate except upon receipt of
certification from the Depositor to the effect that such
transfer complies with the provisions of the Securities Act
of 1933 as amended (the "1933 Act").
(g) It is the understanding of the parties to
this Agreement that Gottschalks Inc. has particular
expertise in performing the functions given by this
Agreement to the Servicer and that the Investor
Certificateholders will be purchasing the Certificates
relying on Gottschalks Inc.'s exercising such expertise in
performing such functions. As provided in Sections 8.05
and 8.07 of the Agreement, the Servicer is not permitted to
resign except as provided herein and the parties understand
that the Servicer's performance of its servicing functions
and the quality of the Receivables will best be ensured if
the Depositor retains all or a portion of the Exchangeable
Certificate. Accordingly, the Depositor's interest in the
Exchangeable Certificate shall not be sold, transferred,
assigned, exchanged, pledged, participated or otherwise
conveyed, unless (i) such sale, transfer, assignment,
exchange, pledge or conveyance would not reduce the
Depositor's retained interest in the Exchangeable
Certificate and any Subordinated Certificate then
outstanding below the Minimum Depositor Interest for any
Series then outstanding, (ii) in the case of an Exchange
pursuant to Section 6.03(c) hereof, the conditions for
issuance of a Series are satisfied and (iii) such sale,
transfer, assignment, exchange, pledge or conveyance would
not result in the Depositor's retained interest in the
Exchangeable Certificate and any Subordinated Certificate
being less than 20% of the sum of the total amount of the
Depositor Interest and any other Series or Class with
respect to which no Tax Opinion has been rendered that such
Series or Class will be treated as debt for federal income
tax purposes. The Trustee may rely on any Officer's
Certificate certifying as to the foregoing.
SECTION 6.05. Mutilated, Destroyed, Lost or
Stolen Certificates. If (a) any mutilated Certificate 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 required by them to hold each of them
harmless (provided that an unsecured agreement of indemnity
from an institutional Certificateholder with a net worth or
statutory surplus of not less than $50 million shall be
sufficient indemnity), then, in the absence of actual
notice to a Responsible Officer of the Trustee that such
Certificate has been acquired by a bona fide purchaser, the
Depositor shall execute and the Trustee shall authenticate,
and the Transfer Agent and Registrar shall deliver in
exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Certificate, a new Certificate of the same
Series or Class and like aggregate amount and tenor. In
connection with the issuance of any new Certificate under
this Section 6.05, the Trustee or the Transfer Agent and
Registrar may require the Certificateholder to pay a sum
sufficient to recover any tax or governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee and
Transfer Agent and Registrar) connected therewith. Any
duplicate Certificate issued pursuant to this Section 6.05
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 6.06. Persons Deemed Owners. The
Trustee, the Transfer Agent and Registrar and any agent of
any of them may, prior to due presentation of a Certificate
for registration of transfer or exchange, treat the Person
or Persons in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving
distributions pursuant to the terms of the related
Supplement and for all other purposes whatsoever; and, in
any such case, neither the Trustee, the Transfer Agent and
Registrar nor any of their respect agents shall be affected
by any notice to the contrary. Notwithstanding the
foregoing, in determining whether the holders of the
requisite Certificates have given any request, demand,
authorization, direction, notice, consent or waiver
hereunder, Certificates owned by the Depositor, the
Servicer or any Affiliate thereof, shall be disregarded and
deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice,
consent or waiver, only Certificates that a Responsible
Officer of the Trustee knows to be so owned shall be so
disregarded. Certificates so owned that have been pledged
in good faith shall not be disregarded and may be regarded
as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act
with respect to such Certificates and that the pledgee is
not the Depositor, the Servicer or any Affiliate thereof.
SECTION 6.07. Access to List of Registered
Certificateholders' Names and Addresses. The Trustee will
furnish or cause to be furnished by the Transfer Agent and
Registrar to the Servicer, within five (5) Business Days
after receipt by the Trustee of a request therefor, a list
in such form as the Servicer may reasonably require, of the
names and addresses of the Certificateholders. If three or
more holders of Investor Certificates (the "Applicants")
apply to the Trustee, and such application states that the
Applicants desire to communicate with other
Certificateholders with respect to their rights under this
Agreement or any Supplement or under the Investor
Certificates and is accompanied by a copy of the
communication that such Applicants propose to transmit,
then the Trustee, after having been indemnified to its
reasonable satisfaction 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 of such Series or all outstanding
Series, as applicable, held by the Trustee. Such list
shall be as of a date no more than forty-five (45) days
prior to the date of receipt of such Applicants' request.
Every Certificateholder, by receiving and holding
an Investor Certificate, agrees with the Trustee that
neither the Trustee, the Transfer Agent and Registrar nor
any of their respective agents, shall be held accountable
by reason of the disclosure of any information as to the
names and addresses of the Certificateholders hereunder,
regardless of the sources from which such information was
derived.
ARTICLE VII
Other Matters Relating to the Depositor
SECTION 7.01. Liability of the Depositor. The
Depositor shall be liable for all obligations, covenants,
representations and warranties of the Depositor arising
under or related to this Agreement. Except as provided in
the preceding sentence, the Depositor shall be liable only
to the extent of the obligations specifically undertaken by
it in its capacity as Depositor hereunder.
SECTION 7.02. Limitation on Liability of the
Depositor. Subject to Section 7.01 and Section 7.03
hereof, neither the Depositor nor any of the directors,
officers, employees, affiliates, stockholders, agents or
representatives or advisors of the Depositor shall be under
any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken
or for refraining from taking any action in its capacity as
Depositor pursuant to this Agreement whether arising from
express or implied duties under this Agreement; provided,
however, that this provision shall not protect the
Depositor or any such Person against any liability that
would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor and any director,
officer, employee, affiliate, stockholder, agent,
representative or advisor of the Depositor may rely in good
faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any
obligation to appear in, prosecute or defend any legal
action that is not incidental to its obligations hereunder
and in its reasonable opinion may involve it in any expense
or liability.
SECTION 7.03. Depositor Indemnification. (A)
The Depositor shall indemnify and hold the Trust, for the
benefit of the Beneficiaries, and the Trustee, harmless
from and against any loss, liability, reasonable expense,
damage or injury suffered or sustained by reason of any
acts or omissions or alleged acts or omissions arising out
of or based upon this Agreement, including, but not limited
to, any judgment, general settlement, reasonable attorneys'
fees and other costs and expenses incurred by the Trustee
in connection with the defense of any actual or threatened
action, proceeding or claim (other than losses on
Receivables and amounts due with respect thereto);
provided, however, that the Depositor shall not indemnify
the Trust or the Trustee or any officer, director, employee
or agent of the Trustee if such actual or threatened
action, proceeding or claim arose out of, or such loss,
liability, expense, damage or injury was caused by fraud,
negligence, breach of fiduciary duty or willful misconduct
by any of the foregoing; provided, further, that the
Depositor shall not be liable, directly or indirectly, for
or in respect of any indebtedness or obligation evidenced
or created by any Certificate, recourse as to which is
limited solely to the assets of the Trust allocated for
payment thereof as provided in this Agreement and any
applicable Supplement; provided, further, that the
Depositor shall not indemnify the Trust, the Trustee or any
Beneficiary for any liabilities, cost or expense of the
Trust with respect to any action taken by the Trustee at
the request of any such Beneficiary to the extent the
Trustee is fully indemnified by such Beneficiary with
respect to such action or with respect to any Federal,
state or local income or franchise taxes (or any interest
or penalties with respect thereto) required to be paid by
the Trust or any Beneficiary in connection herewith to any
taxing authority. In the event that the Trustee is or the
Trust Assets are liable to any third party (not including
the Trustee or its agents or the Holders of the Investor
Certificates) for any losses, claims, damages or
liabilities arising out of the holding of the Receivables
or the administration of this Agreement, any Related
Document or any related arrangement that are not paid out
of the Trust Assets, the Depositor (as Holder of the
Exchangeable Certificate) agrees (i) to be liable as though
the Agreement and any Supplement created a partnership
under the Uniform Partnership Act and (ii) to contribute to
the Trust for the benefit of such third party, without
limitation as to the amount, sufficient cash to satisfy and
discharge such liability. The Trustee agrees to use any
such cash advanced by the Depositor to satisfy and
discharge such liability. The agreement by the Depositor
set forth in this Section shall not limit the liability of
the Depositor hereunder to any Person specified herein.
With respect to any liability for which the Depositor would
not be obligated to make a contribution to the Trust, but
for the operation of this Section 7.03, any party to this
Agreement that would be liable for such liability were such
liability not paid or discharged by the Depositor pursuant
to this Section 7.03, shall indemnify and hold the
Depositor harmless against such liability; provided that
nothing in this Section shall be construed to imply that
the Holders of any Investor Certificates have any liability
to third parties. Any indemnification under this Article
VII shall survive the termination of this Agreement.
ARTICLE VIII
Other Matters Relating
to the Servicer
SECTION 8.01. Liability of the Servicer. The
Servicer shall be liable under this Article VIII only to
the extent of the obligations specifically undertaken by
the Servicer in its capacity as Servicer.
SECTION 8.02. Limitation on Liability of the
Servicer. Except as provided in Section 8.01 and Section
8.03 hereof, neither the Servicer nor any of the directors,
officers, employees, affiliates, stockholders, agents,
representatives or advisors of the Servicer shall be under
any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken
or for refraining from taking any action in its capacity as
Servicer pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any
such Person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder.
The Servicer and any director, officer, employee,
affiliate, stockholder, agent, representative or advisor of
the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The
Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental
to its obligations hereunder that in its reasonable opinion
may involve it in any expense or liability.
SECTION 8.03. Servicer Indemnification of the
Trust and the Trustee. The Servicer shall indemnify and
hold harmless the Trust, for the benefit of the
Beneficiaries, and the Trustee from and against any loss,
liability, reasonable expense, damage or injury suffered or
sustained by reason of any acts or omissions or alleged
acts or omissions arising out of or based upon this
Agreement, including, but not limited to, any judgment,
general settlement, reasonable attorneys' fees and other
costs and expenses incurred by the Trustee in connection
with the defense of any actual or threatened action,
proceeding or claim (other than losses on Receivables and
amounts due with respect thereto); provided, however, that
the Servicer shall not indemnify the Trust or the Trustee
or any officer, director, employee or agent of the Trustee
if such actual or threatened action, proceeding or claim
arose out of, or such loss, liability, expense, damage or
injury was caused by fraud, negligence, breach of fiduciary
duty or willful misconduct by any of the foregoing;
provided, further, that the Servicer shall not be liable,
directly or indirectly, for or in respect of any
indebtedness or obligation evidenced or created by any
Certificate, recourse as to which is limited solely to the
assets of the Trust allocated for payment thereof as
provided in this Agreement and any applicable Supplement;
provided, further, that the Servicer shall not indemnify
the Trust, the Trustee or any Beneficiary for any
liabilities, cost or expense of the Trust with respect to
any action taken by the Trustee at the request of any such
Beneficiary to the extent the Trustee is fully indemnified
by such Beneficiary with respect to such action or with
respect to any Federal, state or local income or franchise
taxes (or any interest or penalties with respect thereto)
required to be paid by the Trust or any Beneficiary in
connection herewith to any taxing authority. The Servicer
shall indemnify and hold harmless the Trustee and its
officers, directors, employees or agents from and against
any loss, liability, reasonable expense, damage or injury
suffered or sustained by reason of the acceptance of the
Trust by the Trustee, the issuance by the Trust of the
Certificates or any of the other matters contemplated
herein or in any Supplement (other than losses on
Receivables and amounts due with respect thereto). Any
indemnification under this Article VIII shall run directly
to and be enforceable by an injured party subject to the
limitations hereof and shall survive the resignation or
removal of the Servicer, the resignation or removal of the
Trustee and/or the termination of the Trust and shall
survive the termination of this Agreement. Any such
indemnification shall not be payable from the assets of the
Trust.
SECTION 8.04. Merger or Consolidation of, or
Assumption of, the Obligations of the Servicer. Subject to
subsection 3.01(a), the Servicer shall not consolidate with
or merge into any other corporation or convey or transfer
its properties and assets substantially as an entirety to
any Person, unless:
(i) immediately after giving effect to any
such transaction, the consolidated tangible net worth
of the surviving person shall not have materially
decreased, such determination to be made on a pro
forma basis after giving effect to the proposed
transaction;
(ii) the corporation 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 thereof or the District
of Columbia and, if the Servicer is not the surviving
entity, such corporation shall expressly assume, by
written 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 as applicable hereunder and
shall benefit from all the rights granted to the
Servicer, as applicable hereunder. (To the extent
that any right, covenant or obligation of the
Servicer, 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);
(iii) the Servicer shall have delivered to
the Trustee an Officer's Certificate signed by a Vice
President (or any more senior officer) stating that
such consolidation, merger, conveyance or transfer and
such supplemental agreement comply with this Section
8.04 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 that the
entity surviving such consolidation, conveyance or
transfer is organized and existing under the laws of
the United States of America or any State thereof or
the District of Columbia; and
(iv) the Servicer shall have obtained the
Consent of Certificateholders (not to be unreasonably
withheld in the event the Rating Agency Condition
shall have been satisfied) and delivered notice to the
Rating Agencies of such consolidation, merger,
conveyance or transfer and the Rating Agency Condition
shall have been satisfied.
SECTION 8.05. The Servicer Not to Resign. The
Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that (a) the
performance of its duties hereunder is no longer
permissible under applicable law and (b) there is no
reasonable action that the Servicer could take to make the
performance of its duties hereunder permissible under
applicable law. 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 10.02 hereof. If the
Trustee is unable within sixty (60) days of the date of
such determination to appoint a Successor Servicer, the
Trustee shall serve as Successor Servicer hereunder.
SECTION 8.06. Access to Certain Information
Regarding the Receivables; Meet and Confer. (a) The
Servicer shall provide to the Trustee and its agents, as
well as any Certificateholders' Representative, access to
the documentation regarding the Accounts and the
Receivables, such access being afforded without charge and
as often as requested but only (i) during normal business
hours, (ii) subject to the Servicer's normal security and
confidentiality procedures, and (iii) at offices designated
by the Servicer. Nothing in this Section 8.06 shall
derogate from the obligation of the Depositor, 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 8.06(a) as a result of such obligation shall
not constitute a breach of this Section 8.06(a).
(b) Subject to the provisions of 8.06(a)(i)
through (iv) above, the Servicer shall also provide upon
reasonable request to a Certificateholders' Representative
access to one or more senior officers of the Servicer to
discuss the financial position of the Servicer and its
ability to perform its obligations hereunder.
SECTION 8.07. Delegation of Duties. 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 Charge Card
Agreements, the Financial Guidelines, this Agreement and
each Supplement. The Servicer shall give prompt written
notice of any such delegation of a material function to the
Rating Agencies, the Trustee and any Enhancement Providers.
Such delegation 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 8.05 hereof.
SECTION 8.08. Examination of Records. The
Depositor and the Servicer shall indicate generally in
their respective computer files or other records that the
Receivables arising in the Accounts have been conveyed to
the Trust pursuant to this Agreement for the benefit of the
Beneficiaries. The Depositor and the Servicer shall, prior
to the sale or transfer to a third party of any receivable
held in its custody, examine its computer and other records
to determine that such receivable is not a Receivable.
ARTICLE IX
Early Amortization Events
SECTION 9.01. Early Amortization Events. If any
one of the following events shall occur:
(a) the Depositor or the Servicer (or the
Seller, if it is not the Servicer) shall file a petition
commencing a voluntary case under any chapter of the
Federal bankruptcy laws or the Depositor or the Servicer
(or the Seller, as aforesaid) shall file a petition or
answer or consent seeking reorganization, arrangement,
adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of
any such petition, answer or consent; or the Depositor or
the Servicer (or the Seller, as aforesaid) shall appoint,
or consent to the appointment of, a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other
similar official in bankruptcy or insolvency of it or of
any substantial part of its property; or the Depositor or
the Servicer (or the Seller, as aforesaid) shall make an
assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they
become due;
(b) any order for relief against the Depositor
or the Servicer (or the Seller, if it is not the Servicer)
shall have been entered by a court having jurisdiction in
the premises under any chapter of the Federal bankruptcy
laws, and such order shall have continued undischarged or
unstayed for a period of sixty (60) days; or a decree or
order by a court having jurisdiction in the premises shall
have been entered approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or
composition of the Depositor or the Servicer (or the
Seller, as aforesaid) under any other similar applicable
Federal law, and such decree or order shall have continued
undischarged or unstayed for a period of sixty (60) days;
or a decree or order of a court having jurisdiction in the
premises for the appointment of a custodian, receiver,
liquidator, trustee, assignee, sequestrator, or other
similar official in bankruptcy or insolvency of the
Depositor or the Servicer (or the Seller, as aforesaid) or
of any substantial part of its property or for the winding
up or liquidation of its affairs, shall have been entered,
and such decree or order shall have remained in force
undischarged or unstayed for a period of sixty (60) days;
(c) the Trust or the Depositor shall become an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(d) a Liquidation Event; or
(e) during the continuance of any Block Period,
a failure by the Depositor to convey Receivables in
Supplemental Accounts to the Trust within five (5) Business
Days after the day on which it is required to convey such
Receivables pursuant to this Agreement;
then, subject to applicable law, and after the applicable
grace period, if any, an amortization event (an "Early
Amortization Event") shall occur without any notice or
other action on the part of the Trustee or any Beneficiary,
immediately upon the occurrence of such event. The Trustee
shall provide written notice to the Rating Agencies
promptly after receipt of written notice of any such event.
SECTION 9.02. Additional Rights Upon the
Occurrence of Certain Events. (a) If a Liquidation Event
occurs with respect to the Depositor, the Depositor shall
on the day such Liquidation Event occurs (the "Appointment
Date") immediately cease to transfer Receivables to the
Trust and shall promptly give notice to the Trustee of such
Liquidation Event. Within fifteen (15) days of the
Appointment Date, the Trustee shall (i) publish a notice in
an Authorized Newspaper that a Liquidation Event or
violation has occurred and that the Trustee intends to
sell, dispose of or otherwise liquidate the Receivables on
commercially reasonable terms and in a commercially
reasonable manner and (ii) give written notice to
Certificateholders describing the provisions of this
Section 9.02 and requesting instructions from such Holders.
Unless the Trustee shall have received instructions within
thirty (30) days from the date notice pursuant to clause
(ii) above is first given from Certificateholders pursuant
to a Consent of Certificateholders, to the effect that such
Certificateholders disapprove of the liquidation of the
Receivables and wish to continue having Principal
Receivables transferred to the Trust as before the
occurrence of such Liquidation Event then the Trustee shall
promptly sell, dispose of or otherwise liquidate the
Receivables, or cause to be sold, disposed of or otherwise
liquidated, in a commercially reasonable manner and on
commercially reasonable terms, which shall include the
solicitation of competitive bids. The Trustee may obtain
and conclusively rely upon a prior determination from any
applicable conservator, receiver or liquidator that the
terms and manner of any proposed sale, disposition or
liquidation are commercially reasonable. The provisions of
Section 9.01 hereof and this Section 9.02 shall not be
deemed to be mutually exclusive.
(b) A "Liquidation Event" shall occur if any
event specified in Section 9.01(a) or Section 9.01(b) of
this Agreement occurs with respect to the Servicer or the
Depositor.
(c) The proceeds from the sale, disposition or
liquidation of the Receivables pursuant to subsection (a)
above (the "Trust Liquidation Proceeds") shall be
immediately deposited in the Collection Account. The
Trustee shall determine conclusively the amount of the
Trust Liquidation Proceeds which are deemed to be Finance
Charge Receivables and Principal Receivables. The Trust
Liquidation Proceeds shall be allocated and distributed to
Certificateholders in accordance with Article IV hereof and
the terms of each Supplement, and the Trust shall terminate
immediately thereafter.
ARTICLE X
Servicer Defaults
SECTION 10.01. Servicer Defaults. If any one of
the following events (a "Servicer Default") shall occur and
be continuing with respect to the Servicer:
(a) any failure by the Servicer to make any
payment, transfer or deposit, or to give instructions or
notice to the Trustee to make such payment, transfer or
deposit, or to give notice to the Trustee as to any action
to be taken under any Enhancement Agreement, in any case on
or before the date occurring two (2) Business Days after
the date such payment, transfer or deposit, 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 its covenant not to create any lien on
any Receivable, which failure has a material adverse effect
on the Certificateholders and which continues unremedied
for a period of thirty (30) days; provided, however, that a
Servicer Default shall not be deemed to have occurred if
the Depositor shall have repurchased the affected
Receivables or, if applicable, all of the Receivables
during such period in accordance with the provisions of
this Agreement;
(c) failure on the part of the Servicer duly to
observe or perform any covenants or agreements of the
Servicer set forth in this Agreement which failure has a
material adverse effect on the Certificateholders and which
continues unremedied for a period of thirty (30) days after
the earlier of (A) the date on which the Servicer has
knowledge thereof and (B) 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;
(d) 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 and which continues
to be incorrect in any material respect for a period of
thirty (30) days after the earlier of (A) the date on which
the Servicer has knowledge thereof and (B) the date on
which written notice thereof, requiring the same to be
remedied, shall have been given to the Servicer by the
Trustee and as a result of which the interests of the
Certificateholders are materially and adversely affected;
provided, however, that a Servicer Default shall not be
deemed to have occurred if the Depositor shall have
repurchased the affected Receivables or, if applicable, all
of the Receivables during such period in accordance with
the provisions of this Agreement; or
(e) the Servicer shall consent to the
appointment of a conservator or receiver or liquidator or
other similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling 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 or
other similar official in any insolvency, readjustment of
debt, marshalling 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 sixty (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 bankruptcy, insolvency or
reorganization statute, make any assignment for the benefit
of its creditors or voluntarily suspend payment of its
obligations.
In the event of any Servicer Default, so long as such
Servicer Default shall not have been remedied, the Trustee
or the Holders pursuant to a Consent of Certificateholders,
by notice then given in writing to the Servicer (a
"termination notice"), may terminate all but not less than
all of the rights and obligations (other than its
obligations that have accrued up to the time of such
termination) of the Servicer as Servicer under this
Agreement and in and to the Receivables and the proceeds
thereof. The Trustee shall give prompt written notice of
any such event to the Rating Agencies, as well as any
waivers or cures of any such event promptly after receipt
of written notice thereof. After receipt by the Servicer
of a Termination Notice, and on the date that a Successor
Servicer shall have been appointed by the Trustee pursuant
to Section 10.02 hereof, all authority and power of the
Servicer under this Agreement shall pass to and be vested
in a Successor Servicer (a "service transfer") and, without
limitation, the Trustee is hereby authorized and empowered
(upon the failure of the Servicer to cooperate) to execute
and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the
purposes of such Service Transfer; provided, however, that
in no event shall the Servicer incur any liability for any
such action taken by the Trustee. 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 the transfer to such Successor Servicer of all
authority of the Servicer to service the Receivables
provided for under this Agreement, including all authority
over all Collections which shall on the date of transfer be
held by the Servicer for deposit, or which have been
deposited by the Servicer, in the Collection Account, or
which shall thereafter be received with respect to the
Receivables, and in assisting the Successor Servicer. The
Servicer shall promptly transfer its electronic records
relating to the Receivables to the Successor Servicer in
such electronic form as the Successor Servicer may
reasonably request, and shall promptly transfer to the
Successor Servicer all other records, correspondence and
documents necessary for the continued servicing of the
Receivables in the manner and at such times as the
Successor Servicer shall reasonably request. Gottschalks,
as Servicer also agrees to provide such access, computer
time and personnel to the Successor Servicer as shall be
necessary in order to assist the Successor Servicer in
assuming its duties hereunder. To the extent that
compliance with this Section 10.01 shall require the
Servicer to disclose to the Successor Servicer information
of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to
enter into such customary licensing and confidentiality
agreements as the Servicer shall deem necessary to protect
its interest.
Notwithstanding the foregoing, a delay in or
failure of performance under subsection (a) of this
Section 10.01 for a period of up to five (5) Business Days
after the applicable grace period, or a delay in or failure
of performance (or the continuance of any such delay or
failure) under subsection (b), (c) or (d) of this
Section 10.01 for a period of up to thirty (30) Business
Days, shall not constitute a Servicer Default if such delay
or failure or continuance was caused by an act of God or
the public enemy, acts of declared or undeclared war,
public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence shall not
relieve the Servicer of its obligation to use its best
efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Agreement and
the Servicer shall provide the Trustee, any Enhancement
Providers and the Depositor with an Officer's Certificate
giving prompt notice of such failure or delay by it,
together with a description of its efforts so to perform
its obligations. The Servicer shall immediately notify the
Trustee in writing of any Servicer Default.
SECTION 10.02. Trustee to Act; Appointment of
Successor. (a) On and after the receipt by the Servicer
of a Termination Notice pursuant to Section 10.01 hereof,
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, as promptly as possible after
the giving of a Termination Notice, appoint an Eligible
Servicer as 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. In the event that a Successor Servicer has
not been appointed or 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. The Trustee may delegate
any of its servicing obligations to an Affiliate or agent
in accordance with Section 3.01 and Section 8.07 hereof.
Notwithstanding the above, the Trustee shall, if it is
legally unable so to act, petition a court of competent
jurisdiction to appoint any established institution
satisfying the definition of Eligible Servicer as the
Successor Servicer hereunder. The Trustee shall
immediately give notice to the Rating Agencies, any
Enhancement Providers, the Depositor and the
Certificateholders upon the appointment of a Successor
Servicer. No party serving as Trustee hereunder shall be
obligated to serve as Successor Servicer after such party
ceases to serve as Trustee hereunder.
(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
Agreement to the Servicer shall be deemed to refer to the
Successor Servicer; provided, however, that (i) the
Successor Servicer shall not be deemed to have assumed any
liability for any duties, responsibilities or obligations
of any predecessor Servicer, (ii) Section 3.03(c) and (d)
hereof shall not apply to any Successor Servicer, and (iii)
the Successor Servicer shall not be required to advance
funds hereunder or under any Supplement. Any Successor
Servicer, by its acceptance of its appointment, will
automatically agree to be bound by the terms and provisions
of any Enhancement Agreement.
(c) In connection with any Termination Notice,
the Trustee will review any bids which it obtains from
Eligible Servicers and shall be permitted to appoint any
Eligible Servicer submitting such a bid as a Successor
Servicer for servicing compensation not in excess of the
Servicing Fee (provided that if all such bids exceed the
Servicing Fee the Depositor, at its own expense, shall pay
when due the amount of any compensation in excess of the
Servicing Fee provided such excess fee shall have been
determined by the Trustee in good faith to be necessary in
order to appoint the Successor Servicer); provided,
however, that the Depositor shall be responsible for
payment of the Depositor's portion of the Servicing Fee as
determined pursuant to this Agreement and all other amounts
in excess of the aggregate of the Monthly Servicing Fees
specified in the Supplements and that no such monthly
compensation paid out of Collections shall be in excess of
such aggregate of the Monthly Servicing Fees.
(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 12.01 hereof, and shall pass to and be vested in
the Depositor and, without limitation, the Depositor 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 Depositor 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 Depositor in such
electronic form as the Depositor may reasonably request and
shall transfer all other records, correspondence and
documents to the Depositor in the manner and at such times
as the Depositor shall reasonably request. To the extent
that compliance with this Section 10.02 shall require the
Successor Servicer to disclose to the Depositor information
of any kind which the Successor Servicer deems to be
confidential, the Depositor shall be required to enter into
such customary licensing and confidentiality agreements as
the Successor Servicer shall deem necessary to protect its
interests.
ARTICLE XI
The Trustee
SECTION 11.01. Duties of Trustee. (a) The
Trustee, prior to the occurrence of any Servicer Default of
which a Responsible Officer of the Trustee has actual
knowledge 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, and no implied covenants or duties shall be read
into this Agreement against the Trustee. If, to the actual
knowledge of a Responsible Officer of the Trustee, a
Servicer Default has occurred (and such Servicer Default
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
their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs;
provided, however, that if the Trustee shall assume the
duties of the Servicer pursuant to Section 8.05 or
Section 10.02 hereof, the Trustee, in performing such
duties, shall use the degree of skill and attention
customarily exercised by a servicer with respect to
comparable receivables that it services for itself or
others.
(b) The Trustee, upon receipt of all
resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments that are
specifically required to be furnished to it pursuant to any
provision of this Agreement, shall, subject to Section
11.02, examine each of the foregoing to determine whether
they conform substantially to the requirements of this
Agreement.
(c) Subject to subsection (a) above, no
provision of this Agreement shall be construed to relieve
the Trustee of 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 charged with
knowledge of any Servicer Default or the failure by
the Servicer to comply with the obligations of the
Servicer referred to in subsections (a), (b) and (c)
of Section 10.01 hereof unless a Responsible Officer
of the Trustee obtains actual knowledge of such
failure;
(iii) the Trustee shall not be charged with
knowledge of an Early Amortization Event unless a
Responsible Officer of the Trustee obtains actual
knowledge thereof; and
(iv) 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 Certificateholders aggregating
more than 66-2/3% of the Invested Amount of any Series
relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee
with respect to such Series, or exercising any trust
or power conferred upon the Trustee with respect to
such Series, under this Agreement.
(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 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.
Notwithstanding the foregoing, the Trustee is entitled to
indemnification under Section 7.03 and Section 8.03 hereof
while acting as Successor Servicer.
(e) Except as expressly provided in this
Agreement, the Trustee shall have no power to vary the
corpus of the Trust including the power to (i) accept any
substitute obligation for a Receivable initially assigned
to the Trust under Section 2.01 or Section 2.05 hereof,
(ii) add any other investment, obligation or security to
the Trust or (iii) withdraw from the Trust any Receivables.
(f) If, to the actual knowledge of a Responsible
Officer of the Trustee, 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 under
this Agreement, the Trustee shall be obligated promptly
after a Responsible Officer of the Trustee acquires actual
knowledge thereof to perform such obligation, duty or
agreement in the manner so required.
(g) Notwithstanding any other provision
contained in this Agreement, the Trustee is not acting as,
and shall not be deemed to be, a fiduciary for any
Enhancement Provider in its capacity as such or as a
Beneficiary, and the Trustee's sole responsibility with
respect to said parties shall be to perform those duties
with respect to said parties as are specifically set forth
herein and no implied duties or obligations shall be read
into this Agreement against the Trustee with respect to any
such party.
SECTION 11.02. Certain Matters Affecting the
Trustee. Except as otherwise provided in Section 11.01
hereof:
(a) the Trustee may rely on and shall be
protected in acting on, or in refraining from acting in
accordance with, any resolution, Officers Certificate,
certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document
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 and any
advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken
or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(c) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement or any 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 Enhancement Provider, pursuant to
the provisions of this Agreement, unless such
Certificateholders or Enhancement Providers shall have
offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be
incurred therein or thereby;
(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 or any Enhancement;
(e) the Trustee shall not be bound to make any
investigation into the facts of matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document;
(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 the
supervision of or any misconduct or negligence on the part
of any such agent, attorney or custodian appointed with due
care by it hereunder except when such appointment was made
in the capacity of Successor Servicer;
(g) except as may be required by
Section 11.01(a) hereof, the Trustee shall not be required
to make any initial or periodic examination of any
documents or records related to the Receivables or the
Accounts for the purpose of establishing the presence or
absence of defects, the compliance by the Depositor with
its representations and warranties or for any other
purpose;
(h) whenever in the administration of this
Agreement the Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may in the
absence of bad faith on its part, request and conclusively
rely upon all Officer's Certificates received by it; and
(i) the right of the Trustee to perform any
discretionary act enumerated in this Agreement or any
Supplement not otherwise required in the performance of its
obligations hereunder shall not be construed as a duty, and
the Trustee shall not be answerable for performance of any
such act.
SECTION 11.03. 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 11.14
hereof, 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 or any security interest of the Trust therein.
The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or
of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor in respect
of the Receivables or deposited in or withdrawn from the
Collection Account or any Series Account. The Trustee
shall have no responsibility for filing any financing or
continuation statement in any public office at any time or
to otherwise perfect or maintain the perfection of any
security interest or Lien granted to it hereunder (unless
the Trustee shall have become the Successor Servicer) or to
prepare or file any Securities and Exchange Commission
filing for the Trust or to record this Agreement or any
Supplement.
SECTION 11.04. Trustee May Own Certificates.
The Trustee, in its individual or any other capacity, may
become the owner or pledgee of Investor Certificates and
may deal with the Depositor, the Servicer and any
Enhancement Provider with the same rights as it would have
if it were not the Trustee. The Trustee in its capacity as
Trustee shall exercise its duties and responsibilities
hereunder independent of and without reference to its
investment, if any, in Certificates.
SECTION 11.05. 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 reasonable compensation (which shall
not be limited by any provision of law in regard to
compensation of a Trustee of an express trust) for all
services rendered by the Trustee 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 8.04 hereof, the Servicer will pay or
reimburse the Trustee (without reimbursement from any
Collection Account or and Series Account) upon its request
for all reasonable expenses (including, without limitation,
expenses in connection with all notices or other
communications to Certificateholders), disbursements and
advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the
reasonable fees and expenses of its agents, any co-trustee
and counsel) except any such expense, disbursement or
advance as may arise from its negligence, willful
misconduct, breach of fiduciary duty or bad faith and
except as provided in the second following sentence. The
Servicer's covenants to pay the expenses, disbursements and
advances provided for in the preceding sentence shall
survive the termination of this Agreement. If the Trustee
is appointed Successor Servicer pursuant to Section 10.02
hereof, the provisions of this Section 11.05 shall not
apply to expenses, disbursements and advances made or
incurred by the Trustee in its capacity as Successor
Servicer, which shall be paid with amounts distributed as
Servicing Fee. To the extent, if any, that any federal,
state or local taxes (including income and franchise taxes)
are payable by the Trust, such taxes shall be payable
solely out of Trust Assets and not out of the personal
assets of the Trustee and the Servicer shall not be
obligated to pay the amount of any such tax.
SECTION 11.06. 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, which shall be, or shall be directly or indirectly
wholly-owned by, an Eligible Institution, and which shall
have a combined capital and surplus of at least
$100,000,000 and be 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 11.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition
so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this
Section 11.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.07
hereof.
SECTION 11.07. 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 Depositor and the Servicer. Upon
receiving such notice of resignation, the Depositor 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 appointment within thirty
(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 11.06
hereof and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a
bankrupt or insolvent, or if 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 Servicer may with the
consent of Certificateholders (not to be unreasonably
withheld), 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 11.07 shall not become
effective until acceptance of appointment by the successor
trustee as provided in Section 11.08 hereof.
(d) The Trustee shall not be liable for any acts
or omissions of any Successor Trustee.
SECTION 11.08. Successor Trustee. (a) Any
successor trustee appointed as provided in Section 11.07
hereof shall execute, acknowledge and deliver to the
Depositor 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 like effect as if originally
named as Trustee herein. The predecessor Trustee shall
deliver to the successor trustee all documents or copies
thereof, at the expense of the Servicer, and statements
held by it hereunder; and the Depositor 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, power, duties and obligations.
The Servicer shall immediately give notice to each Rating
Agency and the Certificateholders upon the appointment of a
successor trustee.
(b) No successor trustee shall accept
appointment as provided in this Section 11.08 unless at the
time of such acceptance such successor trustee shall be
eligible under the provisions of Section 11.06 hereof and
shall have been approved by a Consent of
Certificateholders.
(c) Upon acceptance of appointment by a
successor trustee as provided in this Section 11.08, such
successor trustee shall mail notice of such succession
hereunder to all Certificateholders at their addresses as
shown in the Certificate Register.
SECTION 11.09. 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 without the execution or
filing of any paper or any further act on the part of any
of the parties hereto, provided such corporation shall be
eligible under the provisions of Section 11.06 hereof,
anything herein to the contrary notwithstanding.
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 11.06 hereof and no notice
to Certificateholders of the appointment of any co-trustee
or separate trustee shall be required under Section 11.08
hereof.
(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 law 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, 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 of 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.
SECTION 11.11. Tax Returns. Notwithstanding
Section 3.07 hereof, in the event that the Trust shall be
required to file tax returns, the Servicer shall at its
expense prepare or cause to be prepared any tax returns
required to be filed by the Trust and, to the extent
possible, shall remit such returns to the Trustee for
signature at least five (5) days before such returns are
due to be filed. The Trustee is hereby authorized to sign
any such return on behalf of the Trust. The Servicer, in
accordance with the terms of the Supplement, shall prepare
or shall cause to be prepared all tax information required
by law to be distributed to Certificateholders. The
Trustee will distribute or cause to be distributed such
information to the Certificateholders. The Trustee, upon
request, will furnish the Servicer with all such
information known to the Trustee as may be reasonably
required in connection with the preparation of all tax
returns of the Trust and shall, upon request, execute such
return. In no event shall the Trustee be liable for any
liabilities, costs or expenses of the Trust or the
Certificateholders 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 or addition 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 the Certificates may be
prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in
its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit
of any Series of Certificateholders in respect of which
such judgment has been obtained.
SECTION 11.13. Suits for Enforcement. If a
Servicer Default of which a Responsible Officer of the
Trustee has actual knowledge shall occur and be continuing,
the Trustee, in its discretion may, subject to the
provisions of Section 10.01 hereof, proceed to protect and
enforce its rights and the rights of any affected
Certificateholders under this Agreement by 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 any affected Series of Certificateholders.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on
behalf of any Certificateholder any plan of reorganization,
arrangement, adjustment or composition affecting the
Certificates or the rights of any Holder thereof, or
authorize the Trustee to vote in respect of the claim of
any Certificateholder in any such proceeding.
SECTION 11.14. Representations and Warranties of
Trustee. The Trustee represents and warrants that:
(i) the Trustee is a banking corporation
organized, existing and in good standing 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 each Supplement, and has taken all
necessary action to authorize the execution, delivery
and performance by it of this Agreement and each
Supplement; and
(iii) this Agreement and each Supplement has
been, or will be, as applicable, duly executed and
delivered by the Trustee and constitutes a legal,
valid and binding obligation of the Trustee
enforceable against the Trustee in accordance with its
terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights
generally and except as such enforceability may be
limited by general principles of equity (whether
considered in a suit at law or in equity) and the
availability of equitable remedies.
SECTION 11.15. Maintenance of Office or Agency.
The Trustee will maintain at its expense in 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 of any change in the location of the
Certificate Register or any such office or agency.
ARTICLE XII
Termination
SECTION 12.01 Termination of Trust. The Trust
and the respective obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby
(other than the obligation of the Trustee to make payments
to Certificateholders as hereafter set forth) shall
terminate, except with respect to the duties described in
Section 7.03, Section 8.03 and Section 12.02(b) hereof,
upon the earlier of (such date the "Trust Termination
Date"), (i) the day following the Distribution Date on
which the Invested Amount for all Series and the
Exchangeable Amount (as defined in the applicable
Supplements) is zero (ii) the time provided in
Section 9.02(c) hereof, and (iii) twenty one (21) years
less one day after the death of the last survivor of any of
the descendants living on the date hereof of Joseph P.
Kennedy, father of John Fitzgerald Kennedy. The Servicer
shall give the Rating Agencies prompt notice of the
termination of the Trust.
SECTION 12.02. Final Distribution. (a) The
Servicer shall give the Trustee at least thirty (30) days
prior notice of the Distribution Date on which the
respective Certificateholders of any Series or Class or the
Holder of the Exchangeable Certificate may surrender their
respective Certificates for payment of the final
distribution on and cancellation of such Certificates (or,
in the event of a final distribution resulting from the
application of Section 2.03 or Section 9.01 hereof, notice
of such Distribution Date promptly after the Servicer has
determined that a final distribution will occur, if such
determination is made less than thirty (30) days prior to
such Distribution Date). Such notice shall be accompanied
by an Officer's Certificate setting forth the information
specified in Section 3.05 hereof covering the period during
the then-current calendar year through the date of such
notice. Except as otherwise provided in any Supplement,
not later than the fifth day of the month in which the
final distribution in respect of such Series or Class or
Exchangeable Certificate is payable to Certificateholders
or the Holder of the Exchangeable Certificate, as
applicable, the Trustee shall provide notice to the
respective Certificateholders specifying (i) the date upon
which final payment thereof will be made upon presentation
and surrender of the related Certificates at the office or
offices therein designated, (ii) the amount of any such
final payment and (iii) that the Record Date otherwise
applicable to such payment date is not applicable, payments
being made only upon presentation and surrender of the
related Certificates at the office or offices therein
specified. The Trustee shall give such notice to the
Transfer Agent and Registrar and the Rating Agencies at the
time such notice is given to the respective
Certificateholders.
(b) Notwithstanding a final distribution to the
Certificateholders of any Series or Class or the Holder of
the Exchangeable Certificate (or the termination of the
Trust), except as otherwise provided in this subsection (b)
and in any Supplement, all funds then on deposit in the
Collection Account and any Series Account allocated to such
Certificateholders or the Holder of the Exchangeable
Certificate shall continue to be held in trust for the
benefit of such Certificateholders or the Holder of the
Exchangeable Certificate, as applicable, and the Trustee
shall pay such funds to such Certificateholders upon
surrender of the related Certificates (and any excess shall
be paid in accordance with the terms of any Enhancement
Agreement). Except as provided in any Supplement, in the
event that all such Certificateholders shall not surrender
their Certificates for cancellation within six months after
the date specified in the notice from the Trustee described
in subsection (a) above, the Trustee shall give a second
notice to the remaining such Certificateholders to
surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within one
year after the second notice all such Certificates 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 such
Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the
funds in the Collection Account or, if applicable, any
Series Account held for the benefit of such
Certificateholders. The Trustee shall pay to the Depositor
any monies held by it for the payment of principal or
interest that remain unclaimed for two years. After
payment to the Depositor, Certificateholders entitled to
the money must look to the Depositor for payment as general
creditors unless an applicable abandoned property law
designates another Person.
(c) In the event that (i) the Invested Amount
with respect to any Series is greater than zero on its
Termination Date or (ii) the Exchangeable Amount is greater
than zero on the Termination Date with respect to the
Exchangeable Certificate, in each case after giving effect
to deposits and distributions otherwise to be made on such
Termination Date, the Trustee will use its best efforts to
sell or cause to be sold on such Termination Date
Receivables (or interests therein) in an amount equal to
the interest in the Pool Balance represented by such
Certificates. The net proceeds (the "Termination
Proceeds") from such sale shall be immediately deposited
into the Collection Account for the benefit of the
Certificateholders of such Series and the Holder of the
Exchangeable Certificate, as applicable. The Termination
Proceeds shall be allocated and distributed to the Holders
of Investor Certificates of such Series and the Holder of
the Exchangeable Certificate, as applicable, in accordance
with the terms of the applicable Supplement.
SECTION 12.03. Depositor's Termination Rights.
Upon termination of the Trust pursuant to Section 12.01
hereof and the surrender of the Exchangeable Certificate,
the Trustee shall transfer, assign and convey to the
Depositor or its designee, 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 and all amounts
received with respect thereto and all proceeds thereof,
except for amounts held by the Trustee pursuant to Section
12.02(b) hereof, and all of the Depositor's rights,
remedies, powers and privileges with respect to such
Receivables under the Receivables Purchase 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 Depositor to vest in
the Depositor or its designee all right, title and interest
that the Trust had in all such property.
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.01. Amendment. (a) This Agreement
or any Supplement may be amended from time to time by the
Servicer, the Depositor, the Trustee and (if the Seller is
not the Servicer) the Seller without the consent of any of
the Certificateholders:
(i) to add to the covenants of the
Depositor for the benefit of the Certificateholders,
or to surrender any right or power herein conferred
upon the Depositor; or
(ii) to cure any ambiguity, to correct or
supplement any provision herein which may be defective
or inconsistent with any other provision herein or in
the Certificates
provided, that such action shall not, as evidenced by an
Opinion of Counsel for the Depositor, addressed and
delivered to the Trustee, adversely affect in any material
respect the interests of any Certificateholder or the
Holder of the Exchangeable Certificate. Notwithstanding
anything contained herein to the contrary, the Trustee may
at any time and from time to time amend, modify or
supplement the form of Distribution Date Statement.
(b) This Agreement or any Supplement may also be
amended from time to time by the Servicer, the Depositor
and the Trustee, with the consent of (i) the Holder of the
Exchangeable Certificate, if it would be adversely affected
by such amendment, and (ii) the Holders of Investor
Certificates evidencing more than 50% of the aggregate
unpaid principal amount of the Investor Certificates of
each adversely affected Series, for the purpose of adding
any provisions to or changing in any manner or eliminating
or waiving any of the provisions of this Agreement or any
Supplement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such
amendment shall:
(i) reduce in any manner the amount or
delay the timing of any distributions to be made to
Certificateholders or deposits of amounts to be so
distributed;
(ii) change the definition or the manner of
calculating the interest of any Certificateholder
without the consent of each affected
Certificateholder;
(iii) reduce the amount available under any
Enhancement without the consent of each affected
Certificateholder;
(iv) reduce the aforesaid percentage
required to consent to any such amendment without the
consent of each affected Certificateholder; or
(v) adversely affect the rating of any
Series or Class by any Rating Agency without the
consent of the Holders of Investor Certificates of
such Series or Class evidencing more than 50% of the
aggregate unpaid principal amount of the Investor
Certificates of such Series or Class.
Any amendment to be effected pursuant to this subsection
(b) shall be deemed to adversely affect all outstanding
Series, other than any Series with respect to which such
action shall not, as evidenced by an Opinion of Counsel for
the Depositor, addressed and delivered to the Trustee,
adversely affect in any material respect the interests of
any Holder of Investor Certificates of such Series. The
Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's rights, duties
or immunities under this Agreement or otherwise.
(c) Promptly after the execution of any such
amendment or consent, the Trustee shall furnish
notification of the substance of such amendment to each
Certificateholder and the Servicer shall furnish
notification of the substance of such amendment to each
Rating Agency and each Enhancement Provider.
(d) It shall not be necessary for the consent of
Certificateholders under this Section 13.01 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
the Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this
Section 13.01 to the contrary, no amendment may be made to
this Agreement or any Supplement that would adversely
affect in any material respect the interests of any
Enhancement Provider without the consent of such
Enhancement Provider.
(f) Any Supplement executed in accordance with
the provisions of Section 6.03 hereof shall not be
considered an amendment to this Agreement for the purposes
of this Section 13.01.
SECTION 13.02. 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 Certificateholders and the
Trustee's right, title, and interest in and 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 and the Trustee hereunder to all
property comprising the Trust. The Servicer shall deliver
to the Trustee file-stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided
above, as soon as available following such recording,
registration or filing. The Depositor shall cooperate
fully with the Servicer in connection with the obligations
set forth above and will execute any and all documents
reasonably required to fulfill the intent of this
Section 13.02(a).
(b) Within thirty (30) days after the Depositor
or the Servicer makes any change in its name, identity or
corporate structure that would make any financial statement
or continuation statement filed in accordance with
subsection (a) of this Section 13.02 seriously misleading
within the meaning of Section 9-402(7) of the UCC as in
effect in California, the Depositor shall give the Trustee
notice of any such change and shall file such financing
statements or amendments as may be necessary to continue
the perfection of the Trust's security interest in the
Receivables and the proceeds thereof.
(c) The Depositor and the Servicer shall 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 perfect or to continue the perfection
of the Trust's ownership interest or security interest in
the Receivables and the proceeds thereof. The Depositor
and the Servicer shall 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 shall deliver to the Trustee
and any Enhancement Provider, upon the execution and
delivery of each amendment of this Agreement or any
Supplement, an Opinion of Counsel to the effect that such
amendment was duly authorized, executed and delivered in
compliance with Section 13.01.
SECTION 13.03. 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 Certificateholders' legal representatives or
heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or
winding-up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of
them.
(b) No Certificateholder shall have any right to
vote (except as expressly provided in this Agreement) 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 Holder of Investor Certificates 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 the Holders of Investor Certificates
evidencing more than 50% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to
any such action, suit or proceeding that does not relate to
all Series, 50% of the aggregate unpaid principal amount of
the Investor Certificates of all Series to which such
action, suit or proceeding relates) shall have made a
request to 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
the Trustee may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the
Trustee, for sixty (60) days after such request and offer
of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding.
No Holder of an Exchangeable Certificate 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 Holder may be adversely affected but
for the institution of any such suit, action or proceeding
and shall have made a request to 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 the Trustee may require against the
costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for sixty (60) days after such
request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding.
It is understood and intended, and expressly
covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more
Certificateholders shall have any 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 holders 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 except as
otherwise expressly provided in this Agreement. For the
protection and enforcement of the provisions of this
Section 13.03, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given
either at law or inequity.
SECTION 13.04. No Petition. The Servicer, the
Seller (if it is no longer the Servicer) and the Trustee,
by entering into this Agreement, each Holder of Investor
Certificates, by accepting an Investor Certificate, the
Holder of the Exchangeable Certificate, by accepting the
Exchangeable Certificate or the pledge of the Exchangeable
Certificate, as the case may be, and any Successor Servicer
and each other Beneficiary, by accepting the benefits of
this Agreement, hereby covenants and agrees that they will
not at any time institute against the Depositor any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law.
SECTION 13.05. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
SECTION 13.06. Notices. (a) All demands,
notices, instructions, directions and communications
(collectively, "Notices") under this Agreement shall be in
writing (including telegraphic, telecopy, telex or cable
communications) and shall be deemed to have been duly given
if personally delivered or mailed by registered mail,
return receipt requested, or telegraphed, telecopied,
telexed, cabled or delivered, to:
(i) in the case of Depositor,
7 River Park Place East, Fresno, California 93720,
Attention: Warren Williams, Esq., facsimile number
(209) 434-4804;
(ii) in the case of the Servicer,
7 River Park Place East, Fresno, California 93720,
Attention: Alan Weinstein, facsimile number (209)
434-4804; and
(iii) in the case of the Trustee, Bankers
Trust Company, Four Albany Street, New York, New York
10006, Attention: Corporate Trust & Agency Group,
Structured Finance Team, facsimile number (212) 250-
6439;
or as to each party, at such other address as shall be
designated by such party in a written notice to each other
party.
(b) Any Notice required or permitted to be given
to a Certificateholder shall be given by first-class mail,
postage prepaid, at the address of such Certificateholder
as shown in the Certificate Register. Any Notice so mailed
within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or
not the Certificateholder receives such Notice.
(c) The Trustee shall provide written notice to
the Rating Agencies of the events listed in Section
2.04(b), 2.05(m) and (n), 3.03(b), 9.01(e), 10.01(a) and
10.01(e) promptly upon receipt by a Responsible Officer of
the Trustee of written notice of the occurrence of such
events.
SECTION 13.07. Severability of Provisions. If
any one or more of the covenants, agreements, provisions or
terms of this Agreement shall for any reason whatsoever be
held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or
of the certificates or rights of the Certificateholders.
SECTION 13.08. Assignment. Notwithstanding
anything to the contrary contained herein, except as
provided in Section 8.04 hereof, this Agreement may not be
assigned by the Servicer.
SECTION 13.09. Certificates Nonassessable and
Fully Paid. It is the intention of the parties to this
Agreement that no Certificateholder shall be personally
liable for obligations of the Trust, that the interests in
the Trust represented by the Investor Certificates and the
Exchangeable Certificate shall be nonassessable for any
losses or expenses of the Trust or for any reason
whatsoever and that Investor Certificates and the
Exchangeable Certificate upon authentication thereof by the
Trustee are and shall be deemed fully paid.
SECTION 13.10. Further Assurances. Each of the
Depositor, the Servicer and the Trustee agrees 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 one or more of the other parties hereto more
fully to effect the purposes of this Agreement, including
the execution of any financing statements or continuation
statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
SECTION 13.11. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Trustee, the Certificateholders, the Depositor
or the Servicer, as the case may be, any right, remedy,
power or privilege under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement
preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges provided under
this Agreement are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
SECTION 13.12. 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 13.13. Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon
the parties hereto, the Certificateholders and the other
Beneficiaries and their respective successors and permitted
assigns. Except as otherwise expressly provided in this
Agreement, no other Person will have any right or
obligation hereunder.
SECTION 13.14. Actions by Certificateholders.
Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall
bind such Certificateholder and every subsequent Holder of
any Certificate issued upon the registration of transfer of
the Certificates of such Certificateholder 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 thereof, whether or not notation of such action is
made upon any such Certificate.
SECTION 13.15. Rule 144A Information. For so
long as any of the Investor Certificates of any Series or
Class are "restricted securities" within the meaning of
Rule 144(a)(3) under the 1933 Act, each of the Depositor,
the Trustee, the Servicer and any Enhancement Providers
agree to cooperate with each other to provide to any
Certificateholders of such Series or Class and to any
prospective purchaser of Investor Certificates designated
by such Certificateholder, upon the request of such
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 1933 Act.
SECTION 13.16. Merger and Integration. Except
as specifically stated otherwise herein, this Agreement,
the Supplements and the Receivables Purchase 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 13.17. Headings. The headings herein
are for purposes of reference only and shall not otherwise
affect the meaning or interpretation or any provision
hereof.
IN WITNESS WHEREOF, the Depositor, the Servicer
and the Trustee have caused this Pooling and Servicing
Agreement to be duly executed by their respective officers
as of the day and year first above written.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, Depositor
By: ______________________________
Name: ________________________
Title: _______________________
GOTTSCHALKS INC., Servicer
By: ______________________________
Name: ________________________
Title: _______________________
BANKERS TRUST COMPANY, Trustee
By: ______________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT A
FORM OF EXCHANGEABLE CERTIFICATE
THIS CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY
OR FOR THE ACCOUNT OF AN ERISA PLAN (AS DEFINED BELOW)
THE GOTTSCHALKS CREDIT CARD MASTER TRUST HAS NOT BEEN
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED. THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM. THE TRANSFER, ASSIGNMENT, EXCHANGE,
PLEDGE OR OTHER CONVEYANCE OF THIS CERTIFICATE IS NOT
PERMITTED EXCEPT IN COMPLIANCE WITH THE TERMS AND
CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT
UNDER WHICH THIS CERTIFICATE IS ISSUED (COPIES OF WHICH ARE
AVAILABLE FROM THE TRUSTEE UPON REQUEST). ANY TRANSFEREE
OF THIS CERTIFICATE IS DEEMED AS OF THE DATE OF SUCH
TRANSFER TO MAKE CERTAIN REPRESENTATIONS RELATING TO ERISA
AND OTHER MATTERS.
GOTTSCHALKS CREDIT CARD MASTER TRUST
EXCHANGEABLE CERTIFICATE
This certifies that GOTTSCHALKS CREDIT
RECEIVABLES CORPORATION (the "Exchangeable
Certificateholder") is the registered owner of a fractional
undivided interest not allocated to the Investors' Interest
or the interest of the Holders of the Subordinated
Certificates, if any, in certain assets of a trust (the
"Trust") created pursuant to the Pooling and Servicing
Agreement, dated as of March 30, 1994 (the "Pooling and
Servicing Agreement"), as amended, supplemented or
otherwise modified from time to time, among Gottschalks
Credit Receivables Corporation, as depositor (the
"Depositor"), Gottschalks Inc., as servicer (the
"Servicer"), and Bankers Trust Company, as trustee (the
"Trustee"). Capitalized terms used but not otherwise
defined herein shall have the respective meanings provided
for such terms in the Pooling and Servicing Agreement.
The corpus of the Trust includes (i) all
Receivables sold, transferred, assigned, set over and
otherwise conveyed to the Trust pursuant to Section 2.01 of
the Pooling and Servicing Agreement, (ii) all monies due or
to become due and all amount received with respect thereto
and all proceeds thereof (including "proceeds", as defined
in Section 9-306 of the UCC as in effect in the State of
California, and Recoveries), (iii) all monies on deposit
in, and Eligible Investments credited to, the Collection
Account or any Series Account and (iv) all monies as are
from time to time available under any Enhancements.
This Certificate is issued under and subject to
the terms, provisions and conditions of the Pooling and
Servicing Agreement. By acceptance hereof, the
Exchangeable Certificateholder assents to and is bound by
the terms, provisions and conditions of the Pooling and
Servicing Agreement, as such may be amended, supplemented
or otherwise modified from time to time. This Certificate
does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and
Servicing Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and
duties evidenced hereby and the rights, duties and
obligations of the Trustee. A copy of the Pooling and
Servicing Agreement (without schedules) may be requested
from the Trustee by writing to the Trustee at Bankers Trust
Company, Four Albany Street, New York, New York 10006,
Attention: Corporate Trust & Agency Group, Structured
Finance Team.
The transfer of this Certificate shall be
registered in the Certificate Register upon surrender of
this Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar
accompanied by a written instrument of transfer, in a form
satisfactory to the Trustee or the Transfer Agent and
Registrar, duly executed by the Exchangeable
Certificateholder or such Exchangeable Certificateholder's
attorney-in-fact, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new
Exchangeable Certificates in authorized denominations of
like aggregate amount will be issued to the designated
transferee or transferees.
The Pooling and Servicing Agreement and the
Series Supplement may be amended from time to time, in
certain circumstances, by the Servicer, the Depositor, the
Trustee and (if the Seller is not the Servicer) the Seller
without the consent of any of the Certificateholders. The
Pooling and Servicing Agreement and the Series Supplement
may also be amended from time to time by the Servicer, the
Depositor and the Trustee, with the consent of (i) the
Holder of the Exchangeable Certificate, if it would be
adversely affected by such amendment, and (ii) the Holders
of Investor Certificates evidencing more than 50% of the
aggregate unpaid principal amount of the Investor
Certificates of all adversely affected Series, for the
purpose of adding any provisions to or changing in any
manner or eliminating or waiving any of the provisions of
the Pooling and Servicing Agreement or any Supplement or of
modifying in any manner the rights of the
Certificateholders. Any such amendment and any such
consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued
in exchange hereof or in lieu hereof whether or not
notation thereof is made upon this Certificate.
This Certificate may not be acquired or held by
or for the account of any employee benefit plan or
individual retirement account subject to Title I of ERISA
or Section 4975 of the Internal Revenue Code, or any trust
established under any such employee benefit plan or
individual retirement account (or established to hold the
assets thereof), or any "governmental plan" (as defined in
section 3(32) of ERISA or Section 414(d) of the Internal
Revenue Code) organized in a jurisdiction having
prohibitions on transactions with such governmental plan
similar to those contained in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code (each such
employee benefit plan, individual retirement account and
trust, an "ERISA Plan"). No part of the funds used by any
Person to acquire or hold this Certificate may constitute
assets (within the meaning of ERISA and any applicable
rules and regulations) of an ERISA Plan. By accepting and
holding this Certificate, the Holder hereof shall be deemed
to have represented and warranted that it is not an ERISA
Plan and that this Certificate was not acquired with the
assets of an ERISA Plan.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, as Depositor
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Gottschalks Credit Card Master Trust
Exchangeable Certificate referred to in the Pooling and
Servicing Agreement.
BANKERS TRUST COMPANY, not in its
individual capacity, but solely in
its capacity as Trustee
Name:
Title:
Dated:
<PAGE>
EXHIBIT B
FORM OF DAILY SERVICER'S CERTIFICATE
For _____________, 199_
(To be delivered pursuant to Subsection 3.04(b)of the
Agreement on each Business Day)
____________________________________
GOTTSCHALKS CREDIT CARD MASTER TRUST
____________________________________
The undersigned, a duly authorized representative
of Gottschalks Inc., as servicer (the "Servicer") pursuant
to the Pooling and Servicing Agreement, dated as of
March 30, 1994 (the "Agreement"), by and among Gottschalks
Credit Receivables Corporation, as depositor (the
"Depositor"), the Servicer and Bankers Trust Company, as
trustee, does hereby certify as follows:
1. Capitalized terms used in this Certificate have their
respective meanings set forth in the Agreement. All
information contained in this Daily Report (and the
attached annexes) is for the period from the
commencement of business from the preceding Business
Day through the close of business on the day preceding
the date on which this report is dated.
2. Gottschalks Inc. is as of the date hereof the Servicer
under the Agreement.
3. The undersigned is a Servicing Officer.
4. The aggregate amount of Collections received since the
commencement of business on the preceding Business
Day: . . . . . . . . . . . . . . . . . . .$__________.
5. The aggregate amount of Collections processed since
the commencement of business on the preceding Business
Day: . . . . . . . . . . . . . . . . . . .$__________.
6. A. The aggregate amount of processed Collections
allocated to Finance Charge Receivables
(including the Discount Portion of Principal
Collections processed on such
date):. . . . . . . . . . . . . . . .$__________.
B. The aggregate amount of processed Collections
allocated to Principal Receivables (before
deducting the Discount Portion of Principal
Collections processed on such
date):. . . . . . . . . . . . . . . .$__________.
C. The aggregate Discount Portion of processed
Principal Collections:. . . . . . . .$___________
D. The aggregate amount of processed Collections
allocated to Principal Receivables (less the
Discount Portion of Principal Collections
processed on such date):. . . . . . .$__________.
E. The cumulative Discount Portion of processed
Principal Collections from
March 30, 1994: . . . . . . . . . . .$__________.
7. The aggregate amount of Collections currently in
process. . . . . . . . . . . . . . . . . .$__________.
8. The aggregate amount of Defaulted Receivables since
the commencement of business on the preceding Business
Day was equal to . . . . . . . . . . . . .$__________.
9. On the date hereof, ____ Series of Investor
Certificates have been issued and are outstanding.
10. On the date hereof, the Adjusted Invested Amount for
each outstanding Series is as follows:
Invested Retained Adjusted
Series Amount<F1> Cash<F2> Invested Amount<F3>
1994-1 $ $ $
$ $ $
etc. $ $ $
______________
[FN]
<F1> For Series 1994-1, "Invested Amount" is the sum
of the FBC Invested Amount, the VBC Invested
Amount and the Subordinated Invested Amount.
<F2> Cash on deposit in any Series Account that is
available to supplement Principal Collections
(e.g., Retained Amount Account and Prepayment
Account).
<F3> For each Series, the sum of the Invested Amount
and the Retained Cash for such Series.
11. On the date hereof, the Series Allocation Percentage
for each Series is as follows:
Series Series Allocation Percentage<F1>
1994-1 ____%
______ ____%
etc.
____________
[FN]
<F1> For each Series, the Adjusted Invested
Amount for such Series divided by the
sum of the Adjusted Invested Amounts
for all Series.
12. On the date hereof, the Finance Charge Collections
processed since the commencement of business on the
preceding Business Day (including the Discount Portion
of Principal Collections processed on such date) shall
be allocated among the Series as follows:
Series Finance Charge Collections<F1>
1994-1 $_________________
______ $_________________
etc.
____________
[FN]
<F1> For each Series, the product of the
Series Allocation Percentage for such
Series and the amount in item 6A for
such Series.
13. On the date hereof, the Principal Collections
processed since the commencement of business on the
preceding Business Day (less the Discount Portion of
Principal Collections processed on such date) shall be
allocated among the Series as follows:
Series Principal Collections<F1>
1994-1 $_________________
______ $_________________
etc.
____________
[FN]
<F1> For each Series, the product of the
Series Allocation Percentage for such
Series and the amount in item 6D for
such Series.
14. As of the close of Business on the last day of the
Preceding Collection Period, the Required Series Pool
Balance for each Series was:
Series Required Series Pool Balance
1994-1 $_________________
______ $_________________
etc.
15. As of the close of Business on the last day of the
Preceding Collection Period, the Series Pool Balance
for each Series was:
Series Series Pool Balance
1994-1 $_________________
______ $_________________
etc.
16. On the date hereof, the Floating Allocation Percentage
for each Series is as follows [item 14/item 15]:
Series Floating Allocation Percentage
1994-1 ____%
______ ____%
etc.
[17. The Required Series Pool Balance for each Series as of
the last day of its Revolving Period is as follows:
Series Required Series Pool Balance
1994-1 $__________________
______ $__________________
etc.]
[Applicable during Controlled Amortization Period and Early
Amortization Period only.]
[18. On the date hereof, the Fixed/Floating Allocation
Percentage for each Series is as follows [item 17/item
15]:
Fixed/Floating
Series Allocation Percentage
1994-1 ____%
______ ____%
etc.]
[Applicable during Controlled Amortization Period and Early
Amortization Period only.]
19. The Finance Charge Collections allocated in item 12
above to each Series shall be further allocated among
the Investor Certificates of that Series and the
Exchangeable Certificate as follows:
Finance Charge Investor Exchangeable
Series Collections Certificate<F1> Certificate<F2>
1994-1 $ $ $
______ $ $ $
etc. $ $ $
_________
[FN]
<F1> For each Series, the product of the amount in item 12
and the percentage in item 16 for such Series.
<F2> For each Series, the difference, if greater than zero,
between the amount in column 2 for such Series and the
amount in column 3 for such Series.
20. The Principal Collections allocated in item 13 above
to each Series shall be further allocated among the
Investor Certificates of that Series and the
Exchangeable Certificate as follows:
Principal Investor Exchangeable
Series Collections Certificate<F1> Certificate<F2>
1994-1 $ $ $
______ $ $ $
etc. $ $ $
____________
[FN]
<F1> For each Series, the product of the amount in item 13
and (x) during the Revolving Period, the percentage in
item 16 for such Series or (y) during the Controlled
Amortization Period and Early Amortization Period, the
percentage in item 18 for such Series.
<F2> For each Series, the difference, if greater than zero,
between the amount in column 2 for such Series and the
amount in column 3 for such Series.
21. As of the close of business on the second preceding
Business Day, the aggregate of the Principal
Receivables (less the aggregate Discount Portion of
such Principal Receivables) conveyed to the Trust that
are Eligible Receivables is: . . . . . . .$__________.
22. As of the close of business on the preceding Business
Day, the aggregate of the Principal Receivables
(before deducting the Discount Portion of new
Receivables conveyed to the Trust on such date)
conveyed to the Trust that are Eligible Receivables
is:. . . . . . . . . . . . . . . . . . . .$__________.
23. The aggregate amount of new Receivables that are
Eligible Receivables generated from the close of
business on the second preceding Business Day through
the close of business on the preceding Business Day is
[item 22 - item 21 + item 6B]: . . . . . .$__________.
24. As of the preceding Business Day, the Discount Rate
was. . . . . . . . . . . . . . . . . . . . . . .____%.
25. A. The Discount Portion of the new Receivables is
[item 23 x item 24]: . . . . . . . . . . .$__________.
B. The cumulative Discount Portion from March 30,
1994:. . . . . . . . . . . . . . . . . . .$__________.
26. As of the close of Business on the preceding Business
Day, the Pool Balance is [item 22 - item 25.A + item
6.C.]: . . . . . . . . . . . . . . . . . .$__________.
27. As of the close of Business on the preceding Business
Day, the Series Pool Balance for each Series is as
follows [item 26 x item 11]:
Series Series Pool Balance
1994-1 $_________________
______ $_________________
etc.
28. As of the close of business on the preceding Business
Day, the amount, if any, by which the sum of the
Series Pool Balance for a Series and the amount on
deposit in any Retained Amount Account (or similar
cash retention account) established for such Series
exceeds the Required Series Pool Balance for such
Series is as follows:
Series Excess, if any
1994-1 $__________________
______ $__________________
etc.
29. Finance Charge Collections and Principal Collections
allocated to each Series in accordance with items 12
and 13, respectively, shall be applied as set forth in
the respective annex(es) attached to this Certificate.
30. As of the date hereof, to the best knowledge of the
undersigned, no default in the performance of the
obligations of the Servicer under the Agreement has
occurred or is continuing except as follows: [set
forth in detail the (i) nature of such default, (ii)
the action taken by the Depositor and the Servicer, if
any, to remedy such default and (iii) the current
status of each such default; if applicable, insert
"None"].
31. As of the date hereof, to the best knowledge of the
undersigned, [no Early Amortization Event has occurred
and is continuing] [an Early Amortization Event has
occurred with respect to Series_____].
IN WITNESS WHEREOF, the undersigned has duly
executed and delivered this Certificate this ____ day of
______________, 199_.
GOTTSCHALKS INC.,
as Servicer
By:_______________________
Servicing Officer<PAGE>
Annex A to Exhibit B
Application of Investor Finance Charge
Collections and Investor Principal Collections
allocated to the Series 1994-1
Servicer's Daily Report as of _____________, 199_
1. Closing Balance of Collection Account as of preceding
Business Day: $____________
[To be supplied by Trustee (or electronically accessed
by Servicer)]
2. Closing Balance of Collection Account as of second
preceding Business Day: $____________
[To be supplied by Trustee (or electronically accessed
by Servicer)]
3. Cash to be applied [item 1 - item 2]: $____________
4. Such cash shall be applied among the Series by
multiplying the amount of such cash by the Series
Allocation Percentage for each Series:
Series Cash
1994-1 $_________________
______ $_________________
etc.
Application of Cash for Series 1994-1.
5. Cash to be applied [from item 4]: $____________
6. Distribution to Holder of the Exchangeable
Certificate: $____________
7. Balance of cash to be retained in the Collection
Account or applied as follows.
8. Amount to be deposited to Retained
Amount Account: $____________
9. Amount to be deposited to Prepayment
Account: $____________
10. Amount to be deposited to Spread
Account: $____________
11. Amount to be deposited to Successor
Servicer Account: $____________
12. Distribution to Depositor: $____________
[To be completed for future Series as and when such Series
are issued.]
Application of Cash for Series .
IN WITNESS WHEREOF, the undersigned has duly
executed and delivered this Certificate this ____ day of
______________, 199_.
GOTTSCHALKS INC.,
as Servicer
By:_______________________
Servicing Officer
<PAGE>
Annex B to Exhibit B
Daily allocation of Investor Finance Charge
Collections and Investor Principal Collections
allocated to the Series 1994-1
Data.
1. Date of Servicer's Daily Report: ________, 199_
2. Collection Period commencement date: ________, 199_
3. Collection Period termination date: ________, 199_
4. Assumed Period commencement date: ________, 199_
5. Assumed Period termination date: ________, 199_
6. Number of days in Assumed Period: _________
7. Interest Period commencement date: ________, 199_
8. Interest Period termination date: ________, 199_
9. Number of days in Interest Period: _________
10. FBC Invested Amount as of last day of Preceding
Collection Period: $__________
11. VBC Invested Amount as of last day of Preceding
Collection Period: $__________
12. Subordinated Invested Amount as of last day of
Preceding Collection Period: $__________
13. Required Series Pool Balance as of last day of
Preceding Collection Period: $__________
[item 10 + item 11 + item 12]
14. FBC Investor Percentage for the Related Collection
Period: ______%
[item 10/(item 10 + item 11)]
15. VBC Investor Percentage for the Related Collection
Period: ______%
[item 11/(item 10 + item 11)]
16. FBC Allocation Percentage for the Related Collection
Period: ______%
[item 10/item 13]
17. VBC Allocation Percentage for the Related Collection
Period: ______%
[item 11/item 13]
18. Subordinated Allocation Percentage for the Related
Collection Period: ______%
[item 12/item 13]
19. Assumed VBC Invested Amount:
A. Servicer [has] [has not] received notice from the
Depositor of its intent to (i) draw on the
variable base facility evidenced by the Variable
Base Certificate or (ii) prepay the VBC Invested
Amount.
B. If Servicer has not received such notice, Assumed
VBC Invested Amount will be the VBC Invested
Amount as of the preceding
Distribution Date: $__________
C. If Servicer has received such notice, the Assumed
VBC Invested Amount: $__________
20. Maximum Monthly Senior Servicing Fee: $__________
[1/12 x 2.5% x (item 10 + item 19 + item 12)]
21. Monthly Senior Servicing Fee: $__________
[1/12 x 2.5% x item 13; in the case of the initial
Collection Period only, 1/12 x 2.5% x item 13 x 1/30]
22. FBC Interest Rate: 7.35%
23. FBC Monthly Interest due on Related Distribution
Date: $__________
[1/12 x 7.35% x item 10; in the case of the initial
Collection Period only, 1/12 x 7.35% x item 10 x
15/30]
24. FBC Monthly Interest previously due but not
distributed on a prior Distribution Date: $__________
25. FBC Additional Interest due on Related Distribution
Date: $__________
26. FBC Additional Interest previously due but not
distributed on a prior Distribution Date: $__________
27. FBC Carryover Interest for the Related Collection
Period: $__________
[item 24 + item 25 + item 26]
28. Maximum VBC Interest Rate: 12%
29. Maximum VBC Monthly Interest for the current
Collection Period: $__________
[12% x item 19 x (item 9/360)]
30. Reset Date: __________, 199_
31. LIBOR on Reset Date: ______%
32. Spread over LIBOR for Variable Base
Certificate: ______%
33. VBC Interest Rate for the current
Collection Period: ______%
[lesser of (a) item 28 or (b) item 31 + item 32]
34. VBC Monthly Interest for the current Collection
Period: $__________
[item 33 x item 11 x (item 9/360)]
35. VBC Monthly Interest previously due but not
distributed on a prior Distribution Date: $__________
36. VBC Additional Interest due on Related Distribution
Date: $__________
37. VBC Additional Interest previously due but not
distributed
on a prior Distribution Date: $__________
38. VBC Carryover Interest for the Related Collection
Period: $__________
[item 35 + item 36 + item 37]
39. Maximum VBC Unutilized Commitment Fee: $__________
[($15,000,000 - item 19) x 0.375% x (item 9/365 or 366)]
40. VBC Unutilized Commitment Fee: ______%
[($15,000,000 - item 11) x Commitment Rate x (item
9/365 or 366)]
41. VBC Unutilized Commitment Fee Shortfall: $__________
42. Senior Investor Default Holdback Amount:
A. Collection Period with highest default rate
during the preceding twelve Collection Periods
("Highest Collection Period"): ___________, 199_
B. Default rate during the Highest Collection
Period: ____%
C. Aggregate amount of Receivables owned by the
Trust on the first day
of the current Collection Period: $__________
D. Series Allocation Percentage for the Series
1994-1 for the current
Collection Period: ____%
E. Floating Allocation Percentage for the current
Collection Period: ____%
F. Product of items 42.B. x 42.C. x
42.D. x 42.E. $__________
G. Projected Investor Default Amount for current
Collection Period: $__________
H. Invested Amount for current
Collection Period: $__________
I. Required Series Pool Balance for current
Collection Period: $__________
J. Senior Investor Default Holdback Amount [higher
of item 42.F. or item 42.G. (or, in the case of
the initial Collection Period, $12,180.24)
x item 42.H./item 42.I.]: $__________
43. Amount of unreimbursed FBC Investor Charge-Offs as of
the preceding Distribution Date: $__________
44. Amount of unreimbursed VBC Investor Charge-Offs as of
the preceding Distribution Date: $__________
45. Subordinated Investor Default Holdback Amount:
A. Default rate during the Highest Collection
Period: ____%
B. Aggregate amount of Principal Receivables owned
by the Trust on the first day of the current
Collection Period: $__________
C. Series Allocation Percentage for the Series
1994-1 for the current Collection Period: ____%
D. Floating Allocation Percentage for the current
Collection Period: ____%
E. Product of items 45.A. x 45.B. x
45.C. x 45.D. $__________
F. Projected Investor Default Amount for current
Collection Period: $__________
G. Subordinated Invested Amount for current
Collection Period: $__________
H. Required Series Pool Balance for current
Collection Period: $__________
I. Subordinated Investor Default Holdback Amount
[higher of item 45.E. or item 45.F. (or, in the
case of the initial Collection Period,
$12,180.24)
x item 45.G./item 45.H.]: $__________
46. Spread Requirement:
A. Portfolio Yield for immediately preceding
Collection Period:
I. Investor Finance Charge
Collections: $__________
II. Investor Default Amount: $__________
III. Required Series Pool Balance: $__________
IV. Portfolio Yield _____%
[(item 46.A.I. - item 46.A.II.)/item
46.A.III.]
B. Base Rate for immediately preceding Collection
Period: _____%
Was Portfolio Yield less than Base Rate plus
0.5%: [Yes][No]
C. Portfolio Yield for second preceding Collection
Period:
I. Investor Finance Charge
Collections: $__________
II. Investor Default Amount: $__________
III. Required Series Pool Balance: $__________
IV. Portfolio Yield _____%
[(item 46.C.I. - item 46.C.II.)/item
46.C.III.]
D. Base Rate for second preceding Collection
Period: _____%
Was Portfolio Yield less than Base Rate plus
0.5%: [Yes][No]
E. Sum of the amounts from items 21, 23, 27, 34, 38,
40 and 41 of Annex A of the Daily Reports for the
preceding Collection Period: $__________
F. Balance in Spread Account: $__________
Unless Portfolio Yield was less than Base Rate plus
0.5% for immediately preceding and second preceding
Collection Periods, the Spread Requirement shall be
zero.
If Portfolio Yield was less than Base Rate plus 0.5%
for immediately preceding and second preceding
Collection Periods, the Spread Requirement shall be
amount equal to item 46E minus item 46F:
G. Spread Requirement: $__________
47. Amount of unreimbursed Subordinated Investor Charge-
Offs As of the preceding Distribution
Date: $__________
48. Projected Make Whole Premium:
Projected Make Whole Premium shall be $0 unless the
Early Amortization Period commenced (1) on any date on
or after August 31, 1997 or (2) as a result of the
occurrence of an Early Amortization Event of the type
described in Sections 7.01(a), (c), (e), (f), (g) or
(j) of Series 1994-1 Supplement caused directly or
indirectly by (A) the imposition of a Block Period,
(B) the removal of Removed Accounts, (C) the issuance
of a new Series and/or the willful breach by the
Servicer (so long as the Servicer is Gottschalks) of
its obligations under the Agreement and Series 1994-1
Supplement
A. Remaining Scheduled Payments:
I. Number of remaining scheduled payments
(i.e., 12 minus number of payments made
since Early Amortization Period
commenced): ______
II. Sum of the interest that would be payable on
each remaining scheduled
payment date: $__________
III. Collection Period with highest FBC Principal
Collections during the past three Collection
Periods: _________, 199_
IV. Accelerated Payment (i.e., FBC Principal
Collections during that
Collection Period): $__________
V. Remaining Scheduled Payments: $__________
[item 48.A.II. + item 48.A.IV.]
B. Remaining Average Life:
I. Remaining Dollar-Years:
For each remaining scheduled payment
multiply the amount of such such payment by
the number of years (calculated to the
nearest one-twelfth) from the Distribution
Date on which the Make Whole Premium payment
that is being calculated is to be paid to
the Distribution Date on which such payment
would otherwise have been made had the Early
Amortization Period not commenced. Remaining
Dollar-Years (i.e., aggregate of the amounts
described in preceding paragraph:$__________
II. FBC Invested Amount at time of
calculation: $__________
III. Remaining Average Life: _________
[item 48.B.I./item 48.B.II.]
C. Reinvestment Yield:
I. Yield as shown on page 678 of the Telerate
Service at 10:00 a.m. New York City time on
the first day of the Collection Period (or
if such day is not a Business Day, the first
Business Day thereafter) for actively traded
U.S. Treasury securities which have a yield
to maturity closest to the Remaining Average
Life: _____%
II. Reinvestment Yield (i.e., yield as so
reported, plus 0.5%): _____%
D. Discounted Value (amount obtained by discounting
all Remaining Scheduled Payments at the
Reinvestment Yield and aggregating such
amounts): $__________
E. Projected Make Whole Premium: $__________
[item 48.D. - item 48.A.IV.]
49. Maximum Monthly Subordinated Servicing
Fee: $__________
50. Monthly Subordinated Servicing Fee: $__________
[1/12 x 0.5% x item 13; in the case of the initial
Collection Period only,
1/12 x 0.5% x item 13 x 1/30]
51. Current Discount Rate: ______%
52. Additional Discount Rate:
A. VBC Interest Rate: ______%
B. Initial VBC Interest Rate: ______%
C. Monthly Payment Rate for preceding Collection
Period:
I. Investor Principal Collections for preceding
Collection Period: $_________
II. Required Series Pool Balance for preceding
Collection Period: $_________
III. Monthly Payment Rate for preceding
Collection Period: ______%
[item 52.C.I./item 52.C.II]
D. Monthly Payment Rate for second preceding
Collection Period:
I. Investor Principal Collections for second
preceding Collection Period: $_________
II. Required Series Pool Balance for second
preceding Collection Period: $_________
III. Monthly Payment Rate for second preceding
Collection Period: ______%
[item 52.D.I./item 52.D.II]
E. Monthly Payment Rate for third preceding
Collection Period:
I. Investor Principal Collections for third
preceding Collection Period: $_________
II. Required Series Pool Balance for third
preceding Collection Period: $_________
III. Monthly Payment Rate for third preceding
Collection Period: ______%
[item 52.E.I./item 52.E.II]
F. Weighted average Monthly Payment Rate: _____%
[(item 52.C.III. + item 52.D.III. + item
52.E.III.)/3]
G. Additional Discount Rate: _____%
[((item 52.A. - item 52.B.) x 0.229091)/(item
52.F. x 12)]
<PAGE>
Allocation of Investor Finance Charge Collections.
If Allocation Day is in the Assumed Period complete the
following information:
Amount Opening Closing
Due Balance Balance
Maximum Monthly Senior Servicing Fee
FBC Monthly Interest
FBC Carryover Interest
Maximum VBC Monthly Interest
VBC Carryover Interest
Maximum VBC Unutilized Commitment Fee
VBC Carryover Unutilized Commitment
Fee
Senior Investor Default Holdback
Amount
Spread Requirement
Unreimbursed FBC Investor Charge-Offs
Unreimbursed VBC Investor Charge-Offs
Subordinated Investor Default Holdback
Amount
Unreimbursed Subordinated Investor
Charge-Offs
Projected Make Whole Premium
Unpaid Make Whole Premiums
Maximum Monthly Subordinated Servicing
Fee
Unpaid Monthly Subordinated Servicing
Fee
<PAGE>
If Allocation Day is not in the Assumed Period complete the
following information:
Amount Opening Closing
Due Balance Balance
Monthly Senior Servicing Fee
FBC Monthly Interest
FBC Carryover Interest
VBC Monthly Interest
VBC Carryover Interest
VBC Unutilized Commitment Fee
VBC Carryover Unutilized Commitment
Fee
Senior Investor Default Holdback
Amount
Spread Requirement
Unreimbursed FBC Investor Charge-Offs
Unreimbursed VBC Investor Charge-Offs
Subordinated Investor Default Holdback
Amount
Unreimbursed Subordinated Investor
Charge-Offs
Projected Make Whole Premium
Unpaid Make Whole Premiums
Monthly Subordinated Servicing Fee
Unpaid Monthly Subordinated Servicing
Fee
Add, as applicable, one of the following: (1) Allocation of
Investor Finance Charge Collections During Revolving
Period, (2) Allocation of Investor Finance Charge
Collections During Controlled Amortization Period or (3)
Allocation of Investor Finance Charge Collections During
Early Amortization Period.
<PAGE>
Allocation of Investor Principal Collections During
Revolving Period.
53. Investor Principal Collections (including, on last day
of each Collection Period, Finance Charge Collections
reallocated as Principal Collections
on such last day): $__________
54. FBC Principal Collections: $__________
[item 53 x item 16]
55. VBC Principal Collections: $__________
[item 53 x item 17]
56. Subordinated Principal Collections: $__________
[item 53 x item 18]
57. Required Series Pool Balance for
Collection Period: $__________
58. Series Pool Balance at close of business on the
previous Business Day: $__________
59. Balance of Retained Amount Account: $__________
60. Deposit, if any, to Retained Amount
Account: $__________
[Amount, if positive, after subtracting sum of items
58 and 59 from item 60]
Allocation of FBC Principal Collections.
61. Unreimbursed FBC Investor Charge-Offs as of the
preceding Distribution Date: $__________
62. Subordinated Principal Collections retained since
commencement of Collection Period to reimburse
unreimbursed FBC Investor Charge-Offs and unreimbursed
VBC Investor Charge-Offs: $__________
63. FBC portion of Collections described in
item 62: $__________
[item 14 x item 61]
64. FBC Principal Collections to be retained pursuant to
Section 4.01(d)(i)(A) of the Series 1994-1
Supplement: $__________
[item 61 - item 63]
65. Remaining FBC Principal Collections: $__________
[item 54 - item 64]
66. FBC portion of deposit required to be made to Retained
Amount Account: $__________
[item 16 x item 60]
67. Remaining FBC Principal Collections: $__________
[item 65 - item 66]
68. Deposit, if any, to Successor Servicer
Account: $__________
69. Remaining FBC Principal Collections to be distributed
to Depositor: $__________
[item 67 - item 68]
Allocation of VBC Principal Collections.
70. Unreimbursed VBC Investor Charge-Offs as of the
preceding Distribution Date: $__________
71. Subordinated Principal Collections retained since
commencement of Collection Period to reimburse
unreimbursed FBC Investor Charge-Offs and unreimbursed
VBC Investor Charge-Offs: $__________
72. VBC portion of Collections described in
item 71: $__________
[item 15 x item 71]
73. VBC Principal Collections to be retained pursuant to
Section 4.01(d)(ii)(A) of the Series 1994-1
Supplement: $__________
[item 70 - item 72]
74. Remaining VBC Principal Collections: $__________
[item 55 - item 73]
75. VBC portion of deposit required to be made to Retained
Amount Account: $__________
[item 17 x item 60]
76. Remaining VBC Principal Collections: $__________
[item 74 - item 75]
77. Deposit, if any, to Prepayment Account: $__________
78. Remaining VBC Principal Collections: $__________
[item 76 - item 77]
79. Deposit, if any, to Successor Servicer
Account: $__________
80. Remaining VBC Principal Collections to
be distributed to Depositor: $__________
[item 78 - item 79]
Allocation of Subordinated Principal Collections.
81. For the last day of the Collection Period only.
A. Amount of Investor Finance Charge Collections
allocated during the Collection Period on account
of the Senior Investor Default
Holdback Amount: $__________
B. Portion of Investor Default Amount for the
Collection Period attributable to the Fixed Base
Certificates and the Variable Base Certificate:
[Investor Default Amount x (item 11 + item
12)/item 13] $__________
C. Subordinated Principal Collections to be
reallocated on the last day of the Collection
Period: $__________
[item 81.A. - item 81.B.]
82. Remaining Subordinated Principal
Collections: $__________
[item 56 - item 81.C.]
83. Unreimbursed Investor Charge-Offs as of the preceding
Distribution Date: $__________
84. Investor Principal Collections retained since
commencement of Collection Period to reimburse
unreimbursed FBC Investor Charge-Offs, unreimbursed
VBC Investor Charge-Offs and unreimbursed Subordinated
Investor Charge-Offs: $__________
85. Subordinated Principal Collections to be retained
pursuant to Section 4.01(d)(iii)(B) of the Series
1994-1 Supplement: $__________
[item 83 - item 84]
86. Remaining Subordinated Principal
Collections: $__________
[item 82 - item 85]
87. Subordinated Certificate portion of deposit required
to be made to Retained Amount Account: $__________
[item 18 x item 60]
88. Remaining Subordinated Principal
Collections: $__________
[item 86 - item 87]
89. Deposit, if any, to Successor Servicer
Account: $__________
90. Remaining Subordinated Principal Collections to be
distributed to Depositor: $__________
[item 88 - item 89]
[End of Daily Report]<PAGE>
Allocation of Investor Principal Collections During
Controlled Amortization Period.
53. Investor Principal Collections (including, on last day
of each
Collection Period, reallocated Principal
Collections): $__________
54. FBC Principal Collections: $__________
[item 53 x item 16]
55. VBC Principal Collections: $__________
[item 53 x item 17]
56. Subordinated Principal Collections: $__________
[item 53 x item 18]
57. Required Series Pool Balance for
Collection Period: $__________
58. Series Pool Balance at close of business on the
previous Business Day: $__________
59. Balance of Retained Amount Account: $__________
60. Deposit, if any, to Retained Amount
Account: $__________
[Amount, if positive, after subtracting sum of items
58 and 59 from item 57]
Allocation of FBC Principal Collections.
61. FBC Controlled Distribution Amount: $__________
[FBC Invested Amount at end of Revolving Period/12]
62. FBC Principal Collections previously allocated to
pay the FBC Controlled Distribution
Amount: $__________
63. FBC Principal Collections allocated to
pay the FBC Controlled Distribution
Amount: $__________
[item 61 - item 62]
64. Remaining FBC Principal Collections: $__________
[item 54 - item 63]
65. Unreimbursed FBC Investor Charge-Offs as of the
preceding Distribution Date: $__________
66. Subordinated Principal Collections retained since
commencement of Collection Period to reimburse
unreimbursed FBC Investor Charge-Offs and unreimbursed
VBC Investor Charge-Offs: $__________
67. FBC portion of Collections described
in item 66: $__________
[item 14 x item 66]
68. FBC Principal Collections to be retained pursuant to
Section 4.01(e)(i)(B) of the Series 1994-1
Supplement: $__________
[item 64 - item 67]
69. Remaining FBC Principal Collections: $__________
[item 64 - item 68]
70. FBC portion of deposit required to be made to Retained
Amount Account: $__________
[item 16 x item 60]
71. Remaining FBC Principal Collections: $__________
[item 69 - item 70]
72. Deposit, if any, to Successor Servicer
Account: $__________
73. Remaining Subordinated Principal Collections to be
distributed to Depositor: $__________
[item 71 - item 72]
Allocation of VBC Principal Collections.
74. VBC Controlled Distribution Amount: $__________
75. VBC Principal Collections previously allocated to
pay the VBC Controlled Distribution
Amount: $__________
76. VBC Principal Collections allocated to
pay the VBC Controlled Distribution
Amount: $__________
[item 74 - item 75]
77. Remaining VBC Principal Collections: $__________
[item 55 - item 76]
78. Unreimbursed VBC Investor Charge-Offs as of the
preceding Distribution Date: $__________
79. Subordinated Principal Collections retained since
commencement of Collection Period to reimburse
unreimbursed FBC Investor Charge-Offs and unreimbursed
VBC Investor Charge-Offs: $__________
80. VBC portion of Collections described
in item 79: $__________
[item 15 x item 79]
81. VBC Principal Collections to be retained pursuant to
Section 4.01(d)(ii)(A) of the Series 1994-1
Supplement: $__________
[item 78 - item 80]
82. Remaining VBC Principal Collections: $__________
[item 77 - item 81]
83. VBC portion of deposit required to be made to Retained
Amount Account: $__________
[item 17 x item 60]
84. Remaining VBC Principal Collections: $__________
[item 82 - item 83]
85. Deposit, if any, to Successor Servicer
Account: $__________
86. Remaining Subordinated Principal Collections to be
distributed to Depositor: $__________
[item 84 - item 85]
Allocation of Subordinated Principal Collections.
87. For the last day of the Collection Period only.
A. Amount of Investor Finance Charge Collections
allocated during the Collection Period on account
of the Senior Investor Default
Holdback Amount: $__________
B. Portion of Investor Default Amount for the
Collection Period attributable to the Fixed Base
Certificates and the Variable Base Certificate:
[Investor Default Amount x (item 11 +
item 12)/item 13] $__________
C. Subordinated Principal Collections to be
reallocated on the last day of the Collection
Period: $__________
[item 87.A. - item 87.B.]
88. Remaining Subordinated Principal
Collections: $__________
[item 56 - item 87.C.]
89. Unreimbursed Investor Charge-Offs as of the preceding
Distribution Date: $__________
90. Investor Principal Collections retained since
commencement of Collection Period to reimburse
unreimbursed FBC Investor Charge-Offs, unreimbursed
VBC Investor Charge-Offs and unreimbursed Subordinated
Investor Charge-Offs: $__________
91. Subordinated Principal Collections to be retained
pursuant to Section 4.01(d)(iii)(B) of the Series
1994-1 Supplement: $__________
[item 89 - item 90]
92. Remaining Subordinated Principal
Collections: $__________
[item 88 - item 91]
93. Subordinated Certificate portion of deposit required
to be made to Retained Amount Account: $__________
[item 18 x item 60]
94. Remaining Subordinated Principal
Collections: $__________
[item 92 - item 93]
95. Deposit, if any, to Successor Servicer
Account: $__________
96. Remaining Subordinated Principal Collections to be
distributed to Depositor: $__________
[item 94 - item 95]
[End of Daily Report]<PAGE>
Allocation of Investor Principal Collections During Early
Amortization Period.
53. Investor Principal Collections (including, on last day
of each Collection Period, reallocated Principal
Collections): $__________
54. FBC Principal Collections: $__________
[item 53 x item 16]
55. VBC Principal Collections: $__________
[item 53 x item 17]
56. Subordinated Principal Collections: $__________
[item 53 x item 18]
57. Required Series Pool Balance for
Collection Period: $__________
58. Series Pool Balance at close of business on the
previous Business Day: $__________
59. Balance of Retained Amount Account: $__________
60. Deposit, if any, to Retained Amount
Account: $__________
[Amount, if positive, after subtracting sum of items
58 and 59 from item 60]
Allocation of FBC Principal Collections.
61. FBC Invested Amount at beginning of preceding
Distribution Date: $__________
62. FBC Principal Collections previously allocated to
pay the FBC Invested Amount: $__________
63. FBC Principal Collections allocated to pay the FBC
Controlled Distribution Amount: $__________
[item 61 - item 62]
64. Remaining FBC Principal Collections: $__________
[item 54 - item 63]
65. Deposit, if any, to Successor Servicer
Account: $__________
66. Remaining Subordinated Principal Collections to be
distributed to Depositor: $__________
[item 64 - item 65]
Allocation of VBC Principal Collections.
67. VBC Invested Amount at beginning of preceding
Distribution Date: $__________
68. VBC Principal Collections previously allocated to
pay the VBC Invested Amount: $__________
69. VBC Principal Collections allocated to pay the VBC
Controlled Distribution Amount: $__________
[item 67 - item 68]
70. Remaining VBC Principal Collections: $__________
[item 54 - item 69]
71. Deposit, if any, to Successor Servicer
Account: $__________
72. Remaining Subordinated Principal Collections to be
distributed to Depositor: $__________
[item 70 - item 72]
Allocation of Subordinated Principal Collections.
73. For the last day of the Collection Period only.
A. Amount of Investor Finance Charge Collections
allocated during the Collection Period on account
of the Senior Investor Default
Holdback Amount: $__________
B. Portion of Investor Default Amount for the
Collection Period attributable to the Fixed Base
Certificates and the Variable Base Certificate:
[Investor Default Amount x (item 11 +
item 12)/item 13] $__________
C. Subordinated Principal Collections to be
reallocated on the last day of the Collection
Period: $__________
[item 73.A. - item 73.B.]
74. Remaining Subordinated Principal
Collections: $__________
[item 56 - item 73.C.]
75. Deposit, if any, to Successor Servicer
Account: $__________
76. Remaining Subordinated Principal Collections to be
distributed to Depositor or to Holder of the
Subordinated Certificate: $__________
[item 74 - item 75]
[End of Daily Report]
<PAGE>
EXHIBIT C
GOTTSCHALKS INC.
Officer's Certificate
We, the undersigned, each duly authorized
officers of Gottschalks Inc., a Delaware corporation (the
"Servicer"), DO HEREBY CERTIFY that:
1. This certificate is furnished pursuant to
Section 3.05 of the Pooling and Servicing Agreement, dated
as of even date herewith (the "Pooling and Servicing
Agreement"), among Gottschalks Credit Receivables
Corporation, a Delaware corporation, as depositor, the
Servicer, and Bankers Trust Company, a New York banking
corporation, as trustee. Capitalized terms used but not
otherwise defined herein shall have the respective meanings
assigned to such terms in the Pooling and Servicing
Agreement.
2. The Servicer is, as of the date hereof, the
servicer under the Pooling and Servicing Agreement.
3. The undersigned are duly authorized by the
Servicer to execute and deliver this Certificate to the
Trustee.
4. A review of the activities of the Servicer
during the calendar year ended December __, 199_ and of its
performance under the Pooling and Servicing Agreement was
conducted under our supervision.
5. Based on such review, the Servicer has, to
the best of our knowledge, performed in all material
respects its obligations under the Pooling and Servicing
Agreement and there has been no default in the performance
of any such obligations [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
known to us to have been made by the Servicer during the
calendar year ended December __, 199_, which sets forth in
detail the (i) 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 default.]
IN WITNESS WHEREOF, the undersigned have hereunto
set their hands this ____ day of ______________, ____.
Name:
Title:
Name:
Title:
<PAGE>
EXHIBIT D
FORM OF MONTHLY SERVICER'S CERTIFICATE
(To be delivered pursuant to Subsection 3.04(c)
of the Agreement on each Determination Date)
GOTTSCHALKS CREDIT CARD MASTER TRUST
The undersigned, a duly authorized representative
of Gottschalks Inc., as servicer (the "Servicer") pursuant
to the Pooling and Servicing Agreement, dated as of
March 30, 1994 (the "Agreement"), by and among Gottschalks
Credit Receivables Corporation, as depositor (the
"Depositor"), the Servicer and Bankers Trust Company, as
trustee, does hereby certify as follows:
1. Capitalized terms used in this Certificate have their
respective meanings set forth in the Agreement.
2. Gottschalks Inc. is as of the date hereof the Servicer
under the Agreement.
3. The undersigned is a Servicing Officer.
4. The aggregate amount of Collections processed for the
Collection Period for this Distribution Date was equal
to . . . . . . . . . . . . . . . . . . $______________
5. The aggregate amount of such Collections allocated to
Principal Receivables for the Collection Period for
this Distribution Date was equal to. . $______________
6. The aggregate amount of such Collections allocated to
Finance Charge Receivables for the Collection Period
for this Distribution Date was equal
to . . . . . . . . . . . . . . . . . . $______________
7. The aggregate amount of Collections allocated to
Principal Receivables for the Collection Period for
this Distribution Date was allocated among the Holder
of the Exchangeable Certificate and the Series as
follows:
Exchangeable Certificate . . . . . . . . . . . . ____%
Series 1994-1. . . . . . . . . . . . . . . . . . ____%
Series ______. . . . . . . . . . . . . . . . . . ____%
etc.
8. The aggregate amount of Collections allocated to
Finance Charge Receivables for the Collection Period
for this Distribution Date was allocated among the
Holder of the Exchangeable Certificate and the Series
as follows:
Exchangeable Certificate . . . . . . . . . . . . ____%
Series 1994-1. . . . . . . . . . . . . . . . . . ____%
Series ______. . . . . . . . . . . . . . . . . . ____%
etc.
9. The aggregate amount of Defaulted Receivables for the
Collection Period for this Distribution Date was
allocated among the Holder of the Exchangeable
Certificate and the Series as follows:
Exchangeable Certificate . . . . . . . . . . . . ____%
Series 1994-1. . . . . . . . . . . . . . . . . . ____%
Series ______. . . . . . . . . . . . . . . . . . ____%
etc.
10. The Required Series Pool Balance for each Series and
the Invested Amounts for each Class within each
Series, after giving effect to all payments to be made
on this Distribution Date, are as follows:
Series 1994-1
Fixed Base Certificates $______________
Variable Base Certificate $______________
Subordinated Certificate $______________
Required Series Pool Balance $______________
Series
_______________________ $______________
_______________________ $______________
Required Series Pool Balance $______________
etc.
11. Attached hereto is a true and correct copy of the
statement required to be delivered by the Servicer on
the date of this Certificate to the Trustee in respect
of each Series outstanding pursuant to Section 5.01 of
the Agreement.
12. As of the date hereof, to the best knowledge of the
undersigned, no default in the performance of the
obligations of the Servicer under the Agreement has
occurred or is continuing except as follows: [set
forth in detail the (i) nature of such default, (ii)
the action taken by the Depositor and the Servicer, if
any, to remedy such default and (iii) the current
status of each such default; if applicable, insert
"None"].
13. As of the date hereof, to the best knowledge of the
undersigned, [no Early Amortization Event has occurred
and is continuing] [an Early Amortization Event has
occurred with respect to Series_____].
IN WITNESS WHEREOF, the undersigned has duly
executed and delivered this Certificate this ____ day of
______________, 199_.
GOTTSCHALKS INC.,
as Servicer
By:_______________________
Servicing Officer<PAGE>
EXHIBIT E
FORM OF REASSIGNMENT
REASSIGNMENT No. ____ OF RECEIVABLES, dated as of
____________, ___ (this "Reassignment"), among GOTTSCHALKS
CREDIT RECEIVABLES CORPORATION, a Delaware corporation (the
"Depositor"), GOTTSCHALKS INC., a Delaware corporation (the
"Servicer"), and BANKERS TRUST COMPANY, a New York banking
corporation, not in its individual capacity, but solely in
its capacity as trustee (the "Trustee"). Capitalized terms
used but not otherwise defined herein shall have the
respective meanings provided for such terms in the Pooling
and Servicing Agreement.
W I T N E S S E T H:
WHEREAS, the Depositor, the Servicer and the
Trustee are parties to the Pooling and Servicing Agreement,
dated as of March 30, 1994 (the "Pooling and Servicing
Agreement");
WHEREAS, pursuant to the Pooling and Servicing
Agreement, the Depositor desires to remove all Receivables
arising in certain designated Accounts (the "Removed
Accounts") from the Trust and to cause the Trustee to
reconvey the Receivables arising in such Removed Accounts,
whether now existing or hereafter created, from the Trust
to the Depositor; and
WHEREAS, the Trustee is willing to accept such
designation and to reconvey the Receivables arising in the
Removed Accounts subject to the terms and conditions
hereof;
NOW, THEREFORE, the Depositor, the Servicer and
the Trustee hereby agree as follows:
1. Designation of Removed Accounts. Attached
hereto as Exhibit 1 is a true and complete list of all
Removed Accounts specifying for each such Removed Account,
as of the Removal Notice Date, its account number, the
aggregate amount of Receivables outstanding in such Removed
Account and the aggregate amount of Principal Receivables
in such Removed Account.
2. Conveyance of Receivables. The Trustee does
hereby sell, transfer, assign, set over and otherwise
convey, without recourse or warranty of any kind
whatsoever, to the Depositor, all of the Trust's right,
title and interest in, to and under the Receivables owned
by the Trust at the close of business on the Removal Date
now existing and hereafter created in the Removed Accounts,
all monies due or to become due and all amounts received
with respect thereto and all proceeds thereof (including
"proceeds", as defined in Section 9306 of the UCC as in
effect in the State of California, and Recoveries).
3. Representations and Warranties of the
Depositor. The Depositor hereby represents and warrants to
the Trustee, on behalf of the Trust, as of the date of this
Reassignment and as of the Removal Date, that:
(a) the Depositor believes that the process used
to select the Removed Accounts listed on Schedule 1 hereto
(x) is not materially adverse to the interests of the
Certificateholders, and (y) was conducted on a random
basis;
(b) the Depositor reasonably believes that the
removal of the Removed Account from the Trust will not
result in the occurrence of an Early Amortization Event;
(c) after giving effect to the removal of
Removed Accounts, the Pool Balance shall not be less than
15% in excess of the Required Pool Balance; and
(d) after giving effect to the proposed action,
there will be no material adverse change in the average
yield on the Pool Balance, average age of Accounts
remaining within the Pool or the rate of delinquencies
experienced by the Pool, in each case as a result of the
proposed action.
4. Governing Law. THIS REASSIGNMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused
this Reassignment to be duly executed and delivered by
their respective duly authorized officers on the day and
year first above written.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, as Depositor
Name:
Title:
GOTTSCHALKS INC., as Servicer
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity, but solely in its
capacity as Trustee
Name:
Title:
<PAGE>
EXHIBIT F
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION
Officer's Certificate
I, the undersigned, _______________ of
Gottschalks Credit Receivables Corporation, a Delaware
corporation (the "Company"), DO HEREBY CERTIFY that:
1. This certificate is furnished pursuant to
Section 2.08(d)(ii) of the Pooling and Servicing Agreement,
dated as of March 30, 1994 (the "Pooling and Servicing
Agreement"), among the Company, as depositor, Gottschalks
Inc., a Delaware corporation, as servicer and Bankers Trust
Company, a New York banking corporation, as trustee.
Capitalized terms used but not otherwise defined herein
shall have the respective meanings assigned to such terms
in the Pooling and Servicing Agreement.
2. The process used to select the Supplemental
Accounts listed in the notice, dated ________ __, ____,
delivered pursuant to Section 2.08(d) of the Pooling and
Servicing Agreement, (x) is not materially adverse to the
interests of the Certificateholders, and (y) was conducted
on a random basis.
IN WITNESS WHEREOF, I have hereunto set my hand
this __ day of ____________, ____.
Name:
Title:
<PAGE>
EXHIBIT G
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION
Officer's Certificate
I, the undersigned, _______________ of
Gottschalks Credit Receivables Corporation, a Delaware
corporation (the "Company"), DO HEREBY CERTIFY that:
1. This certificate is furnished pursuant to
Section 2.06(b)((ii) of the Pooling and Servicing
Agreement, dated as of March 30, 1994 (the "Pooling and
Servicing Agreement"), among the Company, as depositor,
Gottschalks Inc., a Delaware corporation, as servicer and
Bankers Trust Company, a New York banking corporation, as
trustee. Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such
terms in the Pooling and Servicing Agreement.
2. After giving effect to the removal of
Removed Accounts, the Pool Balance shall not be less than
15% in excess of the Required Pool Balance.
3. The process used to select the Removed
Accounts listed in the notice, dated ________ __, ____,
delivered pursuant to Section 2.06(b)(iii) of the Pooling
and Servicing Agreement (x) is not materially adverse to
the interests of the Certificateholders, and (y) was
conducted on a random basis.
4. The Company reasonably believes that the
removal of the Removed Account from the Trust will not
result in the occurrence of an Early Amortization Event.
5. After giving effect to the proposed action,
there will be no material adverse change in the average
yield on the Pool Balance, average age of Accounts
remaining within the Pool or the rate of delinquencies
experienced by the Pool, in each case as a result of the
proposed action.
IN WITNESS WHEREOF, I have hereunto set my hand
this __ day of ____________, ____.
Name:
Title:
<PAGE>
EXHIBIT H-1
FORM OF SECURITIES ACT LEGEND
THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. THE
TRANSFER OF THIS CERTIFICATE IS SUBJECT TO
CERTAIN RESTRICTIONS AND CONDITIONS SET FORTH IN
THE POOLING AND SERVICING AGREEMENT AND THE
SERIES 1994-1 SUPPLEMENT TO THE POOLING AND
SERVICING AGREEMENT UNDER WHICH THIS CERTIFICATE
IS ISSUED (COPIES OF WHICH ARE AVAILABLE FROM THE
TRUSTEE UPON REQUEST).<PAGE>
EXHIBIT H-2
FORM OF ERISA LEGEND
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE
ACCOUNT OF AN ERISA PLAN (AS DEFINED BELOW)<PAGE>
EXHIBIT I
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION
Purchaser
and
GOTTSCHALKS INC.
Seller
RECEIVABLES PURCHASE AGREEMENT
Dated as of March 30, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . 1
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions. . . . . . . 1
ARTICLE II
Conveyance of Receivables . . . . . . 2
SECTION 2.01. Conveyance of Receivables. . . . . . . . . 2
SECTION 2.02. Representations and Warranties of the
Seller Relating to the Seller and the
Agreement. . . . . . . . . . . . . . . . . 5
SECTION 2.03. Representations and Warranties of the
Seller Relating to the Receivables . . . . 9
SECTION 2.04. Repurchase of Receivables. . . . . . . . .10
SECTION 2.06. Customer Service Adjustments . . . . . . .16
ARTICLE III
Administration and Servicing of Receivables . .16
SECTION 3.01. Acceptance of Appointment and Other
Matters Relating to the Servicer . . . . .16
SECTION 3.02. Servicing Compensation . . . . . . . . . .17
SECTION 3.03. Allocations and Applications of
Collections and Other Funds. . . . . . . .17
ARTICLE IV
Other Matters Relating to the Seller. . . . . .17
SECTION 4.01. Merger or Consolidation of, or
Assumption, of the Obligations of
the Seller . . . . . . . . . . . . . . . .17
SECTION 4.02. Seller Indemnification of the Purchaser. .18
ARTICLE V
Termination . . . . . . . .19
SECTION 5.01. Termination. . . . . . . . . . . . . . . .19
<PAGE>
ARTICLE VI
Miscellaneous Provisions. . . . . . .19
SECTION 6.01. Amendment. . . . . . . . . . . . . . . . .19
SECTION 6.02. Limited Recourse . . . . . . . . . . . . .21
SECTION 6.03. No Petition. . . . . . . . . . . . . . . .21
SECTION 6.04. GOVERNING LAW. . . . . . . . . . . . . . .21
SECTION 6.05. Notices. . . . . . . . . . . . . . . . . .22
SECTION 6.06. Severability of Provisions . . . . . . . .22
SECTION 6.07. Assignment . . . . . . . . . . . . . . . .22
SECTION 6.08. No Waiver; Cumulative Remedies . . . . . .22
SECTION 6.09. Counterparts . . . . . . . . . . . . . . .22
SECTION 6.10. Third-Party Beneficiaries. . . . . . . . .22
SECTION 6.11. Merger and Integration . . . . . . . . . .23
SECTION 6.12. Headings . . . . . . . . . . . . . . . . .23
SECTION 6.13. Rule 144A Information. . . . . . . . . . .23
Schedule I List of Accounts<PAGE>
RECEIVABLES PURCHASE AGREEMENT, dated as of
March 30, 1994, between GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, a Delaware corporation, (the "Purchaser"), and
GOTTSCHALKS INC., a Delaware corporation, (the "Seller").
W I T N E S E T H:
WHEREAS, the Seller in the ordinary course of its
business finances the purchase of merchandise by consumers
pursuant to consumer revolving credit card accounts thereby
generating certain payment obligations;
WHEREAS, the Seller wishes to sell certain of
such existing and future payment obligations from time to
time to the Purchaser; and
WHEREAS, the Purchaser desires initially to sell
such payment obligations to the Gottschalks Credit Card
Master Trust, pursuant to a Pooling and Servicing Agreement
dated as of March 30, 1994 (as the same may from time to
time be amended, supplemented or otherwise modified, the
"Pooling and Servicing Agreement"), among the Purchaser, as
depositor, the Seller, as servicer, and Bankers Trust
Company, as Trustee .
NOW, THEREFORE, the parties hereto agree as
follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms
used herein but not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement.
In addition, the term "Agreement" means this Receivables
Purchase Agreement, as the same may from time to time be
amended, supplemented or otherwise modified.
SECTION 1.02. Other Definitional Provisions.
(a) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular
provision of this Agreement; Article, Section, Schedule,
and Exhibit references are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement
unless otherwise specified; and the term "including" shall
mean "including without limitation".
(b) The definitions contained in this Agreement
are applicable to the singular as well as the plural forms
of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables.
(a) By execution of this Agreement, the Seller does hereby
sell, transfer, assign, set over and otherwise convey,
without recourse (except as expressly provided herein), to
the Purchaser on the initial Closing Date, (a) all of the
Seller's right, title and interest in, to and under the
Receivables existing at the close of business on the Cut-
Off Date and all monies due or to become due and all
amounts received with respect thereto and all proceeds
thereof (including "proceeds", as defined in Section 9306
of the UCC as in effect in the State of California, and
Recoveries) and (b) all of the Seller's rights, remedies,
powers and privileges with respect to such Receivables.
Subject to Article V hereof, as of each Business Day prior
to the earlier of (x) the occurrence of a Liquidation Event
specified in Section 9.02(b) of the Pooling and Servicing
Agreement and (y) the Trust Termination Date (each, a
"Purchase Date"), the Seller does hereby sell, transfer,
assign, set over and otherwise convey, without recourse
(except as expressly provided herein), to the Purchaser,
all of the Seller's right, title and interest in, to and
under the Receivables (other than any Receivables created
in a Removed Account from and after the applicable Removal
Date, as provided in Section 2.06(c) of the Pooling and
Servicing Agreement) owned by the Seller at the close of
business on such Purchase Date and not theretofore conveyed
to the Purchaser, all monies due or to become due and all
amounts received with respect thereto and all proceeds
thereof (including "proceeds", as defined in Section 9306
of the UCC as in effect in the State of California, and
Recoveries). The foregoing sale, transfer, assignment,
set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do not
constitute, and are not intended to result in, the creation
or an assumption by the Purchaser of any obligation of the
Servicer, the Seller or any other Person in connection with
the Accounts, the Receivables or under any agreement or
instrument relating thereto, including any obligation to
any Obligors.
(b) In connection with such sale, transfer,
assignment, set-over and conveyance the Seller agrees to
record and file, at its own expense, a financing statement
on form UCC-1 (and continuation statements when applicable)
naming the Seller as "seller" and the Purchaser as "buyer"
thereon with respect to the Receivables now existing and
hereafter created for the sale of "accounts" (as defined in
Section 9106 of the UCC as in effect in any state where the
Seller's or the Servicer's chief executive offices or books
and records relating to the Receivables are located)
meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to
perfect, and maintain the perfection of, the sale and
assignment of the Receivables to the Purchaser, and to
deliver a file-stamped copy of such financing statements or
other evidence of such filing to the Purchaser on or prior
to the initial Closing Date, and in the case of any
continuation statements filed pursuant to this Section
2.01, as soon as practicable after receipt thereof by the
Seller. The Purchaser shall be under no obligation
whatsoever to file such financing statement, or a
continuation statement to such financing statement, or to
make any other filing under the UCC in connection with such
sales to the Purchaser.
(c) The Seller further agrees, at its own
expense, on or prior to the date on which each Charge
Account becomes an Account, to indicate in its computer
files that the Receivables created in connection with such
Account have been sold to the Purchaser pursuant to this
Agreement and sold to the Trust pursuant to the Pooling and
Servicing Agreement for the benefit of the Certificate-
holders and the other Beneficiaries and (b) not less than
weekly, to deliver to the Purchaser a computer file or
microfiche or written list containing a true and complete
list of all Accounts specifying for each Account (i) its
account number, (ii) the aggregate amount of Receivables
outstanding in such Account and (iii) the aggregate amount
of Principal Receivables in such Account. Such file,
microfiche or list, as supplemented from time to time,
shall be marked as Schedule I to this Agreement and is
hereby incorporated into and made a part of this Agreement.
(d) The purchase price (the "Purchase
Consideration") with respect to Receivables sold hereunder
shall be as follows: (i) on the initial Closing Date, an
amount equal to $40,000,000 less certain gross costs and
expenses related to such purchase and sale of Receivables
and the establishment of the securitization program with
respect thereto, plus capital contribution in the amount of
the balance of the Receivables transferred on such date and
(ii) on each Purchase Date thereafter, a price agreed to by
the Purchaser and the Seller at the time of such purchase
by the Purchaser; provided, however, that such price shall
not, in the opinion of the Purchaser, be materially less
favorable to the Purchaser than prices for transactions of
a generally similar character at the time of the purchase
taking into account the quality of such Receivables and
other pertinent factors; and provided, further, that such
consideration shall in any event not be less than
reasonably equivalent value therefor.
(e) The Purchase Consideration for Receivables
sold on the initial Closing Date and on each subsequent
Purchase Date shall be paid or provided for on the initial
Closing Date or each such Purchase Date, as the case may
be, in either of the following ways, or any combination
thereof: (i) by payment in cash in immediately available
funds; or (ii) in the event that the total Purchase
Consideration due on the initial Closing Date or each
subsequent Purchase Date is not paid in full in cash by the
Purchaser, the Seller shall be deemed to have made a
capital contribution to the Purchaser in an amount equal to
such cash shortfall.
(f) The Purchaser shall pay all amounts to be
paid in cash with respect to the purchases of Receivables
from the Seller on the date of each such purchase thereof.
All payments hereunder shall be made not later than the
close of business (New York City time) on the date
specified therefor in lawful money of the United States of
America in same day funds to the bank account designated in
writing by the Seller to the Purchaser from time to time.
Whenever any payment to be made hereunder shall be stated
to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
(g) Subject to Article V hereof, on each
Business Day, the Seller shall evidence the sale, transfer,
assignment, set over and conveyance of all its Receivables
not theretofore conveyed to the Purchaser by delivering to
the Purchaser a receivables transmittal (a "Receivables
Transmittal") specifying to the Purchaser the aggregate
outstanding balance of such Receivables.
Upon the receipt by the Seller on any Purchase
Date of the Purchase Consideration for the Receivables to
be sold by the Seller on such date, all the Seller's right,
title and interest in and to such Receivables shall have
been sold, assigned, transferred, conveyed and set over to
the Purchaser.
(h) The parties hereto intend that the transfers
of Receivables effected by this Agreement shall be and
shall be treated as a purchase by the Purchaser and a sale
by the Seller of the Receivables and not as a lending
transaction. In the event that, notwithstanding such
express intent of the parties, a court of competent
jurisdiction were to hold that this Agreement evidences a
loan rather than a sale, then the Seller shall be deemed to
have granted to the Purchaser as of the date hereof a
security interest (as defined in the UCC as in effect in
California) in, to and under the Receivables now existing
and hereafter created and arising in connection with the
Accounts, all monies due or to become due with respect
thereto (including all Finance Charge Receivables), all
proceeds of such Receivables and Recoveries, which grant is
enforceable with respect to Receivables and the proceeds
thereof upon execution and delivery of this Agreement, and
which will be enforceable with respect to such Receivables
hereafter created and the proceeds thereof, upon such
creation. If this Agreement constitutes the grant of a
security interest to the Purchaser in such property, upon
the filing of the financing statement described in this
Section 2.01 and in the case of the Receivables hereafter
created and proceeds thereof, upon such creation, the
Purchaser shall have a first priority security interest in
such property (subject to Section 9306 of the UCC as in
effect in California), except for Permitted Liens.
SECTION 2.02. Representations and Warranties of
the Seller Relating to the Seller and the Agreement. The
Seller hereby represents and warrants to the Purchaser
that, as of each Closing Date:
(a) Organization and Good Standing. The Seller
is a corporation duly organized and validly existing and in
good standing under the law of the State of Delaware and
has full corporate power, authority and legal right to own
its properties and conduct its business as such properties
are presently owned and such business is presently
conducted, and to execute, deliver and perform its
obligations under this Agreement.
(b) Due Qualification. The Seller is duly
qualified to do business and, where necessary, is in good
standing as a foreign corporation (or is exempt from such
requirement) and has obtained all necessary licenses and
approvals in each jurisdiction in which the conduct of its
business requires such qualification except where the
failure to so qualify or be in good standing or obtain
licenses or approvals would not have a material adverse
effect on its ability to perform its obligations hereunder.
(c) Due Authorization. The execution and
delivery of this Agreement and the consummation of the
transactions provided for or contemplated by this Agreement
have been duly authorized by the Seller by all necessary
corporate action on the part of the Seller.
(d) No Conflict. The execution and delivery by
the Seller of this Agreement, the performance by the Seller
of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof and thereof applicable to
the Seller, will not conflict with, result in any breach of
any of the 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 Seller is a
party or by which it or its properties are bound.
(e) No Violation. The execution and delivery of
this Agreement by the Seller, the performance by the Seller
of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof and thereof applicable to
the Seller, will not conflict with or violate any
Requirements of Law applicable to the Seller or give rise
to an adverse claim upon the Seller or the Receivables.
(f) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of the
Seller, threatened against the Seller, before any
Governmental Authority (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement,
(iii) seeking any determination or ruling that, in the
reasonable judgment of the Seller, would affect the
performance by the Seller of its obligations under this
Agreement, (iv) seeking any determination or ruling that
would materially and adversely affect the validity or
enforceability of this Agreement or (v) seeking to affect
adversely the income or franchise tax attributes of the
Trust and of the Investor Certificates under the United
States Federal or any State income or franchise tax
systems. There are no injunctions, writs, restraining
orders or other orders of any nature that would adversely
affect the performance by the Seller of its obligations
under this Agreement or the transactions contemplated
hereby.
(g) All Consents Required. All authorizations,
consents, orders, approvals or other actions of any Person
or of any governmental body or official required in
connection with the execution and delivery by the Seller of
this Agreement, the performance by the Seller of the
transactions contemplated by this Agreement, and the
fulfillment by the Seller of the terms hereof or thereof,
have been obtained.
(h) Enforceability. This Agreement has been
duly executed and delivered by the Seller and constitutes a
legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law
or in equity) and the availability of equitable remedies.
(i) Place of Business; Legal Name. (i) The
principal place of business of the Seller is located in
Fresno, California and the offices where the Seller keeps
its records concerning the Receivables and related
contracts are located in Fresno, California and there have
been no other such locations during the prior four month
period.
(ii) The legal name of the Seller is as set
forth in this Agreement, and the Seller has no tradenames,
fictitious names, assumed names or "doing business as"
names, except for "Village East".
(j) Use of Proceeds. No proceeds of the sale of
any Receivables will be used by the Seller to purchase or
carry any margin security.
(k) Record of Accounts. Schedule I to this
Agreement (as in effect on the date in question) is an
accurate and complete listing in all material respects of
all of the Accounts, 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.
(l) Tax Returns. The Seller has filed all
required tax returns on a timely basis.
(m) Compliance with Laws. The Seller has
complied with all applicable laws, rules, regulations and
orders in respect of the conduct of its business and the
ownership of its properties and purchased assets, and has
maintained all applicable permits, certifications, licenses
and other rights of whatever nature necessary for the
conduct of its business.
(n) Pension Plans. All pension or profit
sharing plans of the Seller and its consolidated
subsidiaries have been fully funded in accordance with the
Seller's applicable pension or profit sharing plan
agreements.
(o) Solvency. The Seller (i) is not insolvent
and will not become insolvent after giving effect to the
transactions contemplated hereby, (ii) is paying its debts
as such debts become due and (iii) after giving effect to
the transactions contemplated hereby, will have adequate
capital to conduct its business.
(p) Business Reasons for Sale. The Seller has
valid business reasons for selling the Receivables to the
Purchaser under this Agreement and is not obtaining a loan
secured by the Receivables as collateral. The Seller will
to the fullest extent permitted by generally accepted
accounting principles and by applicable law, record each
purchase hereunder as a sale on its books and records,
reflect each purchase in its financial statements and tax
returns as a sale and recognize gain or loss, as the case
may be, on each purchase hereunder.
(q) No Material Adverse Effect. There has been
no material adverse change with respect to the Seller's
operations, including its ability to perform its
obligations under this Agreement.
The representations and warranties set forth in
this Section 2.02 shall survive the transfer and assignment
of the Receivables to the Purchaser. Upon discovery by the
Seller or the Purchaser of a breach of any of the foregoing
representations and warranties, the party discovering such
breach shall give prompt written notice to the other party.
In the event of any breach of any of the
representations and warranties set forth in this Section
2.02 and if, as a result of any such breach, the Purchaser
shall be obligated to purchase the Investors' Interest
and/or the Depositor Interest pursuant to Section 2.03 of
the Pooling and Servicing Agreement, the Seller shall
repurchase such Investors' Interest and/or Depositor
Interest, as the case may be, and shall pay to the
Purchaser on the Business Day preceding the Distribution
Date on which such purchase of the Investors' Interest
and/or the Depositor Interest, as applicable, is to be made
by the Purchaser an amount equal to the purchase price
therefor as specified in Section 2.03 of the Pooling and
Servicing Agreement. The obligation of the Seller to
purchase such Investors' Interest and/or Depositor
Interest, as the case may be, pursuant to this Section 2.02
shall constitute the sole remedy against the Seller
respecting an event of the type specified in the first
sentence of this Section 2.02 available to the Purchaser
and to the Holders of the Investor Certificates and/or the
Holder of the Exchangeable Certificate (or the Trustee on
behalf of such Certificateholders).
SECTION 2.03. Representations and Warranties of
the Seller Relating to the Receivables. The Seller hereby
represents and warrants to the Purchaser as of the initial
Closing Date and each Purchase Date that:
(a) No Liens. Each Receivable sold hereunder
has been conveyed to the Purchaser free and clear of any
Lien (except for Permitted Liens) and the Purchaser has
received good title to each such Receivable.
(b) All Consents Required. All appraisals,
consents, orders, approvals, authorizations or other
actions of any Person or any governmental body or official
required in connection with the conveyance of each
Receivable hereunder to the Purchaser have been duly
obtained and are in full force and effect.
(c) Valid Sale. This Agreement constitutes a
valid sale, transfer, assignment, set-over and conveyance
to the Purchaser of all right, title and interest of the
Seller in and to the Receivables now existing and hereafter
created and arising in connection with the Accounts, all
proceeds of such Receivables and Recoveries and such
Receivables and all proceeds thereof will be held by the
Purchaser free and clear of any Lien of any Person claiming
through or under the Seller or any of its Affiliates except
for Permitted Liens.
(d) Account or General Intangible. The Seller
has taken no action to cause any Receivable sold hereunder
to be anything other than an "account" or "general
intangible" (each as defined in Section 9106 of the UCC).
The Seller has taken no action to evidence any Receivable
sold hereunder by any "instrument" or "chattel paper" (as
defined in Section 9105 of the UCC).
The representations and warranties set forth in
this Section 2.03 shall survive the transfer and assignment
of the Receivables to the Purchaser. Upon discovery by the
Seller or the Purchaser of a breach of any of the
representations and warranties set forth in this Section
2.03, the party discovering such breach shall give prompt
written notice to the other party.
SECTION 2.04. Repurchase of Receivables. In the
event any representation or warranty under Section 2.03 is
not true and correct as of the date specified therein with
respect to any Receivable or Account and the Purchaser is,
as the result of any such breach, required to accept a
reassignment of such Receivable or all Receivables in such
Account pursuant to Section 2.04(c) of the Pooling and
Servicing Agreement, then, within thirty (30) days (or such
longer period as may be agreed to by the Purchaser) of the
earlier to occur of the discovery of any such event by the
Seller or the Purchaser, or receipt by the Seller or the
Purchaser of written notice of any such event given by the
Trustee or any Enhancement Provider, the Seller shall,
unless a Liquidation Event has occurred, repurchase the
Receivable or Receivables of which the Purchaser is
required to accept reassignment pursuant to the Pooling and
Servicing Agreement on the Business Day preceding the
Determination Date on which such reassignment is to occur.
The Seller shall purchase each such Receivable
pursuant to this Section 2.04 by making a payment to the
Purchaser in immediately available funds on the Business
Day preceding the Distribution Date on which such
reassignment is to occur in an amount equal to the Purchase
Consideration for such Receivable. Upon payment of the
Purchase Consideration, the Purchaser shall automatically
and without further action be deemed to sell, transfer,
assign, set over and otherwise convey to the Seller,
without recourse, representation or warranty, all the
right, title and interest of the Purchaser in and to such
Receivable and all monies due or to become due with respect
thereto and all proceeds thereof. The Purchaser shall
execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably
be requested by the Seller to effect the conveyance of such
Receivables pursuant to this Section. The obligation of
the Seller to repurchase any such Receivable shall
constitute the sole remedy respecting the event giving rise
to such obligation available to the Purchaser and to the
Certificateholders (or the Trustee on behalf of
Certificateholders).
SECTION 2.05. Covenants of the Seller. So long
as the Purchaser shall have any ownership interest in any
Receivables sold by the Seller or until a termination date
pursuant to Section 5.01 shall have occurred, whichever is
later, the Seller covenants that:
(a) Receivables to be Accounts or General
Intangibles. The Seller shall take no action to cause any
Receivable sold hereunder to be evidenced by any
"instrument" or "chattel paper" (as defined in Section 9105
of the UCC). The Seller shall take no action to cause any
Receivable sold hereunder to be anything other than an
"account" or "general intangible" (each as defined in
Section 9106 of the UCC). In the event that any Receivable
sold hereunder shall, at any time, be evidenced by any
"instrument" or "chattel paper", the Seller shall indicate
or cause to be indicated on such "instrument" or "chattel
paper" a legend stating that such Receivable has been
conveyed to the Purchaser pursuant to this Agreement and
conveyed to the Trust pursuant to the Pooling and Servicing
Agreement for the benefit of the Certificateholders and
other Beneficiaries.
(b) Negative Pledge. Except for the conveyances
hereunder, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur,
assume or suffer to exist any Lien (other than Permitted
Liens) on any Receivable sold hereunder, whether now
existing or hereafter created, or any interest therein; the
Seller will immediately notify the Purchaser of the
existence of any Lien on any Receivable sold hereunder; and
the Seller shall defend the right, title and interest of
the Purchaser in, to and under the Receivables sold
hereunder, whether now existing or hereafter created,
against all claims of third parties claiming through or
under the Seller.
(c) Charge Account Agreements and Financial
Guidelines. The Seller shall comply with and perform its
obligations under any Charge Account Agreement to which the
Seller is a party that relates to the Accounts and the
Financial Guidelines except insofar as any failure to
comply or perform would not materially and adversely affect
the rights of the Trust or any of the Beneficiaries.
Subject to compliance with all Requirements of Law, the
Seller may change the terms and provisions of such Charge
Account Agreements or the Financial Guidelines in any
respect (including the calculation of the amount or the
timing of charge-offs and the rate of the finance charges,
if any, assessed thereon) only if such change (i) would
not, in the reasonable judgment of the Seller, cause a
Early Amortization Event to occur and if the Seller owns a
comparable segment of revolving credit card accounts which
have characteristics the same as, or substantially similar
to, the Accounts that are the subject of such change, such
change is made applicable to such comparable segments of
accounts or (ii) the Seller shall reasonably determine that
such change is necessary in order to satisfy any
Requirement of Law.
(d) Conveyance of Accounts. The Seller
covenants and agrees that it will not convey, assign,
exchange or otherwise transfer any Account to any Person
prior to the termination of this Agreement.
(e) Compliance with Laws, Etc. The Seller shall
comply in all material respects with all applicable laws,
rules, regulations and orders applicable to the Receivables
sold hereunder, including, without limitation, rules and
regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy, where failure
to so comply could reasonably be expected to have a
material adverse effect on the amount of Collections
thereunder.
(f) Preservation of Corporate Existence. Except
as provided in Section 4.01, the Seller shall preserve and
maintain in all material respects its corporate existence,
corporate rights (charter and statutory) and corporate
franchises.
(g) Access to Certain Information Regarding the
Receivables. The Seller shall provide to the Purchaser and
its agents access to the documentation regarding the
Accounts and the Receivables, such access being afforded
without charge but only (i) upon reasonable request,
(ii) during normal business hours, (iii) subject to the
Seller's normal security and confidentiality procedures,
and (iv) at offices designated by the Seller. Nothing in
this Section 2.05(g) shall derogate from the obligation of
the Purchaser to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the
failure of the Seller to provide access as provided in this
Section 2.05(g) as a result of such obligation shall not
constitute a breach of this Section 2.05(g).
(h) Keeping of Records and Books of Account.
The Seller shall maintain and implement, or cause to be
maintained or implemented, administrative and operating
procedures reasonably necessary or advisable for the
collection of all such Receivables, and, until the delivery
to any Successor Servicer appointed pursuant to the Pooling
and Servicing Agreement, keep and maintain, or cause to be
kept and maintained, all documents, books, records and
other information reasonably necessary or advisable for the
collection of all such Receivables.
(i) Performance and Compliance with Receivables
and Charge Account Agreements. The Seller shall at its
expense take all actions on its part reasonably necessary
to maintain in full force and effect its rights under all
Charge Account Agreements to which the Seller is a party.
(j) Location of Records. The Seller shall keep
its chief place of business and chief executive office, and
the offices where it keeps the records concerning the
Receivables and all underlying Charge Account Agreements
(and all original documents relating thereto), at 7 River
Park Place East, Fresno, California 93720 or upon prior
written notice to the Purchaser, at such other locations in
a jurisdiction where all action required by Section 2.05(m)
shall have been taken and completed and be in full force
and effect. The Seller shall at all times maintain its
principal executive office within the United States of
America.
(k) Furnishing Copies, Etc. The Seller shall
furnish to the Purchaser (i) upon the Purchaser's request,
a certificate of the chief financial officer of the Seller
certifying, as of the date thereof, that no termination
event described in Section 5.01 has occurred and is
continuing and setting forth the computations used by the
chief financial officer of the Seller in making such
determination; (ii) as soon as possible and in any event
within five days after the occurrence of any such
termination event or incipient termination event, a
statement of the chief financial officer of the Seller
setting forth details of such termination event or
incipient termination event and the action that the Seller
proposes to take or has taken with respect thereto; and
(iii) promptly following the Purchaser's request thereof,
such other information, documents, records or reports with
respect to the Receivables sold hereunder or the underlying
Charge Account Agreements or the conditions or operations,
financial or otherwise, of the Seller, as the Purchaser may
from time to time reasonably request.
(l) Obligation to Record and Report. The Seller
shall to the fullest extent permitted by generally accepted
accounting principles and by applicable law, record each
purchase hereunder as a sale on its books and records,
reflect each purchase in its financial statements and tax
returns as a sale and recognize gain or loss, as the case
may be, on each purchase hereunder.
(m) Continuing Compliance with the Uniform
Commercial Code. The Seller shall, without limiting the
requirements of Section 2.05(o), at its expense, preserve,
continue, and maintain or cause to be preserved, continued,
and maintained the Purchaser's valid and properly protected
title to each Receivable sold hereunder, including, without
limitation, filing or recording UCC financing statements in
each relevant jurisdiction.
(n) Collections of Receivables. The Seller
shall cause all Collections in respect of Receivables sold
hereunder to be processed in accordance with the collection
arrangements set forth in Section 4.03 of the Pooling and
Servicing Agreement.
(o) Further Action Evidencing Purchases.
(i) The Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further
instruments and documents, and take all further action,
that may be necessary or desirable or that the Purchaser
may reasonably request, to protect or more fully evidence
the Purchaser's ownership, right, title and interest in the
Receivables sold by the Seller and its rights under the
Charge Account Agreements with respect thereto, or to
enable the Purchaser to exercise or enforce any such
rights. Without limiting the generality of the foregoing,
the Seller will upon the request of the Purchaser (A)
execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or
notices, as may be necessary or, in the opinion of the
Purchaser, desirable, (B) indicate on its books and records
(including, without limitation, originals and copies of
sale slips and billing statements, to the extent
practicable) that Receivables have been sold and assigned
to the Purchaser, and provide to the Purchaser, upon
request, copies of any such records and (C) contact
customers to confirm and verify Receivables.
(ii) The Seller hereby irrevocably
authorizes the Purchaser to file one or more financing or
continuation statements, and amendments thereto, relative
to all or any part of the Receivables sold by the Seller,
or the underlying Charge Account Agreements with respect
thereto, without the signature of the Seller where
permitted by law.
(iii) If the Seller fails to perform any of
its agreements or obligations under this Agreement, the
Purchaser may (but shall not be required to) perform, or
cause performance of, such agreements or obligations, and
the expenses of the Purchaser incurred in connection
therewith shall be payable by the Seller.
(p) Change in Business. The Seller shall not
make any change in the nature of its business as conducted
on the date hereof that could reasonably be expected to
have a material adverse effect on the value or
collectibility of the Receivables.
(q) Account Allocations. In the event that the
Seller is unable for any reason to transfer Receivables to
the Purchaser, then the Seller agrees that it shall
allocate, after the occurrence of such event, payments on
each affected 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 the terms of the Pooling and
Servicing Agreement. The parties hereto agree that Finance
Charge Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the
Purchaser and by the Purchaser to the Trust shall continue
to be a part of the Trust notwithstanding any cessation of
the transfer of additional Principal Receivables to the
Purchaser and Collections with respect thereto shall
continue to be allocated and paid in accordance with
Article IV of the Pooling and Servicing Agreement.
(r) Operations of Seller. The Seller agrees
that it shall conduct its operations in such a manner that
the Purchaser would not be substantively consolidated into
the bankruptcy estate of the Seller or have its separate
corporate existence disregarded in the event of a
bankruptcy of the Seller.
(s) Compliance with Certain Provisions of the
Pooling and Servicing Agreement. The Seller agrees that it
shall comply with and observe the provisions of Section
2.07 of the Pooling and Servicing Agreement. The Seller
further agrees that it shall comply, as Seller, with the
meet and confer requirements set forth in Section 8.06(b)
of the Pooling and Servicing Agreement.
SECTION 2.06. Customer Service Adjustments. The
Seller may accept a return of goods for full or partial
credit or make a daily adjustment in the principal amount
or finance or other charges accrued or payable with respect
to the account of a customer who has purchased merchandise
or services on credit under a Charge Account Agreement,
provided that such adjustment is permitted under the
Seller's applicable Financial Guidelines. The aggregate
amount of all such adjustments made by the Seller during
any Collection Period shall be payable to the Purchaser by
the Seller and shall be due no later than the Determination
Date that occurs during such Collection Period.
ARTICLE III
Administration and Servicing
of Receivables
SECTION 3.01. Acceptance of Appointment and
Other Matters Relating to the Servicer. (a) The Seller
agrees to act as the Servicer under this Agreement and the
Pooling and Servicing Agreement, and the Purchaser consents
to the Seller acting as Servicer. The Seller, as Servicer,
will have ultimate responsibility for servicing, managing
and making collections on the Receivables and for holding
such Receivables in trust for the benefit of the Purchaser
and the Trust. The Seller, as Servicer, will have the
authority to make any management decisions relating to such
Receivables, to the extent such authority is granted to the
Servicer under this Agreement and the Pooling and Servicing
Agreement.
(b) The Seller, as Servicer shall service and
administer the Receivables sold hereunder in accordance
with the provisions of the Pooling and Servicing Agreement.
(c) In the event that a Successor Servicer is
appointed pursuant to the Pooling and Servicing Agreement,
such Successor Servicer shall act as Successor Servicer
under this Agreement and the Purchaser consents to the
appointment of such Successor Servicer hereunder.
SECTION 3.02. Servicing Compensation. As full
compensation for its servicing activities hereunder and
under the Pooling and Servicing Agreement, the Seller, as
Servicer, shall be entitled to receive the Servicing Fee on
each Distribution Date. The Servicing Fee shall be paid in
accordance with the terms of the Pooling and Servicing
Agreement.
SECTION 3.03. Allocations and Applications of
Collections and Other Funds. The Seller, as Servicer, will
apply all Collections with respect to the Receivables sold
hereunder and all funds on deposit in the Collection
Account as described in Article IV of the Pooling and
Servicing Agreement.
SECTION 3.04. Other Actions Taken by the Seller.
The Seller hereby agrees that upon the occurrence of an
event described in Section 10.01(e) of the Pooling and
Servicing Agreement with respect to the Seller, the Seller
hereby agrees to cause its customer service employees to
distribute envelopes to Obligors for mail-in payments
rather than accepting In-Store Payments at the customer
service window.
ARTICLE IV
Other Matters Relating
to the Seller
SECTION 4.01. Merger or Consolidation of, or
Assumption, of the Obligations of the Seller. The Seller
shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) immediately after giving effect to any such
transaction, the consolidated tangible net worth of the
surviving person shall not have materially decreased,
determination to be made on a pro forma basis after giving
effect to the proposed transaction; and
(b) the corporation formed by such consolidation
or into which the Seller is merged or the Person which
acquires by conveyance or transfer the properties and
assets of the Seller substantially as an entirety shall be
a corporation organized and existing under the laws of the
United States of America or any State thereof or the
District of Columbia and, if the Seller is not the
surviving entity, such corporation shall expressly assume,
by written agreement supplemental hereto, executed and
delivered to the Purchaser, in form satisfactory to the
Purchaser, the performance of every covenant and obligation
of the Seller hereunder and shall benefit from all the
rights granted to the Seller; and
(c) the Seller shall have delivered to the
Purchaser and the Trustee (i) an Officers' Certificate
signed by a Vice President (or any more senior officer)
stating that such consolidation, merger, conveyance or
transfer complies with this Section 4.01 and that all
conditions precedent herein provided for relating to such
transaction have been complied with and (ii) an Opinion of
Counsel that such supplemental agreement is legal, valid
and binding and that the entity surviving such
consolidation, conveyance or transfer is organized and
existing under the laws of the United States of America or
any State thereof or the District of Columbia;
(c) the Seller shall have delivered notice to the
Rating Agencies of such consolidation, merger, conveyance
or transfer and the Rating Agency Condition shall have been
satisfied; and
(d) Consent of Certificateholders shall have been
obtained, which consent shall not be unreasonably withheld
in the event that the Rating Agency Condition shall have
been satisfied.
provided, however, that notwithstanding the provisions at
this Section 4.01, the Seller shall not merge into or
convey or transfer its properties and assets substantially
as an entirety to the Purchaser.
SECTION 4.02. Seller Indemnification of the
Purchaser. The Seller shall indemnify and hold harmless
the Purchaser, from and against any loss, liability,
expense, claim, damage or injury suffered or sustained by
reason of any acts, omissions or alleged acts or omissions
arising out of activities of the Seller pursuant to this
Agreement (including, without limitation, as Servicer
hereunder) or arising out of or based on the arrangement
created by this Agreement and the activities of the Seller
taken pursuant thereto (other than collection losses on the
Receivables or amounts due with respect thereto, unless
such collection losses arise from a breach of a
representation or warranty by the Seller), including 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 Seller shall not
indemnify the Purchaser if such acts, omissions or alleged
acts or omissions constitute fraud, gross negligence or
willful misconduct by the Purchaser; and provided, further,
that the Seller shall not indemnify the Purchaser for any
liabilities, cost or expense of the Purchaser with respect
to any Federal, state or local income or franchise taxes
(or any interest or penalties with respect thereto)
required to be paid by the Purchaser in connection herewith
to any taxing authority. Any indemnification under this
Article IV shall survive the termination of this Agreement.
ARTICLE V
Termination
SECTION 5.01. Termination. This Agreement will
terminate immediately after the Trust terminates pursuant
to the Pooling and Servicing Agreement. In addition, the
Purchaser shall not purchase Receivables if (i) a
Liquidation Event occurs or (ii) the Seller shall become an
involuntary party to (or be made the subject of) any
proceeding provided for by any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or relating to all
or substantially all of its property (an "Involuntary
Case").
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Amendment. (a) This Agreement
may be amended from time to time by the Seller and the
Purchaser without the consent of any of the Certificate-
holders to:
(i) add to the covenants of the Seller for
the benefit of the Certificateholders, or to surrender any
right or power conferred upon the Seller herein; or
(ii) cure any ambiguity, to correct or
supplement any provision herein which may be defective or
inconsistent with any other provision herein or in any
Certificate;
provided, that such action shall not adversely affect in
any material respect the interests of any Certificateholder
or the Holder of the Exchangeable Certificate.
(b) This Agreement may also be amended from time
to time by the Purchaser and Seller with the consent of the
Holders of Investor Certificates evidencing more than 50%
of the aggregate unpaid principal amount of the Investor
Certificates of each materially adversely affected Series
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 or waiving any of the provisions
of this Agreement or of modifying in any manner the rights
of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of or
delay the timing of any distributions to be made to
Certificateholders or deposits of amounts to be so
distributed with the amount available under any Enhancement
without the consent of each affected Certificateholder,
(ii) change the definition of or the manner of calculating
the interest of any Certificateholders without the consent
of each affected Certificateholder, (iii) reduce the
aforesaid percentage required to consent to any such
amendment without the consent of each Certificateholder or
(iv) adversely affect the rating of any Series or Class by
any Rating Agency without the consent of the Holders of
Investor Certificates of such Series or Class evidencing
more than 50% of the aggregate unpaid principal amount of
the Investor Certificates of such Series or Class. Any
amendment to be effected pursuant to this subsection (b)
shall be deemed to materially adversely affect all
outstanding Series, other than any Series with respect to
which such action shall not adversely affect in any
material respect the interests of any Holder of Investor
Certificates of such Series. The Trustee may, but shall
not be obligated to, enter into any such amendment which
affects the Trustee's rights, duties or immunities under
this Agreement or otherwise.
(c) Promptly after the execution of any such
amendment or consent (other than an amendment pursuant to
subsection (a) above), the Seller shall furnish
notification of the substance of such amendment to the
Trustee, each Certificateholder, each Enhancement Provider
and each Rating Agency.
(d) It shall not be necessary for the consent of
Certificateholders under this Section 6.01 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) Notwithstanding anything in this Section
6.01 to the contrary, no amendment may be made to this
Agreement which would adversely affect in any material
respect the interests of any Enhancement Provider without
the consent of such Enhancement Provider.
SECTION 6.02. Limited Recourse. Notwithstanding
anything to the contrary contained herein, the obligations
of the Purchaser hereunder shall not be recourse to the
Purchaser (or any person or organization acting on behalf
of the Purchaser or any affiliate, officer or director of
the Purchaser), other than to any assets of the Purchaser
not pledged to third parties or otherwise encumbered in a
manner permitted by the Purchaser's Certificate of
Incorporation; provided, however, that any payment by the
Purchaser made in accordance with this Section 6.02 shall
be made only after payment in full of any amounts that the
Purchaser is obligated to deposit in the Collection Account
pursuant to the Pooling and Servicing Agreement.
SECTION 6.03. No Petition. The Seller hereby
covenants and agrees that it will not at any time
institute, or join in instituting, against the Purchaser
any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law.
SECTION 6.04. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
SECTION 6.05. Notices. All demands, notices and
communications hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at
or mailed by registered mail, return receipt requested, to
the parties at such addresses specified in the Pooling and
Servicing Agreement.
SECTION 6.06. Severability of Provisions. If
any one or more of the covenants, agreements, provisions or
terms of this Agreement shall for any reason whatsoever be
held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or
of the Certificates or rights of the Certificateholders.
SECTION 6.07. Assignment. Notwithstanding
anything to the contrary contained herein, this Agreement
may not be assigned by the Seller without the prior consent
of the Purchaser and the Trustee. The Purchaser may assign
its rights, remedies, powers and privileges under this
Agreement to the Trust pursuant to the Pooling and
Servicing Agreement.
SECTION 6.08. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Purchaser or the Seller, as the case may be,
any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege
under this Agreement 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 6.09. 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 6.10. Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon
the parties hereto, the Certificateholders and the other
Beneficiaries and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement,
no other Person will have any right or obligation
hereunder.
SECTION 6.11. 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 6.12. Headings. The headings herein are
for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision
hereof.
SECTION 6.13. Rule 144A Information. For so
long as any of the Investor Certificates of any Series or
Class are "restricted securities" within the meaning of
Rule 144(a)(3) under the 1933 Act, the Seller agrees to
cooperate with the Purchaser to provide to any
Certificateholders of such Series or Class and to any
prospective purchaser of Investor Certificates designated
by such Certificateholder, upon the request of such
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 1933 Act.
IN WITNESS WHEREOF, the Seller and the Purchaser
have caused this Receivables Purchase Agreement to be duly
executed by their respective officers as of the day and
year first above written.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION,
as Purchaser
By:__________________________
Name:
Title:
GOTTSCHALKS INC.,
as Seller
By:__________________________
Name:
Title:
<PAGE>
SCHEDULE I
List of Accounts
The list of all Accounts specifying for each
Account, (i) its account number (ii) the aggregate amount
of Receivables outstanding in such Account, and (iii) the
aggregate amount of Principal Receivables in such Account
has been delivered in the form of computer tape. Such tape
is incorporated herein by this reference.<PAGE>
EXHIBIT J
[FORM OF DEPOSIT ACCOUNT AGREEMENT]
March 30, 1994
[Name of Local Bank]
Re: Acct. No.: (the "Local Deposit Account")
Dear :
Reference is hereby made to (a) that certain
Receivables Purchase Agreement, dated as of March 30, 1994
(the "Receivables Purchase Agreement"), between Gottschalks
Inc., a Delaware corporation ("Gottschalks"), and
Gottschalks Credit Receivables Corporation, a Delaware
corporation ("GCRC"); (b) that certain Pooling and
Servicing Agreement, dated as of March 30, 1994 (the
"Pooling and Servicing Agreement"), among GCRC, as
depositor, Gottschalks, as servicer and Bankers Trust
Company, a New York banking corporation, as trustee (the
"Trustee"); and (c) that certain 1994-1 Supplement to the
Pooling and Servicing Agreement, dated as of March 30, 1994
(the "1994-1 Supplement") among GCRC, Gottschalks and the
Trustee (collectively, the "Transaction Documents").
Capitalized terms used but not otherwise defined herein
shall have the meanings provided for such terms in the
Pooling and Servicing Agreement.
In connection with the above-referenced
transactions, Gottschalks will act as the servicer of
Receivables that have been sold to the Trust for the
benefit of the Beneficiaries. During the normal course of
its servicing operation, individual store locations owned
by Gottschalks will receive In-Store Payments. Under the
terms of the Transaction Documents, Gottschalks is required
to deposit each day all Collections received in respect of
In-Store Payments in a deposit account maintained by a
local bank (the "Local Deposit Account").
GCRC has established account number [number] with
your institution to serve as the Local Deposit Account.
This letter agreement (this "Letter Agreement") defines
certain rights and obligations of the parties hereto in
respect of the Local Deposit Account maintained with your
institution.
GCRC hereby appoints [name of bank] as a Local
Deposit Account Bank to maintain the Local Deposit Account.
[Name of bank] hereby agrees to maintain the Local Deposit
Account and serve as Local Deposit Account Bank on the
terms and subject to the conditions set forth in this
Letter Agreement.
6.14. The Local Deposit Account shall at all
times be maintained in the name of the Trustee on behalf of
the Trust. The Trustee on behalf of the Trust shall have
exclusive dominion and control over, and the sole right of
withdrawal from, the Local Deposit Account. The Trustee on
behalf of the Trust shall possess all right, title and
interest in all of the items from time to time on deposit
in the Local Deposit Account and all proceeds thereof.
6.15. The Local Deposit Account Bank shall, at
the end of each Business Day, transfer, in same day funds,
all available funds on deposit (other than amounts retained
for returned checks in the ordinary course of business) in
the Local Deposit Account to Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention
Corporate Trust & Agency Group, Structured Finance Team,
ABA 021001033, Account [account number] for deposit to the
Gottschalks Credit Card Master Trust Collection Account
[number] (the "Collection Account"). The Local Deposit
Account Bank shall, immediately thereafter, provide the
Trustee with telephonic advice of such transfer. The Local
Deposit Account Bank shall, each Business Day, deliver to
Gottschalks all returned checks previously deposited in the
Local Deposit Account at P.O. Box 26480, Fresno, Califonria
93729-6480, Attention: Returned Check Desk.
6.16. The Local Deposit Account Bank shall
respond promptly to all reasonable inquiries made by
Gottschalks in respect of the Local Deposit Account. The
Local Deposit Account shall furnish Gottschalks and the
Trustee with monthly statements, in the form typical for
the Local Deposit Account Bank, listing all amounts
deposited in, withdrawn from, and transferred in and/or out
of the Local Deposit Account during such monthly period.
6.17. For purposes of this Letter Agreement,
any officer of the Trustee, and any other employee of the
Trustee designated by an officer thereof, shall be
authorized to act, and to give instructions and notice, on
behalf of the Trustee and the Local Deposit Account Bank
shall be entitled to rely on such act, instruction or
notice without further inquiry. Gottschalks acknowledges
that the Local Deposit Account Bank shall incur no
liability to Gottschalks as a result of any action taken
pursuant to an instruction given by or on behalf of the
Trustee.
6.18. The fees for the services of the Local
Deposit Account Bank shall be mutually agreed upon between
Gottschalks and the Local Deposit Account Bank and paid by
Gottschalks. Neither GCRC nor the Trustee on behalf of the
Trust shall have any responsibility or liability for the
payment of any such fee.
6.19. The Local Deposit Account Bank may
perform any of its duties hereunder by or through its
officers, employees or agents and shall be entitled to rely
upon the advice of counsel as to its duties. The Local
Deposit Account Bank shall not be liable to the Trustee or
Gottschalks for any action taken or omitted to be taken by
it in good faith, nor shall the Local Deposit Account Bank
be responsible to the Trustee or Gottschalks for the
consequences of any oversight or error of judgment or be
answerable to the Trustee or Gottschalks for the same
unless the oversight or error of judgment is attributable
to its negligence or willful misconduct.
6.20. The Local Deposit Account Bank may resign
at any time as Local Deposit Account Bank hereunder by
delivery to the Trustee and Gottschalks of written notice
of resignation not less than 30 days prior to the effective
date of such resignation. The Trustee may close the Local
Deposit Account at any time delivery of notice to the Local
Deposit Account Bank at its address appearing below. This
Letter Agreement shall terminate upon receipt of such
notice of closing, or delivery of such notice of
resignation, except that the Local Deposit Account Bank
shall immediately transfer to the Collection Account all
funds, if any, then on deposit in, or otherwise to the
credit of, the Local Deposit Account (other than amounts
retained for returned checks in the ordinary course of
business).
6.21. All notices and communications hereunder
shall be in writing (except where telephonic instructions
or notices are authorized herein) and shall be deemed to
have been received and shall be effective on the day on
which delivered (including delivery by telecopy) (i) in the
case of the Trustee, to Bankers Trust Company, Four Albany
Street, New York, New York 10006, Attention Corporate Trust
& Agency Group, Structured Finance Team, (ii) in the case
of the Local Deposit Account Bank, to [name of bank] at the
address listed above and (iii) in the case of Gottschalks,
to Gottschalks Inc., 7 River Park Place East, P.O. Box
26920, Fresno, California 93729, to the attention of Alan
A. Weinstein, Senior Vice President and Chief Financial
Officer.
6.22. The Local Deposit Account Bank shall not
assign or transfer any of its rights or obligations
hereunder (other than to the Trustee) without the prior
written consent of the Trustee. This Letter Agreement may
be amended only by a written instrument executed by
Gottschalks, GCRC, the Trustee and the Local Deposit
Account Bank, acting by their respective officers thereunto
duly authorized. The Local Deposit Account Bank hereby
irrevocably waives (so long as any Investor Certificate
remains outstanding) any rights to setoff against, or
otherwise deduct from, any funds held in any Local Deposit
Account for any indebtedness or other claim owed by GCRC,
Gottschalks or any other person or entity to the Local
Deposit Account Bank. To the extent that the Local Deposit
Account Bank ever has any such rights, it hereby expressly
subordinates all such rights to the rights of the Trustee.
6.23. THIS LETTER AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF CALIFORNIA.
6.24. This Letter Agreement (i) shall inure to
the benefit of, and be binding upon, Gottschalks, GCRC, the
Trustee, the Local Deposit Account Bank and their
respective successors and assigns and (ii) may be executed
in two or more counterparts, each of which shall be deemed
an original but all of which together shall constitute one
and the same instrument.
6.25. Bankers Trust Company, in its capacity as
trustee under the Pooling and Servicing Agreement, is
entering into this Letter Agreement solely as trustee and
not in its individual capacity and in no case whatsoever
shall Bankers Trust Company be personally liable on, or for
any loss in respect of, any representations, warranties,
agreements or obligations of the Trustee or Gottschalks
hereunder.
GOTTSCHALKS INC.
By:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity, but solely in
its capacity as Trustee
By:
Title:
[Name of Bank]
By:
Title:
<PAGE>
SCHEDULE I
List of Accounts
The list of all Accounts specifying for each
Account, (i) its account number (ii) the aggregate amount
of Receivables outstanding in such Account, and (iii) the
aggregate amount of Principal Receivables in such Account
has been delivered in the form of computer tape. Such tape
is incorporated herein by this reference.<PAGE>
SCHEDULE II
Collection Account
BANKERS TRUST COMPANY:
ABA No. 021001033
Account No. 01419647
Gottschalks Credit Card Master
Trust Collection Account No. 11873
Four Albany Street
New York, New York 10006
<PAGE>
SCHEDULE III
List of Local Deposit Accounts
BANK OF FRESNO: Account No. 04730240
Location 0-01
Payment Processor (Pre-encoded)
7032 North First Street
Fresno, California 93720
UNITED STATES NATIONAL BANK OF OREGON:
Account No. 010 0029 420
Location 1-27
111 S.W. Fifth, T-29
Portland, Oregon 97204
U.S. BANK OF WASHINGTON, N.A.: Account No. 001 7916 305
Location 1-22
Tacoma
111 S.W. Fifth, T-29
Portland, Oregon 97204
WELLS FARGO BANK, N.A.: Account No. 4192150431
1206 Van Ness Avenue
Fresno, California 93721
EXHIBIT 10.74
EXECUTION COPY
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION
Depositor
GOTTSCHALKS INC.
Servicer
and
BANKERS TRUST COMPANY
Trustee
___________________________________
SERIES 1994-1 SUPPLEMENT
Dated as of March 30, 1994
to
POOLING AND SERVICING AGREEMENT
Dated as of March 30, 1994
___________________________________
GOTTSCHALKS CREDIT CARD MASTER TRUST
SERIES 1994-1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Creation of the Series 1994-1 Certificates. . . 1
SECTION 1.01. Designation. . . . . . . . . . . . . . . 1
ARTICLE II
Definitions . . . . . . . . . . 2
SECTION 2.01. Definitions. . . . . . . . . . . . . . . 2
ARTICLE III
Servicing Fee. . . . . . . . . . 19
SECTION 3.01. Servicing Compensation . . . . . . . . . 19
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections. . . 20
SECTION 4.01. Allocations and Distributions. . . . . . 20
SECTION 4.02. Monthly Interest; Unutilized
Commitment Fee . . . . . . . . . . . . . 35
SECTION 4.03. Determination of Monthly Principal . . . 38
SECTION 4.04. Series Accounts. . . . . . . . . . . . . 39
SECTION 4.05. Capitalized Interest Account . . . . . . 41
SECTION 4.06. Retained Amount Account. . . . . . . . . 41
SECTION 4.07. Prepayment Account; Spread Account;
Successor Servicer Account . . . . . . . 45
SECTION 4.08. Deficiency Amount. . . . . . . . . . . . 47
SECTION 4.09. Investor Charge-Offs . . . . . . . . . . 48
ARTICLE V
Distributions and Reports to
Certificateholders. . . . . . . . . 50
SECTION 5.01. Distributions. . . . . . . . . . . . . . 50
SECTION 5.02. Reports and Statements to
Certificateholders . . . . . . . . . . . 50
ARTICLE VI
The Certificates . . . . . . . . . 51
SECTION 6.01. The Fixed Base Certificates. . . . . . . 51
SECTION 6.02. The Variable Base Certificate. . . . . . 52
SECTION 6.03. Transfer Restrictions. . . . . . . . . . 53
SECTION 6.04. Prepayment of the VBC Invested Amount. . 54
SECTION 6.05. The Subordinated Certificate . . . . . . 54
ARTICLE VII
Early Amortization Events. . . . . . . 54
SECTION 7.01. Additional Early Amortization Events . . 54
SECTION 7.02. Waiver . . . . . . . . . . . . . . . . . 57
ARTICLE VIII
Optional Repurchase . . . . . . . . 57
SECTION 8.01. Optional Repurchase. . . . . . . . . . . 57
ARTICLE IX
Final Distributions . . . . . . . . 58
SECTION 9.01. Final Distributions. . . . . . . . . . . 58
ARTICLE X
Miscellaneous Provisions . . . . . . . 61
SECTION 10.01. Ratification of Agreement. . . . . . . . 61
SECTION 10.02. Counterparts . . . . . . . . . . . . . . 61
SECTION 10.03. GOVERNING LAW. . . . . . . . . . . . . . 61
SECTION 10.04. Suspension of VBC Provisions . . . . . . 61
EXHIBITS
EXHIBIT A-1 Form of Fixed Base Certificate
EXHIBIT A-2 Form of Variable Base Certificate
EXHIBIT A-3 Form of Subordinated Certificate
EXHIBIT B Form of Monthly Distribution Statement
EXHIBIT C Form of Representation Letter
SCHEDULES
SCHEDULE I List of Accounts
<PAGE>
SERIES 1994-1 SUPPLEMENT dated as of March 30,
1994 (the "Series Supplement"), among GOTTSCHALKS CREDIT
RECEIVABLES CORPORATION, a Delaware corporation, as
Depositor, GOTTSCHALKS INC., a Delaware corporation, as
Servicer, and BANKERS TRUST COMPANY, a New York banking
corporation, not in its individual capacity but solely as
Trustee.
RECITALS
Section 6.03 of the Pooling and Servicing
Agreement, dated as of March 30, 1994 (as amended and
supplemented, the "Agreement"), among the Depositor, the
Servicer and the Trustee, provides, among other things,
that the Depositor may from time to time direct the Trustee
to authenticate and deliver, on behalf of the Trust, one or
more new Series of Investor Certificates representing
fractional undivided interests in the Trust and in
connection therewith to enter into Series Supplements with
the Servicer and the Trustee to provide for the issuance,
authentication and delivery of a new Series of Investor
Certificates and to specify the Principal Terms thereof.
Pursuant to this Series Supplement, the Depositor and the
Trustee shall hereby create a new Series of Investor
Certificates and specify the Principal Terms thereof.
ARTICLE I
Creation of the Series 1994-1 Certificates
SECTION 1.01. Designation. (a) There is hereby
created a Series of Investor Certificates to be issued
pursuant to the Agreement and this Series Supplement to be
known as the "Gottschalks Credit Card Master Trust, Series
1994-1 Certificates". The Series 1994-1 Certificates will
be issued in three certificated Classes, the first of which
shall be known as the "7.35% Fixed Base Class A-1 Credit
Card Certificates, Series 1994-1"; the second of which
shall be known as the "Variable Base Class A-2 Credit Card
Certificate, Series 1994-1"; and the third of which shall
be known as the "Subordinated Certificate, Series 1994-1".
(b) In the event that any term or provision
contained herein shall conflict with or be inconsistent
with any term or provision contained in the Agreement, the
terms and provisions of this Series Supplement shall
govern.
ARTICLE II
Definitions
SECTION 2.01. Definitions. (a) Whenever used
in this Series Supplement, the following words and phrases
shall have the following meanings.
"Accelerated Payment" shall mean, with respect to
the Fixed Base Certificates, any FBC Principal Collections
that are paid to the Fixed Base Certificateholders prior to
the Expected Final Payment Date due to the commencement of
the Early Amortization Period (a) on any date on or after
August 31, 1997 or (b) as a result of the occurrence of an
Early Amortization Event of the type described in Sections
7.01(a), (c), (e), (f), (g) or (j) hereof caused directly
or indirectly by (A) the imposition of a Block Period, (B)
the removal of Removed Accounts, (C) the issuance of a new
Series and/or the willful breach by the Servicer (so long
as the Servicer is Gottschalks) of its obligations under
the Agreement and this Series Supplement.
"Additional Discount Rate" shall mean, as of any
Distribution Date, the percentage (expressed as a decimal),
calculated in accordance with the following formula:
Y = ((A - B) x 0.229091)/(C x 12)
where: Y = the Additional Discount Rate (expressed
as a decimal);
A = the VBC Interest Rate determined as of
the Reset Date immediately preceding
such Distribution Date (expressed as a
decimal);
B = the Initial VBC Interest Rate
(expressed as a decimal); and
C = the weighted average monthly payment
rate (i.e., the fraction, the numerator
of which for a Collection Period is the
Investor Principal Collections received
during such Collection Period, and the
denominator of which is the Required
Series Pool Balance in effect during
such Collection Period) for the three
consecutive Collection Periods
preceding such Reset Date (expressed as
a decimal).
"Additional Interest" shall mean with respect to
any Distribution Date, the sum of FBC Additional Interest,
if any, and VBC Additional Interest, if any.
"Additional Invested Amounts" shall have the
meaning specified in Section 6.02 hereof.
"Advance Rate" shall mean 100% minus the Required
Subordination Percentage.
"Allocation Day" shall have the meaning specified
in Section 4.01(b) hereof.
"Assumed Period" shall mean, with respect to each
Collection Period in which the VBC Invested Amount is
greater than zero or is expected to be greater than zero,
the period from and including the first day of such
Collection Period to but excluding the first Distribution
Date to occur thereafter.
"Assumed VBC Invested Amount" shall mean, with
respect to any Assumed Period (a) occurring during the
Revolving Period, an amount equal to the VBC Invested
Amount as of the Distribution Date immediately preceding
the commencement of such Assumed Period, provided that if
the Servicer has, by the commencement of such Assumed
Period, received notice from the Depositor of its intent to
(i) draw on the variable base facility evidenced by the
Variable Base Certificate, the VBC Invested Amount shall,
for purposes of allocation only, be adjusted upward by the
amount of such proposed draw or (ii) prepay the VBC
Invested Amount, the VBC Invested Amount shall, for
purposes of allocation only, be adjusted downward by the
amount of such prepayment or (b) occurring during the
Controlled Amortization Period or the Early Amortization
Period, an amount equal to the VBC Invested Amount as of
the Distribution Date immediately preceding the
commencement of such Assumed Period.
"Base Rate" shall mean, as of any date of
determination, the sum of the weighted average of the FBC
Interest Rate, the VBC Interest Rate, a zero percent
interest rate applied to the Subordinated Invested Amount
and the VBC Unutilized Commitment Fee as of such date plus
the Senior Servicing Fee Rate per annum plus 1% per annum.
"Calculation Agent" shall mean the Trustee or any
other Calculation Agent selected by the Depositor which is
reasonably acceptable to the Trustee.
"Capitalized Interest Account" shall have the
meaning specified in Section 4.04(a) hereof.
"Certificates" shall mean, collectively, the
Fixed Base Certificates, the Variable Base Certificate and
the Subordinated Certificate.
"Closing Date" shall mean March 30, 1994.
"Controlled Amortization Period" shall mean,
unless the Early Amortization Period shall have commenced
prior thereto, the period commencing on the day immediately
following the last day of the Revolving Period, and ending
upon the first to occur of (a) the commencement of the
Early Amortization Period, (b) the payment in full to
Certificateholders of the Invested Amount and (c) the
Series Termination Date.
"Discounted Value" shall mean, with respect to
any Accelerated Payment, the amount obtained by discounting
all Remaining Scheduled Payments with reference to such
Accelerated Payment from their respective scheduled due
dates to the Distribution Date on which such Accelerated
Payment is to be paid in accordance with accepted financial
practice and at a discount factor (applied on a monthly
basis) equal to the Reinvestment Yield with respect to such
Accelerated Payment.
"Early Amortization Event" shall mean for the
Series 1994-1 any Early Amortization Event specified in
Section 9.01 of the Agreement, together with any additional
Early Amortization Event specified in Section 7.01 hereof.
"Exchangeable Holder's Percentage" shall mean
100% minus (a) the Floating Allocation Percentage, when
used with respect to Finance Charge Collections and
Defaulted Receivables for all periods and Principal
Collections during the Revolving Period, or (b) the
Fixed/Floating Allocation Percentage, when used with
respect to Principal Collections during the Controlled
Amortization Period and the Early Amortization Period,
provided that in any case the Exchangeable Holder's
Percentage shall not be less than zero.
"Expected Final Payment Date" shall mean the
September 1999 Distribution Date.
"FBC Additional Interest" shall have the meaning
specified in Section 4.02(a) hereof.
"FBC Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent
of a fraction, the numerator of which is the FBC Invested
Amount as of the last day of the Preceding Collection
Period and the denominator of which is the Required Series
Pool Balance as of such last day.
"FBC Carryover Interest" shall mean, for any
Collection Period, an amount equal to the sum of (a) the
amount of any FBC Monthly Interest previously due but not
distributed on the Fixed Base Certificates on a prior
distribution date, (b) to the extent permitted under
applicable law, the amount of any FBC Additional Interest
to accrue during the Related Interest Period and (c) the
amount of any FBC Additional Interest previously due but
not distributed on the Fixed Base Certificates on a prior
Distribution Date.
"FBC Component" shall mean, as of any time of
determination, either (a) in the case of the Retained
Amount Account, the amount set forth as of such time on the
ledger maintained by the Trustee in accordance with Section
4.04(e) hereof as representing the net balance of deposits
made to the Retained Amount Account pursuant to Sections
4.01(d)(i)(B) and 4.01(e)(i)(C) hereof less amounts
withdrawn therefrom in accordance with Section 4.06, or (b)
in the case of the Spread Account, the amount set forth as
of such time on the ledger maintained by the Trustee in
accordance with Section 4.04(e) hereof as representing the
net balance of deposits made to the Spread Account pursuant
to Section 4.01(c)(iv) hereof less amounts withdrawn
therefrom in accordance with Section 4.07(b) hereof.
"FBC Controlled Distribution Amount" shall mean,
with respect to any Distribution Date occurring during the
Controlled Amortization Period, an amount equal to one-
twelfth (1/12th) of the principal balance of the FBC
Invested Amount as of the September 1998 Distribution Date
(after giving effect to any changes in the FBC Invested
Amount occurring on or prior to such date).
"FBC Deficiency Amount" shall have the meaning
specified in Section 4.08(a) hereof.
"FBC Interest Rate" shall mean, with respect to
any Interest Period and the Fixed Base Certificates, a
fixed interest rate per annum equal to 7.35%.
"FBC Interest Shortfall" shall have the meaning
specified in Section 4.02(a) hereof.
"FBC Invested Amount" shall mean, as of any date
of determination, an amount equal to (a) the Initial FBC
Invested Amount, minus, (b) the amount of principal
payments made to the Fixed Base Certificateholders in
respect of the FBC Invested Amount prior to such date, and
minus, (c) the amount, if any, by which the aggregate
amount of FBC Investor Charge-Offs exceed the FBC Investor
Charge-Offs reimbursed pursuant to Section 4.09(a) hereof
prior to such date.
"FBC Investor Charge-Offs" shall have the meaning
specified in Section 4.09(a) hereof.
"FBC Investor Default Amount" shall mean, with
respect to each Distribution Date, an amount equal to the
product of (a) the Investor Default Amount for the Related
Collection Period and (b) the FBC Allocation Percentage for
such Related Collection Period.
"FBC Investor Percentage" shall mean, with
respect to any Allocation Day, the percentage equivalent of
a fraction, the numerator of which is the FBC Invested
Amount as of the preceding Business Day and the denominator
of which is the Invested Amount as of such preceding
Business Day.
"FBC Monthly Interest" shall have the meaning
specified in Section 4.02(a) hereof.
"FBC Monthly Principal" shall have the meaning
specified in Section 4.03(a) hereof.
"FBC Principal Collections" shall have the
meaning specified in Section 4.01(d)(i) hereof.
"Fixed Base Certificates" shall have the meaning
specified in Section 6.01 hereof.
"Fixed Base Certificateholder" shall mean, with
respect to any Fixed Base Certificate on any date, the
Person in whose name such Fixed Base Certificate is
registered on such date.
"Fixed/Floating Allocation Percentage" shall
mean, with respect to any Collection Period during the
Controlled Amortization Period and the Early Amortization
Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is
the Required Series Pool Balance as of the last day of the
Revolving Period and the denominator of which is the Series
Pool Balance as of the last day of the immediately
preceding Collection Period in respect of which the
Fixed/Floating Allocation Percentage is being determined.
"Floating Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Required Series Pool Balance
as of the last day of the immediately preceding Collection
Period and the denominator of which is the Series Pool
Balance as of such last day; provided, however, that, with
respect to the first Collection Period, the Floating
Allocation Percentage shall mean the percentage equivalent
of a fraction, the numerator of which is the sum of the
Initial FBC Invested Amount and the Initial Subordinated
Invested Amount, and the denominator of which is the Series
Pool Balance as of the Cut-Off Date.
"Initial FBC Invested Amount" shall mean
$40,000,000.
"Initial Subordinated Invested Amount" shall mean
$7,619,048.
"Initial VBC Interest Rate" shall mean the VBC
Interest Rate applicable to the purchase of the initial
Additional Invested Amount.
"Interest Period" shall mean, with respect to any
Distribution Date, the period from and including the
Distribution Date immediately preceding such Distribution
Date (or, in the case of the first Distribution Date, from
and including the Closing Date) to but excluding such
Distribution Date.
"Invested Amount" shall mean, as of any date, an
amount equal to the sum of (a) the FBC Invested Amount as
of such date and (b) the VBC Invested Amount as of such
date.
"Investor Charge-Offs" shall mean, with respect
to any Distribution Date, the sum of (a) the FBC Investor
Charge-Offs for such Distribution Date, (b) the VBC
Investor Charge-Offs for such Distribution Date and (c) the
Subordinated Investor Charge-Offs for such Distribution
Date.
"Investor Default Amount" shall mean, with
respect to any Determination Date, an amount equal to the
product of (a) the Defaulted Amount for the Related
Collection Period, (b) the Floating Allocation Percentage
for the Related Collection Period and (c) the Series 1994-1
Allocation Percentage for the Related Collection Period.
"Investor Finance Charge Collections" shall mean,
as of any Allocation Day, the product of (a) the amount of
Series Finance Charge Collections received since the
beginning of the preceding Business Day and (b) the
Floating Allocation Percentage for the then current
Collection Period.
"Investor Investment Proceeds" shall mean, with
respect to any Determination Date, all interest and other
investment earnings (net of losses and investment expenses)
on funds on deposit in the Series Accounts, together with
an amount equal to the Series Allocation Percentage of the
interest and other investment earnings on funds held in the
Collection Account credited as of such date to the
Collection Account pursuant to Section 4.02 of the
Agreement.
"Investor Principal Collections" shall mean, as
of any Allocation Day, the product of (a) the amount of
Series Principal Collections received since the beginning
of the preceding Business Day and (b) if such Allocation
Day is within the Revolving Period, the Floating Allocation
Percentage for the then current Collection Period, or, if
such Allocation Day is within the Controlled Amortization
Period or the Early Amortization Period, the Fixed/Floating
Allocation Percentage.
"LIBOR" shall mean, with respect to any Interest
Period, the arithmetic mean (rounded upwards, if necessary,
to the nearest one-sixteenth of a percent) of offered rates
for deposits in United States dollars having a maturity of
one month (the "Index Maturity") commencing on the first
day of such Interest Period which appears on the Reuters
Screen LIBO Page as of approximately 11:00 a.m., London
time, on the related Reset Date. If fewer than two such
quotations appear, LIBOR with respect to such Interest
Period will be determined at approximately 11:00 a.m.,
London time, on such Reset Date on the basis of the rate at
which deposits in United States dollars having the Index
Maturity are offered to prime banks in the London interbank
market by four major banks in the London interbank market
selected by the Calculation Agent and in a principal amount
equal to an amount of not less than U.S. $500,000 and that
is representative for a single transaction in such market
at such time. The Calculation Agent will request the
principal London office of each such bank to provide a
quotation of its rate. If at least two such quotations are
provided, LIBOR will be the arithmetic mean (rounded
upwards as aforesaid) of such quotations. If fewer than
two quotations are provided, LIBOR with respect to such
Interest Period will be the arithmetic mean (rounded
upwards as aforesaid) of the rates quoted at approximately
11:00 a.m., New York City time, on the applicable Reset
Date by three major banks in New York, New York selected by
the Calculation Agent for loans in United States dollars to
leading European banks having the Index Maturity and in a
principal amount equal to an amount of not less than U.S.
$500,000 and that is representative for a single
transaction in such market at such time; provided, however,
that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, LIBOR in effect for the
applicable period will be LIBOR in effect for the previous
period.
"London Business Day" shall mean any day on which
dealings in deposits in United States dollars are
transacted in the London interbank market.
"Make Whole Premium" shall mean, with respect to
any Accelerated Payment, the excess, if any, of the
Discounted Value with respect to such Accelerated Payment
over such Accelerated Payment. The Make Whole Premium
shall never be less than zero.
"Maximum Available VBC Invested Amount" shall
mean, as of any Distribution Date during the Revolving
Period, an amount equal to the lesser of (a) the difference
between (i) the product of the Series Pool Balance on such
date and the Advance Rate on such date and (ii) the sum of
the FBC Invested Amount on such date (after giving effect
to any changes therein on such Distribution Date) and the
balance of the Retained Amount Account on such date, and
(b) $15,000,000, provided that in no event shall the
Maximum Available VBC Invested Amount be less than zero.
"Maximum Monthly Senior Servicing Fee" shall
mean, as of any day during an Assumed Period, an amount
equal to one-twelfth of the product of (a) the Senior
Servicing Fee Rate and (b) the sum of the FBC Invested
Amount for the current Collection Period, the Assumed VBC
Invested Amount for the current Collection Period and the
Subordinated Invested Amount for the current Collection
Period.
"Maximum Monthly Subordinated Servicing Fee"
shall mean, as of any day during an Assumed Period, an
amount equal to one-twelfth of the product of (a) the
Subordinated Servicing Fee Rate and (b) the sum of the FBC
Invested Amount for the current Collection Period, the
Assumed VBC Invested Amount for the current Collection
Period and the Subordinated Invested Amount for the current
Collection Period.
"Maximum VBC Interest Rate" shall mean a rate per
annum equal to twelve percent (12%).
"Maximum VBC Monthly Interest" shall mean, as of
any day during an Assumed Period, an amount equal to the
product of (a) the Assumed VBC Invested Amount for the then
current Collection Period, (b) the Maximum VBC Interest
Rate and (c) a fraction, the numerator of which is the
actual number of days contained in the Interest Period
commencing immediately after such Assumed Period, and the
denominator of which is 360.
"Maximum VBC Unutilized Commitment Fee" shall
mean, as of any day during an Assumed Period, an amount
equal to the product of (a) the difference between (i)
$15,000,000 and (ii) the Assumed VBC Invested Amount for
the then current Collection Period, (b) 3/8ths of 1% per
annum (based on a year of 365 days or 366 days, as the case
may be) and (c) a fraction, the numerator of which is the
number of days in the Interest Period commencing
immediately after such Assumed Period, and the denominator
of which is the number of days in the then current calendar
year.
"Minimum Depositor Interest" shall mean, with
respect to the Series 1994-1, the Subordinated Invested
Amount.
"Monthly Senior Servicing Fee" shall mean, with
respect to any Distribution Date, five-sixths (5/6th) of
the Monthly Servicing Fee for the Related Collection
Period.
"Monthly Servicing Fee" shall have the meaning
specified in Section 3.01 hereof.
"Monthly Subordinated Servicing Fee" shall mean,
with respect to any Distribution Date, one-sixth (1/6th) of
the Monthly Servicing Fee for the Related Collection
Period.
"Portfolio Yield" shall mean, with respect to any
Collection Period, the annualized percentage equivalent of
a fraction (a) the numerator of which is the amount of
Investor Finance Charge Collections allocated to the
Certificates during the Related Collection Period
calculated on a cash basis, minus the Investor Default
Amount with respect to such Collection Period and (b) the
denominator of which is the Required Series Pool Balance as
of the last day of the Related Collection Period.
"Preceding Collection Period" shall mean, with
respect to any Distribution Date, the Collection Period
ended on the last day of the second calendar month
preceding such date.
"Prepayment Account" shall have the meaning
specified in Section 4.04(a) hereof.
"Prepayment Amount" shall have the meaning
specified in Section 6.04 hereof.
"Prepayment Date" shall have the meaning
specified in Section 6.04 hereof.
"Prepayment Notice" shall have the meaning
specified in Section 6.04 hereof.
"Projected Make Whole Premium" shall mean, for
purposes of allocating Investor Finance Charge Collections
only during a Collection Period, an assumed calculation of
the Make Whole Premium calculated as of the first day of
such Collection Period and assuming that (a) the
Accelerated Payment for such calculation is equal to the
highest aggregate monthly FBC Principal Collections during
the three immediately preceding Collection Periods and (b)
that the Reinvestment Yield is equivalent to the
Reinvestment Yield calculated as of such first day.
"Reassignment Amount" shall mean, with respect to
any Distribution Date, after giving effect to any deposits
and distributions otherwise to be made on such Distribution
Date, the sum of (a) the Invested Amount on such
Distribution Date, (b) accrued and unpaid interest on the
unpaid principal balances of the Certificates (calculated
on the basis of the outstanding principal balance of the
Fixed Base Certificates and Variable Base Certificate at
the FBC Interest Rate and VBC Interest Rate, respectively,
through the day preceding such Distribution Date), and (c)
the amount of Additional Interest, if any, for such
Distribution Date and any Additional Interest previously
due but not distributed on the Certificates on a prior
Distribution Date.
"Reinvestment Yield" shall mean, with respect to
any Accelerated Payment, the yield to maturity implied by
(a) the yields reported, as of 10:00 a.m. New York City
time on the Business Day next preceding the Distribution
Date on which such Accelerated Payment is to be made, on
the display designated as "Page 678" on the Telerate
Service (or such other display as may replace Page 678 on
the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal or closest to the
Remaining Average Life of such Accelerated payment as of
such Distribution Date, plus 0.5% per annum, or (b) if such
yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable, the
Treasury Constant Maturity Series yields reported, for the
latest day for which such yields shall have been so
reported as of the Business Day preceding the Distribution
Date on which such Accelerated Payment is to be made, in
Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the
Remaining Average Life of such Accelerated Payment as of
such Distribution Date, plus 0.5% per annum. Such implied
yield shall be determined, if necessary, by (x) converting
U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (y)
interpolating linearly between reported yields.
"Related Collection Period" shall mean, with
respect to any Distribution Date, the Collection Period
ended on the last day of the calendar month preceding such
date.
"Related Distribution Date" shall mean, with
respect to any day during a Collection Period, the
Distribution Date following the end of such Collection
Period.
"Related Interest Period" shall mean, with
respect to (a) any Distribution Date, the Interest Period
ended on the preceding day, and (b) any Collection Period,
the Interest Period which commences during such Collection
Period.
"Remaining Average Life" shall mean, with respect
to the Fixed Base Certificates at any time of determination
after the commencement of the Early Amortization Period,
the number of years obtained by dividing the then Remaining
Dollar-Years of the Fixed Base Certificates by the FBC
Invested Amount at such time. The term "Remaining Dollar-
Years" means the amount obtained by (a) multiplying (i)
the amount of each remaining payment with respect to the
Fixed Base Certificates, assuming that such payments are
made in the FBC Controlled Distribution Amounts (using the
FBC Invested Amount at the time the Early Amortization
Period commenced in order to calculate such FBC Controlled
Distribution Amounts) over the notional twelve month
Controlled Amortization Period, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse
between the date as of which the calculation is made and
each Distribution Date during the notional Controlled
Amortization Period and (b) totalling all the products
obtained in clause (a).
"Remaining Scheduled Payments" shall mean, with
reference to any Accelerated Payment, the sum of (a) all
payments of interest thereon at the FBC Interest Rate that
would be due on or after the Distribution Date on which
such Accelerated Payment is to be made if no payment of
such Accelerated Payment were made prior to the Expected
Final Payment Date and (b) the amount of such Accelerated
Payment.
"Required Series Pool Balance" shall mean, as of
any date of determination, the sum of (a) the Invested
Amount on such date and (b) the Subordinated Invested
Amount on such date.
"Required Subordination Percentage" shall mean
sixteen percent (16%).
"Reset Date" shall mean the second London
Business Day preceding the first day of each Interest
Period.
"Retained Amount Account" shall have the meaning
specified in Section 4.04(a) hereof.
"Reuters Screen LIBO Page" shall mean the display
designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London
interbank offered rates of major banks).
"Revolving Period" shall mean the period
beginning at the opening of business on the Cut-Off Date
and ending on the earlier of (a) the last day of the
Collection Period ending on August 31, 1998 and (b) the
close of business on the Business Day immediately preceding
the day on which the Early Amortization Period commences.
"Senior Investor Default Holdback Amount" shall
mean, with respect to (a) any Collection Period (other than
the initial Collection Period), the product of (i) the
greater of (A) the Investor Default Amount which the
Servicer reasonably anticipates for such Collection Period
or (B) the product of (1) the highest default rate (i.e., a
fraction, the numerator of which is the Defaulted Amount
for a Collection Period, and the denominator of which is
the aggregate Principal Receivables owned by the Trust as
of the last day of such Collection Period (or, in the case
of the first twelve Collection Periods, owned by
Gottschalks)) for any of the twelve consecutive Collection
Periods preceding such Collection Period, (2) the aggregate
amount of the Principal Receivables owned by the Trust as
of the first day of such Collection Period, (3) the Series
Allocation Percentage for the Series 1994-1 for such
Collection Period, and (4) the Floating Allocation
Percentage for such Collection Period, and (ii) a fraction
the numerator of which is the Invested Amount and the
denominator of which is the Required Series Pool Balance,
in each case, in effect for such Collection Period and (b)
the initial Collection Period, $10,231.40.
"Senior Servicing Fee Rate" shall mean, with
respect to the Certificates, two and one-half percent
(2.5%).
"Series Accounts" shall have the meaning
specified in Section 4.04(a) hereof.
"Series Default Amount" shall mean, with respect
to any Distribution Date, an amount equal to the product of
(a) the Defaulted Amount for the Related Collection Period,
and (b) the Series 1994-1 Allocation Percentage for the
Related Collection Period.
"Series Finance Charge Collections" shall mean,
with respect to the aggregate amount of Finance Charge
Collections deposited in the Collection Account on any
date, that portion allocated to the Series 1994-1 in
accordance with Section 4.04 of the Agreement.
"Series 1994-1" shall mean the Series of Investor
Certificates and the Subordinated Certificate created
pursuant to this Series Supplement.
"Series 1994-1 Allocation Percentage" shall mean,
for any Collection Period, the Series Allocation Percentage
for the Series 1994-1 as calculated for such Collection
Period in accordance with the Agreement.
"Series Pool Balance" shall mean, as of any date
of determination, the product of (a) the Pool Balance as of
such date and (b) the Series 1994-1 Allocation Percentage
for such date.
"Series Principal Collections" shall mean, with
respect to the aggregate amount of Principal Collections
received since the beginning of the preceding Business Day,
that portion allocated to the Series 1994-1 in accordance
with Section 4.04 of the Agreement.
"Series Termination Date" shall mean the March
2000 Distribution Date.
"Servicing Fee Rate" shall mean, with respect to
the Certificates, three percent (3%).
"Spread Account" shall have the meaning specified
in Section 4.04(a) hereof.
"Spread Requirement" shall mean, with respect to
any Collection Period commencing with the third full
Collection Period, zero unless the Portfolio Yield for the
two preceding Collection Periods was less than 0.5% per
annum in excess of the Base Rate for such preceding
Collection Periods, in which case "Spread Requirement"
shall mean the amount, if any, by which (a) the sum, for
the Preceding Collection Period, of the amounts, described
in Sections 4.01(c)(i) and 4.01(c)(ii) hereof exceeds
(b) the amount on deposit in the Spread Account at the
beginning of such Collection Period.
"Standby Servicer" shall mean Bankers Trust
Company or such other party as may be appointed by the
Trustee to stand ready to act as a Successor Servicer in
the event that Gottschalks is removed as Servicer.
"Subordinated Allocation Percentage" shall mean,
with respect to any Collection Period, the percentage
equivalent of a fraction the numerator of which is the
Subordinated Invested Amount as of the last day of the
Preceding Collection Period and the denominator of which is
the Required Pool Series Balance as of such last day.
"Subordinated Certificate" shall have the meaning
specified in Section 6.05 hereof.
"Subordinated Component" shall mean, as of any
time of determination, in the case of the Retained Amount
Account, the amount set forth as of such time on the ledger
maintained by the Trustee in accordance with Section
4.04(e) hereof as representing the net balance of deposits
made to the Retained Amount Account pursuant to Sections
4.01(d)(iii)(C) and 4.01(e)(iii)(C) hereof less amounts
withdrawn therefrom in accordance with Section 4.06.
"Subordinated Invested Amount" shall mean, as of
any date of determination, an amount equal to (a) the
Initial Subordinated Invested Amount, plus, (b) the product
of (i) a fraction, the numerator of which is 16, and the
denominator of which is 84 and (ii) each Additional
Invested Amount purchased by the Variable Base
Certificateholder prior to such date, minus, (c) the
amount, if any, by which the aggregate amount of
Subordinated Investor Charge-Offs exceeds the Subordinated
Investor Charge-Offs reimbursed pursuant to Sections
4.01(c)(vii), 4.01(d)(ii)(B) and 4.01(e)(iii)(B) hereof
prior to such date, minus, (d) the amount of any
reallocation of Subordinated Principal Collections made
pursuant to Sections 4.01(d)(iii)(A), 4.01(e)(iii)(A) and
4.01(f) hereof, plus, (e) the amount of any reallocations
made pursuant to Section 4.01(g)(iii), and minus, (f) the
amount of principal payments made to the holder of the
Subordinated Certificate in respect of the Subordinated
Invested Amount pursuant to Section 4.01(f)(iii)(B) prior
to such date.
"Subordinated Investor Charge-Offs" shall mean
the reductions to the Subordinated Invested Amount
contemplated in Sections 4.09(a) hereof and 4.09(b) hereof.
"Subordinated Investor Default Holdback Amount"
shall mean, with respect to (a) any Collection Period
(other than the initial Collection Period), the product of
(i) the greater of (A) the Investor Default Amount which
the Servicer reasonably anticipates for such Collection
Period or (B) the product of (1) the highest default rate
(i.e., a fraction, the numerator of which is the Defaulted
Amount for a Collection Period, and the denominator of
which is the aggregate Principal Receivables owned by the
Trust as of the last day of such Collection Period (or, in
the case of the first twelve Collection Periods, owned by
Gottschalks)) for any of the twelve consecutive Collection
Periods preceding such Collection Period, (2) the aggregate
amount of the Principal Receivables owned by the Trust as
of the first day of such Collection Period, (3) the Series
Allocation Percentage for the Series 1994-1 for such
Collection Period, and (4) the Floating Allocation
Percentage for such Collection Period, and (ii) a fraction,
the numerator of which is the Subordinated Invested Amount
and the denominator of which is the Required Series Pool
Balance, in each case, in effect for such Collection Period
and (b) the initial Collection Period, $1,948.84.
"Subordinated Principal Collections" shall have
the meaning specified in Section 4.01(d)(iii) hereof.
"Subordinated Reduction (FBC)" shall have the
meaning specified in Section 4.09(a) hereof.
"Subordinated Reduction (VBC)" shall have the
meaning specified in Section 4.09(b) hereof.
"Subordinated Servicing Fee Rate" shall mean,
with respect to the Certificates, one-half of one percent
(0.5%).
"Successor Servicer Account" shall have the
meaning specified in Section 4.04(a) hereof.
"Variable Base Certificate" shall have the
meaning specified in Section 6.02 hereof.
"Variable Base Certificateholder" shall mean,
with respect to the Variable Base Certificate on any date,
the Person in whose name the Variable Base Certificate is
registered on such date.
"VBC Additional Interest" shall have the meaning
specified in Section 4.02(b) hereof.
"VBC Additional Unutilized Commitment Fee" shall
have the meaning specified in Section 4.02(c) hereof.
"VBC Allocation Percentage" shall mean, with
respect to any Collection Period, the percentage equivalent
of a fraction, the numerator of which is the VBC Invested
Amount as of the last day of the Preceding Collection
Period and the denominator of which is the Required Series
Pool Balance as of such last day.
"VBC Carryover Interest" shall mean, for any
Collection Period, an amount equal to the sum of (a) the
amount of any VBC Monthly Interest previously due but not
distributed on the Variable Base Certificate on a prior
distribution date, (b) to the extent permitted under
applicable law, the amount of any VBC Additional Interest
to accrue during the Related Interest Period and (c) the
amount of any VBC Additional Interest previously due but
not distributed on the Variable Base Certificate on a prior
Distribution Date.
"VBC Carryover Unutilized Commitment Fee" shall
mean, for any Collection Period, an amount equal to the sum
of (a) the amount of any VBC Unutilized Commitment Fee
previously due but not distributed to the Holder of the
Variable Base Certificate on a prior Distribution Date, (b)
to the extent permitted under applicable law, the amount of
any VBC Additional Unutilized Commitment Fee to accrue
during the Related Interest Period and (c) the amount of
any VBC Additional Unutilized Commitment Fee due but not
distributed to the Holder of the Variable Base Certificate
on a prior Distribution Date.
"VBC Component" shall mean, as of any time of
determination, either (a) in the case of the Retained
Amount Account, the amount set forth as of such time on the
ledger maintained by the Trustee in accordance with Section
4.04(e) hereof as representing the net balance of deposits
made to the Retained Amount Account pursuant to Sections
4.01(d)(ii)(B) and 4.01(e)(ii)(C) hereof less amounts
withdrawn therefrom in accordance with Section 4.06, or (b)
in the case of the Spread Account, the amount set forth as
of such time on the ledger maintained by the Trustee in
accordance with Section 4.04(e) hereof as representing the
net balance of deposits made to the Spread Account pursuant
to Section 4.01(c)(iv) hereof less amounts withdrawn
therefrom in accordance with Section 4.07(c) hereof.
"VBC Controlled Distribution Amount" shall mean,
with respect to any Distribution Date occurring during the
Controlled Amortization Period, an amount equal to one-
twelfth (1/12th) of the principal balance of the Variable
Base Certificate as of the September 1998 Distribution Date
(after giving effect to any changes in the VBC Invested
Amount on such date).
"VBC Deficiency Amount" shall have the meaning
specified in Section 4.08(b) hereof.
"VBC Interest Rate" shall mean, with respect to
any Interest Period and the Variable Base Certificate, the
lesser of (a) the interest rate for such Interest Period
determined in accordance with the terms of the Variable
Base Certificate and (b) the Maximum VBC Interest Rate.
"VBC Interest Shortfall" shall have the meaning
specified in Section 4.02(b) hereof.
"VBC Invested Amount" shall mean, as of any date
of determination, an amount equal to (a) $0, plus, (b) the
aggregate principal amount of any Additional Invested
Amounts purchased by the Holder of the Variable Base
Certificate on or prior to such date, minus, (c) the amount
of principal payments made to the Variable Base
Certificateholder prior to such date, and minus, (d) the
amount, if any, by which the aggregate amount of VBC
Investor Charge-Offs exceeds the VBC Investor Charge-Offs
reimbursed pursuant to Section 4.09(b) hereof prior to such
date.
"VBC Investor Charge-Offs" shall have the meaning
specified in Section 4.09(b) hereof.
"VBC Investor Default Amount" shall mean, with
respect to each Distribution Date, an amount equal to the
product of (a) the Investor Default Amount for the Related
Collection Period and (b) the VBC Allocation Percentage for
such Related Collection Period.
"VBC Investor Percentage" shall mean, with
respect to any Allocation Day, the percentage equivalent of
a fraction, the numerator of which is the VBC Invested
Amount as of the preceding Business Day and the denominator
of which is the Invested Amount of such preceding Business
Day.
"VBC Monthly Interest" shall have the meaning
specified in Section 4.02(b) hereof.
"VBC Monthly Principal" shall have the meaning
specified in Section 4.03(b) hereof.
"VBC Principal Collections" shall have the
meaning specified in Section 4.01(d)(ii) hereof.
"VBC Unutilized Commitment Fee" shall mean, with
respect to any Distribution Date, either (a) during the
Revolving Period, an amount equal to the aggregate, for
each day during the Related Interest Period (or, in the
case of the first Distribution Date following the date on
which the Variable Base Certificate is authenticated by the
Trustee and delivered to the Variable Base
Certificateholder, the period from and including the date
of authentication and delivery to and including the day
immediately preceding such Distribution Date), of the
product of (i) the difference between $15,000,000 and the
VBC Invested Amount on such day, (ii) the per annum rate
(based on a year of 365 days or 366 days, as the case may
be) set forth in the Variable Base Certificate and (iii) a
fraction, the numerator of which is the number of days in
the Related Interest Period, and the denominator of which
is the number of days in the then current calendar year or
(b) during the Controlled Amortization Period or Early
Amortization Period, zero.
"VBC Unutilized Commitment Fee Shortfall" shall
have the meaning specified in Section 4.02(c) hereof.
(b) Notwithstanding anything to the contrary in
this Series Supplement or the Agreement, the term "Rating
Agency" shall mean, whenever used in this Series Supplement
or the Agreement with respect to the Certificates, Duff &
Phelps and Fitch.
(c) All capitalized terms used herein and not
otherwise defined herein have the meanings ascribed to them
in the Agreement. The definitions in this Section 2.01 are
applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine
and neuter genders of such terms.
(d) The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Series
Supplement shall refer to this Series Supplement as a whole
and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit
are references to Articles, Sections and Exhibits in or to
this Series Supplement unless otherwise specified; and the
term "including" means "including without limitation".
(e) References herein to "Collections received"
shall be deemed to include Collections received and
processed as to principal and finance charges and shall not
include unprocessed Collections (i.e., Collections which
have been received but for which the Servicer in the
ordinary course of its business has not yet identified in
its computer records the principal and finance charge
components).
ARTICLE III
Servicing Fee
SECTION 3.01. Servicing Compensation. The
monthly servicing fee hereunder (the "Monthly Servicing
Fee") shall be payable to the Servicer, in arrears, on each
Distribution Date occurring prior to the earlier of the
first Distribution Date following the Series Termination
Date and the first Distribution Date on which the Invested
Amount and the Subordinated Invested Amount are both zero,
in an amount equal to one-twelfth of the product of (a) the
Servicing Fee Rate and (b) the Required Series Pool Balance
in effect during the Related Collection Period; provided,
however, that with respect to the first Distribution Date,
the Monthly Servicing Fee shall be equal to $3,968.26. In
no event shall the Trust, the Trustee, the Fixed Base
Certificateholders, the Variable Base Certificateholder or
the Holder of the Subordinated Certificate be liable for
any other servicing fee. The Monthly Servicing Fee shall
be payable to the Servicer solely to the extent amounts are
available for distribution in accordance with the terms of
this Series Supplement.
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Allocations and Distributions.
(a) General. Series Finance Charge Collections,
Series Principal Collections and Series Default Amounts, as
they relate to the Certificates and the Exchangeable
Certificate, shall be allocated and distributed as set
forth in this Article IV. If an amount is to be allocated
between, or paid to, the Fixed Base Certificateholders and
the Variable Base Certificateholder, and the amount in
question is not sufficient to fully satisfy the Fixed Base
Certificateholders and the Variable Base Certificateholder,
then, unless the context otherwise requires, such amount
shall be allocated or paid to the Fixed Base
Certificateholders according to the FBC Investor Percentage
then in effect and to the Variable Base Certificateholder
according to the VBC Investor Percentage then in effect.
(b) Distribution of Collections to the Holder of
the Exchangeable Certificate. At the beginning of each
Business Day (an "Allocation Day"), the Servicer shall
cause the Trustee to withdraw from the Collection Account
and distribute to the Holder of the Exchangeable
Certificate (i) an amount equal to the product of (A) the
Exchangeable Holder's Percentage in effect on such day and
(B) the amount of Series Finance Charge Collections
received since the beginning of the preceding Business Day,
and (ii) an amount equal to the product of (A) the
Exchangeable Holder's Percentage in effect on such day and
(B) the amount of Series Principal Collections received
since the beginning of the preceding Business Day. On each
Distribution Date, the Servicer shall allocate to the
Holder of the Exchangeable Certificate an amount equal to
the product of (x) the Exchangeable Holder's Percentage in
effect on such date and (y) the amount of Series Default
Amount for the Related Collection Period.
(c) Allocation of Investor Finance Charge
Collections. At the beginning of each Allocation Day
during the Revolving Period, the Controlled Amortization
Period and/or the Early Amortization Period, the Servicer
shall allocate Investor Finance Charge Collections received
since the beginning of the preceding Business Day as
follows and in the following priorities (each priority to
be satisfied daily before allocations are made to any
subsequent priority):
(i) first, (1) if such Allocation Day falls
within an Assumed Period, unless an amount equal to
the Maximum Monthly Senior Servicing Fee for the
current Collection Period, plus any previously unpaid
Monthly Senior Servicing Fee (but only with respect to
the then current Servicer) is then on deposit in the
Collection Account and allocated therefor, or (2) if
such Allocation Day falls outside of an Assumed
Period, unless an amount equal to the Monthly Senior
Servicing Fee for the current Interest Period, plus
any previously unpaid Monthly Senior Servicing Fee
(but only with respect to the then current Servicer)
is then on deposit in the Collection Account and
allocated therefor, Investor Finance Charge
Collections received since the beginning of the
preceding Business Day shall be retained in the
Collection Account until such amount is then on
deposit;
(ii) second, (1) if such Allocation Day falls
within an Assumed Period, unless an amount equal to
the sum of: (A) the FBC Monthly Interest to accrue
during the next succeeding Interest Period, plus the
amount of any FBC Carryover Interest for such
Collection Period, (B) an amount equal to the Maximum
VBC Monthly Interest to accrue during the next
succeeding Interest Period, plus the amount of any VBC
Carryover Interest for such Interest Period, and (C)
during the Revolving Period only, an amount equal to
the Maximum VBC Unutilized Commitment Fee for the next
succeeding Interest Period, plus the amount of any VBC
Carryover Unutilized Commitment Fee for such Interest
Period, is then on deposit in the Collection Account
and allocated therefor, or (2) if such Allocation Day
falls outside of an Assumed Period, unless an amount
equal to the sum of: (A) the FBC Monthly Interest to
accrue during the current Interest Period, plus the
amount of any FBC Carryover Interest for such
Collection Period, (B) an amount equal to the VBC
Monthly Interest to accrue during the current Interest
Period, plus the amount of any VBC Carryover Interest
for such Interest Period, and (C) during the Revolving
Period only, an amount equal to the VBC Unutilized
Commitment Fee for the current Interest Period, plus
the amount of any VBC Carryover Unutilized Commitment
Fee for such Interest Period, is then on deposit in
the Collection Account and allocated therefor,
Investor Finance Charge Collections received since the
beginning of the preceding Business Day shall be
retained in the Collection Account until the
respective amounts are then on deposit;
(iii) third, unless an amount equal to the
Senior Investor Default Holdback Amount for the
current Collection Period is then on deposit in the
Collection Account and allocated therefor, Investor
Finance Charge Collections received since the
beginning of the preceding Business Day shall be
retained in the Collection Account until such amount
is then on deposit;
(iv) fourth, unless the amount then on deposit
in the Spread Account is equal to the Spread
Requirement on such Allocation Day, Investor Finance
Charge Collections received since the beginning of the
preceding Business Day shall be withdrawn from the
Collection Account in an amount equal to such
insufficiency and shall be deposited in the Spread
Account;
(v) fifth, unless an amount equal to the sum
of (A) all unreimbursed FBC Investor Charge-Offs as of
such Allocation Day have been reallocated as FBC
Principal Collections and (B) all unreimbursed VBC
Investor Charge-Offs as of such Allocation Day have
been reallocated as VBC Principal Collections,
Investor Finance Charge Collections received since the
beginning of the preceding Business Day shall be
reallocated, respectively, as FBC Principal
Collections and VBC Principal Collections until the
amounts reallocated equal all unreimbursed FBC
Investor Charge-Offs and unreimbursed VBC Investor
Charge-Offs; provided, however, that if the amount of
Investor Finance Charge Collections remaining on any
Allocation Day after making the allocations described
in paragraphs (i) through (iv) immediately above is
not sufficient to fully satisfy the reallocations
required to be made pursuant to this paragraph (v) on
such Allocation Day, such remaining Investor Finance
Charge Collections shall be reallocated as follows:
(x) an amount equal to the product of such remaining
Investor Finance Charge Collections and the FBC
Investor Percentage shall be reallocated as FBC
Principal Collections and applied to reimburse
unreimbursed FBC Investor Charge-Offs and (y) an
amount equal to the product of such remaining Investor
Finance Charge Collections and the VBC Investor
Percentage shall be reallocated as VBC Principal
Collections and applied to reimburse unreimbursed VBC
Charge-Offs;
(vi) sixth, unless an amount equal to the
Subordinated Investor Default Holdback for the current
Collection Period is then on deposit in the Collection
Account and allocated therefor, Investor Finance
Charge Collections deposited in the Collection Account
since the beginning of the Preceding Business Day
shall be retained in the Collection Account until such
amount is then on deposit;
(vii) seventh, unless an amount equal to all
unreimbursed Subordinated Investor Charge-Offs as of
such Allocation Day has been reallocated as
Subordinated Principal Collections, Investor Finance
Charge Collections received since the beginning of the
preceding Business Day shall be reallocated as
Subordinated Principal Collections;
(viii) eighth, if such Allocation Day falls
within an Early Amortization Period which commenced
(1) on any date on or after August 31, 1997 or (2) as
a result of the occurrence of an Early Amortization
Event of the type described in Sections 7.01(a), (c),
(e), (f), (g) or (j) hereof caused directly or
indirectly by (A) the imposition of a Block Period,
(B) the removal of Removed Accounts, (C) the issuance
of a new Series and/or the willful breach by the
Servicer (so long as the Servicer is Gottschalks) of
its obligations under the Agreement and this Series
Supplement, then, unless an amount equal to the
Projected Make Whole Premium for the Related
Collection Period (together with any Make Whole
Premium previously due but not paid on a prior
Distribution Date) is then on deposit in the
Collection Account and allocated therefor, Investor
Finance Charge Collections received since the
beginning of the preceding Business Day shall be
retained in the Collection Account until such amount
is then on deposit and allocated therefor;
(ix) ninth, unless (1) if such Allocation Day
falls within an Assumed Period, an amount equal to the
Maximum Monthly Subordinated Servicing Fee for the
current Interest Period, plus any previously unpaid
Monthly Subordinated Servicing Fee (but only with
respect to the then current Servicer) is then on
deposit in the Collection Account and allocated
therefor, or (2) if such Allocation Day falls outside
of an Assumed Period, an amount equal to the Monthly
Subordinated Servicing Fee for the current Interest
Period, plus any previously unpaid Monthly
Subordinated Servicing Fee (but only with respect to
the current Servicer) is then on deposit in the
Collection Account and allocated therefor, Investor
Finance Charge Collections received since the
beginning of the preceding Business Day shall be
retained in the Collection Account until such amount
is then on deposit; and
(x) tenth, the balance, if any, of the
Investor Finance Charge Collections received since the
beginning of the preceding Business Day (after making
the allocations described in paragraphs (i) through
(ix) above) shall, subject to Section 4.07(e) hereof,
be distributed to the Depositor for application in
accordance with the Receivables Purchase Agreement.
(d) Allocation of Investor Principal Collections
During Revolving Period. (i) At the beginning of each
Allocation Day during the Revolving Period, the Servicer
shall allocate the product of (x) the Investor Principal
Collections (including Investor Finance Charge Collections
that have been reallocated as FBC Principal Collections
pursuant to Section 4.01(c) hereof) received since the
beginning of the preceding Business Day and (y) the FBC
Allocation Percentage for such Allocation Day ("FBC
Principal Collections"), as follows and in the following
priorities (each priority to be satisfied daily before
allocations are made to any subsequent priority):
(A) first, unless the product of (x) the amount
retained in the Collection Account pursuant to Section
4.01(d)(iii)(B) hereof and (y) the FBC Investor
Percentage (in each case of the preceding Business
Day), is equal to the amount of all unreimbursed FBC
Investor Charge-Offs, FBC Principal Collections
received since the beginning of the preceding Business
Day shall be retained in the Collection Account until
the sum of such amounts equals the amount of all
unreimbursed FBC Investor Charge-Offs;
(B) second, if pursuant to Section 4.06(a)
hereof an amount is required to be deposited in the
Retained Amount Account on such day, FBC Principal
Collections received since the beginning of the
preceding Business Day in an amount equal to the
lesser of (x) the product of (1) the amount of such
required deposit and (2) the FBC Allocation Percentage
for such Allocation Day, and (y) the amount of FBC
Principal Collections received since the beginning of
the preceding Business Day shall be withdrawn from the
Collection Account and deposited in the Retained
Amount Account; and
(C) third, the balance, if any, of FBC Principal
Collections received since the beginning of the
preceding Business Day (after making the allocations
described in paragraphs (A) and (B) above) shall,
subject to Section 4.07(e) hereof, be distributed to
the Depositor for application in accordance with the
Receivables Purchase Agreement.
(ii) At the beginning of each Allocation Day
during the Revolving Period, the Servicer shall allocate
the product of (x) the Investor Principal Collections
(including Investor Finance Charge Collections that have
been reallocated as VBC Principal Collections pursuant to
Section 4.01(c) hereof) received since the beginning of the
preceding Business Day and (y) the VBC Allocation
Percentage for such Allocation Day ("VBC Principal
Collections"), as follows and in the following priorities
(each priority to be satisfied daily before allocations are
made to any subsequent priority):
(A) first, unless the product of (x) the amount
retained in the Collection Account pursuant to Section
4.01(d)(iii)(B) hereof and (y) the VBC Investor
Percentage (in each case as of the preceding Business
Day), is equal to the amount of all unreimbursed VBC
Investor Charge-Offs, VBC Principal Collections
received since the beginning of the preceding Business
Day shall be retained in the Collection Account until
the sum of such amounts equals the amount of all
unreimbursed VBC Investor Charge-Offs;
(B) second, if pursuant to Section 4.06(a)
hereof an amount is required to be deposited in the
Retained Amount Account on such day, VBC Principal
Collections received since the beginning of the
preceding Business Day in an amount equal to the
lesser of (x) the product of (1) the amount of such
required deposit and (2) the VBC Allocation Percentage
for such Allocation Day, and (y) the amount of VBC
Principal Collections received since the beginning of
the preceding Business Day shall be withdrawn from the
Collection Account and deposited in the Retained
Amount Account;
(C) third, if the Servicer has received a
Prepayment Notice in accordance with Section 6.04
hereof, VBC Principal Collections received since the
beginning of the preceding Business Day shall be
retained in the Collection Account until such time as
the amount on deposit therein is equal to (1) the
Prepayment Amount, or (2) if the Prepayment Date is a
Distribution Date later than the second Distribution
Date following the date on which such Prepayment
Notice was received by the Servicer, the monthly
amount set forth in the Prepayment Notice; and
(D) fourth, the balance, if any, of VBC
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraphs (A), (B) and (C)
above) shall, subject to Section 4.07(e) hereof, be
distributed to the Depositor for application in
accordance with the Receivables Purchase Agreement.
(iii) At the beginning of each Allocation Day
during the Revolving Period, the Servicer shall allocate
the product of (x) the Investor Principal Collections
(including Investor Finance Charge Collections that have
been reallocated as Subordinated Principal Collections
pursuant to Section 4.01(c) hereof) received since the
beginning of the preceding Business Day and (y) the
Subordinated Allocation Percentage for such Allocation Day
("Subordinated Principal Collections"), as follows and in
the following priorities (each priority to be satisfied
daily before allocations are made to any subsequent
priority):
(A) first, on the last day of each Collection
Period, Subordinated Principal Collections will be
reallocated as Investor Finance Charge Collections in
the amount by which the product of (x) the Investor
Default Amount for such Collection Period and (y) a
fraction, the numerator of which is the Invested
Amount for such Collection Period and the denominator
of which is the Required Series Pool Balance for such
Collection Period, exceeds the amounts allocated to
the Senior Investor Default Holdback Amount pursuant
to Section 4.01(c)(iii);
(B) second, unless an amount equal to the amount
of all unreimbursed Investor Charge-Offs is then on
deposit in the Collection Account and allocated
therefor, Subordinated Principal Collections received
since the beginning of the preceding Business Day
shall be retained in the Collection Account until the
sum of such amounts equals the amount of all
unreimbursed Investor Charge-Offs;
(C) third, if pursuant to Section 4.06(a) hereof
an amount is required to be deposited in the Retained
Amount Account on such day, Subordinated Principal
Collections received since the beginning of the
preceding Business Day in an amount equal to the
lesser of (x) the product of (1) the amount of such
required deposit and (2) the Subordinated Principal
Allocation Percentage for such Allocation Day, and (y)
the amount of Subordinated Principal Collections
received since the beginning of the preceding Business
Day shall be withdrawn from the Collection Account and
deposited in the Retained Amount Account; and
(D) fourth, the balance, if any, of Subordinated
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraphs (A), (B) and (C)
above) shall, subject to Section 4.07(e) hereof, be
distributed to the Depositor for application in
accordance with the Receivables Purchase Agreement.
(e) Allocation of Investor Principal Collections
During Controlled Amortization Period. (i) At the
beginning of each Allocation Day during the Controlled
Amortization Period, the Servicer shall allocate the FBC
Principal Collections (including Investor Finance Charge
Collections that have been reallocated as FBC Principal
Collections pursuant to Section 4.01(c) hereof) received
since the beginning of the preceding Business Day as
follows and in the following priorities (each priority to
be satisfied daily before allocations are made to any
subsequent priority):
(A) first, unless an amount equal to the FBC
Controlled Distribution Amount is then on deposit in
the Collection Account and allocated therefor, FBC
Principal Collections received since the beginning of
the preceding Business Day shall be retained in the
Collection Account until such amount is then on
deposit;
(B) second, unless the product of (x) the amount
retained in the Collection Account pursuant to Section
4.01(e)(iii)(B) hereof and (y) the FBC Investor
Percentage (in each case of the preceding Business
Day), is equal to the amount of all unreimbursed FBC
Investor Charge-Offs, FBC Principal Collections
received since the beginning of the preceding Business
Day shall be retained in the Collection Account until
the sum of such amounts equals the amount of all
unreimbursed FBC Investor Charge-Offs;
(C) third, if pursuant to Section 4.06(a) hereof
an amount is required to be deposited in the Retained
Amount Account on such day, FBC Principal Collections
received since the beginning of the preceding Business
Day in an amount equal to the lesser of (x) the
product of (1) the amount of such required deposit and
(2) the FBC Allocation Percentage for such Allocation
Day, and (y) the amount of FBC Principal Collections
received since the beginning of the preceding Business
Day shall be withdrawn from the Collection Account and
deposited in the Retained Amount Account; and
(D) fourth, the balance, if any, of FBC
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraphs (A), (B) and (C)
above) shall, subject to Section 4.07(e) hereof, be
distributed to the Depositor for application in
accordance with the Receivables Purchase Agreement.
(ii) At the beginning of each Allocation Day
during the Controlled Amortization Period, the Servicer
shall allocate the VBC Principal Collections (including
Investor Finance Charge Collections that have been
reallocated as VBC Principal Collections pursuant to
Section 4.01(c) hereof) received since the beginning of the
preceding Business Day as follows and in the following
priorities (each priority to be satisfied daily before
allocations are made to any subsequent priority):
(A) first, unless an amount equal to the VBC
Controlled Distribution Amount is then on deposit in
the Collection Account and allocated therefor, VBC
Principal Collections received since the beginning of
the preceding Business Day shall be retained in the
Collection Account until such amount is then on
deposit;
(B) second, unless the product of (x) the amount
retained in the Collection Account pursuant to Section
4.01(e)(iii)(B) hereof and (y) the VBC Investor
Percentage (in each case of the preceding Business
Day), is equal to the amount of all unreimbursed VBC
Investor Charge-Offs, VBC Principal Collections
received since the beginning of the preceding Business
Day shall be retained in the Collection Account until
the sum of such amounts equals the amount of all
unreimbursed VBC Investor Charge-Offs;
(C) third, if pursuant to Section 4.06(a) hereof
an amount is required to be deposited in the Retained
Amount Account on such day, VBC Principal Collections
received since the beginning of the preceding Business
Day shall be withdrawn from the Collection Account in
an amount equal to the lesser of (x) the product of
(1) the amount of such required deposit and (2) the
VBC Allocation Percentage for such Allocation Day, and
(y) the amount of VBC Principal Collections received
since the beginning of the preceding Business Day and
deposited in the Retained Amount Account; and
(D) fourth, the balance, if any, of VBC
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraphs (A), (B) and (C)
above) shall, subject to Section 4.07(e) hereof, be
distributed to the Depositor to maintain the Invested
Amount for application in accordance with the
Receivables Purchase Agreement.
(iii) At the beginning of each Allocation Day
during the Controlled Amortization Period, the Servicer
shall allocate the Subordinated Principal Collections
(including Investor Finance Charge Collections that have
been reallocated as Subordinated Principal Collections
pursuant to Section 4.01(c) hereof) received since the
beginning of the preceding Business Day as follows and in
the following priorities (each priority to be satisfied
daily before allocations are made to any subsequent
priority):
(A) first, on the last day of each Collection
Period, Subordinated Principal Collections will be
reallocated as Investor Finance Charge Collections in
the amount by which the product of (x) the Investor
Default Amount for such Collection Period and (y) a
fraction, the numerator of which is the Invested
Amount for such Collection Period and the denominator
of which is the Required Series Pool Balance for such
Collection Period, exceeds the amounts allocated to
the Senior Investor Default Holdback Amount pursuant
to Section 4.01(c)(iii);
(B) second, unless an amount equal to the amount
of all unreimbursed Investor Charge-Offs is then on
deposit in the Collection Account and allocated
therefor, Subordinated Principal Collections received
since the beginning of the preceding Business Day
shall be retained in the Collection Account until the
sum of such amounts equals the amount of all
unreimbursed Investor Charge-Offs;
(C) third, if pursuant to Section 4.06(a) hereof
an amount is required to be deposited in the Retained
Amount Account on such day, Subordinated Principal
Collections received since the beginning of the
preceding Business Day shall be withdrawn from the
Collection Account in an amount equal to the lesser of
(x) the product of (1) the amount of such required
deposit and (2) the Subordinated Principal Allocation
Percentage for such Allocation Day, and (y) the amount
of Subordinated Principal Collections received since
the beginning of the preceding Business Day and
deposited in the Retained Amount Account; and
(D) fourth, the balance, if any, of Subordinated
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraphs (A), (B) and (C)
above) shall, subject to Section 4.07(e) hereof, be
distributed to the Depositor for application in
accordance with the Receivables Purchase Agreement.
(f) Allocation of Investor Principal Collections
During Early Amortization Period. (i) At the beginning of
each Allocation Day during the Early Amortization Period,
the Servicer shall allocate the FBC Principal Collections
(including Investor Finance Charge Collections that have
been reallocated as FBC Principal Collections pursuant to
Section 4.01(c) hereof) received since the beginning of the
preceding Business Day as follows and in the following
priorities (each priority to be satisfied daily before
allocations are made to any subsequent priority):
(A) first, unless an amount equal to the FBC
Invested Amount is then on deposit in the Collection
Account and allocated therefor, FBC Principal
Collections received since the beginning of the
preceding Business Day shall be retained in the
Collection Account until such amount is then on
deposit; and
(B) second, the balance, if any, of FBC
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraph (A) above) shall,
subject to Section 4.07(e) hereof, be distributed to
the Depositor for application in accordance with the
Receivables Purchase Agreement.
(ii) At the beginning of each Allocation Day
during the Early Amortization Period, the Servicer shall
allocate the VBC Principal Collections (including Investor
Finance Charge Collections that have been reallocated as
VBC Principal Collections pursuant to Section 4.01(c)
hereof) received since the beginning of the preceding
Business Day as follows and in the following priorities
(each priority to be satisfied daily before allocations are
made to any subsequent priority):
(A) first, unless an amount equal to the VBC
Invested Amount is then on deposit in the Collection
Account and allocated therefor, VBC Principal
Collections received since the beginning of the
preceding Business Day shall be retained in the
Collection Account until such amount is then on
deposit; and
(B) second, the balance, if any, of VBC
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraph (A) above) shall,
subject to Section 4.07(e) hereof, be distributed to
the Depositor for application in accordance with the
Receivables Purchase Agreement.
(iii) At the beginning of each Allocation Day
during the Early Amortization Period, the Servicer shall
allocate the Subordinated Principal Collections (including
Investor Finance Charge Collections that have been
reallocated as Subordinated Principal Collections pursuant
to Section 4.01(c) hereof) received since the beginning of
the preceding Business Day as follows and in the following
priorities (each priority to be satisfied daily before
allocations are made to any subsequent priority):
(A) first, on the last day of each Collection
Period, Subordinated Principal Collections will be
reallocated as Investor Finance Charge Collections in
the amount by which the product of (x) the Investor
Default Amount for such Collection Period and (y) a
fraction, the numerator of which is the Invested
Amount for such Collection Period and the denominator
of which is the Required Series Pool Balance for such
Collection Period, exceeds the amounts allocated to
the Senior Investor Default Holdback Amount pursuant
to Section 4.01(c)(iii);
(B) second, the balance, if any, of Subordinated
Principal Collections received since the beginning of
the preceding Business Day (after making the
allocations described in paragraph (A) above) (1) so
long as the Invested Amount is greater than zero,
shall, subject to Section 4.07(e) hereof, be
distributed to the Depositor for application in
accordance with the Receivables Purchase Agreement,
and (2) if the Invested Amount is zero, shall be
distributed to the Holder of the Subordinated
Certificate until such time as the Subordinated
Invested Amount is zero and thereafter shall be
distributed to the Depositor.
(g) Investor Default Holdback Amounts. On the
first day of each Collection Period (other than in the case
of the first Collection Period), the Servicer shall direct
the Trustee to apply the Senior Investor Default Holdback
Amount retained in the Collection Account during the
Preceding Collection Period as follows:
(i) an amount equal to the lesser of (A) the
product of the Senior Investor Default Holdback Amount
for the Preceding Collection Period and the FBC
Investor Percentage in effect for such Preceding
Collection Period and (B) the product of the Investor
Default Amount for the Preceding Collection Period and
the FBC Allocation Percentage in effect for such
Preceding Collection Period, shall be reallocated as
FBC Principal Collections;
(ii) an amount equal to the lesser of (A) the
product of the Senior Investor Default Holdback Amount
for the Preceding Collection Period and the VBC
Investor Percentage in effect for such Preceding
Collection Period and (B) the product of the Investor
Default Amount for the Preceding Collection Period and
the VBC Allocation Percentage in effect for such
Preceding Collection Period, shall be reallocated as
VBC Principal Collections; and
(iii) if any of the Senior Investor Default
Holdback Amount for the Preceding Collection Period
remains in the Collection Account after making the
reallocations described in paragraphs (i) and (ii)
above, such remaining amount shall be reallocated as
Subordinated Principal Collections and shall result in
a corresponding reinstatement of the Subordinated
Invested Amount (to the extent that any reduction has
previously been made to such amount);
(iv) an amount equal to the lesser of (A) the
Subordinated Investor Default Holdback Amount for the
Preceding Collection Period and (B) the product of the
Investor Default Amount for the Preceding Collection
Period and the Subordinated Allocation Percentage in
effect for the Preceding Collection Period shall be
reallocated as Subordinated Principal Collections; and
(v) if any of the Subordinated Investor Default
Holdback Amount for the Preceding Collection Period
remains in the Collection Account after making the
reallocation desired in (iv) above, such remaining
amount shall be distributed to the Depositor for
application in accordance with the Receivables
Purchase Agreement.
(h) Distributions. (i) On or before each
Determination Date during the Revolving Period, the
Servicer shall provide written directions to the Trustee
directing the Trustee to distribute Investor Finance Charge
Collections and Investor Principal Collections on deposit
in the Collection Account on the following Distribution
Date to the Certificateholders and the Servicer as follows:
(A) to the Fixed Base Certificateholders, (1) an
amount equal to the sum of the amounts, if any,
retained in the Collection Account during the Related
Collection Period in respect of the Fixed Base
Certificates pursuant to Section 4.01(c)(ii) and (2)
an amount equal to the lesser of the Projected Make
Whole Premium for the Related Collection Period and
the Make Whole Premium calculated as of such
Determination Date;
(B) to the Variable Base Certificateholder, an
amount equal to the sum of the amounts, if any,
retained in the Collection Account during the Related
Collection Period in respect of the Variable Base
Certificate pursuant to Section 4.01(c)(ii); and
(C) to the Servicer, an amount equal to the sum
of the amounts, if any, retained in the Collection
Account during the Related Collection Period pursuant
to Sections 4.01(c)(i) and 4.01(c)(ix); provided,
however, so long as Gottschalks is the Servicer, the
Trustee shall first deduct from any amount payable to
the Servicer pursuant to this paragraph (C) an amount
equal to $8,000 (plus any prior payments of such
amount which remain unpaid) as payment for the fees of
the Standby Servicer.
(ii) On or before each Determination Date
during the Controlled Amortization Period, the Servicer
shall provide written directions to the Trustee directing
the Trustee to distribute Investor Finance Charge
Collections and Investor Principal Collections on deposit
in the Collection Account on the following Distribution
Date to the Certificateholders and the Servicer as follows:
(A) to the Fixed Base Certificateholders, an
amount equal to the sum of the amounts, if any,
retained in the Collection Account during the Related
Collection Period in respect of the Fixed Rate
Certificates pursuant to Sections 4.01(c)(ii) and
4.01(e)(i)(A);
(B) to the Variable Base Certificateholder, an
amount equal to the sum of the amounts, if any,
retained in the Collection Account during the Related
Collection Period in respect of the Variable Base
Certificate pursuant to Sections 4.01(c)(ii) and
4.01(e)(ii)(A); and
(C) to the Servicer, an amount equal to the sum
of the amounts, if any, retained in the Collection
Account during the Related Collection Period pursuant
to Sections 4.01(c)(i) and 4.01(c)(ix); provided,
however, that so long as Gottschalks is the Servicer,
the Trustee shall first deduct from any amount payable
to the Servicer pursuant to this paragraph (C) an
amount equal to $8,000 (plus any prior payments of
such amount which remain unpaid) as payment for the
fees of the Standby Servicer.
(iii) On or before each Determination Date
during the Early Amortization Period, the Servicer shall
provide written directions to the Trustee directing the
Trustee to distribute Investor Finance Charge Collections
and Investor Principal Collections on deposit in the
Collection Account on the following Distribution Date to
the Certificateholders and the Servicer as follows:
(A) to the Fixed Base Certificateholders, an
amount equal to the sum of the amounts, if any,
retained in the Collection Account during the Related
Collection Period in respect of the Fixed Rate
Certificates pursuant to Sections 4.01(c)(ii) and
4.01(f)(i)(A);
(B) to the Variable Base Certificateholder, an
amount equal to the sum of the amounts, if any,
retained in the Collection Account during the Related
Collection Period in respect of the Variable Base
Certificate pursuant to Sections 4.01(c)(ii) and
4.01(f)(ii)(A); and
(C) to the Servicer, an amount equal to the sum
of the amounts, if any, retained in the Collection
Account during the Related Collection Period pursuant
to Sections 4.01(c)(i) and 4.01(c)(ix); provided,
however, that so long as Gottschalks is the Servicer,
the Trustee shall first deduct from any amount payable
to the Servicer pursuant to this paragraph (C) an
amount equal to $8,000 (plus any prior payments of
such amount which remain unpaid) as payment for the
fees of the Standby Servicer.
(iv) On each Distribution Date, the Servicer
shall provide written instructions to the Trustee directing
the Trustee to distribute all amounts retained in the
Collection Account pursuant to Section 4.01(c) and not
required for any other purpose to the Depositor for
application in accordance with the Receivables Purchase
Agreement.
(i) Prohibition on Cash Distributions during
First Month. Notwithstanding anything to the contrary
contained is this Section 4.01 or the Agreement, the
Trustee shall not distribute any funds from the Collection
Account to the Depositor (whether in its individual
capacity, as holder of the Exchangeable Certificate or as
holder of the Subordinated Certificate) until such time,
which shall not exceed one calendar month from the Closing
Date, as the Depositor causes Deloitte & Touche (or some
other firm of nationally-recognized independent certified
public accountants) to deliver to the Trustee written
confirmation to the effect that such certified public
accountants have compared the mathematical calculations set
forth in the Daily Report for the two Business Days of the
initial Collection Period and the monthly distribution
statements described in Section 5.02(a) of this Series
Supplement and Section 3.04(b) of the Agreement for the
initial Collection Period with the Servicer's computer
reports which were the source of such amounts and that, on
the basis of such examination, such certified public
accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be
immaterial, with the reporting requirements contained in
the Agreement and this Series Supplement.
(j) Other Amounts. The withdrawals to be made
from the Collection Account pursuant to this Section 4.01
do not apply to deposits into the Collection Account that
do not represent Collections, including payment of the
purchase price for the Certificates pursuant to Section
2.03 of the Agreement, payment of the purchase price for
Additional Invested Amounts pursuant to Section 6.02
hereof, payment of any Make Whole Premium pursuant to
Section 4.01(h) hereof and proceeds from the sale,
disposition or liquidation of Receivables pursuant to
Section 9.02 or Section 12.02 of the Agreement.
SECTION 4.02. Monthly Interest; Unutilized
Commitment Fee. (a) FBC Monthly Interest. The amount of
monthly interest ("FBC Monthly Interest") distributable
from the Collection Account (or, in the case of the first
Distribution Date, from the Capitalized Interest Account)
with respect to the Fixed Base Certificates on any
Distribution Date shall be an amount equal to one-twelfth
(1/12th) of the product of (i) the FBC Invested Amount as
of the close of business on the preceding Distribution Date
(after giving effect to all repayments of the FBC Invested
Amount, if any, on the preceding Distribution Date), and
(ii) the FBC Interest Rate; provided that in the case of
the initial Interest Period the FBC Monthly Interest shall
be $122,500. On the Determination Date preceding each
Distribution Date, the Servicer shall determine the excess,
if any, of (x) the sum of FBC Monthly Interest for the
Related Interest Period plus the amount, if any, of the FBC
Interest Shortfall which was due but not paid on the prior
Distribution Date over (y) the amount which will be
available to be distributed to the Holders of the Fixed
Base Certificates on such Distribution Date in respect
thereof pursuant to this Series Supplement (such excess,
the "FBC Interest Shortfall"). If, on any Distribution
Date, the FBC Interest Shortfall is greater than zero, then
an additional amount ("FBC Additional Interest") shall be
payable as provided herein with respect to Fixed Base
Certificates on each Distribution Date following such
Distribution Date, to but excluding the Distribution Date
on which the FBC Interest Shortfall is paid to the Holders
of the Fixed Base Certificates, in an amount equal to one-
twelfth of the product of (i) such FBC Interest Shortfall
(or the portion thereof which has not previously been paid
to Fixed Base Certificateholders) and (ii) the FBC Interest
Rate. Notwithstanding anything to the contrary herein, FBC
Additional Interest shall be paid or distributed on Fixed
Base Certificates only to the extent permitted by
applicable law.
(b) VBC Monthly Interest. The amount of monthly
interest ("VBC Monthly Interest") distributable from the
Collection Account with respect to the Variable Base
Certificate on any Distribution Date shall be an amount
equal to the product of (i) the VBC Invested Amount as of
the close of business on the preceding Distribution Date
(after giving effect to all repayments of, or increases to,
the VBC Invested Amount, if any, on the preceding
Distribution Date), (ii) the VBC Interest Rate in effect
for the Related Interest Period and (iii) a fraction, the
numerator of which is the actual number of days elapsed in
the Related Interest Period, and the denominator of which
is 360. On the Determination Date preceding each
Distribution Date, the Servicer shall determine the excess,
if any, of (x) the sum of the VBC Monthly Interest for the
Interest Period applicable to such Distribution Date plus
the amount, if any, of the VBC Interest Shortfall which was
due but not paid on the prior Distribution Date over (y)
the amount which will be available to be distributed to the
Holder of the Variable Base Certificate on such
Distribution Date in respect thereof pursuant to this
Series Supplement (such excess, the "VBC Interest
Shortfall"). If, on any Distribution Date, the VBC
Interest Shortfall is greater than zero, then an additional
amount ("VBC Additional Interest") shall be payable as
provided herein with respect to the Variable Base
Certificate on each Distribution Date following such
Distribution Date, to but excluding the Distribution Date
on which the VBC Interest Shortfall is paid to the Holder
of the Variable Base Certificate, in an amount equal to the
product of (i) such VBC Interest Shortfall (or the portion
thereof which has not previously been paid to the Variable
Base Certificateholder), (ii) the VBC Interest Rate in
effect for the Related Interest Period, and (iii) a
fraction, the numerator of which is the actual number of
days elapsed in the Related Interest Period, and the
denominator of which is 360. Notwithstanding anything to
the contrary herein, VBC Additional Interest shall be paid
or distributed on the Variable Base Certificate only to the
extent permitted by applicable law.
(c) VBC Unutilized Commitment Fee. On the
Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any, of (i) the sum
of the VBC Unutilized Commitment Fee for the Interest
Period applicable to such Distribution Date plus the
amount, if any, of the VBC Unutilized Commitment Fee
Shortfall which was due but not paid on the prior
Distribution Date over (ii) the amount which will be
available to be distributed to the Holder of the Variable
Base Certificate on such Distribution Date in respect
thereof pursuant to this Series Supplement (such excess,
the "VBC Unutilized Commitment Fee Shortfall"). If, on any
Distribution Date, the VBC Unutilized Commitment Fee
Shortfall is greater than zero, then an additional amount
("VBC Additional Unutilized Commitment Fee") shall be
payable as provided herein for the VBC Unutilized
Commitment Fee on each Distribution Date following such
Distribution Date, to but excluding the Distribution Date
on which the VBC Unutilized Commitment Fee Shortfall is
paid to the Holder of the Variable Base Certificate, in an
amount equal to the product of (i) such VBC Unutilized
Commitment Fee Shortfall (or the portion thereof which has
not previously been paid to the Variable Base
Certificateholder), (ii) the unutilized commitment fee rate
(based on a year of 365 days or 366 days, as the case may
be) set forth in the Variable Base Certificate, and (iii) a
fraction, the numerator of which is the number of days in
the Related Interest Period, and the denominator of which
is the number of days in the then current calendar year.
Notwithstanding anything to the contrary herein, VBC
Additional Unutilized Commitment Fee shall be paid or
distributed on the Variable Base Certificate only to the
extent permitted by applicable law.
(d) Adjustment of Discount Rate. (i) On each
Reset Date, the Servicer shall calculate the Additional
Discount Rate and, if such rate is positive, cause the
Depositor to increase the Discount Rate by the amount of
the Additional Discount Rate calculated on such Reset Date;
provided, however, that any such increase shall be made in
accordance with, and subject to the limitations of, Section
2.07 of the Agreement. If the Additional Discount Rate so
calculated is negative, the Servicer shall cause the
Depositor to reduce the Discount Rate by such rate;
provided, however, that any such reduction shall be made in
accordance with, and subject to the limitations of, Section
2.07 of the Agreement; and provided further, however, that
such reduction shall not cause the Discount Rate to be less
than the Discount Rate at the time the Initial VBC Interest
Rate was established.
(ii) If the average of the Portfolio Yield for
any three consecutive Collection Periods is reduced to a
rate which is less than one-half of one percent (0.5%) in
excess of the Base Rate, the Depositor shall, subject to
compliance with Section 2.07 of the Agreement, increase the
Discount Rate in accordance with the Agreement by an amount
estimated to cause the Portfolio Yield to increase on an
annualized basis in future Collection Periods by at least
one percent (1%).
SECTION 4.03. Determination of Monthly
Principal. (a) (i) FBC Monthly Principal. The amount of
monthly principal ("FBC Monthly Principal") distributable
from the Collection Account with respect to the Fixed Base
Certificates on each Distribution Date during the Revolving
Period shall be zero.
(ii) The amount of FBC Monthly Principal
distributable from the Collection Account with respect to
the Fixed Base Certificates on each Distribution Date
during the Early Amortization Period shall be equal to the
product of (A) the Investor Principal Collections on
deposit in the Collection Account on such Distribution Date
and (B) the FBC Investor Percentage on such Distribution
Date; provided, however, that the amount of FBC Monthly
Principal distributable to the Holders of the Fixed Base
Certificates on any Distribution Date during the Early
Amortization Period shall in no event exceed the FBC
Invested Amount in effect on the Business Day preceding
such Distribution Date.
(iii) The amount of FBC Monthly Principal
distributable from the Collection Account with respect to
the Fixed Base Certificates on each Distribution Date
during the Controlled Amortization Period shall be equal to
the product of (A) the Investor Principal Collections on
deposit in the Collection Account on such Distribution Date
and (B) the FBC Investor Percentage on such Distribution
Date; provided, however, that the amount of FBC Monthly
Principal distributable to the Holders of the Fixed Base
Certificates on any Distribution Date during the Controlled
Amortization Period shall in no event exceed the FBC
Controlled Distribution Amount.
(b)(i) VBC Monthly Principal. The amount of
monthly principal ("VBC Monthly Principal") distributable
from the Collection Account with respect to the Variable
Base Certificate on each Distribution Date during the
Revolving Period shall, except as provided in Section 4.07
hereof, be zero.
(ii) The amount of VBC Monthly Principal
distributable from the Collection Account with respect to
the Variable Base Certificate on each Distribution Date
during the Early Amortization Period shall be equal to the
product of (i) the Investor Principal Collections on
deposit in the Collection Account on such Distribution Date
and (ii) the VBC Investor Percentage on such Distribution
Date; provided, however, that the amount of VBC Monthly
Principal distributable to the Holder of the Variable Base
Certificate on any Distribution Date during the Early
Amortization Period shall in no event exceed the VBC
Invested Amount in effect on the Business Day preceding
such Distribution Date.
(iii) The amount of VBC Monthly Principal
distributable from the Collection Account with respect to
the Variable Base Certificate on each Distribution Date
during the Controlled Amortization Period shall be equal to
the product of (x) the Investor Principal Collections on
deposit in the Collection Account on such Distribution Date
and (ii) the VBC Investor Percentage on such Distribution
Date; provided, however, that the amount of VBC Monthly
Principal distributable to the Holder of the Variable Base
Certificate on any Distribution Date during the Controlled
Amortization Period shall in no event exceed the VBC
Controlled Distribution Amount.
SECTION 4.04. Series Accounts. (a) The
Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on
behalf of the Trust, (i) an Eligible Deposit Account (the
"Capitalized Interest Account"), which shall be identified
as the "Capitalized Account for Gottschalks Credit Card
Master Trust, Series 1994-1", (ii) an Eligible Deposit
Account (the "Retained Amount Account"), which shall be
identified as the "Retained Amount Account for Gottschalks
Credit Card Master Trust, Series 1994-1", (iii) an Eligible
Deposit Account (the "Prepayment Account"), which shall be
identified as the "Prepayment Account for Gottschalks
Credit Card Master Trust, Series 1994-1", (iv) an Eligible
Deposit Account (the "Spread Account"), which shall be
identified as the "Spread Account for Gottschalks Credit
Card Master Trust, Series 1994-1", and (v) an Eligible
Deposit Account (the "Successor Servicer Account"), which
shall be identified as the "Successor Servicer Account for
Gottschalks Credit Card Master Trust, Series 1994-1".
Each of the Capitalized Interest Account, the Retained
Amount Account, the Prepayment Account and the Spread
Account shall bear a designation clearly indicating that
the funds deposited therein are held for the benefit of the
Certificateholders. The Successor Servicer Account shall
be held for the exclusive benefit of potential Successor
Servicers. The Capitalized Interest Account, the Retained
Amount Account, the Prepayment Account, the Spread Account
and the Successor Servicer Account are referred to herein
individually as a "Series Account" and collectively as
"Series Accounts."
(b) At the written direction of the Servicer,
funds on deposit in any Series Account shall be invested by
the Trustee in Eligible Investments selected by the
Servicer that will mature no later than the date on which
such funds are expected to be withdrawn from such Series
Account. All such Eligible Investments shall be held by
the Trustee for the benefit of the Certificateholders. All
interest and other investment earnings (net of losses and
investment expenses) of funds on deposit in the Series
Accounts shall be deposited in the Collection Account as
Finance Charge Collections.
(c) The Capitalized Interest Account shall be
maintained until all amounts on deposit therein have been
applied in accordance with Section 4.05 hereof. The
Retained Amount Account shall be maintained until all
amounts on deposit therein have been applied in accordance
with Section 4.06(g) or (h) hereof. The Prepayment Account
shall be maintained until all amounts on deposit therein
have been applied in accordance with Section 4.07(a)
hereof. The Spread Account shall be maintained until all
amounts on deposit therein have been applied in accordance
with Section 4.07(d) hereof. The Successor Servicer
Account shall be maintained until all amounts on deposit
therein have been applied in accordance with Section
4.07(e) hereof.
(d) The Trustee shall possess all right, title
and interest in and to all funds on deposit from time to
time in, and all Eligible Investments credited to, the
Series Accounts and in all proceeds thereof. Each Series
Account shall be under the sole dominion and control of the
Trustee for the benefit of the Certificateholders. If, at
any time, any Series Account ceases to be an Eligible
Deposit Account the Servicer shall within ten (10) Business
Days (or such longer period, not to exceed thirty (30)
calendar days, as to which each Rating Agency may consent)
instruct the Trustee to establish a new Series Account
meeting the conditions specified in subsection (a) above as
an Eligible Deposit Account and shall transfer any cash
and/or any investments to such new Series Account. Neither
the Depositor, the Servicer nor any person or entity
claiming by, through or under the Depositor, the Servicer
or any such person or entity shall have any right, title or
interest in, or any right to withdraw any amount from, any
Series Account, except as expressly provided herein.
Schedule 1 hereto, which is hereby incorporated into and
made part of this Series Supplement, identifies the Series
Accounts by setting forth for each such account the account
number of such account, the account designation of such
account and the name of the institution with which such
account has been established. If a substitute Series
Account is established pursuant to this Section 4.04, the
Servicer shall provide to the Trustee an amended Schedule
1, setting forth the relevant information for such
substitute Series Account.
(e) The Servicer shall maintain a ledger for the
Retained Amount Account and shall record in such ledger the
FBC Component, the VBC Component and the Subordinated
Component of each deposit made by the Trustee to, and each
withdrawal by the Trustee from, the Retained Amount
Account. The Servicer shall also maintain a ledger for the
Spread Account and shall record in such ledger the FBC
Component and the VBC Component for each deposit made by
the Trustee to, and withdrawal by the Trustee from, the
Spread Account.
(f) Pursuant to the authority granted to the
Servicer in Section 3.01(a) of the Agreement, the Servicer
shall have the power, revocable by the Trustee, to instruct
the Trustee to make withdrawals and payments from the
Series Accounts for the purposes of carrying out the
Servicer's or the Trustee's duties hereunder.
SECTION 4.05. Capitalized Interest Account. On
the Closing Date, the Trustee shall deposit in the
Capitalized Interest Account from the proceeds of the sale
of the Fixed Base Certificates an amount equal to the FBC
Monthly Interest that will have accrued and be due and
payable to the Holders of the Fixed Base Certificates on
the first Distribution Date. On the first Distribution
Date, the Servicer shall cause the Trustee to withdraw from
the Capitalized Interest Account for distribution to the
Holders of the Fixed Base Certificates an amount equal to
the FBC Monthly Interest that is due and payable on such
Distribution Date.
SECTION 4.06. Retained Amount Account. The
Servicer shall cause the Trustee to deposit amounts in, and
withdraw amounts from, the Retained Amount Account as
follows:
(a) If, at the close of business of the Servicer
on any Business Day during the Revolving Period or the
Controlled Amortization Period, the Required Series
Pool Balance at such time exceeds the sum of (i) the
Series Pool Balance at such time, (ii) the balance of
the Retained Amount Account at such time and (iii) the
balance of the Prepayment Account at such time, the
Servicer shall cause the Trustee to withdraw from the
Collection Account in accordance with Section 4.01(d)
or Section 4.01(e), as the case may be, and deposit in
the Retained Amount Account on such day an amount
equal to the lesser of (x) such excess and (y) if such
day falls within the Revolving Period, an amount equal
to the sum of the maximum amounts available on such
day pursuant to Sections 4.01(d)(i)(B), 4.01(d)(ii)(B)
and 4.01(d)(iii)(C) hereof, or if such day falls
within the Controlled Amortization Period, an amount
equal to the sum of the maximum amounts available on
such day pursuant to Sections 4.01(e)(i)(C),
4.01(e)(ii)(C) and 4.01(e)(iii)(C) hereof.
(b) If, at the close of business of the Servicer
on any Business Day during the Revolving Period or the
Controlled Amortization Period, the balance of the
Retained Amount Account is greater than zero, and the
sum of (i) the Series Pool Balance at such time, (ii)
the balance of the Retained Amount Account at such
time and (iii) the balance of the Prepayment Account
at such time, exceeds the Required Series Pool
Balance, the Servicer shall cause the Trustee to
withdraw from the Retained Amount Account for
distribution to the Depositor on such day an amount
equal to the lesser of (x) the amount of such
difference and (y) the balance of the Retained Amount
Account. Any such withdrawal shall, to the greatest
extent possible, reduce the FBC Component, the VBC
Component and the Subordinated Component of the
Retained Amount Account by the product of the FBC
Allocation Percentage, the VBC Allocation Percentage
or the Subordinated Principal Allocation Percentage,
as the case may be, and the amount of such withdrawal.
(c) If, at the close of business of the Servicer
on any Determination Date during the Controlled
Amortization Period, (i) the balance of the Retained
Amount Account is greater than zero (after first
giving effect to any deposit to, or withdrawal from,
the Retained Amount Account described in subsections
(a) and (b) of this Section 4.06) and (ii) the
Servicer has determined on such Determination Date
that the difference between the FBC Controlled
Amortization Amount and the amount of FBC Principal
Collections on deposit in the Collection Account on
such Determination Date is greater than zero, the
Servicer shall cause the Trustee to withdraw from the
FBC Component of the Retained Amount Account for
deposit in the Collection Account as FBC Principal
Collections an amount equal to the lesser of (x) the
amount of such difference and (y) the balance of the
FBC Component of the Retained Amount Account.
(d) If, at the close of business of the Servicer
on any Determination Date during the Controlled
Amortization Period, (i) the balance of the Retained
Amount Account is greater than zero (after first
giving effect to any deposit to, or withdrawal from,
the Retained Amount Account described in subsections
(a) and (b) of this Section 4.06) and (ii) the
Servicer has determined on such Determination Date
that the difference between the VBC Controlled
Distribution Amount and the amount of VBC Principal
Collections on deposit in the Collection Account on
such Determination Date is greater than zero, the
Servicer shall cause the Trustee to withdraw from the
VBC Component of the Retained Amount Account for
deposit in the Collection Account as VBC Principal
Collections an amount equal to the lesser of (x) the
amount of such difference and (y) the balance of the
VBC Component of the Retained Amount Account.
(e) If, at the close of business of the Servicer
on any Determination Date during the Revolving Period
or the Controlled Amortization Period, (i) the balance
of the Retained Amount Account is greater than zero
(after first giving effect to any deposit to, or
withdrawals from, the Retained Amount Account
described in subsections (a), (b) and (c) of this
Section 4.06) and (ii) the Servicer has determined on
such Determination Date that (A) a FBC Investor
Charge-Off will be required to be made on the Related
Distribution Date, and/or (B) one or more FBC Investor
Charge-Offs made on one or more prior Distribution
Dates has not been reimbursed, the Servicer shall
cause the Trustee to withdraw from such account for
deposit in the Collection Account as FBC Principal
Collections the following amounts (the first priority
to be satisfied before progressing to the second
priority):
(x) first, an amount equal to the lesser of
(1) the sum of the amount of such FBC Investor
Charge-Off to be made and/or unreimbursed FBC
Investor Charge-Offs and (2) an amount equal to
the product of (I) the balance of the
Subordinated Component of the Retained Amount
Account and (II) the FBC Investor Percentage in
effect on such Determination Date; and
(y) second, an amount equal to the lesser
of (1) the amount, if greater than zero, by which
the sum of the amount of such FBC Investor
Charge-Off to be made and/or unreimbursed FBC
Investor Charge-Offs exceeds the amount of the
withdrawal, if any, provided for in paragraph (x)
immediately above, and (2) an amount equal to the
balance of the FBC Component of the Retained
Amount Account.
(f) If, at the close of business of the Servicer
on any Determination Date during the Revolving Period
or the Controlled Amortization Period, (i) the balance
of the Retained Amount Account is greater than zero
(after first giving effect to any deposit to, or
withdrawal from, the Retained Amount Account described
in subsections (a), (b) and (d) of this Section 4.06)
and (ii) the Servicer has determined on such
Determination Date that (A) a VBC Investor Charge-Off
will be required to be made on the Related
Distribution Date, and/or (B) one or more VBC Investor
Charge-Offs made on one or more prior Distribution
Dates has not been reimbursed, the Servicer shall
cause the Trustee to withdraw from such account for
deposit in the Collection Account as VBC Principal
Collections the following amounts (the first priority
to be satisfied before progressing to the second
priority):
(x) first, an amount equal to the lesser of
(1) the sum of the amount of such VBC Investor
Charge-Off to be made and/or unreimbursed VBC
Investor Charge-Offs and (2) an amount equal to
the product of (I) the balance of the
Subordinated Component of the Retained Amount
Account and (II) the VBC Investor Percentage in
effect on such Determination Date; and
(y) second, an amount equal to the lesser
of (1) the amount, if greater than zero, by which
the sum of the amount of such VBC Investor
Charge-Off to be made and/or unreimbursed VBC
Investor Charge-Offs exceeds the amount of the
withdrawal, if any, provided for in paragraph (x)
immediately above, and (2) an amount equal to the
balance of the VBC Component of the Retained
Amount Account.
(g) If, at the close of business of the Servicer
on the first Determination Date during the Early
Amortization Period, the balance of the Retained
Amount Account is greater than zero, the Servicer
shall cause the Trustee to withdraw from the Retained
Amount Account for deposit in the Collection Account
(i) as FBC Principal Collections, the balance of the
FBC Component of the Retained Amount Account; and (ii)
as VBC Principal Collections, the balance of the VBC
Component of the Retained Amount Account. The
balance, if any, of the Subordinated Component of the
Retained Amount Account at the commencement of the
Early Amortization Period will be retained in the
Retained Amount Account and shall be applied to the
extent necessary, to avoid FBC Investor Charge-Offs
and VBC Investor Charge-Offs or to reimburse
unreimbursed FBC Investor Charge-Offs and unreimbursed
VBC Investor Charge-Offs.
(h) At the close of business of the Servicer on
the earlier of (i) the Series Termination Date and
(ii) the date on which the Invested Amount has been
reduced to zero, the balance, if any, remaining in the
Retained Amount Account shall be withdrawn and
transferred to the Depositor for application in
accordance with the Receivables Purchase Agreement.
SECTION 4.07. Prepayment Account; Spread
Account; Successor Servicer Account. (a) Amounts
deposited in the Prepayment Account in accordance with
Section 4.01(d)(ii)(C) pursuant to a Prepayment Notice
hereof shall be withdrawn on the Prepayment Date set forth
in such Prepayment Notice and distributed to the Holder of
the Variable Base Certificate as a prepayment of the VBC
Invested Amount.
(b) If on any Determination Date the Servicer
determines that a FBC Deficiency Amount exists, the
Servicer shall cause the Trustee to withdraw from the FBC
Component of the Spread Account and deposit in the
Collection Account an amount equal to the lesser of (i) the
amount of such FBC Deficiency Amount and (ii) the balance
of the FBC Component of the Spread Account. Amounts so
deposited in the Collection Account shall be set aside
therein to cure (in whole or part) the amount of any such
FBC Deficiency Amount. In the event that a withdrawal is
made from the FBC Component of the Spread Account on any
Determination Date and the amount of such withdrawal is
less than the FBC Deficiency Amount calculated on such
Determination Date, then the amount withdrawn shall be
applied in the following priority, first, against the
amounts described in Section 4.08(a)(i)(A), second, against
the amounts described in Section 4.08(a)(i)(B), third,
against the amounts described in Section 4.08(a)(i)(C), and
fourth, against the amounts described in Section
4.08(a)(i)(D).
(c) If on any Determination Date the Servicer
determines that a VBC Deficiency Amount exists, the
Servicer shall cause the Trustee to withdraw from the VBC
Component of the Spread Account and deposit in the
Collection Account an amount equal to the lesser of (i) the
amount of such VBC Deficiency Amount and (ii) the balance
of the VBC Component of the Spread Account. Amounts so
deposited in the Collection Account shall be set aside
therein to cure (in whole or part) the amount of any such
VBC Deficiency Amount. In the event that a withdrawal is
made from the VBC Component of the Spread Account on any
Determination Date and the amount of such withdrawal is
less than the VBC Deficiency Amount calculated on such
Determination Date, then the amount withdrawn shall be
applied in the following priority, first, against the
amounts described in Section 4.08(b)(i)(A), second, against
the amounts described in Section 4.08(b)(i)(B), third,
against the amounts described in Section 4.08(b)(i)(C),
fourth, against the amounts described in Section
4.08(b)(i)(D), fifth, against the amounts described in
Section 4.08(b)(i)(E), and sixth, against the amounts
described in Section 4.08(b)(i)(F).
(d) At the close of business of the Servicer on
the earlier of (i) the Series Termination Date and (ii) the
date on which the Invested Amount has been reduced to zero,
the balance, if any, remaining in the Spread Account shall
be withdrawn and transferred to the Depositor.
(e) Prior to the distribution in any Collection
Period of any Investor Finance Charge Collections or
Investor Principal Collections from the Collection Account
to the Depositor pursuant to Sections 4.01(c)(ix),
4.01(d)(i)(C), 4.01(d)(ii)(D), 4.01(d)(iii)(D),
4.01(e)(i(D), 4.01(e)(ii)(D), 4.01(e)(iii)(D),
4.01(f)(i)(B), 4.01(f)(ii)(B), 4.01(f)(iii)(B), the Trustee
shall withdraw from the Collection Account and deposit in
the Successor Servicer Account an amount of $35,000 for
such Collection Period until such time as $200,000 is on
deposit in the Successor Servicer Account and, thereafter,
the obligation to fund the Successor Servicer Account shall
cease. Amounts on deposit in the Successor Servicer
Account may be withdrawn only to pay costs associated with
the replacement of Gottschalks as Servicer. If a Successor
Servicer is appointed to replace Gottschalks as Servicer,
the Trustee shall, upon receipt of written requisitions
from such Successor Servicer, withdraw from the Successor
Servicer Account within the three (3) month period
following such appointment amounts as and when needed to
reimburse such Successor Servicer for documented costs
incurred in connection with the appointment of such
Successor Servicer and the performance of its duties under
the Agreement. Any amount on deposit in the Successor
Servicer Account on the three month anniversary of such
appointment shall be distributed to the Depositor. If
Gottschalks is not replaced as Servicer, on the earlier of
(i) the date on which the Invested Amount is zero, or (ii)
the Series Termination Date, all amounts on deposit in the
Successor Servicer Account shall be distributed to the
Depositor. Notwithstanding the foregoing provisions of
this Section 4.07(e), no such withdrawals and deposits
shall be made if the Depositor provides the Trustee by
April 11, 1994 with, or causes the Trustee to be provided
by April 11, 1994 with, and at all times thereafter shall
maintain, an irrevocable direct pay letter of credit with a
face amount equal to the difference between $200,000 and
the amount on deposit in the Successor Servicer Account,
which letter of credit shall be in a form reasonably
acceptable to the Trustee, issued by an Eligible
Institution, and which permits the Trustee to draw
thereunder upon the replacement of Gottschalks as Servicer
under the Agreement.
SECTION 4.08. Deficiency Amount. (a) FBC
Deficiency Amount. On each Determination Date, the
Servicer shall determine the amount (the "FBC Deficiency
Amount"), if any, by which (i) the sum of (A) a pro rata
portion (based on the FBC Investor Percentage) of the
Monthly Senior Servicing Fee for the Related Distribution
Date, (B) the FBC Monthly Interest for the Related Interest
Period, (C) all FBC Carryover Interest for the Related
Interest Period, and (D) the FBC Investor Default Amount,
if any, for such Distribution Date, exceeds (ii) the sum of
(A) the Investor Finance Charge Collections allocated to
the Fixed Base Certificates during the Related Collection
Period pursuant to Section 4.01(c)(ii), (B) a pro rata
portion (based on the FBC Allocation Percentage) of the
Investor Finance Charge Collections retained in the
Collection Account pursuant to Section 4.01(c)(i) during
the Related Collection Period, (C) a pro rata portion
(based on the FBC Allocation Percentage) of the Investor
Investment Proceeds on deposit in the Collection Account on
such Determination Date, (D) a pro rata portion (based on
the FBC Investor Percentage) of the balance of the Spread
Account as of such Determination Date, (E) the FBC
Component of the balance the Retained Amount Account as of
such Determination Date, and (F) a pro rata portion (based
on the FBC Investor Percentage) of the Collections
allocated to the Senior Investor Default Holdback Amount
for the Related Collection Period. In the event the FBC
Deficiency Amount for such Distribution Date is greater
than zero, the Servicer shall give the Trustee written
notice thereof on the date of computation.
(b) VBC Deficiency Amount. On each
Determination Date, the Servicer shall determine the amount
(the "VBC Deficiency Amount"), if any, by which (i) the sum
of (A) a pro rata portion (based on the VBC Investor
Percentage) of the Monthly Senior Servicing Fee for the
Related Distribution Date, (B) the VBC Monthly Interest for
the Related Interest Period, (C) all VBC Carryover Interest
for the Related Interest Period, (D) the VBC Unutilized
Commitment Fee for the related Distribution Date, (E) the
VBC Carryover Unutilized Commitment Fee for the related
Distribution Date, (F) the VBC Investor Default Amount, if
any, for such Distribution Date, exceeds (ii) the sum of
(A) the Investor Finance Charge Collections allocated to
the Variable Base Certificate during the Related Collection
Period pursuant to Section 4.01(c)(ii), (B) a pro rata
portion (based on the VBC Allocation Percentage) of the
Investor Finance Charge Collections retained in the
Collection Account pursuant to Section 4.01(c)(i) during
the Related Collection Period, (C) a pro rata portion
(based on the VBC Allocation Percentage) of the Investor
Investment Proceeds on deposit in the Collection Account on
such Determination Date, (D) a pro rata portion (based on
the VBC Investor Percentage) of the balance of the Spread
Account as of such Determination Date, (E) the VBC
Component of the balance the Retained Amount Account as of
such Determination Date, and (F) a pro rata portion (based
on the VBC Investor Percentage) of the Collections
allocated to the Senior Investor Default Holdback Amount
for the Related Collection Period. In the event the VBC
Deficiency Amount for such Distribution Date is greater
than zero, the Servicer shall give the Trustee written
notice thereof on the date of computation.
SECTION 4.09. Investor Charge-Offs. (a) FBC
Investor Charge-Offs. If on a Distribution Date (i) the
FBC Deficiency Amount (after giving effect to any deposits
to the Collection Account made in accordance with Sections
4.06(e) and 4.07(b) hereof) for such Distribution Date
exceeds the amount, if any, by which (A) the FBC Investor
Default Amount for the Related Collection Period exceeds
(B) the product of (x) the Senior Investor Default Holdback
Amount for the Related Collection Period and (y) the FBC
Investor Percentage for the Related Collection Period,
then, the Subordinated Invested Amount shall be reduced by
the amount of such excess (a "Subordinated Reduction
(FBC)"), but by no more than the FBC Investor Default
Amount for such Distribution Date. In the event that a
Subordinated Reduction (FBC) would cause the Subordinated
Invested Amount to be a negative number, the Subordinated
Invested Amount shall instead be reduced to zero, and the
FBC Invested Amount shall be reduced by the amount which
the Subordinated Invested Amount would have been reduced
below zero, but by not more than the FBC Investor Default
Amount for such Distribution Date (such reduction to the
FBC Invested Amount, a "FBC Investor Charge-Off"). FBC
Investor Charge-Offs shall be reimbursed and the FBC
Invested Amount shall thereafter be increased (but not by
an amount in excess of the aggregate FBC Investor Charge-
Offs) on any Distribution Date by the amount of Investor
Finance Charge Collections reallocated as Investor
Principal Collections for that purpose pursuant to Section
4.01(c)(v), as well as from withdrawals from the Retained
Amount Account and a pro rata portion (based on the FBC
Investor Percentage) of Subordinated Principal Collections
retained in the Collection Account pursuant to Section
4.01(d)(iii)(B) and 4.01(e)(iii)(B) hereof.
(b) VBC Investor Charge-Offs. If on a
Distribution Date (i) the VBC Deficiency Amount (after
giving effect to any deposits to the Collection Account
made in accordance with Sections 4.06(f) and 4.07(c)
hereof) for such Distribution Date exceeds the amount, if
any, by which (A) the VBC Investor Default Amount for the
Related Collection Period exceeds (B) the product of (x)
the Senior Investor Default Holdback Amount for the Related
Collection Period and (y) the VBC Investor Percentage for
the Related Collection Period, then, the Subordinated
Invested Amount shall be reduced by the amount of such
excess (a "Subordinated Reduction (VBC)"), but by no more
than the VBC Investor Default Amount for such Distribution
Date. In the event that a Subordinated Reduction (VBC)
would cause the Subordinated Invested Amount to be a
negative number, the Subordinated Invested Amount shall
instead be reduced to zero, and the VBC Invested Amount
shall be reduced by the amount which the Subordinated
Invested Amount would have been reduced below zero, but by
not more than the VBC Investor Default Amount for such
Distribution Date (such reduction to the VBC Invested
Amount, a "VBC Investor Charge-Off"). VBC Investor Charge-
Offs shall be reimbursed and the VBC Invested Amount shall
thereafter be increased (but not by an amount in excess of
the aggregate VBC Investor Charge-Offs) on any Distribution
Date by the amount of Investor Finance Charge Collections
reallocated as Investor Principal Collections for that
purpose pursuant to Section 4.01(c)(v), as well as from
withdrawals from the Retained Amount Account and a pro rata
portion (based on the VBC Investor Percentage of
Subordinated Principal Collections retained in the
Collection Account pursuant to Section 4.01(d)(iii)(B) and
4.01(e)(iii)(B) hereof.
(c) Pro Ration. If on any Distribution Date the
sum of the Subordinated Reduction (FBC) and the
Subordinated Reduction (VBC) described in subsections (a)
and (b) of this Section 4.09 exceeds the Subordinated
Invested Amount on such Distribution Date, then,
notwithstanding subsections (a) and (b), only a pro rata
portion (based on the FBC Investor Percentage in effect on
such Distribution Date) of such aggregate amount will be
treated as a Subordinated Reduction (FBC) and a pro rata
portion (based on the VBC Investor Percentage in effect on
such Distribution Date) of such aggregate amount will be
treated as a Subordinated Reduction (VBC).
(d) Subordinated Investor Charge-Offs.
Subordinated Reductions (FBC), Subordinated Reductions
(VBC) and amounts withdrawn from Subordinated Principal
Collections pursuant to Section 4.01(d)(iii)(B) and
4.01(e)(iii)(B) are collectively referred to herein as
"Subordinated Investor Charge-Offs." Subordinated Investor
Charge-Offs will result in a reduction in the Subordinated
Invested Amount. Subordinated Investor Charge-Offs shall
be reimbursed and the Subordinated Invested Amount
increased (but not by an amount in excess of the aggregate
amount of Subordinated Investor Charge-Offs) to the extent
that Investor Finance Charge Collections are reallocated as
Subordinated Principal Collections pursuant to Section
4.01(c)(viii) and 4.01(g)(iv) hereof.
ARTICLE V
Distributions and Reports to
Certificateholders
SECTION 5.01. Distributions. (a) On each
Distribution Date, the Trustee shall distribute to the
Certificateholders of record on the preceding Record Date
(other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Certificateholder's
pro rata share of the amounts required to be distributed
pursuant to Article IV hereof. Except as provided in
Section 12.02 of the Agreement with respect to a final
distribution, distributions to Certificateholders hereunder
shall be made by wire transfer in immediately available
funds.
SECTION 5.02. Reports and Statements to
Certificateholders. (a) On each Determination Date, the
Servicer will provide the Trustee with a completed
statement, substantially in the form of Exhibit D hereto,
and on each Distribution Date, the Trustee shall forward to
each Certificateholders such statement.
(b) The Trustee shall maintain at its Corporate
Trust Office a copy of each statement received by it
pursuant to subsection (a) of this Section 5.02. The
Trustee shall make such statements available for inspection
by Certificateholders upon reasonable notice at its
Corporate Trust Office.
(c) On or before January 31 of each calendar
year, beginning with calendar year 1995, the Trustee shall
furnish or cause to be furnished to each Person who at
any time during the preceding calendar year was a
Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in the
monthly statements to Certificateholders described in
subsection (a) of this Section 5.02, as the case may be,
aggregated for such calendar year or the applicable portion
thereof during which such Person was a Certificateholder,
together with such other information as is required to be
provided by an issuer of indebtedness under the Internal
Revenue Code and such other customary information as the
Trustee or the Servicer deems necessary to enable the
Certificateholders to prepare their tax returns. Such
obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to
any requirements of the Internal Revenue Code as from time
to time in effect.
(d) Notwithstanding any other provision of the
Agreement or this Series Supplement to the contrary, the
Trustee and the Servicer shall promptly deliver to the
initial Holders of the Fixed Base Certificates a copy of
each notice, statement or other document received or
generated by it in connection with this Series Supplement
and/or the Agreement; provided, however, that the Trustee
shall not be required to deliver to the initial Holders
copies of notices, statements or other documents received
from the Servicer and for which the Servicer is required to
deliver such notices, statements or other documents
directly to the Holders and vice versa.
(e) Notwithstanding Section 3.04(b) of the
Agreement, the Servicer shall not be required to provide
the Trustee with the Daily Report until such time as
Deloitte & Touche provides the Trustee with the opinion
described in Section 4.01(i) hereof.
ARTICLE VI
The Certificates
SECTION 6.01. The Fixed Base Certificates. The
Fixed Base Certificates will be issued in registered form,
substantially in the form of Exhibit A, and shall upon
issue, be executed and delivered by the Depositor to the
Trustee for authentication (the "Fixed Base Certificates").
The Trustee shall, upon the written request of the
Depositor, authenticate and deliver the Fixed Rate
Certificates to the Person or Persons designated in such
notice against receipt of the purchase price therefor as
provided in the Agreement. The requirements of Section
6.04(e)(ii) of the Agreement shall not apply, and shall be
deemed waived, in connection with the initial purchase of
the Fixed Base Certificates.
SECTION 6.02. The Variable Base Certificate.
(a) The Variable Base Certificate will be issued in
registered form, substantially in the form of Exhibit B,
and shall upon issue, be executed by the Depositor and
delivered to the Trustee for authentication (the "Variable
Base Certificate"). The Trustee shall, upon the written
request of the Depositor, authenticate and deliver the
Variable Base Certificate to the Person designated in such
notice.
(b) The Variable Base Certificateholder shall
agree, by its acceptance of the Variable Base Certificate,
that the Depositor may, upon at least three London
Business Days' prior written notice to the Variable
Base Certificateholder and the Trustee, request the
Variable Base Certificateholder to acquire, and the
Variable Base Certificateholder shall acquire, on any
Distribution Date during the Revolving Period, undivided
interests in the Trust (such interests, the "Additional
Invested Amounts"); provided, however, that the Variable
Base Certificateholder shall not be required to acquire any
Additional Invested Amount (i) that is in a minimum amount
of less than $500,000 or any $100,000 integral multiple in
excess thereof); (ii) if the acquisition thereof would
cause the VBC Invested Amount on such Distribution Date to
exceed the Maximum Available VBC Invested Amount on such
date and (iii) if on the acquisition date any amount is on
deposit in the Prepayment Account.
(c) If the Variable Base Certificateholder
acquires any Additional Invested Amount, then in
consideration of the receipt by the Trustee of such
Certificateholder's payment for such Additional Invested
Amount, the Servicer shall appropriately note in its
succeeding daily and monthly servicing reports such
Additional Invested Amount (and the corresponding increase
in the VBC Invested Amount as a result of such acquisition)
and shall direct the Trustee to pay to the Depositor the
purchase price received by the Trustee for such Additional
Invested Amounts (which shall be equal to the amount of
such Additional Invested Amounts).
(d) The Variable Base Certificateholder
shall, and is hereby authorized to, record on the grid
attached to its Variable Base Certificate (or at such
Certificateholder's option, in its internal books and
records) the date and amount of any Additional Invested
Amount purchased by it, and each repayment thereof;
provided that failure to make any such recordation on such
grid or any error in such grid shall not adversely affect
such Certificateholder's rights with respect to the VBC
Invested Amount and its right to receive principal and
interest payments in respect of the VBC Invested Amount.
(e) Notwithstanding anything to the contrary
contained in this Series Supplement, no VBC Unutilized
Commitment Fee shall commence accruing until such time as
the Trustee has authenticated and delivered the Variable
Base Certificate to the order of the Depositor.
SECTION 6.03. Transfer Restrictions. The
Trustee shall not authenticate and deliver to any Person
any Variable Base Certificate unless it contains a legend
in substantially the following form:
"THIS CERTIFICATE (OR ITS PREDECESSOR) WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OR ANY APPLICABLE STATE SECURITIES LAW OF ANY
STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT
TO OR EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW.
THE HOLDER OF THIS CERTIFICATE AGREES FOR THE
BENEFIT OF GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION THAT NO RESALE OR OTHER TRANSFER OF
THIS CERTIFICATE MAY BE MADE WITHOUT THE PRIOR
WRITTEN CONSENT OF GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION. IN ADDITION TO THE FOREGOING
RESTRICTION, NO RESALE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE EXCEPT (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (2) IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS, OR (3) TO GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION."
In addition to transfer restrictions contained in the
Agreement, the Trustee shall not be required to give effect
to any transfer of the Fixed Base Certificates or the
Variable Base Certificate until such time as the proposed
transferee thereof delivers to the Trustee an investment
representation letter substantially in the form of Exhibit
C attached hereto.
SECTION 6.04. Prepayment of the VBC Invested
Amount. The Depositor may elect to prepay the VBC
Invested Amount in whole, or in part in a minimum amount of
not less than $500,000 or any $100,000 integral multiple in
excess thereof, on any Distribution Date during the
Revolving Period. If the Depositor makes such an election,
it shall give the Holder of the Variable Base Certificate,
the Servicer and the Trustee written notice thereof. Such
notice (a "Prepayment Notice") shall (a) be given to the
Holder of the Variable Base Certificate, the Servicer and
the Trustee no later than three London Business Days prior
to a Distribution Date, (b) specify the amount to be
prepaid (the "Prepayment Amount"), (c) specify the
Distribution Date on which such prepayment is expected to
occur (a "Prepayment Date"), which Prepayment Date shall be
no earlier than the second Distribution Date following the
date on which such Prepayment Notice is received by the
Holder of the Variable Base Certificate, the Servicer and
the Trustee, and (d) specify the monthly amount expected to
be transferred from the Collection Account to the
Prepayment Account in the event that the Prepayment Date is
a Distribution Date later than the second Distribution Date
following the date on which such Prepayment Notice is
received by the Holder of the Variable Base Certificate,
the Servicer and the Trustee.
SECTION 6.05. The Subordinated Certificate.
The Subordinated Certificate will be issued in registered
form, substantially in the form of Exhibit C, and shall
upon issue, be executed and delivered by the Depositor
to the Trustee for authentication (the "Subordinated
Certificate"). The Trustee shall authenticate and
deliver the Subordinated Certificate to the Depositor
simultaneously with its delivery of the Fixed Base
Certificates. The Subordinated Certificate shall not be
transferable.
ARTICLE VII
Early Amortization Events
SECTION 7.01. Additional Early Amortization
Events. If any one or more of the following events shall
occur:
(a) failure on the part of the Depositor (i) to
make any payment or deposit required to be made by the
Depositor by the terms of (A) the Agreement or
(B) this Series Supplement, on or before the date
occurring two Business Days after the date such
payment or deposit is required to be made herein or
(ii) duly to observe or perform in any material
respect any covenants or agreements of the Depositor
set forth in the Agreement or this Series Supplement,
which failure to observe or perform has a material
adverse effect on the Certificateholders and which
continues unremedied for a period of 30 days after the
earlier of (A) the date the Depositor has knowledge
thereof and (B) the date on which written notice of
such failure, requiring the same to be remedied, shall
have been given to the Depositor by the Trustee, or to
the Depositor and the Trustee by the Holders of
Certificates representing more than 50% of the
Invested Amount, and continues to affect materially
and adversely the interests of the Certificateholders
for such period; or
(b) any representation or warranty made by the
Depositor in the Agreement or this Series Supplement,
or any information contained in a computer file or
microfiche list required to be delivered by the
Depositor pursuant to Section 2.01, 2.06 or 2.08 of
the Agreement, (i) shall prove to have been incorrect
in any material respect when made or when delivered,
which continues to be incorrect in any material
respect for a period of 30 days after the earlier of
(A) the date the Depositor has knowledge thereof
and (B) the date on which written notice of such
failure, requiring the same to be remedied, shall
have been given to the Depositor by the Trustee, or to
the Depositor and the Trustee by the Holders of
Certificates representing more than 50% of the
Invested Amount, and (ii) as a result of which the
interests of the Certificateholders are materially and
adversely affected and continue to be materially and
adversely affected for such period; provided, however,
that an Early Amortization Event pursuant to this
subsection 7.01(b) shall not be deemed to have
occurred hereunder if the Depositor has accepted
reassignment of or repurchased the related Receivable,
or all of such Receivables, if applicable, during such
period in accordance with the provisions of the
Agreement; or
(c) a Servicer Default occurs; or
(d) Gottschalks Inc. is replaced as the
Servicer; or
(e) for three consecutive Collection Periods one
and one-half percent (1.5%) or more of the aggregate
balance of all Eligible Receivables are more than 90
days past due; or
(f) the average of the Portfolio Yield for any
three consecutive Collection Periods is reduced to a
rate which is less than the Base Rate; or
(g) for 60 consecutive days, the balance in the
Retained Amount Account shall exceed $2,500,000; or
(h) the failure to pay the Invested Amount by
the Expected Final Payment Date; or the failure to pay
the FBC Controlled Distribution Amount or the VBC
Controlled Distribution Amount on any Distribution
Date during the Controlled Amortization Period; or
(i) the Subordinated Invested Amount shall be
reduced to zero on a date on which the Invested Amount
is greater than zero; or
(j) the Defaulted Amount (net of Recoveries) as
a percentage of the average Receivables outstanding,
on an annualized basis, exceeds seven percent (7%),
for a period of three consecutive Collection Periods;
or
(k) an Early Amortization Period for any other
Series shall commence;
(l) the average of the monthly payment rate
(i.e., for any Collection Period, a fraction, the
numerator of which is the Investor Principal
Collections received during such Collection Period,
and the denominator of which is the Required Series
Pool Balance in effect for such Collection Period) for
any three consecutive Collection Periods shall be less
than 10%;
(m) the failure by Gottschalks Inc. at any time
to have available one or more working capital credit
facilities with an aggregate commitment of at least
$20,000,000 provided by one or more commercial banks
or other lending institutions; or
(n) Gottschalks Inc. shall have defaulted in
the payment of indebtedness for borrowed money in
excess of $500,000 beyond the period of grace provided
for in the agreement or instrument under which such
indebtedness was created or incurred,
such indebtedness shall have been declared due and
payable, such declaration shall not have been
rescinded, revoked or stayed and such declaration
shall have remained in effect for at least 30 days; or
Gottschalks Inc. shall have defaulted on one or more
store leases, and the net liquidated damages or other
net actual losses thereon shall have exceeded
$2,000,000 in the aggregate for any 12 month period.
then, in the case of any event described in subsections (a)
or (b) of this Section 7.01, after the applicable grace
period, if any, set forth in such subsections, either the
Trustee or the Holders of Certificates representing more
than 50% of the Invested Amount by notice then given in
writing to the Depositor and the Servicer (and to the
Trustee if given by Certificateholders) may declare than an
early amortization event (an "Early Amortization Event")
has occurred as of the date of such notice, and, in the
case of any event described in subsections (c), (d), (e),
(f), (g), (h), (i), (j), (k), (l), (m) or (n) of this
Section 7.01, subject to applicable law, an Early
Amortization Event shall occur without any notice or other
action on the part of the Trustee or the Certificateholders
(except as otherwise provided in any such subsection),
immediately upon the occurrence of such event.
Notwithstanding the foregoing, the Early Amortization
Events described in Section 7.01(e), (f), (j) and (l) shall
not become operative until the July 1994 Collection Period.
SECTION 7.02. Waiver. Notwithstanding the
declaration or occurrence of an Early Amortization Period,
the Holders of Certificates representing 50% or more of the
Invested Amount may, by written notice to the Trustee,
waive such Early Amortization Event. Such waiver shall be
binding upon all Fixed Base Certificateholders, the
Variable Base Certificateholder and the other parties to
this Series Supplement. In the case of such a waiver, all
parties hereto and all such Certificateholders shall be
restored to their former positions and rights hereunder and
any such Early Amortization Period shall be deemed not to
be continuing; provided, however, this Section 7.02 shall
not apply in the case of an Early Amortization Event of the
type described in Section 7.01(d).
ARTICLE VIII
Optional Repurchase
SECTION 8.01. Optional Repurchase. (a) On any
Distribution Date occurring after the date on which the
Invested Amount is reduced to 10% or less of the Initial
FBC Invested Amount, the Depositor shall have the option to
purchase the entire amount of, but not less than the entire
amount of, the Certificates, at a purchase price equal to
the Reassignment Amount for such Distribution Date.
(b) The Depositor shall give the Servicer and
the Trustee at least ten (10) days' prior written notice of
the Distribution Date on which the Depositor intends to
exercise such purchase option. Not later than 12:00 noon,
New York City time, on such Distribution Date the Depositor
shall deposit the Reassignment Amount into the Collection
Account in immediately available funds. Such purchase
option is subject to payment in full of the Reassignment
Amount. The Reassignment Amount shall be distributed as
set forth in Section 9.01(b) hereof.
ARTICLE IX
Final Distributions
SECTION 9.01. Final Distributions. (a) The
amount to be paid by the Depositor to the Collection
Account with respect to the Certificates in connection with
a purchase of the Certificates pursuant to Section 2.03 of
the Agreement shall equal the Reassignment Amount for the
first Distribution Date following the Collection Period in
which the reassignment obligation arises under the
Agreement.
(b) Reassignment Amounts deposited into the
Collection Account pursuant to Section 8.01 of this Series
Supplement or Section 2.03 of the Agreement and allocated
to the Series 1994-1 Certificates, shall be applied by the
Trustee at the direction of the Servicer, not later than
12:00 noon, New York City time, on the Distribution Date on
which such amounts are deposited (or, if such date is not a
Distribution Date, on the immediately following
Distribution Date) as follows:
(i) in the case of Reassignment Amounts which
constitute Investor Finance Charge Collections: (A) an
amount equal to the product of such Investor Finance
Charge Collections and the FBC Investor Percentage for
such Distribution Date shall be applied to pay an
amount up to the sum of (1) all accrued and unpaid
interest on the unpaid balance of the FBC Invested
Amount and (2) the FBC Carryover Interest due on such
Distribution Date; (B) an amount equal to the product
of such Investor Finance Charge Collections and the
VBC Investor Percentage for such Distribution Date
shall be applied to pay an amount up to the sum of (1)
all accrued and unpaid interest on the unpaid balance
of the VBC Invested Amount and (2) the VBC Carryover
Interest due on such Distribution Date; and (C) any
amount remaining after the foregoing applications
shall be reallocated as Investor Principal Collections
and applied as provided in paragraph (ii) immediately
below; and
(ii) in the case of Reassignment Amounts which
constitute Investor Principal Collections: (A) an
amount equal to the product of such Investor Principal
Collections and the FBC Allocation Percentage for such
Distribution Date shall be applied to pay an amount up
to the FBC Invested Amount; (B) an amount equal to the
product of such Investor Principal Collections and the
VBC Allocation Percentage for such Distribution Date
shall be applied to pay an amount up to the VBC
Invested Amount; (C) an amount equal to the product of
such Investor Principal Collections and the
Subordinated Allocation Percentage for such
Distribution Date shall be applied to pay an amount up
to the Subordinated Invested Amount; and (D) any
amount remaining after the foregoing applications
shall be distributed to the Holder of the Exchangeable
Certificate.
(c) Termination Proceeds deposited into the
Collection Account pursuant to Section 12.02(c) of the
Agreement and allocated to the Series 1994-1 and the
Certificates, shall be applied by the Trustee at the
direction of the Servicer, not later than 12:00 noon, New
York City time, on the Distribution Date on which such
amounts are deposited (or, if such date is not a
Distribution Date, on the immediately following
Distribution Date) as follows:
(i) in the case of Termination Proceeds which
constitute Investor Finance Charge Collections: (A) an
amount equal to the product of such Investor Finance
Charge Collections and the FBC Investor Percentage for
such Distribution Date shall be applied to pay an
amount up to the sum of (1) all accrued and unpaid
interest on the unpaid balance of the FBC Invested
Amount and (2) the FBC Carryover Interest due on such
Distribution Date; (B) an amount equal to the product
of such Investor Finance Charge Collections and the
VBC Investor Percentage for such Distribution Date
shall be applied to pay an amount up to the sum of (1)
all accrued and unpaid interest on the unpaid balance
of the VBC Invested Amount and (2) the VBC Carryover
Interest due on such Distribution Date; and (C) any
amount remaining after the foregoing applications
shall be reallocated as Investor Principal Collections
and applied as provided in paragraph (ii) immediately
below; and
(ii) in the case of Termination Proceeds which
constitute Investor Principal Collections: (A) an
amount equal to the product of such Investor Principal
Collections and the FBC Allocation Percentage for such
Distribution Date shall be applied to pay an amount up
to the FBC Invested Amount; (B) an amount equal to the
product of such Investor Principal Collections and the
VBC Allocation Percentage for such Distribution Date
shall be applied to pay an amount up to the VBC
Invested Amount; (C) an amount equal to the product of
such Investor Principal Collections and the
Subordinated Allocation Percentage for such
Distribution Date shall be applied to pay an amount up
to the Subordinated Invested Amount; and (D) any
amount remaining after the foregoing applications
shall be distributed to the Holder of the Exchangeable
Certificate.
(d) Liquidation Proceeds deposited into the
Collection Account pursuant to Section 9.02(b) of the
Agreement and allocated to the Series 1994-1 Certificates,
shall be applied by the Trustee at the direction of the
Servicer, not later than 12:00 noon, New York City time, on
the Distribution Date on which such amounts are deposited
(or, if such date is not a Distribution Date, on the
immediately following Distribution Date) as follows:
(i) in the case of Liquidation Proceeds which
constitute Investor Finance Charge Collections: (A) an
amount equal to the product of such Investor Finance
Charge Collections and the FBC Investor Percentage for
such Distribution Date shall be applied to pay an
amount up to the sum of (1) all accrued and unpaid
interest on the unpaid balance of the FBC Invested
Amount and (2) the FBC Carryover Interest due on such
Distribution Date; (B) an amount equal to the product
of such Investor Finance Charge Collections and the
VBC Investor Percentage for such Distribution Date
shall be applied to pay an amount up to the sum of (1)
all accrued and unpaid interest on the unpaid balance
of the VBC Invested Amount and (2) the VBC Carryover
Interest due on such Distribution Date; and (C) any
amount remaining after the foregoing applications
shall be reallocated as Investor Principal Collections
and applied as provided in paragraph (ii) immediately
below; and
(ii) in the case of Liquidation Proceeds which
constitute Investor Principal Collections: (A) an
amount equal to the product of such Investor Principal
Collections and the FBC Allocation Percentage for such
Distribution Date shall be applied to pay an amount up
to the FBC Invested Amount; (B) an amount equal to the
product of such Investor Principal Collections and the
VBC Allocation Percentage for such Distribution Date
shall be applied to pay an amount up to the VBC
Invested Amount; (C) an amount equal to the product of
such Investor Principal Collections and the
Subordinated Allocation Percentage for such
Distribution Date shall be applied to pay an amount up
to the Subordinated Invested Amount; and (D) any
amount remaining after the foregoing applications
shall be distributed to the Holder of the Exchangeable
Certificate.
(e) Notwithstanding anything to the contrary
contained in this Series Supplement or the Agreement, any
distribution made pursuant to this Section 9.01 shall be
deemed to be a final distribution pursuant to Section 12.02
of the Agreement with respect to the Certificates.
(f) Notwithstanding Section 12.02 of the
Agreement, no Certificateholder shall be required to
surrender its Investor Certificate(s) in order to receive
its final distribution under the Agreement and this Series
Supplement.
ARTICLE X
Miscellaneous Provisions
SECTION 10.01. Ratification of Agreement. As
supplemented by this Series Supplement, the Agreement is in
all respects ratified and confirmed and the Agreement as so
supplemented by this Series Supplement, shall be read,
taken and construed as one and the same instrument.
SECTION 10.02. Counterparts. This Series
Supplement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an
original, but all of which shall together constitute but
one and the same instrument.
SECTION 10.03. GOVERNING LAW. THIS SERIES
SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Suspension of VBC Provisions.
Until the Variable Base Certificate has been issued by the
Depositor, authenticated by the Trustee and delivered to a
Person in accordance with Section 6.02(a) hereof, no
provisions relating to the Variable Base Certificate or the
Holder thereof contained in this Series Supplement shall be
considered effective.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Servicer
and the Trustee have caused this Series Supplement to be
duly executed by their respective officers as of the day
and year first above written.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, as Depositor
By:___________________________
Name:______________________
Title:_____________________
GOTTSCHALKS INC., as
Servicer
By:___________________________
Name:______________________
Title:_____________________
BANKERS TRUST COMPANY, not in its
individual capacity but
solely as Trustee
By:___________________________
Name:______________________
Title:_____________________
<PAGE>
EXHIBIT A-1
FORM OF FIXED BASE CERTIFICATE
THIS CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY
OR FOR THE ACCOUNT OF AN ERISA PLAN (AS DEFINED BELOW)
THE GOTTSCHALKS CREDIT CARD MASTER TRUST HAS NOT BEEN
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED. THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE
TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS AND CONDITIONS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT AND THE SERIES 1994-1 SUPPLEMENT TO THE
POOLING AND SERVICING AGREEMENT UNDER WHICH THIS CERTIFICATE
IS ISSUED (COPIES OF WHICH ARE AVAILABLE FROM THE TRUSTEE
UPON REQUEST). ANY TRANSFEREE OF THIS CERTIFICATE IS DEEMED
AS OF THE DATE OF SUCH TRANSFER TO MAKE CERTAIN
REPRESENTATIONS RELATING TO ERISA AND OTHER MATTERS.
No. __________ $_________________
GOTTSCHALKS CREDIT CARD MASTER TRUST
___% FIXED BASE CLASS A-1 CREDIT CARD CERTIFICATE
SERIES 1994-1
This certifies that ______________ (the "Fixed Base
Certificateholder") is the registered owner of a fractional
undivided interest in certain assets of a trust (the "Trust")
created pursuant to the Pooling and Servicing Agreement,
dated as of March 30, 1994 (the "Pooling and Servicing
Agreement"), as supplemented by the Series 1994-1 Supplement
dated as of March 30, 1994 (the "Series Supplement"), among
Gottschalks Credit Receivables Corporation, as depositor (the
"Depositor"), Gottschalks Inc., as servicer (the "Servicer"),
and Bankers Trust Company, as trustee (the "Trustee").
Capitalized terms used but not otherwise defined herein shall
have the respective meanings provided for such terms in the
Pooling and Servicing Agreement or the Series Supplement, as
applicable.
The corpus of the Trust includes (i) all
Receivables sold, transferred, assigned, set over and
otherwise conveyed to the Trust pursuant to Section 2.01 of
the Pooling and Servicing Agreement, (ii) all monies due or
to become due and all amount received with respect thereto
and all proceeds thereof (including "proceeds", as defined in
Section 9-306 of the UCC as in effect in the State of
California, and Recoveries), (iii) all monies on deposit in,
and Eligible Investments credited to, the Collection Account
or any Series Account and (iv) all monies as are from time to
time available under any Enhancements.
This Certificate is one of a series of Investor
Certificates entitled "Gottschalks Credit Card Master Trust,
__% Fixed Base Class A-1 Credit Card Certificates, Series
1994-1" (the "Fixed Base Certificates"), each of which are
issued under and subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement and the
Series Supplement. By acceptance hereof, the Fixed Base
Certificateholder assents to and is bound by the terms,
provisions and conditions of the Pooling and Servicing
Agreement and Series Supplement, as each may be amended from
time to time. Although a summary of certain provisions of
the Pooling and Servicing Agreement and the Series Supplement
is set forth below, this Certificate does not purport to
summarize the Pooling and Servicing Agreement and the Series
Supplement and reference is made to the Pooling and Servicing
Agreement and the Series Supplement for information with
respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties
and obligations of the Trustee. A copy of the Pooling and
Servicing Agreement and the Series Supplement (without
schedules) may be requested from the Trustee by writing to
the Trustee at Bankers Trust Company, Four Albany Street, New
York, New York 10006, Attention: Corporate Trust & Agency
Group, Structured Finance Team.
The Depositor has structured the Pooling and
Servicing Agreement, the Series Supplement and the Investor
Certificates with the intention that the Investor
Certificates will qualify under applicable federal, state,
local and foreign tax law as indebtedness of the Depositor.
The Depositor, the Servicer and each Holder of Investor
Certificates agree to treat and to take no action
inconsistent with the treatment of the Investor Certificates
(or beneficial interest therein) as indebtedness of the
Depositor for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or
measured by income. Each Holder of Investor Certificates, by
acceptance of its Certificate, agrees to be bound by the
provisions of Section 3.07 of the Pooling and Servicing
Agreement.
Interest shall accrue on the FBC Invested Amount
represented by this Certificate from its date of issuance to
and including the last day of the first Interest Period and,
with respect to each Interest Period thereafter, at the rate
of ____% per annum. Interest shall be payable on each
Distribution Date only to the extent that Investor Finance
Charge Collections for the related Collection Period are
sufficient to pay such interest after paying all FBC Monthly
Servicing Fees then outstanding. Interest that is due but
not paid on any Distribution Date shall be payable on the
next Distribution Date and interest shall accrue on such
unpaid amount until paid at the rate of ____% per annum.
Principal shall be payable in respect of this
Certificate commencing on the Distribution Date following the
earlier of (i) commencement of the Controlled Amortization
Period and (ii) commencement of the Early Amortization
Period. During the Controlled Amortization Period, principal
shall be payable on each Distribution Date from Investor
Principal Collections for the related Collection Period in
the amount of the FBC Controlled Amortization Amount. During
the Early Amortization Period, principal shall be payable on
each Distribution Date from Investor Principal Collections
for the related Collection Period in the amount of such
Investor Principal Collections.
In general, payments of principal with respect to
the Fixed Base Certificates are limited to the unpaid FBC
Invested Amount, which may be less than the unpaid principal
balance of the Fixed Base Certificates pursuant to the terms
of the Pooling and Servicing Agreement and the Series
Supplement. The Expected Final Payment Date with respect to
Fixed Base Certificates is the September 1999 Distribution
Date, but principal with respect to the Fixed Base
Certificates may be paid earlier or later under certain
limited circumstances described in the Pooling and Servicing
Agreement and the Series Supplement. If for one or more
months during the Controlled Amortization Period there are
not sufficient funds to pay the Controlled Amortization
Amount, then to the extent that excess funds are not
available on subsequent Distribution Dates with respect to
the Controlled Amortization Period to make up for such
shortfalls, the final payment of principal of the Fixed Base
Certificates will occur later than the September 1999
Distribution Date. If the principal of the Fixed Base
Certificates and the Variable Base Certificate have not been
paid in full prior to the September 1999 Distribution Date,
the Trustee will use its best efforts to sell or cause to be
sold on such Termination Date Receivables (or interests
therein) in an amount equal to the interest in the Pool
Balance represented by the Certificates, subject to certain
limitations, and shall immediately deposit the Termination
Proceeds allocable to the Series 1994-1 Certificateholders'
Interest in the Collection Account. The Termination Proceeds
shall be allocated and distributed to the Fixed Base
Certificateholders, the Variable Base Certificateholder and
the Holder of the Exchangeable Certificate in accordance with
the Pooling and Servicing Agreement and the Series
Supplement.
The Fixed Base Certificates are issuable only in
minimum denominations of $1,000,000 and integral multiples of
$100,000 in excess thereof. The transfer of this Certificate
shall be registered in the Certificate Register upon
surrender of this Certificate for registration of transfer at
any office or agency maintained by the Transfer Agent and
Registrar accompanied by a written instrument of transfer, in
a form satisfactory to the Trustee or the Transfer Agent and
Registrar, duly executed by the Fixed Base Certificateholder
or such Fixed Base Certificateholder's attorney-in-fact, and
duly authorized in writing with such signature guaranteed,
and thereupon one or more new Fixed Base Certificates in
authorized denominations of like aggregate amount will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement and the Series
Supplement may be amended from time to time, in certain
circumstances, by the Servicer, the Depositor, the Trustee
and (if the Seller is not the Servicer) the Seller without
the consent of any of the Certificateholders. The Pooling
and Servicing Agreement and the Series Supplement may also be
amended from time to time by the Servicer, the Depositor and
the Trustee, with the consent of (i) the Holder of the
Exchangeable Certificate, if it would be adversely affected
by such amendment, and (ii) the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid
principal amount of the Investor Certificates of all
adversely affected Series, for the purpose of adding any
provisions to or changing in any manner or eliminating or
waiving any of the provisions of the Pooling and Servicing
Agreement or any Supplement or of modifying in any manner the
rights of the Certificateholders. Any such amendment and any
such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued in
exchange hereof or in lieu hereof whether or not notation
thereof is made upon this Certificate.
This Certificate may not be acquired or held by or
for the account of any employee benefit plan or individual
retirement account subject to Title I of ERISA or Section
4975 of the Internal Revenue Code, or any trust established
under any such employee benefit plan or individual retirement
account (or established to hold the assets thereof), or any
"governmental plan" (as defined in section 3(32) of ERISA or
Section 414(d) of the Internal Revenue Code) organized in a
jurisdiction having prohibitions on transactions with such
governmental plan similar to those contained in Section 406
of ERISA or Section 4975 of the Internal Revenue Code (each
such employee benefit plan, individual retirement account and
trust, an "ERISA Plan"). No part of the funds used by any
Person to acquire or hold this Certificate may constitute
assets (within the meaning of ERISA and any applicable rules
and regulations) of an ERISA Plan. By accepting and holding
this Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not an ERISA Plan and
that this Certificate was not acquired with the assets of an
ERISA Plan.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, as Depositor
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Gottschalks Credit Card Master
Trust __% Fixed Base Class A-1 Credit Card Certificates,
Series 1994-1 referred to in the Series Supplement.
BANKERS TRUST COMPANY, not in its
individual capacity, but solely in
its capacity as Trustee
Name:
Title:
Dated:
<PAGE>
EXHIBIT A-2
FORM OF VARIABLE BASE CERTIFICATE
THIS CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY
OR FOR THE ACCOUNT OF AN ERISA PLAN (AS DEFINED BELOW)
THE GOTTSCHALKS CREDIT CARD MASTER TRUST HAS NOT BEEN
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED. THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE
TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS AND CONDITIONS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT AND THE SERIES 1994-1 SUPPLEMENT TO THE
POOLING AND SERVICING AGREEMENT UNDER WHICH THIS CERTIFICATE
IS ISSUED (COPIES OF WHICH ARE AVAILABLE FROM THE TRUSTEE
UPON REQUEST). ANY TRANSFEREE OF THIS CERTIFICATE IS DEEMED
AS OF THE DATE OF SUCH TRANSFER TO MAKE CERTAIN
REPRESENTATIONS RELATING TO ERISA AND OTHER MATTERS.
No. A2-1 $15,000,000.00
GOTTSCHALKS CREDIT CARD MASTER TRUST
VARIABLE BASE CLASS A-2 CREDIT CARD CERTIFICATE
SERIES 1994-1
This certifies that ______________ (the "Variable
Base Certificateholder") is the registered owner of a
fractional undivided interest in certain assets of a trust
(the "Trust") created pursuant to the Pooling and Servicing
Agreement, dated as of March 30, 1994 (the "Pooling and
Servicing Agreement"), as supplemented by the Series 1994-1
Supplement dated as of March 30, 1994 (the "Series
Supplement"), among Gottschalks Credit Receivables
Corporation, as depositor (the "Depositor"), Gottschalks
Inc., as servicer (the "Servicer"), and Bankers Trust
Company, as trustee (the "Trustee"). Capitalized terms used
but not otherwise defined herein shall have the respective
meanings provided for such terms in the Pooling and Servicing
Agreement or the Series Supplement, as applicable.
The corpus of the Trust includes (i) all
Receivables sold, transferred, assigned, set over and
otherwise conveyed to the Trust pursuant to Section 2.01 of
the Pooling and Servicing Agreement, (ii) all monies due or
to become due and all amount received with respect thereto
and all proceeds thereof (including "proceeds", as defined in
Section 9-306 of the UCC as in effect in the State of
California, and Recoveries), (iii) all monies on deposit in,
and Eligible Investments credited to, the Collection Account
or any Series Account and (iv) all monies as are from time to
time available under any Enhancements.
This Certificate is the Investor Certificate
entitled "Gottschalks Credit Card Master Trust, Variable Base
Class A-2 Credit Card Certificate, Series 1994-1" (the
"Variable Base Certificate"), which is issued under and
subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement and the Series Supplement.
By acceptance hereof, the Variable Base Certificateholder
assents to and is bound by the terms, provisions and
conditions of the Pooling and Servicing Agreement and Series
Supplement, as each may be amended from time to time.
Although a summary of certain provisions of the Pooling and
Servicing Agreement and the Series Supplement is set forth
below, this Certificate does not purport to summarize the
Pooling and Servicing Agreement and the Series Supplement and
reference is made to the Pooling and Servicing Agreement and
the Series Supplement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Pooling and Servicing Agreement
and the Series Supplement (without schedules) may be
requested from the Trustee by writing to the Trustee at
Bankers Trust Company, Four Albany Street, New York, New York
10006, Attention: Corporate Trust & Agency Group, Structured
Finance Team.
The Depositor has structured the Pooling and
Servicing Agreement, the Series Supplement and the Investor
Certificates with the intention that the Investor
Certificates will qualify under applicable federal, state,
local and foreign tax law as indebtedness of the Depositor.
The Depositor, the Servicer and each Holder of Investor
Certificates agree to treat and to take no action
inconsistent with the treatment of the Investor Certificates
(or beneficial interest therein) as indebtedness of the
Depositor for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or
measured by income. Each Holder of Investor Certificates, by
acceptance of its Certificate, agrees to be bound by the
provisions of Section 3.07 of the Pooling and Servicing
Agreement.
By acceptance of this Certificate, the Variable
Base Certificateholder agrees to advance funds in amounts not
less than $500,000 and integral multiples of $100,000 in
excess thereof to the Trust on any Distribution Date during
the Revolving Period; provided, that the aggregate amount of
such advance, together with all advances previously made by
the Variable Base Certificateholder and currently outstanding
shall at no time exceed the Variable Base Certificate
Commitment.
Interest shall accrue on the VBC Invested Amount
from the date of issuance of this Certificate to and
including the last day of the first Interest Period at the
rate of ____% per annum and, with respect to each Interest
Period thereafter, at a rate per annum above LIBOR to be
determined in accordance with Section 4.02(b) of the Pooling
and Servicing Agreement. Interest shall be payable on each
Distribution Date only to the extent that Investor Finance
Charge Collection for the related Collection Period are
sufficient to pay such interest after paying all VBC Monthly
Servicing Fees then outstanding. Interest that is due but
not paid on any Distribution Date shall be payable on the
next Distribution Date and interest shall accrue on such
unpaid amount until paid at the rate then in effect for the
VBC Invested Amount.
The VBC Invested Amount is subject to prepayment,
in full or in part, on any Distribution Date during the
Revolving Period pursuant to the terms of the Pooling and
Servicing Agreement and the Series Supplement; provided, that
any such prepayments must be in amounts of not less than
$500,000 or integral multiples of $100,000 in excess thereof.
Principal shall be payable in respect of this
Certificate commencing on the Distribution Date following the
earlier of (i) commencement of the Controlled Amortization
Period and (ii) commencement of the Early Amortization
Period. During the Controlled Amortization Period, principal
shall be payable on each Distribution Date from Investor
Principal Collections for the related Collection Period in
the amount of the VBC Controlled Amortization Amount. During
the Early Amortization Period, principal shall be payable on
each Distribution Date from Investor Principal Collections
for the related Collection Period in the amount of such
Investor Principal Collections.
In general, payments of principal with respect to
the Variable Base Certificate are limited to the unpaid VBC
Invested Amount, which may be less than the unpaid principal
balance of the Variable Base Certificate pursuant to the
terms of the Pooling and Servicing Agreement and the Series
Supplement. The Expected Final Payment Date with respect to
Variable Base Certificate is the September 1999 Distribution
Date, but principal with respect to the Variable Base
Certificate may be paid earlier or later under certain
limited circumstances described in the Pooling and Servicing
Agreement and the Series Supplement. If for one or more
months during the Controlled Amortization Period there are
not sufficient funds to pay the Controlled Amortization
Amount, then to the extent that excess funds are not
available on subsequent Distribution Dates with respect to
the Controlled Amortization Period to make up for such
shortfalls, the final payment of principal of the Variable
Base Certificate will occur later than the September 1999
Distribution Date. If the principal of the Fixed Base
Certificates and the Variable Base Certificate have not been
paid in full prior to the Septemnber 1999 Distribution Date,
the Trustee will use its best efforts to sell or cause to be
sold on such Termination Date Receivables (or interests
therein) in an amount equal to the interest in the Pool
Balance represented by the Certificates, subject to certain
limitations, and shall immediately deposit the Termination
Proceeds allocable to the Series 1994-1 Certificateholders'
Interest in the Collection Account. The Termination Proceeds
shall be allocated and distributed to the Fixed Base
Certificateholders, the Variable Base Certificateholder and
the Holder of the Exchangeable Certificate in accordance with
the Pooling and Servicing Agreement and the Series
Supplement.
The transfer of this Certificate shall be
registered in the Certificate Register upon surrender of this
Certificate for registration of transfer at any office or
agency maintained by the Transfer Agent and Registrar
accompanied by a written instrument of transfer, in a form
satisfactory to the Trustee or the Transfer Agent and
Registrar, duly executed by the Variable Base
Certificateholder or such Variable Base Certificateholder's
attorney-in-fact, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new Variable
Base Certificates in authorized denominations of like
aggregate amount will be issued to the designated transferee
or transferees.
The Pooling and Servicing Agreement and the Series
Supplement may be amended from time to time, in certain
circumstances, by the Servicer, the Depositor, the Trustee
and (if the Seller is not the Servicer) the Seller without
the consent of any of the Certificateholders. The Pooling
and Servicing Agreement and the Series Supplement may also be
amended from time to time by the Servicer, the Depositor and
the Trustee, with the consent of (i) the Holder of the
Exchangeable Certificate, if it would be adversely affected
by such amendment, and (ii) the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid
principal amount of the Investor Certificates of all
adversely affected Series, for the purpose of adding any
provisions to or changing in any manner or eliminating or
waiving any of the provisions of the Pooling and Servicing
Agreement or any Supplement or of modifying in any manner the
rights of the Certificateholders. Any such amendment and any
such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued in
exchange hereof or in lieu hereof whether or not notation
thereof is made upon this Certificate.
This Certificate may not be acquired or held by or
for the account of any employee benefit plan or individual
retirement account subject to Title I of ERISA or Section
4975 of the Internal Revenue Code, or any trust established
under any such employee benefit plan or individual retirement
account (or established to hold the assets thereof), or any
"governmental plan" (as defined in section 3(32) of ERISA or
Section 414(d) of the Internal Revenue Code) organized in a
jurisdiction having prohibitions on transactions with such
governmental plan similar to those contained in Section 406
of ERISA or Section 4975 of the Internal Revenue Code (each
such employee benefit plan, individual retirement account and
trust, an "ERISA Plan"). No part of the funds used by any
Person to acquire or hold this Certificate may constitute
assets (within the meaning of ERISA and any applicable rules
and regulations) of an ERISA Plan. By accepting and holding
this Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not an ERISA Plan and
that this Certificate was not acquired with the assets of an
ERISA Plan.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, as Depositor
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Gottschalks Credit Card Master Trust
Variable Base Class A-2 Credit Card Certificate, Series
1994-1 referred to in the Series Supplement.
BANKERS TRUST COMPANY, not in its
individual capacity, but solely in
its capacity as Trustee
Name:
Title:
Dated:
<PAGE>
EXHIBIT A-3
FORM OF SUBORDINATED CERTIFICATE
THIS CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY
OR FOR THE ACCOUNT OF AN ERISA PLAN (AS DEFINED BELOW)
THE GOTTSCHALKS CREDIT CARD MASTER TRUST HAS NOT BEEN
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED. THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE
TRANSFER, ASSIGNMENT, EXCHANGE, PLEDGE OR OTHER CONVEYANCE OF
THIS CERTIFICATE IS NOT PERMITTED EXCEPT IN COMPLIANCE WITH
THE TERMS AND CONDITIONS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT AND 1994-1 SERIES SUPPLEMENT TO THE
POOLING AND SERVICING AGREEMENT UNDER WHICH THIS CERTIFICATE
IS ISSUED (COPIES OF WHICH ARE AVAILABLE FROM THE TRUSTEE
UPON REQUEST). ANY TRANSFEREE OF THIS CERTIFICATE IS DEEMED
AS OF THE DATE OF SUCH TRANSFER TO MAKE CERTAIN
REPRESENTATIONS RELATING TO ERISA AND OTHER MATTERS.
GOTTSCHALKS CREDIT CARD MASTER TRUST
SUBORDINATED CERTIFICATE
SERIES 1994-1
This certifies that GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION (the "Subordinated Certificateholder") is the
registered owner of a fractional undivided interest not
allocated to the Investors' Interest or the Exchangeable
Interest in certain assets of a trust (the "Trust") created
pursuant to the Pooling and Servicing Agreement, dated as of
March 30, 1994 (the "Pooling and Servicing Agreement"), as
amended, supplemented or otherwise modified from time to
time, and the 1994-1 Series Supplement to the Pooling and
Servicing Agreement, dated as of March 30, 1994 (the "Series
Supplment"), among Gottschalks Credit Receivables
Corporation, as depositor (the "Depositor"), Gottschalks
Inc., as servicer (the "Servicer"), and Bankers Trust
Company, as trustee (the "Trustee"). Capitalized terms used
but not otherwise defined herein shall have the respective
meanings provided for such terms in the Pooling and Servicing
Agreement or the Series Supplement, as applicable.
The corpus of the Trust includes (i) all
Receivables sold, transferred, assigned, set over and
otherwise conveyed to the Trust pursuant to Section 2.01 of
the Pooling and Servicing Agreement, (ii) all monies due or
to become due and all amount received with respect thereto
and all proceeds thereof (including "proceeds", as defined in
Section 9-306 of the UCC as in effect in the State of
California, and Recoveries), (iii) all monies on deposit in,
and Eligible Investments credited to, the Collection Account
or any Series Account and (iv) all monies as are from time to
time available under any Enhancements.
This Certificate is issued under and subject to the
terms, provisions and conditions of the Pooling and Servicing
Agreement and the Series Supplement. By acceptance hereof,
the Subordinated Certificateholder assents to and is bound by
the terms, provisions and conditions of the Pooling and
Servicing Agreement and the Series Supplement, as each may be
amended, supplemented or otherwise modified from time to
time. This Certificate does not purport to summarize the
Pooling and Servicing Agreement or the Series Supplement and
reference is made to the Pooling and Servicing Agreement and
the Series Supplement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Pooling and Servicing Agreement
and the Series Supplement (without schedules) may be
requested from the Trustee by writing to the Trustee at
Bankers Trust Company, Four Albany Street, New York, New York
10006, Attention: Corporate Trust & Agency Group, Structured
Finance Team.
The Pooling and Servicing Agreement and the Series
Supplement may be amended from time to time, in certain
circumstances, by the Servicer, the Depositor, the Trustee
and (if the Seller is not the Servicer) the Seller without
the consent of any of the Certificateholders. The Pooling
and Servicing Agreement and the Series Supplement may also be
amended from time to time by the Servicer, the Depositor and
the Trustee, with the consent of (i) the Holder of the
Exchangeable Certificate, if it would be adversely affected
by such amendment, and (ii) the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid
principal amount of the Investor Certificates of all
adversely affected Series, for the purpose of adding any
provisions to or changing in any manner or eliminating or
waiving any of the provisions of the Pooling and Servicing
Agreement or any Supplement or of modifying in any manner the
rights of the Certificateholders. Any such amendment and any
such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued in
exchange hereof or in lieu hereof whether or not notation
thereof is made upon this Certificate.
This Certificate may not be acquired or held by or
for the account of any employee benefit plan or individual
retirement account subject to Title I of ERISA or Section
4975 of the Internal Revenue Code, or any trust established
under any such employee benefit plan or individual retirement
account (or established to hold the assets thereof), or any
"governmental plan" (as defined in section 3(32) of ERISA or
Section 414(d) of the Internal Revenue Code) organized in a
jurisdiction having prohibitions on transactions with such
governmental plan similar to those contained in Section 406
of ERISA or Section 4975 of the Internal Revenue Code (each
such employee benefit plan, individual retirement account and
trust, an "ERISA Plan"). No part of the funds used by any
Person to acquire or hold this Certificate may constitute
assets (within the meaning of ERISA and any applicable rules
and regulations) of an ERISA Plan. By accepting and holding
this Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not an ERISA Plan and
that this Certificate was not acquired with the assets of an
ERISA Plan.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed.
GOTTSCHALKS CREDIT RECEIVABLES
CORPORATION, as Depositor
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Gottschalks Credit Card Master Trust
Subordinated Certificate, Series 1994-1 referred to in the
Series Supplement.
BANKERS TRUST COMPANY, not in its
individual capacity, but solely in
its capacity as Trustee
Name:
Title:
Dated:
<PAGE>
EXHIBIT B
FORM OF DISTRIBUTION DATE STATEMENT
_____________________________________
GOTTSCHALKS CREDIT CARD MASTER TRUST
(SERIES 1994-1)
____________________________________
Under the Pooling and Servicing Agreement, dated
as of March 30, 1994 (as amended, modified or supplemented,
the "Pooling and Servicing Agreement"), among Gottschalks
Credit Receivables Corporation, as depositor (the
"Depositor"), Gottschalks, Inc., as servicer (the
"Servicer") and Bankers Trust Company, as trustee (the
"Trustee"), as amended and supplemented by the Series
1994-1 Supplement, dated as of March 30, 1994, among the
Depositor, the Servicer and the Trustee, the Servicer is
required to prepare certain information for each
Distribution Date regarding current distributions to the
Holders of the Fixed Base Certificates and the Holder of
the Variable Base Certificate (the "Investor
Certificateholders") and the performance of the Gottschalks
Credit Card Master Trust (the "Trust") during the Related
Collection Period. The information which is required to be
prepared with respect to the ___________, 199_ Distribution
Date and with respect to the performance of the Trust
during the Related Collection Period for such Distribution
Date is set forth below. Certain of the information is
presented on the basis of an original principal amount of
$1,000 per Certificate. Certain other information is
presented based on the aggregate amounts for the Trust as a
whole.
(A) Information Regarding the Current Monthly
Distribution for the Fixed Base Certificates and
the Variable Base Certificate (stated on the
basis of $1,000 original principal amount).
(1) The total amount of the distribution to
Investor Certificateholders on the
current Distribution Date, per $1,000
original principal amount:. . . . . . $__________
(2) The amount of the distribution set
forth in paragraph 1 above in respect
of interest on the Fixed Base
Certificates, per $1,000 original
principal amount: . . . . . . . . . . $__________
(3) The amount of the distribution set
forth in paragraph 1 above in respect
of principal on the Fixed Base
Certificates, per $1,000 original
principal amount: . . . . . . . . . . $__________
(4) The amount of the distribution set
forth in paragraph 1 above in respect
of the Make Whole Premium, if any, in
respect of the Fixed Base Certificates,
per $1,000 original principal amount: $__________
(5) The amount of the distribution set
forth in paragraph 1 above in respect
of interest on the Variable Base
Certificate, per $1,000 original
principal amount: . . . . . . . . . . $__________
(6) The amount of the distribution set
forth in paragraph 1 above in respect
of principal on the Variable Base
Certificate, per $1,000 original
principal amount: . . . . . . . . . . $__________
(7) The amount of the distribution set
forth in paragraph 1 above in respect
of VBC Unutilized Commitment Fee on the
Variable Base Certificate, per $1,000
original principal amount:. . . . . . $__________
(B) Information Regarding the Unpaid Monthly
Interest, Fees and Make Whole Premium for the
Fixed Base Certificates and the Variable Base
Certificate.
(1) Amount of interest due on the current
Distribution Date with respect to the
Fixed Base Certificates . . . . . . . $__________
(2) Amount of interest to be distributed on
the current Distribution Date to the
Holders of the Fixed Base
Certificates. . . . . . . . . . . . . $__________
(3) Amount, if any, of unpaid monthly
interest for the current Interest
Period with respect to the Fixed Base
Certificates. . . . . . . . . . . . . $__________
(4) Amount of interest due on the current
Distribution Date with respect to the
Variable Base Certificate . . . . . . $__________
(5) Amount of interest to be distributed on
the current Distribution Date to the
Holder of the Variable Base
Certificate . . . . . . . . . . . . . $__________
(6) Amount, if any, of unpaid monthly
interest for the current Interest
Period with respect to the Variable
Base Certificate. . . . . . . . . . . $__________
(7) Amount of Make Whole Premium due on the
current Distribution Date with respect
to the Fixed Base Certificates. . . . $__________
(8) Amount of Make Whole Premium to be
distributed on the current Distribution
Date to the Holders of the Fixed Base
Certificates. . . . . . . . . . . . . $__________
(9) Amount, if any, of unpaid Make Whole
Premium for the current Interest Period
with respect to the Fixed Base
Certificates. . . . . . . . . . . . . $__________
(10) Amount of VBC Unutilized Commitment Fee
due on the current Distribution Date
with respect to the Variable Base
Certificate . . . . . . . . . . . . . $__________
(11) Amount of VBC Unutilized Commitment Fee
to be distributed on the current
Distribution Date to the Holder of the
Variable Base Certificate . . . . . . $__________
(12) Amount, if any, of unpaid VBC
Unutilized Commitment Fee for the
current Interest Period with respect to
the Variable Base Certificate . . . . $__________
(C) Information Regarding the
Performance of the Trust.
(1) Collection of Receivables.
The aggregate amount of payments on
Receivables processed for the Related
Collection Period which were allocated
in respect of the Investor Certificates
of all Series:. . . . . . . . . . . . $__________
The aggregate amount of payments on
Receivables processed for the Related
Collection Period which were allocated
in respect of the Series 1994-1
Investor Certificates:. . . . . . . . $__________
(2) Collection of Principal Receivables.
The aggregate amount of payments on
Principal Receivables processed during
the Related Collection Period which
were allocated in respect of the Fixed
Base Certificates:. . . . . . . . . . $__________
The aggregate amount of payments on
Principal Receivables processed during
the Related Collection Period which
were allocated in respect of the
Variable Base Certificate:. . . . . . $__________
(3) Collection of Finance Charge
Receivables.
The aggregate amount of payments of
Finance Charge Receivables processed
during the Related Collection Period
which were allocated in respect of the
interest on the Fixed Base
Certificates: . . . . . . . . . . . . $__________
The aggregate amount of payments of
Finance Charge Receivables processed
during the Related Collection Period
which were allocated in respect of
interest on the Variable Base
Certificate:. . . . . . . . . . . . . $__________
The aggregate amount of Finance Charge
Receivables processed during the
Related Collection Period that
constitute Recoveries on Defaulted
Receivables:. . . . . . . . . . . . . $__________
(4) Principal Receivables in the Trust.
The aggregate amount of Principal
Receivables in the Trust as of the end
of the Related Collection Period: . . $__________
The amount of Principal Receivables in
the Trust represented by the Invested
Amount of the Certificates of all
Series: . . . . . . . . . . . . . . . $__________
The amount of Principal Receivables in
the Trust represented by the Required
Series Pool Balance of the Series
1994-1 Investor Certificates: . . . . $__________
The amount of Principal Receivables in
the Trust represented by the Fixed Base
Certificates (the "FBC Invested
Amount"). . . . . . . . . . . . . . . $__________
The amount of Principal Receivables in
the Trust represented by the Variable
Base Certificate (the "VBC Invested
Amount"). . . . . . . . . . . . . . . $__________
The amount of Principal Receivables in
the Trust represented by the
Subordinated Certificate (the
"Subordinated Invested Amount") . . . $__________
The Subordinated Invested Amount as a
percentage of the Required Series Pool
Balance of the Series 1994-1
Certificates. . . . . . . . . . . . . . . . ____%
The FBC Allocation Percentage with
respect to the Principal Receivables in
the Trust for the current Distribution
Date. . . . . . . . . . . . . . . . . . . . %
The VBC Allocation Percentage with
respect to the Principal Receivables in
the Trust for the current Distribution
Date. . . . . . . . . . . . . . . . . . . . %
The Subordinated Allocation Percentage
with respect to the Principal
Receivables in the Trust for the
current Distribution Date . . . . . . . . . %
(5) Delinquent Receivables.
The amount of Receivables in the
Accounts which were 30 or more days
delinquent as of the end of the Related
Collection Period:
30-59 days:. . . . . . . . . . . $__________
60-89 days:. . . . . . . . . . . $__________
90-119 days: . . . . . . . . . . $__________
120-149 days:. . . . . . . . . . $__________
150-179 days:. . . . . . . . . . $__________
180-209 days:. . . . . . . . . . $__________
210 or more days:. . . . . . . . $__________
The percentage of Receivables in the
Accounts which were 30 or more days
delinquent as of the end of the Related
Collection Period:
30-59 days:. . . . . . . . . . . . . . ____%
60-89 days:. . . . . . . . . . . . . . ____%
90-119 days: . . . . . . . . . . . . . ____%
120-149 days:. . . . . . . . . . . . . ____%
150-179 days:. . . . . . . . . . . . . ____%
180-209 days:. . . . . . . . . . . . . ____%
210 or more days:. . . . . . . . . . . ____%
(6) Investor Default Amount.
The Defaulted Amount for the Related
Collection Period . . . . . . . . . . $__________
The portion of the Defaulted Amount
allocable to the Series 1994-1 Investor
Certificates (the "Investor Default
Amount"). . . . . . . . . . . . . . . $__________
The portion of the Defaulted Amount
allocable to the Fixed Base
Certificates (the "FBC Investor Default
Amount"). . . . . . . . . . . . . . . $__________
The portion of the Defaulted Amount
allocable to the Variable Base
Certificate (the "Variable Investor
Default Amount"). . . . . . . . . . . $__________
The Senior Investor Default Holdback
Amount for the Related Collection
Period: . . . . . . . . . . . . . . . $__________
The amount, if any, by which the sum of
the FBC Investor Default Amount and the
VBC Investor Default Amount exceeded
the Senior Investor Default Holdback
Amount. . . . . . . . . . . . . . . . $__________
The amount, if any, of Subordinated
Principal Collections reallocated to
the FBC Investor Default Amount and the
VBC Investor Default Amount on the last
day of the Related Collection Period. $__________
The amount, if any, by which the Senior
Investor Default Holdback Amount
exceeded the sum of the FBC Investor
Default Amount and the VBC Investor
Default Amount. . . . . . . . . . . . $__________
The portion of the Defaulted Amount
allocable to the Subordinated
Certificate . . . . . . . . . . . . . $__________
The Subordinated Investor Default
Holdback Amount for the Related
Collection Period:. . . . . . . . . . $__________
The amount, if any, by which the
Subordinated Investor Default Amount
exceeded the Subordinated Investor
Default Holdback Amount . . . . . . . $__________
The amount, if any, by which the
Subordinated Investor Default Holdback
Amount exceeded the sum of the
Subordinated Investor Default Amount. $__________
(7) Investor Charge-Offs; Reimbursement of
Charge-Offs.
The amount of FBC Investor
Charge-Offs . . . . . . . . . . . . . $__________
The amount of FBC Investor Charge-Offs
per $1,000 original principal amount. $__________
The amount of VBC Investor
Charge-Offs . . . . . . . . . . . . . $__________
The amount of VBC Investor Charge-Offs
per $1,000 original principal amount. $__________
The amount of Subordinated Investor
Charge-Offs . . . . . . . . . . . . . $__________
The amount of Subordinated Investor
Charge-Offs per $1,000 original
principal amount. . . . . . . . . . . $__________
The amount of FBC Investor Charge-Offs
reimbursed. . . . . . . . . . . . . . $__________
The amount of FBC Investor Charge-Offs
reimbursed per $1,000 original
principal amount. . . . . . . . . . . $__________
The amount of VBC Investor Charge-Offs
reimbursed. . . . . . . . . . . . . . $__________
The amount of VBC Investor Charge-Offs
reimbursed per $1,000 original
principal amount. . . . . . . . . . . $__________
The amount of Subordinated Investor
Charge-Offs reimbursed. . . . . . . . $__________
The amount of Subordinated Investor
Charge-Offs reimbursed per $1,000
original principal amount . . . . . . $__________
(8) Servicing Fee.
The amount of the Monthly Senior
Servicing Fee due to the Servicer for
the Related Collection Period . . . . $__________
The amount of the Monthly Senior
Servicing Fee payable to the Servicer
for the Related Collection Period . . $__________
The amount of the unpaid Monthly Senior
Servicing Fee for the Related
Collection Period . . . . . . . . . . $__________
The amount of the Monthly Subordinated
Servicing Fee due to the Servicer for
the Related Collection Period . . . . $__________
The amount of the Monthly Subordinated
Servicing Fee payable to the Servicer
for the Related Collection Period . . $__________
The amount of the unpaid Monthly
Subordinated Servicing Fee for the
Related Collection Period . . . . . . $__________
(9) Reallocated Principal Collections.
The amount of Finance Charge
Collections reallocated to Principal
Collections with respect to the current
Distribution Date . . . . . . . . . . $__________
(10) Retained Amount Account.
Balance of the Retained Amount Account
on the Determination Date for the
Preceding Collection Period . . . . . $__________
The FBC Component of all amounts
deposited into the Retained Amount
Account since the Determination Date
for the preceding Distribution Date . $__________
The VBC Component of all amounts
deposited into the Retained Amount
Account since the Determination Date
for the preceding Distribution Date . $__________
The Subordinated Component of all
amounts deposited into the Retained
Amount Account since the Determination
Date for the preceding Distribution
Date. . . . . . . . . . . . . . . . . $__________
The FBC Component of all amounts
withdrawn from the Retained Amount
Account since the Determination Date
for the preceding Distribution Date . $__________
The VBC Component of all amounts
withdrawn from the Retained Amount
Account since the Determination Date
for the preceding Distribution Date . $__________
The Subordinated Component of all
amounts withdrawn from the Retained
Amount Account since the Determination
Date for the preceding Distribution
Date. . . . . . . . . . . . . . . . . $__________
The amount on deposit in the Retained
Amount Account as of the Determination
Date for the current Distribution
Date. . . . . . . . . . . . . . . . . $__________
The FBC Component of all amounts on
deposit in the Retained Amount Account
as of the Determination Date for the
current Distribution Date . . . . . . $__________
The VBC Component of all amounts on
deposit in the Retained Amount Account
as of the Determination Date for the
current Distribution Date . . . . . . $__________
The Subordinated Component of all
amounts on deposit in the Retained
Amount Account as of the Determination
Date for the current Distribution
Date . . . . . . . . . . . . . . . . $__________
(11) Prepayment Account.
The Balance of the Prepayment Account
on the Determination Date for the
Preceding Collection Period . . . . . $__________
Amounts deposited into the Prepayment
Account since the Determination Date
for the Preceding Distribution Date . $__________
Balance of the Prepayment Account on
the date hereof . . . . . . . . . . . $__________
The amount to be withdrawn from the
Prepayment Account and paid to the
Holder of the Variable Base Certificate
on this Distribution Date . . . . . . $__________
(12) Spread Account.
The balance of the Spread Account on
the Determination Date for the
Preceding Collection Period . . . . . $__________
Spread Requirement for the Related
Collection Period [see item 13
below]. . . . . . . . . . . . . . . . $__________
Amounts, if any, deposited into the
Spread Account since the Determination
Date for the Preceding Distribution
Date. . . . . . . . . . . . . . . . . $__________
The balance of the Spread Account as of
the Determination Date for the current
Distribution Date . . . . . . . . . . $__________
The amount, if any, to be withdrawn
from the Spread Account on this
Distribution Date . . . . . . . . . . $__________
(13) Portfolio Yield/Spread Requirement.
The Portfolio Yield for the Preceding
Collection Period . . . . . . . . . . . . . ____%
The Base Rate plus 0.5% for the
Preceding Collection Period . . . . . . . . ____%
The Portfolio Yield for the Preceding
Collection Period minus the sum of the
Base Rate for the Preceding Collection
Period plus 0.5% [is] [is not] greater
than zero . . . . . . . . . . . . . . . [Yes][No]
The Portfolio Yield for the second
preceding Collection Period . . . . . . . . ____%
The Base Rate plus 0.5% for the second
preceding Collection Period . . . . . . . . ____%
The Portfolio Yield for the second
preceding Collection Period minus the
sum of the Base Rate for the second
preceding Collection Period plus 0.5%
[is] [is not] greater than zero . . . . [Yes][No]
The Spread Requirement is zero unless
the Portfolio Yield in each of the two
preceding Collection Periods was less
than the sum of the Base Rate in each
such Collection Period plus 0.5%, in
which case the Spread Requirement shall
be the sum of the following amounts:
The Monthly Senior Servicing
Fee for the Preceding
Collection Period. . . . . . . . $__________
The FBC Monthly Interest for
the Preceding Collection
Period . . . . . . . . . . . . . $__________
The FBC Carryover Interest
for the Preceding Collection
Period . . . . . . . . . . . . . $__________
The VBC Monthly Interest for
the Preceding Collection
Period . . . . . . . . . . . . . $__________
The VBC Carryover Interest
for the Preceding Collection
Period . . . . . . . . . . . . . $__________
The VBC Unutilized Commitment
Fee for the Preceding
Collection Period. . . . . . . . $__________
The VBC Carryover Unutilized
Commitment Fee for the
Preceding Collection Period. . . $__________
Spread Requirement. . . . . . . . . . $__________
(14) Successor Servicer Account.
Face Amount, if any, of any letter of
credit issued to cover Successor
Servicer replacement costs. . . . . . $__________
Balance of the Successor Servicer
Account on the Determination Date for
the Preceding Collection Period . . . $__________
Amounts, if any, deposited into the
Successor Servicer Account since the
Determination Date for the Preceding
Distribution Date . . . . . . . . . . $__________
The amount on deposit in the Successor
Servicer Account as of the
Determination Date for the current
Distribution Date . . . . . . . . . . $__________
The amount, if any, to be withdrawn
from the Successor Account on this
Distribution Date . . . . . . . . . . $__________
(15) Discount Rate.
The Discount Rate in effect on the
prior Determination Date. . . . . . . . . . ____%
The Additional Discount Rate determined
on the prior Reset Date . . . . . . . . . . ____%
Other changes, if any, to the Discount
Rate since the prior Determination
Date. . . . . . . . . . . . . . . . . . . . ____%
Discount Rate as of the current
Determination Date. . . . . . . . . . . . . ____%
(16) Early Amortization Event Triggers.
Section 7.01(e) of Series 1994-1 Supplement.
[Not applicable until the Determination
Date following the June, 1994
Collection Period]
The aggregate balance of all Eligible
Receivables that were 90 days or more
past due at the end of during the
Related Collection Period as a
percentage of the Pool Balance. . . . . . . ____%
The aggregate balance of all Eligible
Receivables that were 90 days or more
past due at the end of the Preceding
Collection Period as a percentage of
the Pool Balance. . . . . . . . . . . . . . ____%
The aggregate balance of all Eligible
Receivables that were 90 days or more
past due at the end of the second
preceding Collection Period as a
percentage of the Pool Balance. . . . . . . ____%
The aggregate balance of all Eligible
Receivables that were 90 days or more
past due at the end of the Related
Collection Period and each of the two
preceding Collection Periods as a
percentage of the Pool Balance [did not
exceed] [exceeded] 1.5%
Section 7.01(f) of Series 1994-1 Supplement.
[Not applicable until the Determination
Date following the June, 1994
Collection Period]
The Portfolio Yield for the Related
Collection Period . . . . . . . . . . . . . ____%
The Portfolio Yield for the Preceding
Collection Period . . . . . . . . . . . . . ____%
The Portfolio Yield for the second
preceding Collection Period . . . . . . . . ____%
The average Portfolio Yield for the
three most recent Collection Periods. . . . ____%
Base Rate for the Related Collection
Period. . . . . . . . . . . . . . . . . . . ____%
The average Portfolio Yield for the
Related Collection Period and the two
preceding Collection Periods minus the
Base Rate for the Related Collection
Period [was] [was not] greater than
zero
Section 7.01(g) of Series 1994-1 Supplement.
The number of consecutive days during
which the balance of the Retained
Amount Account was greater than
$2,500,000. . . . . . . . . . . . . . . . . .____
The number of consecutive days during
which the balance of the Retained
Amount Account was greater than
$2,500,000 [exceeded] [did not exceed]
60 days
Section 7.01(i) of Series 1994-1 Supplement.
The Subordinated Invested Amount on the
current Distribution Date will be . . $__________
The Subordinated Invested Amount on the
current Distribution Date [is greater]
[is less] than zero
Section 7.01(j) of Series 1994-1 Supplement.
[Not applicable until the Determination
Date following the June, 1994
Collection Period]
The Defaulted Amount (net of
Recoveries) as a percentage of the
average Receivables outstanding for the
Related Collection Period . . . . . . . . . ____%
The Defaulted Amount (net of
Recoveries) as a percentage of the
average Receivables outstanding for the
Preceding Collection Period . . . . . . . . ____%
The Defaulted Amount (net of
Recoveries) as a percentage of the
average Receivables outstanding for the
second preceding Collection Period. . . . . ____%
The Defaulted Amount (net of
Recoveries) as a percentage of the
average Receivables outstanding for the
Related Collection Period and each of
the two preceding Collection Periods
[was] [was not] greater than 7%
Section 7.01(l) of Series 1994-1 Supplement.
[Not applicable until the Determination
Date following the June, 1994
Collection Period]
The monthly payment rate for the
Related Collection Period . . . . . . . . . ____%
The monthly payment rate for the
Preceding Collection Period . . . . . . . . ____%
The monthly payment rate for the second
preceding Collection Period . . . . . . . . ____%
The average monthly payment rate for
the three preceding Collection Periods. . . ____%
The average monthly payment rate for
the three preceding Collection Periods
[was not] [was] less than 10%
To the best knowledge of the undersigned, an
Early Amortization Event [has] [has not] occurred
with respect to the Series 1994-1.
IN WITNESS WHEREOF, the undersigned has duly
executed and delivered this Certificate this ____ day of
______________, 199_.
GOTTSCHALKS INC.,
as Servicer
By:________________________
Servicing Officer
<PAGE>
EXHIBIT C
[date]
Gottschalks Credit Receivables Corporation
7 River Place East
Fresno, California 93729
Bankers Trust Company
as Trustee
Four Albany Street
New York, New York 10015
Gentlemen:
Reference is made to that certain Certificate
Purchase Agreement dated as of March 30, 1994 (the
"Certificate Purchase Agreement") between Gottschalks
Credit Receivables Corporation ("GCRC") as seller,
Gottschalks Inc. ("Gottschalks") and [name of transferee]
("Transferee") pursuant to which Transferee, upon the terms
and conditions therein set forth, purchased a ____% Fixed
Base Class ____ Credit Card Certificate, Series _____, in
the original face amount of $[amount] (the "Trust
Certificate"). Capitalized terms used herein and not
defined have the meaning given in that certain Pooling and
Servicing Agreement dated as of March 30, 1994 among GCRC
as depositor, Gottschalks as servicer and Bankers Trust
Company as trustee.
In connection with such purchase, Transferee
represents and warrants that (i) it is acquiring its Trust
Certificate solely for its own account (or for accounts as
to which to exercises investment discretion) for the
purpose of investment only and not with a view to
distribution in violation of the Securities Act of 1933
(the "Act"), and will not sell or otherwise transfer such
Trust Certificate in the absence of registration under the
Act or an exemption therefrom, provided that the
disposition of its property shall at all time be and remain
within its control and (ii) it is a corporation,
partnership or other entity having such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment
in its Trust Certificate and it is (or any account for
which it is purchasing referred to in (i) above is) an
institutional accredited investor within the meaning of
Rule 501 of the Act able to bear the economic risk of
investment in its Trust Certificate, including a complete
loss, while maintaining adequate means of providing for its
current needs and foreseeable contingencies.
Sincerely yours,
[name of transferee]
By:________________________
Name:
Title:
<PAGE>
SCHEDULE I
List of Series Accounts
Bankers Trust Company
ABA # 021001033
ACCT: 01419647
REF: Gottschalks 1994-1
Attn: Kevin Bertscha
Gottschalks Credit Card Master Trust Series 1994-
1 Capitalized Interest Account: 11871
Gottschalks Credit Card Master Trust Series 1994-
1 Retained Amount Account: 11869
Gottschalks Credit Card Master Trust Series 1994-
1 Prepayment Account: 11870
Gottschalks Credit Card Master Trust Series 1994-
1 Spread Account: 11872
Gottschalks Credit Card Master Trust Series 1994-
1 Successor Servicer Account: 11868
EXHIBIT 10.75
__________________________________
GOTTSCHALKS INC.
__________________________________
________________________________________________________________
________________________________________________________________
LOAN AND SECURITY AGREEMENT
Dated: March 30, 1994
$ 35,000,000
________________________________________________________________
________________________________________________________________
__________________________________
BARCLAYS BUSINESS CREDIT, INC.
__________________________________
<PAGE>
TABLE OF CONTENTS
Section Page
1. GENERAL DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . 13
1.3 Other Terms. . . . . . . . . . . . . . . . . . . . . 13
1.4 Certain Matters of Construction. . . . . . . . . . . 13
2. CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . 14
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . 14
2.2 Mandatory Payments of the Revolving Loans. . . . . . 15
2.3 Manner of Borrowing Revolving Loans. . . . . . . . . 15
2.4 Letters of Credit; LC Guaranties . . . . . . . . . . 16
2.5 All Revolving Loans to Constitute One Obligation . . 16
2.6 Loan Account . . . . . . . . . . . . . . . . . . . . 17
2.7 Clean-Up Period. . . . . . . . . . . . . . . . . . . 17
3. INTEREST, FEES, TERM AND REPAYMENT. . . . . . . . . . . . 17
3.1 Interest, Fees and Charges . . . . . . . . . . . . . 17
3.2 Term of Agreement. . . . . . . . . . . . . . . . . . 20
3.3 Termination. . . . . . . . . . . . . . . . . . . . . 20
3.4 Payments . . . . . . . . . . . . . . . . . . . . . . 22
3.5 Application of Payments and Collections. . . . . . . 22
3.6 Statements of Account. . . . . . . . . . . . . . . . 23
3.7 Application of Deposit . . . . . . . . . . . . . . . 23
4. COLLATERAL: GENERAL TERMS . . . . . . . . . . . . . . . . 23
4.1 Security Interest in Collateral. . . . . . . . . . . 23
4.2 Representations, Warranties and Covenants --
Collateral . . . . . . . . . . . . . . . . . . . . . 24
4.3 Lien Perfection. . . . . . . . . . . . . . . . . . . 25
4.4 Location of Collateral . . . . . . . . . . . . . . . 25
4.5 Insurance of Collateral. . . . . . . . . . . . . . . 25
4.6 Protection of Collateral . . . . . . . . . . . . . . 26
4.7 Audits and Appraisals. . . . . . . . . . . . . . . . 27
5 PROVISIONS RELATING TO ACCOUNTS . . . . . . . . . . . . . 27
5.1 Representations and Warranties . . . . . . . . . . . 27
5.2 Records and Schedules of Accounts. . . . . . . . . . 27
5.3 Administration of Accounts.. . . . . . . . . . . . . 28
5.4 Collection of Accounts and other Proceeds of
Collateral . . . . . . . . . . . . . . . . . . . . . 28
6. PROVISIONS RELATING TO INVENTORY. . . . . . . . . . . . . 29
6.1 Representations, Warranties and Covenants. . . . . . 29
6.2 Inventory Reports. . . . . . . . . . . . . . . . . . 29
<PAGE>
7. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 29
7.1 General Representations and Warranties . . . . . . . 29
7.2 Reaffirmation. . . . . . . . . . . . . . . . . . . . 35
7.3 Survival of Representations and Warranties . . . . . 35
8. COVENANTS AND CONTINUING AGREEMENTS . . . . . . . . . . . 35
8.1 Affirmative Covenants. . . . . . . . . . . . . . . . 35
8.2 Negative Covenants . . . . . . . . . . . . . . . . . 40
8.3 Specific Financial Covenants . . . . . . . . . . . . 45
9. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 47
9.1 Documentation. . . . . . . . . . . . . . . . . . . . 47
9.2 Other Conditions . . . . . . . . . . . . . . . . . . 49
10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT . . . . 51
10.1 Events of Default. . . . . . . . . . . . . . . . . . 51
10.2 Acceleration of the Obligations. . . . . . . . . . . 54
10.3 Remedies . . . . . . . . . . . . . . . . . . . . . . 54
10.4 Remedies Cumulative; No Waiver . . . . . . . . . . . 56
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 56
11.1 Power of Attorney. . . . . . . . . . . . . . . . . . 56
11.2 Indemnity. . . . . . . . . . . . . . . . . . . . . . 57
11.3 Modification of Agreement; Sale of Interest. . . . . 57
11.4 Reimbursement of Expenses. . . . . . . . . . . . . . 58
11.5 Indulgences Not Waivers. . . . . . . . . . . . . . . 59
11.6 Severability . . . . . . . . . . . . . . . . . . . . 59
11.7 Successors and Assigns . . . . . . . . . . . . . . . 59
11.8 Cumulative Effects; Conflict of Terms. . . . . . . . 59
11.9 Execution in Counterparts. . . . . . . . . . . . . . 59
11.10 Notice. . . . . . . . . . . . . . . . . . . . . . . 60
11.11 Lender's Consent. . . . . . . . . . . . . . . . . . 61
11.12 Demand Obligations. . . . . . . . . . . . . . . . . 61
11.13 Publicity . . . . . . . . . . . . . . . . . . . . . 61
11.14 Time of Essence . . . . . . . . . . . . . . . . . . 61
11.15 Entire Agreement. . . . . . . . . . . . . . . . . . 61
11.16 Interpretation. . . . . . . . . . . . . . . . . . . 61
11.17 GOVERNING LAW; CONSENT TO FORUM . . . . . . . . . . 62
11.18 WAIVERS BY BORROWER . . . . . . . . . . . . . . . . 62
<PAGE>
TABLE OF EXHIBITS
Exhibit A BORROWER'S BUSINESS LOCATIONS
Exhibit B JURISDICTIONS IN WHICH BORROWER IS AUTHORIZED TO
DO BUSINESS
Exhibit C CORPORATE NAMES
Exhibit D PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
Exhibit E CAPITAL STRUCTURE
Exhibit F CONTRACTS RESTRICTING BORROWER'S RIGHT TO INCUR
DEBTS
Exhibit G LITIGATION
Exhibit H PENSION PLANS
Exhibit I LABOR CONTRACTS
Exhibit J CAPITALIZED LEASES
Exhibit K OPERATING LEASES
Exhibit L PERMITTED LIENS
Exhibit M [INTENTIONALLY OMITTED]
Exhibit N COMPLIANCE CERTIFICATE
Exhibit O BORROWING BASE CERTIFICATE
Exhibit P SCHEDULE OF DOCUMENTS
<PAGE>
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 30th day
of March, 1994, by and between BARCLAYS BUSINESS CREDIT, INC.
("Lender"), a Connecticut corporation with an office at
1999 Harrison Street, Suite 1450, Oakland, California 94612, and
GOTTSCHALKS INC. ("Borrower"), a Delaware corporation with its
chief executive office and principal place of business at 7 River
Park Place East, Fresno, California 93720, with respect to the
following facts:
RECITALS
A. Borrower and Wells Fargo Bank, National Association
("Wells"), are parties to that certain 1993 Amended and Restated
Credit Agreement dated as of August 26, 1993 (the "Wells
Agreement"), pursuant to which Wells has provided certain
financial accommodations to, or for the benefit of, Borrower upon
the terms and conditions set forth therein.
B. Lender and Wells are parties to that certain Assignment
and Acceptance dated as of March 30, 1994, pursuant to which
Lender has purchased an assignment of the Revolving Facility (as
defined in the Wells Agreement) and all of Wells' rights with
respect thereto, upon the terms and conditions set forth therein.
C. Borrower and Lender desire to amend and restate their
respective obligations with respect to the Revolving Facility.
AGREEMENT
NOW, THEREFORE, in consideration of the above premises, and
for other valuable consideration, the receipt and sufficiency of
which is acknowledged, the parties agree as follows:
1. GENERAL DEFINITIONS
1.1 Defined Terms. When used herein, the following terms
shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become
obligated under or on account of an Account.
Accounts - all accounts, credit card and charge card
receivables, contract rights, chattel paper, instruments
(including certificated securities) and documents of Borrower,
whether now owned or hereafter created or acquired by Borrower or
in which Borrower now has or hereafter acquires any interest,
including all accounts arising from Borrower's private credit
card sales.
Adjusted Net Earnings From Operations - with respect to
any fiscal period, means the net earnings (or loss) after
provision for income taxes for such fiscal period of Borrower,
all as reflected on the financial statements of Borrower supplied
to Lender pursuant to Section 8.1(J), but excluding the following
items, net of the applicable tax effect of each:
(i) any gain or loss arising from the sale of capital
assets;
(ii) any gain or loss arising from any write-up or
write-down of assets;
(iii) earnings of any Subsidiary accrued prior to the
date it became a Subsidiary;
(iv) earnings of any corporation, substantially all
the assets of which have been acquired in any manner by Borrower,
realized by such corporation prior to the date of such
acquisition;
(v) net earnings of any business entity (other than a
Subsidiary) in which Borrower has an ownership interest unless
such net earnings shall have actually been received by Borrower
in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary
which for any reason is unavailable for payment of dividends to
Borrower;
(vii) the earnings of any Person to which any assets
of Borrower shall have been sold, transferred or disposed of, or
into which Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date
of such transaction;
(viii) any gain or loss arising from the acquisition
of any Securities of Borrower; and
(ix) any gain or loss arising from extraordinary or
nonrecurring items.
Adjusted Tangible Assets - all assets except: (i) any
surplus resulting from any write-up of assets subsequent to
January 30, 1993; (ii) deferred assets, other than prepaid
insurance and prepaid taxes; (iii) patents, copyrights,
trademarks, trade names, non-compete agreements, licenses,
franchises and other similar intangibles; (iv) good will,
including any amounts, however designated on a Consolidated
balance sheet of a Person and its Subsidiaries, representing the
excess of the purchase price paid for assets or stock over the
value assigned thereto on the books of such Person;
(v) Restricted Investments; (vi) unamortized debt discount and
expense; (vii) assets located and notes and receivables due from
obligors outside of the United States of America; and
(viii) Accounts, notes and other receivables due from Affiliates
or employees.
Adjusted Tangible Net Worth - at any date means a sum
equal to:
(i) the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other
proper reserves) at which the Adjusted Tangible Assets of a
Person would be shown on a balance sheet at such date in
accordance with GAAP,
MINUS
(ii) the amount at which such Person's liabilities
(other than capital stock and surplus and Subordinated Debt)
would be shown on such balance sheet in accordance with GAAP, and
including as liabilities all reserves for contingencies and other
potential liabilities.
Affiliate - with respect to any Person, each Person (other
than a Subsidiary): (i) which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under
common control with, such Person; (ii) which beneficially owns or
holds 5% or more of any class of the Voting Stock of such Person;
or (iii) 5% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 5% or more of the equity
interest) of which is beneficially owned or held by such Person
or a Subsidiary of such Person. For purposes hereof, "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by
contract or otherwise.
Agreement - this Loan and Security Agreement.
Average Monthly Loan Balance - the amount obtained by adding
the unpaid balance of Revolving Loans owing by Borrower to Lender
at the end of each day for each day during the month or portion
thereof in question and by dividing such sum by the number of
days in such month or portion thereof.
Bank - Barclays Bank PLC.
Borrower - Gottschalks Inc., a Delaware corporation.
Borrowing Base - as at any date of determination thereof, an
amount equal to:
(i) the lesser of (A) $35,000,000 minus the face amount
of any LC Guaranty or Letter of Credit issued by Lender or any of
its Affiliates outstanding at such date, or (B) fifty percent
(50%) of the value of Eligible Inventory at such date, calculated
on a first-in, first-out basis (at the lower of cost or market),
minus the face amount of any LC Guaranty or Letter of Credit
issued by Lender or any of its Affiliates outstanding at such
date;
MINUS
(ii) any amounts which Lender may pay pursuant to any
of the Loan Documents for the account of Borrower which remain
outstanding.
Borrowing Base Certificate - a certificate of Borrower
containing information respecting the Collateral and the
borrowing availability hereunder, in the form of Exhibit O
attached hereto or such other form as may be acceptable to
Lender.
Business Day - any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of
California or is a day on which banking institutions located in
such state are closed.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or any
improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the
direct or indirect acquisition of such assets by way of increased
product or service charges, offset items or otherwise and the
principal portion of payments with respect to Capitalized Lease
Obligations.
Capitalized Lease Obligation - any Indebtedness represented
by obligations under a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness shall be the capitalized amount of
such obligations determined in accordance with GAAP.
Clean-Up Period - as defined in Section 2.7.
Closing Date - the date on which all of the conditions
precedent in Section 9 are satisfied or waived in writing by
Lender and the initial Revolving Loan is made hereunder.
Closing Fee - the fee payable by Borrower to Lender on the
Closing Date pursuant to Section 3.1(D).
Code - the Uniform Commercial Code as adopted and in force
in the State of California, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 4 hereof, and all other Property and
interests in Property that now or hereafter secure the payment
and performance of any of the Obligations.
Computation Date - the last day of each Fiscal Period.
Consolidated - the consolidation in accordance with GAAP of
the accounts of any Person or other items as to which such term
applies.
Current Assets - at any date means the amount at which all
of the current assets of a Person would be properly classified as
current assets shown on a balance sheet at such date in
accordance with GAAP, except that amounts due from Affiliates and
investments in Affiliates shall be excluded therefrom.
Current Liabilities - at any date means the amount at which
all of the current liabilities of a Person would be properly
classified as current liabilities on a balance sheet at such date
in accordance with GAAP.
Default - an event or condition the occurrence of which
would, with the passage of time or the giving of notice, or both,
become an Event of Default.
Default Rate - as defined in Section 3.1(B).
Distribution - in respect of any corporation means and
includes: (i) the payment of any dividends or other
distributions on capital stock of such corporation (except for
distributions in such stock); and (ii) the redemption or
acquisition of such corporation's Securities unless made
contemporaneously from the net proceeds of the sale of its
Securities.
Dominion Account - a special account of Lender established
by Borrower pursuant to this Agreement at Wells or such other
bank selected by Borrower, but acceptable to Lender, in its sole
discretion, and over which Lender shall have sole and exclusive
access and control for withdrawal purposes.
Eligible Inventory - such Inventory of Borrower (other than
packaging materials and supplies) which Lender, in the exercise
of its reasonable credit judgment, deems to be Eligible
Inventory. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory unless, in Lender's
opinion, it: (i) is finished goods held for resale purchased by
Borrower in the ordinary course of its business; (ii) is in good,
new and saleable condition; (iii) has been returned to regular
stock at one of the locations listed on Exhibit A hereto if such
Inventory has been returned to Borrower from customers or Account
Debtors; (iv) is not obsolete or unmerchantable; (v) meets all
standards imposed by any governmental agency or authority;
(vi) conforms in all respects to the warranties and
representations set forth in Section 6.1; (vii) is at all times
subject to Lender's duly perfected, first priority security
interest and is subject to no other Lien except for Permitted
Liens; and (viii) is situated at a location in compliance with
Section 4.4 and is not in-transit.
Environmental Laws - all Federal, state and local laws,
rules, regulations, ordinances, programs, permits, guidances,
orders and consent decrees relating to health, safety and
environmental matters, including, but not limited to, the
Resource Conservation and Recovery Act; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980;
the Toxic Substances Control Act, as amended; the Clean Water
Act; the River and Harbor Act; Water Pollution Control Act; the
Marine Protection Research and Sanctuaries Act; the Deep-Water
Port Act; the Safe Drinking Water Act; the Superfund Amendments
and Reauthorization Act of 1986; the Federal Insecticide,
Fungicide and Rodenticide Act; the Mineral Lands and Leasing Act;
the Surface Mining Control and Reclamation Act; state and Federal
superlien and environmental cleanup programs and laws; and U.S.
Department of Transportation regulations.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description
used in Borrower's operations or owned by Borrower or in which
Borrower has an interest, whether now owned or hereafter acquired
by Borrower and wherever located, and all parts, accessories and
special tools and all increases and accessions thereto and
substitutions and replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974
and all rules and regulations promulgated thereunder.
Event of Default - as defined in Section 10.1.
Fiscal Period - each of the twelve (12) accounting periods
comprising a Fiscal Year, each of which shall be a four or five
week period under Borrower's "4-5-4" method of accounting.
Fiscal Year - the fiscal year of Borrower, which is the
fifty-two (52) or fifty-three (53) week period ending on the
Saturday nearest January 31 of each calendar year. Subsequent
changes of the fiscal year of Borrower shall not change the term
"Fiscal Year," unless Lender shall consent in writing to each
such change.
Fixed Assets - all Equipment and real Property subject to a
Mortgage.
Fixed Base Certificates - the $40,000,000 7.35% Fixed Base
Class A-1 Credit Card Certificates, Series 1994-1 issued by the
Gottschalks Credit Card Master Trust pursuant to the
Securitization Facility.
GAAP - generally accepted accounting principles in the
United States of America in effect from time to time.
General Intangibles - all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower,
including all choses in action, causes of action, corporate or
other business records, deposit accounts, inventions, designs,
patents, patent applications, trademarks, trade names, trade
secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, computer programs,
all rights to indemnification and all other intangible property
of every kind and nature (other than Accounts).
Indebtedness - as applied to a Person means, without
duplication: (i) all items which in accordance with GAAP would
be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the date
as of which Indebtedness is to be determined, including
Capitalized Lease Obligations; (ii) all obligations of other
Persons which such Person has guaranteed; and (iii) in the case
of Borrower, the Obligations.
Inventory - all inventory of Borrower, whether now owned or
hereafter acquired by Borrower, including all goods intended for
sale or lease by Borrower, or for display or demonstration; all
work in process; all raw materials and other materials and
supplies of every nature and description used or which might be
used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such
goods or otherwise used or consumed in Borrower's business; and
all documents evidencing and General Intangibles relating to any
of the foregoing.
Inventory Turnover Rate - for any Fiscal Period or period of
consecutive Fiscal Periods, the average end-of-period Inventory
during such period, divided by the cost of Inventory sold over
such period, multiplied by the number of days in such period.
LC Guaranty - a guaranty executed by Lender at Borrower's
request in favor of a Person who has issued a Letter of Credit
for the account of Borrower.
Lender - Barclays Business Credit, Inc., a Connecticut
corporation.
Letter of Credit - a standby or commercial letter of credit
issued for the account of Borrower.
LIBOR Rate - the rate per annum offered by Bank at 11:00
a.m. (London time) in the London interbank market, for Eurodollar
deposits for a period of one (1) month, as quoted on the Reuters
Screen LIBO Page on the second full Eurodollar Business Day (as
defined below) preceding the date with respect to which such
calculation is being made (or if such rate is no longer being
quoted on the Reuters Screen LIBO Page, as quoted in such other
publication as may be designated by Lender), rounded upwards, if
necessary, to the nearest one-sixteenth of one percent (0.0625%).
The term "Eurodollar Business Day" means a business day on which
banks generally in the City of London are open for interbank or
foreign exchange transactions.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or
contract, including the security interest, security title or lien
arising from a security agreement, mortgage, deed of trust, deed
to secure debt, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security
purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of this
Agreement, Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person
for security purposes.
Loan Account - the loan account established on the books of
Lender pursuant to Section 2.6.
Loan Documents - this Agreement, the Other Agreements and
the Security Documents.
Long Term Financing Transaction - a proposed financing
transaction acceptable to Lender between Borrower and a third
party generating not less than $30,000,000 of proceeds to
Borrower (which amount may include the $19,000,000 term portion
of the Wells Indebtedness).
Money Borrowed - as applied to Indebtedness, means:
(i) Indebtedness for borrowed money; (ii) Indebtedness, whether
or not in any such case the same was for borrowed money,
(A) which is represented by notes payable or drafts accepted that
evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or
(C) upon which interest charges are customarily paid (other than
accounts payable) or which was issued or assumed as full or
partial payment for Property; (iii) Indebtedness that constitutes
a Capitalized Lease Obligation; and (iv) Indebtedness under any
guaranty of obligations that would constitute Indebtedness for
Money Borrowed under clauses (i) through (iii) hereof.
Mortgages - the mortgages or deeds of trust to be executed
by Borrower in favor of Lender on or about the Closing Date and
by which Borrower shall grant and convey to Lender, as security
for the Obligations, a Lien upon the real Property of Borrower
located at (i) 2520 Somersville Road, Antioch, California;
(ii) 3300 Broadway, Eureka, California; (iii) 905 Colusa Avenue,
Yuba City, California; (iv) 1123 E. Avenue "P", Palmdale, CA;
(v) 1825 41st Avenue, Capitola, California; (vi) 1673 West Lacey
Blvd., Hanford, California; and (vii) 313 Madonna Rd., San Louis
Obispo, California.
Multiemployer Plan - has the meaning set forth in
Section 4001(a)(3) of ERISA.
Obligations - all loans and all other advances, debts,
liabilities, obligations, covenants and duties owing, arising,
due or payable from Borrower to Lender of any kind or nature,
present or future, whether or not evidenced by any note, guaranty
or other instrument, whether arising under this Agreement or any
of the other Loan Documents or otherwise, whether direct or
indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now
existing or hereafter arising, and however acquired. The term
includes all Revolving Loans, payments made by Lender pursuant to
a Letter of Credit or LC Guaranty, Overadvances, and all
interest, charges, expenses, fees, attorneys' fees and any other
sums chargeable to Borrower under any of the Loan Documents.
Original Term - as defined in Section 3.2.
OSHA - the Occupational Safety and Health Act and all rules
and regulations from time to time promulgated thereunder.
Other Agreements - any and all agreements, instruments and
documents (other than this Agreement and the Security Documents),
heretofore, now or hereafter executed by Borrower or any other
Person and delivered to Lender with respect to the transactions
contemplated by this Agreement, including the Wells Intercreditor
Agreement and any subordination agreement.
Overadvance - as defined in Section 2.1(B).
Participating Lender - each Person who shall be granted the
right by Lender to participate in any of the Revolving Loans
described in this Agreement and who shall have entered into a
participation agreement in form and substance satisfactory to
Lender.
Payables Turnover Rate - for any Fiscal Period or period of
consecutive Fiscal Periods, the average end-of-period accounts
payable during such period, divided by the costs of goods sold
over such period, multiplied by the number of days in such
period.
Permitted Liens - any Lien of a kind specified in
subparagraphs (i) through (xiii) of Section 8.2(H).
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with
the principal amount of all other such Indebtedness and
Capitalized Lease Obligations of Borrower incurred during the
same Fiscal Year, does not exceed $2,000,000 for the Fiscal Year
ending January 28, 1995, or $2,000,000 for any subsequent Fiscal
Year. For the purposes of this definition, the principal amount
of any Purchase Money Indebtedness consisting of capitalized
leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, joint
stock company, land trust, business trust or unincorporated
organization, or a government or agency or political subdivision
thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Pooling Agreement- that certain Pooling and Servicing
Agreement, dated as of March 30, 1994, among Receivables
Corporation, as depositor, Borrower, as servicer, and Bankers
Trust Company, as trustee.
Prepayment Date - as defined in Section 3.3(A).
Prohibited Transaction - any transaction set forth in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code
of 1986.
Projections - Borrower's forecasted Consolidated and
consolidating (i) balance sheets, (ii) profit and loss
statements, (iii) cash flow statements, and (iv) capitalization
statements, all prepared on a consistent basis with Borrower's
historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes
(i) Indebtedness (other than the Obligations) for the payment of
all or any part of the purchase price of any fixed assets,
(ii) any Indebtedness (other than the Obligations) incurred at
the time of or within ten (10) days prior to or after the
acquisition of any fixed assets for the purpose of financing all
or any part of the purchase price thereof, and (iii) any
renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the
time.
Purchase Money Lien - a Lien upon fixed assets which secure
Purchase Money Indebtedness, but only if such Lien shall at all
times be confined solely to the fixed assets the purchase price
of which was financed through the incurrence of the Purchase
Money Indebtedness secured by such Lien.
Receipts - as defined in Section 5.4(A).
Receivables Corporation - Gottschalks Credit Receivables
Corporation, a Delaware corporation and wholly-owned Subsidiary
of Borrower.
Receivables Purchase Agreement - that certain Receivables
Purchase Agreement, dated as of March 30, 1994, between Borrower,
as seller, and Receivables Corporation, as purchaser.
Renewal Terms - as defined in Section 3.2.
Rentals - as defined in Section 8.2(V).
Reportable Event - any of the events set forth in
Section 4043(b) of ERISA.
Restricted Investment - any investment in cash or by
delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by loan,
advance or capital contribution, or otherwise, or in any Property
except the following: (i) investments in one or more
Subsidiaries of Borrower; (ii) investments in Property to be used
in the ordinary course of business; (iii) investments in Current
Assets arising from the sale of goods and services in the
ordinary course of business of Borrower and its Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature
within one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one
year from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or any
state thereof having capital surplus and undivided profits
aggregating at least $100,000,000; and (vi) investments in
commercial paper given the highest rating by a national credit
rating agency and maturing not more than two hundred seventy
(270) days from the date of creation thereof.
Revolving Loan - as defined in Section 2.1(A).
Schedule of Documents - as defined in Section 9.1(N).
Securitization Facility - (i) the securitization facility in
effect as of the Closing Date with respect to certain of
Borrower's Accounts, as evidenced by the Receivables Purchase
Agreement, the Pooling Agreement, and all other agreements,
documents and instruments executed in connection therewith,
including all supplemental financings thereunder; and (ii) such
other securitization facility with respect to the Accounts as may
be acceptable to Lender in its reasonable credit judgment.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Documents - the Mortgages and all other instruments
and agreements now or at any time hereafter securing the whole or
any part of the Obligations.
Senior Debt Coverage Ratio - at any date, means the ratio of
(i) net income for the preceding twelve (12) Fiscal Periods,
after provision for taxes, plus depreciation and amortization for
such period, to (ii) the current portion of long term debt and
Capitalized Lease Obligations as of such date.
Solvent - as to any Person, such Person: (i) owns Property
whose fair saleable value is greater than the amount required to
pay all of such Person's Indebtedness (including contingent
debts); (ii) is able to pay all of its Indebtedness as such
Indebtedness matures; and (iii) has capital sufficient to carry
on its business and transactions and all business and
transactions in which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is
expressly subordinated to the Obligations in a manner
satisfactory to Lender pursuant to a subordination agreement.
Subsidiary - any corporation of which a Person owns,
directly or indirectly through one or more intermediaries, more
than 50% of the Voting Stock at the time of determination.
Times Interest Earned Ratio - at any date, means the ratio
of (i) Borrower's earnings before interest and taxes for the
preceding twelve (12) Fiscal Periods, as determined in accordance
with GAAP, to (ii) actual interest expense paid by Borrower
during such period with respect to all Indebtedness.
Variable Base Certificates - the $15,000,000 Variable Base
Class A-2 Credit Card Certificates, Series 1994-1 issued by the
Gottschalks Credit Card Master Trust pursuant to the
Securitization Facility.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).
Wells - Wells Fargo Bank, National Association.
Wells Agreement - as defined in Recital A.
Wells Indebtedness - all "Obligations" as defined in that
certain 1994 Amended and Restated Credit Agreement of even date
herewith between Borrower and Wells.
Wells Intercreditor Agreement - that certain Intercreditor
Agreement to be executed by Lender and Wells on or about the
Closing Date and by which such parties shall establish certain
rights with respect to their respective collateral and agreements
with respect to access to such collateral.
Working Capital - at any date means Current Assets minus
Current Liabilities.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP consistent with that applied in preparation of the financial
statements referred to in Section 8.1(J), and all financial data
pursuant to this Agreement shall be prepared in accordance with
such principles.
1.3 Other Terms. All other terms contained in this
Agreement shall have, when the context so indicates, the meanings
provided for by the Code to the extent the same are used or
defined therein.
1.4 Certain Matters of Construction. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Section,
paragraph or subdivision. Any reference to a "Section,"
"Exhibit," or "Schedule" shall refer to the relevant section of
or Exhibit or Schedule to this Agreement, unless specifically
indicated to the contrary. Any pronoun used shall be deemed to
cover all genders. The term "including" shall not be limiting or
exclusive, unless specifically indicated to the contrary. The
section titles, table of contents and list of exhibits appear as
a matter of convenience only and shall not affect the
interpretation of this Agreement. All references to statutes and
related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any
instruments or agreements, including references to any of the
Loan Documents, shall include any and all modifications or
amendments thereto and any and all extensions or renewals
thereof.
2. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon
the representations and warranties made in, this Agreement and
the other Loan Documents, Lender agrees to make a total credit
facility of up to THIRTY-FIVE MILLION AND 00/100 DOLLARS
($35,000,000) available upon Borrower's request therefor, as
follows:
2.1 Revolving Loans.
(A) Lender will make revolving loans (each, a
"Revolving Loan") to Borrower from time to time, as requested by
Borrower in accordance with the terms of Section 2.3, up to a
maximum principal amount at any time outstanding equal to the
Borrowing Base at such time. It is expressly understood and
agreed that Lender may use the Borrowing Base as a maximum
ceiling on Revolving Loans outstanding to Borrower at any time.
If the unpaid balance of the Revolving Loans should exceed the
Borrowing Base or any other limitation set forth in this
Agreement, such Revolving Loans shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to
all the benefits thereof. In no event shall Borrower be
authorized to request a Revolving Loan at any time that there
exists a Default or an Event of Default. Notwithstanding the
foregoing provisions of this Section 2.1(A), Lender shall have
the right to establish reasonable reserves in such amounts, and
with respect to such matters, as Lender shall deem necessary or
appropriate, against the amount of Revolving Loans which Borrower
may otherwise request under this Section 2.1(A), including with
respect to: (i) shrinkage, spoilage and obsolescence of
Inventory; (ii) slow moving Inventory; (iii) other sums
chargeable against Borrower's Loan Account as Revolving Loans
under any section of this Agreement; and (iv) such other matters,
events, conditions or contingencies as to which Lender, in its
reasonable credit judgment, determines reserves should be
established from time to time hereunder.
(B) Insofar as Borrower may request and Lender may be
willing in its sole and absolute discretion to make Revolving
Loans to Borrower at a time when the unpaid balance of Revolving
Loans exceeds, or would exceed with the making of such Revolving
Loan, the Borrowing Base (any such Revolving Loan or Revolving
Loans being herein referred to individually as an "Overadvance"
and collectively as "Overadvances"), Lender shall enter such
Overadvances as debits in the Loan Account. All Overadvances
shall be payable on demand, shall be secured by the Collateral
and shall bear interest as provided in this Agreement for
Revolving Loans generally.
(C) The Revolving Loans shall be used solely for
(i) the satisfaction of certain existing Indebtedness of Borrower
to Teachers Insurance & Annuity Association and (ii) Borrower's
general operating capital needs to the extent not inconsistent
with the provisions of this Agreement.
2.2 Mandatory Payments of the Revolving Loans.
(A) If Borrower sells any of its Properties
constituting Collateral (other than real Property) or if any of
its Properties are taken by condemnation, or if there is any loss
of or damage to such Property resulting in the payment of
insurance proceeds, then, unless otherwise agreed by Lender,
Borrower shall pay to Lender, as and when received by Borrower,
and subject to the rights of any holders of Permitted Liens whose
interests are prior to those of Lender, a sum equal to the
proceeds received by Borrower from such sale, condemnation or
insurance net of any amounts used to replace such sold,
condemned, lost or destroyed Property, to be applied as a
mandatory payment of the Revolving Loan, with any excess
remaining after full payment of the Revolving Loan to be applied
to such of the other Obligations as Lender may elect.
(B) Upon the consummation of the Long Term Financing
Transaction, Borrower shall pay to Lender not less than
$5,000,000 of proceeds of such transaction, net of ordinary
transaction costs, to be applied as a mandatory payment of the
Revolving Loan, with any excess remaining after full payment of
the Revolving Loan to be applied to such of the other Obligations
as Lender may elect.
2.3 Manner of Borrowing Revolving Loans. Borrowings under
the credit facility established pursuant to Section 2.1 shall be
made as follows:
(A) A request for a Revolving Loan shall be made, or
shall be deemed to be made, in the following manner:
(i) Borrower shall give Lender notice of
Borrower's intention to borrow no later than 10:30 A.M. (Pacific
Time) on the Business Day of each proposed Revolving Loan. Each
such notice shall be in writing (including by facsimile at (510)
763-4924 or such other facsimile number as may be designated in
writing by Lender), or by telephone at (510) 832-3600 (or such
other telephone number as may be designated in writing by Lender)
confirmed immediately in writing (including by facsimile at (510)
763-4924 or such other facsimile number as may be designated in
writing by Lender), given to Lender's Loan Servicing
Administrator or Account Officer handling Borrower's account, or
such other Person as may be designated in writing by Lender,
specifying therein the date and amount of the proposed Revolving
Loan;
(ii) the becoming due of any amount required to
be paid under this Agreement as interest shall be deemed
irrevocably to be a request for a Revolving Loan on the due date
in the amount required to pay such interest; and
(iii) the becoming due of any other Obligations
shall be deemed irrevocably to be a request for a Revolving Loan
on the due date in the amount then so due.
(B) Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Revolving Loan requested, or deemed
to be requested, pursuant to this Section 2.3 as follows: (i) the
proceeds of each Revolving Loan requested under Section 2.3(A)(i)
shall be disbursed by Lender in lawful money of the United States
of America in immediately available funds, in the case of the
initial borrowing, in accordance with the terms of the written
disbursement letter from Borrower, and in the case of each
subsequent borrowing, by wire transfer to such bank account as
may be agreed upon by Borrower and Lender from time to time; and
(ii) the proceeds of each Revolving Loan requested under
Section 2.3(A)(ii) or (iii) shall be disbursed by Lender by way
of direct payment of the relevant Obligation.
2.4 Letters of Credit; LC Guaranties. If requested to do
so by Borrower, Lender may, in its sole discretion, issue its, or
cause to be issued its Affiliate's, Letters of Credit for the
account of Borrower, or may execute LC Guaranties by which Lender
shall guarantee the payment or performance by Borrower of its
reimbursement obligations with respect to Letters of Credit
issued for Borrower's account by other Persons, provided that the
aggregate face amount of all Letters of Credit and LC Guaranties
outstanding at any time shall not exceed the lesser of
(a) $11,000,000 or (b) the amount of unused borrowing
availability under the Revolving Loans, and no Letter of Credit
may have an expiry date that is after the last day of the
Original Term or, if this Agreement remains in effect after the
Original Term, after the last day of any Renewal Term then in
effect. All Letters of Credit and LC Guaranties shall be subject
to the terms of Bank's Application and Agreement for Documentary
Letter of credit as in effect on the date of issuance of such
Letter of credit. Any amounts paid by Lender under any LC
Guaranty or in connection with any Letter of Credit shall
constitute a Revolving Credit Loan, shall be secured by the
Collateral, and shall thereafter be payable together with
interest as provided in this Agreement for Revolving Loans
generally.
2.5 All Revolving Loans to Constitute One Obligation. All
Revolving Loans shall constitute one general obligation of
Borrower, and shall be secured by Lender's security interest in
and Lien upon all of the Collateral, and by all other security
interests and Liens heretofore, now or at any time or times
hereafter granted by Borrower to Lender.
2.6 Loan Account. Lender shall enter all Revolving Loans
as debits in the Loan Account and shall also record in the Loan
Account all payments made by Borrower on any Obligations and all
proceeds of Collateral which are finally paid to Lender, and may
record therein, in accordance with customary accounting practice,
other debits and credits, including all charges and expenses
properly chargeable to Borrower hereunder. On the Closing Date
the Revolving Note (as defined in the Wells Agreement) shall be
marked "cancelled" and thereafter the outstanding amount
evidenced by the Revolving Note will be evidenced by the entries
by Lender in the Loan Account.
2.7 Clean-Up Period. During the term of this Agreement
Borrower will designate any thirty (30) consecutive calendar days
during the period commencing December 1 of each year through
January 31 of the immediately succeeding calendar year as a
"Clean-Up Period." During each Clean-Up Period: (a) Lender shall
not make any Revolving Loans (other than Revolving Loans created
by Lender's payment on account of previously outstanding Letters
of Credit or LC Guaranties, which Revolving Loans shall be repaid
upon written demand by Lender); (b) Lender shall not issue any
new Letters of Credit or LC Guaranties to or for the benefit of
Borrower; and (c) there shall be no Revolving Loans outstanding
(other than Revolving Loans created by Lender's payment on
account of previously outstanding Letters of Credit or
LC Guaranties, which Revolving Loans shall be repaid upon written
demand by Lender).
3. INTEREST, FEES, TERM AND REPAYMENT
3.1 Interest, Fees and Charges.
(A) Interest. Interest shall accrue on the principal
amount of the Revolving Loans outstanding at the end of each day
at a fluctuating rate per annum equal to three percent (3%) above
the LIBOR Rate. After the date hereof, the foregoing rate of
interest shall be increased or decreased, as the case may be, by
an amount equal to any increase or decrease in the LIBOR Rate,
with such adjustments to be effective as of the opening of
business on the day that any such change in the LIBOR Rate
becomes effective. The LIBOR Rate in effect on the date hereof
shall be the LIBOR Rate effective as of the opening of business
on the date hereof, but if this Agreement is executed on a day
that is not a Business Day, the LIBOR Rate in effect on the date
hereof shall be the LIBOR Rate effective as of the opening of
business on the last Business Day immediately preceding the date
hereof. Interest shall be calculated on a daily basis (computed
on the actual number of days elapsed over a year of 360 days),
commencing on the date hereof, and shall be payable as provided
in Section 3.4.
(B) Default Rate of Interest. Upon and after the
occurrence of an Event of Default and during the continuation
thereof, the principal amount of the Obligations shall bear
interest, calculated daily (computed on the actual days elapsed
over a year of 360 days), at a fluctuating rate per annum equal
to two percent (2%) above the rate otherwise payable pursuant to
Section 3.1(A)(the "Default Rate").
(C) Overadvance Charge. Any Overadvance shall be
assessed a one-time service charge of one percent (1%) of such
Overadvance; provided, that such fee shall only be assessed to
the extent that such Overadvance exceeds the amount of any
Overadvance outstanding on the immediately preceding Business
Day.
(D) Closing Fee. Borrower shall pay to Lender a
closing fee of $175,000, which shall be deemed fully earned and
nonrefundable at the closing of the transactions contemplated
hereby and shall be paid concurrently with the funding of the
initial Revolving Loan hereunder. Such fee shall compensate
Lender for the costs associated with the origination,
structuring, processing, approving and closing of the
transactions contemplated by this Agreement, including
administrative, out-of-pocket, general overhead and lost
opportunity costs, but not including any costs and expenses for
which Borrower has agreed to reimburse Lender pursuant to any
other provisions of this Agreement or any of the other Loan
Documents, such as, by way of example, the allocated charges of
Lender's in-house legal coordinator and Lender's legal fees and
expenses.
(E) Additional Closing Fee. As additional
consideration for Lender's entering into the Loan Documents, in
the event Borrower does not repay not less than $5,000,000 of the
Revolving Loans from the proceeds of the Long Term Financing
Transaction on or before the 90th day after the Closing Date,
Borrower shall pay to Lender on the 91st day after the Closing
Date an additional closing fee of $50,000.
(F) Unused Line Fee. As additional consideration for
Lender's entering into the financing agreements and Lender's
costs and risks of making funds available, Borrower shall pay to
Lender for each month (or portion thereof) during which the
financing agreements are in effect an Unused Line Fee in an
amount equal to the product of (i) the amount, if any, by which
(x) $35,000,000 exceeds (y) the actual amount of the Average
Monthly Loan Balance for such month or such portion thereof;
times (ii) three-eights of one percent (.375%); times (iii) that
fraction, the numerator of which shall be the actual number of
days in such month and the denominator of which shall be 360.
The Unused Line Fee shall be payable in arrears on the first
Business Day of each month and upon the termination of this
Agreement.
(G) Letter of Credit/LC Guaranty Fees. As additional
consideration for Lender's issuing its, or causing to be issued
its Affiliate's, Letters of Credit for Borrower's account, or for
issuing its LC Guaranties at Borrower's request pursuant to
Section 2.4, Borrower agrees to pay Lender fees equal to two
percent (2%) per annum of the aggregate face amount of Letters of
Credit and LC Guaranties outstanding from time to time, payable
in arrears on the first Business Day of each month and upon the
termination of this Agreement.
(H) Capital Adequacy Charge. In the event that Lender
shall have determined that the adoption of any law, rule or
regulation regarding capital adequacy, or any change therein or
in the interpretation or application thereof or compliance by
Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or
governmental authority, does or shall have the effect of reducing
the rate of return on Lender's capital as a consequence of its
obligations hereunder to a level below that which Lender could
have achieved but for such adoption, change or compliance (taking
into consideration Lender's policies with respect to capital
adequacy) by an amount deemed by Lender, in its sole discretion,
to be material, then from time to time, after submission by
Lender to Borrower of a written demand therefor, Borrower shall
pay to Lender such additional amount or amounts as will
compensate Lender for such reduction. A certificate of Lender
claiming entitlement to payment as set forth above shall be
conclusive in the absence of manifest error. Such certificate
shall set forth the nature of the occurrence giving rise to such
payment, the additional amount or amounts to be paid to Lender,
and the method by which such amounts were determined. In
determining such amount, Lender may use any reasonable averaging
and attribution method.
(I) Maximum Interest. In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest
hereunder and charged or collected pursuant to the terms of this
Agreement exceed the highest rate permissible under any law which
a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a
court determines that Lender has charged or received interest
hereunder in excess of the highest applicable rate, the rate in
effect hereunder shall automatically be reduced to the maximum
rate permitted by applicable law and Lender shall promptly refund
to Borrower any interest received by Lender in excess of the
maximum lawful rate or, if so requested by Borrower, shall apply
such excess to the principal balance of the Obligations. Should
any interest payable hereunder thereafter fall below the maximum
lawful rate, interest shall continue to accrue at the maximum
lawful rate until such time as Lender has received an amount of
interest equal to what Lender would have received but for the
operation of this Section 3.1(I), at which time the interest
payable shall again accrue at the rate otherwise provided for
under Section 3.1(A) until such rate under Section 3.1(A) again
exceeds the maximum lawful rate, in which event the terms of this
Section 3.1(I) shall again apply. It is the intent of the
parties hereof that Borrower not pay or contract to pay, and that
Lender not receive or contract to receive, directly or indirectly
in any manner whatsoever, interest in excess of that which may be
paid by Borrower under applicable law.
3.2 Term of Agreement. Subject to Lender's right to cease
making Revolving Loans to Borrower at any time upon or after the
occurrence of a Default or an Event of Default, this Agreement
shall be in effect for a period of three (3) years from the date
hereof, through and including March 29, 1997 (the "Original
Term"), and this Agreement shall automatically renew itself for
one-year terms thereafter (the "Renewal Terms"), unless
terminated as provided in Section 3.3.
3.3 Termination.
(A) Upon at least ninety (90) days prior written
notice to Lender, Borrower may, at its option, terminate this
Agreement; provided, that no such termination shall be effective
until Borrower has paid all of the Obligations in immediately
available funds, and all Letters of Credit and LC Guaranties
issued by Lender or its Affiliates hereunder have expired. At
the effective date of such termination (the "Prepayment Date"),
Borrower shall pay to Lender, in addition to all of the then
outstanding principal, accrued interest and other charges owing
under the terms of this Agreement and any of the other Loan
Documents, as liquidated damages for the loss of the bargain and
not as a penalty, the prepayment premium for amounts outstanding
on the Revolving Loans by paying to Lender on the Prepayment Date
the following amounts:
If Prepayment is Made Between
the Following Dates, Inclusive: The Premium Shall Be:
(i) March 31, 1994 and $525,000 (i.e., one and one-
March 30, 1995 half percent (1.5%) of the
total credit facility)
(ii) March 31, 1995 and $350,000 (i.e., one percent
March 30, 1996 (1%) of the total
credit facility)
(iii) March 31, 1996 and $87,500 (i.e., one-quarter of
thereafter one percent (.25%) of the
total credit facility)
If termination occurs on the last day of the Original Term or on
the last day of any Renewal Term, no prepayment premium shall be
payable.
(B) Lender may terminate this Agreement on the last
day of the Original Term or any Renewal Term by delivering to
Borrower written notice of termination not less than ninety (90)
days prior to the effective termination date. In addition,
Lender may terminate this Agreement upon ninety (90) days prior
written notice to Borrower or without notice upon or after the
occurrence of an Event of Default. On the effective date of any
such termination caused by an Event of Default, Borrower shall
make provision for all outstanding Letters of Credit and
LC Guaranties acceptable to Lender and pay to Lender all
outstanding principal, accrued interest, and any other fees or
charges due under the terms of this Agreement.
(C) All of the Obligations shall be forthwith due and
payable upon any termination of this Agreement. Except as
otherwise expressly provided for in this Agreement or the other
Loan Documents, no termination or cancellation (regardless of
cause or procedure) of this Agreement or any of the other Loan
Documents shall in any way affect or impair the rights, powers or
privileges of Lender or the obligations, duties, or liabilities
of Borrower or Lender in any way relating to (i) any transaction
or event occurring prior to such termination or cancellation or
(ii) any of the undertakings, agreements, covenants, warranties
or representations of Borrower contained in this Agreement or any
of the other Loan Documents. All such undertakings, agreements,
covenants, warranties and representations of Borrower shall
survive such termination or cancellation and Lender shall retain
its Liens in the Collateral and all of its rights and remedies
under this Agreement and the other Loan Documents notwithstanding
such termination or cancellation until all of the Obligations
have been paid in full, in immediately available funds.
(D) It is understood that Borrower may elect to
terminate this Agreement in its entirety only; no section may be
terminated singly.
3.4 Payments. Except where evidenced by notes or other
instruments issued or made by Borrower to Lender specifically
containing payment provisions which are in conflict with this
Section 3.4 (in which event the conflicting provisions of said
notes or other instruments shall govern and control), that
portion of the Obligations consisting of:
(A) principal payable on account of Revolving Loans
made by Lender to Borrower pursuant to Section 2.1 shall be
payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of
the Collateral, to the extent of said proceeds, (ii) the
occurrence of an Event of Default in consequence of which Lender
elects to accelerate the maturity and payment of such Revolving
Loans, or (iii) termination of this Agreement pursuant to
Section 3.3; provided, that if the principal balance of Revolving
Loans outstanding at any time shall exceed the Borrowing Base at
such time, Borrower shall, on demand, repay the Revolving Loans
in an amount sufficient to reduce the aggregate unpaid principal
amount of such Revolving Loans by an amount equal to such excess;
(B) interest accrued on the Revolving Loans shall be
payable by Borrower to Lender on the earliest of (i) the first
Business Day of day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding
month, (ii) the occurrence of an Event of Default in consequence
of which Lender elects to accelerate the maturity and payment of
the Obligations, or (iii) termination of this Agreement pursuant
to Section 3.3; provided, that Borrower hereby irrevocably
authorizes Lender, in Lender's sole discretion to advance to
Borrower, and to charge to Borrower's Loan Account hereunder as a
Revolving Loan, a sum sufficient each month to pay all interest
accrued on the Obligations during the immediately preceding
month;
(C) costs, fees and expenses payable pursuant to this
Agreement shall be payable by Borrower to Lender or to any other
Person designated by Lender in writing on demand; and
(D) the balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Lender
as and when provided in this Agreement, the Other Agreements or
the Security Documents, or on demand, whichever is earlier.
3.5 Application of Payments and Collections. Borrower
irrevocably waives the right to direct the application of any and
all payments and collections at any time or times hereafter
received by Lender from or on behalf of Borrower, and Borrower
does hereby irrevocably agree that Lender shall have the
continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter
by Lender or its agent against the Obligations, in such manner as
Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records. If as the result of
collections of Accounts as authorized by Section 5.4 a credit
balance exists in the Loan Account, such credit balance shall not
accrue interest in favor of Borrower, but shall be available to
Borrower at any time or times for so long as no Default or Event
of Default exists. Lender may offset such credit balance against
the Obligations upon or after the occurrence of an Event of
Default.
3.6 Statements of Account. Lender will account to Borrower
monthly with a statement of Revolving Loans, charges and payments
made pursuant to this Agreement, and such account rendered by
Lender shall be deemed final, binding and conclusive upon
Borrower unless Lender is notified by Borrower in writing to the
contrary within ninety (90) days after the date each account is
mailed to Borrower. Such notice shall only be deemed an
objection to those items specifically objected to therein.
3.7 Application of Deposit. Lender acknowledges that
Borrower has previously delivered to Lender a deposit in the
amount of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) which
Lender has agreed to credit against Lender's charges, costs and
expenses that are payable by Borrower in connection with Lender's
structuring of a credit facility with Borrower and the entering
into this Agreement and the other Loan Documents. Any portion of
such deposit that is not applied to payment of such charges,
costs and expenses shall be credited by Lender to Borrower's Loan
Account. If such charges, costs and expenses exceed the amount
of such deposit, Borrower shall promptly reimburse Lender for
such excess amount upon demand by Lender.
4. COLLATERAL: GENERAL TERMS
4.1 Security Interest in Collateral. To secure the prompt
payment and performance to Lender of the Obligations, Borrower
hereby grants to Lender a continuing security interest in and
Lien upon all the following Property and interests in Property of
Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:
(A) Accounts;
(B) Inventory;
(C) Fixed Assets;
(D) General Intangibles relating to or used or arising
in connection with Borrower's ownership, use or sale of any of
the foregoing;
(E) all monies and other Property of any kind now or
at any time or times hereafter, in the possession or under the
control of Lender or a bailee of Lender;
(F) all accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (A),
(B), (C), (D) and (E) above, including proceeds of and unearned
premiums with respect to insurance policies insuring any of the
Collateral; and
(G) all books and records (including customer lists,
credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (A), (B),
(C), (D), (E) or (F) above,
provided, that Lender's security interest in the Accounts arising
out of Borrower's private label credit card program, and the
collections and proceeds thereof in whatever form (including any
related "instruments," "documents" and "chattel paper," each as
defined under the Code), all deposit accounts associated
therewith, and all books and records related thereto, shall
automatically terminate (but not Lender's security interest in
the proceeds thereof consisting of any amounts paid to Borrower
by Receivables Corporation pursuant to the Receivables Purchase
Agreement) upon the sale of such Accounts under the Receivables
Purchase Agreement; and further provided, that Lender will
release its second priority Lien in the Fixed Assets upon the
repayment to Lender of not less than $5,000,000 of the Revolving
Loans from the proceeds of the Long Term Financing Transaction as
set forth in Section 2.2(B).
4.2 Representations, Warranties and Covenants --
Collateral. To induce Lender to enter into this Agreement,
Borrower represents, warrants and covenants to Lender that:
(A) The Collateral is now and, so long as any of the
Obligations are outstanding, will continue to be owned solely by
Borrower. No other Person has or will have any right, title,
interest, claim, or Lien therein, thereon or thereto other than a
Permitted Lien.
(B) Except for the Liens of Wells upon the Fixed
Assets, the Liens granted to Lender shall be first and prior on
the Collateral. No further action need be taken to perfect the
Liens granted to Lender, other than the filing of continuation
statements under the Code or other applicable law, continued
possession by Lender of that portion of the Collateral
constituting instruments or documents.
(C) All goods evidenced by the Collateral constituting
chattel paper, documents or instruments, the possession of which
has been given to Lender, are owned by Borrower and the same are
free and clear of any prior Lien, except for Permitted Liens.
Borrower further warrants and guarantees the value, quantities,
sound condition, grades and qualities of the goods and services
described therein. Borrower shall pay and discharge when due all
taxes, levies, and other charges upon said Collateral and upon
the goods evidenced by any documents constituting Collateral,
except to the extent such charges are being contested as
permitted under Section 8.1(A), and shall defend Lender against
and save it harmless from all claims of any Person with respect
to the Collateral, except for Permitted Liens. This indemnity
shall include reasonable attorneys' fees and legal expenses.
4.3 Lien Perfection. Borrower agrees to execute all UCC-1
financing statements provided for by the Code or otherwise
together with any and all other instruments, assignments or
documents and shall take such other action as may be required to
perfect or to continue the perfection of Lender's security
interest in the Collateral. Unless prohibited by applicable law,
Borrower hereby authorizes Lender to execute and file any such
financing statement on Borrower's behalf. The parties agree that
a carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof.
4.4 Location of Collateral. All Collateral, other than
Inventory in transit, will at all times be kept by Borrower at
one or more of the business locations set forth on Exhibit A and
shall not, without the prior written approval of Lender, be moved
therefrom except, prior to an Event of Default, for (A) sales of
Inventory in the ordinary course of business and (B) the storage
of Inventory at locations within the continental United States
other than those shown on Exhibit A if: (i) Borrower gives
Lender written notice of the new storage location (y) at least
sixty (60) days prior to storing Inventory at such location or
(z) promptly upon storing Inventory at such location if the
location is to be used only for the storage of Inventory for
Borrower's temporary seasonal needs for a period not exceeding
sixty (60) days; (ii) Lender's security interest in such
Inventory is and continues to be a duly perfected, first priority
Lien thereon; (iii) neither Borrower's nor Lender's right of
entry upon the premises where such Inventory is stored, or its
right to remove the Inventory therefrom, is in any way
restricted; and (iv) all negotiable documents and receipts in
respect of any Collateral maintained at such premises are
promptly delivered to Lender.
4.5 Insurance of Collateral. Borrower agrees to maintain
and pay for insurance upon all Collateral wherever located, in
storage or in transit in vehicles, including goods evidenced by
documents, covering casualty, hazard, public liability and such
other risks and in such amounts and with such insurance companies
as shall be reasonably satisfactory to Lender to insure Lender's
interest in the Collateral. Borrower shall deliver copies of
such policies to Lender with satisfactory lender's loss payable
endorsements naming Lender as loss payee with respect to all
Collateral. Each policy of insurance or endorsement shall
contain a clause requiring the insurer to give not less than
thirty (30) days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever and a clause
that the interest of Lender shall not be impaired or invalidated
either by any act or omission of Borrower or owner of the
Property nor by the occupation of the premises for purposes more
hazardous than are permitted by said policy. If Borrower fails
to provide and pay for such insurance, Lender may, at Borrower's
expense, procure the same, but shall not be required to do so.
Borrower agrees to deliver to Lender, promptly as rendered, true
copies of all reports made in any reporting forms to insurance
companies. Borrower will maintain, with financially sound and
reputable insurers, insurance with respect to its Properties and
business against such casualties and contingencies of such type
(including public liability, product liability, business
interruption, larceny, embezzlement, or other criminal
misappropriation insurance) and in such amounts as is customary
in the business or as otherwise required by Lender.
4.6 Protection of Collateral. All insurance expenses and
all expenses of protecting, storing, warehousing, insuring,
handling, maintaining and shipping the Collateral, any and all
excise, property, sales, and use taxes imposed by any state,
Federal, or local authority on any of the Collateral or in
respect of the sale thereof shall be borne and paid by Borrower;
provided, that Borrower may contest any such taxes to the extent
permitted under Section 8.1(A). If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but
shall not be required to, pay the same and charge the Loan
Account therefor. Borrower agrees to reimburse Lender promptly
therefor with interest accruing thereon daily at the Default Rate
provided in this Agreement. All sums so paid or incurred by
Lender for any of the foregoing and all costs and expenses
(including attorneys' fees, legal expenses, and court costs)
which Lender may incur in enforcing or protecting its Lien on or
rights and interest in the Collateral or any of its rights or
remedies under this or any other agreement between the parties
hereto or in respect of any of the transactions to be had
hereunder until paid by Borrower to Lender with interest at the
Default Rate, shall be considered Obligations owing by Borrower
to Lender hereunder. Such Obligations shall be secured by the
Collateral and by any and all other collateral, security, assets,
reserves, or funds of Borrower in or coming into the hands or
inuring to the benefit of Lender. Lender shall not be liable or
responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto (except for
reasonable care in the custody thereof while any Collateral is in
Lender's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other person whomsoever, but the same shall
be at Borrower's sole risk.
4.7 Audits and Appraisals. Lender or its designee may
conduct a maximum of two (2) audits per year, and Arthur Andersen
& Co. or such other special retail consultant selected by Lender,
may conduct one (1) inventory appraisal per year, unless an Event
of Default has occurred and is continuing, in which event the
number of audits and appraisals conducted will be in Lender's
reasonable discretion. Borrower will reimburse Lender for all
out-of-pocket expenses incurred by Lender in connection with such
audits and appraisals, upon Lender's demand therefor, in an
amount not to exceed $1,000 per audit conducted by Lender and
$5,000 per appraisal conducted by Arthur Andersen & Co. or such
other consultant.
5 PROVISIONS RELATING TO ACCOUNTS
5.1 Representations and Warranties. With respect to all
Accounts, Borrower represents and warrants to Lender that with
respect to each Account:
(A) it is genuine and in all respects what it purports
to be;
(B) it arises out of a completed, bona fide sale and
delivery of goods or rendition of services by Borrower in the
ordinary course of its business; and
(C) Borrower has made no agreement with any Account
Debtor thereunder for any deduction therefrom, except discounts
or allowances which are granted by Borrower in the ordinary
course of its business.
5.2 Records and Schedules of Accounts. Borrower shall keep
accurate and complete records of its Accounts and all payments
and collections thereon and shall submit to Lender on a Fiscal
Period basis a sales report for the preceding Fiscal Period, in a
form acceptable to Lender. On or before the 25th day of each
Fiscal Period from and after the date hereof, Borrower shall
deliver to Lender, in form acceptable to Lender, a detailed aged
trial balance of all Accounts existing as of the last day of the
preceding Fiscal Period, specifying the names, face value, dates
of invoices and due dates for each Account Debtor obligated on an
Account so listed ("Schedule of Accounts"), and, upon Lender's
request therefor, copies of proof of delivery and the original
copy of all documents, including repayment histories and present
status reports relating to the Accounts so scheduled and such
other matters and information relating to the status of then
existing Accounts as Lender shall reasonably request.
5.3 Administration of Accounts. At any time that an Event
of Default occurs and is continuing Lender shall have the right
to settle or adjust all disputes and claims directly with the
Account Debtor and to compromise the amount or extend the time
for payment of the Accounts upon such terms and conditions as
Lender may deem advisable, and to charge the costs and expenses
thereof, including reasonable attorneys' fees, to Borrower.
5.4 Collection of Accounts and other Proceeds of
Collateral.
(A) To expedite collection, Borrower shall endeavor in
the first instance to make collection of its Accounts for Lender.
All remittances received by Borrower on account of Accounts or
any other Collateral, including the proceeds of any sale or other
disposition of or loans against Accounts or other Collateral
owned by Borrower ("Receipts"), shall be held as Lender's
property by Borrower as trustee of an express trust for Lender's
benefit and Borrower shall immediately deposit all Receipts in
the Dominion Account. Lender retains the right at all times
after an Event of Default to notify Account Debtors that Accounts
have been assigned to Lender, and to collect Accounts directly in
Lender's own name and to charge the collection costs and
expenses, including attorneys' fees, to Borrower. Lender has no
duty to protect, insure, collect or realize upon the Accounts or
preserve rights in them. For the purpose of computing interest
hereunder, all Receipts received by Lender shall be deemed
applied by Lender on account of the Obligations upon Lender's
receipt of immediately available funds at Lender's account at
Harris Bank in Chicago, Illinois, or such other account as Lender
may designate by written notice to Borrower.
(B) Borrower shall deposit all Receipts, or cause the
same to be deposited in kind, in a Dominion Account with such
bank(s) as may be selected by Borrower and be acceptable to
Lender. Borrower shall issue to any such bank(s) an irrevocable
letter of instruction directing such banks to deposit all
Receipts received in the Dominion Account for application on
account of the Obligations. All funds deposited in the Dominion
Account shall immediately become the property of Lender and
Borrower shall obtain the agreement by such bank(s) to waive any
offset rights against the funds so deposited. Lender assumes no
responsibility for such Dominion Account, including any claim of
accord and satisfaction or release with respect to deposits
accepted by any bank(s) thereunder.
6. PROVISIONS RELATING TO INVENTORY
6.1 Representations, Warranties and Covenants. With
respect to Inventory, Borrower represents and warrants to Lender
that Lender may rely, in determining which items of Inventory
constitute Eligible Inventory, on all statements and
representations made by Borrower with respect to any Inventory
and that:
(A) all Inventory is presently and will continue to be
located at Borrower's places of business listed on Exhibit A and
will not be removed therefrom except as authorized by
Section 4.4;
(B) no Inventory is now, nor shall any Inventory at
any time or times hereafter be, stored with a bailee,
warehouseman or similar party without Lender's prior written
consent;
(C) no Inventory is or will be consigned to any Person
without Lender's prior written consent; and
(D) No Inventory is or will be produced in violation
of the Fair Labor Standards Act.
6.2 Inventory Reports. Borrower agrees to furnish Lender
with Inventory reports at such times as Lender may request, but
at least monthly. Such reports shall be in form and detail
satisfactory to Lender. Borrower shall deliver a Borrowing Base
Certificate to Lender on a weekly basis that shall include an
update of all Inventory on a weekly basis, together with (a) a
supporting Inventory report showing the daily Inventory purchases
and cost of goods sold, and (b) the Weekly Servicing Report
prepared by Borrower, as servicer, under the Pooling Agreement.
Borrower shall conduct a physical inventory no less frequently
than annually and shall provide to Lender a report based on each
such physical inventory promptly thereafter, together with such
supporting information as Lender shall in its discretion request.
7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce
Lender to enter into this Agreement and to make advances
hereunder, Borrower warrants, represents and covenants to Lender
that:
(A) Organization and Qualification. Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Borrower has duly
qualified and is authorized to do business and is in good
standing as a foreign corporation in each state or jurisdiction
listed on Exhibit B attached hereto and made a part hereof and in
all other states and jurisdictions where the character of its
Properties or the nature of its activities make such
qualification necessary, except where the failure of Borrower to
be so qualified would not have a material adverse effect on the
financial condition, business or Properties of Borrower.
(B) Corporate Names. During the preceding seven (7)
years, Borrower has not been known as or used any corporate,
fictitious or trade names except as disclosed on Exhibit C
attached hereto and made a part hereof. Except as set forth on
Exhibit C, Borrower has not, during the preceding seven (7)
years, been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets
of any Person.
(C) Corporate Power and Authority. Borrower has the
right and power and is duly authorized and empowered to enter
into, execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other
Loan Documents have been duly authorized by all necessary
corporate action and do not and will not: (i) require any
consent or approval of the shareholders of Borrower;
(ii) contravene Borrower's charter, certificate of incorporation
or by-laws; (iii) violate, or cause Borrower to be in default
under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect
having applicability to Borrower; (iv) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which
Borrower is a party or by which it or its Properties may be bound
or affected; or (v) result in, or require, the creation or
imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired
by Borrower.
(D) Legally Enforceable Agreement. This Agreement is,
and each of the other Loan Documents when delivered under this
Agreement will be, a legal, valid and binding obligation of
Borrower enforceable against it in accordance with their
respective terms, except to the extent that such enforcement may
be limited by applicable bankruptcy, insolvency and other similar
laws affecting creditors' rights generally or by principles of
equity pertaining to the availability of equitable remedies.
(E) Use of Proceeds. Borrower's uses of the proceeds
of any Revolving Loans pursuant to this Agreement are, and will
continue to be, legal and proper corporate uses, duly authorized
by its Board of Directors, and such uses will not violate any
applicable laws, including the Foreign Assets Control
Regulations, the Foreign Funds Control Regulations and the
Transaction Control Regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended).
(F) Margin Stock. Borrower is not engaged
principally, or as one of its important activities, in the
business of purchasing or carrying "margin stock" (within the
meaning of Regulation G or U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any
Revolving Loans to Borrower will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or be used for any
purpose which violates or is inconsistent with the provisions of
Regulation X of said Board of Governors.
(G) Governmental Consents. Borrower has, and is in
good standing with respect to, all governmental consents,
approvals, authorizations, permits, certificates, inspections,
and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease
and operate its Properties as now owned or leased by it.
(H) Patents, Trademarks, Copyrights and Licenses.
Borrower owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the
present and planned future conduct of its business without any
known conflict with the rights of others. All such patents,
trademarks, service marks, trade names, copyrights, licenses and
other similar rights are listed on Exhibit D attached hereto and
made a part hereof.
(I) Capital Structure. Exhibit E attached hereto and
made a part hereof states: (i) the correct name of each of the
Subsidiaries of Borrower, the jurisdiction of incorporation and
the percentage of its Voting Stock owned by Borrower; (ii) the
name of each of Borrower's corporate or joint venture Affiliates
and the nature of the affiliation; (iii) the number and nature of
all outstanding Securities of Borrower and each Subsidiary of
Borrower; and (iv) the number of authorized, issued and treasury
shares of Borrower and each Subsidiary of Borrower. Borrower has
good title to all of the shares it purports to own of the stock
of each Subsidiary, free and clear in each case of any Lien other
than Permitted Liens. All such shares have been duly issued and
are fully paid and non-assessable. Except as set forth in
Exhibit E, there are not outstanding any options to purchase, or
any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares
of the capital stock of Borrower.
(J) Solvent Financial Condition. Borrower is now and,
after giving effect to the initial Revolving Loan to be made
hereunder, at all times will be, Solvent.
(K) Restrictions. Borrower is not a party or subject
to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. Borrower is
not a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than
as set forth on Exhibit F attached hereto, none of which prohibit
the execution of or compliance with this Agreement by Borrower.
Neither Borrower nor any of its Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its Property, whether now
owned or hereafter acquired, to be subject to a Lien that is not
a Permitted Lien.
(L) Litigation. Except as set forth on Exhibit G
attached hereto and made a part hereof, there are no actions,
suits, proceedings or investigations pending, or to the knowledge
of Borrower, threatened, against or affecting Borrower or any of
its Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of Borrower or any of its
Subsidiaries, in any court or before any governmental authority
or arbitration board or tribunal, and except as shown on
Exhibit G, no action, suit, proceeding or investigation involves
the possibility of materially and adversely affecting the
Properties, business, prospects, profits or condition (financial
or otherwise) of Borrower or the ability of Borrower to perform
this Agreement. Neither Borrower nor any of its Subsidiaries is
in default with respect to any order, writ, injunction, judgment,
decree or rule of any court, governmental authority or
arbitration board or tribunal.
(M) Title to Properties. Each of Borrower and its
Subsidiaries has good, indefeasible and marketable title to and
fee simple ownership of, or valid and subsisting leasehold
interests in, all of its real Property, and good title to all of
its other Property, in each case, free and clear of all Liens
except Permitted Liens.
(N) Financial Statements; Fiscal Year. The
Consolidated and consolidating balance sheets of Borrower and
such other Persons described therein (including the accounts of
all Subsidiaries for the respective periods during which a
Subsidiary relationship existed) as of October 30, 1993, and the
related statements of income, changes in stockholder's equity,
and cash flows for the periods ended on such dates, have been
prepared in accordance with GAAP (subject to normal year-end
adjustments and the inclusion of footnotes), and present fairly
the financial position of Borrower and such other Persons at such
dates and the results of Borrower's operations for such periods.
Since October 30, 1993, there has been no material change in the
condition, financial or otherwise, of Borrower, its Subsidiaries
and such other Persons as shown on the Consolidated balance sheet
as of such date, and no material change in the aggregate value of
Equipment and real Property owned by Borrower or its Subsidiaries
or such other Persons, except changes in the ordinary course of
business or changes effected by the Long Term Financing
Transaction, none of which individually or in the aggregate has
been materially adverse.
(O) Full Disclosure. Neither the financial statements
referred to in Section 7.1(N), this Agreement, nor any other
written statement of Borrower to Lender (including Borrower's
filings, if any, with the Securities and Exchange Commission),
contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein
or herein not misleading. There is no fact which Borrower has
failed to disclose to Lender in writing which materially affects
adversely or, so far as Borrower can now foresee, will materially
affect adversely the Properties, business, prospects, profits, or
condition (financial or otherwise) of Borrower or any of its
Subsidiaries or the ability of Borrower or its Subsidiaries to
perform this Agreement.
(P) Pension Plans. Except as disclosed on Exhibit H
attached hereto and made a part hereof, neither Borrower nor any
of its Subsidiaries has any Plan. Neither Borrower nor any of
its Subsidiaries has received any notice to the effect that it is
not in full compliance with any of the requirements of ERISA and
the regulations promulgated thereunder. No fact or situation
that could result in a material adverse change in the financial
condition of Borrower, including any Reportable Event, or
Prohibited Transaction, exists in connection with any Plan.
Neither Borrower nor any of its Subsidiaries has any withdrawal
liability in connection with a Multiemployer Plan.
(Q) Taxes. Borrower's Federal Tax Identification
Number is 77-0159791. Each of Borrower and its Subsidiaries has
filed all Federal, state and local tax returns and other reports
it is required by law to file and has paid, or made provision for
the payment of, all taxes, assessments, fees and other
governmental charges that are due and payable. The provision for
taxes on the books of Borrower and its Subsidiaries is adequate
for all years not closed by applicable statutes, and for its
current Fiscal Year.
(R) Labor Relations. Except as described on Exhibit I
attached hereto and made a part hereof, neither Borrower nor any
of its Subsidiaries is a party to any collective bargaining
agreement, and there are no material grievances, disputes or
controversies with any union or any other organization of
Borrower's employees, or threats of strikes, work stoppages or
any asserted pending demands for collective bargaining by any
union or organization.
(S) Compliance With Laws. Borrower has duly complied
with, and its Properties, business operations and leaseholds are
in compliance in all material respects with, the provisions of
all Federal, state and local laws, rules and regulations
applicable to Borrower, its Properties or the conduct of its
business, including OSHA and all Environmental Laws, and there
have been no citations, notices or orders of noncompliance issued
to Borrower or any of its Subsidiaries under any such law, rule
or regulation.
(T) Surety Obligations. Borrower is not obligated as
surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or
obligation of any Person, except as permitted by Section 8.2(G).
(U) No Defaults. No event has occurred and no
condition exists which would, upon the execution and delivery of
this Agreement or Borrower's performance hereunder, constitute a
Default or an Event of Default. Neither Borrower nor any of its
Subsidiaries is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default
in the payment of any Indebtedness to any Person for Money
Borrowed.
(V) Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.
(W) Business Locations; Agent for Process. During the
seven (7) years prior to the Closing Date, Borrower has had no
office, place of business or agent for service of process located
in any state or county other than as shown on Exhibit A.
(X) Trade Relations. There exists no actual or
threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between
Borrower and any customer or any group of customers whose
purchases individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there
exists no present condition or state of facts or circumstances
which would materially affect adversely Borrower or prevent
Borrower from conducting such business after the consummation of
the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
(Y) Leases. Exhibit J attached hereto is a complete
listing of all capitalized leases of Borrower and Exhibit K
attached hereto is a complete listing of all operating leases of
Borrower.
(Z) Investment Company Act. Borrower is not an
"investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended.
7.2 Reaffirmation. Each request made by Borrower for a
Revolving Loan pursuant to this Agreement or any of the other
Loan Documents shall constitute (a) an automatic representation
and warranty by Borrower to Lender that there does not then exist
any Default or Event of Default, and (b) a reaffirmation as of
the date of said request that all of the representations and
warranties of Borrower contained in this Agreement and the other
Loan Documents are true in all material respects except for any
changes in the nature of Borrower's business or operations that
would render the information contained in any Exhibit attached
hereto either inaccurate or incomplete, so long as Lender has
consented to such changes or such changes are expressly permitted
by this Agreement.
7.3 Survival of Representations and Warranties. Borrower
covenants, warrants and represents to Lender that all
representations and warranties of Borrower contained in this
Agreement or any of the other Loan Documents shall be true at the
time of Borrower's execution of this Agreement and the other Loan
Documents, and shall survive the execution, delivery and
acceptance thereof by Lender and the parties thereto and the
closing of the transactions described therein or related thereto.
8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this
Agreement, and thereafter for so long as there are any
Obligations to Lender outstanding, Borrower covenants that,
unless otherwise consented to by Lender in writing, it shall:
(A) Taxes and Liens. Pay and discharge, and cause
each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges upon it, its income and Properties as and
when such taxes, assessments and charges are due and payable,
except and to the extent only that such taxes, assessments and
charges are being actively contested in good faith and by
appropriate proceedings, Borrower maintains adequate reserves on
its books therefor and the nonpayment of such taxes, assessments
and charges does not result in a Lien upon any Properties of
Borrower other than a Permitted Lien. Borrower shall also pay
and discharge any lawful claims which, if unpaid, might become a
Lien against any of Borrower's Properties, except for Permitted
Liens.
(B) Tax Returns. File, and cause each Subsidiary to
file, all Federal, state and local tax returns and other reports
Borrower or such Subsidiary is required by law to file and
maintain adequate reserves for the payment of all taxes,
assessments, governmental charges, and levies imposed upon it,
its income, or its profits, or upon any Property belonging to it.
(C) Payment of Bank Charges. Pay to Lender, on
demand, any and all fees, costs or expenses which Lender or any
Participating Lender pays to a bank or other similar institution
(including any fees paid by the Lender to any Participating
Lender) arising out of or in connection with (i) the forwarding
to Borrower or any other Person on behalf of Borrower, by Lender
or any Participating Lender, of proceeds of loans made by Lender
to Borrower pursuant to this Agreement and (ii) the depositing
for collection, by Lender or any Participating Lender, of any
check or item of payment received or delivered to Lender or any
Participating Lender on account of the Obligations.
(D) Business and Existence. Preserve and maintain,
and cause each Subsidiary to preserve and maintain, its separate
corporate existence and all rights, privileges, and franchises in
connection therewith, and maintain, and cause each Subsidiary to
maintain, its qualification and good standing in all states in
which the failure to be so qualified would have a material
adverse effect on the financial condition, business or Properties
of Borrower.
(E) Maintain Properties. Maintain, and cause each
Subsidiary to maintain, its Properties in good condition and
make, and cause each Subsidiary to make, all necessary renewals,
repairs, replacements, additions and improvements thereto.
(F) Compliance with Laws. Comply, and cause each
Subsidiary to comply, with all laws, ordinances, governmental
rules and regulations to which it is subject, including all
Environmental Laws, and obtain and keep in force any and all
licenses, permits, franchises, or other governmental
authorizations necessary to the ownership of its Properties or to
the conduct of its business, which violation or failure to obtain
might materially and adversely affect the business, prospects,
profits, Properties, or condition (financial or otherwise) of
Borrower.
(G) ERISA Compliance. (i) At all times make prompt
payment of contributions required to meet the minimum funding
standards set forth in ERISA with respect to each Plan;
(ii) promptly after the filing thereof, furnish to Lender copies
of any annual report required to be filed pursuant to ERISA in
connection with each Plan and any other employee benefit plan of
it and its Affiliates subject to such filing requirements;
(iii) notify Lender as soon as practicable of any Reportable
Event and of any additional act or condition arising in
connection with any Plan which Borrower believes might constitute
grounds for the termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate
United States district court of a trustee to administer the Plan;
and (iv) furnish to Lender, promptly upon Lender's request
therefor, such additional information concerning any Plan or any
other such employee benefit plan as may be reasonably requested.
(H) Business Records. Keep, and cause each Subsidiary
to keep, adequate records and books of account with respect to
its business activities in which proper entries are made in
accordance with GAAP reflecting all its financial transactions.
(I) Visits and Inspections. Permit representatives of
Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and
inspect the Properties of Borrower, inspect and make extracts
from its books and records, and discuss with its officers, its
employees and its independent accountants, Borrower's business,
assets, liabilities, financial condition, business prospects and
results of operations.
(J) Financial Statements. Cause to be prepared and
furnished to Lender the following (all to be kept and prepared in
accordance with GAAP applied on a consistent basis, unless
Borrower's certified public accountants concur in any change
therein and such change is disclosed to Lender and is consistent
with GAAP):
(i) as soon as possible, but not later than
ninety (90) days after the close of each Fiscal Year, audited
financial statements of Borrower and its Subsidiaries as of the
end of such Fiscal Year, on a Consolidated and consolidating
basis, certified without qualification (except for a
qualification for a change in accounting principles with which
the independent public accountant concurs) by a firm of
independent certified public accountants of recognized national
standing or otherwise acceptable to Lender;
(ii) as soon as possible, but not later than
thirty (30) days after the end of each Fiscal Period hereafter,
unaudited interim Consolidated financial statements of Borrower
and its Subsidiaries as of the end of such Fiscal Period and of
the portion of the Fiscal Year then elapsed, on a Consolidated
and consolidating basis, certified by the chief financial officer
of Borrower as prepared in accordance with GAAP and fairly
presenting the Consolidated financial position and results of
operations of Borrower and its Subsidiaries for such Fiscal
Period and period, subject only to changes from audit and
year-end adjustments and except that such statements need not
contain notes;
(iii) prior to the beginning of the Fiscal Year
commencing January 28, 1995 and the beginning of each Fiscal Year
thereafter, budgets and projections for the next three (3) Fiscal
Years, done on an annual and Fiscal Period basis for the coming
Fiscal Year and on an annual basis for the remaining Fiscal
Years;
(iv) promptly after the sending or filing thereof,
as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made available to its
shareholders and copies of any regular, periodic and special
reports or registration statements which Borrower files with the
Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or any national securities
exchange; and
(v) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral, Borrower's financial
condition or results of operations, including Federal income tax
returns of Borrower, accounts payable ledgers, and bank
statements.
Concurrently with the delivery of the financial
statements described in clause (i) of this Section 8.1(J),
Borrower shall forward to Lender a copy of the accountants'
letter to Borrower's management that is prepared in connection
with such financial statements and also shall cause to be
prepared and shall furnish to Lender a certificate of the
aforesaid certified public accountants detailing the calculation
of each ratio or amount required to be determined under
Section 8.3 and certifying to Lender that, based upon their
examination of the financial statements of Borrower and its
Subsidiaries performed in connection with their examination of
said financial statements, they are not aware of any Default or
Event of Default, or, if they are aware of such Default or Event
of Default, specifying the nature thereof. Concurrently with the
delivery of the financial statements described in clauses (i) and
(ii) of this Section 8.1(J), Borrower shall cause to be prepared
and furnished to Lender a certificate, in the form of Exhibit N
attached hereto, from the chief financial officer of Borrower
detailing the calculation of each ratio or amount required to be
determined under Section 8.3 and certifying to Lender that to the
best of his knowledge, Borrower has kept, observed, performed and
fulfilled each and every covenant, obligation and agreement
binding upon Borrower in this Agreement and the other Loan
Documents and that no Default or Event of Default has occurred,
or, if such Default or Event of Default has occurred, specifying
the nature thereof.
(K) Notices to Lender. Notify Lender in writing:
(i) promptly after Borrower's learning thereof,
of the commencement of any litigation and of the institution of
any administrative proceeding, if such litigation or
administrative proceeding may materially and adversely affect
Borrower's operations, financial condition, Properties or
business or Lender's Lien upon any of the Collateral;
(ii) at least sixty (60) days prior thereto, of
Borrower's opening of any new office or place of business or
Borrower's closing of any existing office or place of business;
(iii) promptly after Borrower's learning thereof,
of any labor dispute which may materially and adversely affect
Borrower, any strikes or walkouts relating to any of its plants
or other facilities, and the expiration of any labor contract to
which it is a party or by which it is bound;
(iv) promptly after Borrower's learning thereof,
of any material default by Borrower under any note, indenture,
loan agreement, mortgage, lease, deed, guaranty or other similar
agreement relating to any Indebtedness of Borrower exceeding
$1,000,000;
(v) promptly after the occurrence thereof, of any
Default or Event of Default;
(vi) promptly after the occurrence thereof, of
any material default by any obligor under any note or other
evidence of Indebtedness payable to Borrower;
(vii) promptly after the rendition thereof, of
any judgment rendered against Borrower or any of its Subsidiaries
if the judgment is for an amount in excess of $250,000 or would
materially and adversely affect Borrower; and
(viii) promptly after its receipt thereof, of any
notices received by Borrower from Wells with respect to the Wells
Indebtedness, or from any replacement lender thereof, and will
furnish Lender with copies of all such notices.
(L) Landlord and Storage Agreements. Provide Lender
with copies of all agreements between Borrower and any landlord
or warehouseman that owns any premises at which any Inventory or
other Collateral may, from time to time, be kept.
(M) Renewal of Securitization Facility. Within
ninety (90) days prior to any expiration of the Securitization
Facility, Borrower shall provide Lender with satisfactory
evidence that either (i) the Securitization Facility has been
renewed or (ii) Receivables Corporation has obtained a
replacement facility on terms that are no less favorable to
Receivables Corporation or Lender and on terms otherwise
acceptable to Lender, with a replacement lender acceptable to
Lender, and subject to intercreditor arrangements acceptable to
Lender.
(N) No Defaults. No default or event of default has
occurred under or with respect to the Securitization Facility,
the Wells Indebtedness, or any of Borrower's agreements related
thereto.
(O) Further Assurances. At Lender's request, promptly
execute or cause to be executed and deliver to Lender any and all
documents, instruments and agreements deemed necessary by Lender
to give effect to or carry out the terms or intent of this
Agreement or any of the other Loan Documents.
(P) Securitization Facility. So long as there are any
Revolving Loans, Letters of Credit or LC Guaranties outstanding,
Borrower, as the sole shareholder of Receivables Corporation,
shall cause Receivables Corporation, subject to customary
corporate procedures, to cause Receivables Corporation to pay
(including the purchase of receivables) or distribute to
Borrower, by payment directly to the Dominion Account, all
amounts available (after application of all reserves required or
anticipated under the Securitization Facility) for the purchase
of Receivables under and as defined in the Receivables Purchase
Agreement, including amounts available due to the collection of
the Receivables and Receivables Corporation's utilization of the
maximum financing under the Securitization Facility.
8.2 Negative Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender
outstanding, Borrower covenants that, unless Lender has first
consented thereto in writing, it will not:
(A) Mergers; Consolidations; Acquisitions. (i) merge
or consolidate, or permit any Subsidiary to merge or consolidate,
with any Person, except a consolidation or merger involving only
Borrower and one or more wholly owned Subsidiaries; or
(ii) acquire all or any substantial part of the Properties of any
Person.
(B) Loans. Make, or permit any Subsidiary to make,
any loans or other advances of money to any Person, including any
of Borrower's Affiliates, officers or employees, other than
(i) reasonable advances for salary, travel expenses, advances
against commissions and other similar advances in the ordinary
course of Borrower's business, and (ii) other outstanding loans
not exceeding $250,000 in the aggregate for all Persons at any
time.
(C) Total Indebtedness. Create, incur, assume, or
suffer to exist, or permit any Subsidiary to create, incur or
suffer to exist, any Indebtedness, except: (i) the Obligations;
(ii) the Wells Indebtedness; (iii) with respect to the
Securitization Facility; (iv) Subordinated Debt existing as of
the Closing Date; (v) Indebtedness of any Subsidiary to Borrower;
(vi) accounts payable to trade creditors that are not aged more
than sixty (60) days past due and current operating expenses
(other than for Money Borrowed) which are not more than sixty
(60) days past due, in each case incurred in the ordinary course
of business and paid within such time period, unless the same are
actively being contested in good faith and by appropriate and
lawful proceeding and Borrower shall have set aside such
reserves, if any, with respect thereto as may be required by GAAP
and deemed adequate by Borrower and its independent public
accountants; (vii) obligations to pay Rentals permitted by
Section 8.2(V); (viii) Purchase Money Indebtedness and
Capitalized Lease Obligations existing as of the Closing Date or
that constitute Permitted Purchase Money Indebtedness;
(ix) contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the
ordinary course of business; (x) Indebtedness incurred to finance
new stores or store expansions permitted under Section 8.2(L);
and (xi) Indebtedness not included in paragraphs (i) through (x)
above which does not exceed at any time, in the aggregate, the
sum of $5,000,000.
(D) Affiliate Transactions. Enter into, or be a party
to, or permit any Subsidiary to enter into or be a party to, any
transaction with any Affiliate or stockholder of Borrower or a
Subsidiary, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms that are fully
disclosed to Lender and are no less favorable to Borrower than
would obtain in a comparable arm's length transaction with a
Person not an Affiliate or stockholder of Borrower or such
Subsidiary.
(E) Partnerships or Joint Ventures. Become or agree
to become a general or limited partner in any general or limited
partnership or a joint venturer in any joint venture.
(F) Adverse Transactions. Enter into any transaction,
or permit any Subsidiary to enter into any transaction, that
materially and adversely affects or may materially and adversely
affect the Collateral or Borrower's ability to repay the
Obligations; or permit or agree to any material extension,
compromise or settlement or make any change or modification of
any kind or nature with respect to any Account, including any of
the terms relating thereto, other than discounts and allowances
in the ordinary course of business, all of which shall be
reflected in the Schedules of Accounts submitted to Lender
pursuant to Section 5.2.
(G) Guaranties. Except for Borrower's guarantee in
favor of Bank of America NT&SA with respect to the construction
loan on Borrower's corporate headquarters in Fresno, California,
made to Park 41, a California limited partnership in which
Borrower is a thirty-six percent (36%) limited partner,
guarantee, assume, endorse or otherwise, in any way, become
directly or contingently liable with respect to the Indebtedness
of any Person except by endorsement of instruments or items of
payment for deposit or collection.
(H) Negative Pledge; Limitation on Liens. Assign,
pledge, hypothecate, or grant a security interest in any of its
Property constituting Collateral, or create or suffer to exist,
or permit any Subsidiary to create or suffer to exist, any Lien
upon any of its Property constituting Collateral, income or
profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender; (ii) Liens
existing as of the Closing Date that secure the Wells
Indebtedness; (iii) Liens for taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due or being
contested as permitted by Section 8.1(A), but only if in Lender's
judgment such Lien does not affect adversely Lender's rights or
the priority of Lender's Lien in the Collateral; (iv) Liens
securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons for
labor, materials, supplies or rentals incurred in the ordinary
course of Borrower's business, but only if the payment thereof is
not at the time required and only if such Liens are junior to the
Liens in favor of Lender; (v) Liens resulting from deposits made
in the ordinary course of business in connection with workmen's
compensation, unemployment insurance, social security and other
like laws; (vi) attachment, judgment and other similar non-tax
Liens arising in connection with court proceedings, but only if
and for so long as the execution or other enforcement of such
Liens is and continues to be effectively stayed and bonded on
appeal in a manner satisfactory to Lender for the full amount
thereof, the validity and amount of the claims secured thereby
are being actively contested in good faith and by appropriate
lawful proceedings and such Liens do not, in the aggregate,
materially detract from the value of the Property of Borrower or
materially impair the use thereof in the operation of Borrower's
business; (vii) Purchase Money Liens securing Permitted Purchase
Money Indebtedness which is not incurred in violation of
Section 8.2(C); (viii) reservations, exceptions, easements,
rights of way, and other similar encumbrances affecting real
Property, provided that, in Lender's sole judgment, they do not
in the aggregate materially detract from the value of said
Properties or materially interfere with their use in the ordinary
conduct of Borrower's business and, if said real Property
constitutes Collateral, Lender has consented thereto; (ix) Liens
securing Indebtedness of a Subsidiary to Borrower or another
Subsidiary; (x) Liens on certain Fixed Assets granted in
connection with the Long Term Financing Transaction; (xi) Liens
granted pursuant to the terms of the Securitization Facility;
(xii) such other Liens as appear on Exhibit L attached hereto;
and (xiii) such other Liens as Lender may hereafter approve in
writing.
(I) Subordinated Debt. Make, or permit any Subsidiary
to make, any payment of any part or all of any Subordinated Debt
in violation of the subordination agreement relating to such
Subordinated Debt or voluntarily prepay any Subordinated Debt; or
otherwise repurchase, redeem or retire any instrument evidencing
any such Subordinated Debt prior to maturity; or enter into any
agreement (oral or written) which could in any way be construed
to amend, modify, alter or terminate any one or more instruments
or agreements evidencing or relating to any Subordinated Debt.
(J) Subsidiaries. Hereafter create any Subsidiary or
divest itself of any material assets by transferring them to any
Subsidiary, other than the sale of Accounts to Receivables
Corporation in connection with the Securitization Facility.
(K) Capital Expenditures. Make Capital Expenditures
(including by way of capitalized leases) from the proceeds of any
Revolving Loans which, as to Borrower and its Subsidiaries,
exceed $2,000,000 in the aggregate in the Fiscal Year ending
January 28, 1995 or $3,000,000 in the aggregate in any Fiscal
Year thereafter.
(L) Business Locations; New Stores. Transfer its
principal place of business or chief executive office, or
existing store locations, or maintain warehouses or records with
respect to Accounts or Inventory, to or at any locations other
than those at which the same are currently kept or maintained, as
set forth on Exhibit A hereto, without giving at least sixty (60)
days prior written notice to Lender of such change in business
location or without giving written notice to Lender promptly upon
such change if the location is to be used only for the sale or
storage of Inventory for Borrower's temporary seasonal needs for
a period not exceeding ninety (90) days, and after the delivery
to Lender of financing statements, if required by Lender, in form
satisfactory to Lender to perfect or continue the perfection of
Lender's Lien and security interest hereunder; or, in any Fiscal
Year (i) open more than two (2) new stores in addition to those
set forth on Exhibit A hereto, or (ii) undertake more than two
(2) store Expansions (as defined below) without the prior written
consent of Lender, which consent shall not be unreasonably
withheld. For purposes of this section, "Expansion" means the
replacement of an existing store location of Borrower or a
twenty-five percent (25%) increase in the square footage of any
such location.
(M) Change of Business. Enter into any new business
or make any material change in any of Borrower's business
objectives, purposes and operations.
(N) Disposition of Assets. Sell, lease or otherwise
dispose of any of its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in
favor of any Person without the prior written consent, except:
(i) sales of Inventory in the ordinary course of Borrower's
business for so long as no Event of Default exists hereunder;
(ii) a transfer of Property to Borrower by a Subsidiary;
(iii) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or
book value, whichever is greater, of $500,000 or less, provided
that all proceeds thereof are turned over to Lender for
application in accordance with and subject to Section 2.2(A), or
replacements of Equipment that is substantially worn, damaged or
obsolete with Equipment of like kind, function and value,
provided that the replacement Equipment shall be acquired prior
to or concurrently with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear
of Liens other than Permitted Liens that are not Purchase Money
Liens, Borrower shall give Lender at least five (5) days prior
written notice of such disposition, and Borrower shall turn over
to Lender all proceeds realized from any such disposition in
accordance with and subject to Section 2.2(A); (iv) the sale by
Borrower of Accounts to Receivables Corporation in accordance
with the procedures set forth in the documentation evidencing the
Securitization Facility; (v) transfers of Fixed Assets pursuant
to the Long Term Financing Transaction; (vi) the sale of Primary
Bank Collateral (as defined in the Wells Intercreditor Agreement)
for which Wells has given its prior written consent; or
(vii) other dispositions expressly authorized by this Agreement.
(O) Name of Borrower. Use any corporate name (other
than its own) or any fictitious name, tradestyle or "d/b/a"
except for the names disclosed on Exhibit C attached hereto.
(P) Use of Lender's Name. Without the prior written
consent of Lender, use the name of Lender or the name of any
Affiliates of Lender in connection with any of Borrower's
business or activities, other than (i) in connection with
internal business matters, (ii) as required in dealings with
governmental agencies and financial institutions, and (iii) to
trade creditors of Borrower solely for credit reference purposes.
(Q) Amendment of Certain Agreements. Amend or
consent to any amendment of or modification to any of the terms
of the Securitization Facility, the Wells Indebtedness or the
agreements related thereto, except as may be permitted by the
Wells Intercreditor Agreement.
(R) Margin Securities. Own, purchase or acquire (or
enter into any contract to purchase or acquire) any "margin
security" as defined by any regulation of the Federal Reserve
Board as now in effect or as the same may hereafter be in effect
unless, prior to any such purchase or acquisition or entering
into any such contract, Lender shall have received an opinion of
counsel satisfactory to Lender to the effect that such purchase
or acquisition will not cause this Agreement to violate
Regulations G or U or any other regulation of the Federal Reserve
Board then in effect.
(S) Restricted Investment. Make or have, or permit
any Subsidiary to make or have, any Restricted Investment.
(T) Fiscal Year. Change, or permit any Subsidiary to
change, its Fiscal Year, or permit any Subsidiary to have a
Fiscal Year different from that of Borrower.
(U) Stock of Subsidiary, Etc. Sell, pledge, transfer
or otherwise dispose of any shares of capital stock of any
Subsidiary, except in connection with a transaction permitted
under Section 8.2(A), or permit any Subsidiary to issue any
additional shares of its capital stock except director's
qualifying shares.
(V) Leases. Become a lessee under any operating lease
(other than a lease under which Borrower is lessor and excluding
leases of Borrower's store locations) of Property if such lease
would cause the aggregate Rentals payable during any Fiscal Year
to exceed the aggregate Rentals paid during the preceding Fiscal
Year by more than $1,000,000. The term "Rentals" means, as of
the date of determination, all payments which the lessee is
required to make by the terms of any lease.
(W) Tax Consolidation. File or consent to the filing
of any consolidated income tax return with any Person other than
a Subsidiary.
8.3 Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any
Obligations to Lender outstanding, Borrower covenants that,
unless otherwise consented to by Lender in writing, it shall, as
of each Computation Date:
(A) Minimum Working Capital. Maintain at all times
Consolidated Working Capital of not less than $18,000,000.
(B) Minimum Adjusted Tangible Net Worth. Maintain at
all times a Consolidated Adjusted Tangible Net Worth of not less
than $79,000,000.
(C) Current Ratio. Maintain at all times a ratio of
Consolidated Current Assets to Consolidated Current Liabilities
of not less than 1.22 to 1.
(D) Minimum Earnings.
(i) Achieve not less than the following
cumulative Consolidated Adjusted Net Earnings from Operations for
the corresponding periods set forth below as of the end of each
such period:
Fiscal Periods Amount
February 1994 through <$3,000,000>
April 1994
May 1994 through <$1,500,000>
July 1994
August 1994 through <$ 750,000>
October 1994
November 1994 through $3,000,000
January 1995
(ii) Maintain at all times not less than the
following Consolidated Adjusted Net Earnings from Operations for
the corresponding periods set forth below:
Fiscal Period Amount
March 1994 <$850,000>
April 1994 <$850,000>
May 1994 <$750,000>
June 1994 <$750,000>
July 1994 <$750,000>
August 1994 <$450,000>
September 1994 <$450,000>
October 1994 <$450,000>
November 1994 $1.00
December 1994 $1.00
January 1995 <$1,000,000>
Any Fiscal <$1,500,000>
Period thereafter
(iii) Maintain at all times after January 28,
1995, for the prior twelve (12) Fiscal Periods, Consolidated
Adjusted Net Earnings from Operations of not less than
$2,600,000.
(E) Indebtedness Ratio. Maintain at all times a ratio
of Indebtedness to Adjusted Tangible Net Worth of not more than
2 to 1.
(F) Senior Debt Coverage Ratio. Maintain at all times
a Senior Debt Coverage Ratio of not less than 1 to 1; provided,
that during the December 1994 and January 1995 Fiscal Periods,
Borrower shall maintain at all times a Senior Debt Coverage Ratio
of not less than 0.9 to 1.
(G) Times Interest Earned Ratio. Maintain at all
times from the Closing Date through and including the October
1994 Fiscal Period a Times Interest Earned Ratio of not less than
0.5 to 1, and maintain at all times thereafter a Times Interest
Earned Ratio of not less than 1 to 1.
(H) Inventory Turnover Rate - Maintain at all times an
Inventory Turnover Rate not exceeding one-hundred and fifty (150)
days.
(I) Payables Turnover Rate - Maintain at all times a
Payables Turnover Rate not exceeding fifty (50) days.
After the end of each Fiscal Year, Lender will review
Borrower's budgets and Projections to be delivered by Borrower to
Lender prior to the beginning of each Fiscal Year pursuant to
Section 8.1(J), for the purpose of reviewing and, if appropriate,
revising the financial tests set forth above; provided, that
Lender shall be under no obligation to change the financial tests
set forth above.
9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any
of the other Loan Documents, and without affecting in any manner
the rights of Lender under the other sections of this Agreement,
it is understood and agreed that Lender will not make any
Revolving Loan under Section 2 unless and until each of the
following conditions has been and continues to be satisfied or
waived in writing by Lender, all in form and substance
satisfactory to Lender and its counsel:
9.1 Documentation. Lender shall have received the
following documents, each to be in form and substance
satisfactory to Lender and its counsel:
(A) Copies of all agreements between Wells and
Borrower, including any notes, mortgages or other security
agreements relating to the Well Indebtedness;
(B) Copies of all agreements in connection with the
Securitization Facility, including the Receivables Purchase
Agreement and the Pooling Agreement.
(C) Copies of all of Borrower's agreements with
financial institutions regarding the collection of receipts from
purchases made by customers on credit or charge cards other than
Borrower's private label credit card.
(D) Copies of Borrower's casualty insurance policies,
together with loss payable endorsements on Lender's standard form
of Loss Payee Endorsement naming Lender as loss payee, and copies
of Borrower's liability insurance policies;
(E) Evidence satisfactory to Lender that Lender has
obtained all documents necessary to perfect its Lien upon the
Collateral and that such Liens constitute valid and perfected
security interests and Liens, having the Lien priority specified
in Section 4.2(B);
(F) A copy of the Certificate of Incorporation of
Borrower, and all amendments thereto, certified by the Secretary
of State or other appropriate official of its jurisdiction of
incorporation;
(G) Good standing certificates for Borrower, issued by
the Secretary of State or other appropriate official of
Borrower's jurisdiction of incorporation and each jurisdiction
where the conduct of Borrower's business activities or the
ownership of its Properties necessitates qualification;
(H) A closing certificate signed by the President and
Chief Financial Officer of Borrower dated as of the Closing Date,
stating that (i) the representations and warranties set forth in
Section 7 are true and correct on and as of such date,
(ii) Borrower is on such date in compliance with all the terms
and provisions set forth in this Agreement and (iii) on such date
no Default or Event of Default has occurred or is continuing;
(I) The Security Documents duly executed, accepted and
acknowledged by or on behalf of each of the signatories thereto;
(J) The Other Agreements duly executed and delivered
by Borrower;
(K) The favorable, written opinion of Munger, Tolles &
Olson, counsel to Borrower, regarding Borrower, the Loan
Documents and the transactions contemplated by this Agreement and
any of the other Loan Documents, in form and content reasonably
satisfactory to Lender and its counsel;
(L) Written instructions from Borrower directing the
application of proceeds of the initial Revolving Loan made
pursuant to this Agreement, and an initial Borrowing Base
Certificate from Borrower reflecting that Borrower has Eligible
Inventory in amounts sufficient in value and amount to support
the Revolving Loans to be made on the Closing Date and to provide
Borrower with excess borrowing availability under the Revolving
Loans of not less than $2,000,000 after bringing all accounts
payable and accruals to a current position;
(M) Duly executed agreement establishing the Dominion
Account and with a financial institution acceptable to Lender for
the collection of cash and Accounts; and
(N) Such other documents, instruments and agreements
as Lender shall reasonably request in connection with the
foregoing matters, including all documents, instruments,
agreements and schedules listed in the schedule of documents
attached as Exhibit P hereto (the "Schedule of Documents").
9.2 Other Conditions. The following conditions have been
and shall continue to be satisfied, in the sole discretion of
Lender:
(A) No Default or Event of Default shall exist;
(B) Each of the conditions precedent set forth in the
other Loan Documents shall have been satisfied;
(C) Since October 30, 1993, except for changes which
are reflected on the January 29, 1994 financial statements
prepared by management and submitted to Lender, there shall not
have occurred any material adverse change in the business,
financial condition or results of operations of Borrower, or the
existence or value of any Collateral, or any event, condition or
state of facts which would reasonably be expected materially and
adversely to affect the business, financial condition or results
of operations of Borrower;
(D) Since October 30, 1993 and through the Closing
Date, Borrower shall not have (i) made any material change in its
accounting methods, (ii) entered into any material commitment or
material transaction not contemplated by the terms of this
Agreement, including transactions for borrowings and capital
expenditures, which are not in the ordinary course of its
business or (iii) terminated, modified in a manner materially
adverse to Borrower, or been declared in default due to
Borrower's breach of, any materially advantageous agreement in
effect during such period;
(E) No action, proceeding, investigation, regulation
or legislation against Borrower or any other Person shall have
been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related
to or arises out of this Agreement or the consummation of the
transactions contemplated hereby or which, in Lender's sole
discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other
Loan Documents, and Lender shall have completed a review of the
status of all litigation or proceedings, the results of such
review being satisfactory to Lender and its counsel;
(F) Lender shall have received such certificates and
documents as Lender shall find acceptable, reflecting the Solvent
condition of Borrower, after giving effect to the transactions
contemplated by this Agreement, including pro-forma balance
sheets, forecasted financial statements consisting of balance
sheets, income statements and cash flow statements for Borrower
covering at least the three year period commencing on the Closing
Date, in each case prepared by Borrower, and a fair valuation
balance sheet for Borrower showing that Borrower is Solvent;
(G) Lender shall have received all consents necessary
to permit the transactions contemplated by this Agreement to be
consummated;
(H) Lender shall have received confirmation and
completed a satisfactory review of all leases relating to, and
all premises occupied or used by, Borrower;
(I) Lender shall have received a description of each
Plan of Borrower in existence or committed by Borrower as of the
Closing Date, together with confirmation to Lender that each such
Plan has been either assumed by Borrower, terminated, or replaced
in a manner satisfactory to Lender, and, to the extent each such
Plan has been assumed by Borrower, evidence satisfactory to
Lender that each such Plan is funded to Lender's satisfaction;
(J) Lender shall have received copies of labor
contracts or employment contracts to which Borrower is a party,
and all labor contracts or employment contracts which are
necessary to the continuation of the operation of Borrower's
business, all of which such contracts shall be in full force and
effect as of the Closing Date;
(K) Lender and its representatives shall have been
afforded access, at all reasonable times requested, to Borrower's
offices and facilities, to inspect and evaluate the Collateral
and Borrower's books and records, and Borrower shall have
provided to Lender all financial and other relevant information
which Lender may have reasonably requested.
(L) The Securitization Facility has not expired or
been terminated, and no default or event of default with respect
to the Securitization Facility, or under any agreements between
Borrower and any other Person evidencing or relating to the
Securitization Facility has occurred and is continuing.
10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of any one or more
of the following events shall constitute an "Event of Default":
(A) Payment of Obligations. Borrower shall fail to
pay any of the Obligations within three (3) Business Days after
the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise).
(B) Misrepresentations. Any warranty, representation,
or other statement made or furnished to Lender by or on behalf of
Borrower or in any instrument, certificate or financial statement
furnished in compliance with or in reference to this Agreement or
any of the other Loan Documents proves to have been false or
misleading in any material respect when made or furnished.
(C) Breach of Covenants. Borrower shall fail or
neglect to perform, keep or observe (i) any covenant, condition,
term, provision, warranty or representation contained in
Sections 4.2, 4.3, 4.4, 5.2, 5.4(B), 8.1(A), 8.1(F), 8.1(J),
8.1(O), 8.1(P), 8.2 or 8.3.
(D) Breach of Other Covenants. Borrower shall fail or
neglect to perform, keep or observe any other covenant,
condition, term, provision, warranty or representation contained
in this Agreement (other than a covenant, condition, term,
provision, warranty or representation, a default in the
performance or observance of which is dealt with specifically
elsewhere in this Section 10.1) and the breach of such other
covenant, condition, term, provision, warranty or representation
is not cured to Lender's satisfaction within thirty (30) days
after the sooner to occur of Borrower's receipt of notice of such
breach from Lender or the date on which such failure or neglect
first becomes known to any officer of Borrower.
(E) Default Under Other Agreements. Any event of
default shall occur under, or Borrower shall default in the
performance or observance of any covenant, condition, term,
provision, warranty, representation or agreement contained in,
any of the Other Agreements and such default shall continue
beyond any applicable grace or cure period provided therefor.
(F) Default Under Security Documents. Any event of
default shall occur under, or Borrower shall default in the
performance or observance of any covenant, condition, term,
provision, warranty, representation or agreement contained in,
any of the Security Documents and such default shall continue
beyond any applicable grace or cure period provided therefor.
(G) Default Under Agreements Evidencing or Related to
the Securitization Facility. Any event of default shall occur
under, or Borrower or Receivables Corporation shall default in
the performance or observance of any covenant, condition, term,
provision, warranty, representation or agreement evidencing the
Securitization Facility, or under the notes and agreements
evidencing or related to the Securitization Facility, and such
default shall continue beyond any applicable grace or cure period
provided therefor.
(H) Other Defaults. There shall occur any default or
event of default on the part of Borrower (whether due to
non-payment or otherwise) under any agreement, document or
instrument to which Borrower is a party or by which Borrower or
any of its Property is bound, creating or relating to any
Indebtedness (other than the Obligations) in excess of $500,000
if the payment or maturity of such Indebtedness is accelerated in
consequence of such event of default or demand for payment of
such Indebtedness is made.
(I) Termination or Nonrenewal of the Securitization
Facility. The Securitization Facility is terminated for any
reason, or Borrower fails to renew the Securitization Facility or
provide Lender, within ninety (90) days prior to the scheduled
expiration of the same, with satisfactory evidence that Borrower
has obtained a replacement facility (i) on terms that are no less
favorable to Borrower or Lender and on terms otherwise acceptable
to Lender, (ii) with a replacement lender acceptable to Lender,
and (iii) that shall be subject to intercreditor arrangements
acceptable to Lender.
(J) Uninsured Losses; Unauthorized Dispositions. Any
loss, theft, damage or destruction of the Collateral not fully
covered by insurance (as required by this Agreement and subject
to such deductibles as shall be permitted under this Agreement),
or any sale, lease or encumbrance of any of the Collateral, or
the making of any levy, seizure, or attachment of the Collateral
or thereon, except in all cases as may be specifically permitted
by other provisions of this Agreement.
(K) Adverse Changes. There shall occur any material
adverse change in the financial condition or business prospects
of Borrower.
(L) Insolvency, etc. Borrower shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary, or shall make an assignment for
the benefit of creditors, or any petition for an order for relief
shall be filed by or against Borrower under the Bankruptcy Code
(and, if such petition is filed against Borrower, the
continuation of such proceeding for more than thirty (30) days),
or Borrower shall make any offer of settlement, extension or
composition to their respective unsecured creditors generally.
(M) Business Disruption; Condemnation. There shall
occur a cessation of a substantial part of the business of
Borrower for a period which significantly affects Borrower's
capacity to continue its business, on a profitable basis; or
Borrower shall suffer the loss or revocation of any license or
permit now held or hereafter acquired by Borrower which is
necessary to the continued or lawful operation of its business;
or Borrower shall be enjoined, restrained or in any way prevented
by court, governmental or administrative order from conducting
all or any material part of its business affairs; or any material
lease or agreement pursuant to which Borrower leases, uses or
occupies any Property shall be canceled or terminated prior to
the expiration of its stated term; or any part of the Collateral
shall be taken through condemnation or the value of such Property
shall be impaired through condemnation.
(N) Employment of Key Employees. Stephen J. Furst or
Alan A. Weinstein for any reason ceases to remain engaged in the
actual management of Borrower and a replacement reasonably
satisfactory to Lender is not appointed within ninety (90) days.
(O) ERISA. A Reportable Event shall occur which
Lender, in its sole discretion, shall determine in good faith
constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the
appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee
shall be requested or appointed, or if Borrower is in "default"
(as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan resulting from Borrower's
complete or partial withdrawal from such Plan.
(P) Litigation. Borrower or any Affiliate of either,
shall challenge or contest in any action, suit or proceeding the
validity or enforceability of this Agreement or any of the other
Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to
Lender.
(Q) Criminal Forfeiture. Borrower shall be criminally
indicted or convicted under any law that could lead to a
forfeiture of any Property of Borrower, and either a forfeiture
proceeding has been commenced as a result thereof or Lender
reasonably believes that a forfeiture proceeding is likely to be
commenced as a result thereof.
(R) Judgments. Any money judgment in excess of
$250,000, writ of attachment or similar process is entered or
filed against Borrower or any of its Property and results in the
creation or imposition of any Lien that is not a Permitted Lien.
(S) Long Term Financing Transaction. The Long Term
Financing Transaction shall not have been consummated within
ninety (90) days after the Closing Date.
(T) Variable Base Certificates. The Variable Base
Certificates shall not have been placed within ninety (90) days
after the Closing Date.
10.2 Acceleration of the Obligations. Without in any way
limiting the right of Lender to demand payment of any portion of
the Obligations payable on demand in accordance with Section 3.4
or any other section, upon or at any time after the occurrence of
an Event of Default as above provided, all or any portion of the
Obligations due or to become due from Borrower to Lender, whether
under this Agreement, or any of the other Loan Documents or
otherwise, shall, at the option of Lender, or in the case of an
Event of Default caused by an appointment, assignment or filing
of the type described in Section 10.1(L) immediately upon the
occurrence thereof, and without notice or demand by Lender,
become at once due and payable and Borrower shall forthwith pay
to Lender, in addition to any and all sums and charges due, the
entire principal of and interest accrued on the Obligations.
10.3 Remedies. Upon or at any time after the occurrence of
an Event of Default, Lender shall have and may exercise from time
to time the following rights and remedies:
(A) All of the rights and remedies of a secured party
under the Code or under other applicable law, and all other legal
and equitable rights to which Lender may be entitled, all of
which rights and remedies shall be cumulative, and none of which
shall be exclusive, and shall be in addition to any other rights
or remedies contained in this Agreement or any of the other Loan
Documents.
(B) The right to take immediate possession of the
Collateral, and (i) to require Borrower to assemble the
Collateral, at Borrower's expense, and make it available to
Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) to enter any of the premises
of Borrower or wherever any of the Collateral shall be located,
and to keep and store the same on said premises until sold (and
if said premises be the Property of Borrower, Borrower agrees not
to charge Lender for storage thereof).
(C) The right to sell or otherwise dispose of all or
any Collateral in its then condition or after any further
manufacturing or processing thereof, at public or private sale or
sales, with such notice as may be required by law, in lots or in
bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable. Borrower agrees that five (5)
days written notice to Borrower of any public or private sale or
other disposition of the Collateral shall be reasonable notice
thereof, and such sale shall be at such locations as Lender may
designate in said notice. Lender shall have the right to conduct
such sales on Borrower's premises, without charge therefor, and
such sales may be adjourned from time to time in accordance with
applicable law. Lender shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Lender may purchase
all or any part of the Collateral at public or, if permitted by
law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the
Obligations.
(D) Lender is hereby granted a license or other right
to use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, tradenames, trademarks
and advertising matter, or any Property of a similar nature, as
it pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit.
(E) The proceeds realized from the sale of any
Collateral may be applied by Lender upon receipt of available
funds first to the reasonable costs, expenses and attorneys' fees
incurred by Lender in collecting the Obligations, in enforcing
the rights of Lender under the Loan Documents and in collecting,
retaking, completing, protecting, removing, storing, advertising
for sale, selling and delivery any of the Collateral; secondly,
to interest due upon any of the Obligations; and thirdly, to the
principal of the Obligations. If any deficiency shall arise,
Borrower shall remain liable to Lender therefor.
(F) With respect to the face amount of all
LC Guaranties and Letters of Credit issued by Lender or its
Affiliates and then outstanding, Lender may, at its option,
require Borrower to deposit with Lender funds equal to such face
amount, and if Borrower fails to promptly make such deposit,
Lender may advance such amount as a Revolving Loan (whether or
not an Overadvance is created thereby). Any such deposit or
advance shall be held by Lender as a reserve to fund future
payments on such LC Guaranties and future drawings against such
Letters of Credit. At such time as all LC Guaranties have been
paid or terminated and all Letters of Credit have been drawn upon
or expired, any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or to the extent all
Obligations have been indefeasibly paid in full, returned to
Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants,
conditions, provisions, warranties, guaranties, indemnities, and
other undertakings of Borrower contained in this Agreement and
the other Loan Documents, or in any document referred to herein
or contained in any agreement supplementary hereto or in any
schedule given to Lender or contained in any other agreement
between Lender and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in
derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrower herein contained. The
failure or delay of Lender to exercise or enforce any rights,
Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral
shall not operate as a waiver of such Liens, rights, powers and
remedies, but all such Liens, rights, powers, and remedies shall
continue in full force and effect until all Revolving Loans and
all other Obligations owing or to become owing from Borrower to
Lender shall have been fully satisfied, and all Liens, rights,
powers, and remedies herein provided for are cumulative and none
are exclusive.
11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably
designates, makes, constitutes and appoints Lender (and all
Persons designated by Lender) as Borrower's true and lawful
attorney (and agent-in-fact) and Lender, or Lender's agent, may,
without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
(A) At such time or times hereafter as Lender or said
agent, in its sole discretion, may determine, endorse Borrower's
name on any checks, notes, acceptances, drafts, money orders or
any other evidence of payment or proceeds of the Collateral which
come into the possession of Lender or under Lender's control; and
(B) At such time or times upon or after the occurrence
of an Event of Default as Lender or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from
the Account Debtors, enforce payment of the Accounts by legal
proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of
the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal
proceedings brought to collect any of the Accounts or other
Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or
times as Lender deems advisable; (iv) take control, in any
manner, of any item of payment or proceeds relating to any
Collateral; (v) prepare, file and sign Borrower's name to a proof
of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of
lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed
to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may
designate; (vii) endorse the name of Borrower upon any of the
items of payment or proceeds relating to any Collateral and
deposit the same to the account of Lender on account of the
Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight bill, bill of
lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use Borrower's
stationery and sign the name of Borrower to verifications of the
Accounts and notices thereof to Account Debtors; (x) use the
information recorded on or contained in any data processing
equipment and computer hardware and software relating to the
Accounts, Inventory, and any other Collateral and to which
Borrower has access; (xi) make and adjust claims under policies
of insurance; and (xii) do all other acts and things necessary,
in Lender's determination, to fulfill Borrower's obligations
under this Agreement.
11.2 Indemnity. Borrower hereby agrees to indemnify Lender
and hold Lender harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or incurred by
Lender as the result of Borrower's failure to observe, perform or
discharge Borrower's duties hereunder. Without limiting the
generality of the foregoing, this indemnity shall extend to any
claims asserted against Lender by any Person under any
Environmental Laws or similar laws by reason of Borrower's or any
other Person's failure to comply with laws applicable to solid or
hazardous waste materials or other toxic substances. Notwith-
standing any contrary provision of this Agreement, the obligation
of Borrower under this Section 11.2 shall survive the payment in
full of the Obligations and the termination of this Agreement.
11.3 Modification of Agreement; Sale of Interest. This
Agreement may not be modified, altered or amended, except by an
agreement in writing signed by Borrower and Lender. Borrower may
not sell, assign or transfer any interest in this Agreement or
any of the other Loan Documents, or any portion thereof,
including Borrower's rights, title, interests, remedies, powers,
and duties hereunder or thereunder. Borrower hereby consents to
Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement,
any of the other Loan Documents or any of the Obligations, or of
any portion hereof or thereof, including Lender's rights, title,
interests, remedies, powers, and duties hereunder or thereunder.
In the case of an assignment, the assignee shall have, to the
extent of such assignment, the same rights, benefits and
obligations as it would if it were "Lender" hereunder and Lender
shall be relieved of all obligations hereunder upon any such
assignment.
11.4 Reimbursement of Expenses. If, at any time or times
prior or subsequent to the date hereof, regardless of whether or
not an Event of Default then exists or any of the transactions
contemplated hereunder are concluded, Lender uses its in-house
legal coordinator for documentation, closing coordination or
other paralegal type services, or Lender or any Participating
Lender employs counsel for advice or other representation, or
incurs legal or consulting expenses or other costs or out-
of-pocket expenses in connection with: (A) the negotiation and
preparation of this Agreement or any of the other Loan Documents,
any amendment of or modification of this Agreement or any of the
other Loan Documents, or any sale or attempted sale of any
interest herein to a Participating Lender; or (B) the
administration of this Agreement or any of the other Loan
Documents and the transactions contemplated hereby and thereby;
(C) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, Borrower or any other Person) in
any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (D) any attempt to
enforce any rights of Lender or any Participating Lender against
Borrower or any other Person which may be obligated to Lender by
virtue of this Agreement or any of the other Loan Documents,
including the Account Debtors; or (E) any attempt to inspect,
appraise, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral;
then, in any such event, the allocated charges of Lender's in-
house legal coordinator and the attorneys' fees and consultants'
arising from such services and all expenses, costs, charges and
other fees of such counsel or consultant or of Lender or relating
to any of the events or actions described in this Section 11.4
shall be payable, on demand, by Borrower to Lender or to such
Participating Lender, as the case may be, and shall be additional
Obligations hereunder secured by the Collateral. Without
limiting the generality of the foregoing, such expenses, costs,
charges and fees may include accountants' fees, costs and
expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges;
secretarial over-time charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of
such legal or consulting services. Additionally, if any taxes
(excluding taxes imposed upon or measured by the net income of
Lender) shall be payable on account of the execution or delivery
of this Agreement, or the execution, delivery, issuance or
recording of any of the other Loan Documents, or the creation of
any of the Obligations hereunder, by reason of any existing or
hereafter enacted Federal or state statute, Borrower will pay all
such taxes, including, but not limited to, any interest and
penalties thereon, and will indemnify and hold Lender harmless
from and against liability in connection therewith.
11.5 Indulgences Not Waivers. Lender's failure, at any time
or times hereafter, to require strict performance by Borrower of
any provision of this Agreement shall not waive, affect or
diminish any right of Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver
by Lender of an Event of Default by Borrower under this Agreement
or any of the other Loan Documents shall not suspend, waive or
affect any other Event of Default by Borrower under this
Agreement or any of the other Loan Documents, whether the same is
prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained
in this Agreement or any of the other Loan Documents and no Event
of Default by Borrower under this Agreement or any of the other
Loan Documents shall be deemed to have been suspended or waived
by Lender, unless such suspension or waiver is by an instrument
in writing specifying such suspension or waiver and is signed by
a duly authorized representative of Lender and directed to
Borrower.
11.6 Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Agreement.
11.7 Successors and Assigns. This Agreement, the Other
Agreements and the Security Documents shall be binding upon and
inure to the benefit of the successors and assigns of Borrower
and Lender. This provision, however, shall not be deemed to
modify Section 11.3.
11.8 Cumulative Effects; Conflict of Terms. The provisions
of the Other Agreements and the Security Documents are hereby
made cumulative with the provisions of this Agreement. Except as
otherwise provided in Section 3.4 and except as otherwise
provided in any of the other Loan Documents by specific reference
to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern
and control.
11.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same
instrument.
11.10 Notice. Except as otherwise provided herein, all
notices, requests and demands to or upon a party hereto shall be
in writing and shall be sent by certified or registered mail,
return receipt requested, by overnight delivery service providing
evidence of receipt, by personal delivery against receipt, or by
facsimile transmission with receipt confirmed, and, unless
otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered when delivered against
receipt, or, in the case of certified or registered mail, three
(3) Business Days after deposit in the U.S. mail, postage
prepaid, or, in the case of overnight delivery service, one (1)
Business Day after deposit with the overnight carrier, or, in the
case of facsimile transmission, when sent with receipt confirmed,
addressed as follows:
(A) If to Lender:
Barclays Business Credit, Inc.
1999 Harrison Street, Suite 1450
Oakland, California 94612-3508
Attention: Mr. Melvin L. Robbins
FAX NO.: (510) 763-4924
With a copy to:
Murphy, Weir & Butler
101 California Street, 39th Floor
San Francisco, California 94111
Attention: Dick M. Okada, Esq.
FAX NO.: (415) 421-7879
(B) If to Borrower:
Gottschalks Inc.
7 River Park Place East
Fresno, California 93720
Attention: Mr. Alan A. Weinstein
FAX NO.: (209) 434-4804
With a copy to:
Munger, Tolles & Olson
355 South Grand Avenue, 35th Floor
Los Angeles, California 90071
Attention: John B. Frank, Esq.
FAX NO: (213) 687-3702
or to such other address or facsimile transmission number as each
party may designate for itself by like notice given in accordance
with this Section 11.10; provided, that any notice, request or
demand to or upon Lender pursuant to Sections 2.3 or 3.3 shall
not be effective until received by Lender. Any written notice
that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice is
actually received by the noticed party. Failure or delay in
delivering copies of any notice, request or demand to the Persons
designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, request or demand.
11.11 Lender's Consent. Whenever Lender's consent is
required to be obtained under this Agreement, any of the Other
Agreements or any of the Security Documents as a condition to any
action, inaction, condition or event, Lender shall be authorized
to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of
additional collateral security for the Obligations, the payment
of money or any other matter.
11.12 Demand Obligations. Nothing in this Agreement shall
affect or abrogate the demand nature of any portion of the
Obligations expressly made payable on demand by this Agreement or
by any instrument evidencing or securing same, and the occurrence
of an Event of Default shall not be a prerequisite for Lender's
requiring payment of such Obligations.
11.13 Publicity. Borrower consents to Lender publishing a
tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement.
11.14 Time of Essence. Time is of the essence of this
Agreement, the Other Agreements and the Security Documents.
11.15 Entire Agreement. This Agreement and the other Loan
Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to
the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or
implied, oral or written.
11.16 Interpretation. No provision of this Agreement or any
of the other Loan Documents shall be construed against or
interpreted to the disadvantage of any party hereto by any court
or other governmental or judicial authority by reason of such
party's having or being deemed to have structured, drafted or
dictated such provision.
11.17 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS
BEEN NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO
HAVE BEEN MADE IN LOS ANGELES CALIFORNIA. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA; PROVIDED, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN CALIFORNIA, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL
AND THE ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF CALIFORNIA. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS
OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS
OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT
THE SUPERIOR COURTS OF SAN FRANCISCO AND ALAMEDA COUNTY,
CALIFORNIA, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA, SHALL EACH HAVE
NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT
OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES
THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH
FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE
SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.18 WAIVERS BY BORROWER. EACH BORROWER WAIVES (i) THE
RIGHT TO TRIAL BY JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT
OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR
THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE
OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY
LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD;
(iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY
COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S
REMEDIES, INCLUDING THE ISSUANCE OF AN IMMEDIATE WRIT OF
POSSESSION; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS; (v) ANY RIGHT BORROWER MAY HAVE UPON PAYMENT IN
FULL OF THE OBLIGATIONS TO REQUIRE LENDER TO TERMINATE ITS
SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER PROPERTY OF
BORROWER UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH
ITS TERMS AND THE EXECUTION BY BORROWER, AND BY ANY PERSON WHOSE
LOANS TO BORROWER IS USED IN WHOLE OR IN PART TO SATISFY THE
OBLIGATIONS, OF AN AGREEMENT INDEMNIFYING LENDER FROM ANY LOSS OR
DAMAGE LENDER MAY INCUR AS THE RESULT OF DISHONORED CHECKS OR
OTHER ITEMS OF PAYMENT RECEIVED BY LENDER FROM BORROWER OR ANY
ACCOUNT DEBTOR AND APPLIED TO THE OBLIGATIONS; AND (vi) NOTICE OF
ACCEPTANCE HEREOF.
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND
THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
IN WITNESS WHEREOF, this Agreement has been duly
executed in Los Angeles, California on the day and year specified
at the beginning hereof.
("Borrower")
GOTTSCHALKS INC.
By:____________________________
Title:__________________________
("Lender")
BARCLAYS BUSINESS CREDIT, INC.
By:_____________________________
Melvin L. Robbins
Senior Vice President
EXHIBIT 10.76
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (as amended, supplemented,
replaced, restated or otherwise modified, in each case from time
to time, this "Intercreditor Agreement"), dated as of March 30,
1994, is made and entered into by and among Gottschalks Inc., a
Delaware corporation ("Borrower"), Wells Fargo Bank, N.A. ("Wells
Fargo"), and Barclays Business Credit, Inc. ("Barclays").
RECITALS
A. Borrower is indebted to Wells Fargo for funds borrowed
over several years. Pursuant to that certain 1994 Amended and
Restated Credit Agreement of even date herewith between Borrower
and Wells Fargo (the "Bank Credit Agreement"), Wells Fargo and
Borrower have amended and restated the terms of the Existing
Credit Agreement (as defined in the Bank Credit Agreement) to
provide that, among other things, Wells Fargo will make a New
Term Loan (as defined in the Bank Credit Agreement) in the
original principal amount of $6,000,000, and Borrower will
reaffirm its obligations with respect to the Existing Term Loan
(as defined in the Bank Credit Agreement) in the original
principal amount of $19,000,000.
B. Pursuant to that certain Assignment and Acceptance of
even date herewith between Wells Fargo and Barclays, Wells Fargo
has assigned to Barclays, and Barclays has accepted, all of Wells
Fargo's rights and obligations with respect to the Existing
Revolver (as defined in the Bank Credit Agreement) and certain
collateral therefor. Pursuant to that certain Loan and Security
Agreement of even date herewith between Barclays and Borrower
(the "Barclays Loan Agreement"), immediately after such
assignment and acceptance Barclays and Borrower amended and
restated the terms of the Existing Revolver to provide that,
among other things, Barclays will make available to Borrower a
$35,000,000 secured revolving credit facility (the "Barclays
Revolving Debt").
C. It is a condition precedent to the effectiveness of the
Bank Credit Agreement and the Barclays Loan Agreement that, inter
alia, Borrower grant or reaffirm certain liens and security
interests, as follows: (i) in favor of Barclays to secure
repayment of the Barclays Obligations (as defined herein), a
first priority security interest in the Barclays Primary
Collateral (as defined herein) and a second priority security
interest in the Bank Primary Collateral (as defined herein); and
(ii) in favor of Wells Fargo to secure repayment of the Bank
Obligations (as defined herein), a first priority lien on and
security interest in the Bank Primary Collateral (as defined
herein), and a second priority security interest in the Barclays
Primary Collateral.
D. Pursuant to the Barclays Loan Agreement and those
certain Deeds of Trust with Assignments of Rents, each of even
date herewith, between Borrower and Barclays (each a "Second Deed
of Trust" and collectively the "Second Deeds of Trust") recorded
in the applicable Counties in the State of California, Borrower
has granted to Barclays to secure repayment of the Barclays
Obligations, a first priority security interest in the Barclays
Primary Collateral and a second priority security interest in the
Bank Primary Collateral.
E. Pursuant to that certain Second Amended and Restated
Security Agreement dated as of August 26, 1993, as amended by
that certain First Amendment to Second Amended and Restated
Security Agreement of even date herewith, between Borrower and
Wells Fargo (the "Wells Security Agreement"), and those certain
Deeds of Trust, Security Agreements and Fixture Filings, each of
even date herewith, between Borrower and Wells Fargo (each a
"First Deed of Trust" and collectively the "First Deeds of
Trust") recorded in the applicable Counties in the State of
California, Borrower has granted to Wells Fargo to secure
repayment of the Bank Obligations, a first priority lien on and
security interest in the Bank Primary Collateral, and a second
priority security interest in the Barclays Primary Collateral.
F. Wells Fargo, Barclays, and Borrower now enter into the
Agreement below to set forth the respective rights of Wells Fargo
and Barclays with respect to the Barclays Primary Collateral, the
Bank Primary Collateral, and certain other matters.
NOW, THEREFORE, in consideration of the Recitals set
forth above, which by this reference are incorporated into the
Agreement below, and the premises and mutual agreements set forth
below, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
AGREEMENT
ARTICLE I
DEFINITIONS
1.1 Defined Terms. All initially capitalized terms used
but not defined herein shall have the meanings assigned to such
terms in the Bank Credit Agreement, unless clearly specified
otherwise. For purposes of this Intercreditor Agreement, the
following initially capitalized terms shall have the following
meanings:
"Bank Loan Documents" means, and is the collective
reference to, the Bank Credit Agreement, the Loan Documents (as
defined in the Bank Credit Agreement), this Intercreditor
Agreement and any other agreements or documents executed in
connection with any of the foregoing.
"Bank Notes" means, and is the collective reference to,
the "Existing Term Note" and the "New Term Note," each as defined
in the Bank Credit Agreement.
"Bank Obligations" means all present and future
advances, debts, obligations and liabilities of Borrower of every
type and description arising under or in connection with the Bank
Credit Agreement or any of the other Bank Loan Documents, due or
to become due to Wells Fargo or any of its successors,
transferees or assigns, and shall include, without limitation,
(i) all liability of Borrower for payment of principal of and
interest on the Bank Notes, (ii) all liability of Borrower under
the Bank Credit Agreement or under any of the other Bank Loan
Documents for any fees, expense reimbursements and
indemnifications, and (iii) any and all other debts, obligations
and liabilities of Borrower to Wells Fargo heretofore, now or
hereafter incurred or created (and all renewals, extensions,
modifications and rearrangements thereof), under, in connection
with, in respect of, or evidenced or created by, the Bank Credit
Agreement or any or all of the other Bank Loan Documents, whether
voluntary or involuntary, however arising, and whether due or not
due, absolute or contingent, secured or unsecured, liquidated or
unliquidated, determined or undetermined, direct or indirect, and
whether Borrower may be liable individually or jointly with
others.
"Bank Primary Collateral" means, and is the collective
reference to, any and all property of Borrower in which Borrower
purports to grant to Wells Fargo a first priority Lien or
security interest under the Wells Security Agreement or the First
Deeds of Trust, and which is not Barclays Primary Collateral,
including all of Borrower's now owned or hereafter acquired
interests in real property, machinery, apparatus, equipment,
fittings, furniture, fixtures and motor vehicles, and all
proceeds thereof.
"Barclays Loan Documents" means, and is the collective
reference to, the Barclays Loan Agreement, the Loan Documents (as
defined in the Barclays Loan Agreement), this Intercreditor
Agreement and any other agreements or documents executed in
connection with any of the foregoing.
"Barclays Obligations" means all present and future
advances, debts, obligations and liabilities of Borrower of every
type and description arising under or in connection with the
Barclays Loan Agreement or any of the other Barclays Loan
Documents, due or to become due to Barclays or any of its
successors, transferees or assigns, and shall include, without
limitation, (i) all liability of Borrower for payment of
principal of and interest on the Barclays Revolving Debt, (ii)
all liability of Borrower under the Barclays Loan Agreement or
under any of the other Barclays Loan Documents for any fees,
expense reimbursements and indemnifications, and (iii) any and
all other debts, obligations and liabilities of Borrower to
Barclays heretofore, now or hereafter incurred or created (and
all renewals, extensions, modifications and rearrangements
thereof), under, in connection with, in respect of, or evidenced
or created by, the Barclays Loan Agreement or any or all of the
other Barclays Loan Documents, whether voluntary or involuntary,
however arising, and whether due or not due, absolute or
contingent, secured or unsecured, liquidated or unliquidated,
determined or undetermined, direct or indirect, and whether
Borrower may be liable individually or jointly with others.
"Barclays Primary Collateral" means, and is the
collective reference to, any and all property of Borrower in
which Borrower purports to grant to Barclays a first priority
Lien or security interest under the Barclays Loan Agreement,
including all of Borrower's now owned or hereafter acquired
interests in inventory, accounts receivable, chattel paper,
documents, instruments, certificated or uncertificated
securities, letters of credit, cash, tax refunds and deposit
accounts, and all general intangibles (including license
agreements, tradenames, trademarks, trademark licenses, patents
and patent rights) relating to or used or arising in connection
with Borrower's ownership, use or sale of any of the foregoing,
and all books and records relating to any of the foregoing, and
all proceeds thereof (subject in each and every case, however, to
the rights of Receivables Corporation (as defined in the Barclays
Loan Agreement) pursuant to the Receivables Purchase Agreement
(as defined in the Barclays Loan Agreement).
"Foreclosure Action" means any action taken by Barclays
or Wells Fargo based upon the occurrence of a Default or Event of
Default (each as defined in the Barclays Loan Agreement) or an
Unmatured Event of Default or Event of Default (each as defined
in the Bank Loan Agreement), to exercise or enforce any of such
Lender's Liens or security interests in any particular property,
including commencing judicial or nonjudicial foreclosure
proceedings, exercising or taking any steps toward exercising any
remedy with respect to any item of real or personal property
included in the Collateral, exercising or taking any steps toward
exercising any rights afforded to secured creditors in a case
under the Bankruptcy Code, or taking any action under the
Bankruptcy Code that directly relates to or directly affects the
Collateral, other than any such action that relates to or affects
all or substantially all the property of the bankruptcy estate
and is not part of an effort to realize upon any of the
Collateral (e.g. a motion for the appointment of a trustee).
"Insolvency or Liquidation Proceeding" means (i) any
insolvency or bankruptcy case or proceeding (including any case
under the Bankruptcy Code), or any receivership, liquidation,
reorganization or other similar case or proceeding with respect
to Borrower, any Subsidiary of Borrower, or their respective
creditors, or to their assets, or (ii) any liquidation,
dissolution, reorganization or winding up of Borrower or any
Subsidiary of Borrower, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy or (iii) any
assignment for the benefit of creditors or any other marshaling
of assets and liabilities of Borrower or any Subsidiary of
Borrower.
"Junior Bank Lien" means, and is the collective
reference to, the second priority Liens on and security interests
in the Barclays Primary Collateral granted by Borrower to Wells
Fargo pursuant to the Wells Security Agreement to secure payment
of the Bank Obligations.
"Junior Barclays Lien" means, and is the collective
reference to, the second priority Liens on and security interests
in the Bank Primary Collateral granted by Borrower to Barclays
pursuant to the Barclays Loan Agreement and the Second Deeds of
Trust to secure payment of the Barclays Obligations.
"Lenders" means, and is the collective reference to,
Wells Fargo and Barclays and their respective successors and
assigns.
"Loan Documents" means, and is the collective reference
to, the Bank Loan Documents and the Barclays Loan Documents.
"Obligations" means, and is the collective reference
to, the Bank Obligations and the Barclays Obligations.
"Replacement Facility" means a credit facility that is
a renewal, replacement, or extension of the secured revolving
working capital credit facility provided by Barclays to Borrower
pursuant to the Barclays Loan Agreement.
"Senior Bank Lien" means, and is the collective
reference to, the first priority Liens on the Bank Primary
Collateral granted by Borrower to Wells Fargo pursuant to the
Wells Security Agreement and the First Deeds of Trust to secure
payment of the Bank Obligations.
"Senior Barclays Lien" means, and is the collective
reference to, the first priority Liens on and security interests
in the Barclays Primary Collateral granted by Borrower to
Barclays pursuant to the Barclays Loan Agreement to secure
payment of the Barclays Obligations.
ARTICLE II
TREATMENT OF BARCLAYS PRIMARY COLLATERAL
2.1 Priorities In Barclays Primary Collateral Generally.
Each of Wells Fargo, Borrower, and Barclays agrees, subject to
the terms and conditions set forth herein, that until this
Intercreditor Agreement ceases to be effective, Barclays (or its
successors or assigns) shall hold a first priority security
interest in the Barclays Primary Collateral to secure repayment
of the Barclays Obligations (or any Replacement Facility), and
Wells Fargo (or its successors or assigns) shall hold a second
priority security interest in the Barclays Primary Collateral to
secure repayment of the Bank Obligations.
2.2 Subordination of The Junior Bank Lien. Notwithstanding
anything to the contrary in any other agreement to which Wells
Fargo or Barclays is a party or of which any of them is a
beneficiary, the parties hereto agree and acknowledge that:
(a) Junior Bank Lien to Remain Subordinate. The
Junior Bank Lien shall at all times be and remain subordinate,
junior and subject to the Senior Barclays Lien, and the Senior
Barclays Lien shall at all times be and remain superior and prior
in right of payment and enforcement to the Junior Bank Lien,
regardless of the order or time as of which any such Liens attach
to any or all of the Barclays Primary Collateral, the order or
time of UCC filings or any other filings or recordings, the order
or time of granting of any Liens or the physical possession of
any of the Barclays Primary Collateral.
(b) No Action. For so long as the Barclays
Obligations (or any Replacement Facility) are outstanding, Wells
Fargo agrees not to take or cause to be taken any action, the
purpose or effect of which would give it a preference or priority
over Barclays with respect to any of the Barclays Primary
Collateral.
(c) Payments to be Held in Trust. Wells Fargo agrees
that it will pay over or deliver to Barclays, and segregate and
hold in trust for the benefit of Barclays until paid or delivered
to Barclays, any payment or distribution of any character, direct
or indirect, whether in cash, securities or other property,
received by Wells Fargo as a result of any Foreclosure Action on
Barclays Primary Collateral or any other payment or distribution
of or on account of any of the Barclays Primary Collateral or any
proceeds of any of the Barclays Primary Collateral (including
proceeds of any sale or other disposition of any of the Barclays
Primary Collateral) until this Intercreditor Agreement ceases to
be in full force and effect pursuant to Section 5.6 hereof.
(d) Barclays Free to Act. Barclays in its capacity as
holder of the Senior Barclays Lien will be free to take any and
all actions whatsoever in respect of any of the Barclays Primary
Collateral without the consent of Wells Fargo, and Wells Fargo
hereby waives any requirements for such consent, and waives, to
the fullest extent permitted under Applicable Law, any
requirements for notice of Foreclosure Actions with respect to
any of the Barclays Primary Collateral other than the notice
required pursuant to Section 4.2(a) hereof.
2.3 Various Agreements of Wells Fargo.
(a) No Challenge to Senior Barclays Lien. Wells Fargo
agrees not to (i) take any action to challenge the validity,
enforceability, amount or priority of the Senior Barclays Lien,
(ii) induce any other Person to take such action or
(iii) cooperate with any Person in taking such action.
(b) No Duty of Barclays to Act. Barclays in its
capacity as holder of the Senior Barclays Lien shall not have any
obligation or duty, nor shall Wells Fargo have any right to
direct Barclays, to retain, perfect, protect, waive or release
any of the Barclays Primary Collateral, to act or refrain from
acting with respect to any Default or Event of Default (each as
defined in the Barclays Loan Agreement), to act or refrain from
acting with respect to the collection of any claim from any
account debtor, guarantor or any other party, to realize upon any
of the Barclays Primary Collateral or otherwise to exercise or
refrain from exercising any rights or remedies in respect of
Borrower, the Senior Barclays Lien or any of the Barclays Primary
Collateral. Wells Fargo expressly agrees that Barclays will have
the unfettered right to release, waive, terminate or otherwise
diminish (whether intentionally, negligently or otherwise) the
Senior Barclays Lien at any time and that Barclays shall be
entitled to receive and apply to the Barclays Revolving Debt any
and all proceeds which it may receive in consideration of any
such release or termination by Barclays. The foregoing shall
not, however, authorize or permit Barclays to take any action or
refrain from taking any action not otherwise authorized or
permitted by this Agreement.
(c) Wells Fargo Consent to Disposition of Barclays
Primary Collateral. Wells Fargo hereby consents to the
disposition of any Barclays Primary Collateral in a private sale,
with or without an appraisal (and at a price below the appraised
value if any appraisal is obtained), and to any bid (including
any credit bid) or purchase by Barclays at any private or public
sale.
(d) Waiver of Right to Sue. Without limiting the
foregoing, Wells Fargo hereby waives the right to commence any
legal action or assert in any legal action or any bankruptcy or
other proceeding any claim against Barclays seeking damages from
Barclays or other relief, by way of specific performance,
injunction or otherwise, with respect to any action taken or
omitted by Barclays in connection with the Barclays Primary
Collateral in accordance with this Intercreditor Agreement.
2.4 Additional Waivers and Agreements of Wells Fargo With
Respect to Barclays Primary Collateral.
(a) Election of Remedies. Wells Fargo hereby waives
(i) any requirement for marshaling of assets by Barclays in
connection with any foreclosure of the Senior Barclays Lien (or
the proceeds thereof) or any other realization in respect of the
Barclays Primary Collateral and (ii) any other principle of
election of remedies.
(b) Unenforceability of Barclays Obligations or Senior
Barclays Lien. Wells Fargo agrees that the subordination of the
Junior Bank Lien to the Senior Barclays Lien hereunder applies
regardless of the validity or enforceability of the Barclays
Obligations or the validity, perfection or enforceability of the
Senior Barclays Lien. To the extent that Barclays receives
payments of proceeds of Barclays Primary Collateral which are
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
receiver or any other party under the Bankruptcy Code or any
other state or federal law, then, to the extent of such payment
or proceeds received, the Barclays Obligations in respect of the
Barclays Revolving Debt intended to be satisfied shall be revived
and continue in full force and effect as if such payments or
proceeds had not been received by Barclays.
(c) Further Assurances. Wells Fargo will execute and
deliver to Barclays any other document or instrument reasonably
requested by Barclays to further assure the subordinated status
of the Junior Bank Lien with respect to the Barclays Primary
Collateral.
2.5 Release of Junior Bank Lien. Wells Fargo agrees to
take all steps reasonably necessary to release the Junior Bank
Lien upon (a) the payment by Borrower of all of the Bank
Obligations in connection with the New Term Loan, and (b) the
concurrent release by Barclays of the Junior Barclays Lien
pursuant to Section 3.5 hereof.
ARTICLE III
TREATMENT OF BANK PRIMARY COLLATERAL
3.1 Priorities In Bank Primary Collateral Generally. Each
of Wells Fargo, Borrower, and Barclays agrees, subject to the
terms and conditions set forth herein, that until this
Intercreditor Agreement ceases to be effective, Wells Fargo (or
its successors or assigns) shall hold a first priority security
interest in the Bank Primary Collateral to secure repayment of
the Bank Obligations, and Barclays (or its successors or assigns)
shall hold a second priority security interest in the Bank
Primary Collateral to secure repayment of the Barclays
Obligations.
3.2 Subordination of The Junior Barclays Liens.
Notwithstanding anything to the contrary in any other agreement
to which Wells Fargo or Barclays is a party or of which any of
them is a beneficiary, the parties hereto agree and acknowledge
that:
(a) Junior Barclays Lien to Remain Subordinate. The
Junior Barclays Lien shall at all times be and remain
subordinate, junior and subject to the Senior Bank Lien, and the
Senior Bank Lien shall at all times be and remain superior and
prior in right of payment and enforcement to the Junior Barclays
Lien, regardless of the order or time as of which any such Liens
attach to any or all of the Bank Primary Collateral, the order or
time of recording of the First Deeds of Trust and the Second
Deeds of Trust, any UCC filings or any other filings or
recordings, or the order or time of granting of any Liens.
(b) No Action. For so long as the Bank Obligations
are outstanding, Barclays agrees not to take or cause to be taken
any action, the purpose or effect of which would give it a
preference or priority over Wells Fargo with respect to any of
the Bank Primary Collateral.
(c) Payments to be Held in Trust. Barclays agrees
that it will pay over or deliver to Wells Fargo, and segregate
and hold in trust for the benefit of Wells Fargo until paid or
delivered to Wells Fargo, any payment or distribution of any
character, direct or indirect, whether in cash, securities or
other property, received by Barclays as a result of any
Foreclosure Action on Bank Primary Collateral or any other
payment or distribution of or on account of any of the Bank
Primary Collateral or any proceeds of any of the Bank Primary
Collateral (including proceeds of any sale or other disposition
of any of the Bank Primary Collateral) until this Intercreditor
Agreement ceases to be in full force and effect pursuant to
Section 5.6 hereof.
(d) Wells Fargo Free to Act. Wells Fargo will be free
to take any and all actions whatsoever in respect of any of the
Bank Primary Collateral without the consent of Barclays in its
capacity as holder of the Junior Barclays Lien, and Barclays
hereby waives any requirements for such consent, and waives, to
the fullest extent permitted under Applicable Law, any
requirements for notice of Foreclosure Actions with respect to
any of the Bank Primary Collateral other than the notice required
pursuant to Section 4.1(a) hereof.
3.3 Various Agreements of Barclays.
(a) No Challenge to Senior Bank Lien. Barclays agrees
not to (i) take any action to challenge the validity,
enforceability, amount or priority of the Senior Bank Lien,
(ii) induce any other Person to take such action or
(iii) cooperate with any Person in taking such action.
(b) No Duty of Wells Fargo to Act. Wells Fargo shall
not have any obligation or duty to Barclays, nor shall Barclays
have any right to direct Wells Fargo, to retain, perfect,
protect, waive or release any of the Bank Primary Collateral, to
act or refrain from acting with respect to any Unmatured Event of
Default or Event of Default (each as defined in the Bank Credit
Agreement), to realize upon any of the Bank Primary Collateral or
otherwise to exercise or refrain from exercising any rights or
remedies in respect of Borrower, the Senior Bank Lien or any of
the Bank Primary Collateral. Barclays expressly agrees that
Wells Fargo will have the unfettered right to release, waive,
terminate or otherwise diminish (whether intentionally,
negligently or otherwise) the Senior Bank Lien at any time and
that Wells Fargo shall be entitled to receive and apply to the
Bank Obligations any and all proceeds which it may receive in
consideration of any such release or termination by Wells Fargo.
The foregoing shall not, however, authorize or permit Wells Fargo
to take any action or refrain from taking any action not
otherwise authorized or permitted by this Agreement.
(c) Barclays Consent to Disposition of Bank Primary
Collateral, Including By Nonjudicial Foreclosure. Barclays
hereby consents to (i) the disposition of any Bank Primary
Collateral consisting of personal property in a private sale,
with or without an appraisal (and at a price below the appraised
value if any appraisal is obtained), and to any bid (including
any credit bid) or purchase by Bank in its capacity as holder of
the Senior Bank Lien at any private or public sale, and (ii) the
disposition of any Bank Primary Collateral consisting of
interests in real property in a nonjudicial foreclosure sale, and
to any bid (including any credit bid) or purchase by Wells Fargo
at any such foreclosure sale. To the extent that California
Civil Code of Procedure ("CCP") Section 580d might be construed
to give Barclays the right to object to Wells Fargo pursuing a
deficiency judgment following a judicial foreclosure sale,
Barclays waives any such right.
(d) Waiver of Right to Sue. Without limiting the
foregoing, Barclays in its capacity as holder of the Junior
Barclays Lien hereby waives the right to commence any legal
action or assert in any legal action or any bankruptcy or other
proceeding any claim against Wells Fargo seeking damages from
Wells Fargo or other relief, by way of specific performance,
injunction or otherwise, with respect to any action taken or
omitted by Wells Fargo in connection with the Primary Bank
Collateral in accordance with this Intercreditor Agreement.
3.4 Additional Waivers and Agreements of Barclays With
Respect to Bank Primary Collateral.
(a) Election of Remedies. Barclays hereby waives
(i) any requirement for marshaling of assets by Wells Fargo in
connection with any foreclosure of the Senior Bank Lien (or the
proceeds thereof) or any other realization upon the Bank Primary
Collateral and (ii) any other principle of election of remedies.
(b) Unenforceability of Bank Obligations or Senior
Bank Lien. Barclays agrees that the subordination of the Junior
Barclays Lien to the Senior Bank Lien hereunder applies
regardless of the validity or enforceability of the Bank
Obligations or the validity, perfection or enforceability of the
Senior Bank Lien. To the extent that Wells Fargo receives
payments of proceeds of Bank Primary Collateral which are
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
receiver or any other party under the Bankruptcy Code or any
other state or federal law, then, to the extent of such payment
or proceeds received, the Bank Obligations intended to be
satisfied shall be revived and continue in full force and effect
as if such payments or proceeds had not been received by Wells
Fargo.
(c) Further Assurances. Barclays will execute and
deliver to Wells Fargo any other document or instrument
reasonably requested by Wells Fargo to further assure the
subordinated status of the Junior Barclays Lien with respect to
the Bank Primary Collateral.
3.5 Release of Junior Barclays Lien. Barclays agrees to
take all steps reasonably necessary to release the Junior
Barclays Lien upon (a) the payment by Borrower of not less than
$5,000,000 of the Revolving Loans (as defined in the Barclays
Loan Agreement) from the proceeds of the Long Term Financing
Transaction (as defined in the Barclays Loan Agreement), and
(b) the concurrent release by Bank of the Junior Bank Lien
pursuant to Section 2.5 hereof.
ARTICLE IV
AGREEMENTS OF PARTIES WITH RESPECT TO REMEDIES
4.1 Agreements of Wells Fargo With Respect To Debt
Collection Actions.
(a) Forbearance; Required Notice. Wells Fargo agrees
that while this Intercreditor Agreement remains in full force and
effect it shall not demand, sue for, or enforce any claim for any
of the Bank Obligations, exercise any remedy under the Bank
Credit Agreement or otherwise available to it as the holder of
the Bank Obligations (including accelerating the Bank Obligations
or filing, taking or maintaining any Insolvency or Liquidation
Proceeding against or with respect to Borrower in connection with
the Bank Notes), or otherwise take any action against Borrower,
unless Wells Fargo has provided Barclays with at least three (3)
Business Days prior written notice of its intention to take such
action; provided, however, that Wells Fargo may accelerate the
Bank Obligations without providing such notice if at the time of
Wells Fargo's acceleration Barclays has already accelerated the
Barclays Obligations.
(b) Application of this Section 4.1. Wells Fargo
agrees and acknowledges that this Section 4.1 applies only to
actions by Wells Fargo to directly collect the Bank Obligations
on an unsecured basis, not to Foreclosure Actions, as to which
Wells Fargo hereby agrees to enforce its rights exclusively in
accordance with Section 4.3 hereof.
4.2 Agreements of Barclays With Respect To Debt Collection
Actions.
(a) Forbearance; Required Notice. Barclays agrees
that while this Intercreditor Agreement remains in full force and
effect it shall not demand, sue for, or enforce any claim for any
of the Barclays Obligations, exercise any remedy under the
Barclays Loan Agreement or otherwise available to it as the
holder of the Barclays Revolving Debt (including accelerating the
Barclays Obligations or filing, taking or maintaining any
Insolvency or Liquidation Proceeding against or with respect to
Borrower in connection with the Barclays Obligations), or
otherwise take any action against Borrower, unless Barclays has
provided Wells Fargo with at least three (3) Business Days prior
written notice of its intention to take such action; provided,
however, that Barclays may accelerate the Barclays Obligations
without providing such notice if at the time of Barclays'
acceleration Wells Fargo has already accelerated the Bank
Obligations; and provided, however, that this Section 4.2 shall
not prohibit or limit Barclays' discretion to refuse to make
additional Revolving Loans or issue or renew Letters of Credit or
LC Guaranties (each as defined in the Barclays Loan Agreement) at
any time that a Default or Event of Default as defined in the
Barclays Loan Agreement has occurred and is continuing.
(b) Application of This Section 4.2. Barclays agrees
and acknowledges that this Section 4.2 applies only to actions by
Barclays to directly collect the Barclays Obligations on an
unsecured basis, not to Foreclosure Actions, as to which Barclays
hereby agrees to enforce its rights exclusively in accordance
with Section 4.3 hereof.
4.3 Agreements of The Parties With Respect To Foreclosure
Actions.
(a) Foreclosure Actions By Barclays with Respect To
The Senior Barclays Lien. Wells Fargo hereby agrees and
acknowledges that Barclays shall be entitled to take any and all
Foreclosure Actions it deems in its sole and absolute discretion
to be necessary or appropriate in respect of the Senior Barclays
Lien.
(b) Foreclosure Actions by Wells Fargo With Respect To
The Junior Bank Lien. Wells Fargo agrees to forbear and not take
any Foreclosure Actions with respect to the Junior Bank Lien
unless (i) Barclays has consented in advance in writing to such
Foreclosure Action or (ii) this Intercreditor Agreement has
terminated pursuant to Section 5.6 hereof.
(c) Foreclosure Actions by Wells Fargo With Respect To
The Senior Bank Lien. Barclays hereby agrees and acknowledges
that Wells Fargo shall be entitled to take any and all
Foreclosure Actions it deems in its sole and absolute discretion
to be necessary or appropriate in respect of the Senior Bank
Lien.
(d) Foreclosure Actions by Barclays With Respect To
The Junior Barclays Lien. Barclays agrees to forbear and not
take any Foreclosure Actions with respect to the Junior Barclays
Lien unless (i) Wells Fargo has consented in advance in writing
to such Foreclosure Action or (ii) this Intercreditor Agreement
has terminated pursuant to Section 5.6 hereof.
ARTICLE V
ADDITIONAL AGREEMENT AND REPRESENTATIONS
5.1 Relative Rights. To the extent that this
Intercreditor Agreement defines the relative rights of Wells
Fargo, on the one hand, and Barclays, on the other hand, nothing
in this Intercreditor Agreement is intended to or shall:
(a) Obligations of Borrower. Impair, as between
Borrower and Barclays or Borrower and Wells Fargo, the obligation
of Borrower, which is absolute and unconditional, to pay the
outstanding principal of (and premium, if any) and interest on,
the Barclays Revolving Debt and all other Barclays Obligations
and the Bank Notes and all other Bank Obligations, respectively,
as and when the same shall become due and payable in accordance
with their terms;
(b) Rights of Other Creditors. Affect (i) the
relative rights of creditors of Borrower other than Wells Fargo
and Barclays against Borrower or (ii) the relative rights of
Wells Fargo and Barclays against other creditors of Borrower; or
(c) Exercise of Remedies. Prevent either Lender from
exercising all remedies otherwise permitted by Applicable Law
upon an Event of Default, subject to the provisions in this
Intercreditor Agreement.
5.2 Additional Agreements.
(a) Information. Each of the Lenders assumes all
responsibility for keeping itself informed as to the condition
(financial or otherwise), business, assets and operations of
Borrower, the condition of their respective collateral and all
other circumstances that might in any way affect its risk with
respect to the Barclays Obligations or the Bank Obligations, as
the case may be (including the risk of non-payment thereof), and
neither Lender shall have any duty or obligation whatsoever to
obtain or disclose to the other any information or documents
relative to such condition, business, assets or operations of
Borrower, such collateral or such risk, whether acquired by such
Lender in the course of its relationship with Borrower or
otherwise.
(b) Unenforceability of Loan Documents. Barclays
agrees that the terms hereof shall apply regardless of the
validity or enforceability of the Bank Obligations or the Bank
Credit Agreement or any of the other Bank Loan Documents or the
validity, perfection or enforceability of any of the Liens on the
Collateral. Wells Fargo agrees that the terms hereof shall apply
regardless of the validity or enforceability of the Barclays
Obligations or the Barclays Loan Agreement or any other of the
Barclays Loan Documents or the validity, perfection or
enforceability of any of the Liens on the Collateral.
5.3 Transferees of Barclays or Wells Fargo; Notice of
Agreement.
(a) Assumption of Obligations Hereunder. Neither
Wells Fargo nor Barclays shall at any time sell, assign,
transfer, grant participations in, or otherwise dispose of, all
or any portion of the Bank Obligations or the Barclays
Obligations, respectively, unless and until any such transferee
or participant shall have assumed in a writing reasonably
satisfactory to the non-transferring Lender all the Obligations
of the transferring Lender under this Intercreditor Agreement.
All references to successors and assigns of the Lenders hereunder
presume such assumption of Obligations by such successors and
assigns; provided, however, that the Lenders' successors and
assigns shall be bound by the provisions of this Intercreditor
Agreement notwithstanding a breach of this Section 5.3(a).
(b) No Prior Assignments By Barclays. Barclays
represents and warrants to Wells Fargo that Barclays has not
previously assigned or transferred any interest in the Barclays
Loan Agreement, that no party owns an interest in the Barclays
Loan Agreement other than Barclays and that the entire principal
amount of the Barclays Revolving Debt is owing only to Barclays.
Barclays covenants that the entire principal amount of the
Barclays Revolving Debt shall continue to be owing only to it,
unless assigned in accordance with the terms of this
Intercreditor Agreement.
(c) No Prior Assignments By Wells Fargo. Wells Fargo
represents and warrants to Barclays that it has not previously
assigned or transferred any interest in either of the Bank Notes,
that no party owns an interest in either of the Bank Notes other
than Wells Fargo and that the entire principal amount of both of
the Bank Notes is owing only to Wells Fargo. Wells Fargo
covenants to Barclays that the entire principal amount of the
Bank Notes shall continue to be owing only to Wells Fargo, unless
assigned in accordance with the terms of this Intercreditor
Agreement.
5.4 Validity and Binding Nature of Agreement. Each party
hereto represents and warrants to each of the other parties
hereto that this Intercreditor Agreement constitutes the legal,
valid and binding obligation of such party, enforceable against
it in accordance with its terms, except as enforceability may be
limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally.
5.5 Restriction on Amendments to Loan Documents. Unless an
Event of Default (as defined in the Bank Credit Agreement) has
occurred and is continuing, Wells Fargo shall not amend or modify
the terms and conditions of the Bank Credit Agreement or the Bank
Notes, and unless an Event of Default (as defined in the Barclays
Loan Agreement) has occurred and is continuing, Barclays shall
not amend or modify the terms and conditions of the Barclays Loan
Agreement, if in either case the effect of any such amendment or
modification is to (i) advance maturity dates, (ii) increase
interest rates or amounts of payments or any fees, (iii) add
obligors or guarantors, (iv) change any provisions in any manner
which may be materially adverse to the other Lender, or
(v) otherwise make any such terms and conditions more restrictive
or burdensome on Borrower than the terms and conditions of such
Bank Note and Barclays Loan Agreement, respectively, delivered
and in effect on the date of this Intercreditor Agreement or at
the time of such amendment or modification. Neither this Section
5.5 nor any other provision of this Intercreditor Agreement shall
be construed to prohibit, limit, or condition any action of
Barclays in connection with negotiating or agreeing with Borrower
and any other Person as to the terms of new credit facilities to
renew, replace, extend, or modify the Barclays Revolving Debt,
except that Barclays agrees that during the period beginning on
the date hereof and ending on the last day of the Original Term
(as defined in the Barclays Loan Agreement), Barclays will not
enter into any agreement with the Borrower to advance the
maturity date of, increase the interest rate on, or increase the
fees applicable to, the Barclays Revolving Debt.
5.6 Continuing Agreement; Termination. This is a
continuing agreement of the parties hereto, and either Lender may
continue, at any time and without notice to the other but in
accordance with the terms of the Loan Documents to which it is a
party, to extend credit or other financial accommodations to or
for the benefit of Borrower in reliance hereon. This
Intercreditor Agreement shall be effective and may not be
terminated or otherwise revoked by a Lender until the earlier to
occur of (a) the date on which the Barclays Obligations
(including any Replacement Facility) have been paid or otherwise
satisfied in full or (b) the date on which all of the Bank
Obligations have been paid or otherwise satisfied in full. In
the event that either Lender shall have any right under
Applicable Law or otherwise to terminate or revoke this
Intercreditor Agreement which cannot be waived, such termination
or revocation shall not be effective until written notice of such
termination or revocation, signed by such Lender, is actually
received by the other Lender. Any such termination or revocation
shall not affect this Intercreditor Agreement in relation to
(i) any Obligations owing to the other Lender which arose prior
to the receipt thereof, (ii) any of the Obligations owing to the
other Lender created after receipt thereof if such Obligations
were incurred either through committed advances or re-advances by
such other Lender pursuant to its financing arrangements with
Borrower or incurred for the purpose of protecting or enforcing
rights against Borrower or its collateral, or (iii) any renewals,
extensions, re-advances, modifications or rearrangements of the
foregoing.
5.7 Notice of Default or Acceleration Provided by Borrower.
Borrower shall give prompt written notice to Wells Fargo and
Barclays of the occurrence of any Default, Unmatured Event of
Default or Event of Default and the acceleration of any
indebtedness under the Bank Credit Agreement or Barclays Loan
Agreement, as the case may be. Failure to give such notice,
however, shall not affect in any way the relative treatment of
the Bank Obligations and the Barclays Obligations as provided
herein.
5.8 Remedies Not Exclusive.
(a) Remedies Cumulative. No remedy conferred herein
upon or reserved to one or more of the parties hereto is intended
to be exclusive of any other remedy or remedies, but every such
remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law
or in equity.
(b) Delays Or Omissions Do Not Impair. No delay or
omission by one or more of the parties hereto in exercising any
right, remedy or power hereunder shall impair any such right,
remedy or power, or shall be construed to be a waiver thereof,
and every right, power and remedy given by this Intercreditor
Agreement to one or more of the parties hereto may be exercised
from time to time and as often as may be deemed expedient by such
party or parties.
5.9 Antideficiency Waivers. For valuable consideration,
the receipt and sufficiency of which is hereby acknowledged,
Borrower hereby expressly and irrevocably disclaims and renounces
any right and hereby waives any defense, protection or right
under: (a) CCP Section 580d, concerning the bar of a deficiency
judgment after foreclosure of a deed of trust under a power of
sale; (b) CCP Section 580a, purporting to limit the amount of a
deficiency judgment which may be obtained following exercise of a
power of sale under a deed of trust; (c) CCP Section 726,
concerning exhaustion of collateral and the form of foreclosure
proceedings with respect to real property security, and otherwise
limiting the amount of a deficiency judgment which may be
recovered following completion of a judicial foreclosure by
reference to the "fair value" of the foreclosed collateral; and
(d) any rights to receive notices of default, notices of sale or
other similar notices under (i) California Civil Code Sections
2924, 2924b, 2924c, 2924f, 2924g, and 2924h, (ii) California
Uniform Commercial Code ("UCC") Section 9504(3), or (iii) any
other applicable provision of California law to challenge the
regularity or conduct of any foreclosure sale or trustee's sale
of any real property collateral pursuant to the First Deeds of
Trust or the Second Deeds of Trust; and (e) any duty on the part
of Wells Fargo or Barclays to conduct a commercially reasonable
sale under UCC Section 9504(3) to the extent any portion of the
Collateral consists of personal property or fixtures, including,
without limitation, the making of any election under UCC Section
9501(4) in respect of any such personal property or fixtures, and
Borrower agrees that the Bank Obligations and the Barclays
Obligations hereunder shall remain in full force and effect
without modification, impairment, abrogation, diminution or
amendment, notwithstanding any actual or potential absence,
impairment or loss of any right of reimbursement, contribution or
subrogation.
Borrower warrants and agrees that each of the waivers
set forth above is made with Borrower's full knowledge of its
significance and consequences and made after the opportunity to
consult with counsel of its own choosing, and that under the
circumstances the waivers are reasonable and not contrary to
public policy or law. If any of said waivers are determined to
be contrary to any applicable law or public policy, such waiver
shall be effective only to the extent permitted by such
applicable law. By initialing this provision where indicated
below, Borrower confirms that Wells Fargo's and Barclays'
agreements to extend the Bank Obligations and the Barclays
Obligations constitutes adequate and valuable consideration,
given individual weight by Borrower, for this waiver and
agreement.
BORROWER'S INITIALS: ________
ARTICLE VI
MISCELLANEOUS
6.1 Notice. All notices and other communications under
this Intercreditor Agreement shall (a) be in writing (which shall
include communications by telecopy), (b) be deemed to have been
given or made when sent by overnight courier and telecopy and
(c) be given at the following respective addresses and telecopier
numbers:
(i) If to Borrower, to it at:
Gottschalks Inc.
7 River Park Place East
Fresno, California 93720
Attention: General Counsel
Telecopier No.: (209) 434-4804
(ii) If to Wells Fargo, to it at:
Wells Fargo Bank, N.A.
111 Sutter Street, 17th Floor
San Francisco, California 94104
Attention: Bruce O'Neill
Telecopier No.: (415) 398-7572
<PAGE>
(iii) If to Barclays, to it at:
Barclays Business Credit, Inc.
1999 Harrison Street, Suite 1450
Oakland, California 94612-3508
Attention: Melvin L. Robbins
Telecopier No.: (510) 763-4924
or at such other address or telecopier number as Borrower, Wells
Fargo, or Barclays, as the case may be, may hereafter specify for
such purpose in a notice to the others specifically captioned
"Notice of Change of Address."
6.2 Amendments and Waivers. Any provision of this
Intercreditor Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by Wells
Fargo and Barclays (or their successors and assigns) (and, if the
rights or duties of Borrower are affected thereby, by Borrower).
6.3 Successors and Assigns.
(a) Binding Agreement. This Intercreditor Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns,
except that (i) neither Wells Fargo nor Barclays may assign its
obligations under this Intercreditor Agreement except as
expressly permitted hereunder and (ii) Borrower may not assign
its rights or obligations under this intercreditor Agreement.
(b) Rights of Transferees. Subject to Section 6.3(a),
either Lender may at any time sell, assign, transfer, grant
participations in or otherwise dispose of all or any portion of
the Obligations owing such Lender or of its right, title and
interest therein or thereto or in or to this Intercreditor
Agreement and any such purchaser, assignee, transferee,
participant or successor shall thereupon be entitled to the
rights, powers and privileges of such Lender hereunder.
6.4 Governing Law and Venue. The validity of this
Intercreditor Agreement, the construction, interpretation and
enforcement hereof and the rights of the parties hereunder shall
be determined under, governed by, and construed in accordance
with the internal laws of the State of California. The parties
agree that all actions or proceedings arising in connection with
this Intercreditor Agreement shall be tried and litigated in
State and Federal courts located in the County of San Francisco,
State of California unless such actions or proceedings are
required to be brought in another court to obtain subject matter
jurisdiction over the matter in controversy. WELLS FARGO,
BARCLAYS, AND BORROWER HEREBY WAIVE ANY RIGHT ANY OF THEM MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
WITH THIS SECTION 6.4. SERVICE OF PROCESS, SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION OR PROCEEDING AGAINST ANY
PARTY HERETO MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 6.1
HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) CALENDAR DAYS
AFTER SUCH MAILING.
6.5 Severability of Provisions. Any provision of this
Intercreditor Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
6.6 Counterparts. This Intercreditor Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original but all of which shall constitute one
and the same instrument.
6.7 Entire Agreement. This Intercreditor Agreement
constitutes the entire agreement between the parties with respect
to the subject matter hereof, and supersedes and replaces all
prior discussions, negotiations, offers, understandings, and
agreements. There are no other understandings or agreements, and
neither Lender has made any representations or promises with
respect to the subject matter hereof, unless specifically set
forth in this Intercreditor Agreement. Each party acknowledges
that it has expressly bargained for a prohibition of any implied
or oral amendments or modifications of any kinds, nature or
character. Each party acknowledges and agrees that this
Intercreditor Agreement, together with the Loan Documents
executed in connection herewith, is fully integrated and not in
need of parol evidence in order to reflect the intentions of the
parties, and that the parties intend the literal words of this
Intercreditor Agreement executed in connection herewith to govern
the transactions described herein, and for all prior
negotiations, drafts and other extraneous communications to have
no significance or evidentiary effect whatsoever.
6.8 Interpretation.
(a) The term "including" or any of its variants shall
mean "including" or such variant "without limiting the generality
of the foregoing."
(b) The words "herein," "hereof" and "hereunder" and
words of similar import, when used in this Intercreditor
Agreement, shall refer to this Intercreditor Agreement as a whole
and not to any provision of this Intercreditor Agreement.
(c) Unless the context clearly requires otherwise, the
neuter gender includes the masculine or feminine, and the
singular number includes the plural, and vice versa and "or" has
the inclusive meaning represented by the phrase "and/or" (even
though the phrase "and/or" may sometimes be used herein).
(d) The section and other headings contained in this
Intercreditor Agreement are for reference purposes only and shall
not control or affect the construction of any provision of this
Intercreditor Agreement or the interpretation hereof or thereof
in any respect. Section references herein are to this
Intercreditor Agreement unless otherwise specified.
(e) This Intercreditor Agreement shall be construed to
liberally effectuate the rights and remedies of the parties
hereto as expressed herein, and neither such principle of
interpretation nor the express language of this Intercreditor
Agreement shall be impaired or adversely affected by any prior
discussion, form or draft of this Intercreditor Agreement or any
of the instruments and documents executed in connection herewith.
The deletion of any provision from a prior draft of this
Intercreditor Agreement shall not and shall not be deemed to
constitute (and shall not be used as) evidence of any fact or
interpretation, since the parties may disagree as to the meaning
and effect of such a deletion, as no prior draft of this
Intercreditor Agreement shall be admissible as evidence of the
meaning of this Intercreditor Agreement. This Intercreditor
Agreement shall not be construed against either Wells Fargo or
Barclays merely because it was initially drafted by counsel for
Wells Fargo or Barclays.
6.9 WAIVER OF TRIAL BY JURY. WELLS FARGO, BARCLAYS, AND
BORROWER HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
HEREUNDER OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY,
REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR ACTIONS.
6.10 Inconsistencies. In the event of any irreconcilable
inconsistency between the provisions of this Intercreditor
Agreement and any provision of any other Loan Documents, the
provisions of this Intercreditor Agreement shall control.
6.11 No Course of Conduct. At no time shall the prior or
subsequent course of conduct by Borrower or either Lender
directly or indirectly limit, impair or otherwise adversely
affect any of the parties' rights or remedies in connection with
this or any of the instruments and documents executed in
connection herewith, since the parties hereto agree that this
Intercreditor Agreement shall only be amended by written
instruments executed by the parties, as provided herein.
6.12 No Third Parties Benefitted. This Intercreditor
Agreement is made and entered into for the protection and benefit
of the parties hereto and their successors and assigns, and no
other person or entity shall be a direct or indirect beneficiary
of or have any direct or indirect cause of action or claim in
connection with this Intercreditor Agreement.
6.13 Time of The Essence. Time is of the essence of each
and every provision of this Intercreditor Agreement.
6.14 Attorneys' Fees. In the event of any action at law or
in equity between the parties hereto to enforce any of the
provisions of this Intercreditor Agreement, the unsuccessful
party or parties to such litigation shall pay to the successful
party or parties all costs and expenses, including without
limitation reasonable attorneys' fees and expenses, expert
witness fees and costs of appeal, incurred therein by such
successful party or parties, and if such successful party or
parties shall recover judgment in any such action or proceeding,
such costs, expenses, and attorneys' fees may be included in and
as part of such judgment. The successful party shall be the
party who is entitled to recover its costs of suit, whether or
not the suit proceeds to final judgment. If no costs are
awarded, the successful party shall be determined by the court.
IN WITNESS WHEREOF, the parties hereto have caused
this Intercreditor Agreement to be executed by their duly
authorized officers in counterparts all as of the day and year
first written above.
WELLS FARGO BANK, N.A.
By:_________________________
Bruce O'Neill
Vice President
BARCLAYS BUSINESS CREDIT, INC.
By:_________________________
Melvin L. Robbins
Senior Vice President
GOTTSCHALKS INC.
By:_________________________
___________________
___________________
EXHIBIT 10.77
ASSIGNMENT AND ACCEPTANCE
Reference is made to the 1993 Amended and Restated
Credit Agreement (the "Original Credit Agreement") dated as of
August 26, 1993 between Gottschalks Inc., a Delaware corporation,
as the borrower thereunder (the "Company"), and Wells Fargo Bank,
N.A., a national banking association, as the lender thereunder
("Assignor"). All capitalized terms used, but not defined,
herein shall have the respective meanings set forth in the
Original Credit Agreement.
Assignor and Barclays Business Credit, Inc., a
Connecticut corporation ("Assignee"), hereby agree as follows:
1. Subject to the terms hereof, as of the Effective
Date (as defined below), Assignor hereby sells and assigns to
Assignee, WITHOUT RECOURSE, and without any promise, agreement,
statement, representation, warranty or undertaking whatsoever
except as expressly set forth herein, and Assignee hereby
purchases and accepts from Assignor, (a) the Revolving Note, (b)
all of Assignor's interest in the Revolving Facility and the
Revolving Loans, (c) Assignor's security interest in the
Collateral described on Exhibit A hereto (the "Assigned
Collateral"), and (d) all of Assignor's rights with respect to
the foregoing under the Original Credit Agreement, the Revolving
Note, the Collateral Documents, and the other Loan Documents (all
of the foregoing items (a) through (d) being the "Assigned
Interest"). Assignor does not sell and assign, and retains (w)
the Term Note, (x) all of its interests in the Term Facility and
the Term Loans, (y) its security interest in all Collateral other
than the Assigned Collateral, and (z) all of its rights with
respect to the foregoing items (w) through (y) under the Original
Credit Agreement, the Term Note, the Collateral Documents, and
the other Loan Documents.
2. Assignee shall pay to Assignor on the Effective
Date an amount equal to the sum of (a) $19,815,720 ("the Pay-
Off Amount"), and (b) $ 4,984,280 (the "Cash Collateral
Deposit"). Payment by Assignee of the Pay-Off Amount shall
constitute payment in full for the Assigned Interest. The Cash
Collateral Deposit shall secure the Company's reimbursement
obligations to Assignor with respect to any Letters of Credit
issued under the Revolving Facility and outstanding on the
Effective Date. Assignor hereby confirms and agrees with respect
to each such outstanding Letter of Credit that, immediately upon
the earlier of (x) expiration of such Letter of Credit, and
(y) delivery to Assignor of the original of such Letter of
Credit, Assignor shall refund to Assignee, by wire transfer to
such account as Assignee may hereafter direct in writing, the
full amount of the Cash Collateral Deposit relating to such
Letter of Credit, to the extent not previously used to reimburse
Assignor for any draw under such Letter of Credit.
3. Assignor shall deliver to Assignee, (a) on the
Effective Date, executed Uniform Commercial Code partial
assignments of the financing statements filed by Assignor against
the Company, listed on Exhibit B hereto, and (b) as promptly as
practicable after the Effective Date, the Revolving Note,
endorsed in favor of Assignee. Such endorsement may be
accompanied by a statement that it is made WITHOUT RECOURSE and
without any representation, warranty or undertaking whatsoever
except as specifically set forth in this Assignment and
Acceptance.
4. Assignor hereby (a) represents and warrants to
Assignee that, as of the Effective Date, (i) after crediting all
other payments made by or on behalf of the Company on account of
the Revolving Loans or any outstanding Letters of Credit, the
aggregate outstanding Obligations with respect to the Revolving
Loans owing to it is $ 19,815,720 and the aggregate outstanding
Undrawn Amount (as defined in the Original Credit Agreement) of
Letters of Credit issued under the Revolving Facility is
approximately $ 4,984,280, and (ii) it is the legal and
beneficial owner of the interest being assigned by it hereunder
and Assignor is not aware of any adverse claim asserted against
such ownership interest; and (b) makes no representation or
warranty and assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in
connection with the Original Credit Agreement, the Revolving
Note, the Collateral Documents, or the other Loan Documents, (ii)
the enforceability, genuineness, sufficiency or value of the
Original Credit Agreement, the Revolving Note, the Collateral
Documents, or the other Loan Documents, and (iii) the financial
condition of the Company or the performance or observance by the
Company of its obligations under the Original Credit Agreement,
the Revolving Note, the Collateral Documents, or the other Loan
Documents.
5. The effective date for this Assignment and
Acceptance shall be March 30, 1994 (the "Effective Date").
6. From the Effective Date, Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its
rights, and be released from its obligations to the Company, with
respect to the Revolving Facility and the Revolving Loans under
the Original Credit Agreement, the Revolving Note and the other
Loan Documents. Assignor shall have no liability for, and
Assignee shall indemnify and hold Assignor harmless from and
against any liability arising as a result of, any obligation,
act, omission, breach of duty or wrongful conduct of Assignee in
connection with the Revolving Facility and the Revolving Loans
from and after the Effective Date.
7. The rights and interests assigned by Assignor to
Assignee herein shall survive the termination of the Original
Credit Agreement and the other Loan Documents under and as
defined in the Original Credit Agreement.
8. At Assignee's request, Assignor shall promptly
execute, or cause to be executed, and deliver to Assignee any and
all documents, instruments and agreements reasonably requested by
Assignee to give effect to or carry out the terms or intent of
this Assignment and Acceptance. Assignee agrees to reimburse
Assignor for its out-of-pocket expenses in complying with any
such requests.
9. This Assignment and Acceptance may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.
10. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE
OF LAW PRINCIPLES THEREOF.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Assignment and Acceptance to executed and delivered
by a duly authorized officer as of the Effective Date.
WELLS FARGO BANK, N.A.
By:
Bruce O'Neill
Vice President
BARCLAYS BUSINESS CREDIT, INC.
By:
Melvin L. Robbins
Senior Vice President
<PAGE>
ACCEPTANCE AND ACKNOWLEDGMENT OF THE COMPANY
The Company accepts the foregoing Assignment and Acceptance
and the terms thereof, and represents and warrants that as of the
Effective Date, (1) after crediting all other payments made by or
on behalf of the Company on account of the Revolving Loans or any
outstanding Letters of Credit, the aggregate outstanding
Obligations with respect to the Revolving Loans owing by it is
$19,815,720 and the aggregate outstanding amount of Letters of
Credit issued under the Revolving Facility is approximately
$4,984,280, and (2) the Company has no defenses, counterclaims or
offsets of any nature whatsoever against Assignor under, with
respect to, or in connection with the Revolving Facility, the
Revolving Loans, the Original Credit Agreement, the Revolving
Note, the Collateral Documents, or any of the other Loan
Documents.
The Company further confirms, agrees and acknowledges
that as of the Effective Date, Assignor shall have no obligations
to make any further loans or to extend any additional credit
under the Revolving Facility, and Assignee shall have no
obligations with respect to the Revolving Facility other than as
provided for under that certain Loan and Security Agreement dated
as of March 30, 1994, and the other "Loan Documents" defined
therein. The Company acknowledges that Assignor and Assignee are
entering into the foregoing Assignment and Acceptance in reliance
on the representations and warranties made by the Company in
connection herewith.
GOTTSCHALKS INC.
By:
Alan A. Weinstein
Senior Vice President and
Chief Financial Officer
Date: March 30, 1994
<PAGE>
EXHIBIT A TO ASSIGNMENT AND ACCEPTANCE
SECURED PARTY: BARCLAYS BUSINESS CREDIT, INC.
DEBTOR: GOTTSCHALKS INC.
Description of Assigned Collateral:
All (except to the extent provided below) the following property
and interests in property of Debtor, whether now owned or
existing or hereafter created, acquired or arising and
wheresoever located:
(1) all accounts, credit card and charge card
receivables, contract rights, chattel paper, instruments
(including certificated securities) and documents;
(2) all inventory, including all goods intended for
sale or lease by Debtor, or for display or demonstration; all
work in process; all raw materials and other materials and
supplies of every nature and description used or which might be
used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such
goods or otherwise used or consumed in Debtor's business;
(3) all general intangibles relating to or used or
arising in connection with Debtor's ownership, use or sale of any
of the foregoing, including all choses in action, causes of
action, corporate or other business records, deposit accounts,
inventions, designs, patents, patent applications, trademarks,
trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, computer
programs, all rights to indemnification and all other intangible
property of every kind and nature (other than accounts);
(4) all monies and other property of any kind of
Debtor now or at any time or times hereafter, in the possession
or under the control of Secured Party or a bailee of Secured
Party;
(5) all accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of the
items set forth in clauses (1), (2), (3), and (4) above,
including proceeds of and unearned premiums with respect to
insurance policies insuring any of the foregoing; and
(6) all books and records (including customer lists,
credit files, computer programs, print-outs, and other computer
materials and records) of Debtor pertaining to any of the items
set forth in clauses (1), (2), (3), (4), or (5) above,
provided, that Secured Party's security interest in the
receivables arising out of Debtor's private label credit card
program, and the collections and proceeds thereof in whatever
form (including any related "instruments," "documents" and
"chattel paper," each as defined under the California Uniform
Commercial Code), all deposit accounts associated therewith, and
all books and records related thereto, shall automatically
terminate (but not Secured Party's security interest in the
proceeds thereof consisting of any amounts paid by Gottschalks
Credit Receivables Corporation) upon the sale of such receivables
by Debtor to Gottschalks Credit Receivables Corporation.
<PAGE>
EXHIBIT B TO ASSIGNMENT AND ACCEPTANCE
UCC Financing Statements to be partially assigned:
Filing No. Date
STATE OF CALIFORNIA #93-183238 9/10/93
STATE OF OREGON #R73711 9/23/93
STATE OF WASHINGTON #93-253-0000 9/13/93
EXHIBIT 10.78
1994 AMENDED AND RESTATED CREDIT AGREEMENT
Between
GOTTSCHALKS INC.,
as Borrower,
and
WELLS FARGO BANK, N.A.,
as Bank
Dated as of March 30, 1994
1994 AMENDED AND RESTATED CREDIT AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND RELATED MATTERS
Section 1.01. Definitions 2
Section 1.02. Construction In General 19
Section 1.03. Accounting Terms and Determinations 19
Section 1.04. Exhibits and Schedules 19
Section 1.05. Other Definitions 20
ARTICLE II
THE LOANS
Section 2.01. New Term Loan 20
Section 2.02. Reaffirmation of Existing Term Loan 20
Section 2.03. Interest 20
Section 2.04. Notes 21
Section 2.05. Maturity of Loans 22
Section 2.06. Reduction of Loans 22
Section 2.07. Manner of Payment 23
Section 2.08. Capital Costs 23
Section 2.09. Taxes 23
Section 2.10. Determinations; Calculation 24
Section 2.11. Survival 24
ARTICLE III
CASH COLLATERAL ACCOUNT; DELIVERY OF RECEIPTS
Section 3.01. Delivery of Receipts; Cash Collateral
Account 24
Section 3.02. Uses of Funds in Cash Concentration Account
25
ARTICLE IV
CONDITIONS TO NEW TERM LOAN
Section 4.01. Conditions Precedent to New Term Loan on Closing
Date 26
Section 4.02. Condition Subsequent 29
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Organization, Powers and Good Standing 29
Section 5.02. Authorization, Binding Effects, No
Conflict, Etc. 30
Section 5.03. Financial Information 31
Section 5.04. Litigation 31
Section 5.05. Applicable Law 31
Section 5.06. Taxes 32
Section 5.07. Governmental Regulation 32
Section 5.08. Margin Regulations 32
Section 5.09. Employee Benefit Plans 33
Section 5.10. Title to Property; Liens 33
Section 5.11. No Materially Adverse Agreements; No
Defaults 33
Section 5.12. Environmental Condition 34
Section 5.13. No Defaults 34
Section 5.14. Indebtedness 34
Section 5.15. Location of Assets and Chief Executive
Offices 34
Section 5.16. Disclosure 34
Section 5.17. Lien Priorities and Perfection 35
Section 5.18. Licenses, Patents, Trademarks, and Intellectual
Property 35
Section 5.19. Fire and Explosion 36
Section 5.20. Fiscal Year 36
Section 5.21. Employee Matters 36
Section 5.22. No Subordination 36
Section 5.23. Subordinated Debt 36
ARTICLE VI
AFFIRMATIVE COVENANTS OF BORROWER
Section 6.01. Financial Statements and Other Reports 36
Section 6.02. Records and Inspection 38
Section 6.03. Corporate Existence, Etc. 38
Section 6.04. Taxes and Other Liabilities 39
Section 6.05. Facilities 39
Section 6.06. Maintenance of Insurance 39
Section 6.07. Conduct of Business; Consumer Credit
Requirements 39
Section 6.08. Further Assurances 39
Section 6.09. Future Information 40
Section 6.10. Compliance with ERISA 40
Section 6.11. Environmental Protection Statutes; Other
Regulations 40
Section 6.12. Subsidiaries 40
Section 6.13. Payment of Trade Creditors 41
Section 6.14. Notice of Change in Management 41
Section 6.15. Financial Condition 41
ARTICLE VII
NEGATIVE COVENANTS OF BORROWER
Section 7.01. Liens 42
Section 7.02. Indebtedness 42
Section 7.03. Restricted Payments 43
Section 7.04. Investments 43
Section 7.05. Capital Expenditures 43
Section 7.06. Restriction on Fundamental Changes 43
Section 7.07. Transactions with Affiliates 44
Section 7.08. Prepayment of Indebtedness 44
Section 7.09. ERISA 44
Section 7.10. Amendments of Articles 45
Section 7.11. Sale of Assets 45
Section 7.12. Contingent Obligations 46
Section 7.13. Issuance of Preferred Stock 46
Section 7.14. Certain Contracts 46
Section 7.15. Misrepresentations 47
Section 7.16. Partnerships 47
Section 7.17. Change in Location of Chief Executive Offices and
Assets 47
Section 7.18. Warehouse Receipts 47
Section 7.19. Speculative Transactions 47
Section 7.20. Use of Proceeds 47
Section 7.21. No Hazardous Materials 47
Section 7.22. Bonds 47
Section 7.23. Consignment 48
Section 7.24. Loan and Advances 48
Section 7.25. Change in Fiscal Year 48
Section 7.26. Lease Obligations 48
Section 7.27. Bank Accounts 48
Section 7.28. Operating Leases. 48
ARTICLE VIII
ADDITIONAL AUTHORITY OF BANK
Section 8.01. Appointment of Bank as Attorney in Fact 49
ARTICLE IX
EVENTS OF DEFAULT
Section 9.01. Events of Default 49
Section 9.02. Remedies 52
Section 9.03. Application of Proceeds After Default and
Acceleration 53
ARTICLE X
MISCELLANEOUS
Section 10.01. Expenses 53
Section 10.02. Indemnity 54
Section 10.03. Waivers; Modifications in Writing 56
Section 10.04. Notices, Etc. 56
Section 10.05. Successors and Assigns 57
Section 10.06. GOVERNING LAW 57
Section 10.07. JURISDICTION AND VENUE 58
Section 10.08. WAIVER OF TRIAL BY JURY 58
Section 10.09. Severability of Provisions 59
Section 10.10. Inconsistencies 59
Section 10.11. Set Off 59
Section 10.12. Publicity 59
Section 10.13. Effectiveness 59
Section 10.14. Headings 60
Section 10.15. Execution in Counterparts 60
Section 10.16. Complete Agreement 60
Section 10.17. Interpretation 60
Section 10.18. No Course of Conduct 61
Section 10.19. No Third Parties Benefited 61
Section 10.20. Prohibition of Oral Consents 61
Section 10.21. Limited Relationships 61
Section 10.22. Time of The Essence 62
Section 10.23. Lien on Deposits and Property in Possession of
Bank 62
Section 10.24. Effectiveness of Existing Loan Documents
62
Section 10.25. Release of Certain Liens 63
TABLE OF SCHEDULES AND EXHIBITS
Schedule Description
Schedule 4.01 Outstanding Letters of Credit
Schedule 5.01A Subsidiaries and Investments
Schedule 5.01B Partnerships
Schedule 5.02 Conflicts
Schedule 5.09 Employee Benefit Plans
Schedule 5.11 Exceptions to No Material Adverse Agreements and
Other Liabilities
Schedule 5.12 Exceptions to Environmental Permits
Schedule 5.15 Locations of Tangible Personal Property
Schedule 7.02 Other Existing Indebtedness
Schedule 7.07 Transactions with Affiliates
Schedule 7.22 Bonds
Schedule 7.27 Non-Wells Bank Accounts
Schedule 10.04 Addresses for Notices
Exhibit Description
Exhibit 1.01A Form of Barclays Intercreditor Agreement
Exhibit 1.01B Form of First Amendment to Security Agreement
Exhibit 1.01C Form of New Term Note
Exhibit 1.01D Form of Unsecured Environmental Indemnity
Exhibit 4.01A Form of Munger, Tolles & Olson Opinion
Exhibit 4.01B Form of Responsible Officer's Certificate
Exhibit 4.01C Form of Incumbency Certificate
1994 AMENDED AND RESTATED CREDIT AGREEMENT
This 1994 Amended and Restated Credit Agreement (this "Restated
Agreement") is entered into as of March 30, 1994 by and between
GOTTSCHALKS INC., a Delaware corporation ("Borrower"), and WELLS
FARGO BANK, N.A., a national banking association ("Bank").
RECITALS
A. Borrower and Bank are parties to that certain 1993 Amended
and Restated Credit Agreement dated as of August 26, 1993 (the
"Existing Credit Agreement") which sets forth the terms of
Borrower's existing indebtedness to Bank. The Existing Credit
Agreement superseded in its entirety the Credit Agreement between
Borrower and Bank dated as of September 9, 1992, as amended.
B. Pursuant to the Existing Credit Agreement, Bank made
available to Borrower certain revolving credit facilities in the
maximum principal amount of $85,000,000 (the "Existing Revolver")
and a term loan in the original principal amount of $19,000,000
(the "Existing Term Loan").
C. Concurrently with the restructuring of Bank's loans to
Borrower pursuant to the Existing Credit Agreement, Borrower and
Teachers Insurance and Annuity Association of America
("Teachers") consummated a restructuring of Teachers' term loan
to Borrower in the original principal amount of $11,000,000 (the
"Teachers Loan").
D. The Existing Term Loan and the Teachers Loan are equally and
ratably secured by first priority deeds of trust on certain real
property owned by Borrower. The Existing Revolver is secured by
second priority deeds of trust on the same real property. The
Existing Revolver is secured by a first priority lien on all of
Borrower's personal property including, without limitation, all
of Borrower's Receivables and Inventory (each as defined herein).
The Existing Term Loan and the Teachers Loan are equally and
ratably secured by a second priority lien on all of Borrower's
personal property including, without limitation, the Receivables
and Inventory.
E. Borrower now intends to consummate a transaction pursuant to
which it will (i) refinance the Existing Revolver (in part by
obtaining credit from a new lender and in part by selling its
Receivables), (ii) refinance the Teachers Loan with different
lenders, and (iii) leave in place with Bank the existing cash
management system and Existing Term Loan. In addition, Bank has
agreed to make a new term loan to Borrower in the original
principal amount of $6,000,000.
F. Borrower and Bank therefore wish to enter into this Restated
Agreement to effectuate their various agreements.
NOW, THEREFORE, in consideration of the foregoing Recitals, which
are incorporated by this reference into the Restated Agreement
set forth below, and in consideration of the agreements,
covenants, conditions and provisions contained herein, and for
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
ARTICLE I
DEFINITIONS AND RELATED MATTERS
Section 1.01. Definitions. For purposes of this Restated
Agreement, capitalized terms shall have the meanings set forth in
this Section 1.01, in the sections of this Restated Agreement or
the other Loan Documents referred to in this Section 1.01 or as
specified in Section 1.05:
"Acquisition" means any transaction, or any series of related
transactions, by which Borrower and/or any of its Subsidiaries
directly or indirectly (i) acquires any on-going business or five
percent (5%) or more of the Assets of any on-going business,
firm, partnership, joint venture, corporation or division
thereof, whether through purchase of Assets, merger or otherwise
(provided that acquisition of Assets consisting of Inventory
shall not constitute an Acquisition for purposes hereof), or (ii)
acquires (in one transaction or as the most recent transaction in
a series of transactions) control of at least five percent (5%)
of the ordinary voting power of the securities of a corporation
which have ordinary voting power for the election of directors,
or (iii) acquires control of a five percent (5%) or more
ownership interest in any partnership or joint venture.
"Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
such first Person. The term "control" means the possession,
directly or indirectly, of the power, whether or not exercised,
(a) to vote more than fifty percent (50%) of the securities
having voting power for the election of directors of such Person
or (b) to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting
securities or partnership or other equity or ownership interests,
by contract or otherwise, and the terms "controlled" and "common
control" shall have correlative meanings; provided that, in any
event, any Person that owns, directly or indirectly, more than
fifty percent (50%) of the securities having ordinary voting
power for the election of directors or other governing body of a
corporation (other than securities having such power only by
reason of the happening of a contingency), or more than fifty
percent (50%) of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other
Person), will be deemed to control such corporation or other
Person. Notwithstanding the foregoing provisions of this
definition, in no event shall Bank be deemed to be an Affiliate
of Borrower or any Subsidiary of Borrower.
"Applicable Law" means all applicable provisions of all (a)
constitutions, treaties, statutes, laws, rules, regulations,
ordinances and orders of any Governmental Authority, (b)
Governmental Approvals and (c) orders, decisions, judgments,
awards and decrees of any Governmental Authority.
"Asset(s)" means any interest of a Person in any kind of property
or asset, whether real, personal or mixed real and personal, or
whether tangible or intangible; provided, however, that the term
"Assets" shall not be deemed to include any security issued by
such Person.
"Bankers Trust" means Bankers Trust Company, as trustee of the
Trust.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. section 101 et seq.), as amended from time to time, or any
successor statute.
"Barclays" means Barclays Business Credit, Inc., a Connecticut
corporation.
"Barclays Intercreditor Agreement" means that certain
Intercreditor Agreement of even date herewith by and among
Borrower, Bank and Barclays, in substantially the form attached
hereto as Exhibit 1.01A.
"Barclays Liens" means (a) the first priority Liens of Barclays
on Borrower's now owned or hereafter acquired inventory, accounts
receivable, chattel paper, documents, instruments, certificated
or uncertificated securities, letters of credit, cash, tax
refunds and deposit accounts, and all general intangibles
(including license agreements, tradenames, trademarks, trademark
licenses, patents and patent rights) relating to or used or
arising in connection with Borrower's ownership, use or sale of
any of the foregoing, and all books and records relating to any
of the foregoing (subject in each and every case, however, to the
rights of Receivables Corporation and the Trust with respect to
the Receivables) and (b) the second priority Liens of Barclays on
Borrower's owned real property subject to the first priority
Liens of Bank.
"Barclays Obligations" means obligations due and owing Barclays
pursuant to that certain Loan and Security Agreement dated March
30, 1994 between Borrower and Barclays (the "Barclays Loan
Agreement").
"Borrower" has the meaning set forth in the preamble to this
Restated Agreement.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Bank is open for business in California.
"Capital Expenditures" means, when used in connection with any
Person, for any period, the aggregate of all expenditures
(including, only in the year of acquisition, the principal
component of all Capitalized Lease Obligations of such Person and
its Subsidiaries incurred in connection with such acquisition and
excluding Capitalized Lease Obligations and secured Indebtedness
existing on the Closing Date) that, in conformity with GAAP
and/or in conformance with Financial Accounting Standards Board
Statement No. 13, are required to be capitalized and reflected in
the property, plant and equipment or similar fixed asset accounts
in the balance sheet of such Person (including equipment whose
acquisition, in conformity with GAAP and/or in conformance with
Financial Accounting Standards Board Statement No. 13, is
required to be capitalized and reflected in the property, plant
and equipment or similar fixed asset accounts in the balance
sheet of such Person and which is purchased simultaneously with
the trade-in of existing equipment owned by such Person to the
extent of (a) the gross amount of such purchase price less (b)
the value realized on the equipment being traded in at such time)
or are otherwise required to be capitalized in conformity with
GAAP. Notwithstanding anything in the foregoing to the contrary,
Capital Expenditures shall not include Investments in fixed
Assets in connection with new store locations.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (howsoever
designated) of capital stock and any rights (other than debt
securities convertible into capital stock), warrants or options
to acquire capital stock; provided, however, that "Capital Stock"
shall not include phantom stock, stock appreciation rights or the
like.
"Capitalized Lease" means any lease (or other agreement conveying
the right to use) of real or personal property by a Person as
lessee which would, in conformity with GAAP, be required to be
accounted for as a capital lease on the balance sheet of that
Person.
"Capitalized Lease Obligations" means all obligations under
Capitalized Leases of a Person that would, in conformity with
GAAP, appear on a balance sheet of that Person.
"Cash" means, when used in connection with any Person, all
monetary and non-monetary items belonging to such Person that are
treated as cash in accordance with GAAP.
"Cash Concentration Account" has the meaning assigned to such
term in Section 3.01 hereof.
"Cash Equivalents" means, when used in connection with any
Person, such Person's Investments in:
(a) Government Securities due within one year after the date of
the purchase thereof;
(b) demand deposits in, certificates of deposit issued by, bank
deposits in, bankers' acceptances of, and repurchase agreements
covering Government Securities executed by, any bank doing
business in the United States of America or any State thereof and
having on the date of such Investment a rating of A or higher
from Keith Bruyette & Woods or Standard & Poor's Corporation, in
each case due within one year after the date of the making of
such Investment; and
(c) readily marketable commercial paper of corporations doing
business in the United States of America given on the date of
such Investment the highest credit rating by NCO/Moody's
Commercial Paper Division of Moody's Investors Service, Inc. or
Standard & Poor's Corporation, in each case due within six months
after the date of the purchase thereof.
"Change of Control" means
(a) The agreement or commitment to enter into any consolidation
or merger of Borrower in which Borrower is not the continuing or
surviving corporation or pursuant to which the common stock of
Borrower would be converted into Cash, securities or other
property, other than a merger of Borrower in which the holders of
the common stock immediately prior to the merger, in the
aggregate, have not less than fifty percent (50%) of the common
stock of the surviving corporation immediately after such merger;
or
(b) The filing of a report on Schedule 13D or 14D-1 (or any
successor schedule, form or report) pursuant to the Exchange Act,
disclosing that any "person" (as the term is defined in Section
14(d)(2) of the Exchange Act) has become the "beneficial owner"
(as the term is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of fifty percent
(50%) or more of the then outstanding shares of common stock of
Borrower; provided, however, that a Person shall not be deemed to
be a beneficial owner of, or to own beneficially, (i) any
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or such Person's Affiliates or
associates (as defined in the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof) until such
tendered securities are accepted for purchase or exchange
thereunder, (ii) any securities if such beneficial ownership (x)
arises solely as a result of a revocable proxy delivered in
response to a proxy or consent delivered in response to a proxy
or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act, and
(y) is not also then reportable on Schedule 13D (or any successor
schedule) under the Exchange Act, or (iii) any securities which
are the subject of a contract to purchase which is not subject to
Schedule 14D of the Exchange Act until such time as such purchase
is consummated.
Notwithstanding the foregoing provisions of this definition, a
Change of Control shall not be deemed to have occurred if at any
time Borrower, any employee stock ownership plan or any other
employee benefit plan of Borrower, or any Person holding common
stock of Borrower for or pursuant to the terms of any such
employee benefit plan, files or becomes obligated to file a
report under or in response to Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report) under the Exchange Act
disclosing beneficial ownership by it of shares of common stock
of Borrower, whether in excess of fifty percent (50%) or
otherwise.
"Closing Date" means the date the New Term Loan is made to
Borrower under this Restated Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor or superseding tax laws of the
United States of America, together with all regulations
promulgated thereunder.
"Collateral" means, collectively, all Assets of Borrower on which
Bank has a Lien pursuant to this Restated Agreement or any other
Loan Document.
"Collateral Documents" means all present and future security
agreements (including, without limitation, the Existing Security
Agreement as amended by the First Amendment to Security
Agreement), deeds of trust (including, without limitation, the
Deeds of Trust), mortgages, assignments, pledge agreements,
financing statements, landlord waivers, consents and other
documents granting Liens to Bank or perfecting, effecting,
facilitating, consenting to, providing notice of or otherwise
evidencing such Liens.
"Contingent Obligation" means, as to any Person, any obligation,
direct or indirect, contingent or otherwise, in the nature of
suretyship or otherwise, of such Person (whether guaranteed by,
endorsed by, co-made by, discounted by, or sold with recourse to,
such Person) (a) with respect to any Indebtedness or other
obligation or liability of another Person including, without
limitation, any direct or indirect guarantee of such
Indebtedness, dividend, lease, reimbursement obligations relating
to letters of credit, obligation or liability (an "Underlying
Obligation"), endorsement (other than for collection or deposit
in the ordinary course of business) thereof or discount or sale
thereof by such Person with recourse to such Person, or any other
direct or indirect obligation, by agreement or otherwise, to
purchase or repurchase any such Underlying Obligation or any
security therefor, or to provide funds for the payment or
discharge of any such Underlying Obligation (whether in the form
of loans, advances, stock purchases, capital contributions or
otherwise), (b) to provide funds to maintain working capital or
equity capital of another Person or otherwise to maintain the net
worth, solvency or financial condition of the other Person, (c)
to make payment for any Asset, products, property, securities,
lease or services regardless of non-delivery or non-performance
thereof, if the purpose of any agreement so to do is to provide
assurance that another Person's Underlying Obligation will be
paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of another Person's
Underlying Obligation will be protected (in whole or in part)
against loss in respect thereof, or (d) otherwise to assure or
hold harmless the holders of Indebtedness or other obligation or
liability or another Person against loss in respect thereof;
provided, however, that the term "Contingent Obligation" shall
not include (i) trade payables or accrued liabilities of the
Person making the Contingent Obligation, (ii) endorsements of
instruments for deposit or collection in the ordinary course of
such Person's business, or (iii) (A) indemnities or other
Contingent Obligations arising in the ordinary course of
business, including indemnities or other Contingent Obligations
arising in connection with the sale or other disposition of a
Person's Assets or in connection with the incurrence of
Indebtedness and (B) indemnities in favor of investment bankers
and other financial professionals retained by Borrower. The
amount of any Contingent Obligation shall be an amount equal to
the lesser of the amount of the Underlying Obligation guaranteed
or otherwise supported thereby and any stated cap on such
Underlying Obligation.
"Contractual Obligation" means, as applied to any Person, any
material provision of any security issued by that Person or of
any material indenture, mortgage, deed of trust, contract,
agreement, lease or other instrument to which that Person is a
party or by which it or any of its Assets is bound or to which it
or any of its Assets is subject.
"Controlled Group" means all domestic and foreign members of a
controlled group of corporations under Section 1563(a) of the
Code (determined without regard to Section 1563(b)(2)(C) of the
Code) and all trades or businesses (irrespective of whether
incorporated) which are under common control of Borrower. With
regard to all Plans and Multiemployer Plans, "Controlled Group"
shall also include all ERISA Affiliates.
"Coverage Ratio" for any period means (a) the sum of (i)
Borrower's net profits after Taxes for such period plus (ii) all
non-cash charges and expenses deducted in determining Borrower's
net profits after Taxes for such period plus (iii) all lease
expenses accrued by Borrower in determining such net profits
after taxes for such period plus (iv) Interest Expense accrued by
Borrower in determining such net profits for such period plus (v)
any unusual expenses incurred by Borrower during such period
divided by (b) the sum of (x) all lease expenses deducted in
determining Borrower's net profits after Taxes for such period
plus (y) Interest Expenses deducted in determining Borrower's net
profits after Taxes for such period.
"Current Assets" means, as of any date of determination thereof,
the consolidated current Assets, excluding prepaid expenses, on
that date of Borrower, determined in accordance with GAAP.
"Current Liabilities" means, as of any date of determination
thereof, the consolidated current liabilities on that date of
Borrower, determined in accordance with GAAP.
"Deeds of Trust" shall have the meaning assigned to such term in
Section 4.01 hereof.
"Disbursement Account" has the meaning assigned to such term in
Section 3.02(b) hereof.
"Environment" or "Environmental" has the meaning set forth in 42
U.S.C. Section 9601(8).
"Environmental Protection Statute" means any federal or state
law, statute, rule or regulation enacted in connection with or
relating to the protection or regulation of the Environment,
including those laws, statutes, rules and regulations regulating
the disposal, removal, production, storing, refining, handling,
transferring, processing or transporting of Hazardous Waste or
Hazardous Substances, and any regulations issued or promulgated
in connection with such statutes by any governmental agency or
instrumentality.
"EPA" means the United States Environmental Protection Agency or
any successor thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as the same may from time to time be amended or
supplemented, including any rules or regulations issued in
connection therewith.
"ERISA Affiliate" means any trade or business (irrespective of
whether incorporated) which is a member of a group of which
Borrower is a member treated as a single employer under Section
414 of the Code or the regulations promulgated thereunder.
"Event of Default" means any of the events specified in Section
9.01 of this Restated Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and the
rules and regulations thereunder.
"Existing Credit Agreement" has the meaning assigned to such term
in the Recitals to this Restated Agreement.
"Existing Notes" means and is the collective reference to the
promissory notes made by Borrower in favor of Bank pursuant to
the Existing Credit Agreement.
"Existing Security Agreement" means that certain Second Amended
and Restated Security Agreement between Borrower and Bank dated
as of August 26, 1993.
"Existing Term Loan" has the meaning assigned to such term in the
Recitals to this Restated Agreement.
"Existing Term Note" means that certain Amended and Restated Term
Note dated August 26, 1993 in the original principal amount of
$19,000,000, executed by Borrower in favor of Bank, to evidence
the Existing Term Loan made by Bank to Borrower (and any
promissory notes that may be issued in substitution, renewal,
extension, replacement or exchange therefor, either as originally
executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced).
"Existing Term Loan Maturity Date" means June 30, 1996.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto.
"First Amendment to Security Agreement" means that certain First
Amendment to Second Amended and Restated Security Agreement of
even date herewith between Borrower and Bank, in substantially
the form attached hereto as Exhibit 1.01B.
"Fiscal Year" means the fiscal year of Borrower, which shall be
the twelve (12) month period ending on the Saturday that falls
closest to January 31 of each year or such other period as
Borrower may designate and Bank may agree to in writing.
"Fund," "Trust Fund," or "Super Fund" means the Hazardous
Substance Response Trust Fund, established pursuant to 42 U.S.C.
Section 9631, and the Post-Closure Liability Trust Fund, established
pursuant to 42 U.S.C. Section 9641. The above provisions have been
amended or repealed by the Superfund Amendments and
Reauthorization Act of 1986, and the "Fund," "Trust Fund," or
"Super Fund" are now maintained pursuant to 46 U.S.C. Section 9507.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America (as such principles may
change from time to time), consistently applied.
"Government Securities" means and is the collective reference to
readily marketable direct obligations of the United States of
America or obligations fully-guaranteed by the United States of
America.
"Governmental Approval" means an authorization, consent,
approval, order, permit, license or exemption of, qualification,
registration or filing with, or report or notice to, any
Governmental Authority.
"Governmental Authority" means any nation or government, any
state, county, municipality or other political subdivision
thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government or
quasi-governmental authority, agency, department, board, bureau,
commission or instrumentality of the United States, any State of
the United States or any political subdivision thereof, and any
tribunal or arbitrator(s) of competent jurisdiction.
"Hazardous Substance" has the meaning set forth in 42 U.S.C. Section
9601(14).
"Hazardous Waste" has the meaning set forth in 42 U.S.C. Section
6903(5) and 40 C.F.R. Section 261.3.
"Highest Lawful Rate" means the maximum non-usurious interest
rate, as in effect from time to time, which may be charged,
contracted for, reserved, received or collected by Bank in
connection with this Restated Agreement, the Notes, the Loan
Documents, or any other documents executed in connection herewith
or therewith.
"Indebtedness" means, with respect to any Person, the aggregate
amount of, without duplication: (a) all obligations of such
Person for borrowed money; (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar
instruments; (c) all obligations to pay the deferred purchase
price of Assets or services, except to the extent such
obligations comprise (i) deferred Taxes, (ii) liabilities accrued
in the ordinary course of business or (iii) trade accounts
payable arising and being paid in the ordinary course of
business; (d) all Capitalized Lease Obligations; (e) all
obligations or liabilities of others secured by a Lien on any
Asset owned by such Person whether or not such obligation or
liability is assumed, to the extent of the lesser of the amount
of such obligation or liability and the fair market value of such
Asset; (f) all obligations of such Person, contingent or
otherwise, in respect of any letters of credit, bankers'
acceptances, interest rate swaps or other financial products; and
(g) all Contingent Obligations of such Person.
"Intangible Assets" means Assets that are considered intangible
Assets under GAAP including, without limitation, goodwill,
organization expense, patents, trademarks, trade names,
copyrights and other intangible Assets.
"Interest Expense" means, with respect to any fiscal period of
Borrower, the aggregate amount of interest, fees, charges and
related expenses paid or payable in connection with borrowed
money that is treated as interest (other than accretion of
original issue discount on long-term debt) in accordance with
GAAP, and that is charged against Net Income for that fiscal
period. Interest Expense for any fiscal period shall, in all
events, include interest paid or payable during such period in
respect of the Existing Term Note and the New Term Note.
"Interest Payment Date" means the fifteenth calendar day of each
month (or, if such day is not a Business Day, the next succeeding
Business Day).
"Inventory" means all of Borrower's goods held for sale and
including all materials used or consumed in Borrower's business,
but excluding all consigned goods.
"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by that Person of, or any
beneficial interest in, stock, instruments, bonds, debentures, or
other securities of any other Person, or any direct or indirect
loan, advance (other than advances to employees for moving,
travel or payroll expenses, drawing accounts, or similar
expenditures in the ordinary course of such Person's business),
or capital contribution by such Person to any other Person,
including all Indebtedness and Accounts from the other Person
which did not arise from sales or the rendition of services to
the other Person in the ordinary and usual course of such
Person's business, and deposit accounts (including certificates
of deposit). The amount of any Investment shall be the original
cost of such Investment, without any adjustments for
appreciation, earnings, interest or dividends, accretions,
increases or decreases in value, or write-ups, write-downs,
write-offs, or charge-offs to or with respect to such Investment;
provided, however, that, in the case of any Investment which is a
loan, the original amount of such Investment shall be reduced by
the amount of any repayments of principal made with respect to
such Investment. Investments in futures contracts for the
purchase of Inventory in the ordinary course of business shall
not be included within the foregoing definition for purposes of
this Restated Agreement.
"Joint Venture" means a joint venture, partnership or similar
arrangement, whether in corporate, partnership or other legal
form; provided that, as to any such arrangement in corporate
form, such corporation shall not, as to any Person of which such
corporation is a subsidiary, be considered to be a Joint Venture
to which such Person is a party.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
security interest, encumbrance, lien (except for inchoate Liens
securing the payment of nondelinquent Taxes) or charge of any
kind, whether voluntarily incurred or arising by operation of law
or otherwise, affecting any Asset, including any agreement to
give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and/or the
filing of or agreement to give any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction.
"Loan(s)" means and is the collective reference to the New Term
Loan and the Existing Term Loan.
"Loan Documents" means, collectively, this Restated Agreement,
the Notes, the Collateral Documents, the Barclays Intercreditor
Agreement, the Unsecured Environmental Indemnity and any
supplemental agreement or instrument executed or delivered by
Borrower in connection herewith or therewith, and all amendments,
modifications or supplements, and appendices, exhibits and
schedules to, any of the foregoing.
"Margin Regulations" means Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System, as in effect from
time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 3(37) and Section 4001(a)(3)(A) of ERISA to which
Borrower or any of its ERISA Affiliates is making or accruing an
obligation to make contributions or has within any of the
preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a "single employer plan," as
defined in Section 4001(a)(15) of ERISA, which (a) is maintained
for employees of Borrower or an ERISA Affiliate and at least one
Person other than Borrower and its ERISA Affiliates or (b) was so
maintained and in respect of which Borrower or an ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"Net Income" means, with respect to any fiscal period of
Borrower, the net income of Borrower for that period, determined
in accordance with GAAP.
"New Term Loan Maturity Date" means June 30, 1994.
"New Term Note" means that certain Term Note of even date
herewith, in substantially the form attached hereto as Exhibit
1.01C, in the original principal amount of $6,000,000, executed
by Borrower in favor of Bank, to evidence the New Term Loan made
by Bank to Borrower(and any promissory notes that may be issued
in substitution, renewal, extension, replacement or exchange
therefor, either as originally executed or as the same may from
time to time be supplemented, modified, amended, renewed,
extended or refinanced).
"Non-Recourse Debt" means Indebtedness which is not required to
be reflected on the balance sheet of Borrower in accordance with
GAAP and which (a)(i) by its terms provides that Borrower shall
not be responsible for payments thereon or in respect thereof or
(ii) contains terms limiting recourse against Borrower that are
reasonably satisfactory to Bank and (b) the failure to pay or
acceleration of which would not give rise to a right of
cross-default or cross-acceleration on the part of holders of
other Indebtedness created on or after the Closing Date.
"Notes" means and is the collective reference to the Existing
Term Note and the New Term Note.
"Obligations" means all present and future advances, debts,
obligations and liabilities of Borrower of every type and
description arising under or in connection with this Restated
Agreement or any other Loan Document, due or to become due to
Bank or any Person entitled to indemnification pursuant to
Section 10.02 hereof, or any of their respective successors,
transferees or assigns, and shall include, without limitation,
(a) all liability of Borrower for payment of principal of and
interest on the Loans and under the Notes, (b) all liability of
Borrower hereunder or under the Loan Documents for any expense
reimbursements and indemnifications, and (c) any and all other
debts, obligations and liabilities of Borrower to Bank
heretofore, now or hereafter incurred or created (and all
renewals, extensions, modifications and rearrangements thereof),
under, in connection with, in respect of, or evidenced or created
by this Restated Agreement or any or all of the other Loan
Documents, whether voluntary or involuntary, however arising, and
whether due or not due, absolute or contingent, secured or
unsecured, liquidated or unliquidated, determined or
undetermined, direct or indirect, and whether Borrower may be
liable individually or jointly with others.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Investments" means Investments reasonably made
available by Bank to Borrower in which Bank's first priority
security interest remains continuously perfected and with
maturities not longer than seven (7) days from the purchase date
thereof.
"Permitted Liens" means the giving of, and any financing
statements related to, (a) purchase money Liens securing
obligations incurred in connection with purchases of
non-Inventory items or Capitalized Lease Obligations, provided
that such Liens shall be limited to the item or items being so
purchased or leased and the Indebtedness incurred shall also be
subject to the Capital Expenditures limitations set forth in
Section 7.05; (b) Liens securing Taxes, assessments or
governmental charges or levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and
other like Persons not yet delinquent; (c) attachment, judgment
or other similar Liens arising in connection with court
proceedings that are discharged or stayed within forty-five (45)
days of attachment or levy, or payment of which is covered in
full (subject to customary and reasonable deductibles) by
insurance or a surety bond; (d) easements, rights of way,
restrictions and other similar charges or encumbrances on real
property that do not interfere with the orderly conduct of
Borrower's business or materially detract from the value of the
affected real property; (e) minor defects and irregularities in
title to real property existing on the Closing Date that do not
materially detract from the value or impair the use of such
property for the purposes for which it is held; (f) Liens
existing or arising by virtue of the leasing or rental of
Borrower's Assets to the extent leases and rentals are permitted
by this Restated Agreement, whether the same are capital leases
or operating leases or rentals; (g) Liens in favor of Bank under
this Restated Agreement, the Notes and the other Loan Documents;
(h) any Lien arising as a matter of law as a result of referral
of an Account to a collection agent; (i) rights arising out of
consignments to Borrower to the extent permitted hereunder; (j)
Liens securing Non-Recourse Debt in existence on the date hereof
and previously disclosed to Bank (provided that in no event shall
the scope of any such Lien be increased to include Assets of
Borrower not already subject to such Lien on the date hereof);
(k) liens arising in connection with the E. Gottschalk Industrial
Development Bond issued in 1985; and (l) any extension, renewal
or replacement of any of the foregoing.
"Person" means an individual, a corporation, a partnership, a
trust, an unincorporated organization or any other entity or
organization, including a government or any agency or political
subdivision thereof.
"Plan" means any pension, retirement, disability, defined
benefit, defined contribution, profit sharing, deferred
compensation, employee stock ownership, employee stock purchase,
or other employee benefit plan or arrangement, other than a
Multiemployer Plan, irrespective of whether any of the foregoing
is funded, including without limitation any employee benefit plan
as defined in Section 3(3) of ERISA which was, is or will be
sponsored or maintained by Borrower or its ERISA Affiliates, in
which any personnel of Borrower or its ERISA Affiliates
participates or from which any such personnel may derive a
benefit.
"Pooling and Servicing Agreement" means that certain Pooling and
Servicing Agreement dated as of March 30, 1994 by and among
Borrower, Receivables Corporation and Bankers Trust.
"Post-Default Rate" means, at any time, a rate per annum equal to
the rate of interest otherwise in effect at such time pursuant to
the terms hereof, plus two percent (2%).
"Prohibited Transaction" means a transaction which is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not
exempt under Section 4975 of the Code or Section 408 of ERISA.
"Quick Ratio" means, with respect to Borrower, on any date of
determination thereof, (a) the sum of (i) its Cash and Cash
Equivalents plus (ii) the total contract amount of its Accounts
divided by (b) its Current Liabilities.
"Ratio of Total Debt to Tangible Net Worth" means, with respect
to Borrower, on any date of determination thereof, (a) the sum of
(x) Current Liabilities plus (y) Indebtedness not constituting
Current Liabilities less (z) Subordinated Debt divided by (b)
Tangible Net Worth.
"Receipts" has the meaning assigned to such term in Section 3.01
hereof.
"Receivables" has the meaning assigned to such term in the
Pooling and Servicing Agreement.
"Receivables Corporation" means Gottschalks Credit Receivables
Corporation, a Delaware corporation, and its successors in
interest.
"Receivables Purchase Agreement" has the meaning assigned to such
term in the Pooling and Servicing Agreement.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System and any successor regulation, in each
case as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System or any successor regulation, in each
case as in effect from time to time.
"Regulatory Change" means (a) the adoption after the date hereof
of any new, or any change in any existing, treaty or Federal,
state, local or foreign law, rule, regulation (including but not
limited to Regulation D) or guideline (whether or not having the
force of law), (b) the adoption or making after the date hereof
of, or compliance by Bank with, any interpretation, directive,
request, order or decree (whether or not having the force of law)
applicable to Bank by any court or Governmental Authority or
central bank or other monetary authority, or compliance after the
date hereof by Bank with any such law, rule, regulation,
guideline, interpretation, directive, request, order or decree
(whether adopted, made or issued before or after the date
hereof), or (c) any change after the date hereof in the
administration or enforcement of or under any such law, rule,
regulation or guideline by any court or Governmental Authority or
central bank or other monetary authority charged with the
interpretation or administration thereof.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, except any such
event as to which the provision for thirty (30) days' notice to
the PBGC is waived under applicable regulations.
"Residual Obligations" means Obligations which are created
hereunder or under any other Loan Document other than the full
repayment of the Notes and all other liquidated monetary
Obligations due and owing hereunder at the time of full repayment
of the Notes.
"Responsible Officer" means:
(a) When used with reference to any Person other than Borrower
and other than an individual, any corporate officer of such
Person, general partner of such Person, corporate officer of a
corporate general partner of such Person, or corporate officer of
a corporate general partner of a partnership that is a general
partner of such Person, or any other responsible official thereof
duly acting on behalf thereof;
(b) When used with reference to a Person who is an individual,
such Person; and
(c) When otherwise used in reference to Borrower, the chief
executive officer, the chief financial officer, the president,
the senior vice-president/finance, the secretary, the treasurer,
or the chairman.
Except as otherwise specifically provided herein, any requirement
that any document or certificate be signed or executed by any
Person requires that such document or certificate be signed or
executed by a Responsible Officer of such Person, and that the
Responsible Officer signing or executing such document or
certificate on behalf of such Person shall be authorized to do so
by all necessary corporate, partnership and/or other action.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of
Capital Stock of Borrower now or hereafter outstanding, except a
dividend payable solely in shares of a class of Capital Stock of
Borrower to the holders of that class of Capital Stock of
Borrower, (b) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of Borrower
now or hereafter outstanding, and (c) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire,
shares of any class of Capital Stock of Borrower now or hereafter
outstanding.
"Right of Others" means, as to any Asset of Borrower in which a
Person has an interest, any legal or equitable claim, right,
title or other interest (other than a Lien) in or with respect to
that Asset held by any other Person, any option or right held by
any other Person to acquire any such claim, right, title or other
interest, including any option or right to acquire a Lien.
"SEC" means the United States Securities and Exchange Commission,
and any successor thereto.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"Single Employer Plan" means a Plan which is not a Multiemployer
Plan.
"Subordinated Debt" means any Indebtedness of Borrower
subordinated in right of payment to the Obligations and otherwise
incurred on terms approved in advance in writing by Bank.
"Subsidiary" means (i) any corporation or other entity of which
more than fifty percent (50%) of the total voting power of shares
of stock or other securities or other ownership interests
entitled to vote in the election of the board of directors or
other Persons performing similar functions are at the time
directly or indirectly owned by Borrower, or by Borrower and a
Subsidiary of Borrower, or (ii) any other Person (other than a
corporation) in which Borrower, a Subsidiary of Borrower, or
Borrower and a Subsidiary of Borrower, directly or indirectly,
holds at least a majority ownership interest.
"Tangible Net Worth" means, with respect to Borrower, as of any
date of determination thereof, the sum of (a) total stockholders'
equity in Borrower plus (b) Subordinated Debt of Borrower, minus
(c) treasury stock held by Borrower, if any, minus (d) Intangible
Assets of Borrower, minus (e) prepaid loan fees of Borrower,
minus (f) accrued new store pre-opening expenses of Borrower, and
minus (g) receivables from officers, directors, employees and
other Affiliates of Borrower, determined in accordance with GAAP.
"Taxes" means any income, stamp and other taxes, charges, fees,
levies, duties, imposts, withholdings or other assessments,
together with any interest and penalties thereon or in connection
therewith, additions to tax and additional amounts imposed by any
federal, state, local or foreign taxing authority upon any Person
or upon its Assets, income, Capital Stock and franchises.
"Termination Event" means: (a) a Reportable Event or an event
described in Section 4062(e) of ERISA; (b) the withdrawal of
Borrower or any of its ERISA Affiliates from a Multiple Employer
Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA or the cessation of
operations at a facility in the circumstances described in
Section 4062(e) of ERISA; (c) the filing of a notice of intent to
terminate a Plan (including any such notice with respect to a
Plan amendment referred to in Section 4041(e) of ERISA) or the
termination of a Plan excluding, for purposes of this clause (c),
any standard termination under Section 4041(b) of ERISA; (d) the
institution of proceedings to terminate a Plan by the PBGC; (e)
the appointment of a trustee under Section 4042 of ERISA to
administer any Plan; or (f) any other event or condition which
might reasonably constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to
administer, any Plan.
"Teachers" has the meaning assigned to such term in the Recitals
to this Restated Agreement.
"Total Liabilities" means, with respect to Borrower, as of any
date of determination thereof, the sum of (a) all liabilities
(exclusive of Subordinated Debt) that should be reflected as such
in a balance sheet of Borrower on such date prepared in
accordance with GAAP, plus (b) the aggregate amount of
obligations of other Persons that are guaranteed by Borrower or
are the subject of any agreement by Borrower in the nature of a
guaranty, plus (c) the aggregate face amount of all outstanding
standby letters of credit issued for the account of Borrower;
provided, however, that any amount described in clauses (b) and
(c) shall be added only to the extent that the guaranty,
agreement in the nature of a guaranty, or standby letter of
credit covers liabilities that would not be reflected in a
balance sheet of Borrower on such date.
"Trust" means the Gottschalks Credit Card Master Trust created
pursuant to the Pooling and Servicing Agreement.
"Trust Liens" means the first priority Liens of the Trust and
Receivables Corporation on the Receivables pursuant to the
Pooling and Servicing Agreement and the Receivables Purchase
Agreement.
"Trust Obligations" means all obligations of Borrower arising
under or in connection with the sale of the Receivables.
"Unmatured Event of Default" means an event, act, or occurrence
which, with the giving of notice or the passage of time (or
both), would become an Event of Default.
"Unsecured Environmental Indemnity" means that certain Amended
and Restated Environmental Indemnity Agreement (Unsecured) of
even date herewith given by Borrower in favor of Bank, in
substantially the form attached hereto as Exhibit 1.01D.
Section 1.02. Construction In General. Unless the context of
this Restated Agreement clearly requires otherwise, references
herein to the plural include the singular, the singular includes
the plural, the part includes the whole, and the word "including"
is not limiting. References in this Restated Agreement to any
"determination" by Bank include good faith reasonable estimates
by Bank (in the case of quantitative determinations), and good
faith reasonable beliefs by Bank (in the case of qualitative
determinations). The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Restated Agreement refer
to this Restated Agreement as a whole and not to any particular
provision of this Restated Agreement. Article, section,
subsection, exhibit and schedule references are to this Restated
Agreement unless otherwise specified. References in this
Restated Agreement or in any Loan Document to "the knowledge of,"
"the receipt by" or "notice to" Borrower shall refer to the
knowledge of, the receipt by or notice to a Responsible Officer
of Borrower. The phrase "to the best knowledge of" means, when
modifying a representation, warranty or other statement of
Borrower, that the fact or situation described therein is known
by Borrower or any Responsible Officer thereof or, with the
exercise of reasonable due diligence under the circumstances (in
accordance with the standard of what a reasonable Person in
similar circumstances would have done) should have been known by
Borrower or any Responsible Officer thereof.
Section 1.03. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP,
including applicable statements, bulletins and interpretations
issued by the Financial Accounting Standards Board and bulletins,
opinions, interpretations or statements issued by the American
Institute of Certified Public Accountants or its committees,
applied on a basis consistent (except for changes concurred in by
Borrower's independent public accountants) with the financial
statements of Borrower described in Section 5.03 hereof. When
used herein, the term "financial statements" shall include the
notes and schedules thereto.
Section 1.04. Exhibits and Schedules. All of the exhibits and
schedules attached to this Restated Agreement, both as originally
existing or as the same may from time to time be supplemented,
modified or amended, shall be deemed incorporated herein by
reference.
Section 1.05. Other Definitions. Terms defined in the
description of the parties, the Recitals, within another
definition in Section 1.01 hereof and in any other provisions of
this Restated Agreement or any of the other Loan Documents not
defined or referenced in Section 1.01 hereof shall have their
respective defined meanings when used herein or therein.
ARTICLE II
THE LOANS
Section 2.01. New Term Loan.
(a) Agreement to Lend. Upon the terms and subject to the
conditions set forth in this Restated Agreement, Bank agrees to
make to Borrower, on the Closing Date, a term loan (the "New Term
Loan"), the original principal amount of which shall be Six
Million Dollars ($6,000,000). Any amounts prepaid or otherwise
repaid in respect of the New Term Loan pursuant to any provision
of this Restated Agreement may not be reborrowed.
(b) Use of Proceeds. The proceeds of the New Term Loan shall be
used, together with other funds available to Borrower, solely to
repay in full the outstanding principal balance of, and accrued
but unpaid interest on, the Teachers Loan (which shall occur by
wire transfer to Teachers and the making of appropriate entries
on the books and records of Borrower and Bank and without any
actual disbursement of cash to Borrower).
Section 2.02. Reaffirmation of Existing Term Loan. The
outstanding principal balance of the Existing Term Loan on the
date hereof is approximately Eighteen Million Five Hundred
Thirty-Two Thousand Eight Hundred Fifty-Two Dollars and Forty-One
Cents ($18,532,852.41). Borrower hereby reaffirms its obligation
to pay the outstanding principal of and accrued but unpaid
interest on the Existing Term Loan on the terms and conditions
set forth herein and in the Existing Term Note, and agrees and
acknowledges that repayment of the Existing Term Loan is secured
by the security interests granted pursuant to the Collateral
Documents. Borrower acknowledges and agrees that any amounts
prepaid or otherwise repaid in respect of the Existing Term Loan
pursuant to any provision of this Restated Agreement may not be
reborrowed.
Section 2.03. Interest. Each Loan shall bear, and Borrower
agrees to pay, interest on the outstanding principal amount
thereof at the applicable rates and at the times set forth below:
(a) Prior to Default. The New Term Loan shall bear, and
Borrower agrees to pay, interest on the outstanding principal
amount thereof until due (whether at maturity, by reason of
prepayment or acceleration or otherwise), at a rate of ten
percent (10%) per annum.
(b) Post-Default Rate. Notwithstanding subsection (a) of this
Section 2.03, if at any time an Event of Default shall occur, and
for as long thereafter as such Event of Default shall be
continuing, without further notice or demand, the outstanding
principal amount of the Loans (and overdue interest thereon, if
any, to the extent permitted by Applicable Law) shall bear
interest at a rate per annum equal to the Post-Default Rate.
(c) Payment. Interest on each of the Loans shall be payable in
arrears, on the earlier of (i) the next occurring Interest
Payment Date and (ii) the date when such Loan shall become due
(whether at maturity, by reason of prepayment or acceleration or
otherwise). Interest accrued at the Post-Default Rate shall be
payable on demand.
(d) Computations. Interest on each Loan shall accrue from day
to day from and including the Closing Date to and excluding the
due date or the date of any repayment thereof. Interest on each
Loan shall be computed on the basis of a 360-day year and paid
for the actual number of days elapsed. Each determination of an
interest rate by Bank pursuant to any provision of this Restated
Agreement shall be conclusive and binding on Borrower in the
absence of manifest error.
(e) Highest Lawful Rate. The rate of interest payable on the
Loans shall in no event exceed the Highest Lawful Rate. If the
rate of interest payable on the Loans is ever reduced as a result
of this subsection and at any time thereafter the Highest Lawful
Rate shall exceed the rate of interest provided for in this
Restated Agreement, then the rate provided for in this Restated
Agreement shall be increased to the Highest Lawful Rate for such
period as is required so that the total amount of interest
received by Bank is that which would have been received by Bank
but for the operation of the first sentence of this subsection.
For purposes of this Section 2.03, the Highest Lawful Rate shall
be calculated with reference to the law in effect from time to
time and applicable to this transaction, including laws of the
State of California and, to the extent controlling, laws of the
United States of America.
Section 2.04. Notes.
(a) Issuance. Borrower has authorized the issuance of the New
Term Note in the original principal amount of Six Million Dollars
($6,000,000). The New Term Loan shall be evidenced by the New
Term Note, payable to the order of Bank and representing the
obligation of Borrower to pay to Bank the unpaid principal amount
of the New Term Loan, with interest thereon as prescribed by
Section 2.03 hereof and all other amounts due and owing Bank in
connection therewith. The New Term Note shall be dated the
Closing Date, shall set forth Six Million Dollars ($6,000,000) as
the original principal amount thereof, and shall have the blanks
therein appropriately completed.
(b) Existing Term Note. The Existing Term Note shall remain
outstanding and continue to represent Borrower's obligation to
pay the outstanding principal thereof, together with all accrued
but unpaid interest thereon and all other amounts due and owing
Bank in connection therewith, in accordance with the terms hereof
and thereof.
(c) Recordation. Bank is hereby irrevocably authorized to
record on each of the Notes the date and amount of the Loans
outstanding hereunder and each payment or prepayment of principal
thereof on the schedules forming a part thereof and to attach to
and make a part of each Note a continuation of any such schedule
as and when required. The failure to record, or any error in
recording, any such repayment on such schedule (or continuation
thereof) or similar records shall not, however, affect the
obligations of Borrower hereunder or under either Note to repay
the principal amount thereof together with all interest accrued
thereon and all other amounts due pursuant to this Restated
Agreement. All such notations, and in the absence thereof the
books and records of Bank with respect to the Loans, shall
constitute conclusive evidence of the accuracy of the information
so recorded, in the absence of manifest error.
Section 2.05. Maturity of Loans. To the extent not repaid prior
thereto, including without limitation pursuant to Section 2.06
hereof, the entire outstanding principal amount of the Existing
Term Loan, together with any accrued and unpaid interest thereon
and all other amounts due and owing in connection therewith,
shall be due and payable on the Existing Term Loan Maturity Date
and the entire outstanding principal amount of the New Term Loan,
together with any accrued but unpaid interest thereon and all
other amounts due and owing in connection therewith, shall be due
and payable on the New Term Loan Maturity Date.
Section 2.06. Reduction of Loans.
(a) Scheduled Principal Reductions on Existing Term Loan. On
each Interest Payment Date, Borrower shall make a payment of
principal on the Existing Term Loan based upon a fifteen-year
amortization of the $19,000,000 original principal amount of the
Existing Term Loan (such fifteen-year period commencing on the
Closing Date as defined in the Existing Credit Agreement).
(b) Optional Prepayments. Borrower may, upon at least one
Business Day's notice to Bank, prepay the Loans in whole at any
time, or from time to time in part, in amounts aggregating at
least $100,000 and integral multiples of $100,000, by paying the
principal amount to be prepaid together with accrued interest
thereon to the date of prepayment. Once a notice of such
prepayment is delivered to Bank, the notice shall not be
revocable by Borrower without the prior written consent of Bank.
Principal reductions from optional prepayments made pursuant to
this subsection (b) shall be applied first to reduce the
outstanding principal balance of the New Term Loan until reduced
to zero and, second, to reduce the scheduled principal payments
of the Existing Term Loan in inverse order of maturity.
(c) Mandatory Prepayments From Real Property Dispositions. Upon
receipt by or for the account of Borrower of the net Cash
proceeds (Cash sales proceeds less ordinary sales expenses paid
in Cash such as commissions, transfer taxes and sales taxes) from
the disposition of any real property of Borrower as to which
there exists a Lien in favor of Bank to secure the Obligations,
Borrower shall make a mandatory prepayment, without premium or
penalty, of the then outstanding Obligations in an amount equal
to 100% of such net Cash proceeds. The amount of such proceeds
shall be applied in the manner set forth in the last sentence of
subsection (b) above.
Section 2.07. Manner of Payment. All payments due to Bank
pursuant to this Restated Agreement shall be made not later than
10:00 a.m. (California time) on the due date thereof, in lawful
money of the United States of America in Federal or other funds
immediately available to Bank, in all cases without any deduction
whatsoever, including any deduction for setoff, recoupment,
counterclaim or Taxes. Whenever any payment hereunder shall be
due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next succeeding Business Day.
Section 2.08. Capital Costs. Borrower shall from time to time
pay to Bank, upon demand by Bank, such additional amounts as may
be specified by Bank as sufficient to compensate it for any costs
which Bank determines are attributable to the maintenance by it,
pursuant to any Regulatory Change that affects or would affect
the amount of capital required or expected to be maintained by
Bank or any corporation controlling Bank, of capital in respect
of the Loans hereunder (such compensation to be in an amount
equal to any reduction of the rate of return on the capital of
Bank to a level below that which Bank could have achieved but for
such Regulatory Change).
Section 2.09. Taxes. Borrower agrees (i) to pay all amounts
payable by it under this Restated Agreement, and under the Notes
and under the Loan Documents free and clear of and without
liability for, and, subject to the provisions of this Section
2.09, without deduction or withholding for, any and all Taxes;
and (ii) to pay when due, and reimburse Bank upon demand for any
payment made by Bank of, and indemnify and hold Bank harmless
against any liability for, (x) any and all Taxes in any way
related to this Restated Agreement or either Loan, other than
income and franchise taxes imposed upon Bank by the United States
of America or any political subdivision thereof or by any other
country (or any political subdivision thereof) in which Bank does
business or in which Bank has an office, and (y) all interest and
penalties resulting from or related to any delay caused by
Borrower in paying any such Taxes following written notice from
Bank to Borrower given a reasonable time prior to the imposition
of such interest or penalties. Promptly after the date on which
payment of any Taxes is due pursuant to Applicable Law, Borrower
shall furnish to Bank evidence, in form and substance
satisfactory to Bank, that Borrower has satisfied its obligations
under this Section 2.09.
Section 2.10. Determinations; Calculation. Any determination
contemplated by Section 2.08 or 2.09 hereof that is made by Bank
shall be final and conclusive and binding upon Borrower, in the
absence of manifest error in computation. If Bank requests
compensation under Section 2.08 or 2.09 hereof, it shall provide
Borrower with a copy of its calculations of the amount it is
owed.
Section 2.11. Survival. Borrower's obligations under Sections
2.08 or 2.09 hereof shall survive repayment of the Loans made
hereunder and shall be Residual Obligations.
ARTICLE III
CASH COLLATERAL ACCOUNT; DELIVERY OF RECEIPTS
Section 3.01. Delivery of Receipts; Cash Collateral Account.
Borrower and Bank have entered into and hereby agree to maintain
an efficient and economical cash management system, pursuant to
which Borrower agrees that all Cash, checks, credit card
collections, credit card vouchers, and other Cash Equivalents of
the kind commonly deposited and held in deposit accounts
(collectively, "Receipts") received by Borrower from any source
whatsoever (including, without limitation, collections of
Accounts arising in connection with Borrower's retail operations,
arising in connection with the sales of Borrower's Inventory and
products or arising from any other business activity conducted by
Borrower; collections received in respect of Borrower's
installment payment agreements; dividends, distributions and
other proceeds of Investments; amounts received in payment of
leases, sale proceeds (whether in the ordinary course of
business, from sales of tangible Assets, or otherwise);
refinancing proceeds; or amounts in respect of any other
obligation owed by any third party to Borrower) shall, promptly
upon receipt thereof, be delivered, in kind and duly endorsed
with recourse to Borrower, either to Bank or to a Depository Bank
(as defined in a Depository Bank Agreement of the kind defined
below). If Receipts are delivered to a Depository Bank, such
delivery will be for deposit into a blocked, special-purpose
account of Borrower denominated "Gottschalks Cash Collateral
Account" (each a "Local Cash Collateral Account"), pursuant to a
Depository Bank Agreement, in form and substance acceptable to
Bank, to be entered into between Borrower, a Depository Bank and
Bank as soon as practicable after the Closing Date (together with
any amendments, supplements, or modifications thereof, a
"Depository Bank Agreement"). Borrower shall have no right to
make withdrawals from any Local Cash Collateral Accounts. Also
pursuant to the Depository Bank Agreements, all amounts on
deposit in each Local Cash Collateral Account (subject to the
provisions of the Depository Bank Agreement) shall be transferred
as often as agreed among Borrower, Bank and each Depository Bank,
but in any event no less often than every three (3) Business
Days, either directly or through an intermediate concentration
account, to Bank for deposit into an account of Borrower
maintained with Bank denominated "Gottschalks Cash Collateral
Concentration Account" (the "Cash Concentration Account"). If
Receipts are delivered directly to Bank, they will be deposited
into the Cash Concentration Account or a Receivables Account (as
defined below), as appropriate. Borrower shall have no right to
make withdrawals from the Cash Concentration Account (although
under certain circumstances it may direct that amounts be
transferred therefrom in accordance with Section 3.02(b) hereof)
or the Receivables Account maintained with Bank. Notwithstanding
anything to the contrary contained in this Section 3.01, all
Receipts constituting proceeds of Borrower's Receivables shall be
deposited into separate, special-purpose, blocked accounts
maintained with Bank and each Depository Bank for the benefit of
the Trust (the "Receivables Accounts"). Funds in the Receivables
Accounts shall generally be subject to the same provisions
regarding Borrower's access and transfer to Bank as are
applicable to the Local Cash Collateral Accounts.
Section 3.02. Uses of Funds in Cash Concentration Account. Bank
shall apply the amounts in the Cash Concentration Account on any
day in the following order (as applicable):
(a) Application to Obligations. Subject to the Barclays
Intercreditor Agreement and Section 9.03 hereof, if there are any
Obligations due and payable on such date, first, to pay any
amounts due and payable under Sections 10.01 and 10.02 hereof;
second, to pay any interest accruing after the occurrence of an
Event of Default hereunder; third, on each Interest Payment Date
(or, if interest shall not have been paid on any Interest Payment
Date because funds were not available on such Interest Payment
Date, on any date after such Interest Payment Date), first to
interest and then to principal of the Loans in accordance with
the amortization schedule provided for in Section 2.06(a) hereof;
fourth, to pay any other unpaid Obligations of Borrower that are
then due. Bank agrees, on a monthly basis, to provide Borrower
with a written summary of the amounts applied pursuant to this
Section 3.02(a).
(b) Use of Cash When No Obligations Due and Payable. If (i)
there are no Obligations or Barclays Obligations due and payable
on such date (or if all Obligations due and payable on such date
have been repaid in accordance with subsection (a) above), (ii)
no Event of Default has occurred and is continuing as of such
date, and (iii) the Loans hereunder have not been accelerated,
then Borrower may instruct Bank that amounts in the Cash
Concentration Account be either (x) invested at the direction of
Borrower in Permitted Investments and/or (y) for the purpose of
covering clearing checks deposited into the account of Borrower
in Bank denominated the "Gottschalks Disbursement Account" (the
"Disbursement Account"). Each such request by Borrower shall be
deemed to constitute a certification by Borrower that no Event of
Default exists as of the date of such request.
(c) Funds in the Receivables Account at Bank. Borrower
acknowledges and agrees that Bank shall disburse funds deposited
into a Receivables Account at Bank only in accordance with the
instructions of the Trust.
ARTICLE IV
CONDITIONS TO NEW TERM LOAN
Section 4.01. Conditions Precedent to New Term Loan on Closing
Date. Bank's agreement to make the New Term Loan on the Closing
Date shall be subject to satisfaction of all of the following
conditions precedent:
(a) Certain Loan Documents. Bank shall have received all of the
following documents, each of which shall be duly executed by the
appropriate Person and in form and substance satisfactory to Bank
and its counsel:
(i) This Restated Agreement, together with all required
Schedules hereto, which are in each case complete and correct in
all material respects as of the Closing Date;
(ii) The New Term Note, payable to the order of Bank;
(iii) The First Amendment to Security Agreement;
(iv) The duly executed authorization of Teachers to Wells Fargo
Bank, N.A., as collateral agent for Teachers and Bank,
("Collateral Agent"), to release all Liens of Collateral Agent on
Borrower's Assets upon payment to Teachers of all amounts due and
owing on the Teachers Loan;
(v) The Barclays Intercreditor Agreement;
(vi) Duly executed deeds of trust with assignments of rents and
fixture filings in favor of Bank with respect to all of the real
property Assets owned by Borrower as of the Closing Date
(collectively, the "Deeds of Trust"); and
(vii) The Unsecured Environmental Indemnity.
(b) Certain Corporate Documentation. With respect to Borrower,
Bank shall have received:
(i) a certificate of good standing from the Secretary of State
of the State of Delaware;
(ii) certified copies of Borrower's articles of incorporation and
by-laws and any amendments thereto;
(iii) certified copies of corporate resolutions authorizing
the execution, delivery and performance of any Loan Document to
which it is a party and the identity, authority and capacity of
each Responsible Officer thereof authorized to act on its behalf;
and
(iv) a tax clearance certificate from the appropriate tax
authority of the State of Delaware.
(c) Legal Opinion Munger, Tolles & Olson and Local Counsel.
Bank shall have received a legal opinion dated the Closing Date
addressed to Bank from Munger, Tolles & Olson, counsel to
Borrower, in substantially the form attached hereto as Exhibit
4.01A. Bank shall also have received legal opinions dated the
Closing Date and addressed to Bank, in form and substance
satisfactory to Bank, from Oregon and Washington counsel to
Borrower.
(d) Financial Information. Bank shall have received copies of
the financial information described in Section 5.03 hereof, and
the financial status of Borrower disclosed therein shall not show
a material adverse change from the date of the Annual Statement
on Form 10-K, or the Quarterly Statement on Form 10-Q, as the
case may be, filed by Borrower with the SEC most recently before
the Closing Date.
(e) Certain Corporate Officers' Certificates. Bank shall have
received:
(i) A certificate, in substantially the form attached hereto as
Exhibit 4.01B, signed by a Responsible Officer of Borrower, dated
the Closing Date, certifying, after due inquiry, (x) that the
representations and warranties herein contained as to Borrower
are true and correct in all material respects, as if made on and
as of the Closing Date (except to the extent that such
representations and warranties reflect changes brought about by
the transactions contemplated or permitted hereby), (y) that no
Event of Default or Unmatured Event of Default has occurred and
is continuing or would result from the making of the New Term
Loan or continuation of the Existing Term Loan on the Closing
Date, and (z) that no material adverse change in the business,
Assets (in the aggregate), results of operations or financial
condition of Borrower shall have occurred since the date of
Borrower's then most recent quarterly financial reports; and
(ii) A certificate, in substantially the form attached hereto as
Exhibit 4.01C, of the Secretary of Borrower dated the Closing
Date certifying, among other things, (A) the names and true
signatures of the officers of Borrower authorized to sign the
Loan Documents executed by Borrower, (B) the by-laws of Borrower
as in effect on the date of such certification, (C) the
resolutions of Borrower's Board of Directors approving and
authorizing the execution, delivery and performance of the Loan
Documents executed by Borrower, and (D) that such resolutions
have not been modified or rescinded and remain in full force and
effect.
(f) Corporate Proceedings. All corporate proceedings taken or
to be taken by Borrower in connection herewith and with each of
the other Loan Documents, shall be satisfactory to Bank in its
sole and absolute discretion, and Bank shall have received
original or certified copies of such documents as Bank may
request.
(g) Existing Revolver, Existing Term Loan Interest and Expenses
Paid; Outstanding Letters of Credit Collateralized. Borrower
shall have paid to Bank in full on or before the Closing Date (i)
all of the outstanding principal of, and accrued but unpaid
interest thereon, and all other amounts due and payable with
respect to, the Existing Revolver, (ii) all accrued but unpaid
interest on the Existing Term Loan and (iii) all amounts then
payable to Bank pursuant to Sections 10.01(a) and (b) hereof
which shall have been presented for payment. Any outstanding
undrawn Letters of Credit (as defined in the Existing Credit
Agreement), a list of which is set forth on Schedule 4.01 hereto,
which have not expired prior to the Closing Date shall have been
fully cash collateralized in a manner satisfactory to Bank in its
sole determination; provided, however, that the Letter of Credit
(NBS 181831) in favor of American Insurance Co. in the amount of
$3,500,000 shall have been replaced by a letter of credit issued
by Barclays and the Letter of Credit (NBS 181831) shall have been
returned to Bank.
(h) Representations and Warranties. All of the representations
and warranties of Borrower contained in Article V hereof and in
any other Loan Document shall be true and correct in all material
respects on and as of the Closing Date as though made on and as
of that date (except to the extent that such representations and
warranties reflect changes brought about by the transactions
contemplated or permitted hereby).
(i) No Default. No Event of Default or Unmatured Event of
Default shall have occurred and be continuing or would result
from the making of the New Term Loan or continuation of the
Existing Term Loan.
(j) No Prohibition or Adverse Litigation. Except for litigation
pending as of the Closing Date that has been disclosed to Bank
(as set forth on Schedule 5.04 hereto), no Applicable Law shall
prohibit, and no litigation shall be pending or threatened which
in Bank's sole judgment would, if adversely determined, prevent
or make unlawful, or impose any material adverse condition upon,
any transaction contemplated hereby or by any other Loan
Document, or Borrower's ability to perform its Obligations
hereunder or thereunder.
(k) No Material Adverse Change. No material adverse change, as
determined by Bank in its sole and absolute discretion, shall
have occurred since January 31, 1994, with respect to the
financial condition or business of Borrower, and there shall have
been no material decline, as determined by Bank in its sole and
absolute discretion, in the market value of the Collateral or as
to a substantial or material portion of Borrower's Assets.
(l) Title Insurance. Bank shall have received a binding
commitment from a title insurance company acceptable to it to
issue title insurance policies, with only such exceptions as are
satisfactory to Bank, with respect to all of the properties of
Borrower subject the Deeds of Trust.
(m) General. All other documents, certificates, consents,
opinions, and legal matters in connection with the transactions
contemplated by this Restated Agreement shall have been delivered
or executed or recorded in form and substance satisfactory to
Bank, and Bank shall have received all such counterpart originals
or certified copies thereof as Bank may request.
Section 4.02. Condition Subsequent. Bank's agreement to
maintain the Loans after the Closing Date shall be subject to
satisfaction of the following condition subsequent: Borrower
shall have delivered to Bank within thirty (30) days after the
Closing Date Depository Bank Agreements executed by Bank of
America, U.S. Bank of Washington, and United States National Bank
(together with any other necessary Depository Bank Agreements).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce Bank to enter into this Restated Agreement,
Borrower makes the representations and warranties set forth in
this Article V. Each of the representations set forth in this
Article V shall be true, correct and complete in all material
respects at and as of the Closing Date and shall remain true,
correct and complete until all Obligations (other than Residual
Obligations) have been paid in full (except to the extent that
such representations and warranties are affected by transactions
contemplated or permitted hereby).
Section 5.01. Organization, Powers and Good Standing.
(a) Organization and Powers. Borrower is a corporation duly
organized and existing and in good standing under the laws of the
State of Delaware, and is qualified or licensed to do business
and is in good standing as a foreign corporation in all
jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so
licensed could have a material adverse effect on Borrower.
(b) Subsidiaries. Except as set forth on Schedule 5.01A hereto,
Borrower does not have any Subsidiaries nor does it own or hold,
directly or indirectly, any Capital Stock or equity security of,
any joint venture interest in, or any equity interest in, any
corporation or business.
(c) Partnerships and Joint Ventures. Except as set forth on
Schedule 5.01B hereto, Borrower is neither a general partner of
nor a limited partner of any general or limited partnership or a
joint venturer in any Joint Venture.
Section 5.02. Authorization, Binding Effect, No Conflict, Etc.
(a) Authorization by Borrower. As of the Closing Date, the
execution, delivery and performance by Borrower of each Loan
Document to which it is a party has been duly authorized by all
necessary corporate action on the part of Borrower.
(b) Execution and Delivery by Borrower. Each Loan Document to
which it is a party has been duly executed and delivered by
Borrower.
(c) Binding Obligations of Borrower. Each Loan Document to
which it is a party is the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its
terms, except as enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium or similar
laws relating to creditors' rights generally, or (ii) general
principles of equity relating to the granting of specific
performance and other equitable remedies as a matter of judicial
discretion (without regard to whether enforceability is
considered in a proceeding at equity or at law).
(d) No Conflict. Except as set forth on Schedule 5.02 hereto,
the execution, delivery and performance by Borrower of each Loan
Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not
(i) require any consent or approval not heretofore obtained of
any director, stockholder, security holder or creditor, (ii)
violate or conflict with any provision of the certificate of
incorporation or by-laws of Borrower, or any amendments thereto
or any provision of Applicable Law binding on Borrower, (iii) to
the extent a material adverse effect on the business, Assets (in
the aggregate), results of operations or financial condition of
Borrower would occur as a result of any such conflict, conflict
with, result in a breach of, or constitute (or, with the giving
of notice or lapse of time or both, would constitute) a default
under, or cause or permit the acceleration of any obligation owed
under, or require the approval or consent of any Person pursuant
to, any Contractual Obligation of Borrower, or (iv) except for
Liens permitted under Section 7.01 hereof, result in or require
the creation or imposition of any Lien or Right of Others upon or
in respect of any Asset now owned or leased or hereafter acquired
of Borrower.
(e) Governmental Approvals. No Governmental Approval is or will
be required in connection with the execution, delivery and
performance by Borrower of each Loan Document to which it is a
party or the transactions contemplated hereby or thereby or to
ensure the legality, validity or enforceability hereof or thereof
other than those which, if not obtained, would not have a
material adverse effect upon the business, Assets (in the
aggregate), results of operations or financial condition of
Borrower, except that filing and/or recording may be required to
perfect certain of Bank's security interests granted under the
Collateral Documents.
Section 5.03. Financial Information. The balance sheet of
Borrower as at January 31, 1994 and related statements of
operations and cash flow for the three-month period then ended
certified by a Responsible Officer of Borrower, a copy of which
has been delivered to Bank, were prepared in accordance with GAAP
and accurately present the financial position of Borrower as of
such date and the results of operations and cash flow for the
period covered thereby, subject only to normal year-end audit
adjustments. Borrower has no material obligation or liability of
a nature required to be disclosed on a balance sheet prepared in
accordance with GAAP that is not disclosed by the financial
statements referred to above.
Section 5.04. Litigation. Except as set forth on Schedule 5.04
hereto, there are no actions, suits or proceedings pending or, to
the best knowledge of Borrower, threatened against or affecting
Borrower or any of its Assets before any Governmental Authority
(a) in which there is a reasonable possibility of an adverse
determination that would have a material adverse effect on the
business, Assets (in the aggregate), results of operations or
financial condition of Borrower, or (b) which in any manner
questions the validity or the enforceability of the Existing
Credit Agreement, the Existing Notes, the Collateral Documents,
this Restated Agreement or any other Loan Document.
Section 5.05. Applicable Law. Borrower is not in violation of
any Applicable Law where such violation would have a material
adverse effect on the business, Assets (in the aggregate),
results of operations or financial condition of Borrower.
Section 5.06. Taxes. As of the Closing Date, Borrower (and, to
the extent required, each of its former and current Subsidiaries)
has filed all United States Federal income tax returns and all
other Tax returns required to be filed by it and has paid, or
made provision for the payment of, all Taxes shown to be due on
the returns so filed as well as all other assessments,
governmental charges and other Taxes which have become due,
except such assessments, charges and other Taxes, if any, that
are being contested in good faith and as to which adequate
reserves have been established in accordance with GAAP. Borrower
has established and is maintaining adequate reserves for Tax
liabilities, if any, in accordance with GAAP. Other than as
previously disclosed to Bank, Borrower does not know of any
proposed, asserted or assessed Tax deficiency against it that
would be material to the financial condition of Borrower.
Borrower is not a party to or obligated under any Tax sharing or
similar agreement.
Section 5.07. Governmental Regulation.
(a) Status of Borrower. Borrower is not a "holding company," or
a "subsidiary company" of a "holding company," or an "affiliate"
of a "holding company" or a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended. Borrower is not an "investment
company" or an "affiliated person" of an "investment company" as
such terms are defined in the Investment Company Act of 1940, as
amended, and Borrower's right to use any particular Asset shall
not be materially adversely affected thereby. Borrower is not a
"public utility," an "electric utility," an "electric utility
holding company," a "public utility holding company," a "holding
company" or an "electrical corporation" or a subsidiary or
affiliate of any of the foregoing as such terms are defined in
the Public Utility Holding Company Act of 1935, the Federal Power
Act of 1920 and the Public Utility Regulatory Policies Act of
1978, each as amended.
(b) No Violation of Regulations. Neither the making of the
Loans hereunder nor the use of the proceeds thereof as
contemplated hereby will violate the Foreign Assets Control
Regulations, the Foreign Funds Control Regulations, the
Transaction Control Regulations, the Cuban Assets Control
Regulations, the Iranian Assets Control Regulations, the
Nicaraguan Trade Control Regulations, the Libyan Sanctions
Regulations or any other applicable regulation of the United
States Treasury Department (as defined in 31 C.F.R., Subtitle B,
Chapter V, as amended).
Section 5.08. Margin Regulations.
(a) Business of Borrower. Borrower is not engaged principally,
or as one of its important activities, in the business of
extending credit for the purposes of purchasing or carrying
Margin Stock.
(b) No Margin Stock. Borrower does not own any Margin Stock.
(c) Statements. Promptly upon the request of Bank, Borrower
will furnish Bank with a statement or statements in conformity
with the requirements of Federal Reserve Forms G-3 and/or U-1
referred to in certain of the Margin Regulations.
Section 5.09. Employee Benefit Plans.
(a) List of Plans. Set forth on Schedule 5.09 hereto is a
complete and accurate list of all Plans maintained or contributed
to by Borrower or any of its ERISA Affiliates.
(b) Compliance. Except as previously disclosed to Bank,
Borrower is in compliance in all material respects with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Plans and
Multiemployer Plans. There has been no Prohibited Transaction to
which Borrower is a party with respect to any Plan which could
result in any material liability of Borrower. Borrower has made
any and all payments required to be made under any agreement
relating to a Multiemployer Plan or any law pertaining thereto.
(c) Amount of Liabilities. Liabilities (whether or not vested)
under all Plans do not exceed the Assets thereunder by more than
$1,000,000.
(d) Multiemployer Plans. Borrower has not incurred, and does
not reasonably expect to incur, any material withdrawal liability
under ERISA to any Multiemployer Plan. Borrower has not been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan has been terminated, within the meaning of
Title IV of ERISA, and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, with the
meaning of Title IV of ERISA.
Section 5.10. Title to Property; Liens. Borrower has good and
marketable title to, or valid and subsisting leasehold interests
in, all of its real property Assets, and good title to or valid
and subsisting leasehold interests in substantially all of its
other Assets reflected in its books and records as being owned or
leased by it, and none of such Assets is subject to any Lien or
Right of Others, except for (i) Permitted Liens, (ii) in the
Barclays Liens and (iii) the Trust Liens.
Section 5.11. No Materially Adverse Agreements; No Defaults.
(a) No Materially Adverse Agreements. Except as set forth on
Schedule 5.11 hereto, Borrower is neither a party to nor bound by
any Contractual Obligation which could materially and adversely
affect the business, Assets (in the aggregate), results of
operations or financial condition of Borrower.
(b) No Defaults. Except as previously disclosed to Bank,
Borrower is not in material default in the performance or
observance of any of the covenants or conditions contained in any
of its Contractual Obligations to the extent that an Event of
Default under Section 9.01(b) hereof could arise as a result
thereof.
(c) No Other Liabilities; No Material Adverse Changes. Except
as set forth in Schedule 5.11 hereto, Borrower does not have any
material liability or material contingent liability not reflected
or disclosed in the financial statements or notes thereto
described in Section 5.03 hereof and there has been no material
adverse change in the business, Assets (in the aggregate),
results of operations, or financial condition of Borrower,
between the date of the financial statements described in Section
5.03 and the date hereof.
Section 5.12. Environmental Condition. Except as set forth on
Schedule 5.12 hereto, Borrower has obtained all permits, licenses
and other authorizations which are required under all
Environmental Protection Statutes, except to the extent failure
to have any such permit, license or authorization could not have
a material adverse effect on the business, Assets (in the
aggregate), results of operations or financial condition of
Borrower. Borrower is in compliance with all terms and
conditions of the permits, licenses and authorizations required
to be obtained by it, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in
those laws or contained in any regulations, code, plan, order,
decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, except to the extent
that failure so to comply could not have a material adverse
effect on the business, Assets (in the aggregate), results of
operations or financial condition of Borrower.
Section 5.13. No Defaults. No Event of Default or Unmatured
Event of Default has occurred and is continuing.
Section 5.14. Indebtedness. Borrower has no Indebtedness
outstanding other than Indebtedness of the kinds not prohibited
by Section 7.02.
Section 5.15. Location of Assets and Chief Executive Offices.
The chief executive office of Borrower is located at 7 River Park
Plaza East, Fresno, California 93720. The real property and
tangible personal property of Borrower is located only at the
locations identified on Schedule 5.15 hereto, as the same may be
updated from time to time.
Section 5.16. Disclosure. The information contained in the
documents, certificates and written statements furnished to Bank
by or on behalf of Borrower with respect to the business, Assets,
results of operations or financial condition of Borrower for use
in connection with the transactions contemplated by this Restated
Agreement, taken as a whole, is true in all material respects and
does not omit to state material facts necessary in order to make
the statements therein not misleading. To the best knowledge of
Borrower, there is no fact which Borrower has not disclosed to
Bank in writing which materially and adversely affects or, so far
as Borrower can now foresee, is reasonably likely to prove to
affect materially and adversely the business, operations, Assets
(in the aggregate), results of operations, or financial condition
of Borrower or Borrower's ability to perform its Obligations
under the Loan Documents.
Section 5.17. Lien Priorities and Perfection. The Liens granted
by Borrower to Bank on Borrower's owned real property pursuant to
the Deeds of Trust and on Borrower's personal property Assets
other than the personal property subject to the Barclays Liens
and the Trust Liens pursuant to the Existing Security Agreement
as amended by the First Amendment to Security Agreement are
validly created, perfected, and first priority Liens, subject
only to Permitted Liens, and secure Borrower's Obligations. The
Liens granted by Borrower to Bank in Borrower's personal property
Assets which are subject to the Barclays Liens pursuant to the
Existing Security Agreement as amended by the First Amendment to
Security Agreement are validly created, perfected, and second
priority Liens, subject only to Permitted Liens. All necessary
steps requested by Bank have been taken to fully perfect and to
maintain fully perfected the Liens of Bank on the Collateral, to
the fullest extent that such Liens may be perfected by the filing
and/or recording of financing statements pursuant to the Uniform
Commercial Code, subject only to the requirement that
continuation statements be filed.
Section 5.18. Licenses, Patents, Trademarks, and Intellectual
Property. Borrower owns, or (except with respect to computer
software) possesses the unrestricted right to use, all necessary
patents, patent rights, licenses, trademarks, trademark rights,
trade names, trade name rights, copyrights, permits, memberships,
contracts, and franchises in order for it to conduct its business
and to operate its Assets substantially as now or as proposed to
be conducted or operated, as the case may be, without known
conflict with any Rights of Others, and all of same are valid and
subsisting, except where such lack of validity or subsistence
could not have a material adverse effect on the business, Assets
(in the aggregate), results of operations, or financial condition
of Borrower. Borrower has not been charged nor is it threatened
to be charged with any infringement of, nor has it to its
knowledge infringed, any unexpired trademark, trademark
registration, trade name, patent, copyright, copyright
registration, or other proprietary right of any other Person
which charge or threat could have a materially adverse effect
upon the business, Assets (in the aggregate), results of
operations, or financial condition of Borrower.
Section 5.19. Fire and Explosion. None of the business, Assets
or operations of Borrower is presently affected by any fire,
explosion or accident, by any strike, lockout or other labor
dispute, by any drought, storm, hail, earthquake, embargo, act of
God or of the public enemy or other casualty (irrespective of
whether covered by insurance), which materially and adversely
affects the business, Assets (in the aggregate), operations or
financial condition of Borrower.
Section 5.20. Fiscal Year. Borrower operates on a fiscal year
ending on the Saturday which falls closest to January 31 of each
year, the fiscal months of which are as has been disclosed to the
Bank in writing.
Section 5.21. Employee Matters. As of the date hereof, there is
no strike, work stoppage or labor dispute with any union or group
of employees pending or overtly threatened involving Borrower.
Section 5.22. No Subordination. There is no agreement,
indenture, contract or instrument to which Borrower is a party or
by which Borrower may be bound that requires subordination in
right of payment of any of the Obligations thereto.
Section 5.23. Subordinated Debt. The Obligations are hereby
designated by Borrower as "Senior Debt" for purposes of all of
Borrower's other Indebtedness, and all Subordinated Debt is, and
at all times shall be, subordinate in right of payment to the
Obligations.
ARTICLE VI
AFFIRMATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that until all Obligations of
Borrower other than Residual Obligations are paid in full,
Borrower shall perform each and all of the following covenants:
Section 6.01. Financial Statements and Other Reports. Borrower
shall deliver to Bank at Borrower's sole expense:
(a) Annual Financial Statements. As soon as practicable but in
any event within one hundred five (105) days after the end of
each Fiscal Year of Borrower, an unqualified audited consolidated
financial statement of Borrower, prepared by a certified public
accountant in accordance with GAAP, to include balance sheet,
income statement, statement of cash flow, statement of changes in
working capital, reconciliation of net worth and footnotes,
together with a copy of the management letter prepared by such
certified public accountant in conjunction with its annual audit
and review of Borrower's records.
(b) 10-Q Reports. As soon as practicable but not later than
forty-five (45) days after and as of the end of each fiscal
quarter of Borrower, a copy of Borrower's 10-Q report filed with
the SEC.
(c) Quarterly Store Operating Statements. As soon as
practicable but in any event within thirty (30) days after the
end of each fiscal quarter of Borrower, an operating statement
for each store location prepared by Borrower.
(d) Monthly Financial Statements. Not later than thirty (30)
days after, and as of, the end of each month, a financial
statement of Borrower, prepared by Borrower, to include balance
sheet and income statement, and a certificate of compliance
signed by a Responsible Officer of Borrower.
(e) Certificate re Defaults. Promptly (but in no event later
than five (5) days after the occurrence thereof), notice in
reasonable detail of the occurrence of any Unmatured Even of
Default or Event of Default.
(f) ERISA Liability. Promptly (but in no event later than five
(5) days after the occurrence thereof), notice to Bank in
reasonable detail of the occurrence and nature of any Reportable
Event or Prohibited Transaction, or any funding deficiency with
respect to any Plan.
(g) ERISA Notices. Promptly, copies of (i) all notices received
by Borrower of the PBGC's intent to terminate any Plan
administered or maintained by Borrower or any of its ERISA
Affiliates or to have a trustee appointed to administer any such
Plan; (ii) at the request of Bank, each annual report (IRS Form
5500 Series) and all accompanying schedules, the most recent
actuarial reports, the most recent financial information
concerning the financial status of each Plan administered or
maintained by Borrower or any of its ERISA Affiliates, and
schedules showing the amounts contributed to each such Plan by or
on behalf of Borrower or in which any of its personnel
participate or from which such personnel may derive a benefit,
and each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by any member of the Controlled Group
with the IRS with respect to each such Plan;
(h) Litigation. Promptly give notice to Bank in writing, in
reasonable detail, of any litigation pending or threatened
against Borrower seeking relief in excess of Five Hundred
Thousand Dollars ($500,000);
(i) Amendments. Promptly upon the availability thereof, copies
of all amendments to the articles of incorporation or by-laws of
Borrower;
(j) Environmental Notices. Promptly, and in any event within
thirty (30) calendar days after the receipt thereof by Borrower,
a copy of any notice, summons, citation, directive, letter, or
other form of communication from the EPA, or any other
governmental agency or instrumentality, in any way concerning any
material action or omission on the part of Borrower in connection
with Hazardous Waste or Hazardous Substances, or concerning the
filing of a Lien upon, against or in connection with Borrower or
any of its Assets, in connection with a Super Fund;
(k) Audit Reports. Promptly upon request by Bank, copies of any
detailed audit reports submitted to Borrower by its independent
accountants in connection with the accounts or books of Borrower,
or any audit of any of them;
(l) Changes in Name, etc. Promptly (but in any event not later
than five (5) days after the occurrence of such change), notice
in reasonable detail of any change in name, identity or corporate
structure of Borrower.
(m) Insurance Matters. Promptly (but in any event not later
than five (5) days after the occurrence of such termination or
cancellation), notice in reasonable detail of any termination or
cancellation of any insurance policy which Borrower is required
to maintain, or any uninsured or partially uninsured loss through
liability or property damage, or through fire, theft or any other
cause affecting Borrower's Assets, in excess of an aggregate of
One Million Dollars ($1,000,000).
(n) Other Information. From time to time such additional data
and information as Bank may request.
Section 6.02. Records and Inspection. Borrower shall maintain
adequate books, records and accounts as may be required or
necessary to permit the preparation of financial statements in
accordance with sound business practices and GAAP and in material
compliance with all applicable requirements of any Governmental
Authority with regulatory jurisdiction over Borrower. Borrower
shall permit such Persons as Bank may designate, at reasonable
times and as often as may be reasonably requested, (a) to visit
and inspect any properties of Borrower, (b) to inspect and copy
or make abstracts from its books and records, (c) to discuss with
its officers and its independent accountants, its business,
Assets, liabilities, prospects, results of operations and
financial condition, and (d) to examine and audit (including
quarterly field audits) Borrower's books and records. Bank will
use its best efforts, consistent with its normal business
practices, to maintain the confidentiality of any information so
received.
Section 6.03. Corporate Existence, Etc. Borrower will preserve
and maintain its corporate existence and all of its rights,
privileges and franchises; conduct its business in an orderly,
efficient and regular manner; and comply with the provisions of
all documents pursuant to which Borrower is organized and/or
which govern Borrower's continued existence and with Applicable
Law.
Section 6.04. Taxes and Other Liabilities. Borrower shall pay
and discharge when due any and all Indebtedness, obligations,
assessments and Taxes, both real and personal and including
federal and state income taxes, except such as Borrower may in
good faith and diligently contest or as to which a bona fide
dispute may arise, provided that provision is made to Bank's
satisfaction for eventual payment thereof in the event that it is
found that the same is an obligation of Borrower.
Section 6.05. Facilities. Borrower shall keep all of its Assets
useful or necessary to Borrower's business in good repair and
condition, and from time to time make necessary repairs, renewals
and replacements thereto so that Borrower's Assets shall be fully
and efficiently preserved and maintained.
Section 6.06. Maintenance of Insurance. Borrower shall maintain
and keep in force insurance of the types and in the amounts
customarily carried in lines of business similar to Borrower's
including, but not limited to, fire, public liability, property
damage and workers' compensation insurance, carried with
companies and in amounts satisfactory to Bank, and deliver to
Bank from time to time, as Bank may request, schedules setting
forth all insurance then in effect.
Section 6.07. Conduct of Business; Consumer Credit Requirements.
Borrower will not engage in any business other than the business
in which Borrower is engaged as of the date hereof or any
business or activities substantially similar or related thereto.
Borrower shall conduct its business in compliance in all material
respects with Applicable Law and all Contractual Obligations,
except where Borrower's failure to so comply would not have a
material adverse effect on the business, Assets (in the
aggregate), results of operations or financial condition of
Borrower. Without limiting the generality of the foregoing,
Borrower shall perform all Contractual Obligations or other
obligations, give all required Federal or State disclosures
(consumer or otherwise) required in connection with Borrower's
activities as a creditor, comply with the Federal Equal Credit
Opportunity Act and perform any other statutory obligations
arising in connection with Borrower's extension of consumer
credit. It is expressly agreed and acknowledged by Borrower that
Borrower is obligated to maintain its existence and to perform
all such statutory obligations and that none of such statutory
obligations has been assumed by Bank.
Section 6.08. Further Assurances. At any time or from time to
time upon the request of Bank, Borrower shall execute and deliver
such further documents and do such other acts and things as Bank
may request in order to effect fully the purpose of this Restated
Agreement, the other Loan Documents and any other agreement
contemplated hereby and thereby and to provide for payment with
respect to the Loans in accordance with the terms of this
Restated Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, Borrower agrees that at
any time, and from time to time, upon the request of Bank,
promptly to execute and deliver, or cause to be executed and
delivered, to Bank, Collateral Documents covering any or all of
the Assets of Borrower, as requested, to secure payment and
performance of the Obligations, or such portion thereof as may be
specified by Bank, whether or not an Unmatured Event of Default
or an Event of Default shall have occurred and be continuing. It
is understood hereby that, subject to Section 10.25 hereof, Bank
shall be entitled, at its option, to be secured by any and all
Assets of Borrower (other than the Receivables).
Section 6.09. Future Information. All material data,
certificates, reports, statements, documents and other
information (except projections) furnished to Bank by a
Responsible Officer of Borrower in connection with this Restated
Agreement or any amendment or modification of, or waiver under,
this Restated Agreement, shall, at the time the information is so
furnished (a) be complete and correct in all material respects to
the extent necessary to give Bank sufficient and accurate
knowledge of the subject matter thereof, (b) not contain any
untrue statement of a material fact and (c) not omit to state a
material fact necessary in order to make the statements contained
therein, taken as a whole (together with all such data,
certificates, reports, statements, documents and information
previously furnished), not misleading.
Section 6.10. Compliance with ERISA. Borrower shall take no
action which would render the representations and warranties set
forth in Section 5.09 of this Restated Agreement inaccurate in
any material respect.
Section 6.11. Environmental Protection Statutes; Other
Regulations. Borrower shall comply in all material respects,
with all Environmental Protection Statutes, and all laws,
regulations, or directives with respect to equal employment
opportunity and employee safety in all jurisdictions in which
Borrower does business; provided, however, that this Section 6.11
shall not prevent Borrower from, in good faith and with
reasonable diligence, contesting the validity or application of
any such laws or regulations by appropriate legal proceedings.
Section 6.12. Subsidiaries. Promptly notify Bank of the
existence of any new Subsidiary of Borrower and, except as
otherwise noted in the immediately succeeding sentence, cause to
be executed and delivered to Bank such Loan Documents, Collateral
Documents, resolutions, guaranties and other agreements as
required by Bank to be executed by such Subsidiary. The parties
agree that to the extent Borrower has Subsidiaries (other than
Receivables Corporation), Bank shall have the option of requiring
each such Subsidiary to become a party to this Restated
Agreement, to execute a guaranty of Borrower's Obligations
hereunder, and to pledge its Assets to secure repayment of the
Obligations.
Section 6.13. Payment of Trade Creditors. Pay Borrower's trade
debt on the trade terms customarily entered into in the ordinary
course of business, provided that Borrower shall not be required
to pay items of trade debt which it is diligently contesting in
good faith by appropriate proceedings. Bank and Borrower agree
that a breach of this Section 6.13 shall be deemed to exist,
except as provided in the immediately preceding sentence, when an
item of trade debt in excess of $50,000 remains unpaid for more
than two (2) Business Days after (a) a trade creditor of Borrower
ceases shipment of goods as a result of non-payment or (b) a
trade creditor of Borrower threatens to bring an action for
non-payment (provided, however, that Bank and Borrower
acknowledge that any breach of this Section 6.13 is subject to a
twenty-day cure period pursuant to Section 9.01(e)(ii) hereof).
Section 6.14. Notice of Change in Management. Borrower shall
provide notice to Bank, promptly (but in any event not later than
five (5) days after such change), of any change in the staffing
of the positions held by persons identified herein as Responsible
Officers of Borrower.
Section 6.15. Financial Condition. Borrower shall maintain its
financial condition as follows, using GAAP except to the extent
GAAP is modified by the definitions set forth in Section 1.01
hereof:
(a) Quick Ratio. Borrower's Quick Ratio shall not be less than
.65:1.0 as of the end of each Fiscal Year of Borrower.
(b) Tangible Net Worth. At the end of each quarter set forth
below, Borrower's Tangible Net Worth shall not be less than the
amount set forth opposite such quarter below:
First Quarter FY 1994
$72,000,000
Second Quarter FY 1994
$70,000,000
Third Quarter FY 1994
$69,000,000
Fourth Quarter FY 1994
$74,000,000
First Quarter FY 1995
$72,000,000
Second Quarter FY 1995
$72,000,000
Third Quarter FY 1995
$72,000,000
Fourth Quarter FY 1995
$75,000,000
First Quarter FY 1996
$73,000,000
Second Quarter FY 1996
$73,000,000
(c) Ratio of Total Debt To Tangible Net Worth. Borrower's Ratio
of Total Debt to Tangible Net Worth shall not be greater than
2.4:1.0 as of the end of each month.
(d) Coverage Ratio. Borrower's Coverage Ratio shall not be less
than 1.10:1.00, calculated as of the end of each quarter for the
four quarters then ended (provided, however, that no such
calculation shall take into account any quarter prior to the
third quarter of Fiscal Year 1993).
ARTICLE VII
NEGATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that until all Obligations of
Borrower, other than Residual Obligations, are paid in full,
Borrower shall perform each and all of the following covenants
applicable to it:
Section 7.01. Liens. Except for (a) Permitted Liens, (b) the
Barclays Liens and (c) the Trust Liens, Borrower shall not
create, incur, assume or permit to exist any Lien on or with
respect to any Asset of Borrower, whether now owned or hereafter
acquired, or any income or profits therefrom or rights in respect
thereof; provided, however, that if, notwithstanding this Section
7.01, any Lien which this Section 7.01 prohibits shall be created
or arise without the prior written consent of Bank, the
Obligations shall automatically be secured by such Lien with
priority over the other Indebtedness secured thereby, Borrower
will take or cause to be taken all such action as may be
requested by Bank to confirm and protect the existence and
priority of such Lien in favor of Bank, and the holder of such
other Indebtedness, by accepting such Lien, shall be deemed to
have agreed that its Lien shall be subordinated to the Lien in
favor of Bank, whether or not Bank's security interest shall be
perfected; provided further, that notwithstanding such priority
in favor of Bank, the existence of such Lien shall constitute a
default by Borrower in the performance or observance of this
Section 7.01. To the extent necessary, this Restated Agreement
shall be construed to grant such a security interest.
Section 7.02. Indebtedness. Borrower shall not after the date
hereof create, incur, assume, guaranty or otherwise thereafter
become liable with respect to, any Indebtedness, except:
(a) Obligations. The Obligations;
(b) Barclays and Trust Obligations. The Barclays Obligations
and the Trust Obligations;
(c) Investments. All Indebtedness arising out of or related to
the making of Investments permitted under Section 7.04 hereof;
(d) Permitted Liens. All Indebtedness secured by Permitted
Liens;
(e) Capital Expenditures. All Indebtedness incurred in
connection with the making of Capital Expenditures not prohibited
by Section 7.05 hereof;
(f) Contingent Obligations. Indebtedness arising as a result of
Contingent Obligations permitted to be incurred pursuant to
Section 7.12 hereof;
(g) E. Gottschalk IDB. Borrower's Indebtedness pursuant to the
E. Gottschalk Industrial Development Bond issued in 1985;
(h) Other Disclosed Indebtedness. Other Indebtedness of
Borrower existing as of, and disclosed by Borrower to Bank in
writing prior to, the Closing Date, as set forth on Schedule 7.02
hereto; and
(i) Other Permitted Indebtedness. Other Indebtedness in an
aggregate cumulative amount not exceeding One Million Dollars
($1,000,000) in any Fiscal Year.
Section 7.03. Restricted Payments. Except as otherwise
permitted by Section 7.04 or 7.07 hereof, Borrower shall not
declare, pay or make, or agree to declare, pay or make, any
Restricted Payments; provided, however, that Borrower may fund
Plans qualified under Section 401(k) of the Code for the accounts
of its employees, in an aggregate cumulative amount not to exceed
Five Hundred Twenty Thousand Dollars ($520,000) in any Fiscal
Year.
Section 7.04. Investments. Borrower shall not make any
Acquisition or make or own any Investment in any Person, except:
(a) Permitted Investments. Permitted Investments; and
(b) Existing Investments. Investments that exist on the Closing
Date.
Section 7.05. Capital Expenditures. Except as permitted by
Section 7.28 hereof and by Section 8.2(L) of the Barclays Loan
Agreement, and except with the prior written consent of Bank,
Borrower shall not make or incur obligations for any Capital
Expenditures in excess of Two Million Dollars ($2,000,000) in any
Fiscal Year. To the extent Capital Expenditures permitted under
this Section 7.05 are not made in any Fiscal Year, the unused
permitted amount may not be carried over to any succeeding Fiscal
Year.
Section 7.06. Restriction on Fundamental Changes. Borrower will
not make any substantial change in the nature of Borrower's
business, merge into or consolidate with any corporation or other
entity, or acquire all or substantially all of the Assets of any
corporation or other entity, or reclassify its Capital Stock,
liquidate, wind up or dissolve or sell, lease, transfer or
otherwise dispose of, in one transaction or a series of
transactions, all or substantially all of its business or Assets,
whether now owned or hereafter acquired.
Section 7.07. Transactions with Affiliates. Except for the sale
of the Receivables to Receivables Corporation pursuant to the
Receivables Purchase Agreement and for transactions listed on
Schedule 7.07 hereto, Borrower shall not enter into or permit to
exist, directly or indirectly, any material transaction
(including the purchase, sale, lease, or exchange of any Assets
or the rendering of any service) with any holder of five percent
(5%) or more of any class of equity securities of Borrower or any
of its Affiliates, or with any Affiliate of any such holder, on
terms that are less favorable to Borrower than those terms which
might be obtained at the time from Persons who are not such a
holder or Affiliate, or if such transaction is not one in which
terms could be obtained from such other Person, on terms that are
not negotiated in good faith on an arms' length basis.
Section 7.08. Prepayment of Indebtedness. Borrower shall not
voluntarily purchase, acquire, redeem or retire, make any payment
or distribution on account of, or reduce any Indebtedness, prior
to its originally stated maturity (or its stated maturity on the
date hereof in the case of Indebtedness outstanding on the date
hereof), or directly or indirectly become obligated to do any of
the foregoing by amending the terms thereof or otherwise, except
for:
(a) Obligations. Prepayments of the Obligations pursuant to
this Restated Agreement or the other Loan Documents;
(b) Barclays and Trust Obligations. Prepayments of the Barclays
Obligations and the Trust Obligations, in each case in accordance
with the terms thereof.
(c) Non-Recourse Debt. Prepayment of Non-Recourse Debt made
with the proceeds of any sale, assignment, transfer, lease or
other disposition of Assets encumbered to secure such
Non-Recourse Debt and of other Indebtedness that is permitted
hereby to be secured made with the proceeds of a permitted sale
or other disposition of Assets encumbered to secure such
Indebtedness; or
(d) Additional Prepayments. With respect to any such
Indebtedness, any such purchase, acquisition, redemption,
retiring, payment or distribution in an amount not exceeding Two
Hundred Thousand Dollars ($200,000) in any Fiscal Year.
Section 7.09. ERISA. Borrower shall not:
(a) Civil Penalty. Engage in any transaction which it knows or
has reason to know could subject any member of the Controlled
Group to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Code;
(b) Excess of Benefits over Assets. Permit the present value of
all benefits on a termination basis (whether or not vested) under
all Plans subject to Title IV of ERISA to exceed the current
value of the Assets of such Plans allocable to such benefits;
(c) Multiemployer Plans. Fail to make any payments to any
Multiemployer Plan that Borrower may be required to make under
any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(d) Termination. Voluntarily terminate any one or more of its
Plans, if such termination would result in the imposition of
Liens on any Asset of Borrower under Section 4068 of ERISA;
(e) Required Contributions. Fail to make required contributions
to any Plan subject to Section 412(n) of the Code that with the
passage of time reasonably could result in a Lien upon the Assets
of Borrower;
(f) Welfare Plan Liability. Create or suffer to exist any
liability with respect to Plans that are welfare plans within the
meaning of Section 3(1) of ERISA if, after immediately giving
effect to such liability, the aggregate annualized cost with
respect to such Plans for post retirement benefits for any fiscal
year would exceed Two Hundred Thousand Dollars ($200,000); or
(g) Amendments. Adopt an amendment to any Plan with respect to
which security is required under Section 307 of ERISA.
For purposes of this Section 7.09, the term "Controlled Group"
shall include any ERISA Affiliate of Borrower.
Section 7.10. Amendments of Articles. Borrower shall not amend
in any respect its articles of incorporation or by-laws without
in each case obtaining the prior written consent of Bank, which
consent shall not be unreasonably withheld.
Section 7.11. Sale of Assets. Other than (a) the sale or other
disposition of Inventory of Borrower in the ordinary and usual
course of business, in accordance with past practices, (b) the
indirect sale of the Receivables to the Trust, (c) sales of real
property Assets (subject to Section 2.06(c) hereof) and (d) sales
or other dispositions of Assets up to One Hundred Thousand
Dollars ($100,000) for each sale and an aggregate cumulative
total of Five Hundred Thousand Dollars ($500,000) for any Fiscal
Year, Borrower shall not sell, assign, lease, transfer, convey,
or otherwise dispose of all or any part of its Assets, whether
now owned or hereafter acquired, except with the prior written
consent of Bank.
Section 7.12. Contingent Obligations. From and after the
Closing Date, Borrower shall not create or become liable,
directly or indirectly, with respect to any Contingent
Obligation, except:
(a) Existing Guaranty. Borrower's existing guaranty in the
amount of $9,300,000, which represents a portion of the
Indebtedness incurred to finance construction of, and tenant
improvements for, Borrower's corporate office building; and
(b) Contingent Obligations. Contingent Obligations of Borrower
with respect to Indebtedness not prohibited by Section 7.02 of
this Restated Agreement.
Section 7.13. Issuance of Preferred Stock. Without the prior
written consent of Bank, Borrower shall not create or issue any
class or series of preferred stock.
Section 7.14. Certain Contracts. Borrower shall not enter into
or be a party to:
(a) Take or Pay Contracts. Any contract for the purchase of
materials, supplies, or other Assets or for the rendering of
services if such contract (or any related document) requires that
payments shall be made regardless of whether delivery of such
materials, supplies, or other property or services is ever made
or tendered;
(b) Leases. Any contract to rent or lease (as lessee) any Asset
if such contract (or related document) provides that the
obligation to make payments thereunder is absolute and
unconditional under conditions not customarily found in
commercial leases of the same nature, and covering space of the
same size, then in general use in the locality involved, or
requires that the lessee purchase or otherwise acquire securities
or obligations of the lessor;
(c) Subordinated Contractual Obligations. Any contract for the
sale or use of materials, supplies or other Assets, or for the
rendering of services, if such contract (or any related document)
requires that payment for such materials, supplies or other
Assets, or the use thereof, or payment for such services, shall
be subordinated to any Indebtedness of the purchaser or user of
such materials, supplies or other Assets or the Person entitled
to the benefit of such services owed or to be owed to any Person;
or
(d) Equivalent Contracts. Any other contract which, in economic
effect, is substantially equivalent to a Contingent Obligation,
except to the extent not prohibited under Section 7.02 or 7.12
hereof.
Section 7.15. Misrepresentations. Borrower shall not willfully
permit any Responsible Officer of Borrower to furnish Bank with
any certificate or other document that: (a) contains any untrue
statement of material fact; or (b) omits to state a material fact
necessary to make the statements contained therein not
misleading, taken as a whole (together with all such data,
certificates, reports, statements, documents and information
previously furnished).
Section 7.16. Partnerships. Borrower shall not be or become a
general or limited partner in any partnership or a joint venturer
in any Joint Venture without the prior written consent of Bank,
which consent may be withheld in Bank's sole and absolute
discretion.
Section 7.17. Change in Location of Chief Executive Offices and
Assets. Borrower shall not relocate without first giving Bank
thirty (30) calendar days' prior written notice of any proposed
relocation of its chief executive offices. Borrower shall not
move any of its equipment or Inventory having a value in excess
of Fifty Thousand Dollars ($50,000) to a location other than
those locations identified on Schedule 5.15 hereto, as updated
from time to time, without giving Bank written notice thereof
within five (5) calendar days thereafter.
Section 7.18. Warehouse Receipts. Borrower shall not store its
Inventory with a bailee, warehouseman or similar Person where
such storage is evidenced by negotiable warehouse receipts that
are not immediately delivered to Bank.
Section 7.19. Speculative Transactions. Borrower shall not
engage in any transactions involving commodity options or futures
contracts except for foreign forward exchange contracts, option
contracts, or future commitments with respect to raw materials
and supplies, incidental in each case to the conduct of
Borrower's business.
Section 7.20. Use of Proceeds. Borrower shall not engage in any
transaction or use the proceeds of the New Term Loan in a manner
that does not comply with Section 2.01(b) hereof.
Section 7.21. No Hazardous Materials. Borrower shall not cause,
permit or suffer any Hazardous Materials to be brought upon,
treated, stored, disposed of, discharged, released, manufactured,
generated, refined or used upon, about or beneath any of its
owned or leased real property or any portion thereof, except as
in material compliance with Applicable Law.
Section 7.22. Bonds. Except as set forth on Schedule 7.22
hereto, Borrower shall not (a) post any bond which is secured by
a Lien on any Assets of Borrower, or for which Assets of Borrower
are pledged, escrowed, or otherwise impounded in the event such
bond is drawn upon or paid to satisfy, or (b) otherwise use
Assets of Borrower to secure, collateralize or serve as an escrow
or impound, except, in either case, in order to comply with any
judgment or order of any court, or with the conditions of any
stay of any such judgment or order.
Section 7.23. Consignment. Borrower shall not make or enter
into any agreement or other arrangement pursuant to which
Borrower takes inventory of any other Person(s) for or on
consignment, except for consignments which do not, at any time,
exceed an aggregate amount equal to Twenty Million Dollars
($20,000,000) (determined at the lower of cost and market);
provided, however, that at no time shall such consigned inventory
be included in any reporting or calculations required hereunder
as Inventory of Borrower.
Section 7.24. Loans and Advances. Except for loans and advances
made to Receivables Corporation as may be necessary to comply
with the Trust Obligations, Borrower shall not make loans or
advances to or Investments in any Person in excess of an
aggregate cumulative amount equal to One Million Dollars
($1,000,000) in any Fiscal Year.
Section 7.25. Change in Fiscal Year. Borrower shall not change
its Fiscal Year or the months thereof.
Section 7.26. Lease Obligations. Borrower shall not incur new
obligations for the lease or hire of real or personal property
requiring payments in excess of an aggregate cumulative amount
equal to One Million Dollars ($1,000,000) in any Fiscal Year.
Section 7.27. Bank Accounts. Except in conformance with the
Barclays Obligations and the Trust Obligations and as otherwise
set forth on Schedule 7.27 hereto, Bank, Borrower shall not
maintain any deposit, savings or other account in any bank,
banking institution, money market fund, cash management account
or similar type of account or fund for the receipt and
disbursement of cash, other than with a Depository Bank or Bank.
Section 7.28. Operating Leases. Except for operating leases of
personal property consistent with Borrower's past practices and
as permitted under Section 8.2(L) of the Barclays Loan Agreement,
Borrower shall not, without obtaining in advance the express
written consent of Bank, permit or enter into any new leases of
real or personal property Assets, other than Capitalized Leases
subject to Section 7.05 hereof; provided, however, that the
renewal of an existing lease, including a renewal which involves
the relocation of a store within the same shopping mall, building
or shopping center, shall not constitute a new lease for the
purposes of Section 7.26 hereof or this Section 7.28.
ARTICLE VIII
ADDITIONAL AUTHORITY OF BANK
Section 8.01. Appointment of Bank as Attorney in Fact. Until
all the Obligations other than the Residual Obligations have been
paid in full, Borrower hereby irrevocably appoints Bank as its
attorney in fact and authorizes and empowers Bank to:
(a) Endorsement. Endorse and affix Borrower's name (i) from and
after the occurrence of an Event of Default hereunder and while
such Event of Default is continuing, to or upon any check, draft,
note, instrument or other writing relating to the Collateral, or
relating to any other Collateral, or upon any check or other
instrument given in payment thereof, and (ii) at any time, to or
upon any omitted assignment, notification of assignment, demand
or auditor's verification relating to Collateral and to or upon
all other instruments and writings required to assert, protect or
assure Bank's rights in the Collateral; and
(b) Mail. Upon the occurrence and during the continuance of an
Event of Default hereunder, receive, open and dispose of all mail
addressed to Borrower (other than mail from Borrower's counsel),
and notify the Post Office authorities to change the address for
the delivery of mail addressed to Borrower to such address as
Bank may designate.
These powers, being coupled with an interest, are irrevocable
while the Obligations (other than Residual Obligations) remain
unsatisfied in any part, and may be exercised at any time and
from time to time by any employee or representative of Bank.
Borrower hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue of this Section 8.01.
ARTICLE IX
EVENTS OF DEFAULT
Section 9.01. Events of Default. The occurrence of any one or
more of the following events, acts or occurrences shall
constitute an event of default (an "Event of Default") hereunder:
(a) Failure to Make Payments. Borrower shall (i) fail to pay
when due, whether in accordance with Section 2.06 hereof or
otherwise, any principal (whether at stated maturity, upon
acceleration, by notice of or other requirement of prepayment or
otherwise) of either Loan, or any interest thereon or (ii) fail
to pay within ten (10) Business Days after they become due any
costs, expenses or other amounts payable hereunder or under the
Notes or any other Loan Documents;
(b) Default in Other Agreements. (i) Borrower shall default in
the payment (whether at stated maturity, required prepayment,
upon demand or otherwise), beyond any period of grace provided
therefor, of any principal of or interest on any Indebtedness
(other than the Obligations) whose principal amount at the time
of such default is in excess of Five Hundred Thousand Dollars
($500,000) or (ii) Borrower shall commit any breach of or default
under any other term of any agreement or indenture or instrument
relating to any such Indebtedness, if the effect of such breach
or default is to cause Indebtedness in such amount to become or
be declared due and payable prior to its stated maturity;
provided, however, that such default shall not constitute an
Event of Default hereunder so long as (x) the default is not one
arising under the Barclays Obligations or the Trust Obligations
and (y) Borrower is diligently contesting the validity of such
obligation or the declaration of such default in good faith, and
so long as no final judgment has been entered against Borrower in
connection therewith;
(c) Breach of Certain Covenants and Failure of Conditions
Subsequent. Borrower shall fail duly and punctually to perform,
comply with or observe any agreement, covenant or obligation to
be performed, observed or complied with by it pursuant to Section
6.01(e), Section 6.03 (insofar as such Section requires the
preservation of the corporate existence of Borrower), or any of
Sections 6.16, 7.03, 7.05, 7.06, 7.08, 7.10, 7.11, 7.13, 7.15,
7.19, 7.20, 7.21, or 7.24; or the condition subsequent set forth
in Section 4.02 shall have failed to occur by the date required
to occur;
(d) Breach of Warranty. Any representation or warranty or
certification made or furnished by Borrower under this Restated
Agreement, the other Loan Documents or any agreement, instrument
or document contemplated hereby or thereby shall, at any time,
prove to have been false or incorrect in any material respect
when made;
(e) Other Defaults Under Agreement and Other Loan Documents.
Borrower shall fail duly and punctually to perform, comply with
or observe any covenant or obligation to be performed, observed
or complied with by it under this Restated Agreement (other than
those provisions referred to in subsections (a) and (c) above)
and such failure shall not have been remedied or waived within
(i) as to breaches of Section 3.01, five (5) days and (ii) as to
all other breaches, twenty (20) days, in each case after the
earlier of (x) receipt of notice thereof from Bank and (y) the
date upon which any Responsible Officer of Borrower has knowledge
of such default;
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. There
shall be commenced against Borrower or any of its Subsidiaries an
involuntary case seeking the liquidation or reorganization of
Borrower or such Subsidiary under Chapter 7 or Chapter 11,
respectively, of the Bankruptcy Code or any similar proceeding
under any other Applicable Law or an involuntary case or
proceeding seeking the appointment of a receiver, liquidator,
sequestrator, custodian, trustee or other officer having similar
powers of Borrower or any of its Subsidiaries to take possession
of all or a substantial portion of the Assets or to operate all
or a substantial portion of the business of Borrower or any of
its Subsidiaries, and any of the following events occurs: (i)
Borrower or any of its Subsidiaries consents to the institution
of the involuntary case or proceeding; (ii) the petition
commencing the involuntary case or proceeding is not timely
controverted; (iii) the petition commencing the involuntary case
or proceeding remains undismissed and unstayed for a period of
sixty (60) days; or (iv) an order for relief shall have been
issued or entered therein;
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc.
Borrower or any of its Subsidiaries shall institute a voluntary
case seeking liquidation or reorganization under Chapter 7 or
Chapter 11, respectively, of the Bankruptcy Code; or Borrower or
any of its Subsidiaries shall file a petition, answer, or
complaint or shall otherwise institute any similar proceeding
under any other Applicable Law, or shall consent thereto; or
Borrower or any of its Subsidiaries shall consent to the
conversion of an involuntary case to a voluntary case; or
Borrower or any of its Subsidiaries shall file a petition, answer
a complaint or otherwise institute any proceeding seeking, or
shall consent or acquiesce to the appointment of, a receiver,
liquidator, sequestrator, custodian, trustee or other officer
with similar powers to take possession of all or a substantial
portion of the Assets or to operate all or a substantial portion
of the business of Borrower or any of its Subsidiaries; or
Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of creditors; or Borrower or any of
its Subsidiaries shall generally not pay its debts as they become
due; or the Board of Directors of Borrower (or any committee
thereof) shall adopt any resolution or otherwise authorize action
to approve any of the foregoing;
(h) Judgments and Attachments. Borrower shall suffer any money
judgments, writs or warrants of attachment, or similar processes
which give rise to a Lien which individually or in the aggregate
involve an amount in excess of the amount covered in full,
subject to customary and reasonable deductibles, by insurance or
a surety bond, and shall not discharge, vacate, bond or stay the
same within a period of forty-five (45) days or, in any event,
within ten (10) days prior to the date of any proposed sale
thereunder; or a judgment creditor shall obtain possession of any
material portion of the Assets of Borrower by any means
including, without limitation, levy, distraint, replevin or
self-help;
(i) Change of Control. A Change of Control shall occur at any
time;
(j) ERISA Liabilities.
(i) any violation of ERISA, Reportable Event or Termination
Event occurs which can reasonably be expected to result in a
liability by Borrower or an ERISA Affiliate which would
reasonably be expected to have a material adverse effect on
Borrower; or
(ii) failure to make full payment when due of all amounts which,
under the provisions of any Plan or Applicable Law, Borrower or
an ERISA Affiliate is required to pay as a contribution thereto,
which would reasonably be expected to have a material adverse
effect on Borrower; or
(iii) Borrower or any ERISA Affiliate creates an accumulated
funding deficiency within the meaning of Section 302 of ERISA,
Section 412 of the Code, or any other similar provision of
foreign law, irrespective of whether waived, with respect to any
Plan which would reasonably be expected to have a material
adverse effect on Borrower; or
(iv) Borrower or any ERISA Affiliate shall have incurred or
received notice of withdrawal liability from a Multiemployer Plan
which would reasonably be expected to have a material adverse
effect on Borrower; or
(v) any Lien shall attach to any Asset of Borrower under Section
302 of ERISA;
(k) Failure of Subordination. Any agreement to subordinate
other Indebtedness in right of payment to the Obligations, at any
time and for any reason other than satisfaction in full of all of
the Obligations or satisfaction in full of such Subordinated Debt
upon the originally stated maturity thereof, whether incorporated
in the indenture or agreement governing, or instrument
evidencing, such Subordinated Debt, ceases to be in full force
and effect or is declared to be null and void; or
(l) Termination of Loan Documents, Etc. Any of the Loan
Documents, or any material provision in any of them, shall cease
at any time after the Closing Date to be in full force and effect
for any reason other than a release or termination thereof upon
the full payment and satisfaction of the Obligations (other than
Residual Obligations), or Borrower shall so claim or assert in
any writing.
Section 9.02. Remedies. Upon the occurrence of an Event of
Default:
(a) Automatic Termination of Commitments. If an Event of
Default occurs under Section 9.01(f) or (g) hereof, then the
unpaid principal amount of and any accrued interest on the Loans
shall automatically become immediately due and payable, without
presentment, demand, protest, notice or other requirements of any
kind, all of which are hereby expressly waived by Borrower.
(b) Optional Termination by Bank. If an Event of Default occurs
and is continuing under Section 9.01 hereof, other than under
Section 9.01(f) or (g), Bank may, by written notice to Borrower,
declare the unpaid principal amount of the Loans, or any of them
individually, to be, and the same shall thereupon become, due and
payable together with any and all accrued interest thereon and
all costs and expenses payable pursuant to this Restated
Agreement or any other Loan Documents, without presentment,
demand, protest, any additional notice whatsoever or other
requirements of any kind, all of which are hereby expressly
waived by Borrower, except as otherwise provided in this Restated
Agreement or by Applicable Law.
(c) Enforcement. Upon the occurrence of any Event of Default
and while such Event of Default is continuing, Bank, without
notice to or demand upon Borrower, which are hereby expressly
waived by Borrower, may proceed to protect, exercise and enforce
its rights and remedies under the Loan Documents against Borrower
and such other rights and remedies as are provided by law or
equity.
(d) Involuntary Filing. Upon the occurrence and during the
continuance of any Unmatured Event of Default under Section
9.01(f), Bank may take such action as Bank deems necessary to
protect its interests under the Loan Documents.
Section 9.03. Application of Proceeds After Default and
Acceleration. From and after the date on which all Obligations
become due and payable in accordance with Section 9.01 and
Section 9.02 hereof, subject to the Barclays Intercreditor
Agreement and Bank's obligations, if any, with respect to the
Trust, all amounts in the Cash Concentration Account, and all
other amounts received by Bank in connection with the
Obligations, whether as a result of the exercise of remedies or
otherwise, shall be applied to pay the Obligations in the order
set forth in Section 3.02(a) hereof.
ARTICLE X
MISCELLANEOUS
Section 10.01. Expenses. Irrespective of whether the
transactions contemplated hereby shall be consummated, Borrower
hereby agrees to pay all of the following expenses (the "Bank
Expenses") promptly following written demand therefor: (a) the
reasonable out-of-pocket costs and expenses of Bank incurred in
connection with the negotiation, preparation and execution of
this Restated Agreement, the Notes, the other Loan Documents and
all other agreements, instruments and documents contemplated
hereby and thereby, and any intercreditor agreement with any
other party providing financing to Borrower during the term of
this Restated Agreement and any amendments, modifications,
restatements or waivers hereto or thereto; (b) the reasonable
fees, expenses and disbursements of counsel and other
professionals (including allocated fees, expenses and
disbursements of in-house counsel of Bank on a real hourly basis)
to Bank in connection with the negotiation, preparation,
reproduction, execution, delivery and administration of this
Restated Agreement, the Notes, the other Loan Documents, and all
other agreements, instruments and documents contemplated hereby
and thereby, and any intercreditor agreement with any other party
providing financing to Borrower during the term of this Restated
Agreement and any amendments, modifications, restatements or
waivers hereto or thereto; (c) filing, recording, publication,
search and title fees paid or incurred by or on behalf of Bank in
connection with the transactions contemplated by, and the
administration of, this Restated Agreement, the Notes and the
other Loan Documents; (d) the reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees and expenses,
including allocated fees and expenses of in-house counsel of Bank
on a real hourly basis) incurred by Bank to correct any default,
to enforce any provision of this Restated Agreement, any of the
Notes or any of the other Loan Documents, or any other document
or instrument contemplated hereby or thereby or to prosecute or
defend any lawsuit or administrative proceeding arising from or
relating to this Restated Agreement or the other Loan Documents,
or the transactions or occurrences arising thereunder or relating
thereto; (e) the reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and expenses, including
allocated fees and expenses of in-house counsel of Bank on a real
hourly basis, and the fees and expenses of other professionals)
incurred by Bank in connection with any bankruptcy or other
insolvency proceeding, reorganization, workout, composition or
other creditor arrangement of Borrower; and (f) the reasonable
out-of-pocket costs and expenses (including reasonable attorneys'
fees and expenses) incurred by Bank in connection with the
negotiation, preparation and execution of all agreements,
instruments or documents in connection with the collateral
security for Borrower's Obligations hereunder.
Section 10.02. Indemnity.
(a) Indemnification. In addition to the payment of Bank
Expenses pursuant to Section 10.01 hereof, Borrower agrees to
indemnify, defend and hold harmless Bank and any holder of any
interest in the Notes and the officers, directors, employees and
agents of Bank and such holders (the "Indemnitees") from and
against (i) any and all transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Restated Agreement
and the other Loan Documents or the making of the Loans (other
than income and franchise taxes imposed upon Bank by the United
States of America or any political subdivision thereof or by any
other country (or any political subdivision thereof) in which
Bank does business or in which Bank has an office), and (ii) any
and all liabilities, losses, damages, penalties, judgments,
suits, claims, costs and expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees
and disbursements of counsel and other professionals and
allocated costs of in-house counsel) in connection with any
investigative, administrative or judicial proceeding, whether or
not such Indemnitee shall be designated a party thereto, which
may be imposed on, incurred by or asserted against such
Indemnitee, in any manner relating to or arising out of or in
connection with the making of the Loans, this Restated Agreement
and all other Loan Documents or the use or intended use of the
proceeds of the Loans and (iii) any and all liabilities, losses,
damages, penalties, judgments, suits, claims, costs and expenses
of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel and other
professionals and allocated costs of in-house counsel) in
connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitee shall be designated a
party thereto, which may be imposed on, incurred by or asserted
against such Indemnitee, in any manner relating to or arising out
of or in connection with, under or with respect to any accounts
receivable pledged to Bank or any disclosure statement at any
time given by Borrower, or other collateral, or any of Bank's
actions in the keeping, holding, maintaining or collecting of any
of the above (the "Indemnified Liabilities"); provided, however,
that Borrower shall have no obligation hereunder with respect to
any of the Indemnified Liabilities arising from (x) the gross
negligence or willful misconduct of any Indemnitee or (y) any
matter which, although arising out of the making of the Loans
and/or the Loan Documents, is in substance a dispute between or
among one or more of the Indemnitees which results in a judicial
action or arbitration proceeding being brought to which Borrower
is not a party (except that Borrower may be a necessary or
nominal party or for purposes of jurisdiction or venue and except
if Borrower is dismissed as a party to such action).
(b) Proceedings. Each Indemnitee shall promptly notify Borrower
of each event of which it has knowledge which may give rise to a
claim under the indemnification provisions of this Section 10.02;
provided, however, that the failure to so notify Borrower shall
in no way impair Borrower's obligations under this Section 10.02
except to the extent that material prejudice to Borrower results
from such failure. If any investigative, judicial or
administrative proceeding arising from any of the foregoing is
brought against any Indemnitee indemnified or intended to be
indemnified pursuant to this Section 10.02, Borrower, to the
extent directed by the Indemnitee, will resist and defend such
action, suit or proceeding, or cause the same to be resisted and
defended by counsel designated by Borrower (which counsel shall
be reasonably satisfactory to the Indemnitee). Each Indemnitee
will use its best efforts to cooperate in the defense of any such
action, writ or proceeding. To the extent that the undertaking
to indemnify, pay and hold harmless set forth in the preceding
provisions may be unenforceable because it is violative of any
law or public policy, Borrower shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under Applicable
Law.
(c) Survival. The obligations of Borrower under this Section
10.02 shall be Residual Obligations.
Section 10.03. Waivers; Modifications in Writing.
(a) Failure or Delay. No failure, delay or discontinuance on
the part of Bank or any other holder of rights in the Notes in
exercising any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. The remedies provided under this Restated Agreement, in
the Notes and in the other Loan Documents are cumulative and are
not exclusive of any remedies that may be available to Bank at
law, in equity or otherwise. No amendment, modification,
supplement, termination, consent or waiver of this Restated
Agreement, the Notes or any of the other Loan Documents, nor
consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by Bank.
(b) Limited Waiver. Any waiver of any provision of this
Restated Agreement or the other Loan Documents shall be effective
only in the specific instance and for the specific purpose for
which given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand
in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this
Section 10.03 shall be binding upon each holder of any Note, each
future holder of any Note and Borrower. Borrower agrees and
acknowledges that it shall not be entitled to rely upon or assert
any purported, implied or oral modification hereof.
Section 10.04. Notices, Etc. All notices, demands, instructions
and other communications required or permitted to be given to or
made upon any party hereto shall be in writing and (except for
financial statements, other related informational documents and
routine communications to be furnished pursuant hereto, which may
be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by courier, by overnight mail, by registered
mail or certified mail, return receipt requested, postage
prepaid, or by prepaid telex, telecopy or telegram (with
messenger delivery specified) and shall be deemed to be given for
purposes of this Restated Agreement on the day that such writing
is received by the intended recipient thereof. Unless otherwise
specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 10.04, notices, demands,
instructions and other communications in writing shall be given
to or made upon the respective parties hereto at their respective
addresses (or to their respective telex or telecopier numbers)
indicated on Schedule 10.04 hereto.
Section 10.05. Successors and Assigns.
(a) Binding Upon Successors and Assigns. This Restated
Agreement and any amendments hereto shall be binding upon and
inure to the benefit of and be enforceable by Borrower and Bank
and their respective successors and assigns. Borrower may not
assign or transfer any interest hereunder without the prior
written consent of Bank.
(b) Assignments of And Participation In Loans.
(i) Assignments. On the conditions set forth herein, Bank may
enter into an agreement with a third party for the assignment of
all or part of the Loans, and the Notes evidencing Borrower's
Obligations hereunder.
(ii) Participations. Bank may agree to sell participations in
the Loans, the Loan Documents, and the Notes on the terms and
conditions set forth herein. The holder of any such
participation, if the participation agreement so provides, (x)
shall, with respect to its participation, be entitled to all of
the rights of Bank and (y) may exercise any and all rights of
set-off or banker's lien with respect thereto, in each case as
fully as though Borrower were directly indebted to the holder of
such participation in the amount of such participation.
(iii) Information. In connection with any such assignment or
grant of a participation, Bank may disclose all documents and
information which Bank now or hereafter may have relating to any
credit extended by Bank to Borrower; provided, however, that such
disclosure shall be made in a manner reasonably calculated to
maintain the confidentiality of the documents and information
disclosed. Borrower hereby specifically acknowledges and
consents to the foregoing and agrees upon Bank's request to
execute such documents, agreements or certificates as Bank may
require in connection with any such participation.
Section 10.06. GOVERNING LAW. THIS RESTATED AGREEMENT, THE
NOTES AND (EXCEPT TO THE EXTENT ANOTHER JURISDICTION'S LAW IS
CHOSEN THEREIN) THE OTHER LOAN DOCUMENTS SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF CALIFORNIA AND THE VALIDITY OF THIS
RESTATED AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS, AND
THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT THEREOF, AND THE
RIGHTS OF THE PARTIES THERETO, SHALL BE DETERMINED UNDER,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.
Section 10.07. JURISDICTION AND VENUE. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS RESTATED AGREEMENT,
THE NOTES OR THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA OR, AT THE SOLE
OPTION OF BANK AND TO THE EXTENT REQUIRED WITH RESPECT TO
PARTICULAR ITEMS OF COLLATERAL IN ORDER TO ALLOW BANK TO EXERCISE
ITS REMEDIES WITH RESPECT THERETO, IN ANY OTHER COURT WHICH HAS
SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY AS A
RESULT OF COLLATERAL BEING LOCATED IN SUCH JURISDICTION.
BORROWER AND BANK, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY
WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 10.07 AND STIPULATE THAT
THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SAN
FRANCISCO, STATE OF CALIFORNIA SHALL HAVE IN PERSONAM
JURISDICTION AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF
LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING
OUT OF OR RELATED TO THIS RESTATED AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS. TO THE EXTENT PERMITTED BY LAW, SERVICE OF
PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION
AGAINST BORROWER MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SCHEDULE
10.04 ATTACHED HERETO. BORROWER AND BANK AGREE THAT ANY FINAL
JUDGMENT RENDERED AGAINST IT IN ANY ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL JUDGMENT AND MAY BE
ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER PROVIDED BY LAW.
Section 10.08. WAIVER OF TRIAL BY JURY. BORROWER AND BANK, TO
THE EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF
ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS
RESTATED AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS TO
WHICH THEY ARE PARTIES, OR IN ANY WAY CONNECTED WITH, OR RELATED
TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH
RESPECT TO THIS RESTATED AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS TO WHICH THEY ARE PARTIES, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE. BORROWER AND BANK, TO THE EXTENT THEY MAY LEGALLY DO
SO, HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF
ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A
JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION 10.08 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO
WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
Section 10.09. Severability of Provisions. Any provision of
this Restated Agreement which is illegal, invalid, prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such illegality, invalidity,
prohibition or unenforceability without invalidating or impairing
the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 10.10. Inconsistencies. In the event of any
irreconcilable inconsistency between the provisions of this
Restated Agreement and any provision of any other Loan Documents,
the provisions of this Restated Agreement shall control.
Section 10.11. Set Off. Subject to the terms of the Barclays
Intercreditor Agreement and to Bank's obligations, if any, with
respect to the Trust, in addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any
such rights, upon the occurrence of any Event of Default, Bank
and each holder or transferee of any Note or any Person with any
interest in any Note is hereby authorized by Borrower at any time
or from time to time, without notice to Borrower or to any other
Person, any such notice being hereby expressly waived, to set off
and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other indebtedness at any time
held or owing by a subsequent holder to or for the credit or the
account of Borrower or against and on account of the Obligations
of Borrower to Bank or that subsequent holder under this Restated
Agreement and the Notes including, but not limited to, all claims
of any nature or description arising out of or connected with
this Restated Agreement or the Notes, irrespective of whether or
not Bank or that subsequent holder shall have made any demand
under this Restated Agreement.
Section 10.12. Publicity. Except as otherwise required by
Applicable Law, any publicity release, advertisement, filing,
public statement or announcement made by or at the request of
Borrower regarding this Restated Agreement or the financing
provided under this Restated Agreement which makes reference to
Bank, or describes the financing provided by Bank, shall be first
reviewed by and must be satisfactory to Bank.
Section 10.13. Effectiveness. Each and every provision of this
Restated Agreement, and all Obligations of Borrower hereunder,
shall remain in full force and effect and enforceable in
accordance with their terms (except as enforceability is limited
in accordance with the provisions hereof) until all of the
Obligations shall have been paid in full or otherwise satisfied;
provided, however, that at any time when Borrower's only
remaining Obligations hereunder are Residual Obligations, the
provisions of Articles V, VI, VII and VIII hereof shall not be
binding upon Borrower, and any breach thereof shall not give rise
to an Unmatured Event of Default or an Event of Default.
Section 10.14. Headings. Article and section headings used in
this Restated Agreement are for convenience of reference only and
shall not constitute a part of this Restated Agreement for any
other purpose or affect the construction of this Restated
Agreement.
Section 10.15. Execution in Counterparts. This Restated
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together,
shall constitute but one and the same Restated Agreement. This
Restated Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto. At Bank's
discretion, Bank may accept facsimile signatures from Borrower.
Section 10.16. Complete Agreement. Each of the Schedules and
Exhibits hereto is incorporated herein by this reference.
Notwithstanding any provision of any of the Loan Documents to the
contrary, this Restated Agreement, the Notes, the other Loan
Documents and the other instruments and documents executed in
connection herewith constitute the entire agreement between the
parties, and supersede and replace all prior discussions,
negotiations, offers, understandings, and agreements, including
without limitation the Existing Credit Agreement (except that
such supersession shall be prospective in nature and shall not be
deemed to affect or change the date on which the obligations of
Borrower under the Existing Notes which survive the Closing Date
were created or the date on which the security interests under
the Collateral Documents were granted). There are no other
understandings or agreements, and Bank has not made any
representations or promises, unless specifically set forth in
this Restated Agreement or in the other Loan Documents executed
in connection herewith. Each party acknowledges that it has
expressly bargained for a prohibition of any implied or oral
amendments or modifications of any kinds, nature or character.
Each party acknowledges and agrees that this Restated Agreement,
together with the other Loan Documents executed in connection
herewith, is fully integrated and not in need of parol evidence
in order to reflect the intentions of the parties, and that the
parties intend the literal words of this Restated Agreement and
the other Loan Documents executed in connection herewith to
govern the transactions described herein, and for all prior
negotiations, drafts and other extraneous communications to have
no significance or evidentiary effect whatsoever.
Section 10.17. Interpretation. This Restated Agreement and each
of the other Loan Documents executed in connection herewith shall
be construed to effectuate liberally the rights and remedies of
the parties hereto as expressed herein, and neither such
principle of interpretation nor the express language of this
Restated Agreement or any of the other Loan Documents executed in
connection herewith shall be impaired or adversely affected by
any prior discussion, form or draft of this Restated Agreement or
any of the instruments and documents executed in connection
herewith. The deletion of any provision from a prior draft of
this Restated Agreement or any of the other Loan Documents
executed in connection herewith shall not and shall not be deemed
to constitute (and shall not be used as) evidence of any fact or
interpretation, since the parties may disagree as to the meaning
and effect of such a deletion, as no prior draft of this Restated
Agreement or the other Loan Documents executed in connection
herewith shall be admissible as evidence of the meaning of this
Restated Agreement or any of the other Loan Documents executed in
connection herewith. Neither this Restated Agreement nor any of
the other Loan Documents executed in connection herewith shall be
construed against Bank merely because they were initially drafted
by Bank's counsel.
Section 10.18. No Course of Conduct. At no time shall the prior
or subsequent course of conduct by Borrower or Bank directly or
indirectly limit, impair or otherwise adversely affect any of the
parties' rights or remedies in connection with this or any of the
instruments and documents executed in connection herewith, since
the parties hereto agree that this Restated Agreement and the
other Loan Documents executed in connection herewith shall only
be amended by written instruments executed by the parties, as
provided herein.
Section 10.19. No Third Parties Benefited. This Restated
Agreement is made and entered into for the protection and benefit
of the parties hereto and their successors and assigns, and no
other person or entity shall be a direct or indirect beneficiary
of or have any direct or indirect cause of action or claim in
connection with this Restated Agreement or any of the other Loan
Documents executed in connection herewith.
Section 10.20. Prohibition of Oral Consents. In every instance
where this Restated Agreement or any of the other documents
required under this Restated Agreement requires the consent of
Bank to an act or omission of Borrower or to the existence of
some fact, matter, circumstance or event, Bank shall only be
deemed to have given its consent when a duly authorized officer
of Bank expresses consent in a written notice to Borrower as
provided in this Restated Agreement or any of the other documents
required under this Restated Agreement and no oral consent of any
kind, nature or character shall be effective for any purpose
whatsoever.
Section 10.21. Limited Relationships. Neither Bank nor any
representative of Bank at any time has agreed or consented to
being an agent, principal, business associate or participant,
joint venturer, partner or alter ego of Borrower, and no such
relationship is contemplated. No Person except employees of Bank
and Bank's counsel has at any time been directly or indirectly
authorized by Bank directly or indirectly to represent, speak or
act for or on behalf of Bank with respect to any matter
whatsoever related to, arising out of or connected with this
Restated Agreement or any other matter or contract.
Section 10.22. Time of The Essence. Time is of the essence of
each and every provision of this Restated Agreement and each of
the other Loan Documents.
Section 10.23. Lien on Deposits and Property in Possession of
Bank. As security for the prompt payment and performance of all
Obligations, Borrower hereby grants to Bank a Lien on and a
security interest in all its right, title and interest in and to
any and all deposit accounts now or hereafter maintained with
Bank and in and to any and all of its property and the proceeds
thereof now or hereafter in the possession of Bank. If an Event
of Default has occurred and is continuing, Bank may, subject to
the Barclays Intercreditor Agreement, exercise its rights under
Division 9 of the California Uniform Commercial Code and other
Applicable Laws and apply any funds in any deposit account
maintained with it by Borrower and/or any property of Borrower in
its possession against any Obligation owed to it by Borrower
hereunder and/or under any other Loan Document.
Section 10.24. Effectiveness of Existing Loan Documents. The
parties hereto intend that this Restated Agreement from and after
the Closing Date shall supersede the Existing Credit Agreement
(except for such of Section 12.24 of the Existing Credit
Agreement dealing with Borrower's reaffirmation of Sections 2.3
and 2.5 of the "Existing Credit Agreement" (as defined in the
Existing Credit Agreement), which is hereby reaffirmed by
Borrower) and that the relationship of the parties hereto from
and after the Closing Date shall be governed by the terms of this
Restated Agreement and the other Loan Documents (each of which
Borrower hereby reaffirms in full with the exception of the
Intercreditor Agreement (as defined in the Existing Credit
Agreement) and the Collateral Agent Security Agreement (as
defined in the Existing Credit Agreement), which Borrower and
Bank agree shall cease to be effective from and after the Closing
Date). The parties hereto expressly agree that the execution,
delivery and acceptance by the parties of this Restated Agreement
(and the documents, instruments and certificates referred to
herein) are not intended to, do not, and shall not be deemed to
constitute a payment, cancellation, satisfaction, discharge,
extinguishment or novation of the Indebtedness and obligations
evidenced by the Existing Term Note. The Collateral made subject
to the Existing Security Agreement, as amended by the First
Amendment to Security Agreement and the Deeds of Trust shall
continue to secure the Obligations as set forth in this Restated
Agreement.
Section 10.25. Release of Certain Liens. Bank agrees to release
its Liens on certain of Borrower's personal property Assets in
accordance with Section 6 of the First Amendment to Security
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Restated
Agreement to be executed and delivered as of the date first set
forth above.
GOTTSCHALKS INC., a Delaware corporation
By:
Title:
WELLS FARGO BANK, N.A., a national banking association,
By:
Title:
Schedule 4.01
Letters of credit open at 3/30/94:
L/C Number Beneficiary Expiration Amount
NAI 192262 Connor 4/15/94 $ 72,597.01*
NAI 193363 Kaven 6/06/94 $ 16,605.00*
NBS 183405 Tamara 2/28/94** $ 172,960.72
NBS 187574 Tamara 5/30/94 $ 211,724.16
NBS 187012 Tamara 2/28/94** $ 296,878.80
NBS 192257 Tamara 5/30/94 $ 300,000.00
NBS 187564 Fashion Exch. 5/30/94 $ 50,000.00
NBS 181831 American Ins. 5/03/94 $3,500,000.00
NAS 186673 Levi Strauss 12/31/94 $ 300,000.00
NAS 186850 Sony 5/31/94 $ 250,000.00
NBS 192554 Bass 5/31/94 $ 30,000.00
* Connor and Kaven L/C's are collateralized by Certificates
of Deposit.
** Extended for 30 days.
EXHIBIT 10.79
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SECURITY
AGREEMENT (this "Amendment") is made as of the 30th day of March,
1994, by and between Gottschalks Inc., a Delaware corporation
("Debtor"), and Wells Fargo Bank, National Association, a
national banking association ("Secured Party").
RECITALS
A. Debtor and Secured Party are parties to that certain Second
Amended and Restated Security Agreement dated as of August 26,
1993 (the "Security Agreement"), pursuant to which Debtor granted
to Secured Party a security interest in the Collateral (as
defined in the Security Agreement) to secure Debtor's obligations
to Secured Party under that certain 1993 Amended and Restated
Credit Agreement (the "Existing Credit Agreement").
B. Debtor and Secured Party have agreed to amend and restate
Debtor's obligations to Secured Party under the Existing Credit
Agreement and have therefore entered into that certain 1994
Amended and Restated Credit Agreement of even date herewith (the
"Restated Credit Agreement").
C. In connection with the Restated Credit Agreement, Debtor and
Secured Party now desire to amend in certain respects the
Security Agreement.
NOW, THEREFORE, in consideration of the above Recitals, which by
this reference are incorporated into the agreement below, and for
other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Debtor and Secured Party hereby
agree as follows:
AGREEMENT
1. Capitalized Terms. All initially capitalized terms used but
not defined herein shall have the meanings assigned to such terms
in the Security Agreement or the Restated Credit Agreement,
unless specified otherwise.
2. Amendment to Section 2 of the Security Agreement. Debtor
and Secured Party agree that subsection (a) of Section 2 of the
Security Agreement shall be revised to read in its entirety as
follows:
"(a) all present and future advances, debts, obligations and
liabilities of Debtor of every type and description extended
pursuant to or arising under or in connection with the Restated
Credit Agreement, and any instrument evidencing any of the
foregoing; and"
3. Amendment to Section 5 of the Security Agreement. Debtor
and Secured Party agree that clause (a) of the first sentence of
Section 5 of the Security Agreement shall be revised to read in
its entirety as follows:
"(a) this Restated Security Agreement grants to Secured Party a
valid and enforceable Lien on the Collateral, which Lien shall
have a first priority except as to such of the Collateral as is
subject to the Barclays Liens (in which case Secured Party's Lien
on such Collateral shall have a second priority) and for
Collateral that is subject to a purchase money security interest
in favor of such Collateral;"
4. Amendment to Section 6 of the Security Agreement. Debtor
and Secured Party agree that Section 6 of the Security Agreement
shall be revised to read in its entirety as follows:
"Section 6. [Reserved]."
5. Amendment to Section 7 of the Security Agreement. Debtor
and Secured Party agree that the first clause of the first
sentence of Section 7 of the Security Agreement shall be revised
in relevant part by deleting the phrase "Credit Agreement which
are directly in respect of the Revolver" and substituting
therefor "Restated Credit Agreement".
6. Release of Certain Collateral. Secured Party agrees that
substantially concurrently with (i) Debtor's payment in full of
the outstanding principal balance of, together with accrued but
unpaid interest on and all other amounts due and owing in
connection with, the New Term Loan and (ii) the recordation of
reconveyances with respect to all of the Barclays Liens on
Debtor's real property Assets, Secured Party shall release its
Liens on all of Borrower's personal property Assets as to which
Barclays has a first priority Lien.
7. Amendment to Section Reference to Credit Agreement. Debtor
and Secured Party agree that all references to "Section 12.01 of
the Credit Agreement" shall hereafter be deemed to be references
to Section 10.01 of the Restated Credit Agreement.
8. Amendment to Exhibit A to the Security Agreement;
Priorities. Debtor and Secured Party agree that Exhibit A to the
Security Agreement shall be deleted in its entirety and Exhibit A
to this Amendment shall be substituted therefor. All references
in the Security Agreement to "Exhibit A" shall be deemed to be
references to Exhibit A to this Amendment. Debtor hereby grants
to Secured Party a first priority Lien on all of the Collateral
described in numbered paragraphs 1 and 10 (and the Collateral
described in numbered paragraph 9 arising in connection with
numbered paragraphs 1 and 10) of such Exhibit A. As to all
Collateral not described in numbered paragraphs 1 and 10 (and the
Collateral described in numbered paragraph 9 arising in
connection with numbered paragraphs 1 and 10), Debtor hereby
grants to Secured Party a second priority Lien.
9. References and Terminology. All references in the Security
Agreement to this "Restated Security Agreement" shall hereafter
be deemed to be references to the "Restated Security Agreement,
as amended by this Amendment, and all extensions, renewals,
amendments, supplements, restatements, replacements and/or
modifications thereof." All references in the Security Agreement
to the "Credit Agreement" shall hereafter be deemed to be
references to the "Restated Credit Agreement, and all extensions,
renewals, amendments, supplements, restatements, replacements
and/or modifications thereto."
10. Payment of Other Fees and Expenses. Debtor hereby agrees to
pay any and all expenses of Secured Party (including, without
limitation, attorneys' fees and allocated costs of Secured
Party's in-house counsel) incurred in connection with this
Amendment.
11. Other Terms and Conditions Unchanged. Except as expressly
provided herein, all other terms and conditions of the Security
Agreement shall remain unchanged and in full force and effect and
are hereby ratified and reaffirmed in all respects. Debtor
hereby ratifies and reaffirms in all respects all of the
Obligations secured by the Security Agreement.
12. Continuance of Lien. Debtor agrees that the property
described in the Security Agreement, as amended by this
Amendment, remains subject to the lien, charge, encumbrance and
security interest of the Security Agreement and other Collateral
Documents, as amended, and nothing herein shall affect or impair
the priority thereof.
13. Inconsistencies. In the event of any irreconcilable
inconsistency between the provisions of this Amendment and any
provision of the Restated Credit Agreement, the provisions of the
Restated Credit Agreement shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.
GOTTSCHALKS INC., a Delaware corporation
By:_____________________________
Stephen J. Furst
President
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association
By:_____________________________
Bruce O'Neill
Vice President
EXHIBIT A to
Second Amended and Restated
Security Agreement
List of Collateral
1. All presently-owned and hereafter acquired equipment of
Debtor in all of its forms and wherever located, including,
without limitation, motors, tools, trucks, vehicles, rolling
stock, machinery, machine tools, industrial equipment, office
equipment, furniture and furnishings (including, without
limitation, any and all cases, cabinets, shelves or other
furniture used by Debtor for displaying merchandise to
customers), typewriters, telephones, word processing equipment,
file cabinets and the contents thereof, rolling equipment, mobile
equipment, controls, attachments, parts and tools used by Debtor
in the conduct of its business operations, together with all
attachments, accessories, additions and accessions thereto and
replacements therefor.
2. All presently-owned and hereafter acquired goods and
inventory of Debtor wherever located, including but not limited
to all present and future goods held for sale or lease or to be
furnished under a contract of service and all returned goods, and
all materials used or consumed in the production of inventory of
any kind or type.
3. All presently-owned and hereafter acquired chattel paper,
contracts for the sale of inventory and documents of title of
Debtor.
4. All presently-owned and hereafter acquired instruments,
including without limitation promissory notes and other evidences
of indebtedness, and any security therefor.
5. All presently-owned and hereafter acquired stocks, bonds,
debentures, securities, interests of Debtor in any limited or
general partnership (including without limitation Debtor's
limited partnership interest in Park 41, a California limited
partnership), or any joint venture, all new, substituted and
additional securities or interests issued with respect thereto,
together with all cash and noncash dividends or distributions and
all other property now or hereafter receivable with respect to
any of the foregoing.
6. All presently-owned and hereafter acquired rights to payment
of Debtor no matter how evidenced including all accounts,
contract rights, instruments, documents and other writings
evidencing a right to payment (collectively, "Accounts"), and
general intangibles of Debtor including without limitation tax
refunds, return premiums on any insurance, permits, rights under
government programs or to government subsidies, licenses, rights
of use, firm names, logos, symbols, trademarks, trade secrets,
patents, patent applications and patent licenses, good will,
plans and specifications, rights under insurance policies, choses
and things in action, claims against any third party under any
provision of any bankruptcy or insolvency law or law relating to
the payment of money, now existing or hereafter arising, and all
goods repossessed or returned in connection therewith.
7. All presently-owned and hereafter acquired books and
records, including computer programs and software, pertaining to
any of the foregoing and the equipment containing said books and
records, relating to Debtor's business.
8. All presently-owned and hereafter acquired bank accounts,
deposit accounts (including without limitation, demand deposit
accounts), and similar accounts in any bank, savings and loan
association or similar institution to the extent of Debtor's
interest therein.
9. All policies of insurance; payments under, or rights to
payment and proceeds of, policies of insurance; and any rights
under or in connection with policies of insurance including,
without limitation, policies of insurance which insure any of the
Collateral.
10. All buildings, structures and improvements of every nature
whatsoever now or hereafter situated on the real property owned
or (from and after the date hereof) leased by Debtor, and all
leases therefor, and all other furnishings, furniture, fixtures
(provided that in no event shall cases, cabinets, shelves or
other furniture of Debtor used for displaying merchandise to
customers be fixtures), machinery, equipment, appliances,
chattels, and tangible personal property of every kind and nature
whatsoever in which Debtor now or hereafter owns an interest and
located in, on or about, or used or intended to be used with or
in connection with the use, operation or enjoyment of such real
property, including all extensions, additions, improvement,
betterments, after-acquired property, renewals, replacements and
substitutions, or proceeds from a sale of any of the foregoing;
and all the right, title and interest of Debtor in any such
furnishings, furniture, fixtures, machinery, equipment,
appliances, chattels and tangible personal property subject to or
covered by any prior security agreement, conditional sales
contract, chattel mortgage or similar lien or claim, together
with the benefit of any deposits or payment now or hereafter made
by or on behalf of Debtor; and all personal property constituting
proceeds acquired with cash proceeds of any of the property
described hereinabove.
11. All proceeds and products of the foregoing, including but
not limited to accounts, general intangibles, equipment,
inventory, money, deposit accounts, goods, chattel papers,
documents, instruments and insurance proceeds, all refunds,
equities, benefits, book equities, returns, credits, revolving
fund withholdings, return of capital and certificates evidencing
any right to receive payment in any form from any person and any
other tangible or intangible property received upon the sale,
lease or other disposition of any of the foregoing.
12. Notwithstanding anything to the contrary contained in this
Exhibit A, Secured Party's Collateral shall not include (a) all
present and future Receivables (as defined in the Receivables
Purchase Agreement referenced below), all monies due or to become
due and all amounts received with respect thereto and all
proceeds thereof, (b) any of Debtor's rights, remedies, powers
and privileges under the Receivables Purchase Agreement dated
March 30, 1994 between Debtor and Gottschalks Credit Receivables
Corporation and (c) any bank or other deposit accounts
established and maintained by Debtor in connection with the
Receivables.
