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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) November 19, 1998
JCP MASTER CREDIT CARD TRUST
(Issuer of the Certificates)
JCP RECEIVABLES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-17270 75-2231415
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6501 Legacy Drive, MS 1318
Plano, Texas 75024-3698
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (972) 431-2082
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Item 5. Other Events.
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On November 25, 1998, JCP Receivables, Inc. ("JCPR"), entered into a Series E
Supplement ("Supplement") (a copy of which is filed herewith as Exhibit 4.1) to
the Master Pooling and Servicing Agreement dated as of September 5, 1988, as
amended as of October 15, 1997 with J. C. Penney Company, Inc. ("JCPenney"), as
Servicer, and The Fuji Bank and Trust Company, as Trustee (as so supplemented,
the "Pooling and Servicing Agreement"). JCP Master Credit Card Trust 5.50%
Class A Asset Backed Certificates, Series E, representing an aggregate principal
amount of $650,000,000 were issued by the JCP Master Credit Card Trust, pursuant
to the Pooling and Servicing Agreement, on November 25, 1998 (a specimen of such
Certificates is filed herewith as Exhibit 4.2).
Item 7. Financial Statements and Exhibits.
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The following are filed as Exhibits to this Report:
1.1 Underwriting Agreement, dated as of November 19, 1998
4.1 Series E Supplement, dated as of November 25, 1998
4.2 Specimen Certificate
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JCP RECEIVABLES, INC.
Date: December 10, 1998 By: /s/ Catherine A. Walther
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Catherine A. Walther
President
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EXHIBIT 1.1
JCP MASTER CREDIT CARD TRUST
JCP RECEIVABLES, INC.
J. C. PENNEY COMPANY, INC.
UNDERWRITING AGREEMENT
November 19, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
As Representative of the Underwriters
named in Schedule A hereto
Eleven Madison Avenue
New York, New York 10010
Dear Sirs:
1. Introductory. JCP Receivables, Inc., a Delaware corporation ("JCPR"),
proposes to sell $650,000,000 aggregate principal amount of 5.50% Class A Asset
Backed Certificates, Series E (the "Certificates") issued by JCP Master Credit
Card Trust (the "Trust"). The Certificates will be issued pursuant to a Master
Pooling and Servicing Agreement among JCPR, J. C. Penney Company, Inc., as
servicer ("JCPenney"), and The Fuji Bank and Trust Company, as trustee (the
"Trustee"), dated as of September 5, 1988, as amended as of October 15, 1997, as
supplemented by the Series E Supplement with respect to the Certificates
(together, the "Pooling and Servicing Agreement") (references to the Pooling and
Servicing Agreement herein may, as the context requires, include all supplements
thereto, including the Series E Supplement). $71,341,463 aggregate principal
amount of Class B Investor Interest, Series E (the "Class B Investor Interest")
and $71,341,463 aggregate principal amount of Class C Investor Interest, Series
E (the "Class C Investor Interest") will also be issued pursuant to the Pooling
and Servicing Agreement. The Class B Investor Interest and the Class C Investor
Interest are expected to be initially retained by JCPR. JCPR has entered into a
Receivables Purchase Agreement with JCPenney, as seller of the Receivables,
dated as of September 5,
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1988, as amended as of October 15, 1997 (together with any supplements thereto,
the "Receivables Purchase Agreement"), which provides for the sale of
Receivables (as defined below) by JCPenney to JCPR. Each Certificate will
represent a specified percentage Undivided Interest in the Trust. To the extent
not defined herein, capitalized terms used herein have the meanings assigned in
the Pooling and Servicing Agreement.
JCPR and JCPenney agree with Credit Suisse First Boston Corporation,
as representative (the "Representative") of the underwriters named in Schedule A
hereto (the "Underwriters") as follows:
2. Representations and Warranties of JCPR. JCPR represents and warrants
to, and agrees with, the Underwriters that:
(a) A registration statement on Form S-1 (Registration No. 333-64649)
relating to the Certificates, including a form of prospectus, has been filed
with, and has been declared effective by, the Securities and Exchange Commission
(the "Commission"). If any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and delivery
of this Agreement, the most recent such amendment has been declared effective by
the Commission. For purposes of this Agreement, "Effective Time" means the date
and time as of which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the Commission,
and "Effective Date" means the date of the Effective Time. Such registration
statement, as amended at the Effective Time, including all information deemed to
be a part thereof as of the Effective Time pursuant to paragraph (b) of Rule
430A ("Rule 430A") under the Securities Act of 1933, as amended (the "Act"), is
hereinafter referred to as the "Registration Statement," and the form of
prospectus relating to the Certificates, as filed pursuant to paragraph (1) or
(4) of Rule 424(b) ("Rule 424(b)") under the Act, is hereinafter referred to as
the "Prospectus."
(b) On any Effective Date, the Registration Statement conformed in
all material respects to the requirements of the Act and the published rules and
regulations of the Commission (the "Rules and Regulations"), and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. On the date of this Agreement, the Registration Statement and the
Prospectus conform, and at the time of filing of the Prospectus pursuant to Rule
424(b) such documents will conform, in all material respects to the requirements
of the Act and the Rules and
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Regulations, and none of such documents includes, and on the Closing Date (as
defined below) the Prospectus will not include, any untrue statement of a
material fact, or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. The
two preceding sentences do not apply to statements in or omissions from either
of such documents based upon written information furnished to JCPR by the
Underwriters for use therein.
(c) Upon payment therefor as provided herein, the Certificates will have
been duly authorized and (assuming their due authentication by the Trustee) will
have been validly issued and will conform in all material respects to the
description thereof in the Prospectus, and will be entitled to the benefits of
the Pooling and Servicing Agreement.
(d) The issue and sale of the Certificates and the compliance by JCPR
with all of the provisions of the Certificates, the Pooling and Servicing
Agreement, the Receivables Purchase Agreement and this Agreement will not
conflict with or result in any breach which would constitute a material default
under, or, except as contemplated by the Pooling and Servicing Agreement, result
in the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of JCPR, material to JCPR, pursuant to the terms of any
indenture, loan agreement or other agreement or instrument for borrowed money to
which JCPR is a party or by which JCPR may be bound or to which any of the
property or assets of JCPR may be bound or to which any of the property or
assets of JCPR, material to JCPR, is subject, nor will such action result in any
material violation of the provisions of the Certificate of Incorporation, as
amended, or Bylaws of JCPR or, to the best of JCPR's knowledge, any statute or
any order, rule or regulation applicable to JCPR of any court or any Federal,
state or other regulatory authority or other governmental body having
jurisdiction over JCPR, and no consent, approval, authorization or other order
of, or filing with, any court or any such regulatory authority or other
governmental body is required for the issue and sale of the Certificates except
as may be required under the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and securities laws of the various states and
other jurisdictions in which the Underwriters will offer and sell Certificates
and except for the filing of any financing statement required to perfect the
Trust's interest in the Receivables.
(e) To the best of JCPR's knowledge, the compliance by JCPenney with all
of the provisions of the Pooling and Servicing Agreement and the
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Receivables Purchase Agreement will not conflict with or result in any breach
which would constitute a material default under, or, except as contemplated by
the Pooling and Servicing Agreement and the Receivables Purchase Agreement,
result in the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of JCPenney or any subsidiary thereof, material to
JCPenney and its subsidiaries (whether or not consolidated) considered as a
whole, pursuant to the terms of any indenture, loan agreement or other agreement
or, except as contemplated by the Receivables Purchase Agreement, instrument for
borrowed money to which JCPenney, JCPR or any Affiliate thereof is a party or by
which JCPenney, JCPR or any Affiliate thereof may be bound or to which any of
the property or assets of JCPenney, JCPR or any Affiliate thereof may be bound
or to which any of the property or assets of JCPenney, JCPR or any Affiliate
thereof, material to JCPenney, JCPR or any Affiliate thereof (whether or not
consolidated) considered as a whole, is subject, nor will such action result in
any material violation of the provisions of the Restated Certificate of
Incorporation or the Bylaws of JCPenney or, to the best of JCPR's knowledge, any
statute or any order, rule or regulation applicable to JCPenney of any court or
any Federal, state or other regulatory authority or other governmental body
having jurisdiction over JCPenney.
(f) The Principal Receivables conveyed by JCPR to the Trust under the
Pooling and Servicing Agreement had an aggregate outstanding balance determined
as of September 30, 1998 in accordance with the Pooling and Servicing Agreement
of not less than $1,444,269,021.
(g) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and the Trust is not required to be registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act").
3. Purchase, Sale, Payment and Delivery of Certificates. On the basis of
the representations, warranties and covenants herein contained, JCPR agrees to
sell to the Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from JCPR the respective principal amounts of the Certificates set
forth in Schedule A hereto opposite the names of the Underwriters. Such
Certificates are to be purchased by the Underwriters at a purchase price of
99.093406% of the principal amount thereof plus accrued interest, if any, from
November 25, 1998.
JCPR will deliver the Certificates to the Representative against payment
of the purchase price by wire transfer of immediately available funds to the
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account of JCPR at the office of JCPenney in Plano, Texas at 10:00 A.M., C.S.T.,
on November 25, 1998 or at such other time not later than seven full business
days thereafter as the Representative and JCPR determine, such time being herein
referred to as the "Closing Date." The Certificates so to be delivered shall be
represented by one or more definitive certificates registered in the name of
Cede & Co., as nominee for The Depository Trust Company. JCPR shall make such
definitive certificates representing the Certificates available for inspection
by the Underwriters at least 24 hours prior to the Closing Date.
4. Offering by Underwriters. It is understood that after the Registration
Statement becomes effective the Underwriters propose to offer the Certificates
for sale to the public (which may include selected dealers) as set forth in the
Prospectus. The Underwriters may offer the Certificates to certain dealers at
the price to public of 99.418406% of the principal amount thereof less
concessions not in excess of .200% of the principal amount thereof. The
Underwriters may allow, and such dealers may reallow, concessions not in excess
of .125% of the principal amount of the Certificates.
5. Covenants of JCPR and JCPenney. JCPR, and where specified, JCPenney,
covenant with the Underwriters, with respect to the Certificates, that:
(a) JCPR will file the Prospectus with the Commission pursuant to Rule
424(b) within the time periods specified by Rule 424(b) and Rule 430A; JCPR will
advise you at least 24 hours prior to the filing of any amendment of or
supplement to the Registration Statement or the Prospectus; and JCPR will advise
you promptly of the effectiveness of any such amendment of or supplement to the
Registration Statement or Prospectus, of any request by the Commission for any
amendment of or supplement to the Registration Statement or the Prospectus or
for any additional information, of the receipt by JCPR of any notification with
respect to the suspension of qualification of the Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
and of the institution by the Commission of any stop order proceeding in respect
of the Registration Statement, and will use their best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its lifting,
if issued.
(b) If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements
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therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Registration
Statement or the Prospectus to comply with the Act, JCPR promptly will prepare
and file with the Commission (subject to the provisions of paragraph (a) of this
Section) an amendment or supplement which will correct such statement or
omission or effect such compliance.
(c) Not later than 90 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Trust during which the Closing
Date occurs, JCPR will cause the Trust to make generally available to the
Certificateholders an earnings statement or statements of the Trust covering
such 12-month period which will satisfy the provisions of Section 11(a) of the
Act.
(d) JCPR will furnish to you copies of the Registration Statement (one
of which, to be delivered to your counsel, will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as you reasonably request. JCPR will pay the expenses of
printing or other production of all documents relating to the offering.
(e) JCPR will use its best efforts to arrange for the qualification of
the Certificates for sale and the determination of the Certificates for sale and
the determination of their eligibility for investment under the laws of such
jurisdictions as the Representative reasonably designates and will diligently
endeavor to continue such qualifications in effect so long as required for the
distribution of the Certificates; provided, however, that JCPR shall not be
required to register or qualify, or to maintain qualification, as a foreign
corporation nor, except as to matters and transactions relating to the offer or
sale of the Certificates, consent to service of process generally in any state.
(f) For a period from the date of this Agreement until the retirement of
the Certificates, (i) JCPenney will furnish to you copies of each certificate
and the annual statements of compliance relating to the Certificates delivered
to the Trustee pursuant to Article III of the Pooling and Servicing Agreement
and the annual independent certified public accountant's servicing reports
furnished to the Trustee pursuant to Article III of the Pooling and Servicing
Agreement, by first-class mail as soon as practicable after such statements and
reports are furnished to the Trustee and (ii) on each Determination Date or as
soon thereafter as practicable,
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JCPenney shall give notice substantially in the form of Schedule B hereto by
telex or telecopy to you of the Pool Factor as of the related Record Date.
(g) So long as any of the Certificates are outstanding, JCPR or
JCPenney, as the case may be, will furnish you by first-class mail as soon as
practicable, all documents (A) distributed, or caused to be distributed, by JCPR
or JCPenney to the Certificateholders, (B) filed, or caused to be filed, by JCPR
with the Commission pursuant to the Exchange Act, any order of the Commission
thereunder or pursuant to a "no-action" letter from the staff of the Commission
and (C) from time to time in the possession of JCPR or JCPenney concerning the
Trust as you may reasonably request.
(h) JCPR will pay all expenses incident to the performance of its
obligations under this Agreement and will reimburse the Underwriters for any
reasonable expenses (including reasonable fees and disbursements of counsel)
incurred by the Underwriters in connection with qualification of the
Certificates for sale and determination of their eligibility for investment
under the laws of such jurisdictions as the Representative reasonably designates
and the printing and memoranda relating thereto, for any fees charged by
investment rating agencies for the rating of the Certificates, and for
reasonable expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.
(i) To the extent, if any, that the rating provided with respect to the
Certificates by Moody's Investors Service, Inc. ("Moody's") and/or Standard &
Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc.
("Standard & Poor's") is conditional upon the furnishing of documents or the
taking of any other action by JCPR, agreed upon on or prior to the Closing Date,
JCPR shall furnish such documents and take any such other action.
(j) JCPR will not offer, sell, contract to sell or otherwise dispose of
any additional Series other than the Series represented by the Certificates, the
Class B Investor Interest and the Class C Investor Interest without the prior
written consent of the Underwriters, which shall not be unreasonably withheld,
for a period of 15 days from the date of this Agreement.
6. Conditions of the Obligations of the Underwriters. The obligations of
the Underwriters to purchase and pay for the Certificates will be subject to the
accuracy of the representations and warranties on the part of JCPR herein, to
the accuracy
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of the statements of officers of JCPR made pursuant to the provisions hereof, to
the performance by JCPR and JCPenney of their obligations hereunder and to the
following additional conditions precedent:
(a) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this Agreement;
and, prior to the Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of JCPR or the
Underwriters, shall be contemplated by the Commission.
(b) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
JCPR, JCPenney or JCPenney Card Bank, National Association ("JCP Card Bank")
which, in your reasonable judgment, materially impairs the investment quality of
the Certificates; (ii) any downgrading in the rating of the debt securities of
JCPR or JCPenney to below investment grade by Moody's or Standard & Poor's;
(iii) any suspension or limitation of trading in securities generally on the New
York Stock Exchange, excluding any such suspension or limitation of trading
resulting from the application of the "circuit breaker" rules of the New York
Stock Exchange unless such rules shall have been applied on more than one day
subsequent to the execution and delivery of this Agreement, or any setting of
minimum prices for trading on such exchange; (iv) any banking moratorium
declared by Federal, New York or Delaware authorities; or (v) the United States
shall be engaged in hostilities which have resulted in a declaration of a
national emergency or a declaration of war by Congress; any of which events set
forth in clauses (i) through (v), in your reasonable judgment, renders it
inadvisable to proceed with the public offering or the delivery of the
Certificates.
(c) The Underwriters shall have received an opinion of C. R. Lotter,
General Counsel for JCPR and JCPenney, addressed to the Underwriters, dated the
Closing Date and satisfactory in form to the Representative and counsel for the
Underwriters to the effect that:
(i) JCPR has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware, has corporate power
and authority to own its property, conduct its business as described in the
Prospectus, enter into and perform its
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obligations under this Agreement, the Receivables Purchase Agreement and
the Pooling and Servicing Agreement and execute the Certificates and is
duly qualified as a foreign corporation and in good standing in Texas,
which is the only state in which JCPR currently conducts business. JCPR has
full power and authority to authorize, issue and sell the Certificates as
contemplated by this Agreement.
(ii) This Agreement has been duly authorized, executed and
delivered by JCPenney and JCPR and, assuming the due authorization,
execution and delivery thereof by the Underwriters, constitutes a legal,
valid and binding obligation of each of JCPenney and JCPR enforceable
against each of JCPenney and JCPR in accordance with its terms (subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles); provided, however, that such
counsel need not express any opinion concerning the enforceability of the
provisions in Section 7 of this Agreement concerning indemnification or
contribution in respect of violations of Federal or state securities laws.
(iii) The Receivables Purchase Agreement has been duly authorized,
executed and delivered by JCPR and JCPenney and constitutes a legal, valid
and binding obligation of each of JCPenney and JCPR enforceable against
each of JCPenney and JCPR in accordance with its terms (subject, as to
enforcement of remedies, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles).
(iv) The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by JCPR and JCPenney and, assuming that such
agreement was duly authorized, executed and delivered by the Trustee,
constitutes a legal, valid and binding obligation of each of JCPenney and
JCPR enforceable against each of JCPenney and JCPR in accordance with its
terms (subject, as to enforcement of remedies, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles).
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(v) The certificates representing the Certificates have been duly
authorized and executed, and assuming due authentication thereof by the
Trustee in accordance with the Pooling and Servicing Agreement, were
validly issued to JCPR by the Trust, are entitled to the benefits of the
Pooling and Servicing Agreement and are enforceable in accordance with
their terms (subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles). When such Certificates are delivered to the Underwriters by
JCPR against payment therefor in accordance with this Agreement, the
Underwriters will have, assuming that the Underwriters have no notice of
any adverse claim, valid and marketable title thereto, free and clear of
any liens, security interests or encumbrances.
(vi) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required in connection
with the execution, delivery and performance by JCPR of this Agreement, the
Pooling and Servicing Agreement or the Receivables Purchase Agreement, or
in connection with the issuance by the Trust or sale by JCPR of the
Certificates, except such as have been obtained under the Act and such as
may be required under state blue sky laws and the filing of Uniform
Commercial Code financing statements.
(vii) The issue and sale of the Certificates and the execution and
delivery of this Agreement, the Receivables Purchase Agreement and the
Pooling and Servicing Agreement, and the consummation of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof and
thereof, will not result in a breach or violation of, or constitute a
default under, any statute, rule, regulation or order of any governmental
agency or body or any court having jurisdiction over JCPR or the Trust or
any of their property, the Certificate of Incorporation, as amended, or
Bylaws of JCPR or to the best of such counsel's knowledge, any agreement or
instrument to which JCPR is a party or by which the Trust or JCPR is bound
or to which any of the property of JCPR is subject.
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(viii) The Certificates, the Receivables Purchase Agreement and the
Pooling and Servicing Agreement conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus.
(ix) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act and the Trust is not, and the
issuance and sale of the Certificates in the manner contemplated by the
Pooling and Servicing Agreement and the Underwriting Agreement will not
cause the Trust to be, required to be registered under the Investment
Company Act.
(x) The Registration Statement has become effective under the
Act, the filing of the Prospectus pursuant to Rule 424(b) thereunder has
been made and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or threatened under the Act.
(xi) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirements of the Act and the
Rules and Regulations (except as to the financial data contained therein,
as to which such counsel need not express any opinion).
(xii) Such counsel does not know of any pending or threatened
action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator against JCPR or the Trust which would
be required to be disclosed in the Registration Statement or Prospectus and
which is not disclosed therein.
(xiii) Such counsel does not know of any contracts or documents of a
character required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement that
are not so described or filed.
In passing on the Registration Statement and the Prospectus, such
counsel may assume the correctness and completeness of the statements made or
included therein by JCPR and may take no responsibility therefor except as
specified
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in paragraph (viii) above and except insofar as such statements relate to such
counsel. However, in the course of the preparation by JCPR of the Registration
Statement, such opinion shall state that such counsel had conferences with
certain officers of JCPR and such counsel's discussions in the above-mentioned
conferences did not disclose to such counsel any information that gave such
counsel reason to believe that the Registration Statement, at the time it became
effective, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (except in each case as to the financial data included
therein, as to which such counsel need not express any opinion).
In rendering such opinion counsel may rely (A) as to matters involving
the application of laws of any jurisdiction other than the State of New York,
the State of Delaware (as to its General Corporation Law) and the United States,
to the extent deemed proper and stated in such opinion, upon the opinion of
other counsel of good standing believed by such counsel to be reliable and
acceptable to you and your counsel, and (B) as to matters of fact, to the extent
deemed proper and as stated therein, on certificates of responsible officers of
the Trust, JCPR, JCPenney and public officials. References to the Prospectus in
this paragraph (c) include any supplements thereto.
(d) On or prior to the date of this Agreement, KPMG Peat Marwick,
independent certified public accountants for JCPenney and JCPR, shall have
furnished to the Underwriters a letter or letters, dated as of the date of this
Agreement, in form and substance satisfactory to the Representative and counsel
for the Underwriters, (i) confirming that they are certified independent public
accountants within the meaning of the Act and the applicable published Rules and
Regulations, (ii) stating in effect that they have performed certain specified
procedures as a result of which they have determined that certain information of
an accounting, financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general accounting records
of the Trust, JCPenney and JCPR) set forth in the Registration Statement and the
Prospectus (and any supplement thereto), including the information set forth
under the captions "JCPENNEY'S CREDIT CARD BUSINESS", "THE ACCOUNTS", "MATURITY
ASSUMPTIONS" AND "RECEIVABLE YIELD CONSIDERATIONS" in the Prospectus, agrees
with the accounting records of the Trust, JCPenney and JCPR, excluding any
questions of legal interpretation, and (iii)(a) in their opinion, the
consolidated
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financial statements and schedules covered by their opinion therein comply in
form in all material respects with the applicable accounting requirements of the
Act and the Exchange Act and the respective applicable published rules and
regulations thereunder and (b) on the basis of procedures (but not an
examination made in accordance with generally accepted auditing standards)
consisting of a reading of the latest unaudited consolidated condensed financial
statements of JCPenney and its consolidated subsidiaries and certain other
specified means, nothing has come to their attention that would cause them to
believe that such unaudited consolidated condensed financial statements (A) do
not comply in form in all material respects with the applicable accounting
requirements of the Exchange Act or (B) are not in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited consolidated financial statements and certain other matters.
(e) The Underwriters shall have received from KPMG Peat Marwick, a
letter, dated as of the Closing Date, in form and substance satisfactory to the
Representative and counsel for the Underwriters, to the effect that confirms the
items stated by them in clauses (i) and (iii) of paragraph (d) of this Section
6.
(f) The Underwriters shall receive evidence satisfactory to the
Representative and counsel for the Underwriters that, on or before the Closing
Date, UCC-1 financing statements have been or are being filed in the offices of
the Secretaries of State of Texas and such other jurisdictions as its counsel
deems appropriate reflecting the interest of the Trust in the Receivables now
existing and hereafter created in the Accounts, all monies due and to become due
with respect thereto, all proceeds thereof and Insurance Proceeds relating
thereto, and all of JCPR's rights, remedies, powers and privileges with respect
to such Receivables under the Receivables Purchase Agreement.
(g) The Underwriters shall have received an opinion from Skadden, Arps,
Slate, Meagher & Flom LLP, stating in effect that the Certificates would be
treated as debt of JCPR for Federal income tax purposes.
(h) The Underwriters shall have received from Donohoe, Jameson &
Carroll, P.C., special counsel to JCPR and JCPenney, a favorable opinion, dated
the Closing Date and satisfactory in form to the Representative and counsel for
the Underwriters to the effect that:
13
<PAGE>
(i) If the Pooling and Servicing Agreement and the Receivables
Purchase Agreement constitute a valid transfer of all right, title and
interest of JCPR in, to and under the Receivables existing at the Closing
Date and thereafter created in the Accounts designated therein and, when
added pursuant to Section 2.6(c) of the Pooling and Servicing Agreement and
designated in a transfer agreement in the form of Exhibit E to the Pooling
and Servicing Agreement, the Additional Accounts designated therein, all
monies due or to become due with respect thereto, all proceeds thereof and
Insurance Proceeds relating thereto and all of JCPR's rights, remedies,
powers and privileges with respect to such Receivables under the
Receivables Purchase Agreement, then, assuming the accuracy of the Uniform
Commercial Code searches and the officer's certificates of JCPR and
JCPenney, the Trustee will acquire all right, title and interest of JCPR in
each such item free and clear of any Lien or interest of any person
claiming through or under JCPR except for (i) Liens permitted under Section
2.5(b) of the Pooling and Servicing Agreement and (ii) the rights of others
as specified in paragraph (ii) below.
(ii) If the Pooling and Servicing Agreement and the Receivables
Purchase Agreement do not constitute a valid transfer of all right, title
and interest of JCPR in, to and under the Receivables existing at the
Closing Date and thereafter created in the Accounts designated therein and,
when added pursuant to Section 2.6(c) of the Pooling and Servicing
Agreement and designated in a transfer agreement in the form of Exhibit E
to the Pooling and Servicing Agreement, the Additional Accounts designated
therein, all monies due or to become due with respect thereto, all proceeds
thereof and Insurance Proceeds relating thereto and all of JCPR's rights,
remedies, powers and privileges with respect to such Receivables under the
Receivables Purchase Agreement, then the Pooling and Servicing Agreement
and the Receivables Purchase Agreement create a valid security interest in
favor of the Trustee, for the benefit of the holders of the Certificates,
in each such item and, based upon the UCC-1 financing statements having
been filed, assuming the due and proper filing thereof in the filing
offices specified in such opinion, and assuming the accuracy and
completeness of the Uniform Commercial Code searches and the officer's
certificates of JCPR and JCPenney, create a first priority perfected
security interest in each such item, except Liens permitted
14
<PAGE>
by Section 2.5(b) of the Pooling and Servicing Agreement. Such counsel need
not express any opinion, however, as to JCPenney's, JCPR's or the Trustee's
title to the Receivables or with respect to the following possible
interests or rights in the Receivables or limitations on such security
interest: (a) security interests for the perfection of which no filing is
required under Section 9.302(a) of the Uniform Commercial Code; (b)
security interests afforded temporary perfection status without filing
under Section 9.312 of the Uniform Commercial Code; (c) the perfection of
security interests in proceeds to the extent that the same ceases in
accordance with or under the circumstances specified in Section 9.306 of
the Uniform Commercial Code; (d) security interests, liens, transactions or
rights not governed by the Uniform Commercial Code, or, absent compliance
with the Federal Assignment of Claims Act, in respect of Receivables
arising under contracts with the United States government; (e) the priority
of any security interest as against any claim or lien in favor of the
United States government or any agency or instrumentality thereof
(including, without limitation, Federal tax liens or liens under the
Employee Retirement Income Security Act of 1974, as amended); (f) rights
and interests of any lien creditors which have instituted proceedings for
attachment, execution or other action against the Receivables in the
Accounts prior to the Closing Date; (g) any prior security interests in the
Receivables in the Accounts which have been improperly filed; and (h) in
the event of the filing of a bankruptcy petition with respect to JCPR, any
liens on after-acquired property of JCPR created by the Pooling and
Servicing Agreement will be subject to Section 552 of the United States
Bankruptcy Code.
(iii) Except for the filing of continuation statements pursuant to
Section 9.403 of the Uniform Commercial Code with respect to the UCC-1
financing statements, no additional Uniform Commercial Code filing is
necessary to maintain the perfection of the security interest of the
Trustee in all right, title and interest of JCPR in, to, and under the
Receivables existing at the Closing Date and thereafter created in the
Accounts designated in the Pooling and Servicing Agreement and, when added
pursuant to Section 2.6(c) of the Pooling and Servicing Agreement and
designated in a transfer agreement in the form of Exhibit E to the Pooling
and Servicing Agreement, the Additional Accounts designated therein, all
monies
15
<PAGE>
due or to become due with respect thereto, all proceeds thereof (including
Insurance Proceeds relating thereto) and all of JCPR's rights, remedies,
powers and privileges with respect to such Receivables under the
Receivables Purchase Agreement against third parties.
In passing on the Registration Statement and the Prospectus, such
counsel may assume the correctness and completeness of the statements made or
included therein by JCPR and may take no responsibility therefor except insofar
as such statements relate to such counsel.
Such counsel shall deliver, or cause to be delivered, to the
Underwriters such additional opinions addressing the transfers or grantings of
security interests by JCPR to the Trustee effected by the Pooling and Servicing
Agreement as may be required by each Rating Agency rating the Certificates.
In rendering such opinion counsel may rely (A) as to matters involving
the application of laws of any jurisdiction other than the State of Texas, the
State of Delaware (as to its General Corporation Law) and the United States, to
the extent deemed proper and stated in such opinion, upon the opinion of other
counsel of good standing believed by such counsel to be reliable and acceptable
to you and your counsel, and (B) as to matters of fact, to the extent deemed
proper and as stated therein, on certificates of responsible officers of the
Trust, JCPR, JCPenney and public officials. References to the Prospectus in
this paragraph (h) include any supplements thereto.
(i) The Underwriters shall have received from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to the organization of JCPR, the validity
of the Certificates, the Registration Statement, the Prospectus and other
related matters as you may require, and JCPR shall have furnished to such
counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(j) The Underwriters shall have received a certificate, dated the
Closing Date, of the President and a principal financial or accounting officer
of JCPR in which each such officer, to the best of his or her knowledge after
reasonable investigation, shall state that the representations and warranties of
JCPR in this Agreement are true and correct in all material respects on and as
of the Closing Date, that JCPR has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date, the representa-
16
<PAGE>
tions and warranties of JCPR in the Pooling and Servicing Agreement are true and
correct as of the dates specified in the Pooling and Servicing Agreement, that
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
threatened by the Commission and that the Prospectus has been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the Rules and Regulations.
(k) The Underwriters shall have received an opinion of C. R. Lotter,
Executive Vice President, Secretary and General Counsel of JCPenney, addressed
to the Underwriter, dated the Closing Date and satisfactory in form to the
Representative and counsel for the Underwriters to the effect that:
(i) JCPenney has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified as a foreign corporation and in good standing in each
jurisdiction in which the performance of its obligations under this
Agreement, the Receivables Purchase Agreement and the Pooling and Servicing
Agreement would require such qualification.
(ii) This Agreement, the Receivables Purchase Agreement and the
Pooling and Servicing Agreement have been duly authorized, executed and
delivered by JCPenney.
(iii) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required in connection
with the execution, delivery and performance by JCPenney of this Agreement,
the Pooling and Servicing Agreement or the Receivables Purchase Agreement,
except such as may be required under the Act or state blue sky laws.
(iv) The execution and delivery of this Agreement, the Receivables
Purchase Agreement and the Pooling and Servicing Agreement, and the
consummation of the transactions contemplated thereby and the fulfillment
by JCPenney of the terms thereof, will not result in a breach or violation
of, or constitute a default under, any statute, rule, regulation or order
of any governmental agency or body or any court having jurisdiction over
JCPenney or any of its property,
17
<PAGE>
the Restated Certificate of Incorporation or Bylaws of JCPenney or any
material agreement or instrument to which JCPenney is a party or by which
JCPenney is bound or to which any of the property of JCPenney is subject.
(l) The Underwriters shall have received an opinion of Kramer, Levin,
Naftalis & Frankel LLP, counsel to the Trustee, addressed to the Underwriters,
dated the Closing Date and satisfactory in form and substance to the
Representative and counsel for the Underwriters to the effect that:
(i) The Trustee is a banking corporation validly existing and in
good standing under the laws of the State of New York with full power and
authority (corporate and other) to own its properties and conduct its
business, as presently conducted by it, and to enter into and perform its
obligations under the Pooling and Servicing Agreement.
(ii) The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee, and, assuming that such agreement is
a legally effective and enforceable obligation of each of the other parties
thereto, constitutes the legal, valid and binding agreement of the Trustee,
enforceable against the Trustee in accordance with its terms, except as the
enforceability thereof may be (a) limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation or other similar laws of general
applicability affecting the enforceability of creditors' rights generally
and (b) subject to general principles of equity (regardless of whether
considered in proceedings in equity or at law) as well as concepts of
reasonableness, good faith and fair dealing.
(iii) The certificates representing the Certificates have been duly
authenticated by the Trustee under the Pooling and Servicing Agreement.
(iv) Neither the execution nor the delivery by the Trustee of the
Pooling and Servicing Agreement nor the consummation of any of the
transactions by the Trustee contemplated under any provision thereof
requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action
18
<PAGE>
with respect to, any governmental authority or agency under any existing
Federal or New York law governing the banking or trust powers of the
Trustee.
(m) The Underwriter shall have received evidence satisfactory to the
Underwriter that the Certificates shall be rated AAA by Standard & Poor's and/or
Aaa by Moody's.
7. Indemnification and Contribution.
(a) JCPR and JCPenney will jointly and severally indemnify and hold
harmless each Underwriter and each person, if any, who controls such Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that (i) JCPR and JCPenney will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission made in any of such
documents in reliance upon and in conformity with written information furnished
to JCPR by any Underwriter for use therein and (ii) the indemnity agreements
contained in this paragraph (a) with respect to any such related preliminary
prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of the Certificates to any person asserting any such
losses, claims, damages, liabilities or expenses a copy of the Prospectus (or
the Prospectus as so amended or supplemented) was not sent or delivered to such
person and the untrue statement of a material fact contained in such related
preliminary prospectus was corrected in the Prospectus (or the Prospectus as so
amended or supplemented). This indemnity
19
<PAGE>
agreement will be in addition to any liability which JCPR or JCPenney may
otherwise have.
(b) Each Underwriter will indemnify and hold harmless JCPR and JCPenney,
each of their directors, each of their officers who have signed the Registration
Statement and each person, if any, who controls JCPR or JCPenney within the
meaning of the Act, against any losses, claims, damages or liabilities to which
JCPR or JCPenney or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to JCPR by such
Underwriter for use therein; and will reimburse any legal or other expenses
reasonably incurred by JCPR or JCPenney or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified
20
<PAGE>
party in connection with the defense thereof other than reasonable costs of
investigation. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with such
consent or if there has been a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(d) If recovery is not available under the foregoing indemnification
provisions of this Section, for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution for liabilities and expenses, except to the extent that
contribution is not permitted under Section 11(f) of the Act. In determining the
amount of contribution to which the respective parties are entitled, there shall
be considered the relative benefits received by each party from the offering of
the Certificates (taking into account the portion of the proceeds of the
offering realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission and any other
equitable considerations appropriate under the circumstances. JCPR, JCPenney and
the Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. Neither an
Underwriter nor any person controlling such Underwriter shall be obligated to
make contribution hereunder which in the aggregate exceeds the total public
offering price of the Certificates purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages which such Underwriter and
its controlling persons have otherwise been required to pay in respect of the
same claim or any substantially similar claim.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Certificates hereunder and the aggregate principal
amount of the Certificates which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total principal amount
of the Certificates, the Representative may make arrangements satisfactory to
JCPR for the purchase of such Certificates by other persons, including any of
the Underwriters, but if no such arrangements are made by the Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Certificates which such
defaulting Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters so default and the aggregate principal amount of Certificates with
respect to which such default or defaults occur is more than 10% of the total
principal amount of the Certificates and
21
<PAGE>
arrangements satisfactory to the Representative and JCPR for the purchase of
such Certificates by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any non-
defaulting Underwriter or JCPR, except as provided in Section 9 hereof. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
JCPR, JCPenney and the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Underwriter,
JCPR or JCPenney or any of their respective officers or directors or any
controlling person, and will survive delivery of and payment for the
Certificates. If for any reason the purchase of the Certificates by the
Underwriters pursuant to this Agreement is not consummated, JCPR shall remain
responsible for the expenses to be paid or reimbursed by JCPR pursuant to
Section 5 and the respective obligations of JCPR, JCPenney and the Underwriters
pursuant to Section 7 shall remain in effect. If for any reason the purchase of
the Certificates by the Underwriters is not consummated other than solely
because of the occurrence of any event specified in clauses (iii), (iv) or (v)
of Section 6(b), JCPR and JCPenney will reimburse the Underwriters for all out-
of-pocket expenses (including fees and disbursement of counsel) reasonably
incurred by them in connection with the offering of the Certificates.
10. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered or telegraphed and confirmed to them
c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, New
York 10010, Attention: Michael B. Raynes, and if sent to JCPR or JCPenney as the
case may be will be mailed, delivered or telegraphed and confirmed to JCPR, 6501
Legacy Drive, Mail Stop 1318, Plano, Texas 75024, Attention: President and to
JCPenney, 6501 Legacy Drive, Plano, Texas 75024, Attention: Treasurer.
11. Successors. This Underwriting Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.
22
<PAGE>
12. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
23
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement among JCPR, JCPenney and the Underwriters in
accordance with its terms.
Very truly yours,
JCP RECEIVABLES, INC.
By
-------------------------------------
Name: C. A. Walther
Title: President
J. C. PENNEY COMPANY, INC.
By
-------------------------------------
Name: R. B. Cavanaugh
Title: Vice President and Treasurer
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
As Representative of the Underwriters
named in Schedule A hereto
By
-------------------------------------
Name: Michael B. Raynes
Title: Director
<PAGE>
SCHEDULE A
UNDERWRITERS
$650,000,000 aggregate principal amount of 5.50%
Class A Asset Backed Certificates, Series E
Underwriter Principal Amount
----------- ----------------
Credit Suisse First Boston Corporation................... $455,000,000
Bear, Stearns & Co. Inc. ................................ 97,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................ 97,500 000
<PAGE>
SCHEDULE B
FORM OF SERVICER'S CERTIFICATE
CREDIT SUISSE FIRST BOSTON CORPORATION
As Representative of the Underwriters
Eleven Madison Avenue
New York, New York 10010
Attention:
Re: Pooling and Servicing Agreement dated as of September 5, 1988, as
amended as of October 15, 1997, as supplemented by the Series E
Supplement, dated as of November 25, 1998 (together, the "Pooling and
Servicing Agreement") among JCP Receivables, Inc., J. C. Penney
Company, Inc. and The Fuji Bank and Trust Company, as Trustee
---------------------------------------------------------------------
Determination Date to which this Certificate
relates: __________, ____
Applicable Record Date: __________, ____
1. The undersigned Servicing Officer does hereby certify that the Pool
Factor is ____________________________.
2. Capitalized terms used in this Certificate shall have the same
meanings as in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand as of the above-referenced
Determination Date.
J. C. PENNEY COMPANY, INC.,
as Servicer
By
-------------------------------------
Servicing Officer
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
JCP RECEIVABLES, INC.
and
J. C. PENNEY COMPANY, INC.
Servicer
and
THE FUJI BANK AND TRUST COMPANY
Trustee
on behalf of the Certificateholders
of the JCP Master Credit Card Trust
$792,682,926
SERIES E
- -------------------------------------------------------------------------------
SERIES E SUPPLEMENT
Dated as of November 25, 1998
to
MASTER
POOLING AND SERVICING AGREEMENT
Dated as of September 5, 1988, as amended as of October 15, 1997
- --------------------------------------------------------------------------------
<PAGE>
SERIES E SUPPLEMENT, dated as of November 25, 1998 (this "Series
Supplement") among JCP Receivables, Inc. ("JCPR"), J. C. Penney Company, Inc.
("JCPenney"), as Servicer, and The Fuji Bank and Trust Company, a banking
corporation organized and existing under the laws of New York (together with its
successors in interest, or any successor or additional trustee appointed as
provided in the Pooling and Servicing Agreement referred to below, the
"Trustee"), as trustee under the Master Pooling and Servicing Agreement dated as
of September 5, 1988, as amended as of October 15, 1997 (the "Pooling and
Servicing Agreement").
PRELIMINARY STATEMENT
Section 6.12 of the Pooling and Servicing Agreement provides, among
other things, that JCPR, JCPenney and the Trustee will enter into a Supplement
to issue the first Series of Certificates and may thereafter at any time and
from time to time enter into a Supplement to the Pooling and Servicing Agreement
for the purpose of authorizing the issuance by the Trustee to JCPR for execution
and redelivery to the Trustee for authentication one or more additional Series
of Certificates. If this Supplement is entered into in conjunction with the
issuance of one or more Series of Certificates other than the initial Series,
JCPR has tendered the Exchange Notice required by subsection 6.12(b) of the
Pooling and Servicing Agreement. JCPR, JCPenney and the Trustee hereby enter
into this Series Supplement as required by subsection 6.12(c) of the Pooling and
Servicing Agreement to provide for the issuance, authentication and delivery of
the Class A Certificates and the issuance of the Class B Investor Interest and
the Class C Investor Interest (each as defined in Section 1 below).
In the event that any term or provision contained herein shall
conflict with or be inconsistent with any provision contained in the Pooling and
Servicing Agreement, the terms and provisions of this Series Supplement shall
govern. All capitalized terms not otherwise defined herein are defined in the
Pooling and Servicing Agreement. Each capitalized term defined herein shall
relate only to the Class A Certificates, the Class B Investor Interest and the
Class C Investor Interest and no other Series of Investor Certificates issued by
the Trust.
SECTION 1. Designation. (a) There is hereby created a Series of
Investor Certificates to be issued in three classes pursuant to the Pooling and
Servicing Agreement and this Series Supplement and to be known together as
"Series E." The three classes shall be designated the 5.50% Class A Asset
Backed Certificates, Series E (the "Class A Certificates"), the Class B Investor
Interest, Series E (the "Class B Investor Interest") and the Class C Investor
Interest, Series E (the "Class C Investor Interest"). The Class A Certificates
shall be substantially in the
<PAGE>
form of Exhibit A hereto. Each of the Class B Investor Interest and the Class C
Investor Interest shall be an uncertificated interest in the Trust (subject to
the provisions of subsection 11(c) hereof), which shall be deemed to be an
"Investor Certificate" for all purposes under the Pooling and Servicing
Agreement and this Series Supplement, except as expressly provided herein.
(b) Each of the Class B Investor Interest Holder and the Class
C Investor Interest Holder, as holder of an "Investor Certificate" under the
Pooling and Servicing Agreement, shall be entitled to the benefits of the
Pooling and Servicing Agreement and this Series Supplement upon payment by such
Class B Investor Interest Holder or such Class C Investor Interest Holder, as
applicable, of the purchase price of the Class B Investor Interest or the
Class C Investor Interest, as applicable. Notwithstanding the foregoing,
except as expressly provided herein, (i) (A) the provisions of Article VI of
the Pooling and Servicing Agreement relating to the registration,
authentication, delivery, presentation, cancellation and surrender of
registered Certificates and (B) the opinion described in subsection 6.12(b)(e)
of the Pooling and Servicing Agreement shall not, subject in the case of
clause (A) to the provisions of subsection 11(c) hereof, be applicable to the
Class B Investor Interest or the Class C Investor Interest and (ii) the
provisions of Section 3.7 of the Pooling and Servicing Agreement shall not
apply to cause the Class C Investor Interest (or the Class B Investor
Interest while retained by JCPR) to be treated as debt for federal, state and
local income and franchise tax purposes, but rather JCPR intends and, together
with the Class C Investor Interest Holder, agrees to treat the Class C
Investor Interest (and the Class B Investor Interest while retained by JCPR)
for federal, state and local income and franchise tax purposes as representing
an equity interest in the assets of the Trust.
SECTION 2. Definitions.
"Adjusted Investor Amount" shall mean, with respect to Series E, the
Adjusted Investor Interest.
"Adjusted Investor Interest" shall mean, with respect to any date of
determination, an amount equal to the sum of (a) the Class A Adjusted Investor
Interest, (b) the Class B Adjusted Investor Interest and (c) the Class C
Adjusted Investor Interest.
"Amortization Commencement Date" shall mean the first day of the
Controlled Accumulation Period or the Rapid Amortization Period, as applicable.
"Assignee" shall have the meaning specified in subsection 9(a) hereof.
2
<PAGE>
"Available Investor Principal Collections" shall mean with respect to
any Monthly Period, an amount equal to (a) the Investor Principal Collections
for such Monthly Period, minus (b) the amount of Reallocated Class C Principal
Collections and Reallocated Class B Principal Collections with respect to such
Monthly Period which pursuant to Section 4.19 hereof are used to fund the Class
A Required Amount and the Class B Required Amount.
"Base Rate" shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is equal
to the sum of the Class A Monthly Interest, the Class B Monthly Interest and the
Class C Monthly Interest, each for the related Interest Period, and the Investor
Monthly Servicing Fee for such Monthly Period, and the denominator of which is
the Investor Interest as of the close of business on the last day of such
Monthly Period.
"Class A Account Percentage" shall mean, with respect to any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the aggregate amount on deposit in the Principal Funding Account with respect
to Class A Monthly Principal as of the Record Date preceding the related
Transfer Date and the denominator of which is the aggregate amount on deposit in
the Principal Funding Account with respect to Class A Monthly Principal and
Class B Monthly Principal as of the Record Date preceding the related Transfer
Date.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.13(a) hereof.
"Class A Adjusted Investor Interest" shall mean, with respect to any
date of determination, an amount equal to the Class A Investor Interest minus
-----
the funds on deposit in the Principal Funding Account (in an amount not to
exceed the Class A Investor Interest) on such date of determination.
"Class A Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) the Class A Floating Allocation of the
Collections of Finance Charge Receivables and Net Recoveries allocated to the
Investor Certificates and deposited in the Finance Charge Account for such
Monthly Period, (b) the Class A Account Percentage of the Principal Funding
Investment Proceeds, if any, with respect to the related Transfer Date and (c)
the amount deposited into the Finance Charge Account pursuant to subsection
4.20(e) hereof.
"Class A Certificate Rate" shall mean 5.50% per annum, calculated on
the basis of a 360-day year consisting of twelve 30-day months.
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"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any of the certificates executed by
JCPR and authenticated by or on behalf of the Trustee, substantially in the form
of Exhibit A hereto.
"Class A Deficiency Amount" shall have the meaning specified in
subsection 4.13(a) hereof.
"Class A Expected Final Distribution Date" shall mean the November
2003 Distribution Date.
"Class A Fixed Allocation" shall mean, with respect to any Monthly
Period following the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class A Investor Interest as of the close of business on the last day of the
Revolving Period and the denominator of which is equal to the Investor Interest
as of the close of business on the last day of the Revolving Period.
"Class A Floating Allocation" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class A Adjusted Investor Interest as
of the close of business on the last day of the preceding Monthly Period (or
with respect to the first Monthly Period, as of the Closing Date) and the
denominator of which is the Adjusted Investor Interest as of the close of
business on such day.
"Class A Initial Investor Interest" shall mean the aggregate initial
principal amount of the Class A Certificates, which is $650,000,000.
"Class A Investor Allocation" shall mean with respect to any Monthly
Period, (a) with respect to Default Amounts and Finance Charge Receivables at
any time and Principal Receivables during the Revolving Period, the Class A
Floating Allocation, and (b) with respect to Principal Receivables during the
Controlled Accumulation Period or the Rapid Amortization Period, the Class A
Fixed Allocation.
"Class A Investor Charge-Offs" shall have the meaning specified in
subsection 4.17(a) hereof.
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"Class A Investor Default Amount" shall mean, with respect to each
Transfer Date, an amount equal to the product of (a) the Investor Default Amount
for the related Monthly Period and (b) the Class A Floating Allocation for the
related Monthly Period.
"Class A Investor Interest" shall mean, on any date of determination,
an amount equal to (a) the Class A Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class A Certificateholders prior
to such date and minus (c) the excess, if any, of the aggregate amount of Class
A Investor Charge-Offs pursuant to subsection 4.17(a) hereof over Class A
Investor Charge-Offs reimbursed pursuant to subsection 4.18(b) hereof prior to
such date of determination; provided, however, that the Class A Investor
Interest may not be reduced below zero.
"Class A Monthly Interest" shall mean the monthly interest
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.13(a) hereof.
"Class A Monthly Principal" shall mean the monthly principal to be
deposited or distributed in respect of the Class A Certificates as calculated in
accordance with subsection 4.14(a) hereof.
"Class A Required Amount" shall have the meaning specified in
subsection 4.15(a) hereof.
"Class A Servicing Fee" shall have the meaning specified in Section 3
hereof.
"Class B Account Percentage" shall mean, with respect to any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the aggregate amount on deposit in the Principal Funding Account with respect
to Class B Monthly Principal as of the Record Date preceding the related
Transfer Date and the denominator of which is the aggregate amount on deposit in
the Principal Funding Account with respect to Class A Monthly Principal and
Class B Monthly Principal as of the Record Date preceding the related Transfer
Date.
"Class B Additional Interest" shall have the meaning specified in
subsection 4.13(b) hereof.
"Class B Adjusted Investor Interest" shall mean, with respect to any
date of determination, an amount equal to the Class B Investor Interest minus
the
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excess, if any, of the Principal Funding Account Balance over the Class A
Investor Interest on such date of determination (such excess not to exceed the
Class B Investor Interest).
"Class B Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) the Class B Floating Allocation of the
Collections of Finance Charge Receivables and Net Recoveries allocated to the
Investor Certificates and deposited in the Finance Charge Account for such
Monthly Period and (b) the Class B Account Percentage of the Principal Funding
Investment Proceeds, if any, with respect to the related Transfer Date.
"Class B Deficiency Amount" shall have the meaning specified in
subsection 4.13(b) hereof.
"Class B Expected Final Distribution Date" shall mean the December
2003 Distribution Date.
"Class B Fixed Allocation" shall mean, with respect to any Monthly
Period following the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class B Investor Interest as of the close of business on the last day of the
Revolving Period and the denominator of which is equal to the Investor Interest
as of the close of business on the last day of the Revolving Period.
"Class B Floating Allocation" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class B Adjusted Investor Interest as
of the close of business on the last day of the preceding Monthly Period (or
with respect to the first Monthly Period, as of the Closing Date) and the
denominator of which is the Adjusted Investor Interest as of the close of
business on such day.
"Class B Initial Investor Interest" shall mean $71,341,463.
"Class B Investor Allocation" shall mean with respect to any Monthly
Period, (a) with respect to Default Amounts and Finance Charge Receivables at
any time or Principal Receivables during the Revolving Period, the Class B
Floating Allocation, and (b) with respect to Principal Receivables during the
Controlled Accumulation Period or the Rapid Amortization Period, the Class B
Fixed Allocation.
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"Class B Investor Charge-Offs" shall have the meaning specified in
subsection 4.17(b) hereof.
"Class B Investor Default Amount" shall mean, with respect to each
Transfer Date, an amount equal to the product of (a) the Investor Default Amount
for the related Monthly Period and (b) the Class B Floating Allocation for the
related Monthly Period.
"Class B Investor Interest" shall mean, on any date of determination,
an amount equal to (a) the Class B Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to the Class B Investor Interest
Holder prior to such date, minus (c) the aggregate amount of Class B Investor
Charge-Offs for all prior Transfer Dates pursuant to subsection 4.17(b) hereof,
minus (d) the amount of the Reallocated Class B Principal Collections allocated
pursuant to subsection 4.19(a) hereof on all prior Transfer Dates for which the
Class C Investor Interest has not been reduced, minus (e) an amount equal to the
amount by which the Class B Investor Interest has been reduced on all prior
Transfer Dates pursuant to subsection 4.17(a) hereof and plus (f) the aggregate
amount of Excess Spread allocated and available on all prior Transfer Dates
pursuant to subsection 4.18(d) hereof for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (c), (d) and (e); provided, however,
that the Class B Investor Interest may not be reduced below zero.
"Class B Investor Interest Holder" shall mean the entity so designated
in writing by JCPR to the Trustee.
"Class B Monthly Interest" shall mean the monthly interest
distributable in respect of the Class B Investor Interest as calculated in
accordance with subsection 4.13(b) hereof.
"Class B Monthly Principal" shall mean the monthly principal to be
deposited or distributed in respect of the Class B Investor Interest as
calculated in accordance with subsection 4.14(b) hereof.
"Class B Rate" shall mean 0% per annum, or such higher rate not in
excess of the applicable U.S. Treasury rate based on the remaining term to
maturity of the Class B Investor Interest at the time such rate is designated
plus 200 basis points (or a floating rate equivalent of such rate at such time),
as most recently designated to be the "Class B Rate" by JCPR to the Trustee in
writing.
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"Class B Required Amount" shall have the meaning specified in
subsection 4.15(b) hereof.
"Class B Servicing Fee" shall have the meaning specified in Section 3
hereof.
"Class C Adjusted Investor Interest" shall mean, with respect to any
date of determination, an amount equal to the Class C Investor Interest minus
the excess, if any, of the Principal Funding Account Balance over the sum of the
Class A Investor Interest and the Class B Investor Interest on such date of
determination (such excess not to exceed the Class C Investor Interest).
"Class C Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the Class C Floating Allocation of the Collections of
Finance Charge Receivables and Net Recoveries allocated to the Investor
Certificates and deposited in the Finance Charge Account for such Monthly
Period.
"Class C Fixed Allocation" shall mean with respect to any Monthly
Period following the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class C Investor Interest as of the close of business on the last day of the
Revolving Period and the denominator of which is equal to the Investor Interest
as of the close of business on the last day of the Revolving Period.
"Class C Floating Allocation" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class C Adjusted Investor Interest as
of the close of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Adjusted Investor Interest as of the close
of business on such day.
"Class C Initial Investor Interest" shall mean $71,341,463.
"Class C Investor Allocation" shall mean with respect to any Monthly
Period, (a) with respect to Default Amounts and Finance Charge Receivables at
any time or Principal Receivables during the Revolving Period, the Class C
Floating Allocation, and (b) with respect to Principal Receivables during the
Controlled Accumulation Period or the Rapid Amortization Period, the Class C
Fixed Allocation.
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<PAGE>
"Class C Investor Charge-Offs" shall have the meaning specified in
subsection 4.17(c) hereof.
"Class C Investor Default Amount" shall mean, with respect to each
Transfer Date, an amount equal to the product of (a) the Investor Default Amount
for the related Monthly Period and (b) the Class C Floating Allocation for the
related Monthly Period.
"Class C Investor Interest" shall mean, on any date of determination,
an amount equal to (a) the Class C Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to the Class C Investor Interest
Holder prior to such date, minus (c) the aggregate amount of Class C Investor
Charge-Offs for all prior Transfer Dates pursuant to subsection 4.17(c) hereof,
minus (d) the amount of Reallocated Principal Collections allocated pursuant to
subsections 4.19(a) and (b) hereof on all prior Transfer Dates, minus (e) an
amount equal to the amount by which the Class C Investor Interest has been
reduced on all prior Transfer Dates pursuant to subsections 4.17(a) and (b)
hereof, and plus (f) the aggregate amount of Excess Spread allocated and
available on all prior Transfer Dates pursuant to subsection 4.18(i) hereof for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Class C Investor Interest may not
be reduced below zero.
"Class C Investor Interest Holder" shall mean the entity so designated
in writing by JCPR to the Trustee.
"Class C Monthly Interest" shall mean the monthly interest
distributable in respect of the Class C Investor Interest as calculated in
accordance with subsection 4.13(c) hereof.
"Class C Monthly Principal" shall mean the monthly principal to be
deposited or distributed in respect of the Class C Investor Interest as
calculated in accordance with subsection 4.14(c) hereof.
"Class C Rate" shall mean 0% per annum, or such higher rate not in
excess of the applicable U.S. Treasury rate based on the remaining term to
maturity of the Class C Investor Interest at the time such rate is designated
plus 200 basis points (or a floating rate equivalent of such rate at such time),
as most recently designated to be the "Class C Rate" by JCPR to the Trustee in
writing.
"Class C Servicing Fee" shall have the meaning specified in Section 3
hereof.
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"Closing Date" shall mean November 25, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Controlled Accumulation Amount" shall mean for any Transfer Date with
respect to the Controlled Accumulation Period, $108,333,333.34
"Controlled Accumulation Period" shall mean, unless a Pay Out Event
shall have occurred prior thereto, the period commencing at the end of the day
on April 30, 2003 and ending on the first to occur of (a) the commencement of
the Rapid Amortization Period or (b) the payment of the Investor Interest in
full.
"Controlled Deposit Amount" shall mean, with respect to any Transfer
Date, the sum of (a) the Controlled Accumulation Amount for such Transfer Date
and (b) any existing Deficit Controlled Accumulation Amount.
"Covered Amount" shall mean an amount, determined as of each Transfer
Date, equal to one-twelfth of the product of (i) the Class A Certificate Rate
and (ii) the aggregate amount on deposit in the Principal Funding Account with
respect to Class A Monthly Principal as of the Record Date preceding such
Transfer Date.
"Deficit Controlled Accumulation Amount" shall mean, on the first
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount over the amount of Class A
Monthly Principal for the related Distribution Date and, on each subsequent
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Deposit Amount over the amount of Class A
Monthly Principal (or, after the Class A Certificates have been paid in full,
the Class B Monthly Principal) for such Distribution Date.
"Excess Spread" shall mean, with respect to any Transfer Date, the sum
of the amounts with respect to such Transfer Date, if any, specified pursuant to
subsections 4.16(a)(iv), 4.16(b)(iii) and 4.16(c)(ii) hereof.
"Final Maturity Date" shall mean June 15, 2007.
"Fixed Investor Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent of a fraction, the numerator of which is the
Investor Interest as of the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the aggregate amount of Principal
Receivables in the Trust
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as of the end of the last day of the prior Monthly Period and (b) the sum of the
numerators used to calculate the Investor Percentages for allocations with
respect to Principal Receivables for all outstanding Series on such date of
determination.
"Floating Investor Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent of a fraction, the numerator of which is the
Adjusted Investor Interest as of the end of the last day of the preceding
Monthly Period (or with respect to the first Monthly Period, the Initial
Investor Interest), except that such numerator as applied to Finance Charge
Receivables during the Controlled Accumulation Period and the Rapid Amortization
Period shall be the Adjusted Investor Interest as of the end of the last day
preceding the commencement of the Controlled Accumulation Period or the Rapid
Amortization Period, as the case may be, and the denominator of which is the
greater of (a) the aggregate amount of Principal Receivables in the Trust as of
the end of the last day of the preceding Monthly Period (or with respect to the
first calendar month in the first Monthly Period, the aggregate amount of
Principal Receivables in the Trust as of the end of the day immediately
preceding the Closing Date), and (b) the sum of the numerators used to calculate
the Investor Percentages for allocations with respect to Finance Charge
Receivables, Default Amounts or Principal Receivables, as applicable, for all
outstanding Series on such date of determination.
"Initial Investor Amount" shall mean, with respect to Series E, the
Initial Investor Interest.
"Initial Investor Interest" shall mean $792,682,926.
"Interest Period" shall mean, with respect to any Distribution Date,
the period from and including the previous Distribution Date (or in the case of
the first Distribution Date, from and including the Closing Date) through the
day preceding such Distribution Date.
"Investment Letter" shall have the meaning specified in subsection
9(a) hereof.
"Investor Amount" shall mean, with respect to Series E, the Investor
Interest.
"Investor Certificateholder" shall mean (a) with respect to the Class
A Certificates, the holder of record of a Class A Certificate, (b) with respect
to the Class B Investor Interest, the Class B Investor Interest Holder and (c)
with respect to the Class C Investor Interest, the Class C Investor Interest
Holder.
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<PAGE>
"Investor Certificates" shall mean the Class A Certificates, the Class
B Investor Interest and the Class C Investor Interest.
"Investor Interest" shall mean, on any date of determination, an
amount equal to the sum of (a) the Class A Investor Interest, (b) the Class B
Investor Interest and (c) the Class C Investor Interest, each as of such date.
"Investor Percentage" shall mean for any Monthly Period, (a) with
respect to Finance Charge Receivables and Default Amounts at any time and
Principal Receivables during the Revolving Period, the Floating Investor
Percentage and (b) with respect to Principal Receivables during the Controlled
Accumulation Period or the Rapid Amortization Period, the Fixed Investor
Percentage.
"Investor Principal Collections" shall mean, with respect to any
Monthly Period, the sum of (a) the aggregate amount deposited into the Principal
Account for such Monthly Period with respect to Series E pursuant to subsections
4.3(c) and 4.3(f) of the Pooling and Servicing Agreement and (b) the aggregate
amount to be treated as Investor Principal Collections pursuant to subsections
4.16(a)(iii) and 4.18(a), (b), (c), (d), (h) and (i) hereof for such Monthly
Period (other than such amount paid from Reallocated Principal Collections).
"Minimum JCPR Percentage" shall mean 15%.
"Monthly Interest" shall mean, with respect to any Transfer Date, the
sum of (a) the Class A Monthly Interest, the Class A Additional Interest, if
any, and the unpaid Class A Deficiency Amount, if any, (b) the Class B Monthly
Interest, the Class B Additional Interest, if any, and the unpaid Class B
Deficiency Amount, if any, and (c) the Class C Monthly Interest and any
previously due and unpaid Class C Monthly Interest, each with respect to such
Transfer Date.
"Monthly Period" shall have the meaning specified in the Pooling and
Servicing Agreement, except that the first Monthly Period with respect to the
Investor Certificates shall begin on and include the Closing Date and shall end
on and include November 30, 1998.
"Permitted Assignee" shall mean any Person who, if it were the Class B
Investor Interest Holder or the Class C Investor Interest Holder or a holder of
an interest in the Trust, as applicable, would not cause the Trust to be taxable
as a publicly traded partnership taxable as a corporation for federal income tax
purposes.
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"Portfolio Yield" shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction the numerator of which is the sum
of (a) the amount of Finance Charge Receivables deposited in the Finance Charge
Account pursuant to Section 4.3 of the Pooling and Servicing Agreement and
allocated to Series E, calculated on a cash basis after subtracting the Investor
Default Amount of Series E for such Monthly Period and (b) the Principal Funding
Investment Proceeds for the Transfer Date related to such Monthly Period, and
the denominator of which is the Investor Amount as of the last day of the
preceding Monthly Period.
"Principal Funding Account" shall have the meaning set forth in
subsection 4.20(a) hereof.
"Principal Funding Account Balance" shall mean, with respect to any
date of determination, the principal amount, if any, on deposit in the Principal
Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall mean, with respect to
each Transfer Date, the investment earnings on funds in the Principal Funding
Account (net of investment expenses and losses) for the period from and
including the immediately preceding Transfer Date to but excluding such Transfer
Date.
"Principal Funding Investment Shortfall" shall have the meaning set
forth in subsection 4.20(d) hereof.
"Rapid Amortization Period" shall mean the Amortization Period
commencing on the Pay Out Commencement Date and ending on the Series E
Termination Date.
"Rating Agency" shall mean Moody's and Standard & Poor's.
"Rating Agency Condition" shall mean the notification in writing by
each Rating Agency to JCPR, the Servicer and the Trustee that an action with
respect to the Trust will not result in such Rating Agency reducing or
withdrawing its then existing rating of the Certificates of any outstanding
Series or class of a Series with respect to which it is a Rating Agency.
"Reallocated Class B Principal Collections" shall mean, with respect
to any Transfer Date, Collections of Principal Receivables applied in accordance
with subsection 4.19(a) hereof in an amount not to exceed the product of (a) the
Class B Investor Allocation with respect to the Monthly Period relating to such
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Transfer Date and (b) the Investor Percentage with respect to the Monthly Period
relating to such Transfer Date and (c) the amount of Collections of Principal
Receivables with respect to the Monthly Period relating to such Transfer Date;
provided, however, that such amount shall not exceed the Class B Investor
Interest after giving effect to any Class B Investor Charge-Offs for such
Transfer Date.
"Reallocated Class C Principal Collections" shall mean, with respect
to any Transfer Date, Collections of Principal Receivables applied in accordance
with subsections 4.19(a) and (b) hereof in an amount not to exceed the product
of (a) the Class C Investor Allocation with respect to the Monthly Period
relating to such Transfer Date and (b) the Investor Percentage with respect to
the Monthly Period relating to such Transfer Date and (c) the amount of
Collections of Principal Receivables with respect to the Monthly Period relating
to such Transfer Date; provided, however, that such amount shall not exceed the
Class C Investor Interest after giving effect to any Class C Investor Charge-
Offs for such Transfer Date.
"Reallocated Principal Collections" shall mean the sum of (a)
Reallocated Class B Principal Collections and (b) Reallocated Class C Principal
Collections.
"Required Class C Investor Interest" shall mean (a) initially,
$71,341,463 and (b) on any Transfer Date thereafter, 9.0% of the sum of the
Class A Adjusted Investor Interest and the Class B Adjusted Investor Interest on
such Transfer Date, after taking into account payments to be made on the related
Distribution Date, and the Class C Adjusted Investor Interest on the prior
Transfer Date, after any adjustments to be made on such date, but not less than
$23,780,488; provided, however, that (x) if either (i) there is a reduction in
the Class C Investor Interest pursuant to clause (c), (d) or (e) of the
definition of such term or (ii) a Pay Out Event with respect to the Investor
Certificates has occurred (or in the event that the Class A Certificates are not
paid in full on the Class A Expected Final Distribution Date or the outstanding
principal amount of the Class B Investor Interest is not paid in full on the
Class B Expected Final Distribution Date), the Required Class C Investor
Interest for any Transfer Date shall equal the Required Class C Investor
Interest for the Transfer Date immediately preceding such reduction or Pay Out
Event (or failure to make payment in full), (y) in no event shall the Required
Class C Investor Interest exceed the sum of the outstanding principal amounts of
(i) the Class A Certificates and (ii) the Class B Investor Interest, each as of
the last day of the Monthly Period preceding such Transfer Date after taking
into account the payments to be made on the related Distribution Date and (z)
the Required Class C Investor Interest may be reduced at JCPR's option at any
time to a lesser amount if the Rating Agency
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Condition shall have been satisfied and a Tax Opinion shall have been delivered
to the Trustee.
"Revolving Period" shall mean the period from and including the
Closing Date to, but not including, the Amortization Commencement Date.
"Series E" shall mean the Series of the JCP Master Credit Card Trust
represented by the Investor Certificates.
"Series E Termination Date" shall mean the earliest to occur of (a)
the Distribution Date on which the Investor Interest is paid in full, (b) the
Final Maturity Date and (c) the termination of the Trust pursuant to Section
12.1 of the Pooling and Servicing Agreement.
"Servicing Fee Percentage" shall mean 2.0%.
"Tax Opinion" shall mean with respect to any action, an Opinion of
Counsel to the effect that, for federal income tax purposes, (a) such action
will not adversely affect the tax characterization as debt of Investor
Certificates of any outstanding Series that were characterized as debt at the
time of their issuance, (b) following such action the Trust will not be deemed
to be an association (or publicly traded partnership) taxable as a corporation
and (c) such action will not cause or constitute an event in which gain or loss
would be recognized by any Investor Certificateholder or the Trust unless, in
the case of an Investor Certificateholder, such Investor Certificateholder shall
have consented to such action.
"Transfer" shall have the meaning specified in subsection 9(a) hereof.
SECTION 3. Servicing Compensation. The share of the Investor
Monthly Servicing Fee with respect to Series E allocable to the Class A
Investor Interest with respect to any Transfer Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (i) the Class A Floating
Allocation, (ii) the Servicing Fee Percentage and (iii) the Adjusted Investor
Interest as of the first day of the Monthly Period preceding such Transfer
Date; provided, however, that with respect to the first Transfer Date, the
Class A Servicing Fee shall be $216,667. The share of the Investor Monthly
Servicing Fee with respect to Series E allocable to the Class B Investor
Interest with respect to any Transfer Date (the "Class B Servicing Fee") shall
be equal to one-twelfth of the product of (i) the Class B Floating Allocation,
(ii) the Servicing Fee Percentage and (iii) the Adjusted Investor Interest as
of the first day of the Monthly Period preceding such Transfer Date; provided,
however, that with respect to the first Transfer Date, the Class B Servicing
Fee shall be
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$23,780. The share of the Investor Monthly Servicing Fee with respect to Series
E allocable to the Class C Investor Interest with respect to any Transfer Date
(the "Class C Servicing Fee") shall be equal to one-twelfth of the product of
(i) the Class C Floating Allocation, (ii) the Servicing Fee Percentage and (iii)
the Adjusted Investor Interest as of the first day of the Monthly Period
preceding such Transfer Date; provided, however, that with respect to the first
Transfer Date, the Class C Servicing Fee shall be $23,780. The Class A Servicing
Fee shall be payable to the Servicer solely to the extent amounts are available
for distribution in respect thereof pursuant to subsections 4.16(a)(ii) and
4.18(a) hereof. The Class B Servicing Fee shall be payable to the Servicer
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsection 4.18(d) or, if applicable, subsections 4.16(b)(ii) and
4.18(c) hereof. The Class C Servicing Fee shall be payable to the Servicer
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsection 4.18(g) or, if applicable, subsection 4.16(c)(i) hereof.
SECTION 4. Reassignment and Transfer Terms. The Investor Interest
shall be subject to retransfer to JCPR at its option, in accordance with the
terms specified in subsection 12.2(a) of the Pooling and Servicing Agreement,
on any Distribution Date on or after the Class A Expected Final Distribution
Date. The deposit required in connection with any such reassignment shall be
equal to the sum of (a) the Investor Interest and (b) accrued and unpaid
interest on the Investor Certificates through the day preceding the
Distribution Date on which the repurchase occurs.
SECTION 5. Delivery and Payment for the Class A Certificates. The
Trustee shall deliver the Class A Certificates when authenticated in
accordance with Section 6.2 of the Pooling and Servicing Agreement to Credit
Suisse First Boston Corporation upon payment to JCPR of $644,107,139.
SECTION 6. Form of Delivery of the Class A Certificates; Depository.
(a) The Class A Certificates shall be delivered as Book-Entry
Certificates as provided in Section 6.9 of the Pooling and Servicing Agreement.
(b) The Class A Certificates shall be initially registered in
the name of Cede & Co., as nominee of The Depository Trust Company.
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SECTION 7. Article IV of the Pooling and Servicing Agreement as
Applied to Series E. Sections 4.1 through 4.9 shall be read in their entirety
as provided in the Pooling and Servicing Agreement, except as modified hereby.
In addition, the following Sections 4.11 through 4.20 shall be applicable to
Series E.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.11 Rights of Class A Certificateholders, the Class B
Investor Interest Holder and the Class C Investor Interest Holder. The Investor
Certificates shall represent the right (which in the case of the Class A
Certificates and the Class B Investor Interest shall represent limited recourse
indebtedness) to receive, to the extent necessary to make the required payments
with respect to such Investor Certificates at the times and in the amounts
specified in this Agreement, (a) the Floating Investor Percentage and Fixed
Investor Percentage (as applicable from time to time) of Collections received
with respect to the Receivables and, without duplication, (b) funds on deposit
in the Collection Account, the Finance Charge Account, the Principal Account,
the Principal Funding Account and the Distribution Account. The Class C
Investor Interest shall be subordinate with respect to payment to the Class A
Certificates and the Class B Investor Interest. The Class B Investor Interest
shall be subordinate with respect to payment to the Class A Certificates.
SECTION 4.12 Allocations for Series E.
With respect to the Investor Certificates, and notwithstanding
anything in the Pooling and Servicing Agreement to the contrary, with respect to
any Monthly Period (i) the Servicer will only be required to deposit Collections
from the Collection Account into the Finance Charge Account, the Principal
Account or the Principal Funding Account, as applicable, up to the required
amount to be deposited into any such account or, without duplication,
distributed on or prior to the related Distribution Date to the Investor
Certificateholders and (ii) if at any time prior to such Distribution Date the
amount of Collections deposited in the Collection Account exceeds the amount
required to be deposited pursuant to clause (i) above, the Servicer will be
permitted to withdraw the excess from the Collection Account.
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SECTION 4.13 Determination of Monthly Interest.
(a) The amount of monthly interest distributable with respect
to the Class A Certificates shall be an amount equal to one-twelfth of the
product of (i) the Class A Certificate Rate times (ii) the outstanding
principal balance of the Class A Certificates determined as of the Record Date
preceding the related Transfer Date (the "Class A Monthly Interest"); provided,
however, that with respect to the December 1998 Distribution Date, Class A
Monthly Interest shall be equal to the interest accrued on the outstanding
principal balance of the Class A Certificates at the Class A Certificate Rate
for the period from and including the Closing Date through but excluding
December 15, 1998; provided, further, that in addition to the Class A Monthly
Interest an amount equal to the amount of any unpaid Class A Deficiency
Amounts, as defined below, plus an amount equal to the product of (A) the sum
of the Class A Certificate Rate plus 2% per annum and (B) any Class A
Deficiency Amount from the prior Transfer Date, as defined below (or the
portion thereof which has not theretofore been paid to Class A
Certificateholders) (the "Class A Additional Interest") shall also be
distributable with respect to the Class A Certificates, and on such Transfer
Date the Trustee shall deposit such funds, to the extent available, into the
Distribution Account; provided further, that the "Class A Deficiency Amount"
for any Transfer Date shall be equal to the excess, if any, of the aggregate
amount accrued pursuant to this subsection 4.13(a) as of the prior Interest
Period over the amount actually transferred to the Distribution Account for
payment of such amount.
(b) The amount of monthly interest distributable with respect
to the Class B Investor Interest shall be an amount equal to one-twelfth of
the product of (i) the Class B Rate times (ii) the outstanding principal
balance of the Class B Investor Interest determined as of the Record Date
preceding the related Transfer Date (the "Class B Monthly Interest"); provided,
however, that with respect to the December 1998 Distribution Date, Class B
Monthly Interest shall be $0; provided, further, that in addition to the Class B
Monthly Interest an amount equal to the amount of any unpaid Class B
Deficiency Amounts, as defined below, plus an amount equal to the product of
(A) the sum of the Class B Rate plus 2% per annum and (B) any Class B
Deficiency Amount from the prior Transfer Date, as defined below (or the
portion thereof which has not theretofore been paid to the Class B Investor
Interest Holder) (the "Class B Additional Interest") shall also be
distributable with respect to the Class B Investor Interest, and on such
Transfer Date the Trustee shall deposit such funds, to the extent available,
into the Distribution Account; provided further, that the "Class B Deficiency
Amount" for any Transfer Date shall be equal to the excess, if any, of the
aggregate amount accrued pursuant to this subsection 4.13(b) as of the prior
Interest Period over the amount actually
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transferred to the Distribution Account for payment of such amount.
Notwithstanding the foregoing, until JCPR shall make the designation referred to
in the definition of "Class B Rate," no interest shall be payable with respect
to the Class B Investor Interest.
(c) The amount of monthly interest distributable with respect
to the Class C Investor Interest shall be an amount equal to one-twelfth of
the product of (i) the Class C Rate times (ii) the outstanding principal
balance of the Class C Investor Interest determined as of the Record Date
preceding the related Transfer Date (the "Class C Monthly Interest"); provided,
however, that with respect to the December 1998 Distribution Date, Class C
Monthly Interest shall be $0. Notwithstanding the foregoing, until JCPR shall
make the designation referred to in the definition of "Class C Rate," no
interest shall be payable with respect to the Class C Investor Interest.
SECTION 4.14 Determination of Monthly Principal.
(a) The amount of monthly principal to be deposited in the
Principal Funding Account or the Distribution Account, as applicable, from the
Principal Account with respect to the Class A Certificates on each Transfer Date
("Class A Monthly Principal"), beginning with the Transfer Date in the month
following the month in which the Controlled Accumulation Period or, if earlier,
the Rapid Amortization Period, begins, shall be equal to the least of (i) the
Available Investor Principal Collections on deposit in the Principal Account
with respect to such Transfer Date, (ii) for each Transfer Date with respect
to the Controlled Accumulation Period, the Controlled Deposit Amount for such
Transfer Date and (iii) the Class A Adjusted Investor Interest (after taking
into account any adjustments to be made on such Transfer Date pursuant to
Section 4.17 hereof) prior to any deposits or distributions with respect to
such Transfer Date.
(b) The amount of monthly principal to be deposited in the
Principal Funding Account or the Distribution Account, as applicable, from
the Principal Account with respect to the Class B Investor Interest on each
Transfer Date (the "Class B Monthly Principal") with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, beginning with the
Transfer Date immediately preceding the Distribution Date on which the
Class A Investor Interest will be paid in full (after taking into account
payments to be made on such Distribution Date), shall be an amount equal to the
least of (i) the Available Investor Principal Collections on deposit in the
Principal Account with respect to such Transfer Date (minus the portion of such
Available Investor Principal Collections applied to Class A Monthly Principal
on such Transfer Date), (ii) for each Transfer Date with respect
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to the Controlled Accumulation Period, the Controlled Deposit Amount for such
Transfer Date (minus the Class A Monthly Principal with respect to such Transfer
Date) and (iii) the Class B Adjusted Investor Interest (after taking into
account any adjustments to be made on such Transfer Date pursuant to Sections
4.17 and 4.19 hereof) prior to any deposits or distributions with respect to
such Transfer Date.
(c) The amount of monthly principal to be deposited in the
Principal Funding Account or the Distribution Account, as applicable, from the
Principal Account with respect to the Class C Investor Interest on each
Transfer Date (the "Class C Monthly Principal") shall be (A) during the
Revolving Period following any reduction of the Required Class C Investor
Interest pursuant to clause (z) of the proviso in the definition thereof, an
amount equal to the lesser of (1) the excess, if any, of the Class C Investor
Interest (after taking into account any adjustments to be made on such Transfer
Date pursuant to Sections 4.17 and 4.19 hereof) over the Required Class C
Investor Interest on such Transfer Date and (2) the Available Investor
Principal Collections on such Transfer Date or (B) during the Controlled
Accumulation Period or the Rapid Amortization Period, an amount equal to the
lesser of (1) the excess, if any, of the Class C Investor Interest (after
taking into account any adjustments to be made on such Transfer Date pursuant
to Sections 4.17 and 4.19 hereof) over the Required Class C Investor Interest
on such Transfer Date and (2) the excess, if any, of (i) the Available
Investor Principal Collections on such Transfer Date over (ii) the sum of the
Class A Monthly Principal and the Class B Monthly Principal for such Transfer
Date.
SECTION 4.15 Coverage of Required Amount.
(a) On or before each Transfer Date, the Servicer shall
determine the amount (the "Class A Required Amount"), if any, by which the sum
of (i) the Class A Monthly Interest for the related Distribution Date, plus
(ii) the Class A Deficiency Amount, if any, for such Transfer Date, plus (iii)
the Class A Additional Interest, if any, for such Transfer Date, plus (iv) the
Class A Servicing Fee for the prior Monthly Period plus (v) the Class A
Servicing Fee, if any, due but not paid on any prior Transfer Date, plus (vi)
the Class A Investor Default Amount, if any, for the prior Monthly Period,
exceeds the Class A Available Funds for the related Monthly Period.
(b) On or before each Transfer Date, the Servicer shall also
determine the amount (the "Class B Required Amount"), if any, equal to the sum
of (i) the amount, if any, by which the sum of (A) the Class B Monthly Interest
for the related Distribution Date, plus (B) the Class B Deficiency Amount, if
any, for such Transfer Date, plus (C) the Class B Additional Interest, if any,
for such Transfer
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Date, plus (D) if JCPenney or an Affiliate thereof is no longer the Servicer,
the Class B Servicing Fee for the prior Monthly Period, plus (E) if JCPenney or
an Affiliate thereof is no longer the Servicer, the Class B Servicing Fee, if
any, due but not paid on any prior Transfer Date, exceeds the Class B Available
Funds for the related Monthly Period, plus (ii) the Class B Investor Default
Amount, if any, for the prior Monthly Period.
(c) In the event that the Class A Required Amount for such
Transfer Date is greater than zero, all or a portion of the Excess Spread with
respect to such Transfer Date in an amount equal to the Class A Required Amount,
to the extent available, for such Transfer Date shall be distributed from the
Finance Charge Account on such Transfer Date pursuant to subsection 4.18(a)
hereof. In the event that the Class A Required Amount for such Transfer Date
exceeds the amount of Excess Spread with respect to such Transfer Date, the
Collections of Principal Receivables allocable to the Class C Investor Interest
and the Collections of Principal Receivables allocable to the Class B Investor
Interest with respect to the prior Monthly Period shall be applied as specified
in Section 4.19 hereof. In the event that the Class B Required Amount for such
Transfer Date exceeds the amount of Excess Spread available to fund the Class B
Required Amount pursuant to subsection 4.18(c) hereof, the Collections of
Principal Receivables allocable to the Class C Investor Interest (after
application to the Class A Required Amount) shall be applied as specified in
Section 4.19 hereof; provided, however, that the sum of any payments pursuant to
this paragraph shall not exceed the sum of the Class A Required Amount and the
Class B Required Amount.
SECTION 4.16 Monthly Payments. On or before each Transfer Date, the
Servicer shall instruct the Trustee in writing to withdraw and the Trustee,
acting in accordance with such instructions, shall withdraw on such Transfer
Date or the related Distribution Date, as applicable, to the extent of available
funds, the amounts required to be withdrawn from the Finance Charge Account, the
Principal Account, the Principal Funding Account and the Distribution Account as
follows:
(a) An amount equal to the Class A Available Funds deposited
into the Finance Charge Account for the related Monthly Period will be
distributed on each Transfer Date in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Transfer Date, plus the amount of any Class A Deficiency Amount for
such Transfer Date, plus the amount of any Class A Additional Interest
for such Transfer Date, shall be deposited by the Servicer or the
Trustee into the Distribution Account;
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(ii) an amount equal to the Class A Servicing Fee for such
Transfer Date plus the amount of any Class A Servicing Fee due but not
paid to the Servicer on any prior Transfer Date shall be distributed to
the Servicer;
(iii) an amount equal to the Class A Investor Default Amount,
if any, for the preceding Monthly Period shall be treated as a portion
of Investor Principal Collections and deposited into the Principal
Account on such Transfer Date; and
(iv) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.18 hereof.
(b) An amount equal to the Class B Available Funds deposited into
the Finance Charge Account for the related Monthly Period will be distributed on
each Transfer Date in the following priority:
(i) an amount equal to the Class B Monthly Interest for
such Transfer Date, plus the amount of any Class B Deficiency Amount for
such Transfer Date, plus the amount of any Class B Additional Interest
for such Transfer Date, shall be deposited by the Servicer or the
Trustee into the Distribution Account;
(ii) if JCPenney or an Affiliate thereof is no longer the
Servicer, an amount equal to the Class B Servicing Fee for such
Transfer Date, plus the amount of any Class B Servicing Fee due but not
paid to the Servicer on any prior Transfer Date for such Transfer Date
shall be distributed to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section 4.18
hereof.
(c) An amount equal to the Class C Available Funds deposited into
the Finance Charge Account for the related Monthly Period will be distributed
on each Transfer Date in the following priority:
(i) if JCPenney or an Affiliate thereof is no longer the
Servicer, an amount equal to the Class C Servicing Fee for
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such Transfer Date, plus the amount of any Class C Servicing Fee due but
not paid to the Servicer on any prior Transfer Date shall be distributed
to the Servicer; and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.18 hereof.
(d) During the Revolving Period, an amount equal to the Available
Investor Principal Collections deposited into the Principal Account for the
related Monthly Period will be distributed on each Transfer Date in the
following priority:
(i) an amount equal to the Class C Monthly Principal shall
be distributed to the Class C Investor Interest Holder; and
(ii) an amount equal to the excess, if any, of (A) the
Available Investor Principal Collections for such Transfer Date over
(B) the applications specified in subsection 4.16(d)(i) above shall be
paid to the Holder of the Exchangeable Certificate, subject to the
provisions of Section 4.3(f) of the Pooling and Servicing Agreement.
(e) During the Controlled Accumulation Period or the Rapid
Amortization Period, an amount equal to the Available Investor Principal
Collections deposited into the Principal Account for the related Monthly Period
will be distributed on each Transfer Date in the following priority:
(i) an amount equal to the Class A Monthly Principal for
such Transfer Date shall (A) during the Controlled Accumulation Period
be deposited into the Principal Funding Account and (B) during the
Rapid Amortization Period be deposited into the Distribution Account;
(ii) after giving effect to the distribution referred to in
clause (i) above, an amount equal to the Class B Monthly Principal
shall (A) during the Controlled Accumulation Period be deposited into
the Principal Funding Account and (B) during the Rapid Amortization
Period be deposited into the Distribution Account;
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(iii) after giving effect to the distributions referred to
in clauses (i) and (ii) above, an amount equal to the Class C Monthly
Principal shall (A) during the Controlled Accumulation Period be
deposited into the Principal Funding Account and (B) during the Rapid
Amortization Period be distributed to the Class C Investor Interest
Holder; and
(iv) an amount equal to the excess, if any, of (A) the
Available Investor Principal Collections over (B) the applications
specified in subsections 4.16(e)(i) through (iii) above shall be paid
to the Holder of the Exchangeable Certificate, subject to the
provisions of Section 4.3(f) of the Pooling and Servicing Agreement.
(f) On the earlier to occur of (i) the first Transfer Date with
respect to the Rapid Amortization Period and (ii) the Transfer Date immediately
preceding the Class A Expected Final Distribution Date, in the case of amounts
deposited into the Principal Funding Account pursuant to subsection 4.16(e)(i)
above, or the Transfer Date immediately preceding the Class B Expected Final
Distribution Date, in the case of amounts deposited in the Principal Funding
Account pursuant to subsections 4.16(e)(ii) and 4.16(e)(iii) above, and on each
Transfer Date thereafter, the Trustee, acting in accordance with instructions
from the Servicer, shall cause to be withdrawn from the Principal Funding
Account and deposited in the Distribution Account, the amount deposited into
the Principal Funding Account pursuant to subsections 4.16(e)(i), 4.16(e)(ii)
and 4.16(e)(iii) above, as applicable.
(g) On each Distribution Date, the Trustee shall cause to be paid
(i) to the Class A Certificateholders from the Distribution Account, the amount
deposited into the Distribution Account pursuant to subsection 4.16(a)(i)
hereof on the preceding Transfer Date and (ii) to the Class B Investor
Interest Holder from the Distribution Account, the amount deposited into the
Distribution Account pursuant to subsection 4.16(b)(i) hereof on the preceding
Transfer Date.
(h) On the earlier to occur of (i) the first Distribution Date
with respect to the Rapid Amortization Period and (ii) the Class A Expected
Final Distribution Date, and on each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer, shall cause to be
paid from the Distribution Account the amount so deposited into the
Distribution Account pursuant to subsections 4.16(e) and 4.16(f) hereof on
the related Transfer Date in the following priority:
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(i) an amount equal to the lesser of such amount deposited
to the Distribution Account and the Class A Investor Interest shall be
paid to the Class A Certificateholders;
(ii) after giving effect to the distribution referred to in
clause (i) above, an amount equal to the lesser of such amount
deposited into the Distribution Account and the Class B Monthly
Principal shall be paid to the Class B Investor Interest Holder; and
(iii) after giving effect to the distributions referred to
in clauses (i) and (ii) above, an amount equal to the lesser of such
amount deposited in the Distribution Account and the Class C Monthly
Principal shall be paid to the Class C Investor Interest Holder.
SECTION 4. 17 Investor Charge-Offs.
(a) On or before each Transfer Date, the Servicer shall calculate
the Class A Investor Default Amount. If on any Transfer Date, the Class A
Investor Default Amount for the prior Monthly Period exceeds the sum of the
amount allocated with respect thereto pursuant to subsection 4.16(a)(iii),
subsection 4.18(a) and Section 4.19 hereof with respect to such Monthly Period,
the Class C Investor Interest (after giving effect to reductions for any Class
C Investor Charge-Offs and any Reallocated Principal Collections on such
Transfer Date) will be reduced by the amount of such excess, but not by more
than the lesser of the Class A Investor Default Amount and the Class C
Investor Interest (after giving effect to reductions for any Class C Investor
Charge-Offs and any Reallocated Principal Collections on such Transfer Date)
for such Transfer Date. In the event that such reduction would cause the Class
C Investor Interest to be a negative number, the Class C Investor Interest will
be reduced to zero, and the Class B Investor Interest (after giving effect to
reductions for any Class B Investor Charge-Offs and any Reallocated Class B
Principal Collections on such Transfer Date) will be reduced by the amount by
which the Class C Investor Interest would have been reduced below zero. In the
event that such reduction would cause the Class B Investor Interest to be a
negative number, the Class B Investor Interest will be reduced to zero, and
the Class A Investor Interest will be reduced by the amount by which the Class
B Investor Interest would have been reduced below zero, but not by more than
the Class A Investor Default Amount for such Transfer Date (a "Class A Investor
Charge-Off"). If the Class A Investor Interest has been reduced by the amount
of any Class A Investor Charge-Offs, it will be reimbursed on any Transfer Date
(but
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not by an amount in excess of the aggregate Class A Investor Charge-Offs) by the
amount of Excess Spread allocated and available for such purpose pursuant to
subsection 4.18(b) hereof.
(b) On or before each Transfer Date, the Servicer shall calculate
the Class B Investor Default Amount. If on any Transfer Date, the Class B
Investor Default Amount for the prior Monthly Period exceeds the amount of
Excess Spread and Reallocated Class C Principal Collections which are allocated
and available to fund such amount pursuant to subsection 4.18(c) and Section
4.19 hereof, the Class C Investor Interest (after giving effect to reductions
for any Class C Investor Charge-Offs and any Reallocated Principal Collections
on such Transfer Date and any adjustments with respect thereto as described in
subsection 4.17(a) above) will be reduced by the amount of such excess but not
by more than the lesser of the Class B Investor Default Amount and the Class C
Investor Interest (after giving effect to reductions for any Class C Investor
Charge-Offs and any Reallocated Principal Collections on such Transfer Date and
any adjustments with respect thereto as described in subsection 4.17(a) above)
for such Transfer Date. In the event that such reduction would cause the Class C
Investor Interest to be a negative number, the Class C Investor Interest will be
reduced to zero and the Class B Investor Interest will be reduced by the amount
by which the Class C Investor Interest would have been reduced below zero, but
not by more than the Class B Investor Default Amount for such Transfer Date (a
"Class B Investor Charge-Off"). The Class B Investor Interest will also be
reduced by the amount of Reallocated Class B Principal Collections in excess of
the Class C Investor Interest pursuant to Section 4.19 hereof and the amount of
any portion of the Class B Investor Interest allocated to the Class A
Certificates to avoid a reduction in the Class A Investor Interest pursuant to
subsection 4.17(a) above. The Class B Investor Interest will thereafter be
reimbursed (but not to an amount in excess of the unpaid principal balance of
the Class B Investor Interest) on any Transfer Date by the amount of Excess
Spread allocated and available for that purpose as described under subsection
4.18(d) hereof.
(c) On or before each Transfer Date, the Servicer shall
calculate the Class C Investor Default Amount. If on any Transfer Date, the
Class C Investor Default Amount for the prior Monthly Period exceeds the amount
of Excess Spread which is allocated and available to fund such amount pursuant
to subsection 4.18(h) hereof, the Class C Investor Interest will be reduced by
the amount of such excess but not by more than the lesser of the Class C
Investor Default Amount and the Class C Investor Interest for such Transfer
Date (a "Class C Investor Charge-Off"). The Class C Investor Interest will
also be reduced by the amount of Reallocated Principal Collections pursuant
to Section 4.19 hereof and the amount of any portion of the Class C Investor
Interest allocated to the Class A Certificates or the
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Class B Investor Interest to avoid a reduction in the Class A Investor Interest,
pursuant to subsection 4.17(a) hereof, or the Class B Investor Interest,
pursuant to subsection 4.17(b) hereof, respectively. The Class C Investor
Interest will thereafter be reimbursed on any Transfer Date by the amount of the
Excess Spread allocated and available for that purpose as described under
subsection 4.18(i) hereof.
SECTION 4.18 Excess Spread. On or before each Transfer Date, the
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Servicer shall instruct the Trustee in writing to apply Excess Spread with
respect to the related Monthly Period to make the following distributions on
each Transfer Date in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date shall be used to fund the Class A Required Amount
and be applied in accordance with, and in the priority set forth in, subsection
4.16(a) hereof;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed shall be treated as a
portion of Investor Principal Collections and deposited into the Principal
Account on such Transfer Date;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Transfer Date shall be used to fund the Class B Required Amount
and be applied first in accordance with, and in the priority set forth in,
subsection 4.16(b) hereof and then any remaining amount available to pay the
Class B Investor Default Amount shall be treated as a portion of Investor
Principal Collections and deposited into the Principal Account on such
Transfer Date;
(d) if JCPenney or an Affiliate thereof is the Servicer, an amount
equal to the aggregate amount of accrued but unpaid Class B Servicing Fees shall
be paid to the Servicer;
(e) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the Class B Initial Investor Interest
for reasons other than the payment of principal to the Class B Investor
Interest Holder (but not in excess of the aggregate amount of such reductions
which have not been previously reimbursed) shall be treated as a portion of
Investor Principal Collections and deposited into the Principal Account on
such Transfer Date;
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(f) an amount equal to the Class C Monthly Interest plus the
amount of any past due Class C Monthly Interest for the related Distribution
Date shall be distributed to the Class C Investor Interest Holder;
(g) if JCPenney or an Affiliate thereof is the Servicer, an amount
equal to the aggregate amount of accrued but unpaid Class C Servicing Fees shall
be paid to the Servicer;
(h) an amount equal to the Class C Investor Default Amount, if
any, for the prior Monthly Period shall be treated as a portion of Investor
Principal Collections and deposited into the Principal Account on such Transfer
Date;
(i) an amount equal to the aggregate amount by which the Class C
Investor Interest has been reduced for reasons other than the payment of amounts
with respect to Class C Monthly Principal (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed) shall be
treated as a portion of Investor Principal Collections and deposited into the
Principal Account on such Transfer Date; and
(j) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (i) above shall be paid to the Holder of
the Exchangeable Certificate.
SECTION 4.19 Reallocated Principal Collections. On or before each
Transfer Date, the Servicer shall instruct the Trustee in writing to withdraw
from the Principal Account and apply Reallocated Principal Collections (applying
all Reallocated Class C Principal Collections in accordance with subsections
4.19(a) and (b) hereof prior to applying any Reallocated Class B Principal
Collections in accordance with subsection 4.19(a) hereof for any amounts still
owing after the application of Reallocated Class C Principal Collections) with
respect to such Transfer Date, to make the following distributions on each
Transfer Date in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Transfer Date over (ii) the
amount of Excess Spread with respect to the related Monthly Period, shall be
applied pursuant to subsections 4.16(a)(i), (ii) and (iii) hereof; and
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Transfer Date over (ii) the
amount of Excess Spread allocated and available to the Class B Investor
Interest pursuant to
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subsection 4.18(c) hereof on such Transfer Date shall be applied first pursuant
to subsections 4.16(b)(i) and (ii) hereof and then pursuant to subsection
4.18(c) hereof.
On each Transfer Date, the Class C Investor Interest shall be
reduced by the amount of Reallocated Class C Principal Collections and by the
amount of Reallocated Class B Principal Collections for such Transfer Date. In
the event that such reduction would cause the Class C Investor Interest (after
giving effect to any Class C Investor Charge-Offs for such Transfer Date) to be
a negative number, the Class C Investor Interest (after giving effect to any
Class C Investor Charge-Offs for such Transfer Date) shall be reduced to zero
and the Class B Investor Interest shall be reduced by the amount by which the
Class C Investor Interest would have been reduced below zero. In the event
that the application of Reallocated Principal Collections would cause the Class
B Investor Interest (after giving effect to any Class B Investor Charge-Offs for
such Transfer Date) to be a negative number on any Transfer Date, Reallocated
Principal Collections shall be reallocated on such Transfer Date in an aggregate
amount not to exceed the amount which would cause the Class B Investor Interest
(after giving effect to any Class B Investor Charge-Offs for such Transfer Date)
to be reduced to zero.
SECTION 4.20 Principal Funding Account.
(a) The Trustee shall establish and maintain an account with a
Qualified Institution, which may be the Trustee, in the name of the Trust, on
behalf of the Trust, for the benefit of the Investor Certificateholders, which
account shall be a segregated trust account with the corporate trust
department of such Qualified Institution (the "Principal Funding Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Investor Certificateholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Principal Funding Account and in all proceeds thereof. The Principal
Funding Account shall be under the sole dominion and control of the Trustee
for the benefit of the Investor Certificateholders. If at any time the
institution holding the Principal Funding Account ceases to be a Qualified
Institution, JCPR shall notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall, within 10 Business Days,
establish a new Principal Funding Account meeting the conditions specified
above with a Qualified Institution, and shall transfer any cash or any
investments to such new Principal Funding Account. The Trustee, at the
direction of the Servicer, shall (i) make withdrawals from the Principal
Funding Account from time to time, in the amounts and for the purposes set
forth in this Series Supplement, and (ii) on each Transfer Date (from and
after the commencement of the Controlled Accumulation Period) prior to the
termination of the Principal Funding Account make deposits into the Principal
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Funding Account in the amounts specified in, and otherwise in accordance with,
subsection 4.16(e) hereof.
(b) Funds on deposit in the Principal Funding Account shall be
invested at the direction of the Servicer by the Trustee in Permitted
Investments. Funds on deposit in the Principal Funding Account on any Transfer
Date, after giving effect to any withdrawals from the Principal Funding Account
on such Transfer Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Transfer Date.
(c) On each Transfer Date with respect to the Controlled
Accumulation Period and on the first Transfer Date with respect to the Rapid
Amortization Period, the Trustee, acting at the Servicer's direction given on
or before such Transfer Date, shall transfer from the Principal Funding Account
to the Finance Charge Account the Principal Funding Investment Proceeds on
deposit in the Principal Funding Account for application as Class A Available
Funds and Class B Available Funds in accordance with Section 4.16 hereof.
Principal Funding Investment Proceeds (including reinvested interest) shall not
be considered part of the amounts on deposit in the Principal Funding Account
for purposes of this Series Supplement.
(d) On or before each Transfer Date with respect to the
Controlled Accumulation Period and on or before the first Transfer Date with
respect to the Rapid Amortization Period, the Servicer shall calculate the
amount, if any, by which the Covered Amount for such Transfer Date exceeds the
Class A Account Percentage of Principal Funding Investment Proceeds for such
Transfer Date (the "Principal Funding Investment Shortfall").
(e) In the event that, for any Transfer Date, there is a Principal
Funding Investment Shortfall, the Servicer shall deposit into the Finance Charge
Account for application as Class A Available Funds the lesser of (i) the
Principal Funding Investment Shortfall and (ii) the amount, if any, of
Collections of Finance Charge Receivables and Net Recoveries allocable to the
Holder of the Exchangeable Certificate for the related Monthly Period.
[End of Article IV]
SECTION 8. Series E Termination. The right of the Investor
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series E Termination Date.
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<PAGE>
SECTION 9. Transfers of the Class B Investor Interest and the Class
C Investor Interest.
(a) Unless otherwise consented to by JCPR, no portion of the
Class B Investor Interest or the Class C Investor Interest or any interest
therein may be sold, conveyed, assigned, hypothecated, pledged, participated,
exchanged or otherwise transferred (each, a "Transfer") except in accordance
with this Section 9 and only to a Permitted Assignee. Any attempted or
purported transfer, assignment, exchange, conveyance, pledge, hypothecation or
grant other than to a Permitted Assignee shall be void. Unless otherwise
consented to by JCPR, no portion of the Class B Investor Interest or the
Class C Investor Interest or any interest therein may be Transferred to any
Person (each such Person acquiring the Class B Investor Interest or the Class C
Investor Interest or any interest therein, an "Assignee") unless such Assignee
shall have executed and delivered to JCPR on or before the effective date of
any Transfer a letter substantially in the form of Exhibit B hereto (an
"Investment Letter"), with respect to such Transfer.
(b) No portion of the Class B Investor Interest or the Class C
Investor Interest or any interest therein may be Transferred to, and each
Assignee will certify that it is not, (a) an "employee benefit plan" (as
defined in Section 3(3) of ERISA), whether or not subject to Title I of ERISA,
including governmental plans, foreign plans and church plans, (b) any "plan"
(as defined in Section 4975(e)(1) of the Code), whether or not subject to
Section 4975 of the Code, including individual retirement accounts and Keogh
plans, or (c) any other entity whose underlying assets include "plan assets"
(within the meaning of Department of Labor Regulation Section 2510.3-101, 29
C.F.R. (S) 2510.3-101 or otherwise under ERISA) by reason of a plan's
investment in the entity, including, without limitation, an insurance company
general account.
SECTION 10. Other Terms of Series E.
(a) For Series E, the period of time for segregation of
collections, as described in subsection 4.3(a) of the Pooling and Servicing
Agreement, shall be five (5) consecutive Business Days following the Closing
Date and for a period of two (2) consecutive Business Days each year thereafter.
JCPR shall have complete discretion with respect to the dates chosen during
the year for the two consecutive business day segregation.
(b) Notwithstanding anything in the Pooling and Servicing
Agreement to the contrary, interest on the Investor Certificates with respect
to any
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<PAGE>
Monthly Period shall accrue from and including the Distribution Date in such
Monthly Period to but excluding the next succeeding Distribution Date.
(c) The Principal Amount (see Series C Supplement) in the case of
Series E shall be the Investor Interest.
(d) Subsections 9.1(h) and 9.1(i) of the Pooling and Servicing
Agreement shall not be applicable to Series E.
SECTION 11. Amendment and Ratification of Pooling And Servicing
Agreement.
(a) Following the payment in full of Series B and Series C,
JCPenney and JCPR may transfer all or a portion of JCPenney's or the Bank's
consumer open end credit card accounts and/or the receivables arising
thereunder, which may include all, but not less than all, of the Accounts and
JCPenney's and JCPR's remaining interest in the Receivables arising thereunder
and in the Trust (collectively, the "Assigned Assets"), together with all
servicing functions and other obligations under the Receivables Purchase
Agreement and the Pooling and Servicing Agreement or relating to the
transactions contemplated thereby (collectively, the "Assumed Obligations"), to
another entity (the "Assuming Entity") which may be an entity that is not
affiliated with JCPenney or JCPR, without the consent or approval of any of
the Investor Certificateholders, if the following conditions are satisfied:
(i) the Assuming Entity, the Trustee and JCPenney or JCPR, as the case may
be, shall have entered into an assumption agreement providing for the
Assuming Entity to assume the Assumed Obligations, including the
obligations under the Receivables Purchase Agreement and the Pooling and
Servicing Agreement, as the case may be, to transfer the Receivables
arising under the Accounts to JCPR or the Trust, as the case may be, (ii)
all filings required to perfect the interest of JCPenney, JCPR or the
Trustee, as the case may be, in the Receivables arising under such Accounts
shall have been duly made and copies thereof shall have been delivered to
the Trustee, (iii) the Rating Agency Condition, (iv) the Trustee shall have
received an Opinion of Counsel with respect to clauses (i) and (ii) above
in form and substance satisfactory to the Trustee and (v) the Trustee shall
have received a Tax Opinion. After a permitted transfer and assumption,
neither JCPenney nor JCPR shall have further liability or obligation under
the Receivables Purchase Agreement or the Pooling and Servicing Agreement,
other than those liabilities that arose prior to such transfer and
assumption, and JCPenney and JCPR shall remain liable for all of their
respective representations, warranties and covenants made prior to such
transfer and assumption.
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<PAGE>
(b) Following the payment in full of Series B and Series C, an
amendment under Section 13.1(b) of the Pooling and Servicing Agreement may be
made without the consent or approval of any of the Investor Certificateholders
so long as the Rating Agency Condition shall be satisfied.
(c) For purposes of determining the JCPR Amount pursuant to
Section 2.6(a) of the Pooling and Servicing Agreement, the Aggregate Investor
Amount shall be calculated by using the Initial Investor Amount of Series E
instead of the Investor Amount of Series E.
(d) Subject to the satisfaction of the Rating Agency Condition,
this Series Supplement may be amended at any time by the Servicer, JCPR and
the Trustee with the consent solely of the Class B Investor Interest Holder or
the Class C Investor Interest Holder, as applicable, to add provisions hereto
that permit the Class B Investor Interest or the Class C Investor Interest,
as applicable, to be represented by a certificated security.
(e) As supplemented by this Series Supplement, the Pooling and
Servicing Agreement is in all respects ratified and confirmed and the Pooling
and Servicing Agreement as so supplemented by this Series Supplement shall be
read, taken, and construed as one and the same instrument.
SECTION 12. Additional Information for Rating Agencies.
(a) In connection with any automatic inclusion of Additional
Accounts pursuant to Section 2.6(c) of the Pooling and Servicing Agreement,
JCPR and the Servicer shall provide the Rating Agencies with such information
with respect to any such Additional Accounts as the Rating Agencies may
reasonably request.
(b) JCPR or the Servicer shall notify the Rating Agencies of any
change in the Class B Rate or the Class C Rate or of any sale or other
transfer of the Class B Investor Interest or the Class C Investor Interest.
(c) JCPR or the Servicer shall promptly notify the Rating
Agencies of any Servicer Default or of the selection of any successor to the
Servicer or the Trustee.
SECTION 13. Counterparts. This Series Supplement may be executed
in any number of counterparts, each of which so executed shall be deemed
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<PAGE>
to be an original, but all of such counterparts shall together constitute but
one and the same instrument.
SECTION 14. Governing Law. This Series Supplement shall be
construed in accordance with and governed by the substantive laws of the State
of New York applicable to agreements made and to be performed therein.
34
<PAGE>
IN WITNESS WHEREOF, JCPR, 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.
JCP RECEIVABLES, INC.
By:
--------------------------------
Name: C.A. Walther
Title: President
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------
Name:
Title:
J. C. PENNEY COMPANY, INC.
By:
--------------------------------
Name: R.B. Cavanaugh
Title: Vice President and Treasurer
35
<PAGE>
EXHIBIT A
FORM OF INVESTOR CERTIFICATE
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to JCP
Receivables, Inc. or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co.
or in such other name as requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No. __ $___________
CUSIP NO.___________
JCP MASTER CREDIT CARD TRUST
___ % ASSET BACKED CERTIFICATE, SERIES E
Evidencing an undivided interest in a trust, the corpus of which consists of a
portfolio of J. C. Penney Company, Inc. ("JCPenney") credit card receivables
acquired by JCP Receivables, Inc. ("JCPR").
(NOT AN INTEREST IN OR OBLIGATION OF
JCPR OR JCPENNEY
EXCEPT AS STATED HEREIN OR
IN THE POOLING AND SERVICING AGREEMENT.)
This certifies that ________________ (the "Certificateholder") is the
registered owner of the undivided interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of receivables (the "Receivables") now existing
or hereafter created under selected JCPenney credit card accounts (the
"Accounts") acquired by or to be acquired by JCPR and transferred by JCPR to the
Trust, all monies due or to become due with respect thereto and the other assets
and interests constituting the Trust pursuant to a Master Pooling and Servicing
Agreement dated as of September 5, 1988, as amended, by and among JCPR,
JCPenney, as Servicer, and The Fuji Bank and Trust Company, as Trustee, as
supplemented by the Series E Supplement ("Supplement") thereto (as so
supplemented, the "Pooling and Servicing Agreement"), a summary of certain of
the pertinent provisions of which is set forth below.
PRINCIPAL IN RESPECT OF THIS CERTIFICATE IS PAYABLE AS SET FORTH
HEREIN ON _______, _________, OR EARLIER UPON THE OCCURRENCE OF A PAY OUT EVENT.
ACCORDINGLY, THE UNPAID PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE
LESS THAN THE PRINCIPAL BALANCE SET FORTH ABOVE. THIS CERTIFICATE DOES NOT
REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, JCPR OR THE SERVICER EXCEPT AS
STATED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT. THIS CERTIFICATE IS
LIMITED IN RIGHT OF PAYMENT TO CERTAIN
36
<PAGE>
COLLECTIONS RESPECTING THE RECEIVABLES, ALL AS MORE SPECIFICALLY SET FORTH
HEREIN AND IN THE POOLING AND SERVICING AGREEMENT.
JCPR has structured the Pooling and Servicing Agreement, any Supplement
thereto and the Investor Certificates to facilitate a secured financing on
favorable terms with the intention that the Investor Certificates will
constitute indebtedness of JCPR for federal income and state and local tax
purposes; and each Investor Certificateholder by acceptance of its Certificate
agrees to recognize and report all Investor Certificates as indebtedness of JCPR
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income, and to report all receipts and payments
relating thereto in a manner that is consistent with such characterization.
Capitalized terms used herein have their respective meanings set forth in
the Pooling and Servicing Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement, as amended and supplemented
from time to time, the Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound.
Although a summary of certain provisions of the Pooling and Servicing
Agreement is set forth below, this Certificate is qualified in its entirety by
the terms and provisions of 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.
Interest will accrue on the Certificates at the rate of ___% per annum
from the Closing Date, as more specifically set forth in the Pooling and
Servicing Agreement, and will be distributed on the 15th day of each month or,
if such day is not a Business Day, on the next succeeding Business Day (a
"Distribution Date"), to the Certificateholders of record as of the last
Business Day of the calendar month preceding such Distribution Date. During the
Rapid Amortization Period, Available Investor Principal Collections will be
distributed to the Certificateholders on the Distribution Date of each calendar
month commencing in the month following the commencement of the Rapid
Amortization Period until the earlier of the date the Certificates are paid in
full and the termination of Series E. During the Controlled Accumulation
Period, the amount on deposit in the Principal Funding Account will be
distributed as principal to the Certificateholders on the ____ _____
Distribution Date, unless distributed earlier as a result of the commencement of
the Rapid Amortization Period in accordance with the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement permits, with certain exceptions, the
amendment thereof and the modification of the rights and obligations of the
Servicer and the rights of the Certificateholders under the Pooling and
Servicing Agreement at any time by the Servicer, JCPR and the Trustee (a) in
certain cases with the consent of Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 66 2/3% of the investor amounts of
all Series adversely affected or (b) following the respective final payment
dates of the Series B and Series C Certificates, by satisfying the Rating Agency
Condition for the purpose of adding any provisions to, changing in any manner or
eliminating any of the provisions of the Pooling and Servicing Agreement or any
Supplement or of modifying in any manner the rights of Certificateholders;
provided, however, that no such amendment may (a) reduce in any manner the
amount of, or delay the timing of, distributions which are required to be made
on any Investor Certificate, (b) change the definition of or the manner of
calculating the Investor Amount, the Investor Percentage or the Investor Default
Amount, or (c) reduce the aforesaid percentage required to consent to any such
amendment, in each case without the consent of each Investor Certificateholder
affected thereby.
This Certificate shall be governed by and construed in accordance with the
laws of the State of New York.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement, or be valid
for any purpose.
37
<PAGE>
IN WITNESS WHEREOF, JCPR has caused this Certificate to be duly executed
under its official seal.
JCP RECEIVABLES, INC.
By:
-----------------------------
------------------- President
[Seal]
Attested to:
By:
------------------------------
Secretary
Date: ,
--------------------- -----
38
<PAGE>
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the Pooling and Servicing
Agreement.
THE FUJI BANK AND TRUST or THE FUJI BANK AND TRUST
COMPANY, As Trustee, COMPANY, As Trustee,
By: By:
------------------------ ------------------------
Authorized Officer As Authenticating Agent
For the Trustee
By:
------------------------
Authorized Officer
39
<PAGE>
EXHIBIT B
FORM OF INVESTMENT LETTER
[DATE]
Re: JCP Master Credit Card Trust
Purchases of Class B Investor Interest and Class C Investor Interest
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by the undersigned
(the "Purchaser") pursuant to Section 9 of the Series E Supplement dated as of
November 25, 1998 (the "Series Supplement") to the Master Pooling and Servicing
Agreement dated as of September 5, 1988 (as amended and supplemented, the
"Pooling and Servicing Agreement"), each among JCP Receivables, Inc. ("JCPR"),
J. C. Penney Company, Inc. ("JCPenney"), as Servicer, and The Fuji Bank and
Trust Company, as Trustee. Capitalized terms used herein without definition
shall have the meanings set forth in the Series Supplement. The Purchaser
represents to and agrees with JCPR as follows:
(a) The Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the [Class B] [Class C] Investor Interest and is able to bear
the economic risk of such investment.
(b) The Purchaser is an "accredited investor" as defined in Rule 501
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or is a sophisticated institutional investor. The Purchaser
understands that the offering and sale of the [Class B] [Class C] Investor
Interest has not been and will not be registered under the Securities Act
and has not and will not be registered or qualified under any state
securities or "blue sky" laws, and that the offering and sale of the [Class
B] [Class C] Investor Interest has not been reviewed by, passed on or
submitted to any federal or state agency or commission, securities exchange
or other regulatory body.
(c) The Purchaser is acquiring an interest in the [Class B] [Class
C] Investor Interest without a view to any distribution, resale or other
transfer thereof except as contemplated in the following sentence. The
Purchaser will not resell or otherwise transfer any interest or
participation in the [Class B] [Class C] Investor Interest, except in
accordance with Section 9 of the Series Supplement and (i) in a
40
<PAGE>
transaction exempt from the registration requirements of the Securities
Act and applicable state securities or "blue sky" laws; (ii) to JCPR or
any affiliate of JCPR; or (iii) to a person who the Purchaser reasonably
believes is a qualified institutional buyer (within the meaning thereof
in Rule 144A under the Securities Act) that is aware that the resale or
other transfer is being made in reliance upon Rule 144A. In connection
therewith, the Purchaser hereby agrees that it will not resell or
otherwise transfer the [Class B] [Class C] Investor Interest or any
interest therein unless the purchaser thereof provides to the addressee
hereof a letter substantially in the form hereof.
(d) No portion of the [Class B] [Class C] Investor Interest or any
interest therein may be Transferred, and each Assignee will certify that
it is not, (a) an "employee benefit plan" (as defined in Section 3(3) of
ERISA), whether or not subject to Title I of ERISA, including governmental
plans, foreign plans and church plans, (b) any "plan" (as defined in
Section 4975(e)(1) of the Code), whether or not subject to Section 4975 of
the Code, including individual retirement accounts and Keogh plans, or (c)
any other entity whose underlying assets include "plan assets" (within the
meaning of Department of Labor Regulation Section 2510.3-101 or otherwise
under ERISA) by reason of a plan's investment in the entity, including,
without limitation, an insurance company general account.
(e) [to be included unless a Tax Opinion is received] The Purchaser
(x) has neither acquired, nor will it sell, trade or transfer any interest
in the [Class B] [Class C] Investor Interest or cause any interest in the
[Class B] [Class C] Investor Interest to be marketed on or through either
(i) an "established securities market" within the meaning of Code section
7704(b)(1), including, without limitation an interdealer quotation system
that regularly disseminates firm buy or sell quotations by identified
brokers or dealers by electronic means or otherwise or (ii) a "secondary
market (or the substantial equivalent thereof)" within the meaning of Code
section 7704(b)(2), including a market wherein interests in the Trust are
regularly quoted by any person making a market in such interests and a
market wherein any person regularly makes available bid or offer quotes
with respect to interests in the Trust and stands ready to effect buy or
sell transactions at the quoted prices for itself or on behalf of others,
(y) unless JCPR consents otherwise, such holder (i) is properly classified
as, and will remain classified as, a "corporation" as described in Code
section 7701(a)(3) and (ii) is not, and will not become, an S corporation
as described in Code section 1361, and (z) it will (i) cause any
participant with respect to such interest otherwise permitted hereunder to
make similar representations and covenants for the benefit of JCPR and the
Trust and (ii) forward a copy of such representations and covenants to the
Trustee.
(f) This Investment Letter has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable
41
<PAGE>
against the Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles affecting the
enforcement of creditors' rights generally and general principles of
equity.
Very truly yours,
[NAME OF PURCHASER]
By:
--------------------------------
Name:
Title:
AGREED TO AS OF THE DATE
FIRST ABOVE WRITTEN:
JCP RECEIVABLES, INC.
By:
-------------------------
Name:
Title:
42
<PAGE>
EXHIBIT 4.2
INVESTOR CERTIFICATE
--------------------
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to JCP
Receivables, Inc. or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co.
or in such other name as requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No. 1 $ 200,000,000
CUSIP NO. 466115AE2
JCP MASTER CREDIT CARD TRUST
5.50% ASSET BACKED CERTIFICATE, SERIES E
Evidencing an undivided interest in a trust, the corpus of which consists of a
portfolio of J. C. Penney Company, Inc. ("JCPenney") credit card receivables
acquired by JCP Receivables, Inc. ("JCPR").
(NOT AN INTEREST IN OR OBLIGATION OF
JCPR, JCPENNEY OR ANY AFFILIATE THEREOF
EXCEPT AS STATED HEREIN OR IN THE POOLING AND SERVICING AGREEMENT.)
This certifies that Cede & Co. (the "Certificateholder") is the registered
owner of the undivided interest in a trust (the "Trust"), the corpus of which
consists of a portfolio of receivables (the "Receivables") now existing or
hereafter created under selected JCPenney credit card accounts (the "Accounts")
acquired by or to be acquired by JCPR and transferred by JCPR to the Trust, all
monies due or to become due with respect thereto and the other assets and
interests constituting the Trust pursuant to a Master Pooling and Servicing
Agreement dated as of September 5, 1988, as amended, by and among JCPR,
JCPenney, as Servicer, and The Fuji Bank and Trust Company, as Trustee, as
supplemented by the Series E Supplement ("Supplement") thereto (as so
supplemented, the "Pooling and Servicing Agreement"), a summary of certain of
the pertinent provisions of which is set forth below.
PRINCIPAL IN RESPECT OF THIS CERTIFICATE IS PAYABLE AS SET FORTH HEREIN
NOVEMBER 17, 2003, OR EARLIER UPON THE OCCURRENCE OF A PAY OUT EVENT.
ACCORDINGLY, THE UNPAID PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE
LESS THAN THE PRINCIPAL BALANCE SET FORTH ABOVE. THIS CERTIFICATE DOES NOT
REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, JCPR OR THE SERVICER OR ANY
AFFILIATE THEREOF EXCEPT AS STATED HEREIN AND IN THE POOLING AND SERVICING
AGREEMENT. THIS CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE CERTIFICATES NOR
THE UNDERLYING ACCOUNTS OR RECEIVABLES OR ANY COLLECTIONS THEREON ARE INSURED OR
GUARANTEED BY
<PAGE>
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY. THIS CERTIFICATE IS LIMITED IN RIGHT OF PAYMENT TO CERTAIN
COLLECTIONS RESPECTING THE RECEIVABLES, ALL AS MORE SPECIFICALLY SET FORTH
HEREIN AND IN THE POOLING AND SERVICING AGREEMENT.
JCPR has structured the Pooling and Servicing Agreement, any Supplement
thereto and the Investor Certificates to facilitate a secured financing on
favorable terms with the intention that the Investor Certificates will
constitute indebtedness of JCPR for federal income and state and local tax
purposes; and each Investor Certificateholder by acceptance of its Certificate
agrees to recognize and report all Investor Certificates as indebtedness of JCPR
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income, and to report all receipts and payments
relating thereto in a manner that is consistent with such characterization.
Capitalized terms used herein have their respective meanings set forth in
the Pooling and Servicing Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement, as amended and supplemented
from time to time, the Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound.
Although a summary of certain provisions of the Pooling and Servicing
Agreement is set forth below, this Certificate is qualified in its entirety by
the terms and provisions of 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.
Interest will accrue on the Certificates at the rate of 5.50% per annum
from the Closing Date, as more specifically set forth in the Pooling and
Servicing Agreement, and will be distributed on the 15th day of each month or,
if such day is not a Business Day, on the next succeeding Business Day (a
"Distribution Date"), to the Certificateholders of record as of the last
Business Day of the calendar month preceding such Distribution Date. During the
Rapid Amortization Period, Available Investor Principal Collections will be
distributed to the Certificateholders on the Distribution Date of each calendar
month commencing in the month following the commencement of the Rapid
Amortization Period until the earlier of the date the Certificates are paid in
full and the termination of Series E. During the Controlled Accumulation Period,
the amount on deposit in the Principal Funding Account will be distributed as
principal to the Certificateholders on the November 2003 Distribution Date,
unless distributed earlier as a result of the commencement of the Rapid
Amortization Period in accordance with the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits, with certain exceptions, the
amendment thereof and the modification of the rights and obligations of the
Servicer and the rights of the Certificateholders under the Pooling and
Servicing Agreement at any time by the Servicer, JCPR and the Trustee (a) in
certain cases with the consent of Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 66 2/3% of the investor amounts of
all Series adversely affected or (b) following the respective final payment
dates of the Series B and Series C Certificates, by satisfying the Rating Agency
Condition for the purpose of adding any provisions to, changing in any manner or
eliminating any of the provisions of the Pooling and Servicing Agreement or any
Supplement or of modifying in any manner the rights of Certificateholders;
provided, however, that no such amendment may (a) reduce in any manner
2
<PAGE>
the amount of, or delay the timing of, distributions which are required to be
made on any Investor Certificate, (b) change the definition of or the manner of
calculating the Investor Amount, the Investor Percentage or the Investor Default
Amount, or (c) reduce the aforesaid percentage required to consent to any such
amendment, in each case without the consent of each Investor Certificateholder
affected thereby.
This Certificate shall be governed by and construed in accordance with the
laws of the State of New York.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement, or be valid
for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, JCPR has caused this Certificate to be duly executed
under its official seal.
JCP RECEIVABLES, INC.
By:
-----------------------------
C. A. Walther, President
[Seal]
Attested to:
By:
------------------------------
Secretary
Date: November 25, 1998
4
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Certificates described in the Pooling and Servicing
Agreement.
THE FUJI BANK AND TRUST
COMPANY, As Trustee,
By:
------------------------------
Authorized Officer
DATED:
---------------------------
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