FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 4, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 33-62001
SPECIALTY RETAILERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3034294
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10201 MAIN STREET, HOUSTON, TEXAS 77025
(Address of principal executive offices) (Zip Code)
(713) 667-5601
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of common stock outstanding as of June 10, 1996 was
5,000 shares, all held by the registrants parent, Stage Stores, Inc.
(formerly Apparel Retailers, Inc.)
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A) AND
(B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
==============================================================================
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SPECIALTY RETAILERS, INC.
(a wholly-owned subsidiary of Stage Stores, Inc.,
formerly Apparel Retailers, Inc.)
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands, except par value and number of shares)
February 3, May 4,
1996 1996
-------- --------
(unaudited)
ASSETS
Cash and cash equivalents ................................ $ 20,264 $ 10,399
Accounts receivable ...................................... 65,740 50,587
Merchandise inventories .................................. 150,032 166,303
Prepaid expenses and other current assets ................ 24,457 23,446
-------- --------
Total current assets ............................... 260,493 250,735
Property, equipment and leasehold improvements, net ...... 93,118 96,901
Goodwill, net ............................................ 30,876 30,606
Other assets ............................................. 18,331 17,743
-------- --------
$402,818 $395,985
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable ......................................... $ 41,494 $ 41,153
Accrued interest ......................................... 12,327 6,580
Accrued expenses and other current liabilities ........... 36,750 30,862
Accrued taxes, other than income taxes ................... 3,375 4,082
-------- --------
Total current liabilities .......................... 93,946 82,677
Long-term debt ........................................... 226,022 226,116
Related party debt ....................................... 44,200 44,200
Other long-term liabilities .............................. 16,232 15,515
-------- --------
Total liabilities .................................. 380,400 368,508
-------- --------
Common stock, par value $0.01, 5,000 shares
authorized, issued and outstanding ..................... -- --
Additional paid-in capital ............................... 3,317 3,317
Retained earnings ........................................ 19,101 24,160
-------- --------
Stockholder's equity .................................. 22,418 27,477
-------- --------
Commitments and contingencies ............................ -- --
-------- --------
$402,818 $395,985
======== ========
The accompanying notes are an integral part of this statement.
1
SPECIALTY RETAILERS, INC.
(a wholly-owned subsidiary of Stage Stores, Inc.,
formerly Apparel Retailers, Inc.)
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(in thousands)
(unaudited)
For the three months ended
-------------------------
April 29, 1995 May 4, 1996
--------- ---------
Net sales ...................................... $ 142,353 $ 163,177
Cost of sales and related buying,
occupancy and distribution expenses .......... (96,070) (111,096)
--------- ---------
Gross profit ................................... 46,283 52,081
Selling, general and
administrative expenses ...................... (33,812) (38,876)
Service charge income .......................... 2,683 2,913
Store opening and closing costs ................ (315) (71)
--------- ---------
Operating income ............................... 14,839 16,047
--------- ---------
Interest income ................................ 150 126
--------- ---------
Interest expense:
Related party ................................ (1,037) (1,117)
Other ........................................ (6,121) (6,594)
Amortization of debt issue costs ............. (343) (359)
--------- ---------
(7,501) (8,070)
--------- ---------
Income before income tax ....................... 7,488 8,103
Income tax expense ............................. (2,919) (3,044)
--------- ---------
Net income ..................................... $ 4,569 $ 5,059
========= =========
The accompanying notes are an integral part of this statement.
2
SPECIALTY RETAILERS, INC.
(a wholly-owned subsidiary of Stage Stores, Inc.,
formerly Apparel Retailers, Inc.)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the three months ended
--------------------
April 29, May 4,
1995 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................................. $ 4,569 $ 5,059
-------- --------
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization ............................................. 2,700 3,149
Deferred income taxes ..................................................... (13) 173
Accretion of discount ..................................................... 187 234
Amortization of debt issue costs .......................................... 343 359
Changes in operating assets and liabilities:
Decrease in accounts receivable ......................................... 11,523 11,453
Increase in merchandise inventories ..................................... (27,582) (16,271)
(Increase) decrease in other assets ..................................... (965) 492
Increase in accounts receivable sold .................................... 10,300 3,700
Decrease in accounts payable and accrued liabilities .................... (7,342) (11,547)
-------- --------
Total adjustments ..................................................... (10,849) (8,258)
-------- --------
Net cash used in operating activities ................................... (6,280) (3,199)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, equipment and leasehold improvements ................. (12,495) (6,449)
-------- --------
Net cash used in investing activities ................................... (12,495) (6,449)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on:
Long-term debt ............................................................ (115) (125)
Additions to debt issue costs ............................................. (210) (92)
-------- --------
Net cash used in financing activities ................................... (325) (217)
-------- --------
Net decrease in cash and cash equivalents ............................... (19,100) (9,865)
Cash and cash equivalents:
Beginning of period ....................................................... 27,797 20,264
-------- --------
End of period ............................................................. $ 8,697 $ 10,399
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid ............................................................... $ 12,205 $ 13,207
======== ========
Income taxes paid ........................................................... $ 1,800 $ 5,883
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
3
SPECIALTY RETAILERS, INC.
(a wholly-owned subsidiary of Stage Stores, Inc.,
formerly Apparel Retailers, Inc.)
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDER'S EQUITY
(in thousands, except numbers of shares)
(unaudited)
Common Stock
-----------------
Additional
Shares Paid-in Retained
Outstanding Amount Capital Earnings Total
----- ------ ------ ------- -------
Balance, February 3, 1996 ........ 5,000 $ -- $3,317 $19,101 $22,418
Net income ....................... -- -- -- 5,059 5,059
===== ====== ====== ======= =======
Balance, May 4, 1996 ............. 5,000 $ -- $3,317 $24,160 $27,477
===== ====== ====== ======= =======
The accompanying notes are an integral part of this statement.
4
SPECIALTY RETAILERS, INC.
(a wholly-owned subsidiary of Stage Stores, Inc.,
formerly Apparel Retailers, Inc.)
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated condensed financial statements
of Specialty Retailers, Inc. (the "Company"), have been prepared in accordance
with Rule 10-01 of Regulation S-X and do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. Those adjustments, which include only normal recurring
adjustments, that are, in the opinion of management, necessary for a fair
presentation of the results of the interim periods have been made. The results
of operations for such interim periods are not necessarily indicative of results
of operations for a full year. The unaudited consolidated condensed financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto for the year ended February 3, 1996 filed with the
Company's Annual Report on Form 10-K. Certain reclassifications have been made
to prior year amounts to conform with the current year presentation. The fiscal
years discussed herein end on the Saturday nearest to January 31 in the
following calendar year. For example, references to "1996" mean the fiscal year
ended February 1, 1997.
2. Under the accounts receivable securitization program implemented in
1993 (the "Accounts Receivable Program"), an indirect wholly-owned subsidiary of
the Company, SRI Receivables Purchase Co., Inc. ("SRPC") purchases the accounts
receivable generated under the Company's private label credit card program. Such
accounts receivable are in turn transferred to a master trust (the "Trust")
which has issued certain certificates representing undivided interests in the
Trust. SRPC owns an undivided interest in the accounts receivable not supporting
the certificates issued by the Trust (the "Retained Interest"). SRPC is a
separate corporate entity from the Company and SRPC's creditors have a claim on
its assets prior to those assets becoming available to any creditor of the
Company.
3. During the first quarter of 1996, the Company adopted Statement of
Financial Accounting Standard No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of ("SFAS 121"), and
Statement of Financial Accounting Standard No. 123, Accounting for Stock Based
Compensation ("SFAS 123"). Neither the adoption of SFAS 121 or SFAS 123 had a
material effect on the Company's financial position or it's results of
operations. With the adoption of SFAS 123, the Company continues to measure
compensation plans using the intrinsic value method prescribed by APB Opinion
No. 25, Accounting for Stock Issued to Employees, and will provide pro forma
disclosures of net income and earnings per share as if the market value based
method prescribed by SFAS 123 had been applied in measuring compensation expense
in its annual financial statements.
4. On June 3, 1996, Palais Royal, Inc., a wholly-owned subsidiary of the
Company, completed its acquisition of Uhlmans Inc. ("Uhlmans") for $28.7
million, including the repayment of certain debt of Uhlmans. Uhlmans, which
operated thirty-four family apparel stores located in Ohio, Michigan and
Indiana, had net sales of $59.7 million and net income of $0.6 million for the
year ended February 3, 1996. The Company plans to operate the majority of the
acquired locations under the "Stage" banner following a brief conversion period.
The Company filed a Current Report on Form 8-K on May 9, 1996 related to this
transaction.
The Company financed its acquisition of Uhlmans through the issuance of
$30.0 million in aggregate principal amount of 12.5% Trust Certificate-Backed
Notes Due 2000 (the "SRPC Notes"). Interest on the SRPC Notes is payable
semi-annually on June 15 and December 15 of each year, commencing December 15,
1996 from amounts otherwise received by SRPC from its Retained Interest.
Principal repayments are anticipated to commence on December 1, 1999.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following information, discussion and analysis that follow should be
read in conjuction with the Management Discussion and Analysis and Consolidated
Financial Statements included in the Company's 1995 Annual
Report on Form 10-K.
OVERVIEW. The Company operates the store of choice for well known national
brand name family apparel in over 200 small towns and communities across the
central United States. At May 4, 1996, the Company operated 268 stores. The
Company has recognized the high level of brand awareness and demand for
fashionable, quality apparel by consumers in small markets and has identified
these markets as a profitable and underserved niche. The Company has developed a
unique franchise focused on small markets, differentiating itself from the
competition by offering a broad range of merchandise with a high level of
customer service in convenient locations.
In recent years, the Company has undertaken several initiatives to realize
the full potential of its unique franchise in small markets, including (i)
recruiting a new senior management team, (ii) embarking on a store expansion
program to capitalize on available opportunities in new markets through new
store openings and strategic acquisitions, (iii) continuing to refine the
Company's retailing concept and (iv) closing unprofitable stores.
RECENT ACQUISITIONS. The Company acquired forty-five stores from
Beall-Ladymon in 1994 and subsequently reopened the stores in the first quarter
of 1995 under the Stage name. In 1993, the year prior to their acquisition, the
Beall-Ladymon stores generated sales and store contribution of approximately
$53.4 million and $3.8 million, respectively, whereas the newly opened Stage
stores in the same locations generated sales and store contribution for the
twelve months ended May 4, 1996 of $93.1 million and $13.1 million respectively,
increases of 74% and 245% respectively. The Company believes that the following
key strengths have contributed to its successful expansion and acquisition plan:
(i) ability to operate profitably in smaller markets, (ii) benefits of strong
vendor relationships, (iii) effective merchandising strategy, (iv) focused
marketing strategy, (v) benefits of proprietary credit card program, (vi)
emphasis on customer service, and (vii) sophisticated operating and information
systems.
On June 3, 1996 the Company consummated the acquisition of Uhlmans for
$28.7 million, including the repayment of certain indebtedness of Uhlmans. For
the year ended February 3, 1996, Uhlmans had net sales of $59.7 million and
operating income of $2.2 million. The Company is in the process of implementing
a consolidation program to absorb the Uhlmans general office functions,
including accounting, data processing, merchandising, personnel, credit and
distribution into similar functions provided by the Company.
STORE CLOSURE PLAN. During the fourth quarter of 1994, the Company
approved the store closure plan (the "Store Closure Plan") which provided for
the closure of forty underperforming Fashion Bar stores. These stores were
primarily located in major regional malls within the Denver area. Management
determined that the merchandising strategy and market positions of such stores
were not compatible with the Company's overall strategy. Accordingly, the
Company accrued $5.2 million for the expected costs associated with the Store
Closure Plan during 1994. The Store Closure Plan was substantially completed in
1995.
ACCOUNTS RECEIVABLE PROGRAM. Pursuant to the Accounts Receivable Program,
the Company sells, on a daily basis, substantially all of the accounts
receivable generated from purchases by the holders of the Company's proprietary
credit card to SRPC. SRPC is a separate limited-purpose subsidiary that is
operated in a manner intended to ensure that its assets and liabilities are
distinct from those of the Company and its other affiliates so that SRPC's
creditors have a claim on its assets prior to such assets becoming available to
any creditor of the Company. SRPC sells, on a daily basis, the accounts
receivable purchased from the Company to the Trust in exchange for cash or a
certificate representing an undivided interest in the Trust. The Company's
Retained Interest at May 4, 1996 was $48.6 million, which represented 22.3% of
total receivables outstanding in the Trust. The remaining interest in the Trust
is held by third-party investors.
6
The Retained Interest is effectively subordinated to the interests of such
third-party investors, and is pledged to secure the SRPC Notes.
Prior to the implementation of the Accounts Receivable Program in 1993,
operating income included all service charge income and servicing costs
attributable to the Company's accounts receivable and credit card operations.
The cost of financing the Company's accounts receivable was included in interest
expense. Subsequent to the implementation of the Accounts Receivable Program,
service charge income only includes the amount of service charge income
attributable to the Company's Retained Interest. Additionally, the Company's
selling, general and administrative expenses are decreased or increased by a
gain or loss, respectively, on the sale of receivables to the Trust. This gain
or loss is calculated based upon the projected cash receipts from the
receivables sold to the Trust (primarily service charge income) and reduced by
the projected payments of returns to the holders of the Trust Certificates, and
projected credit expenses. Selling, general and administrative expenses are also
affected by adjustments to previously recorded gains and losses. Bad debt
expenses on the Company's entire portfolio were reflected in selling, general
and administrative expenses prior to the adoption of the Accounts Receivable
Program. Under the Accounts Receivable Program, bad debt expenses remain
effectively included in selling, general and administrative expenses because
they directly affect the profitability of the Accounts Receivable Program.
RESULTS OF OPERATIONS
Because of the 53-week year in 1995, the Company's quarterly accounting
periods for 1996 occur one week later than their 1995 counterparts. Other
factors being equal, this calendar shift, combined with the timing of the
Company's promotional events and holidays, is likely to affect year-to-year
comparable store performance for 1996 favorably in the second quarter and
unfavorably in the third and the fourth quarters.
Sales for the first quarter of 1996 increased 14.6% to $163.2 million from
$142.4 million in the comparable period of 1995. The increase was due to a $13.0
million increase in sales from stores opened during 1996 and 1995 combined with
a 7.4% increase in comparable store sales excluding stores in the Store Closure
Plan and 6.5% including such stores. The significant increase in comparable
store sales was primarily attributable to strong performance at the Company's
Bealls stores combined with a one-week shift in the comparable calendar period
due to the 53-week year in 1995.
Gross profit increased 12.5% to $52.1 million for the first quarter of
1996, from $46.3 million in the comparable period of 1995. Gross profit as a
percent of sales for the first quarter of 1996 declined to 31.9% compared to
32.5% for the comparable period in 1995 due to the favorable impact of vendor
discount programs to support the opening of fifty-one new stores during the
first quarter of 1995 (as compared to eleven new store openings in the first
quarter of 1996) combined with lower markdowns experienced by these stores
during their first quarter of operations, as is generally the case with newly
opened stores. Such impact was offset in part by the benefits due to the
application of fixed buying, occupancy and distribution costs over a larger
sales base in 1996.
Selling, general and administrative expenses as a percentage of sales
remained unchanged at 23.8% despite the inclusion of a $0.8 million reversal of
a litigation reserve as a result of a favorable court ruling in the first
quarter of 1995 and an increase in the general level of bad debt expense
associated with the Company's proprietary credit card programs during the first
quarter of 1996. These were offset by the benefits of applying the Company's
selling, general and administrative expenses to a larger sales volume. Without
the reversal of the litigation reserve, selling, general and administrative
expenses as a percent of sales for the first quarter of 1995 would have been
24.3%. Selling, general and administrative expenses for the first quarter of
1996 increased by 15.1% to $38.9 million from $33.8 million for the comparable
period in 1995.
Service charge income for the first quarter of 1996 increased 7.4% to $2.9
million from $2.7 million for the comparable period in 1995. Service charge
income increased due to the increased yield on the accounts receivable portfolio
resulting primarily from an increase in the late fee charges applied to
delinquent payments.
7
Operating income increased 8.1% in the first quarter of 1996 as compared
to the first quarter of 1995 due to the factors described above.
Interest expense for the first quarter of 1996 increased 8.0% to $8.1
million from $7.5 million for the comparable period in 1995. The increase was
due to the issuance of $18.3 million of 11% Series D Senior Subordinated Notes
in August 1995 (the "Series D Senior Subordinated Notes").
As a result of the foregoing, the Company's net income for the first
quarter of 1996 increased by 10.9% to $5.1 million from $4.6 million for the
comparable period in 1995.
SEASONALITY AND INFLATION
The Company's business is seasonal and its quarterly sales and profits
traditionally are lower during the first three quarters and higher during the
fourth quarter (November through January). In addition, working capital
requirements fluctuate throughout the year, increasing substantially in October
and November in anticipation of the holiday season due to requirements for
significantly higher inventory levels.
1995 1996
------------------------------------ ---------
Q1 Q2 Q3 Q4 Q1
------- -------- -------- ------- ---------
(dollars in thousands)
Net sales................... $ 142,353$ 154,578 $ 159,161 $ 226,532$ 163,177
Gross profit (1)............ 46,283 46,555 48,659 72,780 52,081
Operating income............ 14,839 11,073 9,725 25,854 16,047
Quarters' operating
income as a percent
of annual income........... 24% 18% 16% 42% --
Net income.................. $ 4,569 $ 2,198 $ 1,190 $ 11,716 $ 5,059
- ------------
(1) The Company states its inventories at the lower of cost or market, cost
being determined on the last-in first-out method.
The Company does not believe that inflation had a material effect on its results
of operations during the past two years. However, there can be no assurance that
the Company's business will not be affected by inflation in the future.
8
LIQUIDITY AND CAPITAL RESOURCES
At May 4, 1996, the Company's consolidated long-term debt included $130.0
million of Senior Notes, $116.6 million of Senior Subordinated Notes and certain
other debt.
On June 3, 1996, the Company purchased Uhlmans for approximately $28.7
million including the repayment of certain existing indebtedness of Uhlmans. The
Company, through SRPC, issued $30.0 million in aggregate principal amount of
SRPC Notes on May 30, 1996. The SRPC Notes are secured by the Company's Retained
Interest. Interest on the SRPC Notes is payable semi-annually on June 15 and
December 15 of each year, commencing December 15, 1996 from amounts received by
SRPC from its Retained Interest. The scheduled amortization of principal will
commence in December 1999 and is subject to the collection experience regarding
the receivables underlying the Trust Certificates at that time. The Company
issued the SRPC Notes to finance the acquisition of Uhlmans. The issuance of the
SRPC Notes does not impact the ability of the Company to issue additional
certificates under the Accounts Receivable Program to third-party investors.
Total working capital of $168.1 million at May 4, 1996 remained
essentially unchanged from February 3, 1996, although the components of working
capital including cash, inventory and accounts receivable varied. Merchandise
inventories increased and cash decreased primarily due to the seasonal build in
inventories and the opening of eleven stores during the first quarter of 1996.
Accounts receivable decreased $15.2 million during the first quarter of 1996 as
a result of the seasonal liquidation of accounts receivable generated during the
Christmas season.
The Company's primary capital requirements are for working capital, debt
service and capital expenditures. Based upon the current capital structure,
management anticipates interest payments to be approximately $5.8 million higher
than the 1995 level during 1996 and 1997 due to the issuance of the Series D
Senior Subordinated Notes and the SRPC Notes. Generally, capital expenditures
are for new store openings, remodeling of existing stores and customary store
maintenance. Capital expenditures for the first quarter of 1996 decreased 48.8%
to $6.4 million from $12.5 million for the comparable period of 1995 as a result
of opening eleven new stores during the first quarter of 1996 compared to
fifty-one new stores during the first quarter of 1995. Management expects
capital expenditures to be approximately $28.0 million during 1996 consisting
primarily of the opening of thirty-five stores, the conversion of all of the
Uhlmans stores to Stage stores, routine store maintenance, store remodels and
renovations at the corporate headquarters. Required aggregate principal payments
on debt total $2.4 million during 1996 and 1997.
The Company's short-term liquidity needs are provided by (i) existing cash
balances, (ii) operating cash flows, (iii) the Accounts Receivable Program which
provides a source of funds from the sale of accounts receivable to the Trust and
(iv) the Revolving Credit Agreements (as defined below). The Company expects to
fund its long-term liquidity needs from cash flow from operations, through the
issuance of debt and/or equity securities, the securitization of its accounts
receivable and bank borrowings.
The Company has a revolving credit agreement with a bank (the "Revolving
Credit Agreement") under which it may draw up to $25.0 million. Of this amount,
$15.0 million may be used to support letters of credit. As of May 4, 1996, no
borrowings were outstanding under the Revolving Credit Agreement. As of May 4,
1996, $8.5 million of the total commitment was used to collateralize letters of
credit resulting in available funds of $16.5 million. The Company also has a
separate agreement with the bank under which it may borrow an additional $10.0
million for seasonal working capital needs (the "Seasonal Credit Agreement" and
together with the Revolving Credit Agreement, the "Revolving Credit
Agreements"). Funds are available under the Seasonal Credit Agreement from
August 15 through January 15 of each calendar year (the "Seasonal Period"). The
Revolving Credit Agreements are available through February 3, 1998. During 1995,
the availability under the Revolving Credit Agreement was never less than $4.5
million. During the Seasonal Period, the availability under the Revolving Credit
Agreements was never less than $11.5 million.
Since its inception, the Trust has issued $165.0 million of term
certificates and a $40.0 million revolving certificate (collectively, the "Trust
Certificates") representing undivided interests in the Trust. The holder of the
9
revolving certificate agreed to purchase interests in the Trust equal to the
amount of accounts receivable in the Trust above the level required (aggregating
$205.3 million at May 4, 1996) to third-party investors to support the term
certificates, up to a maximum of $40.0 million. If receivable balances in the
Trust fall below the level required to support the term certificates and
revolving certificates, certain principal collections may be retained in the
Trust until such time as the accounts receivable balances exceed the amount of
accounts receivable required to support the Trust Certificates and any required
transferor's interest. SRPC receives distributions from the Trust of cash in
excess of amounts required to satisfy the Trust's obligations to third-party
investors on the Trust Certificates. Cash so received by SRPC may be used to
purchase additional accounts receivable from, or make distributions to, the
Company after SRPC has satisfied its obligations on the SRPC Notes. As of May 4,
1996, the outstanding balance under the revolving certificate was $3.7 million.
The Trust may issue additional series of certificates from time to time on
various terms. Terms of any future series will be determined at the time of
issuance.
RECENT ACCOUNTING PRONOUNCEMENTS
During the first quarter of 1996, the Company adopted SFAS 121 and SFAS 123.
Neither the adoption of SFAS 121 or SFAS 123 had a material impact on the
Company's financial position or results of operations. With the adoption of SFAS
123, the Company continues to measure compensation plans using the intrinsic
value method prescribed by APB Opinion No. 25, Accounting for Stock Issued to
Employees, and will provide pro forma disclosures of net income and earnings per
share as if the fair value based method prescribed by SFAS 123 had been applied
in measuring compensation expense in its annual financial statements.
10
SPECIALTY RETAILERS, INC.
(A wholly-owned subsidiary of Stage Stores, Inc.,
formerly Apparel Retailers, Inc.)
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
4.1 Form of Indenture among SRI Receivables Purchase Co., Inc.,
Specialty Retailers, Inc., as Administrative Agent, and Bankers
Trust Company, as Trustee and Collateral Agent, relating to the
12.5% Trust Certificate-Backed Notes of SRI Receivables Purchase
Co., Inc. (including form of note).
4.2 First Amendment to Amended and Restated Pooling and Servicing
Agreement by and among SRI Receivables Purchase Co., Inc.,
Specialty Retailers, Inc. and Bankers Trust (Delaware), dated as
of May 30, 1996.
4.3 Amended and Restated Series 1993-1 Supplement among SRI
Receivables Purchase Co., Inc., Specialty Retailers, Inc. and
Bankers Trust (Delaware) dated as of May 30, 1996.
4.4 Amended and Restated Series 1993-2 Supplement among SRI
Receivables Purchase Co., Inc., Specialty Retailers, Inc. and
Bankers Trust (Delaware) dated as of May 30, 1996.
4.5 First Amendment to the Series 1993-2 Supplement and Revolving
Certificate Purchase Agreement by and among Specialty Retailers,
Inc., SRI Receivables Purchase Co., Inc., Bankers Trust (Delaware)
as Trustee for the SRI Receivables Master Trust, the financial
institutions parties thereto and National Westminster Bank Plc, New
York branch dated as of August 11, 1995.
4.6 Amended and Restated Series 1995-1 Supplement by and among SRI
Receivables Purchase Co., Inc., Specialty Retailers, Inc. and
Bankers Trust (Delaware) on behalf of the Series 1995-1
Certificateholders dated as of May 30, 1996.
11
4.7 Amended and Restated Receivables Purchase Agreement among SRI
Receivables Purchase Co., Inc. and Originators dated as of May
30, 1996.
4.8 Seventh Amendment dated February 1, 1996 to Revolving Credit
Agreement by and among Specialty Retailers, Inc., Palais Royal,
Inc., and the First National Bank of Boston, as agent for itself and
other financial institutions dated as of January 28, 1994.
4.9 Eighth Amendment dated as of May 30, 1996 to Revolving Credit
Agreement by and among Specialty Retailers, Inc., Palais Royal, Inc.
and The First National Bank of Boston, as agent for itself and other
financial institutions dated as of January 28, 1994.
4.10 Third Amendment dated February 1, 1996 to the seasonal Revolving
Credit Agreement by and among Specialty Retailers, Inc., Palais
Royal, Inc., and the First National Bank of Boston, as agent for
itself and other financial institutions dated March 31, 1995.
4.11 Fourth Amendment dated as of May 30, 1996 to the seasonal Revolving
Credit Agreement by and among Specialty Retailers, Inc., Palais
Royal, Inc. and The First National Bank of Boston, as agent for
itself and other financial institutions dated as of March 31, 1995.
10.1 Securities Purchase Agreement dated May 9, 1996 by and among
Palais Royal, Inc. a Texas Corporation, Roger S. Vail, Sharon K.
Vail, James L. Stainbrook, Melissa A Uhlman, Fred W. Uhlman, Jr.,
Robert M. Uhlman and Virginia U. Nader relating to the sale of
the common stock of Uhlmans, Inc.
REPORTS ON FORM 8-K
None.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPECIALTY RETAILERS, INC.
JUNE 17, 1996 /s/ CARL E. TOOKER
(Date) Carl E. Tooker
President and
Chief Executive Officer
JUNE 17, 1996 /s/ JAMES A. MARCUM
(Date) James A. Marcum
Executive Vice President and
Chief Financial Officer
13
SRI RECEIVABLES PURCHASE CO., INC.,
an indirect wholly-owned subsidiary
of
SPECIALTY RETAILERS, INC.,
the Administrative Agent
$30,000,000
12.5% Trust Certificate-Backed Notes
----------------------------------------
----------------------
INDENTURE
Dated as of May 30, 1996
----------------------
---------------------------------------------------------
BANKERS TRUST COMPANY,
as Trustee and as Collateral Agent
---------------------------------------------------------
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1)................................................. 11.10
(a)(2)................................................ 11.10
(a)(3) ............................................... N.A.
(a)(4)................................................ N.A.
(a)(5)................................................ 11.10
(b) .................................................. 11.10
(c) .................................................. N.A.
311 (a) ................................................... 11.11
(b) .................................................. 11.11
(c) .................................................. N.A.
312 (a).................................................... 3.5
(b)................................................... 14.3
(c) .................................................. 14.3
313 (a) ................................................... 11.6
(b)(1) ............................................... N.A.
(b)(2) ............................................... 11.6
(c) .................................................. 11.6;14.2
(d)................................................... 11.6
314 (a) ................................................... 7.3;14.2
(b) .................................................. N.A.
(c)(1) ............................................... 14.4
(c)(2) ............................................... 14.4
(c)(3) ............................................... N.A.
(d)................................................... N.A.
(e) ................................................. 14.5
(f)................................................... N.A.
315 (a).................................................... 11.1
(b)................................................... 11.5;14.2
(c) ................................................. 11.1
(d)................................................... 11.1
(e)................................................... 9.10
316 (a)(last sentence) .................................... N.A.
(a)(1)(A)............................................. 9.5
(a)(1)(B) ............................................ 9.4
(a)(2) ............................................... N.A.
(b) .................................................. 9.8
(c) .................................................. 13.1;13.2
317 (a)(1) ................................................ 9.11
(a)(2)................................................ 9.12
(b) .................................................. 3.4
318 (a).................................................... 14.1
(b)................................................... N.A.
(c)................................................... 14.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.................................................... 1
Section 1.2 Other Definitions.............................................. 11
Section 1.3 Incorporation by Reference of Trust Indenture Act.............. 11
Section 1.4 Rules of Construction.......................................... 12
ARTICLE 2
GRANTS OF SECURITY INTEREST;
APPOINTMENT OF COLLATERAL AGENT
Section 2.1 Grants Of Security Interest.................................... 12
Section 2.2 Appointment Of Collateral Agent................................ 13
ARTICLE 3
THE NOTES
Section 3.1 Form and Dating............................................... 13
Section 3.2 Execution and Authentication.................................. 14
Section 3.3 Registrar and Paying Agent.................................... 14
Section 3.4 Paying Agent to Hold Money in Trust........................... 15
Section 3.5 Holder Lists.................................................. 15
Section 3.6 Book-Entry Provisions for Global Notes........................ 15
Section 3.7 Special Transfer Provisions................................... 16
Section 3.8 Replacement Notes............................................. 17
Section 3.9 Outstanding Notes............................................. 18
Section 3.10 Temporary Notes.............................................. 18
Section 3.11 Cancellation................................................. 18
Section 3.12 Defaulted Interest........................................... 19
ARTICLE 4
PAYMENTS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.1 Establishment of Accounts..................................... 19
Section 4.2 Deposits Into The Interest Reserve Account.................... 20
Section 4.3 Deposits Into The Principal Reserve Account................... 21
Section 4.4 Transfers to the Payment Account.............................. 21
Section 4.5 Payments of Principal and Interest............................ 22
Section 4.6 Statements to Noteholders..................................... 22
Section 4.7 Daily Report and Settlement Statement......................... 23
Section 4.8 Final Distributions........................................... 23
i
PAGE
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 General Provisions............................................ 23
Section 5.2 Security For Notes............................................ 24
ARTICLE 6
REDEMPTION
Section 6.1 Optional Redemption........................................... 25
Section 6.2 Notices to Trustee............................................ 25
Section 6.3 Selection of Notes to Be Redeemed............................. 25
Section 6.4 Notice of Redemption.......................................... 26
Section 6.5 Effect of Notice of Redemption................................ 26
Section 6.6 Deposit of Redemption Price................................... 27
Section 6.7 Notes Redeemed in Part........................................ 27
ARTICLE 7
COVENANTS
Section 7.1 Payment of Notes.............................................. 27
Section 7.2 Maintenance of Office or Agency............................... 27
Section 7.3 Additional Reports............................................ 28
Section 7.4 Compliance Certificate........................................ 28
Section 7.5 Taxes......................................................... 29
Section 7.6 Stay, Extension and Usury Laws................................ 29
Section 7.7 Liens......................................................... 29
Section 7.8 Corporate Existence........................................... 29
Section 7.9 Senior Debt................................................... 29
Section 7.10 Amendment of Receivables, Master Trust Documents............. 30
Section 7.11 Conditions Precedent to Issuance of Future Notes............. 30
Section 7.12 Charge Account Agreements and Credit and Collection Policies..30
ARTICLE 8
SUCCESSORS
Section 8.1 Merger, Consolidation, or Sale of Assets...................... 30
Section 8.2 Successor Corporation Substituted............................ 31
ARTICLE 9
DEFAULTS AND REMEDIES
Section 9.1 Defaults and Events of Default................................ 32
Section 9.2 Acceleration.................................................. 33
Section 9.3 Other Remedies................................................ 33
Section 9.4 Waiver of Past Defaults....................................... 34
Section 9.5 Control by Majority........................................... 34
ii
PAGE
Section 9.6 Limitation on Suits........................................... 34
Section 9.7 No Bankruptcy Petition........................................ 35
Section 9.8 Rights of Holders of Notes to Receive Payment................. 35
Section 9.9 Limited Recourse.............................................. 35
Section 9.10 Undertaking for Costs........................................ 36
Section 9.11 Collection Suit by Trustee................................... 36
Section 9.12 Trustee May File Proofs of Claim............................. 36
ARTICLE 10
ADMINISTRATIVE AGENT
Section 10.1 Appointment and Authority of Administrative Agent............ 37
Section 10.2 Administrative Agent's Services and Duties................... 37
Section 10.3 Standard of Care............................................. 37
Section 10.4 Compensation of the Administrative Agent..................... 38
Section 10.5 Indemnification.............................................. 38
ARTICLE 11
TRUSTEE
Section 11.1 Duties of Trustee............................................ 39
Section 11.2 Rights of Trustee............................................ 40
Section 11.3 Individual Rights of Trustee................................. 40
Section 11.4 Trustee's Disclaimer......................................... 41
Section 11.5 Notice of Defaults........................................... 41
Section 11.6 Reports by Trustee to Holders of the Notes................... 41
Section 11.7 Compensation and Indemnity................................... 41
Section 11.8 Replacement of Trustee....................................... 42
Section 11.9 Successor Trustee by Merger, etc............................. 43
Section 11.10 Eligibility; Disqualification............................... 43
Section 11.11 Preferential Collection of Claims Against Company........... 43
ARTICLE 12
LEGAL DEFEASANCE
Section 12.1 Option to Effect Legal Defeasance............................ 44
Section 12.2 Legal Defeasance and Discharge............................... 44
Section 12.3 Conditions to Legal Defeasance............................... 44
Section 12.4 Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions............................. 45
Section 12.5 Repayment to Company......................................... 46
Section 12.6 Reinstatement................................................ 46
ARTICLE 13
AMENDMENT, SUPPLEMENT AND WAIVER
Section 13.1 Without Consent of Holders of Notes.......................... 46
Section 13.2 With Consent of Holders of Notes............................. 47
iii
PAGE
Section 13.3 Compliance with Trust Indenture Act.......................... 48
Section 13.4 Revocation and Effect of Consents............................ 48
Section 13.5 Notation on or Exchange of Notes............................. 48
Section 13.6 Trustee and Administrative Agent to Sign Amendments, etc..... 48
ARTICLE 14
MISCELLANEOUS
Section 14.1 Trust Indenture Act Controls................................. 49
Section 14.2 Notices...................................................... 49
Section 14.3 Communication by Holders of Notes with Other Holders of Notes 51
Section 14.4 Certificate and Opinion as to Conditions Precedent........... 51
Section 14.5 Statements Required in Certificate or Opinion................ 51
Section 14.6 Rules by Trustee and Agents.................................. 51
Section 14.7 No Personal Liability of Directors, Officers, Employees and
Stockholders............................................... 52
Section 14.8 Governing Law................................................ 52
Section 14.9 No Adverse Interpretation of Other Agreements................ 52
Section 14.10 Successors.................................................. 52
Section 14.11 Severability................................................ 52
Section 14.12 Counterpart Originals....................................... 52
Section 14.13 Table of Contents, Headings, etc............................ 52
EXHIBITS
Exhibit A Forms of Notes
Exhibit B Form of Legend for Book-Entry Notes
Exhibit C Form of Accredited Investor Letter
Exhibit D Form of Regulation S Letter
Exhibit E Amended and Restated Pooling and Servicing Agreement
Exhibit F Amended and Restated Series 1993-1 Supplement
Exhibit G Amended and Restated Series 1995-1 Supplement
Exhibit H Amended and Restated Receivables Purchase Agreement
Exhibit I Form of Daily Report
Exhibit J Form of Settlement Statement
Exhibit K Form of Statement to Noteholders
Exhibit L Form of Appointment Agreement
iv
INDENTURE dated as of May 30, 1996 by and among SRI
RECEIVABLES PURCHASE CO., INC., a Delaware special purpose corporation (the
"Company"), SPECIALTY RETAILERS, INC., as administrative agent (the
"Administrative Agent"), and BANKERS TRUST COMPANY, as trustee (the "Trustee")
and as collateral agent (the "Collateral Agent").
The Company, the Administrative Agent, the Trustee and the
Collateral Agent agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the 12.5% Trust Certificate-Backed
Notes (the "Notes"):
PRELIMINARY STATEMENTS
The Company is duly authorized to execute and deliver this
Indenture to provide for the Notes issuable as provided in this Indenture. All
covenants and agreements made by the Company herein are for the benefit and
security of the Noteholders, the Trustee and the Collateral Agent. The Company
is entering into this Indenture, and the Trustee is accepting the trusts created
hereby, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged.
All things necessary to make the Notes, when duly executed by
the Company, and authenticated and delivered hereunder, the valid obligations of
the Company and to make this Indenture a valid and binding agreement of the
Company have been done.
All payments on the Notes will be made from distributions on
the Collateral Securities, which were issued pursuant to the Pooling and
Servicing Agreement, as supplemented by the Series 1993-1 Supplement and the
Series 1995-1 Supplement, copies of which are attached hereto as Exhibits E, F
and G, respectively. Payment with respect to the Collateral Securities are made
from collections of payments on the Receivables sold by Palais Royal, Inc., a
Texas corporation ("Palais"), to the Company pursuant to the Receivables
Purchase Agreement attached hereto as Exhibit H, and further transferred by the
Company to the SRI Receivables Master Trust pursuant to the Pooling and
Servicing Agreement.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1 DEFINITIONS.
Capitalized but undefined terms have the meanings set forth in the Master Trust
Documents.
"1993-1 CERTIFICATES" means the Series issued pursuant to the
Series 1993-1 Supplement.
"1993-2 CERTIFICATES" means the Series issued pursuant to the
Series 1993-2 Supplement.
"1995-1 CERTIFICATES" means the Series issued pursuant to the
Series 1995-1 Supplement.
1
"ACCOUNTS" has the meaning set forth in Section 1.01 of the
Receivables Purchase Agreement. "ADMINISTRATIVE AGENT" means SRI or any
successor thereto consented to by the Trustee in accordance with the applicable
provisions of this Indenture.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
PROVIDED, HOWEVER, that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"AMORTIZATION PERIOD" has the meaning set forth in Section 1.1
of the Pooling and Servicing Agreement.
"BANKERS TRUST" means Bankers Trust (Delaware).
"BANKRUPTCY LAW" means title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company, or any authorized committee of such Board of Directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL STOCK" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, including, without limitation, partnership interests.
"CASH EQUIVALENTS" has the meaning set forth in Section 1.1 of
the Pooling and Servicing Agreement.
"CHARGE ACCOUNT AGREEMENTS" has the meaning set forth in
Section 1.1 of the Pooling and Servicing Agreement.
"CLASS D CERTIFICATEHOLDER" has the collective meanings set
forth in Section 2 of the Series 1995-1 Supplement and Section 2 of the Series
1993-1 Supplement.
"CLASS D CERTIFICATES" means the Series 1993-1 Class D
Certificates and the Series 1995-1 Class D Certificates.
"CLASS D DAILY CASH FLOWS" means on any Business Day the
principal payments made to the Class D Certificateholder on such Business Day.
"CLASS D FLOATING ALLOCATION PERCENTAGE" has the collective
meanings set forth in Section 2 of the Series 1995-1 Supplement and Section 2 of
the Series 1993-1 Supplement.
2
"CLASS D INITIAL INVESTED AMOUNT" has the collective meanings
set forth in Section 2 of the Series 1995-1 Supplement and Section 2 of the
Series 1993-1 Supplement.
"CLOSING DATE" means May 30, 1996.
"COLLATERAL AGENT" means the party named as such above until a
successor replaces it or it is terminated in accordance with the applicable
provisions of this Indenture and thereafter means any successor serving in
accordance with this Indenture.
"COLLATERAL SECURITIES" means the Class D Certificates and the
Transferor Certificate.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the
address of the Trustee specified in Section 14.2 hereof or such other address as
to which the Trustee may give notice to the Company.
"CREDIT AND COLLECTION POLICY" has the meaning set forth in
Section 1.1 of the Pooling and Servicing Agreement.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
"DAILY REPORT" means a report substantially in the form of
Exhibit I hereto as may be amended or modified from time to time in accordance
with Section 4.7.
"DCR" means Duff & Phelps Credit Rating Co.
"DEPOSITORY" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 3.3
hereof as the Depository with respect to the Notes, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"DESIGNATED SERIES" means Series 1993-1 and Series 1995-1.
"DETERMINATION DATE" means the second Business Day prior to
the Initial Interest Payment Date, each Semi-Annual Interest Payment Date, any
Monthly Payment Date and the Expected Maturity Date.
"EQUALIZATION ACCOUNT" has the meaning set forth in Section
1.1 of the Pooling and Servicing Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCESS FINANCE CHARGE COLLECTIONS" has the meaning set forth
in Section 1.1 of the Series 1995-1 Supplement.
"EXCESS TRANSFEROR DAILY CASH FLOWS" means the amount by which
Transferor Daily Cash Flows exceeds the amount paid to the holder of the Class D
Certificates as Class D Daily Cash Flows.
"EXPECTED MATURITY DATE" means November 15, 2000.
3
"FINAL INTEREST PAYMENT AMOUNT" means for the Expected
Maturity Date, if no Event of Default has occurred, the sum of (a) the
Semi-Annual Payment Amount plus (b) one additional day's interest, calculated by
the Administrative Agent as an amount equal to the product of (i) one divided by
360, (ii) 12.5% and (iii) the principal amount of the Notes.
"FINANCE CHARGE COLLECTIONS" has the meaning set forth in
Section 1.01 of the Receivables Purchase Agreement.
"FISCAL MONTH" means the monthly period ending on the Saturday
of the last week in any month, based on a standard retail 4/5/4-week calendar
quarter, with March, June, September and December always containing 5 weeks. All
other months are 4-week periods, except for the January Fiscal Month, which ends
on the Saturday closest to January 31.
"FUTURE INDENTURE" means an indenture under which any Future
Notes are issued.
"FUTURE NOTES" means a series of notes issued by the Company
after the date hereof, which are secured in whole or in part by the Transferor
Certificate.
"FUTURE NOTEHOLDERS" means any Person in whose name a Future
Note is registered.
"GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on the
date of this Indenture.
"GLOBAL NOTE" means a Note that is in the form of Exhibit A
and bears the legend set forth in Exhibit B.
"GOVERNMENT SECURITIES" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"HOLDER" or "NOTEHOLDER" means a Person in whose name a Note
is registered.
"INDEBTEDNESS" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to capital leases).
"INDENTURE" means this Indenture, as amended or supplemented
from time to time.
"INITIAL INTEREST PAYMENT DATE" means December 16, 1996.
4
"INITIAL INVESTED AMOUNTS" has the meaning set forth in
Section 1.1 of the Pooling and Servicing Agreement.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"INTEREST PAYMENT DATE" means the Initial Interest Payment
Date, a Monthly Payment Date, a Semi-Annual Interest Payment Date or Expected
Maturity Date, as applicable.
"INTEREST RATE" means 12.5% per annum.
"INVESTOR CERTIFICATES" has the meaning set forth in Section
1.1 of the Pooling and Servicing Agreement.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"LEGAL MATURITY DATE" means January 15, 2003.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"MASTER TRUST" means SRI Receivables Master Trust.
"MASTER TRUST CERTIFICATES" means any series of Investor
Certificates.
"MASTER TRUST DOCUMENTS" means the Receivables Purchase
Agreement, the Pooling and Servicing Agreement, the Series 1993-1 Supplement and
the Series 1995-1 Series Supplement. The "Master Trust Documents" do not include
the Series 1993-2 Supplement or any supplement in respect of any future series.
"MINIMUM TRANSFEROR INTEREST" has the meaning set forth in
Section 1.1 of the Pooling and Servicing Agreement.
"MONTHLY INTEREST PAYMENT AMOUNT" means with respect to any
Monthly Interest Period one-twelfth of the product of the Interest Rate and the
Principal Balance of the Notes as of the close of business on the first day of
such Monthly Interest Period.
"MONTHLY INTEREST PERIOD" means for a Monthly Payment Date
each period from and including the previous Monthly Payment Date (or in the case
of the first Monthly Interest Period, the previous Semi-Annual Interest Payment
Date) to and including the day preceding such Monthly Payment Date.
5
"MONTHLY INTEREST RESERVE AMOUNT" means, with respect to each
Semi-Annual Period Deposit Month, an amount equal to 25% of the Semi-Annual
Interest Payment Amount for the then current Semi-Annual Interest Payment
Period.
"MONTHLY PAYMENT DATE" means, following the occurrence of an
Event of Default, the fifteenth day of each month beginning with the month
following the month in which the Event of Default occurs, or if any such
fifteenth day is not a Business Day, the next succeeding Business Day.
"NON-U.S. PERSON" means any Person which is not a "U.S.
Person" as defined in Rule 902 under the Securities Act.
"NOTE ALLOCATION PERCENTAGE" means on any date of
determination (i) the sum of the Class D Initial Invested Amounts of the
Designated Series divided by (ii) the sum of the Class D Initial Invested
Amounts of the Designated Series plus Initial Invested Amounts of the
Certificates of each Transferor Retained Certificate that have been pledged for
the benefit of any additional issuances of notes by the Company.
"NOTE CUSTODIAN" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"NOTES" means the SRI Receivables Purchase Co., Inc. 12.5%
Trust Certificate-Backed Notes, substantially in the form of Exhibit A hereto.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING CIRCULAR" means the offering circular dated May 24,
1996 relating to the offering of the Notes.
"OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 14.4 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who
is reasonably acceptable to the Trustee and that meets the requirements of
Section 14.4 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"ORIGINATOR" has the meaning set forth in Section 1.1 of the
Pooling and Servicing Agreement.
"PAYMENT ACCOUNT" shall have the meaning set forth in Section
4.1.
6
"PAYMENT DATE" means the Initial Interest Payment Date, each
Semi-Annual Interest Payment Date, any Monthly Payment Date and the Expected
Maturity Date.
"PAY OUT EVENT" shall have the meaning set forth in Section
1.1 of the Pooling and Servicing Agreement.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"POOLING AND SERVICING AGREEMENT" means the Amended and
Restated Pooling and Servicing Agreement dated as of August 11, 1995 among the
Company, as Transferor, SRI, as Servicer and Bankers Trust (Delaware), as
trustee of the Master Trust, as amended and supplemented from time to time.
"PRINCIPAL BALANCE" means as of any date of determination,
$30,000,000 reduced by the aggregate amount of principal payments made on the
Notes pursuant to Subsection 4.5 (b) as of such date.
"PRINCIPAL COLLECTIONS" has the meaning set forth in Section
1.01 of the Receivables Purchase Agreement.
"PRINCIPAL RESERVE ACCOUNT" shall have the meaning set forth
in Section 4.1.
"PRINCIPAL SHORTFALLS" has the meaning set forth in Section
1.1 of the Pooling and Servicing Agreement.
"PRIVATE PLACEMENT LEGEND" means the legend initially set
forth on the Notes in the form set forth in Exhibit A.
"PURCHASE TERMINATION EVENT" shall have the meaning set forth
in Section 1.01 of the Receivables Purchase Agreement.
"PURCHASE TERMINATION EVENT OF DEFAULT" means an Event of
Default occurring as a result of a Purchase Termination Event under and as
defined in the Receivables Purchase Agreement (without regard to whether any
Default or other Event of Default has theretofore occurred).
"QIB" shall have the meaning set forth in Rule 144A under the
Securities Act.
"RAPID RESERVE PERIOD" means the period beginning on the first
day of the December 1999 Fiscal Month and continuing through the Expected
Maturity date and for so long as an Event of Default has not occurred.
"RATING AGENCIES" means S&P and DCR.
"RECEIVABLES PURCHASE AGREEMENT" means the Amended and
Restated Receivables Purchase Agreement dated as of May 30, 1996 between Palais
Royal, Inc. and the Company, as amended from time to time.
7
"RECORD DATE" means the last day of the calendar month prior
to any of the Expected Maturity Date, the Initial Interest Payment Date, a
Semi-Annual Payment Date or a Monthly Payment Date.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company and
the other parties named on the signature pages thereof, relating to the Notes,
as such agreement may be amended or supplemented from time to time.
"RELEASED EQUALIZATION ACCOUNT CASH FLOWS" means on any
Business Day the amounts released from the Equalization Account and distributed
to the Transferor by reason of the Transferor Interest exceeding the Minimum
Transferor Interest.
"REQUIRED AMOUNT" has the collective meanings set forth in
Section 2 of the Series 1995-1 Supplement and Section 2 of the Series 1993-1
Supplement.
"REQUIRED DEPOSIT RATING" means a rating which is acceptable
to each of the Rating Agencies; and any requirement that deposits have the
"Required Deposit Rating" shall mean that such deposits have the foregoing
ratings from each of such rating agencies or such other rating which is
acceptable to the Rating Agencies.
"RESPONSIBLE OFFICER" means, when used with respect to the
Trustee or the Collateral Agent, any officer within the Corporate Trust Office
(or any successor group of the Trustee) including any managing director, vice
president, assistant vice president, assistant secretary, assistant treasurer,
or any other officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"RESTRICTED NOTE" shall have the meaning of the term
"Restricted Security" as set forth in Rule 144(a)(3) under the Securities Act,
provided that the Trustee shall be entitled to request and conclusively rely
upon an Opinion of Counsel with respect to whether any Note is a Restricted
Note.
"REVOLVING PERIOD" has the meaning set forth in Section 1.1 of
the Pooling and Servicing Agreement.
"S&P" means Standard & Poor's, a Division of The McGraw-Hill
Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEMI-ANNUAL INTEREST PAYMENT AMOUNT" means, for any
Semi-Annual Interest Payment Date, one-half of the product of (i) the Interest
Rate and (ii) the Principal Balance of the Notes (plus, for the initial
Semi-Annual Interest Payment Date 16 days interest calculated on the basis of a
365 day year).
"SEMI-ANNUAL INTEREST PAYMENT DATE" means, prior to an Event
of Default, June 15 and December 15 of each year (or if any such day is not a
Business Day, the next succeeding Business Day).
8
"SEMI-ANNUAL INTEREST PERIOD" means, with respect to any
Semi-Annual Interest Payment Date, the period from and including the preceding
Semi-Annual Interest Payment Date (or, with respect to the initial Semi-Annual
Interest Period, the Closing Date) to and including the day preceding such
Semi-Annual Interest Payment Date.
"SEMI-ANNUAL PERIOD DEPOSIT MONTH" means, with respect to any
Semi-Annual Interest Period, each of the four successive Fiscal Months beginning
with the Fiscal Month during which such Semi-Annual Interest Period commences.
"SENIOR NOTES" means the SRI 10% Senior Notes Due 2000.
"SENIOR SUBORDINATED NOTES" means collectively the SRI 11%
Series B Senior Subordinated Notes and the SRI 11% Series D Senior Subordinated
Notes Due 2003.
"SERIES" means any series of certificates issued pursuant to a
series supplement to the Pooling and Servicing Agreement, whether now or
hereafter outstanding.
"SERIES 1993-1 CLASS D CERTIFICATES" means the Class D
Certificates issued pursuant to the Series 1993-1 Supplement.
"SERIES 1995-1 CLASS D CERTIFICATES" means the Class D
Certificates issued pursuant to the Series 1995-1 Supplement.
"SERIES 1993-1 SUPPLEMENT" means the Amended and Restated
Series 1993-1 Supplement to the Pooling and Servicing Agreement dated as of May
30, 1996 by and among the Company, as Transferor, SRI, as Servicer and Bankers
Trust (Delaware), as trustee of the Master Trust, as amended and supplemented
from time to time.
"SERIES 1993-2 SUPPLEMENT" means the Series 1993-2 Supplement
to the Pooling and Servicing Agreement dated as of July 30, 1993 among the
Company, as Transferor, SRI, as Servicer, and Bankers Trust (Delaware), as
trustee of the Master Trust, as amended and supplemented from time to time.
"SERIES 1995-1 SUPPLEMENT" means the Amended and Restated
Series 1995-1 Supplement to the Pooling and Servicing Agreement dated as of May
30, 1996 by and among the Company, as Transferor, SRI, as Servicer, and Bankers
Trust (Delaware), as trustee of the Master Trust, as amended and supplemented
from time to time.
"SETTLEMENT STATEMENT" means a report substantially in the
form of Exhibit J hereto as may be amended or modified from time to time in
accordance with Section 4.7.
"SHARED PRINCIPAL COLLECTIONS" has the meaning set forth in
Section 1.1 of the Pooling and Servicing Agreement.
"SRI" means Specialty Retailers, Inc., a Delaware corporation.
"SRI RECEIVABLES MASTER TRUST" means the trust created by the
Pooling and Servicing Agreement.
9
"STATEMENT TO NOTEHOLDERS" means the statement to Noteholders,
substantially in the forms of Exhibit K hereto.
"SUBSIDIARY" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of such Person or a
combination thereof other than Unrestricted Subsidiaries (except as used in the
definition thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TRANSFEROR" means SRI Receivables Purchase Co., Inc.
"TRANSFEROR CERTIFICATE" shall mean "Exchangeable Transferor
Certificate" as defined on page 11 of the Pooling and Servicing Agreement.
"TRANSFEROR/CLASS D CASH FLOWS" means, on any date of
determination (x) during the Revolving Period, the sum for all Designated Series
of the Class D Floating Allocation Percentage of Principal Collections for such
Designated Series for such day and (y) during the Amortization Period, the sum
for all Designated Series of the Class D Fixed Allocation Percentage of
Principal Collections for such Designated Series, which are paid to the
Transferor.
"TRANSFEROR DAILY CASH FLOWS" means on any date of
determination (x) the sum of (i) Transferor Percentage Principal Cash Flows,
(ii) Transferor Percentage Finance Charge Cash Flows, (iii) Released
Equalization Account Cash Flows, (iv) Transferor Shared Principal Collection
Cash Flows, (v) Transferor Excess Finance Charge Cash Flows, and (vi)
Transferor/Class D Cash Flows minus (y) funds deposited into the Equalization
Account to maintain the Transferor Interest at least equal to the Minimum
Transferor Interest.
"TRANSFEROR EXCESS FINANCE CHARGE CASH FLOWS" means Excess
Finance Charge Collections for all outstanding Series that would be paid to the
Transferor.
"TRANSFEROR INTEREST" has the meaning set forth in Section 1.1
of the Pooling and Servicing Agreement.
"TRANSFEROR PERCENTAGE" has the meaning set forth in Section
1.1 of the Pooling and Servicing Agreement.
"TRANSFEROR PERCENTAGE CASH FLOWS" means on any date of
determination the sum of (i) Transferor Percentage Principal Cash Flows, (ii)
Transferor Percentage Finance Charge Cash Flows, and (iii) Released Equalization
Account Cash Flows.
"TRANSFEROR PERCENTAGE FINANCE CHARGE CASH FLOWS" means on any
date of determination (i) the product of (a) the Transferor Percentage on such
day and (b) Finance Charge Collections on such day minus (ii) the sum of (a) any
amounts of such portion of Finance Charge Collections paid into the Equalization
Account to maintain the Transferor Interest at least equal to the Minimum
Transferor Interest and (b) any amount of such portion of Finance Charge
Collections applied to satisfy the Required Amount of any Series.
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"TRANSFEROR PERCENTAGE PRINCIPAL CASH FLOWS" means on any date
of determination (i) the product of (a) the Transferor Percentage on such day
and (b) Principal Collections on such day.
"TRANSFEROR RETAINED CERTIFICATE" has the meaning set forth in
Section 1.1 of the Pooling and Servicing Agreement.
"TRANSFEROR SHARED PRINCIPAL COLLECTION CASH FLOWS" means on
any date of determination Principal Collections or Finance Charge Collections
that are treated as Shared Principal Collections, EXCEPT to the extent that such
Shared Principal Collections are applied to (i) Principal Shortfalls on any
Series or (ii) repayment of principal of any Variable Funding Certificates.
"TRUSTEE" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"VARIABLE FUNDING CERTIFICATES" means a Series of Certificates
with fluctuating principal amounts, including the 1993-2 Certificates.
SECTION 1.2 OTHER DEFINITIONS. DEFINED IN TERM SECTION
"AGENT MEMBERS"................................................ 3.6
"DEFAULT"...................................................... 9.1
"EVENT OF DEFAULT"............................................. 9.2
"GLOBAL NOTES"................................................. 3.1
"INTEREST RESERVE ACCOUNT"..................................... 4.1
"LEGAL DEFEASANCE" ............................................ 11.2
"OFFSHORE PHYSICAL NOTES"...................................... 3.1
"PAYING AGENT"................................................. 3.3
"PAYMENT ACCOUNT".............................................. 4.1
"PAYMENT DEFAULT" ............................................. 9.1
"PHYSICAL NOTES"............................................... 3.1
"PRINCIPAL RESERVE ACCOUNT".................................... 4.1
"REGISTRAR".................................................... 3.3
"U.S. PHYSICAL NOTES".......................................... 3.1
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company, any successor
obligor upon the Notes.
11
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION.
(a) Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) words in the singular include the plural, and in the
plural include the singular;
(4) provisions apply to successive events and transactions;
and
(5) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement or successor sections or
rules adopted by the SEC from time to time.
(b) The Fiscal Months "in" or "related to" a Semi-Annual
Interest Period or a Monthly Interest Period during which collections are
reserved to make payments on the Notes are those Fiscal Months which begin
approximately two weeks before the commencement of the Semi-Annual Interest
Period or Monthly Interest Period and which end approximately two weeks before
the end of the SemiAnnual Interest Period or Monthly Interest Period.
ARTICLE 2
GRANTS OF SECURITY INTEREST;
APPOINTMENT OF COLLATERAL AGENT
SECTION 1 GRANTS OF SECURITY INTEREST.
(a) The Company hereby grants (i) to the Trustee, for the benefit and
security of the Noteholders and Future Noteholders, a security interest in (x)
all of the Company's right, title and interest in, to and under the Class D
Certificates and all payments thereon or with respect thereto and all proceeds
thereof and (y) the Interest Reserve Account and the Principal Reserve Account
and (ii) to the Collateral Agent for the benefit and security of the Trustee and
the Noteholders and any Future Trustee and any Future Noteholders, a security
interest in all of the Company's right, title and interest in, to and under the
Transferor Certificate and all payments thereon or with respect thereto and all
proceeds thereof. The grant in clause (i) is made in trust to secure the Notes
equally and ratably without prejudice, priority or distinction between any Note
and any other Note by reason of difference in time of issuance or otherwise and
to secure (x) the payment of all amounts due on the Notes in accordance with
their terms, (y) the payment of all other sums payable under this Indenture, and
(z) compliance with the provisions of this Indenture, all as provided in this
Indenture. The grant in clause (ii) is made in trust to secure (a) (1) the Notes
equally and ratably without prejudice, priority or distinction between any Note
and any other Note by reason of difference in time of issuance or otherwise and
(2) the payment of all amounts due on the Notes in accordance with their terms,
(3) the payment of all other sums payable under this Indenture, and (4)
compliance with the provisions of this Indenture, all as provided in this
Indenture and (b)(1) the Future Notes equally and ratably without
12
prejudice, priority or distinction between any Future Note and any other Future
Note by reason of difference in time of issuance or otherwise and to secure (2)
the payment of all amounts due on the Future Notes in accor dance with their
terms, (3) the payment of all other sums payable under each Future Indenture,
and (4) compliance with the provisions of each Future Indenture.
(b) Each of the Trustee and the Collateral Agent acknowledges such
grant and accepts the trusts hereunder in accordance with the provisions hereof.
(c) In connection with the grant described in Sections 2(a)(i) and
2(a)(ii), the Company shall file, on or prior to the Closing Date, in the
appropriate office of any applicable state, county or other relevant
jurisdiction, UCC-1 financing statements executed by the Transferor as debtor,
and with respect to the grant described in Section 2(a)(i), naming the Trustee
as secured party and identifying the Class D Certificates as the Collateral and
with respect to the grant described in Section 2(a)(ii), naming the Collateral
Agent as secured party and identifying the Collateral as the Transferor
Certificate. In connection with such filing, the Company shall cause to be filed
all necessary continuation statements thereof and take or cause to be taken such
actions and execute such documents as are necessary to con tinue the perfection
and protect the Noteholders' interest in such property.
(d) In connection with the grant described in Section 2.1(a)(i), the
Company shall deliver to, and deposit with, the Trustee, on or before the
Closing Date, the certificates representing the Class D Certificates and in
connection with the grant described in Section 2(a)(ii), the Company shall
deliver to the Collateral Agent the Certificate representing the Transferor
Certificate. The Trustee hereby agrees to maintain the Class D Certificates in
its continuous possession. The Collateral Agent hereby agrees not to transfer
possession of the Transferor Certificate except as directed by Bankers Trust
(Delaware) as Trustee under the Pooling and Servicing Agreement in connection
with an Exchange in accordance with Section 6.9 of the Pooling and Servicing
Agreement of the applicable Master Trust Documents.
SECTION 2 APPOINTMENT OF COLLATERAL AGENT.
The Company hereby appoints the Collateral Agent as its agent to hold
the Transferor Certificate and the Collateral Agent hereby accepts such
appointment. The Collateral Agent hereby agrees to hold the Transferor
Certificate for the benefit of the Noteholders and if requested by the Company
for the benefit of any Future Noteholders.
ARTICLE 3
THE NOTES
SECTION 1 FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
13
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent Global Notes in registered form,
substantially in the form set forth in Exhibit A ("Global Notes"), deposited
with the Trustee, as custodian for the Depository, and shall bear the legend
set forth on Exhibit B. The aggregate principal amount any Global Note may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, as hereinafter provided.
Notes offered and sold in reliance on any other exemption from
registration under the Securities Act other than as described in the preceding
paragraph shall be certificated Notes in registered form in substantially the
form set forth in Exhibit A (the "Physical Notes").
SECTION 2 EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount of $30,000,000 from time to time outstanding, at the direction of the
Company. The Company shall direct the Trustee to authenticate a particular
principal amount of Notes having a particular designation or series in such
Officers' Certificate.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 3 REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-Registrars and one or more additional
paying agents. The term "Registrar" includes any co-Registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
14
The Company initially appoints The Depository Trust Company to act as
Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as the Note Custodian with respect to the Global
Notes.
SECTION 4 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal or interest on the Notes, and will notify the Trustee of any default
by the Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other
than the Company or an Affiliate) shall have no further liability for the money.
If the Company or an Affiliate acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.
SECTION 5 HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date, and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes.
SECTION 6 BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES.
(a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit B.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository, or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 3.7. In addition, Physical Notes shall
be transferred to all beneficial owners in exchange for their beneficial
interests in Global Notes if the Depository notifies the Company that it is
unwilling or unable to continue as Depository for any Global Note and a
successor depositary is not appointed by the Company within 90 days of such
notice.
15
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical
Notes are to be issued) reflect on its books and records the date and a decrease
in the principal amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred or
exchanged, and the Company shall execute and the Trustee shall authenticate and
deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer or exchange of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Notes, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraph (c) of Section 3.7, bear the
legend regarding transfer restrictions applicable to the Physical Notes set
forth in Exhibit A.
(f) The Holder of any Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 7 SPECIAL TRANSFER PROVISIONS.
(a) The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted Note
to any Institutional Accredited Investor which is not a QIB or to any Non-U.S.
Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the Private
Placement Legend, if (x) the requested transfer is after May 30, 1999 or
(y) (1) in the case of a transfer to an Institutional Accredited Investor
which is not a QIB (excluding Non-U.S. Persons), the proposed transferee
has delivered to the Registrar a certificate substantially in the form of
Exhibit C hereto and the transferor has delivered to the Trustee and the
Company such certifications, legal opinions and other information as the
Trustee and the Company may reasonably request to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act or (2)
in the case of a transfer to a Non-U.S. Person, the transferor has
delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of (x)
the certificate, certificates, legal opinions and other information, if
any, required by paragraph (i) above and (y) instructions given in
accordance with the Depositary's and the Registrar's procedures.
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Company shall execute and the Trustee shall authenticate and deliver
one or more Physical Notes of like tenor and amount.
16
(b) The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted Note
to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of Note stating, or has otherwise advised the Company and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or has otherwise
advised the Company and the Registrar in writing, that it is purchasing
the Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer are
to be evidenced by an interest in the Global Note, upon receipt by the
Registrar of instructions given in accordance with the Depository's and
the Registrar's procedures, the Registrar shall reflect on its books and
records the date and an in crease in the principal amount of the Global
Note in an amount equal to the principal amount of the Physical Notes to
be transferred, and the Trustee shall cancel the Physical Notes so trans
ferred.
(c) Upon the transfer, exchange or replacement of Notes not bearing
the Private Placement Legend, the Registrar shall deliver Notes that do not bear
the Private Placement Legend. Upon the transfer, exchange or replacement of
Notes bearing the Private Placement Legend, the Registrar shall deliver only
Notes that bear the Private Placement Legend unless (i) the circumstances
contemplated by paragraph (a)(i)(x) of this Section 3.7 exist, (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act or (iii) such Note has been sold pursuant to an
effective registration statement under the Securities Act.
(d) By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications re ceived pursuant to Section 3.6 or this Section 3.7.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
17
SECTION 8 REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee or the Company, as the case may be, to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 9 OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. A Note does not cease to be outstanding because the
Company or an Affiliate holds the Note, except for purposes of granting any
consents or waivers of the Holders of the Notes.
If a Note is replaced pursuant to Section 3.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.5 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 10 TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary securities upon a written
order of the Company signed by two Officers of the Company. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for Temporary Notes. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 11 CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of
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transfer, exchange or payment. The Trustee and no one else shall cancel all
Notes surrendered for registration of transfer, exchange, payment, replacement
or cancellation and shall destroy cancelled Notes. Certification of the
destruction of all cancelled Notes shall be delivered to the Company. The
Company may not issue new Notes to replace Notes that it has paid or that have
been delivered to the Trustee for cancellation.
SECTION 12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 7.1 hereof. The Company shall, with the consent of
the Trustee, fix each such special record date and payment date. At least 30
days before the special record date, the Company (or the Trustee, in the name of
and at the expense of the Company) shall mail to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 4
PAYMENTS; STATEMENTS TO
CERTIFICATEHOLDERS
SECTION 1 ESTABLISHMENT OF ACCOUNTS.
The Trustee shall establish and maintain the Interest Reserve
Account, the Principal Reserve Account and the Payment Account in the name of
the Trustee for the benefit of the Holders of the Notes. Each of the Interest
Reserve Account and the Principal Reserve Account shall be a segregated,
non-interest-bearing trust account initially established with the Trustee and
maintained with the Trustee so long as (i) the deposits of the Trustee have the
Required Deposit Rating or (ii) the Interest Reserve Account and the Principal
Reserve Account is maintained as a fully segregated trust account. All amounts
held in the Interest Reserve Account and the Principal Reserve Account shall be
invested in Cash Equivalents by the Trustee, at the written direction of the
Administrative Agent, in each case such investments must mature not later than
the 15th day of the following month. Such written direction shall certify that
any such investment is authorized by this Section 4.1 and complies with the
requirements of Cash Equivalents. On the 15th day of each month any earnings
(net of losses and investment expenses) on funds or deposits in the Interest
Reserve Account or the Principal Reserve Account will be withdrawn from such
accounts by the Trustee as directed by the Administrative Agent and paid to the
Company, or at the option of the Administrative Agent and the Company retained
in the Interest Reserve Account or the Principal Reserve Account, as applicable.
Investment earnings retained in the Interest Reserve Account shall be applied
towards the following Monthly Interest Reserve Amount. The Payment Account shall
be a segregated, non-interest-bearing trust account initially established with
the Trustee and maintained with the Trustee for so long as (x) the deposits of
the Trustee have the Required Deposit Rating or (y) the Payment Account is
maintained as a fully segregated trust account. The amounts in the Payment
Account shall not be invested. Should the deposits of the Trustee no longer have
the Required Deposit Rating and the Payment Account, the Interest Reserve
Account or the Principal Reserve Account, as applicable, shall not be maintained
as a fully segregated trust account, then the Administrative Agent shall, with
the Trustee's assistance as necessary, cause the Interest Reserve Account or the
Principal Reserve Account to be moved, within 60 days after the occurrence of
the later of the loss of the Required Deposit Rating or the cessation of such
accounts being maintained as fully segregated trust accounts, to a bank or trust
company organized under the laws of the United States of any state thereof, the
deposits of which shall have the Required Deposit Rating.
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SECTION 2 DEPOSITS INTO THE INTEREST RESERVE ACCOUNT.
The Company shall make the following deposits into the Interest
Reserve Account, as specified in the applicable Daily Report:
(a) Subject to Section 4.2(b), commencing on the first Business Day
of the June 1996 Fiscal Month and prior to the Rapid Reserve Period and so long
as an Event of Default has not occurred, on each Business Day, during each
Semi-Annual Period Deposit Month, the Company shall deposit in the Interest
Reserve Account an amount equal to 10% of the Note Allocation Percentage of
Transferor Daily Cash Flows, until the Company has deposited an amount equal to
the Monthly Interest Reserve Amount for such Semi-Annual Interest Deposit Month.
(b) If deposits are being made by the Company pursuant to Section
4.2(a) and an amount has not been deposited into the Interest Reserve Account
equal to the Monthly Interest Reserve Amount in any one Semi-Annual Period
Deposit Month, the Company shall, beginning on the first Business Day of the
Semi-Annual Period Deposit Month following a Semi-Annual Period Deposit Month in
which the Monthly Interest Reserve Amount was not deposited into the Interest
Reserve Account, and on each Business Day thereafter, deposit into the Interest
Reserve Account an amount equal to 100% of the Note Allocation Percentage of
Transferor Daily Cash Flows until such time as the Company has deposited in the
Interest Reserve Account an amount equal to (i) the current Semi-Annual Period
Deposit Month's Monthly Interest Reserve Amount, if any, and (ii) any portion of
the Monthly Interest Reserve Amount for any prior Semi-Annual Period Deposit
Month that has not previously been deposited into the Interest Reserve Account.
If the amount on deposit in the Interest Reserve Account does not equal the
Semi-Annual Interest Payment Amount at the close of business on the last
Business Day of the fourth Semi-Annual Period Deposit Month in such Semi-Annual
Interest Period, the Company shall thereafter, on each remaining Business Day of
such Semi-Annual Interest Period, deposit 100% of the Note Allocation Percentage
of Transferor Daily Cash Flows in the Interest Reserve Account until such time
as the Semi-Annual Interest Payment Amount has been deposited into the Interest
Reserve Account.
(c) Subject to Section 4.2(d), during the Rapid Reserve Period and so
long as an Event of Default has not occurred, on each Business Day during each
Monthly Interest Period in a Semi-Annual Interest Period, the Company shall
deposit in the Interest Reserve Account an amount equal to 50% of the Note
Allocation Percentage of Excess Transferor Daily Cash Flows, until the Company
has deposited an amount equal to the Monthly Interest Reserve Amount for such
Monthly Interest Period. The Company shall make the deposits referred to in the
preceding sentence until the amounts on deposit in the Interest Reserve Account
equal the Semi-Annual Interest Payment Amount.
(d) If deposits are being made by the Company pursuant to Section
4.2(c) and an amount has not been deposited into the Interest Reserve Account
equal to the Monthly Interest Reserve Amount in any Semi-Annual Period Deposit
Month, the Company shall, on the first Business Day of the Monthly Interest
Period following the Monthly Interest Period in which the Monthly Interest
Reserve Amount was not deposited into the Interest Reserve Account, and on each
Business Day thereafter, deposit into the Interest Reserve Account an amount
equal to the Note Allocation Percentage of Excess Transferor Daily Cash Flows,
until such time as the Semi-Annual Interest Payment Amount has been deposited in
the Interest Reserve Account.
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(e) Subject to Section 4.2(f), on and after the date on which an
Event of Default other than a Purchase Termination Event of Default is deemed to
have occurred and after the Expected Maturity Date if the Notes have not been
paid in full, the Company shall deposit in the Interest Reserve Account on each
Business Day of the Fiscal Month (other than the last Business Day of such
Fiscal Month) prior to each Monthly Payment Date an amount equal to the Note
Allocation Percentage of Excess Transferor Daily Cash Flows, until an amount
equal to 125% of the Monthly Interest Payment Amount for such Fiscal Month has
been deposited into the Interest Reserve Account.
(f) On each Business Day beginning on the day on which a Purchase
Termination Event of Default occurs, the Company shall deposit in the Interest
Reserve Account the Note Allocation Percentage of Transferor Daily Cash Flows
for application in accordance with Section 4.4(d).
(g) Subject to Section 4.8, on and after the occurrence of an Event
of Default or on any day after the Expected Maturity Date, the Company shall
make deposits into the Interest Reserve Account pursuant to Sections 4.2(e) and
4.2(f) until the Principal Balance of the Notes has been reduced to zero.
SECTION 3 DEPOSITS INTO THE PRINCIPAL RESERVE ACCOUNT.
The Company shall make the following deposits into the Principal
Reserve Account, as specified in the applicable Daily Report:
(a) Prior to the first day of the June 2000 Fiscal Month, so long as
an Event of Default has not occurred, deposits shall not be made into the
Principal Reserve Account.
(b) Subject to Section 4.8, on and after the earlier of the
occurrence of an Event of Default and the first day of the June 2000 Fiscal
Month, so long as a Purchase Termination Event of Default shall not have
occurred, on each Business Day the Company shall deposit into the Principal
Reserve Account the sum of (i) the Class D Daily Cash Flows and (ii) the excess
of the Note Allocation Percentage of Excess Transferor Daily Cash Flows over the
amount thereof required to be deposited in the Interest Reserve Account pursuant
to Section 4.2 on such day, until such time as an amount equal to the
outstanding Principal Balance of the Notes has been set aside in the Principal
Reserve Account.
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(c) Following the occurrence of a Purchase Termination Event of
Default, the Company shall not make any additional deposits into the Principal
Reserve Account and shall only make the deposits into the Interest Reserve
Account as described in subsection 4.2(g) and shall distribute such amounts in
accordance with subsection 4.4(d).
SECTION 4 TRANSFERS TO THE PAYMENT ACCOUNT.
(a) Prior to the occurrence of an Event of Default the Trustee,
acting in accordance with the written instructions of the Administrative Agent
in the Settlement Statement, shall, on each SemiAnnual Interest Payment Date,
cause an amount equal to the Semi-Annual Interest Payment Amount to be withdrawn
from the Interest Reserve Account and deposited into the Payment Account.
(b) On the Expected Maturity Date the Trustee, acting in accordance
with the written instructions of the Administrative Agent in the Settlement
Statement, shall cause an amount equal to (i) the Final Interest Payment Amount
and (ii) the lesser of (x) Principal Balance of the Notes and (y) the amount of
funds on deposit in the Principal Reserve Account on the last day of the
preceding Fiscal Month to be withdrawn from the Interest Reserve Account and
Principal Reserve Account, respectively, and deposited into the Payment Account.
(c) Following the occurrence of an Event of Default other than a
Purchase Termination Event of Default, the Trustee, acting in accordance with
the written instructions of the Administrative Agent in the Settlement
Statement, shall, on each Monthly Payment Date (other than the Expected Maturity
Date), cause the following amounts to be withdrawn and deposited into the
Payment Account:
(i) from the Interest Reserve Account as payment of interest,
the Monthly Interest Payment Amount; and
(ii) from the Principal Reserve Account, the amount on deposit
in the Principal Reserve Account at the close of business on the
Business Day prior to such Monthly Payment Date.
(d) Following a Purchase Termination Event of Default, the Trustee,
acting in accordance with the instructions of the Administrative Agent in the
Settlement Statement, shall on each Monthly Payment Date, cause the amounts
described in clauses (i), (ii) and (iii) below to be withdrawn and deposited
into the Payment Account:
(i) from the Interest Reserve Account, the Monthly Interest
Payment Amount related to such Monthly Payment Date;
(ii) from the Principal Reserve Account, the amount on deposit
in the Principal Reserve Account at the close of business on the
Business Day prior to such Monthly Payment Date;
(iii) from the Interest Reserve Account, an amount equal to the
excess of (x) the amount on deposit in the Interest Reserve Account
at the close of business on the Business Day prior to such Monthly
Payment Date over (y) the amounts described in clause (i) above.
SECTION 5 PAYMENTS OF PRINCIPAL AND INTEREST.
(a) On each Payment Date, the Administrative Agent shall cause the
amounts on deposit in the Payment Account to be withdrawn and paid, by the
Trustee in accordance with the Settlement Statement, to each Noteholder that was
a Holder on the related Record Date.
(b) Amounts deposited into the Payment Account pursuant to Sections
4.4(a), 4.4(b)(i), 4.4(c)(i) and 4.4(d)(i) shall be paid by the Trustee to
Noteholders in respect of interest accrued during the related Semi-Annual
Interest Period or Monthly Interest Period, as applicable, and amounts deposited
into the Payment Account pursuant to Sections 4.4(b)(ii), 4.4(c)(ii) and
4.4(d)(ii) and (iii) shall be paid by the Trustee to Noteholders as principal in
reduction of the Principal Balance of the Notes, in each case in accordance with
the instructions of the Administrative Agent in the Settlement Statement.
To the extent funds are available, payments to Noteholders shall be
made by the Trustee in immediately available funds (or, if Physical Notes have
been issued, by check mailed by the Trustee to each Noteholder's address of
record in the records of the Paying Agent).
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SECTION 6 STATEMENTS TO NOTEHOLDERS.
On each Determination Date, the Administrative Agent shall prepare
the Statement to Noteholders, substantially in the form of Exhibit K hereto, and
deliver it to the Trustee on the Initial Interest Payment Date, each Semi-Annual
Interest Payment Date, any Monthly Payment Date and the Expected Maturity Date
and the Trustee shall in turn provide the Holders of the Notes with such
Statement to Noteholders on each such date. The Administrative Agent shall also
deliver the Statement to Noteholders to the Rating Agencies.
SECTION 7 DAILY REPORT AND SETTLEMENT STATEMENT.
On each Business Day the Administrative Agent shall prepare the Daily
Report and on each Determination Date the Administrative Agent shall prepare the
Settlement Statement. The Daily Report and the Settlement Statement shall be in
substantially the forms of Exhibits I and J, respectively, with such changes as
the Administrative Agent may determine to be necessary or desirable; PROVIDED,
HOWEVER, that no such change shall serve to exclude information required by this
Indenture and each such change shall be reasonably acceptable to the Trustee.
The Administrative Agent shall, upon making such determination and receiving the
consent of the Trustee to such change, deliver to the Trustee and each Rating
Agency an Officers' Certificate to which shall be annexed the form of the
related Exhibit, as so changed. Upon the delivery of such Officers' Certificate
to the Trustee, the related Exhibit, as so changed, shall for all purposes of
this Indenture constitute such Exhibit. The Trustee may conclusively rely upon
such Officers' Certificate in determining whether the related Exhibit, as
changed, conforms to the requirements of this Indenture. The Administrative
Agent shall also deliver the Settlement Statement to the Rating Agencies.
SECTION 8 FINAL DISTRIBUTIONS.
Notwithstanding anything to the contrary contained herein, the
Company shall not be required to make any deposits pursuant to Sections 4.2 or
4.3 after the last day of the Fiscal Month immediately prior to the Legal
Maturity Date. If after the Legal Maturity Date the Principal Balance of the
Notes has not been reduced to zero, then payments shall be made to Noteholders
from proceeds of the sale contemplated by Section 9 of the Series 1995-1
Supplement up to an amount that would reduce the Principal Balance of the Notes
to zero.
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 1 GENERAL PROVISIONS.
The Notes to be issued on the Closing Date shall be executed by the
Company and delivered to the Trustee for authentication and thereupon the same
shall be authenticated and delivered by the Trustee upon request by the Company,
upon compliance with Section 5.2 and upon receipt by the Trustee of the
following:
(1) the Series 1993-1 Class D Certificate and the Series 1995-1
Class D Certificate, together with evidence of the delivery to the
Collateral Agent of the Transferor Certificate;
(2) a certificate of the Secretary of the Company (a) evidencing the
authorization by a resolution of the Board of Directors of the execution
and delivery of this Indenture
23
and the Purchase Agreement and the execution, authentication and delivery
of the Notes; and (b) certifying that (i) the attached copy of the
resolutions of the Board of Directors and the organizational documents of
the Company are true and complete copies thereof, (ii) such resolutions
have not been rescinded and such resolutions and organizational documents
are in full force and effect on and as of the Closing Date and (iii) the
officers authorized to execute and deliver such documents have the
requisite power to do so and hold the offices and have the signatures
indicated thereon;
(3) an Officers' Certificate stating that the Company is not in
Default under this Indenture and that no Event of Default has occurred and
that the issuance of the Notes will not result in a breach of any of the
terms, conditions or provisions of, or constitute a default under, the
certificate of incorporation or by-laws of the Company, any indenture or
other agreement or instrument to which the Company is a party or by which
it is bound, or violate any order of any court or administrative agency
entered in any proceeding to which the Company is a party or by which it
may be bound or to which it may be subject, except for any such breach,
default or violation which would not, individually or in the aggregate
have a material adverse effect on the business condition (financial or
otherwise), or results of operations of the Company or on its ability to
perform its obligations under the Master Trust Documents, the Purchase
Agreement or the Notes; and that all conditions precedent provided in this
Indenture relating to the authentication and deliv ery of the Notes have
been complied with;
(4) an executed counterpart of the Purchase Agreement;
(5) opinion(s) of Kirkland & Ellis, special counsel to the Company,
satisfactory in form and substance to the Rating Agencies, dated the
Closing Date;
(6) an opinion of Kirkland & Ellis, special tax counsel to the
Company, dated the Closing Date to the effect that the Notes will be
characterized as indebtedness for Federal and applicable state income tax
purposes and that the issuance of the Notes will not adversely affect the
Federal or applicable state tax characterization of any outstanding series
of Investor Certificates of the Master Trust or the status of the Master
Trust (as not being an "association" or publicly traded partnership
taxable as a corporation) under Federal or applicable state income tax
laws;
(7) written evidence that the Rating Agencies shall have rated the
Notes at least B+ or its equivalent and that none of the then current
ratings of the Investor Certificates of the Master Trust will be reduced
or withdrawn as a result of the issuance of the Notes; and
(8) such other documents or opinions as the Trustee may reasonably
require.
SECTION 2 SECURITY FOR NOTES.
Notes to be issued on the Closing Date shall be executed by the
Company and delivered to the Trustee for authentication and thereupon the same
shall be authenticated and delivered to the Company by the Trustee upon
direction by the Company and upon delivery by the Company to the Trustee, and
receipt by the Trustee, of a certificate of an Authorized Officer of the
Company, dated as of the Closing Date, to the effect that, in the case of the
Collateral Securities, immediately prior to the deliv ery thereof to the Trustee
on the Closing Date:
(1) the Company is the owner of the Collateral Securities free and
clear of any Liens, claims or encumbrances of any nature whatsoever except
for those granted pursuant to this Indenture;
24
(2) the Company has acquired its ownership in the Collateral
Securities in good faith without notice of any adverse claim;
(3) the Company has not assigned, pledged or otherwise encumbered
any interest in the Collateral Securities other than interests granted
pursuant to this Indenture; and
(4) the Company has full right to grant a security interest in and
assign and pledge the Collateral Securities to the Trustee.
ARTICLE 6
REDEMPTION
SECTION 1 OPTIONAL REDEMPTION.
The Company shall not have the option to redeem the Notes pursuant to
this Section 6.1 prior to August 15, 1997. Thereafter, the Company shall have
the option to redeem the Notes, in whole or in part, at the redemption prices,
calculated by the Administrative Agent (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on December 15 of the years indicated below:
YEAR PERCENTAGE
1997......................... The greater of (i) 106.25% or (ii) 100%
plus the coupon discounted at a rate equal
to the yield on the date of the redemption
notice of the class of United States
Treasury Notes maturing closest to
August 15, 1999 plus 100 basis points.
1998..........................................106.25%
1999 and thereafter...........................100.00%
SECTION 2 NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 6.1 hereof, it shall furnish to the Trustee, at
least 30 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (i) the section of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
SECTION 3 SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed among the Holders of the Notes on a PRO RATA
basis, by lot or in accordance with any other method the Trustee considers fair
and appropriate (and in such manner as complies with applicable legal and stock
exchange requirements, if any), PROVIDED that no Notes of $1,000 or less shall
be redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 25 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
25
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 4 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date and the amount of accrued and unpaid
principal thereon;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
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SECTION 5 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 6.4 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
SECTION 6 DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate described in Section
7.1.
SECTION 7 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.
ARTICLE 7
COVENANTS
SECTION 1 PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
this Indenture and in the Notes. Principal, premium, if any, and interest shall
be considered paid on the date due if the Trustee or Paying Agent, holds in the
Payment Account as of 10:00 a.m. New York time on the due date money deposited
by the Company in immediately available funds and designated for and sufficient
to pay all principal, premium, if any, and interest then due.
SECTION 2 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
Affiliate of the Trustee, Registrar or co-Registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
27
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
3.3.
SECTION 3 ADDITIONAL REPORTS.
(a) On each Semi-Annual Interest Payment Date and each Monthly
Payment Date, in addition to the Statement to Noteholders to be provided by the
Trustee pursuant to Section 4.6, the Trustee will cause to be delivered to
Noteholders as provided in Section 4.5, copies of the Monthly and, to the extent
requested in writing by Noteholders, annual statements referenced in Section 5.2
of the Series 1993-1 Supplement and Section 5.2 of the Series 1995-1 Supplement
and the audited annual financial statements of the Company which relate to such
dates.
(b) For so long as any Restricted Securities remain outstanding, the
Company shall furnish to all Holders and prospective purchasers of the Notes
designated by the Holders of Restricted Securities, promptly upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
SECTION 4 COMPLIANCE CERTIFICATE.
(a) The Administrative Agent shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company during the preceding fiscal year has
been made under the supervision of the signing Officers (who may be Officers of
the Administrative Agent) with a view to determining whether the Company has
kept, observed, performed and fulfilled its obligations under this Indenture,
and further stating, as to each such Officer signing such certificate, that to
the best of his or her knowledge, the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto. The Administrative Agent shall deliver
such Officers' Certificate to the Rating Agencies.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 7.3(a)
28
above shall be accompanied by a written statement of the Company's independent
public accountants (who shall be a firm of established national reputation) that
in making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Articles 4, 7 or 8 hereof or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company and the Administrative Agent shall, so long as any of
the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer of
the Company, or the Administrative Agent, as applicable, becoming aware of any
Default or Event of Default an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto. The Administrative Agent shall deliver such Officers'
Certificate to the Rating Agencies.
SECTION 5 TAXES.
The Company shall pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is
not adverse in any material respect to the Holders of the Notes.
SECTION 6 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 7 LIENS.
The Company shall not directly or indirectly create, incur, assume or
suffer to exist any Lien on the Collateral Securities or any income or profits
therefrom or assign or convey any right to receive income therefrom.
SECTION 8 CORPORATE EXISTENCE.
Subject to Article 8 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company.
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SECTION 9 SENIOR DEBT.
The Company shall not incur, create, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to any Indebtedness
that is senior in any respect in right of payment to the Notes.
SECTION 10 AMENDMENT OF RECEIVABLES, MASTER TRUST DOCUMENTS.
The Company shall not execute any amendment or supplement to any of
the Master Trust Documents if such amendment would materially adversely affect
the rights of the Noteholders unless the Company shall have first obtained the
prior written consent of the majority of the outstanding principal amount of the
Notes.
SECTION 7.11 CONDITIONS PRECEDENT TO ISSUANCE OF FUTURE NOTES.
The Company shall not issue any Future Notes unless (a) the
Collateral Agent and the Trustee shall have received a legal opinion of counsel
satisfactory to it to the effect that after giving effect to such issuance the
Collateral Agent will continue to have a valid and perfected first priority
security interest in the Transferor Certificate for the benefit of the Trustee
and any Future Trustee and (b) the Trustee shall have received written
confirmation from each Rating Agency that such issuance will not cause a
reduction, withdrawal or downgrade of its then current rating of the Notes and
each class of Master Trust Certificates then outstanding.
SECTION 7.12 CHARGE ACCOUNT AGREEMENTS AND CREDIT AND COLLECTION POLICIES.
The Company shall comply with and perform its obligations and shall
take all actions reasonably within its control to cause the Originators to
comply with and perform their obligations under the Charge Account Agreements
relating to the Accounts and the Credit and Collection Policy except insofar as
any failure to comply or perform would not materially and adversely affect the
rights of the Holders hereunder or under the Notes. The Company shall also take
all action reasonably within its control to cause the Originators to apply
payments by obligor in the following order: (i) finance charges; (ii) other
charges or fees; and (iii) the unpaid principal balance of purchases allocated
first to the longest outstanding receivable. The Company may change, and permit
the Originators to change, the terms and provisions of the Charge Account
Agreements or the Credit and Collection Policy in any respect (including,
without limitation, the reduction of the required minimum monthly payment, the
calculation of the amount, or the timing, of charge offs and the periodic
finance charges and other fees to be assessed thereon) only if such change
(individually or taken together with all prior changes to the terms and
provisions of the Charge Account Agreements or the Credit and Collection Policy)
(i) would not, in the reasonable belief of the Company, cause, immediately or
with the passage of time, a Pay Out Event to occur and (ii) (A) (if it owns a
comparable segment of charge card accounts) is made applicable to the comparable
segment of the revolving credit card accounts owned by the Company, if any,
which have characteristics the same as, or substantially similar to, the
Accounts that are the subject of such change and (B) (if it does not own such a
comparable segment) will not be made with the intent to materially benefit the
Company over the Holders or to materially adversely affect the Holders, except
as otherwise restricted by an endorsement, sponsorship, or other agreement
between the Company and an unrelated third party or by the terms of the Charge
Account Agreements.
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ARTICLE 8
SUCCESSORS
SECTION 1 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
(a) The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Company
substantially as an entirety shall be, if the Company is not the
surviving entity, organized and existing under the laws of the United
States of America or any State or the District of Columbia and shall
expressly assume, by an agreement supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the
performance of every covenant and obligation of the Company, as
applicable hereunder. To the extent that any right, covenant or
obligation of the Company, as applicable hereunder, is inapplicable
to the successor entity, such successor entity shall be subject to
such covenant or obligation, or benefit from such right, as would
apply, to the extent practicable, to such successor entity.
(ii) the Company shall have delivered to the Trustee an
Officers' Certificate of the Company stating that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply
with this Section 8.1 and that all conditions precedent herein
provided for relating to such transaction have been complied with and
an Opinion of Counsel that such supplemental agreement is legal,
valid and binding and that the entity surviving such consolidation,
conveyance or transfer is organized and existing under the laws of
the United States of America or any State or the District of Columbia
and, subject to customary limitations and qualifications, such entity
will not be substantively consolidated with any Originator or the
Servicer;
(iii) the Company shall have delivered notice to the
Rating Agencies of such consolidation, merger, conveyance or transfer
and the Rating Agency shall have provided written confirmation that
such consolidation, merger, conveyance or transfer will not result in
the Rating Agency reducing or withdrawing its then existing rating on
the Notes as to which it is a Rating Agency; and
(iv) the successor entity shall be a special purpose
bankruptcy remote entity.
(b) The obligations of the Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Transferor
hereunder except for mergers, consolidations, assumptions or transfers in
accordance with the provisions of the foregoing paragraph.
SECTION 2 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 8.1 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of this Indenture
referring to the Company shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein, and the predecessor Company (if not the surviving
corporation) shall be relieved from its obligations under this Indenture and the
Notes.
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ARTICLE 9
DEFAULTS AND REMEDIES
SECTION 1 DEFAULTS AND EVENTS OF DEFAULT.
A "Default" occurs if:
(a) the Company defaults in the payment when due of interest
on the Notes and the default continues for a period of 30 days;
(b) the Company fails to comply with Section 8.1 hereof which
failure remains uncured for 30 days;
(c) the Company fails to observe or perform any other
covenant, warranty or other agreement in this Indenture or the Notes
for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% of the Principal Balance of the Notes then
outstanding;
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(d) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company, whether such Indebtedness now exists or is created after
the date of this Indenture, which default (i) is caused by a failure
to pay at final maturity, principal or interest on such Indebtedness
within the grace period provided in such Indebtedness (a "Payment
Default") or (ii) has resulted in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $5 million or more;
(e) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Company and such judgment or judgments remain
undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, PROVIDED that the aggregate of all
such undischarged judgments exceeds $1 million;
(f) the Company pursuant to or within the meaning of
Bankruptcy Law:
(I) commences a voluntary case;
(II) consents to the entry of an order for relief against
it in an involuntary case;
(III) consents to the appointment of a Custodian of it or
for all or substantially all of its property; and
(IV) makes a general assignment for the benefit of its
creditors;
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(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law, which order or decree remains in
effect and unstayed for 60 consecutive days, that:
(I) is for relief against the Company in an involuntary
case;
(II) appoints a Custodian of the Company or for all or
substantially all of the property of the Company; or
(III) orders the liquidation of the Company.
(h) the occurrence of a Purchase Termination Event or an event
which would constitute a Pay Out Event or a Servicer Default
regardless of whether the Investor Certificateholders have exercised
a remedy with respect thereto;
(i) SRI defaults pursuant to its outstanding Senior Notes or
Senior Subordinated Notes or any Indebtedness issued to extend,
refinance or replace the Senior Notes or Senior Subordinated Notes,
which default results in the acceleration of such Indebtedness; or
(j) the Company shall become subject to regulation by the
Securities and Exchange Commission as an "investment company" within
the meaning of the Investment Company Act.
SECTION 2 ACCELERATION.
Defaults arising under clauses (a), (b), (g), (h) and (i) above will
constitute an event of default (an "Event of Default") automatically. Defaults
arising under clauses (c), (d), (e), (f) and (j) above will constitute an "Event
of Default" only upon the affirmative vote of the Holders of more than 50% of
the outstanding principal amount of the Notes. If an Event of Default occurs all
outstanding Notes will become due and payable without further action or notice
and Holders of the Notes will be repaid on the terms specified in Article 4.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
Section 6.1 hereof, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law, anything in this Indenture or in
the Notes to the contrary notwithstanding. If an Event of Default occurs prior
to August 15, 1997 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to such date, then the premium
payable for purposes of this paragraph shall be as specified pursuant to Section
6.1 hereof for the twelve-month period beginning December 15, 1997.
SECTION 3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture. Such remedies may include foreclosure on the Class
D Certificates, but only (i) in accordance with Section 11(c) of the Series
1995-1 Supplement and (ii) if the Invested Amounts with respect to all current
or future Investor Certificates that have a higher initial rating by the Rating
Agencies than the Notes have been paid to the holders thereof. Such foreclosure
shall be in accordance with instructions from the Holders of a majority of the
Principal Balance of the Notes or, in the absence of such instructions, in such
manner as the Trustee deems appropriate in its absolute discretion. The proceeds
received by the Trustee will be applied by the Trustee first to pay expenses and
fees and other amounts payable to the Trustee and thereafter to pay all amounts
then owing to the Holders. In no event may the Collateral Agent foreclose on the
Transferor Certificate.
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The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy, accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 4 WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences, except a continuing Default or Event of Default in the payment of
the principal of, premium, if any, or interest on, the Notes (including in
connection with an offer to purchase); PROVIDED, HOWEVER, that the Holders of a
majority in aggregate principal amount of the then outstanding Notes may rescind
an acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereof.
SECTION 5 CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6 LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% of the Principal Balance of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
34
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
SECTION 7 NO BANKRUPTCY PETITION.
Each of the Trustee (and any successor trustee), the Administrative
Agent (and any successor administrative agent) and each Holder of a Note
covenants and agrees that prior to the date which is one year and one day after
the payment in full of the Notes and all Master Trust Certificates issued by the
Master Trust and Future Notes issued by the Company in each case if rated by any
nationally recognized statistical rating organization it will not institute
against, or join any other Person in institut ing against, the Company any
bankruptcy, reorganization, arrangement, insolvency or liquidation pro ceedings,
or other proceedings under any federal or state bankruptcy or similar law.
No Noteholder shall have any right by virtue of any provisions of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Noteholder
previously shall have given written notice to the Trustee, and unless the
Holders of Notes evidencing more than 50% of the Principal Balance of the Notes
which may be adversely affected but for the institution of such suit, action or
proceeding, shall have made written request upon the Trustee to institution such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Noteholder with every other Noteholder with every other Noteholder and the
Trustee, that no one or more Noteholders shall have the right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Noteholders of any
other of the Notes, or obtain or seek to obtain priority over or preference to
any other such Noteholder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Noteholders. For the protection and enforcement of the provisions of this
Section 9.7, each and every Noteholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity. The rights of the Noteholders
pursuant to this second paragraph of Section 9.7 shall be subject to and limited
by the first paragraph of this Section 9.7.
SECTION 8 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Except as provided in Section 9.7, the right of any Holder of a Note
to receive payment of principal, premium, if any, and interest on the Note, on
or after the respective due dates expressed in the Note (including in connection
with an offer to purchase), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
SECTION 9 LIMITED RECOURSE.
Payments of principal, interest and premium, if any, on the Notes
will be secured by, and will be paid solely from the distributions on, the
Collateral Certificates. The Notes are not general recourse obligations of the
Company or any of its Affiliates and Noteholders shall not have recourse to
assets of the Company or any of its Affiliates, except with respect to the Class
D Certificates and the Note Allocation Percentage of Transferor Daily Cash
Flows.
35
SECTION 10 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 9.8 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 11 COLLECTION SUIT BY TRUSTEE.
Subject to Section 9.7, if an Event of Default specified in Section
9.2 occurs and is continuing, the Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the Company for the
whole amount of principal of, premium, if any, and interest remaining unpaid on
the Notes and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 12 TRUSTEE MAY FILE PROOFS OF CLAIM.
Subject to Section 9.7, the Trustee is authorized to file such proofs
of claim and other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders of the Notes allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 11.7 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 11.7 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders of the Notes may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder of any plan of reorganiza tion, arrangement, adjustment or composition
affecting the Notes or the rights of any Holders, or to authorize the Trustee to
vote in respect of the claim of any Holder, in any such proceeding.
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ARTICLE 10
ADMINISTRATIVE AGENT
SECTION 1 APPOINTMENT AND AUTHORITY OF ADMINISTRATIVE AGENT.
The Company hereby appoints SRI its agent to supervise and manage, on
the Company's behalf, (i) the operations of the Company in connection with or
relating to this Indenture and (ii) the operations of the Company in connection
with or relating to the issuance, sale and payment of the Notes, and to perform
certain other services on behalf of the Company that are specified below. SRI,
acting in such capacity, is hereinafter referred to as the "Administrative
Agent."
SECTION 2 ADMINISTRATIVE AGENT'S SERVICES AND DUTIES.
(a) The Administrative Agent's duties on behalf of the Company in
connection with the Indenture shall be the following, or advising the Company as
to the following:
(i) arranging for the execution of this Indenture by the
Company and arranging for the execution of amendments to and waivers
under the Master Trust Documents and any other documents or
instruments deliverable by the Company thereunder or in connection
therewith to allow for the transactions contemplated by this
Indenture;
(ii) monitoring the Company's distributions on the
Collateral Securities.
(iii) causing amounts out of such received payments to be
deposited into the Interest Reserve Account and the Principal Reserve
Account in the amounts and manner specified in Sections 4.2 and 4.3,
and in accordance with the Daily Report;
35
(iv) giving such notices and other communications as the
Company may from time to time be required or permitted to give under
this Indenture;
(v) preparing and delivery to the Trustee the Statement to
Noteholders in accordance with Section 4.6 and the Certificate
specified in Section 7.4 in accordance with such Section;
(vi) delivering to Noteholders the reports required by
Section 7.3;
(vii) cooperating with and assisting the outside auditors
of the Company in conducting examinations required by Section 7.4;
(viii) maintenance of general accounting records of the
Company, and preparation for certification of such periodic financial
statements as may be necessary or appropriate;
(ix) taking such other actions as are required to be
performed by the Administrative Agent under this Indenture;
(x) (1) preparation for execution by the Company, and
causing to be filed thereafter, such income, franchise or other tax
returns of the Company as shall be required to be filed by applicable
law, and (2) causing to be paid, but solely from the assets of the
Company, any taxes required to be paid by the Company by applicable
law;
37
(xi) preparing the Offering Circular and other offering
memoranda to be provided to the Initial Purchaser in connection with
the initial sale of the Notes and assuring for the benefit of the
Initial Purchaser and the Company that no such Offering Circular or
offering memoranda (A) contains any untrue statement of a material
fact or (B) omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading;
(xii) retain, on behalf of and for the account of the
Company, legal counsel necessary to perform for the Company the
services necessary or appropriate to the preparation, execution and
delivery of this Indenture and the related agreements to which the
Company is a party and the future services provided by a general
corporate counsel; and
(xiii) use its reasonable efforts to cause the Company to
satisfy its obligations under this Indenture.
(b) The services of the Administrative Agent to the Company under
this Agreement are not to be deemed exclusive, and the Administrative Agent
shall be free to render similar services to others.
(c) The Administrative Agent shall maintain proper books of account
and complete records of all transactions of the Company undertaken or performed
by it hereunder and will render statements or copies thereof from time to time
as reasonably requested by the Company or by the Rating Agencies. The
Administrative Agent will assist in all audits of the Company.
SECTION 3 STANDARD OF CARE.
The Administrative Agent shall perform its duties hereunder
diligently, in conformity with the Company's obligations relating thereto and in
accordance with the same standard of care exercised by a prudent person in
connection with the administration of assets or investments similar to the Notes
and, in no event with less care than it exercises or would exercise in
connection with the administration of assets or investments similar to the Notes
issued in its own capacity.
SECTION 4 COMPENSATION OF THE ADMINISTRATIVE AGENT.
The Company covenants and agrees to pay to the Administrative Agent
from time to time, and the Administrative Agent shall be entitled to receive,
reasonable compensation for all services rendered by the Administrative Agent in
connection with the performance of its duties hereunder.
SECTION 5 INDEMNIFICATION.
The Administrative Agent hereby agrees to indemnify and hold harmless
each of the Company and the Trustee and each of its directors, officers,
employees, agents and stockholders from and against any and all damages, losses,
liabilities, costs and expenses incurred by the Company resulting from the
negligence or wilful misconduct of the Administrative Agent in performing (or
fail ing to perform) its obligations under this Indenture; excluding, however,
damages, losses, liabilities, costs or expenses to the extent resulting solely
from the gross negligence or willful misconduct of the Company or the Trustee,
its officers, employees or agents (other than the Administrative Agent). The
Company or the Trustee shall immediately notify the Administrative Agent of any
damage, loss, liability, cost or expense which the Company has determined has
given or would give rise to a right of indemnification hereunder and the
Administrative Agent shall have the exclusive right to
38
compromise or defend any such liability or claim at its own expense, which
decision shall be binding and conclusive upon the Company. Failure to give such
notice shall not relieve the Administrative Agent of its indem nity hereunder;
PROVIDED, HOWEVER, that the Administrative Agent shall not be held responsible
for any damage, loss, liability, cost or expense resulting from the failure to
give such notice.
ARTICLE 11
TRUSTEE AND COLLATERAL AGENT
SECTION 1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee
need perform only those duties that are specifically set
forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth
of the statements and the correctness of the
opinions expressed therein, upon certificates
or opinions furnished to the Trustee and
conforming to the requirements of this
Indenture. However, the Trustee shall examine
the certificates and opinions to determine
whether or not they conform to the requirements
of this Indenture.
(c) The Trustee and the Collateral Agent may not be relieved from
liabilities for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee and the Collateral Agent shall not
be liable for any error of judgment made in
good faith by a Responsible Officer, unless it
is proved that the Trustee or the Collateral
Agent was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee and the Collateral Agent shall not
be liable with respect to any action it takes
or omits to take in good faith in accordance
with a written direction received by it
pursuant to Section 9.5 hereof.
Whether or not therein expressly so provided, every provision of this Indenture
that in any way relates to the Trustee is subject to paragraphs (a), (b), and
(c) of this Section.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and
39
powers under this Indenture at the request of any Holder, unless such Holder
shall have offered to the Trustee security and indemnity satisfactory to it
against any loss, liability or expense.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 2 RIGHTS OF TRUSTEE.
(a) The Trustee and the Collateral Agent shall have the duties set
forth in this Indenture and only such duties and no implied duties shall be read
into this Indenture. The Trustee and the Collateral Agent may conclusively rely
upon any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee or the Collateral Agent acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of Counsel or
both. Each of the Trustee and the Collateral Agent shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. Each of the Trustee and the Collateral Agent
may consult with counsel and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) Each of the Trustee and the Collateral Agent may act through its
attorneys and agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(d) Each of the Trustee and the Collateral Agent shall not be liable
for any action it takes or omits to take in good faith that it believes to be
authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) Each of the Trustee and the Collateral Agent shall be under no
obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders unless such Holders
shall have offered to the Trustee or the Collateral Agent reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction.
SECTION 3 INDIVIDUAL RIGHTS OF TRUSTEE AND COLLATERAL AGENT.
Each of the Trustee and the Collateral Agent in its individual or any
other capacity may become the owner or pledgee of Notes and may otherwise deal
with the Company or any Affiliate of the Company with the same rights it would
have if it were not Trustee or the Collateral Agent. Any Agent may do the same
with like rights and duties. The Trustee is also subject to Sections 11.10 and
11.11 hereof.
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SECTION 4 TRUSTEE'S AND COLLATERAL AGENT'S DISCLAIMER.
Neither the Trustee nor the Collateral Agent shall be responsible for
and/or make any representation as to the validity or adequacy of this Indenture,
the Master Trust Documents, or the Notes, and they shall not be accountable for
the Company's use of the proceeds from the Notes or any money paid to the
Company or upon the Company's direction under any provision of this Indenture,
and they shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and they shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than (in the case of the Trustee) its certificate of
authentication.
SECTION 5 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and a
Responsible Officer of the Trustee has received written notice thereof, the
Trustee shall mail to Holders of Notes a notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or Event
of Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as its Responsible Officers
in good faith determine that withholding the notice is in the interests of the
Holders of the Notes.
SECTION 6 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to the Holders of the Notes
and the Rating Agencies a brief report dated as of such reporting date that
complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed. The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange.
SECTION 7 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee and the Collateral Agent from
time to time reasonable compensation for its acceptance of this Indenture and
performance of its services hereunder. The Trustee's and Collateral Agent's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee and the Collateral Agent
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's and Collateral Agent's agents and counsel.
The Company shall indemnify the Trustee and the Collateral Agent
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture without negligence or bad faith on its part. The Trustee and the
Collateral Agent shall notify the Company promptly of any claim for which it may
seek indemnity. Failure by the Trustee and the Collateral Agent to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee and the Collateral Agent shall cooperate
in the defense. The Trustee and the Collateral Agent
41
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld. This
indemnity shall apply to the directors, officers, employees and agents of the
Trustee and the Collateral Agent.
The obligations of the Company under this Section 11.7 shall survive
the satisfaction and discharge of this Indenture, and the resignation and
removal of the Trustee and the Collateral Agent.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 9.1(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 8 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company and notice of such
resignation shall be delivered by the Trustee to the Rating Agencies. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 11.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
42
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
11.10, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes and to the Rating Agencies. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, PROVIDED all sums owing to the Trustee hereunder have been
paid and subject to the Lien provided for in Section 11.7 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 11.8, the
Company's obligations under Section 11.7 hereof shall continue for the benefit
of the retiring Trustee.
SECTION 9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5).
Pursuant to Section 3.10(b) of the TIA, if upon the occurrence of an
Event of Default the Trustee has as "conflicting interest" (as defined in
Section 3.10(b) of the TIA), then, within 90 days after ascertaining that the
Trustee has such conflicting interest, and if the Event of Default has not been
cured or duly waived or otherwise eliminated before the end of such 90-day
period, the Trustee shall either eliminate such conflicting interest or, except
as otherwise provided in Section 3.10(b) of the TIA, resign and the Company
shall take prompt steps to have a successor trustee appointed pursuant to
Section 11.8.
SECTION 11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
43
ARTICLE 12
LEGAL DEFEASANCE
SECTION 1 OPTION TO EFFECT LEGAL DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
Section 12.2 hereof be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article Eight.
SECTION 2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 12.3 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 12.4 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
12.3 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
Three and Section 7.2 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article Twelve.
SECTION 3 CONDITIONS TO LEGAL DEFEASANCE.
The following shall be the conditions to the application of Section 12.2
hereof to the outstanding Notes:
In order to exercise Legal Defeasance:
(a) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest on the Notes on the
stated date for payment thereof or on the applicable redemption date,
as the case may be, of such principal or installment of principal of,
premium, if any, or interest on the Notes;
(b) the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that (A) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (B)
since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that,
and based thereon such Opinion of Counsel shall confirm that, the
Holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
44
(c) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the incurrence of Indebtedness all or
a portion of the proceeds of which will be used to defease the Notes
pursuant to this Article Eight concurrently with such incurrence) or
insofar as Sections 9.1(g) and 9.1(h) hereof are concerned, at any
time in the period ending on the 91st day after the date of such
deposit;
(d) such Legal Defeasance shall not result in a breach or
violation of, or constitute a default under this Indenture or any
other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(e) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company; and
(f) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent provided for or relating to the Legal
Defeasance have been complied with.
SECTION 4 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS.
Subject to Section 12.5 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 12.4, the
"Trustee") pursuant to Section 12.3 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company or a Subsidiary acting as Paying
Agent) as the Trustee may determine, to the Holders of such Notes of all sums
due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 12.3 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or non-callable Government Securities held by it as provided
in Section 12.3 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
12.3(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance.
45
SECTION 5 REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in THE NEW YORK TIMES and THE
WALL STREET JOURNAL (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 6 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 12.2
hereof, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to Section 12.2 hereof
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 12.2 hereof, as the case may be; PROVIDED,
HOWEVER, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 13
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 1 WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 13.2 of this Indenture, the Company, the
Administrative Agent and the Trustee may amend or supplement this Indenture or
the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for the assumption of the Company's obligations to
the Holders of the Notes in the case of a merger or consolidation pursuant
to Article Eight hereof;
(c) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note; or
(d) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA once it is
registered thereunder.
46
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
13.6 hereof, the Trustee shall join with the Company and the Administrative
Agent in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
The Administrative Agent shall deliver a copy of any such amendment or
supplement to the Rating Agencies.
SECTION 2 WITH CONSENT OF HOLDERS OF NOTES.
The Company, the Administrative Agent and the Trustee may amend or
supplement this Indenture and the Notes with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and any existing Default or Event of Default or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes).
Notwithstanding the foregoing, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of
the Notes;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest on the Notes;
(g) make any change in Section 9.4 or 9.8 hereof or in the foregoing
amendment and waiver provisions; or
(h) make any change in Article 13 hereof that adversely affects any
Holder.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with
47
the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 13.6 hereof, the Trustee shall join with the Company and
the Administrative Agent in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 13.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 13.2
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver.
Notwithstanding the above, if any amendment, supplement or waiver to
this Indenture or the Notes disproportionately impacts any particular series of
Notes exclusively, then the Company shall also be required to obtain the consent
of the applicable percentage of the outstanding principal amount of Notes in
such series, voting as a separate class, before such amendment, supplement or
waiver becomes effective.
The Administrative Agent shall deliver written notice to the Rating
Agencies of any amendment or supplement under this Section 13.2 prior to its
execution.
SECTION 3 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 5 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
48
SECTION 6 TRUSTEE AND ADMINISTRATIVE AGENT TO SIGN AMENDMENTS, ETC.
The Trustee and the Administrative Agent shall sign any amended or
supplemental Indenture authorized pursuant to this Article Nine if the amendment
or supplement does not adversely affect the rights, duties, liabilities or
immunities of the Trustee or the Administrative Agent, as applicable. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it.
ARTICLE 14
MISCELLANEOUS
SECTION 1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 2 NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
SRI Receivables Purchase Co., Inc.
10201 South Main Street
Houston, Texas 77025
Telecopier No.: (713) 660-3342
Attention: Chief Financial Officer
With a copy to:
Bain Capital
Two Copley Place, 7th Floor
Boston, Massachusetts 02116
Telecopier No.: (617) 572-3274
Attention:
and to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Telecopier No.: (312) 861-2200
Attention: Kenneth P. Morrison, Esq.
49
If to the Trustee:
Bankers Trust Company
Corporate Trust and Agency Group
4 Albany Street, 10th floor
New York, New York 10006
Telecopier No.: (212) 250-6439
Attention: Structured Finance
If to the Administrative Agent:
Specialty Retailers, Inc.
10201 South Main Street
Houston, Texas 77025
Telecopier No.: (713) 660-3342
Attention: Chief Financial Officer
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Telecopier No.: (312) 861-2200
Attention: Kenneth P. Morrison, Esq.
If to the Collateral Agent:
Bankers Trust Company
Corporate Trust and Agency Group
4 Albany Street, 10th Floor
New York, New York 10006
Telecopier No.: (212) 250-6439
Attention: Structured Finance
If to S&P:
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10007
Attention: Ray Galkowski
If to DCR:
Duff & Phelps Ratings Co.
55 East Monroe Street
Chicago, Illinois 60603
Attention: Corporate Surveillance Group
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
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All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 3 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 14.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 14.5 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
51
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 6 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes or this Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
SECTION 8 GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10 SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11 SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
52
SECTION 13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
53
SIGNATURES
Dated as of May 30, 1996 SRI RECEIVABLES PURCHASE CO., INC.
By: /s/JAMES A. MARCUM
Name: James A. Marcum
Title: Exec. Vice President
Attest: /s/ MARK A. HESS
Mark A. Hess
(SEAL)
Dated as of May 30, 1996 BANKERS TRUST COMPANY
as Trustee and as Collateral Agent
By: /s/LARA GRAFF
Name: Lara Graff
Title: Assistant Vice President
Attest:/s/ MARK A. HESS
Mark A. Hess
(SEAL)
Dated as of May 30, 1996 SPECIALTY RETAILERS, INC.
as Administrative Agent
By: /s/ JAMES A. MARCUM
Name: James A. Marcum
Title: Exec. Vice President
Attest: /s/ MARK A. HESS
Mark A. Hess
(SEAL)
[FORM OF NOTE]
(Face of Note)
SRI RECEIVABLES PURCHASE CO., INC.
12.5% Trust Certificate-Backed Note
No. ___________ $________
SRI Receivables Purchase Co., Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successor entity
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to _______________ or registered assigns, the principal sum of
_______________ Dollars on a date that is expected to be December 15, 2000 (the
"Expected Maturity Date") as more fully described in the Indenture, dated May
30, 1996 among the Company, Specialty Retailers, Inc., as Administrative Agent,
and Bankers Trust Company, as Trustee and Collateral Agent, to which this Note
re lates.
First Payment Date: December 16, 1996.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its seal to be affixed hereto or imprinted hereon.
SRI RECEIVABLES PURCHASE CO., INC.
By:
By:
[SEAL]
A-1
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within mentioned Indenture.
BANKERS TRUST COMPANY, as Trustee
By:
Authorized Signature
A-2
(Back of Note)
12.5% Trust Certificate-Backed Notes
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a) (1),
(2), (3), OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES
THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C) INSIDE THE UNITED STATES
TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE OR TRANSFER
AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE OR TRANSFER AGENT FOR THIS NOTE), (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THREE YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS NOTE, IF THE PROPOSED TRANSREREE IS AN ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE OR TRANSFER AGENT
AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE ACT.
To the extent not defined herein, capitalized terms used herein have
the meanings assigned to such terms in the Indenture
A-3
dated May 30, 1996, among the Company, Specialty Retailers, Inc., as
administrative agent and Bankers Trust Company as trustee and collateral agent
(the "Trustee"). This Note is issued under and is subject to the terms,
provisions and conditions of the Indenture, as amended from time to time, to
which Indenture, as so amended, the Holders of the Notes by virtue of the
acceptance hereof, and to which any beneficial owner, by acquiring a beneficial
interest herein, assents and by and to which the Holders of the Notes and any
such beneficial owner are bound. Although this Note summarizes certain
provisions of the Indenture, this Note does not purport to summarize the
Indenture; and reference is made to the Indenture for information with respect
to the interests, rights, benefits, obligations and duties evidenced hereby and
the rights, duties and obligations of the Trustee. In the event of any
inconsistency or conflict between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
a. INTEREST. SRI Receivables Purchase Co., Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 12.5% per annum from the date this Note is issued until the earlier of the
date on which principal is paid in full and January 15, 2003. Interest on this
Note will accrue at a rate of 12.5% per annum and will be payable semi-annually
on June 15 and December 15 of each year, including the Expected Maturity Date
(or, if any such day is not a Business Day, the first Business Day thereafter)
(each a "Semi-Annual Interest Payment Date"), commencing December 16, 1996,
except that, on and after the occurrence of an Event of Default, or on any day
following the Expected Maturity Date, interest will be payable on the 15th day
(or, if such day is not a business day, then the first business day thereafter)
of each month (each a "Monthly Payment Date" and together with each Semi-Annual
Interest Payment Date, a "Payment Date"). Interest will accrue from each Payment
Date to the day preceding the next succeeding Payment Date. In the case of any
Event of Default occurring by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have had to pay if the Company
then had elected to redeem the Notes pursuant to Section 6.1 of the Indenture,
an equivalent premium shall also become and be immediately due and payable to
the extent permitted by law, anything in the Indenture or in this Note to the
contrary notwithstanding. If an Event of Default occurs prior to August 15, 1997
by reason of any willful action (or inaction) taken (or
A-4
not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of this Note prior to such date, then the premium
payable for purposes of this paragraph shall be as specified pursuant to Section
6.1 of the Indenture for the twelve-month period beginning December 15, 1997.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
b. METHOD OF PAYMENT. The Company will pay interest on the Notes to the
Persons who are registered Holders of Notes at the close of business on the last
day of the month preceding each Payment Date. Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the closing date of the offering being made hereby. The Notes
will be payable both as to principal and interest by the Trustee in immediately
available funds.
c. PAYING AGENT AND REGISTRAR. Initially, Bankers Trust Company, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
d. INDENTURE. The Company issued the Notes under the Indenture. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms.
e. LIMITED RECOURSE. Principal, interest and premium, if any, on the
Notes will be secured by, and will be paid solely from distributions on, the
Collateral Securities (including any excess cash flows allocable to the
Collateral Securities). The Notes will not be general recourse obligations of
the Company or any of its Affiliates and Holders will not have recourse to other
assets of the Company or any of its Affiliates.
f. OPTIONAL REDEMPTION.
The Notes will be subject to redemption, on not less than 30 nor more
than 60 days' notice, at the redemption prices set forth below (expressed as
percentages of principal amount) plus accrued and unpaid interest thereon to the
redemption date, if redeemed
A-5
during the twelve-month period beginning on the dates indicated
below:
YEAR PERCENTAGE
December 15, 1997.........................................The
greater of (i) 106.25%
or (ii) 100% plus the
coupon discounted at a
rate equal to the
yield on the date of
the redemption notice
of the class of United
States Treasury Notes
maturing closest to
August 15, 1999, plus
100 basis points
December 15, 1998.........................................106.25%
August 15, 1999 and thereafter............................100%
g. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
h. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture.
i. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
j. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding
A-6
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
k. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on the Notes; (ii) breach of certain
restrictions on the Company's ability to consolidate with or merge into another
corporation or convey or transfer its properties and assets substantially as an
entirety; (iii) failure by the Company for 60 days after notice to the Company
by the Trustee or the Holders of at least 25% in aggregate principal amount of
the Notes then outstanding to comply with other agreements in the Indenture or
this Note; (iv) defaults under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company whether such indebtedness now
exists or is created after the date of the Indenture, which default (a) is
caused by a failure to pay when due principal or interest on such indebtedness
within the grace period provided in such indebtedness (a "PAYMENT DEFAULT") or
(b) results in the acceleration of such indebtedness prior to its express
maturity and, in each case the principal amount of such indebtedness, together
with the principal amount of any other such indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $5 million or more; (v) a final judgment or final judgments for the
payment of money are entered by a court or courts of competent jurisdiction
against the Company and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
except that the aggregate of all such undischarged judgments exceeds $1 million;
(vi) certain events of bankruptcy or insolvency with respect to the Company;
(vii) the occurrence of a Purchase Termination Event,
A-7
Pay Out Event or Servicer Default regardless of whether the Certificateholders
have exercised a remedy with respect thereto; (viii) defaults of SRI pursuant to
its outstanding Senior Notes and Senior Subordinated Notes or any indebtedness
issued to extend, refinance or replace the Senior Notes or Senior Subordinated
Notes, which default results in the acceleration of such indebtedness; or (ix)
the Company shall become subject to regulation by the Commission as an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Defaults arising under clauses (i), (ii), (vi), (vii) and (viii) above
will constitute an automatic event of default (an "EVENT OF DEFAULT"). Defaults
arising under clauses (iii), (iv), (v) and (ix) above will constitute an Event
of Default only upon the affirmative vote of the Holders of more than 50% of the
outstanding principal amount of the Notes. If an Event of Default occurs and is
continuing, all outstanding Notes will become due and payable without further
action or notice. The Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture.
l. NO BANKRUPTCY PETITION. The Holder of this Note covenants and agrees
that prior to the date which is one year and one day after the payment in full
of the Notes and all Master Trust Certificates issued by the Master Trust and
Future Notes issued by the Company in each case if rated by any nationally
recognized statistical rating organization it will not institute against, or
join any other Person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law.
m. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
SRI Receivables Purchase Co., Inc.
10201 South Main Street
Houston, Texas 77025
Attention: Chief Financial Officer
A-8
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we)
assign and transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-9
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE1
The following exchanges of a part of this Global Note for
Definitive Notes have been made:
Principal Signature of
Amount of Amount of Amount of authorized
decrease in increase in this Global officer
Principal Principal Note of Trustee
Amount of Amount of following such or
Date Of This This Decrease (Or Note Cust-
Exchange Global Note Global Note Increase) odian
- --------
1 This should be included only if the Note is issued in global form.
A-10
FIRST AMENDMENT TO THE AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
THIS FIRST AMENDMENT (this "AMENDMENT") to the Amended and Restated
Pooling and Servicing Agreement (the "AGREEMENT") dated as of August 11, 1995,
by and among SRI Receivables Purchase Co., Inc., a Delaware corporation (the
"TRANSFEROR"), Specialty Retailers, Inc., a Delaware corporation (the
"SERVICER") and Bankers Trust (Delaware), a Delaware banking corporation (the
"TRUSTEE") is made and entered into as of May 30, 1996 by and among the
Servicer, the Trustee and the Transferor, and this Amendment is consented to by
(i) National Westminster Bank Plc, New York branch (the "FACILITY AGENT"),
Anagram Funding Corp. ("ANAGRAM") and Argos Funding Corp. ("ARGOS") and (ii) for
the limited purpose specified in Section 20 hereof, The Chicago Corporation
("TCC"), SunAmerica Investments, Inc. ("SUNAMERICA") and Pacific Mutual Life
Insurance Company ("PACIFIC MUTUAL").
WHEREAS, pursuant to Section 13.1(b) of the Agreement, all conditions
precedent to the Trustee's entering into this Amendment have been satisfied.
WHEREAS, the Servicer, the Trustee on behalf of the Trust and the
Transferor desire to modify and amend certain terms of the Agreement in the
manner more particularly described herein below;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged:
The Servicer, the Trustee on behalf of the Trust and the Transferor
hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein but not otherwise
defined shall have the meanings set forth in the Agreement, as amended by this
Amendment.
2. DIVIDEND CONDITION. The definition of Dividend Condition is hereby
deleted.
-1-
3. PORTFOLIO CORRECTION DISTRIBUTION AMOUNT. The definition of
Portfolio Correction Distribution Amount shall read as follows:
"PORTFOLIO CORRECTION DISTRIBUTION AMOUNT" means the aggregate
Series Portfolio Distribution Amounts for each Series then in its
Revolving Period.
4. PORTFOLIO IMBALANCE EVENT. The definition of Portfolio Imbalance
Event shall read as follows:
"PORTFOLIO IMBALANCE EVENT" will occur if, on the last day of
any Monthly Period occurring during the Revolving Period (the
"measuring day"), (a) on each of such day and the last day of each of
the preceding eleven consecutive Monthly Periods, (i) the amount of all
Cash Equivalents and other amounts on deposit in the Equalization
Account exceeded 25% of (ii) the sum of all Principal Receivables and
Cash Equivalents and other amounts on deposit in the Equalization
Account on each such day, or (b) on each of the measurement day and the
last day of the preceding Monthly Period, (i) the amount of all Cash
Equivalents and other amounts on deposit in the Equalization Account
exceeded 45% of (ii) the sum of Principal Receivables and Cash
Equivalents and other amounts on deposit in the Equalization Account on
each such day. All such amounts shall be calculated after giving effect
to all amounts to be distributed on the Distribution Date following the
last day of the applicable Monthly Period.
5. TRANSFEROR INTEREST. The definition of Transferor Interest is hereby
amended and restated as follows:
"TRANSFEROR INTEREST" shall mean, on any date of
determination, the aggregate amount of Principal Receivables at the end
of the day immediately prior to such date of determination PLUS all
amounts on deposit in the Equalization Account (but not including
investment earnings on such amounts) at the end of such immediately
preceding day, minus the aggregate Adjusted Invested Amount for all
Series at the end of such immediately preceding day.
6. ADJUSTED INVESTED AMOUNT. The definition of Adjusted Invested Amount
shall read as follows:
"ADJUSTED INVESTED AMOUNT" shall mean, with respect to any
Series or any Class, when used with respect to any Business Day, the
Invested Amount of such Series or Class, as applicable MINUS any
amounts then on deposit in any Principal Account for such Series or
Class, as applicable.
-2-
7. ELIGIBLE RECEIVABLES. Clause (b) of the definition of Eligible
Receivables is hereby amended and restated as follows:
(b) it constitutes an "account," a "general intangible" or
"chattel paper" as defined in Article 9 of the UCC as then in effect in
each Relevant UCC State;
8. SENIOR EQUALIZATION ACCOUNT PERCENTAGE. The definition of Senior
Equalization Account Percentage shall read as follows:
"SENIOR EQUALIZATION ACCOUNT PERCENTAGE" shall mean, with
respect to any Series on any Business Day, the percentage equivalent of
a fraction, the numerator of which is equal to the Adjusted Invested
Amount of such Series minus the Adjusted Invested Amount of all
Transferor Retained Classes in such Series and the denominator of which
is equal to the sum of the Adjusted Invested Amounts of all Series in
Amortization Periods minus the Adjusted Invested Amount of all
Transferor Retained Classes of such Series.
9. LIMITED REPURCHASE OF DEFAULTED RECEIVABLES.
(a) SECTION 2.4(F) is hereby amended and restated as follows:
LIMITED REPURCHASE OF DEFAULTED RECEIVABLES. (i) On each
Distribution Date with respect to a Monthly Period during each fiscal
year of the Transferor, the Transferor shall repurchase from the Trust
all Receivables transferred to the Trust by the Transferor which have
theretofore become Defaulted Receivables during the period commencing
on the first day of such fiscal year and ending on the last day of such
Monthly Period (the "YEAR-TO-DATE PERIOD"); provided, that (A) the Pro
Forma Condition has been satisfied as of such date, (B) the Originator
has elected to repurchase Defaulted Receivables pursuant to the
Receivables Purchase Agreement, (C) no Amortization Period is then in
effect for any Series, and (D) the Transferor shall not repurchase,
with respect to any Monthly Period, an amount of Defaulted Receivables
which will cause the aggregate cumulative principal amount of Defaulted
Receivables repurchased by the Transferor for the Year-to-Date Period
to exceed 95% of the product of (1) the cumulative principal amount of
Receivables transferred pursuant to this Agreement by the Transferor
during such Year-to-Date Period MULTIPLIED by (2) the percentage
equivalent of a fraction, the numerator of which is the aggregate
principal amount of Defaulted Receivables recorded by the Transferor
during the immediately preceding fiscal year, and the denominator of
which is the cumulative principal amount of Receivables transferred
pursuant to this Agreement by the Transferor during the immediately
preceding fiscal year (such percentage equivalent, the "PRIOR YEAR'S
DEFAULT RATIO").
(ii) The Transferor shall deposit, on the Transfer Date (in
next day funds) preceding each Distribution Date on which Defaulted
Receivables are repurchased, an amount equal to the principal amount of
Defaulted Receivables being repurchased (the
-3-
"DEFAULTED RECEIVABLE REPURCHASE AMOUNT") into the Collection Account.
On such Distribution Date, such repurchased Defaulted Receivables and
all monies due or to become due with respect thereto and all proceeds
of such repurchased Defaulted Receivables allocated to such repurchased
Defaulted Receivables for which the Defaulted Receivable Repurchase
Amount has been paid shall be released to the Transferor after payment
of all amounts otherwise due hereunder on or prior to such dates and
the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty,
as shall be prepared by and as are reasonably requested by the
Transferor to vest in the Transferor or its designee or assign, all
right, title and interest of the Trust in and to such repurchased
Defaulted Receivables, all monies due or to become due with respect
thereto and all proceeds of such repurchased Defaulted Receivables.
Thereafter, such repurchased Defaulted Receivables shall not be
considered Receivables for any purpose hereunder other than (x) for
purposes of calculating a Prior Year's Default Ratio and (y) to the
extent provided in the definition of "Default Amount."
(iii)In consideration for the Transferor's repurchase of
Defaulted Receivables as set forth in this subsection 2.4(f), so long
as the Transferor complies with such obligation, the Transferor shall
retain any amounts other than Recoveries received by the Transferor
with respect to Defaulted Receivables.
10. COVENANTS OF THE TRANSFEROR. Section 2.5(a) of the Agreement is
hereby amended and restated in its entirety as follows:
RECEIVABLES TO BE ACCOUNTS, GENERAL INTANGIBLES OR CHATTEL
PAPER. Transferor will take no action to cause any Receivable to be
evidenced by any instrument (as defined in the UCC as in effect in the
Relevant UCC State). The Transferor will take no action to cause any
Receivable to be anything other than an "account," "general intangible"
or "chattel paper" (each as defined in the UCC as in effect in the
Relevant UCC State).
11. ADJUSTMENTS. The last two sentences of Section 3.8(a) of the
Agreement are hereby amended and restated in their entirety as follows:
In the event that, following any such exclusion, the Transferor
Interest would be less than the Minimum Transferor Interest, within two
Business Days of the date on which such adjustment obligation arises,
the Transferor shall pay to the Servicer, for deposit into the
Collection Account in immediately available funds an amount equal to
the amount by which the Transferor Interest would be reduced below the
Minimum Transferor Interest. Any amounts deposited into the Collection
Account in connection with the adjustment of a Receivable (an
"ADJUSTMENT PAYMENT") shall be applied in accordance with Article IV
and the terms of each Supplement.
12. AMOUNTS IN EQUALIZATION ACCOUNT. SECTION 4.3(F) of the Agreement
shall be amended and restated to read:
-4-
(f) AMOUNTS IN EQUALIZATION ACCOUNT. Amounts on deposit in the
Equalization Account on any Business Day will be invested by the
Servicer (or, at the direction of the Transferor, by the Trustee) on
behalf of the Transferor in Cash Equivalents which shall mature and be
available on or before the next Business Day on which amounts may be
released from the Equalization Account. Earnings from such investments
received shall be deposited in the Collection Account and treated as
Finance Charge Collections. Any investment instructions to the Trustee
shall be in writing and shall include a certification that the proposed
investment is a Cash Equivalent that matures at or prior to the date
required by this Agreement. If on any Business Day other than a
Business Day on which a Prospective Pay Out Event has occurred and is
continuing, the Transferor Interest is greater than the Minimum
Transferor Interest, amounts on deposit in the Equalization Account
may, at the option of the Transferor, be released to the Holder of the
Exchangeable Transferor Certificate. On the first Business Day of the
Amortization Period for any Series, funds on deposit in the
Equalization Account will be deposited in the Principal Account for
such Series to the extent of the lesser of (x) the Invested Amount of
such Series and (y) the product of (i) the product of (A) 100% minus
the Transferor Percentage minus the Fixed Allocation Percentage
represented by any Class of Transferor Retained Certificates and (B)
the amount on deposit in the Equalization Account at the beginning of
such Amortization Period and (ii) the Senior Equalization Account
Percentage for such Series. Any funds in the Equalization Account on
any subsequent day will be allocated to Investor Certificates of each
Series in an Amortization Period (other than any Transferor Retained
Class of such Series) to the extent that Default Amounts allocated to
the Transferor Interest or adjustments as described in subsection 3.8
would cause the Transferor Interest to be less than the Minimum
Transferor Interest and, with respect to any credit adjustment, the
Transferor has not made an Adjustment Payment to the Collection
Account, in an amount equal to the least of (i) the product of (A) such
reduction below the Minimum Transferor Interest and (B) the Senior
Equalization Account Percentage for such Series, (ii) the product of
(A) the amount of funds available in the Equalization Account and (B)
the Senior Equalization Account Percentage and (iii) the Adjusted
Invested Amount of such Series (other than the Adjusted Invested Amount
of any Transferor Retained Class). To the extent provided in any
Supplement, remaining funds in the Equalization Account shall be
allocated to the Investor Certificates of any Series in an Amortization
Period (other than any Transferor Retained Class) to the extent of the
least of (i) Investor Charge-Offs allocated to such Transferor Retained
Class, (ii) the product of (A) the amount of funds available in the
Equalization Account and (B) the Senior Equalization Account Percentage
for such Series and (iii) the aggregate Adjusted Invested Amount of
such Investor Certificates (other than such Transferor Retained Class).
On and after the day on which principal payments are being allocated
for payment to any Transferor Retained Class of a Series any amounts
remaining on deposit in the Equalization Account will be deposited in
the Principal Account for such Series in an amount not to exceed the
Invested Amount of such Transferor Retained Class of such Series.
-5-
13. APPLICATION OF FUNDS ON DEPOSIT IN THE COLLECTION ACCOUNT FOR THE
CERTIFICATES. The following shall be added to SECTION 4.3 of the Agreement:
(g) PORTFOLIO IMBALANCE EVENT. On the first business day
following a Portfolio Imbalance Event, funds on deposit in the
Equalization Account will be deposited, in accordance with written
instructions from the Servicer, in the Principal Account to the extent
of the Portfolio Correction Distribution Amount.
14. REGISTRATION OF TRANSFER AND EXCHANGE CERTIFICATES. SECTION 6.3(B)
is hereby amended and restated in its entirety as follows:
(b) Except as provided in Section 6.9 or 7.2 or in any
Supplement, in no event shall the Exchangeable Transferor Certificate
or any interest therein be transferred, sold, exchanged, pledged,
participated or otherwise assignment hereunder (each of the above, a
"TRANSFER"), in whole or in part, unless (i) the Servicer shall have
provided an Officer's Certificate to the Trustee to the effect that
such sale, exchange, pledge, participation or assignment will not
materially adversely affect the interests of the Certificateholders,
(ii) such sale, exchange, pledge, participation or assignment shall
not, as evidenced by an Opinion of Counsel, cause the Trust to be
characterized for Federal income tax purposes as an association taxable
as a corporation or otherwise have a material adverse impact on the
Federal income taxation of any outstanding Series of Investor
Certificates and (iii) the Servicer shall have provided at least ten
Business Days prior written notice to each Rating Agency of such sale,
exchange, pledge, participation or assignment and shall have received
written confirmation from each Rating Agency to the effect of the
original rating of any Series or any class of any Series will not be
reduced or withdrawn as a result of such sale, exchange, pledge,
participation or assignment, a copy of which confirmation will be
provided to the Trustee.
15. NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR. Section 13.17 shall
read as follows:
Section 13.17 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR.
The Trustee and each Investor Certificateholder, by its acceptance of
an Investor Certificate, severally and not jointly, hereby covenant and
agree that, prior to the date which is one year and one day after the
payment in full of all outstanding Investor Certificates issued by the
Trust, none of them will institute against, or join any other Person in
instituting against, the Transferor any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceeding under the laws of the United States or any state of the
United States.
-6-
16. EFFECTIVENESS OF AMENDMENTS. The parties hereto expressly
acknowledge that the effectiveness of this Amendment is conditioned upon the
following:
(a) the receipt of written confirmation from each Rating
Agency to the effect that the original rating of any Series or any
class of any Series will not be reduced or withdrawn as a result of
this Amendment;
(b) the receipt of written consents to this Amendment from
holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Invested Amount of each and
every Series adversely affected;
(c) confirmation by Kirkland & Ellis that this Amendment does
not alter the conclusions with respect to "true sale,"
"non-consolidation" and preferential transfer expressed in its opinion
letter dated April 4, 1996.
Upon satisfaction of the foregoing conditions, this Amendment shall be deemed
effective on the date hereof. Except as expressly set forth above, all terms of
the Agreement shall be and remain in full force and effect and shall constitute
the legal, valid and binding and enforceable obligations of the parties thereto.
To the extent any terms and conditions in the Agreement shall contradict or be
in conflict with any provisions of this Amendment, the provisions of this
Amendment shall govern.
17. EXPENSES. The Servicer hereby agrees to pay all reasonable
attorneys' fees incurred by each of the Facility Agent, Trustee, Anagram and
Argos in connection with this Amendment.
18. GOVERNING LAW. THIS AMENDMENT AND THE AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PROTECTION OF THE PURCHASER'S
OWNERSHIP OF THE
-7-
PURCHASED RECEIVABLES, OR REMEDIES HEREUNDER IN RESPECT THEREOF, MAY BE GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
19. COUNTERPARTS. This Amendment may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement. 20. ACKNOWLEDGEMENTS. By execution
and delivery of this Amendment in the space provided below, each of the Trustee,
the holders of the Series 1993-2 Investor Certificates, Class A, and the
Majority Holders of the Series 1995-1 Investor Certificates, Class A acknowledge
and consent to the terms of this Amendment, the Amended and Restated Receivables
Purchase Agreement, the Amended and Restated Series 1995-1 Supplement, the
Amended and Restated Series 1993-2 Supplement and the Amended and Restated
1993-1 Supplement each in the form attached hereto. Notwithstanding the
foregoing, Section 4.16 of the Amended and Restated Series 1993-1 Supplement
shall not become effective unless and until Argos, Pacific Mutual and
SunAmerica, as holders of Investor Certificates issued thereunder, have executed
and delivered this Amendment, and Section 4.16 of the Amended and Restated
Series 1995-1 Supplement shall not become effective unless and until TCC, as
holder of an Investor Certificate issued thereunder, has executed and delivered
this Amendment. 21. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the sufficiency of this Amendment or for or in
respect of any recitals contained herein, all of which recitals are made solely
by the Transferor.
-8-
22. By execution of this Amendment, Anagram Funding Corp., Argos
Funding Corp. and National Westminster Bank Plc, as holders of Investor
Certificates, agree that the Transferor shall be entitled (but not required) to
transfer to the Trustee, for the benefit of the Investor Certificateholders of
any or all outstanding Series, one or more interest rate cap agreements,
interest rate spread agreements or interest rate collar agreements (the "New
Rate Protection Agreements"), without further consent of the Investor
Certificateholders, subject to the following conditions:
(a) the existing Interest Rate Cap Agreements for each outstanding
Series shall remain in full force and effect;
(b) no assets of the Trust or the Transferor shall be used to acquire
the New Rate Protection Agreements;
(c) the New Rate Protection Agreements shall impose no payment
obligations upon the Trustee or the Transferor;
(d) the Servicer shall provide at least ten Business Days prior written
notice to each Rating Agency of such addition of New Rate Protection Agreements
and each Rating Agency shall confirm in writing that (i) the transfer of the New
Rate Protection Agreements to the Trustee and (ii) any amendments to the
applicable Supplements which have been made for the purpose of transferring such
New Rate Protection Agreements to the Trustee (together, the "Addition")shall
not result in a downgrade or withdrawal of the original rating of any
outstanding Investor Certificates;
(e) such Addition shall not, as evidenced by an Opinion of Counsel,
cause the Trust to be characterized for Federal income tax purposes as an
association taxable as a corporation or otherwise have any material adverse
impact on the characterization of the Investor Certificates for Federal income
tax purposes; and
-9-
(f) the Servicer shall have provided an Officer's Certificate to the
Trustee to the effect that such amendment will not materially and adversely
affect the interests of the Investor Certificateholders.
-10-
IN WITNESS WHEREOF, the parties thereto have executed this Amendment on
the day and year first above written.
SPECIALTY RETAILERS, INC., Servicer
By: __________________________
Its: Chief Financial Officer
SRI RECEIVABLES PURCHASE CO., INC.,
Transferor
By: __________________________
Its: Chief Financial Officer
BANKERS TRUST (DELAWARE), Trustee
By: ________________________
Its: ________________________
NATIONAL WESTMINSTER BANK, Plc,
New York Branch
By: ________________________
Its: ________________________
ANAGRAM FUNDING CORP.
By: ________________________
Its: ________________________
ARGOS FUNDING CORP.
By: ________________________
Its: ________________________
-11-
THE CHICAGO CORPORATION
By: ________________________
Its: ________________________
SUNAMERICA INVESTMENTS, INC.
By: ________________________
Its: ________________________
PACIFIC MUTUAL LIFE INSURANCE
COMPANY
By: ________________________
Its: ________________________
-12-
SRI RECEIVABLES PURCHASE CO., INC.
Transferor
SPECIALTY RETAILERS, INC.
Servicer
and
BANKERS TRUST (DELAWARE)
Trustee
on behalf of the Series 1993-1 Certificateholders
----------------------------------
AMENDED AND RESTATED SERIES 1993-1 SUPPLEMENT
Dated as of May 30, 1996
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of August 11, 1995
------------------------------------
$121,500,000 Floating Rate Class A-1
Certificates, Series 1993-1
$8,500,000 Floating Rate Class B-1
Certificates, Series 1993-1
$10,000,000 Floating Rate Class C-1
Certificates, Series 1993-1
$30,000,000 Floating Rate Class D-1
Certificates, Series 1993-1
SRI RECEIVABLES MASTER TRUST
i
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. Designation.....................................................................................1
SECTION 2. Definitions.....................................................................................1
SECTION 3. Reassignment Terms.............................................................................20
SECTION 3A. Conveyance of Interest in Interest Rate Cap; Cap Proceeds Account...................................20
SECTION 4. Delivery and Payment for the Series 1993-1 Certificates........................................21
SECTION 5. Form of Delivery of Series 1993-1 Certificates.................................................21
SECTION 6. Article IV of Agreement........................................................................21
Section 4.4 Rights of Certificateholders...............................................................21
Section 4.5 Collections and Allocation; Payments on Exchangeable Transferor Certificate
22
Section 4.6 Determination of Monthly Interest for the Series 1993-1 Certificates..................23
Section 4.7 Determination of Principal Amounts....................................................25
Section 4.8 [Reserved]............................................................................27
Section 4.9 Application of Funds on Deposit in the Collection Account for the
Certificates...................................................................................27
Section 4.10 Coverage of Negative Carry Amount and Required Amount for the Series
1993-1 Certificates............................................................................38
Section 4.11 Payment of Certificate Interest and Other Amounts.....................................39
Section 4.12 Payment of Certificate Principal......................................................40
Section 4.13 Investor Charge-Offs..................................................................41
Section 4.14 Shared Principal Collections..............................................................42
Section 4.15 Certain Prepayment Premiums...............................................................43
SECTION 7. Article V of the Agreement.....................................................................44
Section 5.1 Distributions.........................................................................44
Section 5.2 Certificateholders' Statement.........................................................45
SECTION 8. Series 1993-1 Pay Out Events...................................................................47
ii
SECTION 9. Series 1993-1 Termination......................................................................49
SECTION 10. Periodic Finance Charges and Other Fees........................................................49
SECTION 11. Legends; Transfer and Exchange; Restrictions on Transfer of Series 1993-1
Certificates; Tax Treatment.............................................................................49
SECTION 12. Ratification of Agreement......................................................................52
SECTION 13. Counterparts...................................................................................52
SECTION 14. GOVERNING LAW.......................................................................................52
SECTION 15. The Trustee....................................................................................52
SECTION 16. Instructions in Writing........................................................................52
SECTION 17. Negative Carry Account.........................................................................52
SECTION 18. Notices; Credit and Collection Policy Compliance and Changes; Daily Reports
.......................................................................................................54
SECTION 19. Ratings Reconfirmations........................................................................54
</TABLE>
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT A-3 Form of Class C Certificate
EXHIBIT A-4 Form of Class D Certificate
EXHIBIT B [Reserved]
EXHIBIT C Form of Monthly Certificateholders' Statement
EXHIBIT D Form of 144A Exchange Notice and Certification
EXHIBIT E Representation Letter [Non-Rule 144A]
iii
AMENDED AND RESTATED SERIES 1993-1 SUPPLEMENT, dated as of May
30, 1996 (this "Series Supplement") by and among SRI RECEIVABLES PURCHASE CO.,
INC., a corporation organized and existing under the laws of the State of
Delaware, as Transferor (the "Transferor"), SPECIALTY RETAILERS, INC., a
corporation organized and existing under the laws of Delaware, as Servicer (the
"Servicer"), and BANKERS TRUST (DELAWARE), a banking corporation organized and
existing under the laws of the State of Delaware as trustee (together with its
succes sors in trust thereunder as provided in the Agreement referred to below,
the "Trustee") under the Amended and Restated Pooling and Servicing Agreement
dated as of August 11, 1995 (the "Agreement") among the Transferor, the Servicer
and the Trustee.
Section 6.9 of the Agreement provides, among other things,
that the Transferor and the Trustee may at any time and from time to time enter
into a supplement to the Agreement for the purpose of authorizing the issuance
by the Trustee to the Transferor, for execution and redelivery to the Trustee
for authentication, one or more Series of Certificates. Pursuant to Section
13.1(b) of the Agreement, the holders of at least 66 2/3% of the Investor
Certificates have consented to the amendment and restatement of this Series
Supplement and the Agreement contains no other conditions precedent to the
Trustee entering into this Series Supplement. Notwithstanding the foregoing,
Section 4.16 of Article IV hereof shall not become effective until consent
thereto has been received from 100% of the holders of the Investor Certificates.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Certificates and shall specify the
Principal Terms there of.
SECTION 1. DESIGNATION. There is hereby created a Series of
Investor Certificates to be issued pursuant to the Agreement and this Series
Supplement to be known generally as the "Series 1993-1 Certificates." The Series
1993-1 Certificates shall be issued in four Classes, which shall be designated
generally as the Class A-1 Certificates, Series 1993-1 (the "Class A
Certificates"), the Class B-1 Certificates, Series 1993-1 (the "Class B
Certificates"), the Class C-1 Certificates, Series 1993-1 (the "Class C
Certificates") and the Class D-1 Certificates, Series 1993-1 (the "Class D
Certificates").
SECTION 2. DEFINITIONS. In the event that any term or
provision contained herein shall conflict with or be inconsistent with any
provision contained in the Agreement, the terms and provisions of this Series
Supplement shall govern with respect to the Series 1993-1 Certificates. All
Article, Section or subsection references herein shall mean Article, Section or
subsections of the Agreement, as amended or supplemented by this Series
Supplement, except as otherwise provided herein. All
1
<PAGE>
capitalized terms not otherwise defined herein are defined in the Agreement.
Each capi talized term defined herein shall relate only to the Series 1993-1
Certificates and no other Series of Certificates issued by the Trust.
"ADDITIONAL INTEREST" shall mean, at any time of
determination, the sum of Class A Additional Interest, Class B Additional
Interest, Class C Additional Interest and Class D Additional Interest.
"ADJUSTED INVESTED AMOUNT" shall mean the sum of the Class A
Adjusted Invested Amount, the Class B Adjusted Invested Amount, the Class C
Adjusted Invested Amount and the Class D Invested Amount.
"AGGREGATE EARLY PAY OUT AMOUNT" shall mean the sum of the
Class A Early Pay Out Amount, the Class B Early Pay Out Amount and the Class C
Early Pay Out Amount.
"AMORTIZATION PERIOD COMMENCEMENT DATE" shall mean the earlier
of the first day of the December 1999 Monthly Period and the Pay Out
Commencement Date.
"APPLICABLE RESERVE RATIO" shall mean for the November Monthly
Period, the December Monthly Period and the January Monthly Period, 2.0%, and
for each other Monthly Period, zero.
"AVAILABLE SERIES 1993-1 FINANCE CHARGE COLLECTIONS" shall
have the meaning specified in subsection 4.9(a).
"BASE RATE" shall mean the sum of (i) the weighted average of
the Class A Certificate Rate, the Class B Certificate Rate, the Class C
Certificate Rate and the Class D Certificate Rate PLUS (ii) the Series Servicing
Fee Percentage per annum.
"BUSINESS DAY" shall have the meaning set forth in the Pooling
and Servicing Agreement; PROVIDED that as used in the definition of "LIBOR
Rate," "Business Day" shall mean a day for dealings by and between banks in U.S.
dollar deposits in the London interbank eurodollar markets.
"CAP PROCEEDS ACCOUNT" shall have the meaning specified in
subsection 3A(b).
"CARRYOVER CLASS A INTEREST" shall mean on any Business Day in
a Monthly Period, (a) any Class A Interest with respect to any Interest Accrual
Period
2
beginning in a prior Monthly Period which has not previously been deposited in
the Interest Funding Account or paid on any previous Distribution Date PLUS (b)
any Class A Additional Interest.
"CARRYOVER CLASS B INTEREST" shall mean on any Business Day in
a Monthly Period, (a) any Class B Interest with respect to any Interest Accrual
Period beginning in a prior Monthly Period which has not previously been
deposited in the Interest Funding Account or paid on any previous Distribution
Date PLUS (b) any Class B Additional Interest.
"CARRYOVER CLASS C INTEREST" shall mean on any Business Day in
a Monthly Period, (a) any Class C Interest with respect to any Interest Accrual
Period beginning in a prior Monthly Period which has not previously been
deposited in the Interest Funding Account or paid on any previous Distribution
Date PLUS (b) any Class C Additional Interest.
"CLASS A ADDITIONAL INTEREST" shall have the meaning specified
in subsection 4.6(a).
"CLASS A ADJUSTED INVESTED AMOUNT" shall mean, when used with
respect to any Business Day, the Class A Invested Amount MINUS the amount on
deposit in the Principal Account allocated to the Class A Certificates.
"CLASS A CERTIFICATEHOLDER" shall mean the Person in whose
name a Class A Certificate is registered in the Certificate Register.
"CLASS A CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1993-1 Certificateholders' Interest evidenced by the Class A
Certificates.
"CLASS A CERTIFICATE RATE" shall mean with respect to the
Class A Certificates, 4.1325% per annum with respect to the initial Interest
Accrual Period and, with respect to each subsequent Interest Accrual Period a
per annum rate of 0.82% in excess of LIBOR prevailing on the related Rate
Determination Date, calculated on the basis of the actual number of days elapsed
in such subsequent Interest Accrual Period over a year of 360 days.
"CLASS A CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
3
"CLASS A CONTROLLED DISTRIBUTION AMOUNT" shall mean, with
respect to any Distribution Date, an amount equal to $6,295,336.80 and multiples
of $1,259,067.40 in excess thereof not to exceed in the aggregate the Class A
Invested Amount as of such Distribution Date (prior to giving effect to any
distribution in respect of principal of such Certificates to be made on such
Distribution Date).
"CLASS A EARLY PAY OUT AMOUNT" shall mean, following an Early
Repayment Event as a result of which any Class A Invested Amount is paid prior
to January 1, 2000, the net present value (as of the Early Repayment Date) of
the amount of interest that would have accrued on such Class A Invested Amount
from such Early Repayment Date through January 1, 2000 at an interest rate equal
to .082% per annum, discounted at a rate equal to LIBOR as of such Early
Repayment Date.
"CLASS A FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amount on deposit in the
Equalization Account as of the end of the last day of the Revolving Period and
(b) the sum of the numerators used to calculate the allocation percentages with
respect to Principal Collections for all Series.
"CLASS A FLOATING ALLOCATION PERCENTAGE" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class A Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is the greater of (a) the
sum of the amount of Principal Receiv ables in the Trust and the amounts on
deposit in the Equalization Account at the end of the preceding Business Day and
(b) the sum of the numerators with respect to all Class es of all Series then
outstanding on such Business Day used with respect to Principal Collections, to
calculate the applicable allocation percentage.
"CLASS A INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class A Certificates, which is $121,500,000.
"CLASS A INTEREST" shall mean the interest distributable with
respect of the Class A Certificates as calculated in accordance with subsection
4.6(a).
"CLASS A INTEREST SHORTFALL" shall have the meaning specified
in subsection 4.6(a).
4
"CLASS A INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class A Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class A
Certificateholders prior to such Business Day and MINUS (c) the aggregate amount
of Class A Investor Charge-Offs for all prior Business Days, and PLUS (d) the
sum of the aggregate amount allocated with respect to Class A Investor
Charge-Offs and available on all prior Business Days pursuant to subsection
4.9(a)(vi), for the purpose of reinstating amounts reduced pursuant to the
foregoing clause (c).
"CLASS A INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(d).
"CLASS A INVESTOR PERCENTAGE" shall mean, for any Business
Day, (a) with respect to Finance Charge Collections and Receivables in Defaulted
Accounts at any time or Principal Collections during the Revolving Period, the
Class A Floating Allocation Percentage and (b) with respect to Principal
Collections during the Amorti zation Period, the Class A Fixed Allocation
Percentage.
"CLASS A INTEREST" shall mean the interest distributable in
respect of the Class A Certificates as calculated in accordance with subsection
4.6(a).
"CLASS A PRINCIPAL" shall mean the principal distributable in
respect of the Class A Certificates as calculated in accordance with subsection
4.7(a).
"CLASS A POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class A Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class A Invested Amount which will
occur on the following Distribution Date) to the Class A Initial Invested
Amount.
"CLASS A PORTFOLIO IMBALANCE PREMIUM" shall mean, following
the occurrence of a Portfolio Imbalance Event, the net present value (as of the
Portfolio Correction Distribution Date) as of the amount of interest that would
have accrued on the portion of the Class A Invested Amount to be repaid on the
Portfolio Correction Distribution Date from the Portfolio Correction
Distribution Date through the January 2001 Distribution Date at an interest rate
equal to .082% per annum, discounted at a rate equal to LIBOR as of such
Portfolio Correction Distribution Date.
"CLASS A PRINCIPAL" shall mean the principal distributable in
respect of the Class A Certificates as calculated in accordance with subsection
4.7(a).
5
"CLASS B ADDITIONAL INTEREST" shall have the meaning specified
in subsection 4.6(b).
"CLASS B ADJUSTED INVESTED AMOUNT" shall mean, when used with
respect to any Business Day, the Class B Invested Amount MINUS the amount on
deposit in the Principal Account allocated to the Class B Certificates.
"CLASS B CERTIFICATEHOLDER" shall mean the Person in whose
name a Class B Certificate is registered in the Certificate Register.
"CLASS B CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1993-1 Certificateholders' Interest evidenced by the Class B
Certificates.
"CLASS B CERTIFICATE RATE" shall mean, with respect to the
Class B Certificates, 4.7025% per annum with respect to the initial Interest
Accrual Period and, with respect to each subsequent Interest Accrual Period a
per annum rate of 1.39% in excess of LIBOR prevailing on the related Rate
Determination Date, calculated on the basis of the actual number of days elapsed
in such subsequent Interest Accrual Period over a year of 360 days.
"CLASS B CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"CLASS B CONTROLLED DISTRIBUTION AMOUNT" shall mean (i) with
respect to the Distribution Date on which the Class B Invested Amount is reduced
to zero, an amount equal to $300,000 and integral multiples of $100,000 in
excess thereof not to exceed in the aggregate the Class B Invested Amount as of
such Distribution Date, and (ii) with respect to any other Distribution Date, an
amount equal to $100,000 and integral multiples thereof (in each case prior to
giving effect to any distribution in respect of principal of such Certificates
to be made on such Distribution Date).
"CLASS B DAILY PRINCIPAL AMOUNT" shall have the meaning
specified in subsection 4.9(c)(ii).
"CLASS B EARLY PAY OUT AMOUNT" shall mean, following an Early
Repayment Event as a result of which the Class B Invested Amount is paid prior
to January 1, 2000, the net present value (as of the Early Repayment Date) of
the amount of interest that would have accrued on such Class B Invested Amount
from such Early
6
Repayment Date through January 1, 2000 at an interest rate equal to 1.39%,
discounted at a rate equal to LIBOR as of such Early Repayment Date.
"CLASS B FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amount on deposit in the
Equalization Account at the end of the last day of the Revolving Period and (b)
the sum of the numerators used to calculate allocation percentages with respect
to Principal Collections for all Series.
"CLASS B FLOATING ALLOCATION PERCENTAGE" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class B Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is the greater of (a) the
sum of the amount of Principal Receiv ables in the Trust and the amount on
deposit in the Equalization Account as of the end of the preceding Business Day
and (b) the sum of the numerators with respect to all Classes of all Series then
outstanding on such Business Day used with respect to Prin cipal Collections to
calculate the applicable allocation percentage.
"CLASS B INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class B Certificates, which is $8,500,000.
"CLASS B INTEREST" shall mean the interest distributable in
respect of the Class B Certificates as calculated in accordance with subsection
4.6(b).
"CLASS B INTEREST SHORTFALL" shall have the meaning specified
in subsection 4.6(b).
"CLASS B INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class B Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class B
Certificateholders prior to such Business Day, MINUS (c) the aggregate amount of
Class B Investor Charge-offs for all prior Business Days, and PLUS (d) the sum
of the aggregate amount allocated with respect to Class B Investor Charge-Offs
and available on all prior Business Days pursu ant to subsection 4.9(a)(ix), for
the purpose of reinstating amounts reduced pursuant to the foregoing clause (c).
"CLASS B INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(c).
7
"CLASS B INVESTOR PERCENTAGE" shall mean, for any Distribution
Date, (a) with respect to Finance Charge Collections and Receivables in
Defaulted Accounts at any time or Principal Collections during the Revolving
Period, the Class B Floating Allocation Percentage and (b) with respect to
Principal Collections during the Amorti zation Period, the Class B Fixed
Allocation Percentage.
"CLASS B INTEREST" shall mean the interest distributable in
respect of the Class B Certificates as calculated in accordance with subsection
4.6(b).
"CLASS B PRINCIPAL" shall mean the principal distributable in
respect of the Class B Certificates as calculated in accordance with subsection
4.7(b).
"CLASS B POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class B Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class B Invested Amount which will
occur on the following Distribution Date) to the Class B Initial Invested
Amount.
"CLASS B PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) the Distribution Date in an Amortization Period on which the
Class A Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 1993-1 Investor Certificates remaining after
payments have been made to the Class A Certificates on such Distribution Date,
the Distribution Date following the Distribution Date on which the Class A
Invested Amount is paid in full and (b) the Distribution Date following a sale
or repurchase of the Receivables as set forth in Sections 2.4(e), 9.2, 10.2(a),
12.1 or 12.2 of the Agreement and Section 3 of this Series Supplement.
"CLASS C ADDITIONAL INTEREST" shall have the meaning specified
in subsection 4.6(c).
"CLASS C ADJUSTED INVESTED AMOUNT" shall mean, when used with
respect to any Business Day, the Class C Invested Amount MINUS the amount on
deposit in the Principal Account allocated to the Class C Certificates.
"CLASS C CERTIFICATEHOLDER" shall mean the Person in whose
name a Class C Certificate is registered in the Certificate Register.
"CLASS C CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1993-1 Certificateholders' Interest evidenced by the Class C
Certificates.
8
"CLASS C CERTIFICATE RATE" shall mean, with respect to the
Class C Certificates, 6.3125% per annum with respect to the initial Interest
Accrual Period and, with respect to each subsequent Interest Accrual Period a
per annum rate of 3.00% in excess of LIBOR prevailing on the related Rate
Determination Date, calculated on the basis of the actual number of days elapsed
in such subsequent Interest Accrual Period over a year of 360 days.
"CLASS C CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-3 hereto.
"CLASS C CONTROLLED DISTRIBUTION AMOUNT" shall mean
"CLASS C DAILY PRINCIPAL AMOUNT" shall have the meaning
specified in subsection 4.9(c)(iii).
"CLASS C EARLY PAY OUT AMOUNT" shall mean, following an Early
Repayment Event as a result of which the Class B Invested Amount is paid prior
to January 1, 2000, the net present value (as of the Early Repayment Date) of
the amount of interest that would have accrued on such Class C Invested Amount
from such Early Repayment Date through January 1, 2000 at an interest rate equal
to 3.00%, discounted at a rate equal to LIBOR as of such Early Repayment Date.
"CLASS C FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class C Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amount on deposit in the
Equalization Account as of the end of the last day of the Revolving Period and
(b) the sum of the numerators used to calculate alloca tion percentages with
respect to Principal Collections for all Series.
"CLASS C FLOATING ALLOCATION PERCENTAGE" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class C Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is the greater of (a) the
sum of the amount of Principal Receiv ables in the Trust and the amount on
deposit in the Equalization Account at the end of the preceding Business Day and
(b) the sum of the numerators with respect to all Class es of all Series then
outstanding on such Business Day used with respect to Principal Collections to
calculate the applicable allocation percentage.
9
"CLASS C INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class C Certificates, which is $10,000,000.
"CLASS C INTEREST" shall mean the interest distributable in
respect of the Class C Certificates as calculated in accordance with subsection
4.6(c).
"CLASS C INTEREST SHORTFALL" shall have the meaning specified
in subsection 4.6(c).
"CLASS C INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class C Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class C
Certificateholders prior to such Business Day, MINUS (c) the aggregate amount of
Class C Investor Charge-Offs for all prior Business Days, and PLUS (d) the sum
of the aggregate amount allocated with respect to Class C Investor Charge-Offs
and available on all prior Business Days pursu ant to subsection 4.9(a)(x), for
the purpose of reinstating amounts reduced pursuant to the foregoing clause (c).
"CLASS C INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(b).
"CLASS C INVESTOR PERCENTAGE" shall mean, for any Distribution
Date, (a) with respect to Finance Charge Collections and Receivables in
Defaulted Accounts at any time or Principal Collections during the Revolving
Period, the Class C Floating Allocation Percentage and (b) with respect to
Principal Collections during the Amorti zation Period, the Class C Fixed
Allocation Percentage.
"CLASS C INTEREST" shall mean the interest distributable in
respect of the Class C Certificates as calculated in accordance with subsection
4.6(c).
"CLASS C PRINCIPAL" shall mean the principal distributable in
respect of the Class C Certificates as calculated in accordance with subsection
4.7(c).
"CLASS C POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class C Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class C Invested Amount which will
occur on the following Distribution Date) to the Class C Initial Invested
Amount.
10
"CLASS C PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) the Distribution Date in an Amortization Period on which the
Class B Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 1993-1 Investor Certificates remaining after
payments have been made to the Class B Certificates on such Distribution Date,
the Distribution Date following the Distribution Date on which the Class B
Invested Amount is paid in full and (b) the Distribution Date following a sale
or repurchase of the Receivables as set forth in Sections 2.4(e), 9.2, 10.2(a),
12.1 or 12.2 of the Agreement and Section 3 of this Series Supplement.
"CLASS D CERTIFICATEHOLDER" shall mean the Person in whose
name a Class D Certificate is registered in the Certificate Register.
"CLASS D CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1993-1 Certificateholders' Interest evidenced by the Class D
Certificates.
"CLASS D CERTIFICATE RATE" shall mean 0% per annum.
"CLASS D CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-4 hereto.
"CLASS D DAILY PRINCIPAL AMOUNT" shall have the meaning
specified in subsection 4.9(c)(iv).
"CLASS D FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class D Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the amount of
Principal Receivables in the Trust and the amount on deposit in the Equalization
Account at the end of the last day of the Revolving Period and (b) the sum of
the numerators used to calculate allocation per centages with respect to
Principal Collections for all Series.
"CLASS D FLOATING ALLOCATION PERCENTAGE" shall mean with
respect to any Business Day the percentage equivalent of a fraction, the
numerator of which is the Class D Invested Amount as of the end of the preceding
Business Day and the denominator of which is the greater of (a) the sum of the
amount of Principal Receivables in the Trust and the amount on deposit in the
Equalization Account at the end of the preceding Business Day and (b) the sum of
the numerators with respect to all Classes of all Series then outstanding on
such Business Day used with respect to Principal Collections to calculate the
applicable allocation percentage.
11
"CLASS D INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class D Certificates, which is $30,000,000.
"CLASS D INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class D Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class D
Certificateholders prior to such Business Day, MINUS (c) the amount deposited in
the Negative Carry Account, if any, pursuant to subsection 17(b) (other than
amounts so deposited in respect of allocations pursuant to Section
4.9(a)(xiii)), MINUS (d) the aggregate amount of Class D Investor Charge-offs
for all prior Business Days, PLUS (e) the sum of the aggregate amount allocated
with respect to Class D Investor Charge-Offs and available on all prior Business
Days pursuant to subsection 4.9(a)(xii), for the purpose of reinstating amounts
reduced pursuant to the foregoing clause (d) and PLUS (f) on the Class D
Principal Payment Commencement Date, an amount equal to the amount on deposit in
the Negative Carry Account.
"CLASS D INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(a).
"CLASS D INVESTOR PERCENTAGE" shall mean, for any Business
Day, (a) with respect to Finance Charge Collections and Receivables in Defaulted
Accounts at any time or Principal Collections during the Revolving Period, the
Class D Floating Allocation Percentage and (b) with respect to Principal
Collections during the Amorti zation Period, the Class D Fixed Allocation
Percentage.
"CLASS D PRINCIPAL" shall mean the principal distributable in
respect of the Class D Certificates as calculated in accordance with subsection
4.7(d).
"CLASS D POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class D Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class D Invested Amount which will
occur on the following Distribution Date) to the Class D Initial Invested
Amount.
"CLASS D PRINCIPAL" shall mean the principal distributable in
respect of the Class D Certificates as calculated in accordance with subsection
4.7(d).
"CLASS D PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) the Distribution Date on which the Class C Invested Amount is
paid in full or, if there are no Principal Collections allocable to the Series
1993-1 Investor Certificates
12
remaining after payments have been made to the Class C Certificates on such Dis
tribution Date, the Distribution Date following the Distribution Date on which
the Class C Invested Amount is paid in full and (b) the Distribution Date
following a sale or repurchase of the Receivables as set forth in Sections
2.4(e), 9.2, 10.2(a), 12.1 and 12.2 of the Agreement and Section 3 of this
Series Supplement.
"CLOSING DATE" shall mean July 30, 1993.
"CONTROLLED AMORTIZATION PERIOD" shall mean, with respect to
the Series 1993-1 Certificates, unless a Pay Out Event shall have occurred with
respect to such Series prior thereto, the period commencing on the Amortization
Period Commence ment Date and ending upon the earliest to occur of (x) the
payment in full to the Inves tor Certificateholders of the Invested Amount, and
(y) the Series 1993-1 Termination Date.
"DAILY CAP PROCEEDS AMOUNT" shall mean, with respect to any
Business Day, an amount on deposit in the Cap Proceeds Account equal to the
lesser of (A) the amount determined to be deposited in the Interest Funding
Account pursuant to clause (y) of subsections 4.9(a)(i), (ii) and (iii), and (B)
the sum of (a) the product of (x) the quotient of (I) the amount deposited in
the Cap Proceeds Account on the immediately preceding payment date for the
Interest Rate Caps DIVIDED by (II) the number of days from payment date to
payment date for such Interest Rate Caps times (y) the number of days elapsed
since the preceding Business Day and (b) the aggregate amount not transferred
prior to such day during the period since the preceding payment date pursuant to
this subclause (B).
"DISTRIBUTION DATE" shall mean September 20, 1995 and the
third Wednesday of each March, June, September and December thereafter, or if
such day is not a Business Day, the next succeeding Business Day.
"EARLY AMORTIZATION PERIOD" shall mean the period commencing
on the Pay Out Commencement Date and ending on the earlier to occur of (i) the
date of termi nation of the Trust pursuant to Section 12.1 of the Agreement or
(ii) the Series 1993-1 Termination Date.
"EARLY PAY OUT SET ASIDE DATE"shall mean any date during the
Amortization Period following the trust Certificate-Backed Note Repayment Date
on which any unpaid Aggregate Early Pay Out Amount or unpaid Class A Portfolio
Unbalance Premium has not bee deposited in the Interest Funding Account.
13
"EARLY REPAYMENT DATE" means, with respect to any Investor
Certificates, the Distribution Date(s) or other date(s) on which any Invested
Amount in respect of such Investor Certificates is paid as a result of an Early
Repayment Event.
"EARLY REPAYMENT EVENT" means the payment, prior to January 1,
2000, of Invested Amount in respect of the Class A, B or C Certificates to the
holder thereof, for any reason other than with respect to the Class A
Certificates, a Portfolio Imbalance Event.
"EARLY TERMINATION EVENT" shall have the meaning specified in
Section 8.
"ENHANCEMENT" shall mean, with respect to the Class A
Certificates, the subordination of the Class B Invested Amount, the Class C
Invested Amount, and the Class D Invested Amount, with respect to the Class B
Certificates, the subordination of the Class C Invested Amount and the Class D
Invested Amount, and with respect to the Class C Certificates, the subordination
of the Class D Invested Amount.
"EXCESS FINANCE CHARGE COLLECTIONS" shall mean, with respect
to any Business Day, as the context requires, either (x) the amount described in
subsection 4.9(a)(xvii) allocated to the Series 1993-1 Certificates but
available to cover shortfalls in amounts paid from Finance Charge Collections
for other Series, if any or (y) the aggregate amount of Finance Charge
Collections allocable to other Series in excess of the amounts necessary to make
required payments with respect to such Series, if any, and available to cover
shortfalls with respect to the Series 1993-1 Certificates.
"FIXED ALLOCATION PERCENTAGE" shall mean for any Distribution
Date the percentage equivalent of a fraction, the numerator of which is the
Invested Amount at the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables in the Trust and the amount on deposit in the Equalization
Account as of the end of the last day of the Revolving Period and (b) the sum of
the numerators used to calculate allocation percentages with respect to
Principal Collections for all Series.
"FLOATING ALLOCATION PERCENTAGE" shall mean for any Business
Day the sum of the applicable Class A Floating Allocation Percentage, Class B
Floating Allocation Percentage, Class C Floating Allocation Percentage, and
Class D Floating Allocation Percentage for such Business Day.
14
"INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Investor Certificates of Series 1993-1, which is
$140,000,000.
"INTEREST ACCRUAL PERIOD" shall mean, with respect to a
Distribution Date, the period from and including the preceding Distribution Date
to and excluding such Distribution Date; PROVIDED, HOWEVER, that the Initial
Interest Accrual Period will run from the Series 1995-1 Closing Date to and
excluding the initial Distribution Date.
"INTEREST RATE CAP AGREEMENT" shall mean an interest rate cap
agreement in form and substance satisfactory to the Trustee and the Rating
Agency between the Transferor and an obligor pursuant to which the obligor will
be paid its entire consideration by the Transferor on the date of execution
thereof and which obligor will be obligated for a term ending not earlier than
the Scheduled Series 1993-1 Termination Date to make payments to the Trustee
quarterly with respect to each set quarterly period specified therein in an
amount (if positive) equal to the product of (i) the remainder of (A) an index
rate which shall be equal to LIBOR (or a similar three-month offered rate quoted
in the London interbank eurodollar market) (as if the Interest Accrual Period
referenced in the definition thereof was the applicable set quarterly period)
minus (B) 12%, multiplied by (ii) a notional amount specified therein,
multiplied by (iii) the ratio of the actual number of days in such set quarterly
period to 360; provided, however, that the interest rate cap agreement can
deviate from the terms described herein if the Trans feror receives prior
written approval with respect to any such deviations from (i) the Rating Agency
and (ii) Holders of Investor Certificates representing more than 50% of the
aggregate Undivided Interests.
"INTEREST RATE CAPS" shall mean the interest rate cap or caps
provided pursuant to Interest Rate Cap Agreements by one or more obligors, each
of which shall be acceptable to the Rating Agency and shall have a long-term
unsecured debt rating of not less than AAA and a short term unsecured debt
rating of A-1+ by Standard & Poor's Corporation (the "Requisite Cap Rating") and
shall contain an arrangement for the replacement of such obligor or the
substitution of alternative credit enhancement provisions (any of which shall
have the Requisite Cap Ratings) in the event that such then-current interest
rate cap shall be downgraded below the Requisite Cap Ratings.
"INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A Invested Amount as
of such Business Day, (b) the Class B Invested Amount as of such Business Day,
(c) the Class C Invested Amount as of such Business Day and (d) the Class D
Invested Amount as of such Business Day.
15
"INVESTOR CERTIFICATEHOLDER" shall mean the Holder of record
of an Investor Certificate of Series 1993-1.
"INVESTOR CERTIFICATES" shall mean the Class A Certificates,
the Class B Certificates, the Class C Certificates and the Class D Certificates.
"INVESTOR CHARGE-OFFS" shall mean the sum of Class A Investor
Charge-Offs, Class B Investor Charge-Offs, Class C Investor Charge-Offs and
Class D Investor Charge-Offs.
"INVESTOR DEFAULT AMOUNT" shall mean, with respect to each
Business Day, an amount equal to the product of the Default Amount for such
Business Day and the Floating Allocation Percentage applicable for such Business
Day.
"INVESTOR PERCENTAGE" shall mean for any Business Day, (a)
with respect to Finance Charge Collections and Receivables in Defaulted Accounts
at any time or Principal Collections during the Revolving Period, the Floating
Allocation Percentage and (b) with respect to Principal Collections during the
Amortization Period, the Fixed Allocation Percentage.
"ISSUANCE DATE" shall mean the Closing Date.
"LIBOR" shall mean, with respect to any Interest Accrual
Period, the rate obtained by dividing (x) the three-month rate described on the
Dow Jones Telerate Sys tem, page 3750, as of 11:00 a.m. London time on the Rate
Determination Date by (y) a percentage equal to one minus the stated maximum
rate (stated as a decimal) of all reserves required to be maintained against
"Eurocurrency Liabilities" as specified in Regulation D (or against any other
category of liabilities which includes deposits by reference to which the
interest rate on LIBOR is determined or any category of exten sions of credit or
other assets which includes loans by a non-United States office of any bank to
United States residents) which shall be zero unless the Company has notified the
Trustee otherwise; PROVIDED, HOWEVER, with respect to clause (x) above, in the
event such rate shall not be provided, "LIBOR" shall mean (a) the arithmetic
average (rounded upwards to the nearest 1/16th of 1%) of the rates at which
deposits in United States dollars are offered to four reference banks selected
by BT Securities Corp. in the interbank eurodollar market at approximately 11:00
a.m. (London time) divided by (b) the percentage specified in clause (y) above.
"MINIMUM RETAINED PERCENTAGE" shall mean 3.5%.
16
"MINIMUM TRANSFEROR PERCENTAGE" shall mean the Applicable
Reserve Ratio.
"MONTHLY PERIOD" shall have the meaning specified in the
Agreement, except that the first Monthly Period with respect to the Series
1993-1 Certificates shall begin on and include the Closing Date and shall end on
and include August 27, 1993.
"NEGATIVE CARRY ACCOUNT" shall have the meaning specified in
subsection 17(a).
"NEGATIVE CARRY AMOUNT" shall have the meaning specified in
subsection 4.10(a).
"NEGATIVE CARRY FILL-UP DATE" shall have the meaning specified
in subsection 17(b).
"PAY OUT COMMENCEMENT DATE" shall mean the date on which a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of the Agreement
or a Series 1993-1 Pay Out Event is deemed to occur pursuant to Section 8 of
this Series Supplement.
"PORTFOLIO CORRECTION AMOUNT" means the smallest amount which,
if distributed to certificateholders of the Trust in reduction of the aggregate
invested amount of all certificates upon the occurrence of a Portfolio Imbalance
Event, would result in compliance with the percentage limitation in the
definition of Portfolio Imbalance Event the violation of which gave rise to such
Portfolio Imbalance Event.
"PORTFOLIO CORRECTION DISTRIBUTION DATE" means the first
Distribution Date following the occurrence of a Portfolio Imbalance Event.
"PORTFOLIO IMBALANCE EVENT" means an event which will occur
if, on the last day of any Monthly Period occurring during the Revolving Period
(the "MEASURE MENT DAY"), (a) on each of such day and the last day of each of
the preceding [eleven] consecutive Monthly Periods, (i) the amount of all Cash
Equivalents and other amounts on deposit in the Equalization Account exceeded
25% of (ii) the sum of all Principal Receivables and Cash Equivalents and other
amounts on deposit in the Equalization Account on each such day, or (b) on each
of the measurement day and the last day of the [preceding] Monthly Period, (i)
the amount of all Cash Equivalents and other amounts on deposit in the
Equalization Account exceeded 45% of (ii) the sum of all Principal Receivables
and Cash Equivalents and other amounts on deposit in the
17
Equalization Account on each such day. All such amounts shall be calculated
after giving effect to all amounts to be distributed on the Distribution Date
following the last day of the applicable Monthly Period.
"PORTFOLIO YIELD" shall mean for the Series 1993-1
Certificates, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is an amount equal to the sum
of the aggregate amount of Available Series 1993-1 Finance Charge Collections
and the aggregate Daily Cap Proceeds Amount for such Monthly Period, calculated
on a cash basis, MINUS the aggregate Inves tor Default Amount for such Monthly
Period, and the denominator of which is the average daily Invested Amount during
the preceding Monthly Period.
"PRINCIPAL SHORTFALLS" shall mean on any Business Day (x) for
Series 1993-1 the Invested Amount of the class then receiving principal payments
after the application of Principal Collections on such Business Day plus, on and
after the Trust Certificate-Backed Note Repayment Date, the unpaid Aggregate
Early Pay Out Amount and unpaid Class A Portfolio Imbalance Premium or (y) for
any other Series, the amounts specified as such in the Supplement for such other
Series.
"RATE DETERMINATION DATE" shall mean, with respect to any
Interest Accrual Period, the second Business Day before the first day of such
Interest Accrual Period.
"RATING AGENCY" shall mean Standard & Poor's Ratings Group and
Duff & Phelps Credit Rating Co.
"REQUIRED AMOUNT" shall have the meaning specified in Section
4.10.
"REVOLVING PERIOD" shall mean the period from and including
the Closing Date to, but not including, the Amortization Period Commencement
Date.
"SCHEDULED SERIES 1993-1 TERMINATION DATE" shall mean the
January 2003 Distribution Date.
"SERIES 1993-1" shall mean the Series of the SRI Receivables
Master Trust represented by the Series 1993-1 Certificates.
"SERIES 1993-1 CERTIFICATEHOLDER" shall mean the holder of
record of any Series 1993-1 Investor Certificate.
18
"SERIES 1993-1 CERTIFICATEHOLDERS' INTEREST" shall have the
meaning specified in Section 4.4 of the Agreement.
"SERIES 1993-1 CLOSING DATE" shall mean July 30, 1993.
"SERIES 1993-1 PAY OUT EVENT" shall have the meaning specified
in Section 8 of this Series Supplement.
"SERIES 1993-1 PORTFOLIO CORRECTION DISTRIBUTION AMOUNT" means
the smallest Class A Controlled Distribution Amount which is greater than the
product of (i) the Portfolio Correction Distribution Amount and (ii) a fraction,
the numerator of which is the Floating Allocation Percentage, and the
denominator of which is the sum of the floating allocation percentages for each
Series which is then in its Revolving Period.
"SERIES 1993-1 TERMINATION DATE" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the Series 1993-1
Certificates are paid in full, or (ii) the Scheduled Series 1993-1 Termination
Date.
"SERIES SERVICING FEE PERCENTAGE" shall mean 2.0%.
"SERVICING FEE" shall mean for any Monthly Period, an amount
equal to the product of (i) one-twelfth, (ii) the Series Servicing Fee
Percentage and (iii) the Adjusted Invested Amount as of the preceding Record
Date, or, in the case of the first Distribution Date, the Initial Invested
Amount.
"SHARED PRINCIPAL COLLECTIONS" shall mean, as the context
requires, either (a) the amount allocated to the Series 1993-1 Investor
Certificates which, in accordance with subsections 4.9(b) and 4.9(c)(v), may be
applied in accordance with Section 4.3(e) of the Agreement or (b) the amounts
allocated to the investor certificates (other than Transferor Retained
Certificates) of other Series which the applicable Supplements for such Series
specify are to be treated as "Shared Principal Collections" and which may be
applied to cover Principal Shortfalls with respect to the Series 1993-1 Investor
Certificates.
"TERMINATION PAYMENT DATE" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an Insolvency Event and the occurrence of the Scheduled Series 1993-1
Termination Date.
19
"TRANSFEROR FINANCE CHARGE COLLECTIONS" shall mean on any
Business Day the product of (a) the Finance Charge Collections for such Business
Day, (b) the Transferor Percentage and (c) the Floating Allocation Percentage.
"TRANSFEROR RETAINED CERTIFICATES" shall mean investor
certificates of any Series, including the Class D Certificates, which the
Transferor is required to retain, but only for so long as the Transferor is the
Holder of such Certificates.
"TRUST CERTIFICATE-BACKED NOTES" means notes in a principal
amount not to exceed $30,000,000 issued on or after the date hereof by the
Transferor that are secured, in whole or in part, by Class D Certificates and
the Transferor Certificate and that have an Expected Maturity Date on or before
December 15, 2000.
"TRUST CERTIFICATE-BACKED NOTE REPAYMENT DATE" shall mean the
date on which all principal and interest (at the original stated interest rate,
and excluding any premium) on the Trust Certificate-Backed Notes has been paid
or deposited into a principal reserve account for payment by the Transferor
provided that, unless and until Trust Certificate-Backed Notes have been issued,
such date shall be the effective date of this Supplement.
SECTION 3. REASSIGNMENT TERMS. The Class A Certificates, Class
B Certificates and Class C Certificates shall be subject to repurchase by the
Transferor at its option, in accordance with the terms specified in subsection
12.2(a) of the Agreement, on any Distribution Date on or after the Distribution
Date on which the sum of the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount is reduced to an amount less than or
equal to 10% of the sum of the Class A Initial Invested Amount, the Class B
Initial Invested Amount and the Class C Initial Invested Amount. The deposit
required in connection with any such repurchase and final distribution on the
Class A Certificates, the Class B Certificates, and Class C Certificates shall
be equal to the sum of the Class A Invested Amount, the Class B In vested Amount
and the Class C Invested Amount plus accrued and unpaid interest on such
Certificates through the day prior to the Distribution Date on which the final
distri bution occurs.
SECTION 3A. CONVEYANCE OF INTEREST IN INTEREST RATE CAP; CAP
PROCEEDS ACCOUNT. (a) The Transferor hereby covenants and agrees that, on or
prior to the Closing Date, it shall obtain Interest Rate Caps by entering into
one or more Interest Rate Cap Agreements such that the aggregate notional amount
under all such agree ments shall, at any time, be at least equal to the Invested
Amount at such time. The Transferor hereby assigns, sets-over, conveys, pledges
and grants a security interest and
20
lien (free and clear of all other Liens) to the Trustee for the benefit of the
Series 1993-1 Certificateholders, in all of the Transferor's right, title and
interest now existing or hereafter arising in and to the Interest Rate Cap
Agreements and the Interest Rate Caps arising thereunder, together with the Cap
Proceeds Amount and all other proceeds there of, as collateral security for the
benefit of the Series 1993-1 Certificateholders. The Transferor hereby further
agrees to execute all such instruments, documents and financing statements and
take all such further action requested by the Trustee to evidence and perfect
the assignment of the Interest Rate Cap Agreements and the Interest Rate Caps
pursuant to this Section 3A.
(b) The Trustee, for the benefit of the Series 1993-1
Certificateholders, shall establish and maintain with a Qualified Institution in
the name of the Trust, a certain segregated trust account (the "CAP PROCEEDS
ACCOUNT"). All amounts received by the Trustee pursuant to the Interest Rate
Caps on the settlement date for any Interest Rate Cap (a "Cap Settlement Date")
shall be deposited in the Cap Proceeds Account. Funds in the Cap Proceeds
Account shall be invested at the direction of the Servicer, in Cash Equivalents
with maturities not later than the next succeeding Business Day. Any earnings on
such invested funds shall be deposited and held in the Cap Proceeds Account and
applied in the same manner and priority as payments pursuant to the Interest
Rate Caps.
SECTION 4. DELIVERY AND PAYMENT FOR THE SERIES 1993-1
CERTIFICATES. The Transferor shall execute and deliver the Series 1993-1
Certificates to the Trustee for authentication in accordance with Section 6.1 of
the Agreement. The Trustee shall deliver the Series 1993-1 Certificates to or
upon the order of the Transferor when authenticated in accordance with Section
6.2 of the Agreement.
SECTION 5. FORM OF DELIVERY OF SERIES 1993-1 CERTIFICATES. The
Class A Certificates, the Class B Certificates, the Class C Certificates and the
Class D Certificates, shall be delivered as Registered Certificates as provided
in Section 6.1 of the Agreement.
SECTION 6. ARTICLE IV OF AGREEMENT. Sections 4.1, 4.2 and 4.3
of the Agreement shall read in their entirety as provided in the Agreement.
Article IV of the Agreement (except for Sections 4.1, 4.2 and 4.3 thereof) shall
read in its entirety as follows and shall be applicable only to the Series
1993-1 Certificates:
21
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 RIGHTS OF CERTIFICATEHOLDERS. The Series 1993-1
Certificates shall represent undivided interests in the Trust, consisting of the
right to receive, to the extent necessary to make the required payments with
respect to such Series 1993-1 Certificates at the times and in the amounts
specified in this Agreement, (a) the Floating Allocation Percentage and Fixed
Allocation Percentage (as applicable from time to time) of Collections available
in the Collection Account, (b) funds allocable to the Series 1993-1 Certificates
on deposit in the Equalization Account and (c) funds on deposit in the Interest
Funding Account, the Principal Account, the Cap Proceeds Account and the
Distribution Account (for such Series, the "Series 1993-1 Certificate holders'
Interest"). The Class B Invested Amount, the Class C Invested Amount and the
Class D Invested Amount shall be subordinated to the Class A Certificates, the
Class C Invested Amount and the Class D Invested Amount shall be subordinated to
the Class B Certificates, and the Class D Invested Amount shall be subordinated
to the Class C Certificates, in each case to the extent provided in this Article
IV. The Class B Certifi cates will not have the right to receive payments of
principal until the Class A Invested Amount has been paid in full. The Class C
Certificates will not have the right to receive payments of principal until the
Class A Invested Amount and the Class B Invested Amount have been paid in full.
The Class D Certificates will not have the right to receive payments of
principal until the Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount have been paid in full.
Section 4.5 COLLECTIONS AND ALLOCATION; PAYMENTS ON
EXCHANGEABLE TRANSFEROR CERTIFICATE.
(a) COLLECTIONS. The Servicer will apply or will instruct the
Trustee to apply all funds on deposit in the Collection Account and the
Equalization Ac count allocable to the Series 1993-1 Certificates, and all funds
on deposit in the Interest Funding Account, the Principal Account and the
Distribution Account maintained for this Series, as described in this Article
IV.
(b) [Reserved]
(c) PAYMENTS TO THE HOLDER OF THE EXCHANGEABLE TRANSFEROR
CERTIFICATE. On each Business Day, the Servicer shall determine whether a Pay
Out Event is deemed to have occurred with respect to the Series 1993-1
Certificates, and the
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Servicer shall allocate and pay Collections in accordance with the Daily Report
with respect to such Business Day to the Holder of the Exchangeable Transferor
Certificate as follows:
(i) For each Business Day with respect to the Revolving
Period, in addition to amounts allocated and paid to the Holder of the
Exchangeable Transferor Certificate pursuant to subsection 4.3(b) of
the Agreement, an amount equal to the product of the Class D Floating
Allocation Percentage and the amount of Principal Collections on such
Business Day.
(ii) For each Business Day with respect to the Amortization
Period prior to the Business Day on which an amount equal to the Class
C Invested Amount has been deposited in the Principal Account to be
applied to the payment of Class C Principal, in addition to amounts
allocated and paid to the Holder of the Exchangeable Transferor
Certificate pursuant to subsection 4.3(b) of the Agree ment, an amount
equal to the product of the Class D Fixed Allocation Percent age and
the amount of Principal Collections on such Business Day.
(iii) For each Business Day on and after the day on which
Principal Collections are being deposited in the Principal Account
pursuant to Section 4.9(c)(iv), the amount of payments made to the
Holder of the Exchangeable Transferor Certificate shall be determined
only as provided in subsection 4.3(b) of the Agreement.
Notwithstanding the foregoing, amounts payable to the Holders
of the Exchangeable Transferor Certificate pursuant to subsection 4.5(c)(i) or
(ii) shall instead be deposited in the Equalization Account to the extent
necessary to prevent the Trans feror Interest from being less than the Minimum
Transferor Interest.
The allocations to be made pursuant to this subsection 4.5(c)
also apply to deposits into the Collection Account that are treated as
Collections, including Adjust ment Payments, payment of the reassignment price
pursuant to Section 2.4(e) of the Agreement and proceeds from the sale,
disposition or liquidation of the Receivables pursuant to Section 9.2, 10.2(a),
12.1 or 12.2 of the Agreement and Section 3 of this Series Supplement, such
deposits to be treated as Collections and to be allocated as Finance Charge
Receivables or Principal Receivables as provided in the Agreement.
Section 4.6 DETERMINATION OF MONTHLY INTEREST FOR THE SERIES
1993-1 CERTIFICATES. (a) The amount of monthly interest (for the Series 1993-1
Certificates, the "Class A Interest") allocable to the Class A Certificates of
the Series 1993-1 Certifi cates with respect to any Monthly Period shall be an
amount equal to one-third of the product of (i) the Class A Certificate Rate and
(ii) the principal balance of the Class A Certificates as of the close of
business on the last day of the Monthly Period immedi ately preceding the
related interest accrual period.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "Class A Interest Shortfall") equal
to the excess, if any, of (x) the aggregate Class A Interest for the Interest
Accrual Period applicable to the Distribution Date OVER (y) the amount available
to be paid to the Class A Certificateholders in respect of interest on such
Distribution Date. If there is a Class A Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class A Additional Interest") shall be
payable as provided herein with respect to the Class A Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class A Interest Shortfall is paid to Class A
Certificateholders, equal to the product of (i) the Class A Certificate Rate and
(ii) such Class A Interest Shortfall remaining unpaid calculated on the basis of
the actual number of days in the related Interest Accrual Period over a year of
360 days. Notwith standing anything to the contrary herein, Class A Additional
Interest shall be payable or distributed to Class A Certificateholders only to
the extent permitted by applicable law.
(b) The amount of monthly interest (for the Series 1993-1
Certificates, the "Class B Interest") allocable to the Class B Certificates of
the Series 1993-1 Certifi cates with respect to any Monthly Period shall be an
amount equal to one-third of the product of (i) the Class B Certificate Rate and
(ii) the Class B Invested Amount as of the close of business on the last day of
the Monthly Period immediately preceding the related Interest Accrual Period
immediately preceding the related Interest Accrual Period.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "Class B Interest Shortfall") equal
to the excess, if any, of (x) the aggregate Class B Interest for the Interest
Accrual Period applicable to the Distribution Date OVER (y) the amount available
to be paid to the Class B Certifi cateholders in respect of interest on such
Distribution Date. If there is a Class B Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class B Additional Interest") shall be
payable as provided herein with respect to the Class B Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class B Interest Shortfall is paid to Class B
Certificateholders, equal to the product of (i) the Class B Certificate Rate and
(ii) such Class B Interest Shortfall remaining unpaid calculated on the basis of
the actual number
23
of days in the related Interest Accrual Period over a year of 360 days.
Notwithstanding anything to the contrary herein, Class B Additional Interest
shall be payable or distrib uted to Class B Certificateholders only to the
extent permitted by applicable law.
(c) The amount of monthly interest (for the Series 1993-1
Certificates, the "Class C Interest") allocable to the Class C Certificates of
the Series 1993-1 Certifi cates with respect to any Monthly Period shall be an
amount equal to one-third of the product of (i) the Class C Certificate Rate and
(ii) the Class C Invested Amount as of the close of business on the last day of
the preceding Monthly Period immediately preceding the related Interest Accrual
Period.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "Class C Interest Shortfall") equal
to the excess, if any, of (x) the aggregate Class C Interest for the Interest
Accrual Period applicable to the Distribution Date OVER (y) the amount available
to be paid to the Class C Certifi cateholders in respect of interest on such
Distribution Date. If there is a Class C Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class C Additional Interest") shall be
payable as provided herein with respect to the Class C Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class C interest Shortfall is paid to Class C
Certificateholders, equal to the product of (i) the Class C Certificate Rate and
(ii) such Class C Interest Shortfall remaining unpaid calculated on the basis of
the actual number of days in the related Interest Accrual Period over a year of
360 days. Notwithstanding anything to the contrary herein, Class C Additional
Interest shall be payable or distrib uted to Class C Certificateholders only to
the extent permitted by applicable law.
Section 4.7 DETERMINATION OF PRINCIPAL AMOUNTS. (a) The amount
of principal (for the Series 1993-1 Certificates, the "Class A Principal")
distributable from the Distribution Account with respect to the Class A
Certificates on each Distribution Date with respect to the Amortization Period
shall be equal to the largest Class A Con trolled Distribution Amount which does
not exceed an amount calculated as follows: the sum of (i) an amount equal to
the product of the Class A Fixed Allocation Percentage and the aggregate amount
of Principal Collections with respect to the three preceding Monthly Periods
(or, in the case of the first Distribution Date following the Negative Carry
Fill-up Date, the Class A Fixed Allocation Percentage of Principal Collections
received after the Negative Carry Fill-up Date and the Class A Fixed Allo cation
Percentage of any Principal Collection received on the Negative Carry Fill-up
Date to the extent not needed for deposit in the Negative Carry Account), (ii)
any amount on deposit in the Equalization Account allocated to the Class A
Certificates pursuant to subsection 4.9(d) with respect to the three preceding
Monthly Periods, (iii)
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the amount, if any, allocated to the Class A Certificates pursuant to
subsections 4.9(a)(v), (vi), (ix), (x) and (xii) and (IV) the amount of Shared
Principal Collections allocated to the Series 1993-1 Certificates with respect
to the three preceding Monthly Periods pursuant to Section 4.14; PROVIDED,
FURTHER, that with respect to any Distribution Date, Class A Principal may not
exceed the Class A Invested Amount; PROVIDED, FURTHER, that with respect to the
Scheduled Series 1993-1 Termination Date, the Class A Principal shall be an
amount equal to the Class A Invested Amount; PROVIDED, FURTHER, that no
distribution of Class A Principal shall be made which would reduce the Class A
Invested Amount to an amount less than $121,500,000 except for a payment in full
of the Class A Invested Amount.
(b) The amount of principal (for the Series 1993-1
Certificates, the "Class B Principal") distributable from the Distribution
Account with respect to the Class B Certificates on each Distribution Date,
beginning with the Class B Principal Payment Commencement Date, shall be an
amount equal to the largest Class B Controlled Distribution Amount which does
not exceed an amount calculated as fol lows: the sum of (i) an amount equal to
the product of the Class B Fixed Allocation Percentage and the aggregate amount
of Principal Collections with respect to the three preceding Monthly Periods
(or, in the case of the first Distribution Date following the date on which an
amount equal to the Class A Invested Amount is deposited in the Principal
Account to be applied to the payment of Class A Principal, the Class B Fixed
Allocation Percentage of Principal Collections from the date on which such
deposit is made), (ii) any amount on deposit in the Equalization Account
allocated to the Class B Certificates pursuant to subsection 4.9(d) with respect
to the three preceding Monthly Periods, (iii) the amount, if any, allocated to
the Class B Certificates pursuant to subsec tions 4.9(a)(v), (ix), (x) and (xii)
with respect to such Distribution Date and (iv) the amount of Shared Principal
Collections allocated to the Series 1993-1 Certificates with respect to the
three preceding Monthly Periods pursuant to Section 4.14 on and after the Class
B Principal Payment Commencement Date; PROVIDED HOWEVER that, with respect to
any Distribution Date Class B Principal shall not be distributable on any
Distribution Date in an amount less than the Class B Invested Amount; PROVIDED,
FURTHER, that with respect to any Distribution Date, Class B Principal may not
exceed the Class B Invested Amount; PROVIDED, FURTHER, that with respect to the
Scheduled Series 1993-1 Termina tion Date, the Class B Principal shall be an
amount equal to the Class B Invested Amount; PROVIDED, FURTHER, that no
distribution of Class A Principal shall be made which would reduce the Class A
Invested Amount to an amount less than $6,595,336.80 except for a payment in
full of the Class A Invested Amount.
(c) The amount of principal (for the Series 1993-1
Certificates, the "Class C Principal") distributable from the Distribution
Account with respect to the
25
Class C Certificates on each Distribution Date, beginning with the Class C
Principal Payment Commencement Date, shall be an amount equal to and calculated
as follows: the sum of (i) an amount equal to the product of the Class C Fixed
Allocation Percent age and the aggregate amount of Principal Collections with
respect to the three preceding Monthly Periods (or, in the case of the first
Distribution Date following the date on which an amount equal to the Class B
Invested Amount is deposited in the Principal Account to be applied to the
payment of Class B Principal, the Class C Fixed Allocation Percentage of
Principal Collections from the date on which such deposit is made), (ii) any
amounts on deposit in the Equalization Account allocated to the Class C
Certificates pursuant to subsection 4.9(d) with respect to the three preceding
Monthly Periods, (iii) the amount, if any, allocated to the Class C Certificates
pursuant to subsec tions 4.9(a)(v), (x) and (xii) with respect to such
Distribution Date and (iv) the amount of Shared Principal Collections allocated
to the Series 1993-1 Certificates with respect to the three preceding Monthly
Periods pursuant to Section 4.14 of the Agreement on and after the Class C
Principal Payment Commencement Date; PROVIDED that with re spect to any
Distribution Date, Class C Principal may not exceed the Class C Invested Amount;
PROVIDED, FURTHER, that with respect to the Scheduled Series 1993-1 Termina tion
Date, the Class C Principal shall be an amount equal to the Class C Invested
Amount.
(d) The amount of principal (for the Series 1993-1
Certificates, the "Class D Principal") distributable from the Distribution
Account with respect to the Class D Certificates on each Distribution Date,
beginning with the Class D Principal Payment Commencement Date, shall be an
amount equal to and calculated as follows: the sum of (i) an amount equal to the
product of the Class D Fixed Allocation Percent age of Principal Collections
with respect to the related Period (or, in the case of the first Distribution
Date following the date on which an amount equal to the Class C Invested Amount
is deposited in the Principal Account to be applied to the payment of Class C
Principal, the Class D Fixed Allocation Percentage of Principal Collections from
the date on which such deposit is made), (ii) any amount on deposit in the
Equalization Ac count allocated to the Class D Certificates pursuant to
subsection 4.9(d) with respect to the three preceding Monthly Periods, and (iii)
the amount, if any, allocated to the Class D Certificates pursuant to
subsections 4.9(a)(v) and (xii) with respect to such Distri bution Date and (iv)
the amount of Shared Principal Collections allocated to the Series 1993-1
Certificates with respect to the three preceding Monthly Periods pursuant to
Section 4.14 of the Agreement on and after the Class D Principal Payment
Commence ment Date; PROVIDED, HOWEVER, that with respect to the Scheduled Series
1993-1 Termination Date, the Class D Principal shall be an amount equal to the
Class D Invest ed Amount.
26
Section 4.8 [Reserved]
Section 4.9 APPLICATION OF FUNDS ON DEPOSIT IN THE COLLECTION
ACCOUNT FOR THE CERTIFICATES. (a) On each Business Day, the Servicer shall
deliver to the Trustee a Daily Report in which it shall instruct the Trustee to
withdraw, and the Trustee, acting in accordance with such instructions, shall
withdraw, to the extent of (x) the sum of (i) the Floating Allocation Percentage
of Finance Charge Collections available in the Collection Account and (ii)
investment earnings on amounts on deposit in the Principal Account (the
"Available Series 1993-1 Finance Charge Collections") plus (y) the Daily Cap
Proceeds Amount, if any, the amounts required to be withdrawn from the
Collection Account and the Cap Proceeds Account pursuant to subsections
4.9(a)(i) through 4.9(a)(xviii).
(i) CLASS A INTEREST. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw first from the Cap Proceeds Account,
to the extent of the Daily Cap Proceeds Amount for such Business Day,
and then from the Collection Ac count and deposit into the Interest
Funding Account for distribution on the next Distribution Date to the
Class A Certificateholders, to the extent of the Available Series
1993-1 Finance Charge Collections for such Business Day, an amount
equal to the lesser of (x) the Available Series 1993-1 Finance Charge
Collections and (y) the excess of (1) the sum of Class A Interest and
Carryover Class A Interest OVER (2) any amounts with respect thereto
previously deposited into the Interest Funding Account on any prior
Business Day during such Monthly Period. Notwithstanding anything to
the contrary herein, Carryover Class A Interest shall be payable or
distributable to Class A Certificateholders only to the extent
permitted by applicable law.
(ii) CLASS B INTEREST. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw first from the Cap Proceeds Account,
to the extent of the Daily Cap Proceeds Amount for such Business Day
(after giving effect to withdrawals pursuant to subsection 4.9(a)(i) of
the Agreement), and then from the Collection Account and deposit into
the Interest Funding Account for distribution on the next Distribution
Date to the Class B Certificateholders, to the extent of any Available
Series 1993-1 Finance Charge Collections remaining after giving effect
to the withdrawal pursuant to subsection 4.9(a)(i), an amount equal to
the lesser of (x) any such remaining Available Series 1993-1 Finance
Charge Collections and (y) the excess of (1) the sum of Class B
Interest and Carryover Class B Interest OVER (2) any amounts with
respect thereto previously deposited
27
into the Interest Funding Account on any prior Business Day during such
Monthly Period. Notwithstanding anything to the contrary herein,
Carryover Class B Interest shall be payable or distributable to Class B
Certificateholders only to the extent permitted by applicable law.
(iii) CLASS C INTEREST. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw first from the Cap Proceeds Account,
to the extent of the Daily Cap Proceeds Amount for such Business Day
(after giving effect to withdrawals pursuant to subsection 4.9(a)(i)
and (ii) of the Agreement), and then from the Collection Account and
deposit into the Interest Funding Account for dis tribution on the next
Distribution Date to the Class C Certificateholders, to the extent of
any Available Series 1993-1 Finance Charge Collections remaining after
giving effect to the withdrawal pursuant to subsections 4.9(a)(i) and
(ii), an amount equal to the lesser of (x) any such remaining Available
Series 1993-1 Finance Charge Collections and (y) the excess of (1) the
sum of Class C Interest and Carryover Class C Interest OVER (2) any
amounts with respect thereto previously deposited into the Interest
Funding Account on any prior Business Day during such Monthly Period.
Notwithstanding anything to the contrary herein, Carryover Class C
Monthly Interest shall be payable or distributable to Class C
Certificateholders only to the extent permitted by applicable law.
(iv) INVESTOR SERVICING FEE. On each Business Day on
which SRI or an Affiliate of SRI is not the Servicer, the Trustee,
acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and distribute to the Servicer, to
the extent of any Available Series 1993-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (iii), an amount equal to the lesser of
(x) any such remaining Available Series 1993-1 Finance Charge
Collections and (y) the excess of (i) the Servicing Fee for such
Monthly Period plus any unpaid Servicing Fees from prior Monthly
Periods over (ii) any amounts with respect thereto previously
distributed to the Servicer during such Monthly Period.
(v) INVESTOR DEFAULT AMOUNT. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of any
Available Series 1993-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (iv), an amount equal to the lesser of (x) any such remaining
Available Series 1993-1 Finance Charge Collections and (y) the sum of
(1) the aggregate Investor Default Amount for such Business Day
28
PLUS (2) the unpaid Investor Default Amount for any previous Business
Day during such Monthly Period, such amount to be (A) treated as Shared
Principal Collections during the Revolving Period, (B) during the
Amortization Period on and prior to the day on which an amount equal to
the Class A Invested Amount is deposited in the Principal Account,
deposited in the Principal Account for distribution to the Class A
Certificateholders on the next Distribution Date, (C) during the
Amortization Period, on and after the day on which such deposit to the
Principal Account with respect to the Class A Invested Amount has been
made and on and prior to the day on which an amount equal to the Class
B Invested Amount is deposited in the Principal Account, deposited in
the Principal Account for payment to the Class B Certificateholders on
the next Distribution Date, (D) during the Amortization Period, on and
after the day on which such deposit to the Principal Account with
respect to the Class B Invested Amount has been made and on and prior
to the day on which an amount equal to the Class C Invested Amount is
deposited in the Principal Account, deposited in the Principal Account
for payment to the Class C Certificateholders on the next Distribution
Date, and (E) on and after such deposit to the Principal Account with
respect to the Class C Invested Amount has been made, paid to the Class
D Certificateholders.
(vi) REIMBURSEMENT OF CLASS A INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 1993-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (v), an amount equal to the lesser of
(x) any such remaining Available Series 1993-1 Finance Charge
Collections and (y) the unreimbursed Class A Investor Charge-Offs, such
amount during the Revolving Period to be treated as Shared Principal
Collections, and during the Amortization Period on and prior to the day
on which an amount equal to the Class A Invested Amount is deposited in
the Principal Account to be deposited in the Principal Account for
distribution to the Class A Certificateholders on the next Distribution
Date.
(vii) UNPAID CLASS B INTEREST. On each Business Day,
the Trustee, acting in accordance with the instructions from the
Servicer, shall withdraw from the Collection Account and deposit in the
Interest Funding Account for distribution to the Class B
Certificateholders on the next Distribu tion Date, to the extent of any
Available Series 1993-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (vi), an amount equal to the lesser of (x) any such
29
remaining Available Series 1993-1 Finance Charge Collections and (y)
the sum of (1) the amount of interest which has accrued with respect to
the outstanding aggregate principal amount of the Class B Certificates
at the Class B Certificate Rate but which has not been deposited into
the Interest Funding Account or paid to the Class B Certificateholders
and (2) any additional interest at the Class B Certificate Rate for
interest that has accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was not deposited in the
Interest Funding Account or paid to the Class B Certificateholders.
(viii) UNPAID CLASS C INTEREST. On each Business Day,
the Trustee, acting in accordance with the instructions from the
Servicer, shall withdraw from the Collection Account and deposit in the
Interest Funding Account for distribution to the Class C
Certificateholders on the next Distribu tion Date, to the extent of any
Available Series 1993-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (vii), an amount equal to the lesser of (x) any such remaining
Available Series 1993-1 Finance Charge Collections and (y) the sum of
(1) the amount of interest which has accrued with respect to the
outstanding aggregate principal amount of the Class C Certificates at
the Class C Certificate Rate but which has not been deposited into the
Interest Funding Account or paid to the Class C Certificateholders and
(2) any additional interest at the Class C Certificate Rate for
interest that has accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was not deposited in the
Interest Funding Account or paid to the Class C Certificateholders.
(ix) REIMBURSEMENT OF CLASS B INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 1993-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (viii), an amount equal to the lesser
of (x) any such remaining Available Series 1993-1 Finance Charge
Collections and (y) the unreimbursed Class B Investor Charge-Offs, such
amount, (i) during the Revolving Period, to be treated as Shared
Principal Collections, (ii) during the Amortization Period, on and
prior to the day on which an amount equal to the Class A Invested
Amount is deposited in the Principal Account to be deposited in the
Principal Account for distribution to the Class A Certificateholders on
the next Distribution Date, and (iii) during the Amortization Period,
on and after the day on which such deposit has been made, to be
deposited in the Principal Account for payment to the Class B
Certificateholders on the next Distribution Date.
30
(x) REIMBURSEMENT OF CLASS C INVESTOR CHARGE-OFFS. On
each Business Day, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Collection Account, to the
extent of any Available Series 1993-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (ix), an amount equal to the lesser of
(x) any such remaining Available Series 1993-1 Finance Charge
Collections and (y) the unreimbursed Class C Investor Charge-Offs, such
amount, (i) during the Revolving Period, to be treated as Shared
Principal Collections, (ii) during the Amortization Period, on and
prior to the day on which an amount equal to the Class A Invested
Amount is deposited in the Principal Account, to be deposited in the
Principal Account for distribution to the Class A Certificateholders on
the next Distribution Date, (iii) during the Amortization Period, on
and after the date on which such deposit has been made and prior to the
date on which an amount equal to the Class B Invested Amount is
deposited in the Principal Account, to be deposited in the Principal
Account for payment to the Class B Certificateholders on the next
Distribution Date, and (iv) during the Amortization Period, on and
after the day on which such deposit has been made and on and prior to
the day on which an amount equal to the Class C Invested Amount is
deposited in the Principal Account, to be deposited in the Principal
Account for payment to the Class C Certificateholders on the next
Distribution Date.
(xi) CLASS D INTEREST. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay to the Class D
Certificateholders, to the extent of any Available Series 1993-1
Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (x), an amount
equal to the lesser of (x) any such remaining Available Series 1993-1
Finance Charge Collections and (y) the sum of (1) the amount of
interest which has accrued with respect to the outstanding aggregate
principal amount of the Class D Certificates at the Class D Certificate
Rate but which has not been paid to the Class D Certificateholders and
(2) any additional interest at the Class D Certificate Rate for
interest that has accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but not paid to the Class D
Certificateholders.
(xii) REIMBURSEMENT OF CLASS D INVESTOR CHARGE-OFFS. On each
Business Day, the Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Collection Account, to the extent
of any
31
Available Series 1993-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (xi), an amount equal to the lesser of (x) any such remaining
Available Series 1993-1 Finance Charge Collections and (y) the
unreimbursed Class D Investor Charge-Offs, such amount, (i) during the
Revolving Period, to be treated as Shared Principal Collections, (ii)
during the Amortization Period on and prior to the day on which an
amount equal to the Class A Invested Amount is deposited in the
Principal Account to be deposited in the Principal Account for
distribution to the Class A Certificateholders on the next Distribution
Date, (iii) during the Amortization Period, on and after the day on
which such deposit to the Principal Account with respect to the Class A
Invested Amount has been made and on and prior to the day on which an
amount equal to the Class B Invested Amount is deposited in the
Principal Account, deposited in the Principal Account for pay ment to
the Class B Certificateholders on the next Distribution Date, (iv)
during the Amortization Period on and after the day on which such
deposit to the Principal Account with respect to the Class B Invested
Amount has been made on and prior to the day on which an amount equal
to the Class C Invested Amount is deposited in the Principal Account,
deposited in the Principal Ac count for payment to the Class C
Certificateholders on the next Distribution Date and (v) on and after
the day such deposit to the Principal Account with respect to Class C
Invested Amount has been made, paid to the Class D Certifi cateholders.
(xiii) INVESTOR SERVICING FEE. On each Business Day,
if SRI or an Affiliate of SRI is the Servicer, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer, to the extent of
Available Series 1993-1 Finance Charge Collections for such Business
Day (after giving effect to the withdrawals pursuant to subsections
4.9(a)(i) through (xiii) of the Agreement), the Investor Servicing Fee
accrued since the preceding Business Day PLUS any Investor Servicing
Fee due with respect to any prior Business Day but not distributed to
the Servicer.
(xiv) [Reserved]
(xv) [Reserved]
(xvi) [Reserved]
32
(xvii) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts
re maining in the Collection Account to the extent of any Available
Series 1993-1 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsection 4.9(a)(i) through (xiii),
shall be treated as Excess Finance Charge Collections, and the Servicer
shall direct the Trustee in writing on each Business Day to withdraw
such amounts from the Collection Account and, FIRST, to make such
amounts available to pay to Certificateholders of other Series to the
extent of shortfalls, if any, in amounts payable to such
Certificateholders from Finance Charge Collections (but not from Excess
Finance Charge Collections) allocated to such other Series, SECOND, to
pay any unpaid com mercially reasonable costs and expenses of a
Successor Servicer, if any, THIRD, to make any required Adjustment
Payment that the Transferor has theretofore failed to make pursuant to
Section 3.8(a) with respect to any preceding Monthly Period, and
FOURTH, for the benefit of the Transferor, to apply any remaining
Excess Finance Charge Collections as provided in clause (xviii) below;
PROVID ED, HOWEVER, that on any Business Day during any Early
Amortization Period, the Trustee shall deposit any such remaining
Available Series 1993-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (a)(xvi), into the Interest Funding Account and shall add such
funds to the Available Series 1993-1 Finance Charge Collections on each
subsequent Business Day in such Monthly Period until the last Business
Day of the related Monthly Period, when the aggregate amount of such
remain ing Available Series 1993-1 Finance Charge Collections shall be
distributed as Excess Finance Charge Collections in accordance with
this subsection 4.9(a)(xvii) (without giving effect to this proviso).
(xviii) TRANSFEROR APPLICATION OF EXCESS FINANCE
CHARGE COLLECTIONS. On each Business Day the Trustee, acting in
accordance with instructions from the Servicer, shall apply, for the
benefit of the Transferor, any Excess Finance Charge Collections
pursuant to clause FOURTH of Section 4.9(a)(xvii) in the following
order:
(A) FIRST, to the extent provided in the
indenture governing the Trust Certificate-Backed Notes, to
transfer to the indenture trustee thereunder amounts required
to be paid or set aside in respect of principal and interest
on such Trust Certificate-Backed Notes;
(B) SECOND, if a Portfolio Imbalance Event
has occurred, to deposit in the Interest Funding Account for
distribution to the Class A Certificateholders on the next
Distribution Date, to the
33
extent of any Excess Finance Charge Collections remaining
after giving effect to the application pursuant to subsection
4.9(a)(xviii)(A), an amount equal to the lesser of (1) any
such remaining Excess Finance Charge Collections and (2) the
amount of any Class A Portfolio Imbalance Premium;
(C) THIRD, if an Early Repayment Event has
occurred, to deposit in the Interest Funding Account for
distribution to the Class A Certificateholders on the next
Distribution Date, to the extent of any Excess Finance Charge
Collections remaining after giving effect to the application
pursuant to subsections 4.9(a)(xviii)(A) and (B), an amount
equal to the lesser of (1) any such remaining Excess Finance
Charge Collections and (2) the unpaid Class A Early Pay Out
Amount;
(D) FOURTH, if an Early Repayment Event has
occurred, to deposit in the Interest Funding Account for
distribution to the Class B Certificateholders on the next
Distribution Date, to the extent of any Excess Finance Charge
Collections remaining after giving effect to the application
pursuant to subsections 4.9(a)(xviii)(A) through (C), an
amount equal to the lesser of (1) any such remaining Excess
Finance Charge Collections and (2) the unpaid Class B Early
Pay Out Amount;
(E) FIFTH, if an Early Repayment Event has
occurred, to deposit in the Interest Funding Account for
distribution to the Class C Certificateholders on the next
Distribution Date, to the extent of any Excess Finance Charge
Collections remaining after giving effect to the application
pursuant to subsections 4.9(a)(xviii)(A) through (D), an
amount equal to the lesser of (1) any such remaining Excess
Finance Charge Collections and (2) the unpaid Class C Early
Pay Out Amount; and
(F) SIXTH, any remaining Excess Finance
Charge Collections shall be paid to the Transferor.
(b) For each Business Day with respect to the Revolving
Period, the funds on deposit in the Collection Account to the extent of the
product of (i) the sum of the Class A Floating Allocation Percentage, the Class
B Floating Allocation Percentage and the Class C Floating Allocation Percentage
and (ii) Principal Collections with re spect to such Business Day will be
treated as Shared Principal Collections and applied,
34
pursuant to the written direction of the Servicer in the Daily Report for such
Business Day, as provided in subsection 4.3(e) of the Agreement.
(c) For each Business Day on and after the Amortization Period
Commencement Date, the amount of funds on deposit in the Collection Account as
described below will be distributed, pursuant to the written direction of the
Servicer in the Daily Report for such Business Day in the following priority:
(i) on and prior to the day on which an amount equal
to the Class A Invested Amount has been deposited in the Principal
Account to be applied to the payment of Class A Principal, an amount
(not in excess of the Class A In vested Amount) equal to the sum of (w)
the product of the Class A Fixed Allo cation Percentage and Principal
Collections in the Collection Account at the end of the preceding
Business Day, (x) any amount on deposit in the Equalization Account
allocated to the Class A Certificates on such Business Day pursuant to
subsection 4.9(d), (y) amounts to be paid pursuant to subsections
4.9(a)(v), (vi), (ix), (x) and (xii) on such Business Day and (z) the
amount of Shared Principal Collections allocated to the Series 1993-1
Certificates in accordance with Section 4.14 on such Business Day (such
sum, the "CLASS A DAILY PRINCIPAL AMOUNT"), will be deposited into the
Principal Account;
(ii) on and after the day on which an amount equal to
the Class A Invested Amount has been deposited in the Principal Account
to be applied to the payment of Class A Principal, an amount (not in
excess of the Class B Invested Amount) equal to the sum of (w) an
amount equal to the product of the Class B Fixed Allocation Percentage
and Principal Collections in the Collection Account at the end of the
preceding Business Day, (x) any amount on deposit in the Equalization
Account allocated to the Class B Certificates on such Busi ness Day
pursuant to subsection 4.9(d), (y) the amount, if any, allocated to be
paid to the Class B Certificates pursuant to subsections 4.9(a)(v),
(ix), (x) and (xii) with respect to such Business Day and (z) the
amount of Shared Principal Collections allocated to the Series 1993-1
Certificates in accordance with Sec tion 4.14 on such Business Day
(such sum, the "CLASS B DAILY PRINCIPAL AMOUNT") will be deposited into
the Principal Account;
(iii) on and after the day on which an amount equal
to the Class B Invested Amount has been deposited in the Principal
Account to be applied to the payment of Class B Principal, an amount
(not in excess of the Class C Invested Amount) equal to the sum of (w)
an amount equal to the product of the Class C Fixed Allocation
Percentage and Principal Collections in the Collection
35
Account at the end of the preceding Business Day, (x) any amount on
deposit in the Equalization Account allocated to the Class C
Certificates on such Busi ness Day pursuant to subsection 4.9(d), (y)
the amount, if any, allocated to be paid to the Class C Certificates
pursuant to subsections 4.9(a)(v), (x) and (xii) with respect to such
Business Day and (z) the amount of Shared Principal Collections
allocated to the Series 1993-1 Certificates in accordance with Sec tion
4.14 on such Business Day (such sum, the "CLASS C DAILY PRINCIPAL
AMOUNT") will be deposited into the Principal Account;
(iv) on and after the day on which an amount equal to
the Class C Invested Amount has been deposited in the Principal Account
to be applied to the payment of Class C Principal, an amount equal to
the sum of (v) the amount on deposit in the Negative Carry Account at
the end of the preceding Business Day, (w) an amount equal to the
product of the Class D Fixed Alloca tion Percentage and Principal
Collections in the Collection Account at the end of the preceding
Business Day, (x) any amount on deposit in the Equalization Account
allocated to the Class D Certificates on such Business Day pursuant to
subsection 4.9(d), (y) the amount, if any, allocated to be paid to the
Class D Certificates pursuant to subsections 4.9(a)(v) and (xii) with
respect to such Business Day and (z) subject to Section 4.15, the
amount of Shared Principal Collections allocated to the Series 1993-1
Certificates in accordance with Sec tion 4.14 on such Business Day
(such sum, the "CLASS D DAILY PRINCIPAL AMOUNT") will be distributed to
the Class D Certificateholders;
(v) except on any Early Pay Out Set Aside Date, an
amount equal to the excess, if any, of (A) the product of (x) the sum
of the Class A Fixed Allocation Percentage, the Class B Fixed
Allocation Percentage and the Class C Fixed Allocation Percentage and
(y) Principal Collections in the Collec tion Account at the end of the
preceding Business Day over (B) the sum of the amounts deposited in the
Principal Account pursuant to clauses (i)(w), (ii)(w) and (iii)(w)
above will be treated as Shared Principal Collections and applied as
provided in subsection 4.3(e) of the Agreement; and
(vi) on any Early Pay Out Set Aside Date, an amount equal to
the excess, if any, of (A) the product of (x) the sum of the Class A
Fixed Allocation Percentage, the Class B Fixed Allocation Percentage
and the Class C Fixed Allocation Percentage and (y) Principal
Collections in the Collection Account at the end of the preceding
Business Day over (B) the sum of the amounts deposited in the Principal
Account pursuant to clauses (i)(w), (ii)(w) and (iii)(w) above will be
applied as provided in Section 4.15.
36
(d) On the first Business Day of the Amortization Period funds
on deposit in the Equalization Account will be deposited in the Principal
Account to the extent of the lesser of (x) the Invested Amount and (y) the
product of (i) the product of (A) 100% minus the Transferor Percentage minus the
fixed allocation percentage represented by any Transferor Retained Certificates
and (B) the amount on deposit in the Equalization Account at the beginning of
the Amortization Period and (ii) the Senior Equalization Account Percentage with
respect to Series 1993-1. Any funds retained in the Equalization Account on any
subsequent day will be allocated to the Class A Certifi cates, the Class B
Certificates and the Class C Certificates to the extent that Default Amounts
allocated to the Transferor Interest or adjustments as described in Section 3.8
of the Agreement would cause the Transferor Interest to be less than the Minimum
Transferor Interest and, with respect to any credit adjustment, the Transferor
has not made an Adjustment Payment to the Collection Account in an amount equal
to the least of (i) the product of (A) the amount of such reduction below the
Minimum Transferor Interest and (B) the Senior Equalization Account Percentage
with respect to Series 1993-1, (ii) the product of (A) the amount of funds
available in the Equalization Account and (B) the Senior Equalization Account
Percentage and (iii) the sum of the Class A Adjusted Invested Amount, the Class
B Adjusted Invested Amount and the Class C Adjusted Invested. On any
Determination Date that occurs during the Amortization Period and prior to the
Class D Principal Payment Commencement Date on which a Class D Investor
Charge-Off is recorded, funds in the Equalization Account shall be allocated to
the Investor Certificates (other than the Class D Certificates) in an amount
equal to the lease of (i) the amount of such Class D Investor Charge-Off, (ii)
the product of (A) the amount of funds available in the Equalization Account and
(B) the Senior Equalization Account Percentage with respect to Series 1993-1 and
(iii) the aggregate remaining Class A Adjusted Invested Amount, Class B Adjusted
Invested Amount and the Class C Adjusted Invested Amount. The amounts allocated
in the preceding two sentences will be allocated, in accordance with written
instructions from the Servicer, in the following order of priority: (i) to the
Class A Certificates in an amount not to exceed the Class A Invested Amount
after subtracting therefrom any amounts to be deposited in the Principal Account
with respect thereto pursuant to sub sections 4.9(c)(i)(w) and (y), (ii) to the
Class B Certificates in an amount not to exceed the Class B Invested Amount
after subtracting therefrom any amounts to be deposited in the Principal Account
with respect thereto pursuant to subsections 4.9(c)(ii)(w) and (y), and (iii) to
the Class C Certificates in an amount not to exceed the Class C Invested Amount
after subtracting therefrom any amounts to be deposited in the Principal Account
with respect thereto pursuant to subsections 4.9(c)(iii)(w) and (y). On the day
on which an amount equal to the Class C Invested Amount has been deposited in
the Principal Account to be applied to the payment of Class C Principal, amounts
remaining on deposit in the Equalization Account will be allocated to the Series
1993-1
37
Certificates and deposited in the Principal Account in an amount not to exceed
the lesser of (i) the Class D Invested Amount after subtracting therefrom any
amounts to be deposited in the Principal Account with respect thereto pursuant
to subsections 4.9(c)(iv), (w) and (y) and (ii) the product of (A) such amounts
remaining on deposit and (B) a fraction, the numerator of which is the Class D
Invested Amount and the denominator of which is the sum of the invested amounts
of all Transferor Retained Classes of Series then in amortization periods on
such day (except that, to the extent such allocation and deposit would result in
the occurrence of the Trust Certificate-Backed Note Repayment Date, any portion
of such allocation and deposit in excess of the amount needed to cause such date
to occur shall instead be allocated as provided in Section 4.15).
(e) On the first business day following the occurrence of a
Portfolio Imbalance Event, funds on deposit in the Equalization Account will, in
accordance with written instructions from the Servicer, be deposited in the
Principal Account and allocated to Series 1993-1 to the extent of the Series
1993-1 Portfolio Correction Distribution Amount.
(f) Any application of funds pursuant to subsections
4.9(a)(xvii) or 4.9(d) shall not discharge the Transferor from its obligation to
make any Adjustment Payment pursuant to Section 3.8 of the Agreement.
Section 4.10 COVERAGE OF NEGATIVE CARRY AMOUNT AND REQUIRED
AMOUNT FOR THE SERIES 1993-1 CERTIFICATES. (a) To the extent that any amounts
are on deposit in the Principal Account or the Equalization Account on any
Business Day, the Servicer shall apply Transferor Finance Charge Collections in
an amount (the "NEGATIVE CARRY AMOUNT") equal to the excess of (x) the product
of (a) the Base Rate, (b) the amounts on deposit in the Principal Account and
the Equalization Account and (c) the number of days elapsed since the previous
Business Day DIVIDED by the actual number of days in such year over (y) the
aggregate amount of all earnings since the previous Business Day available from
the Cash Equivalents in which funds on deposit in the Equalization Account are
invested (the "Negative Carry Amount") in the manner specified for appli cation
of Available Series 1993-1 Finance Charge Collections in subsections 4.9(a)(i)
through (xiii). On each Business Day on and after the Negative Carry Fill-up
Date but prior to the day on which an amount equal to the Class C Invested
Amount has been deposited in the Principal Account to be applied to payment of
Class C Principal, to the extent of any Negative Carry Amount remaining after
application of Transferor Finance Charge Collections, the Servicer shall apply
all or a portion of the amount on deposit in the Negative Carry Account to the
extent of such remaining Negative Carry Amount
38
in the manner specified for application of Available Series 1993-1 Finance
Charge Collections in subsections 4.9(a)(i) through (xiii).
(b) To the extent that on any Business Day payments are being
made pursuant to any of subsections 4.9(a)(i) through (xiii), respectively, and
the full amount to be paid pursuant to any such subsection receiving payments on
such Business Day is not paid in full on such Business Day, the Servicer shall
apply all or a portion of the Excess Finance Charge Collections from other
Series with respect to such Business Day allocable to the Series 1993-1
Certificates in an amount (the "REQUIRED AMOUNT") equal to the excess of the
full amount to be allocated or paid pursuant to the applicable subsection over
the amount applied with respect thereto from Available Series 1993-1 Finance
Charge Collections, Transferor Finance Charge Collections and amounts on deposit
in the Negative Carry Account on such Business Day (the "Required Amount").
Excess Finance Charge Collections allocated to the Series 1993-1 Certificates
for any Business Day shall mean an amount equal to the product of (x) Excess
Finance Charge Collections available from all other Series for such Business Day
and (y) a fraction, the numerator of which is the Required Amount for such
Business Day and the denominator of which is the aggregate amount of shortfalls
in required amounts or other amounts to be paid from Finance Charge Collections
for all Series for such Business Day.
Section 4.11 PAYMENT OF CERTIFICATE INTEREST AND OTHER
AMOUNTS. On each Transfer Date, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
withdraw the amount on deposit in the Interest Funding Account with respect to
the three prior Monthly Periods allocable to the Series 1993-1 Certificates and
deposit such amount in the Distribution Account. On each Distribution Date, the
Paying Agent shall pay in accordance with Section 5.1 of the Agreement to (x)
the Class A Certificateholders from the Distribution Account such amount
deposited into the Distribution Account on the related Transfer Date allocable
thereto pursuant to subsection 4.9(a)(i), (xviii)(B) and (xviii)(C) and
subsections 4.15(a) and (b), (y) the Class B Certificateholders from the
Distribution Account the amount deposited into the Distribution Account
allocable thereto pursuant to subsections 4.9(a)(ii), (vii) and (xviii)(D) and
subsection 4.15(c) and (z) the Class C Certificateholders from the Distribution
Account the amount deposited into the Dis tribution Account allocable thereto
pursuant to subsections 4.9(a)(iii), (viii) and (xviii)(E) and subsection
4.15(d).
Section 4.12 PAYMENT OF CERTIFICATE PRINCIPAL. (a) On the
Transfer Date preceding each Distribution Date with respect to the Amortization
Period, the Trustee, acting in accordance with instructions from the Servicer
set forth in the Daily Report for such day, shall withdraw from the Principal
Account and deposit in the
39
Distribution Account an amount equal to but not less than the Class A Principal
for such Distribution Date. On each Distribution Date with respect to the
Amortization Period, the Paying Agent shall pay in accordance with Section 5.1
to the Class A Certificate holders from the Distribution Account such amount
deposited into the Distribution Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal
Payment Commencement Date and each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit in
the Distribution Account an amount equal to but not less than the Class B
Principal for such Distribution Date. On the Class B Principal Payment
Commencement Date, after the payment of any principal amounts to the Class A
Certificates on such day, and on each Distribution Date thereafter until the
Class B Invested Amount is paid in full, the Paying Agent shall pay in
accordance with Section 5.1 to the Class B Certificateholders from the
Distribution Account such amount deposited into the Distribution Account on the
related Transfer Date.
(c) On the Transfer Date preceding the Class C Principal
Payment Commencement Date and each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit in
the Distribution Account an amount equal to the lesser of the Class C Invested
Amount and the amount on deposit in the Principal Account allocable to the
Series 1993-1 Certificates (after giving effect to transfers pursuant to
subsection 4.12(a) and (b)). On the Class C Principal Payment Commencement Date,
after the payment of any principal amounts to the Class B Certifi cates on such
day, and on each Distribution Date thereafter until the Class C Invested Amount
is paid in full, the Paying Agent shall pay in accordance with Section 5.1 to
the Class C Certificateholders from the Distribution Account such amount
deposited into the Distribution Account on the related Transfer Date.
(d) On the day on which an amount equal to the Class C
Invested Amount has been deposited in the Principal Account to be applied to the
payment of Class C Principal and each Business Day thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall make payments of principal to the Class D
Certificateholder in accordance with subsection 4.9(c)(iv).
(e) On the Transfer Date preceding a Portfolio Correction
Distribution Date, the Trustee, acting in accordance with instructions from the
Servicer set forth in
40
the Daily Report for such date, shall withdraw from the Principal Account and
deposit in the Distribution Account an amount equal to the Series 1993-1
Portfolio Correction Distribution Amount. On the Portfolio Correction
Distribution Date, the Paying Agent shall pay in accordance with Section 5.1 to
the Class A Certificateholders from the Distribution Account such amount
deposited into the Distribution Account on the related Transfer Date.
Any amounts remaining in the Principal Account and allocable
to the Series 1993-1 Certificates, after the Class D Invested Amount has been
paid in full, will be treated as Shared Principal Collections and applied in
accordance with Section 4.3(e) of the Agreement.
Section 4.13 INVESTOR CHARGE-OFFS. (a) If, on any
Determination Date, the aggregate Investor Default Amount, if any, for each
Business Day in the preceding Monthly Period exceeded the Available Series
1993-1 Finance Charge Collections applied to the payment thereof pursuant to
subsection 4.9(a)(v) and the amount of Transferor Finance Charge Collections and
Excess Finance Charge Collections allocat ed thereto pursuant to subsection
4.10, the Class D Invested Amount will be reduced by the amount by which such
aggregate Investor Default Amount exceeds the amount applied with respect
thereto during such preceding Monthly Period (the "Class D Inves tor
Charge-Offs").
(b) In the event that any such reduction of the Class D
Invested Amount would cause the Class D Invested Amount to be a negative number,
the Class D In vested Amount will be reduced to zero, and, the Class C Invested
Amount will be reduced by the amount by which the Class D Invested Amount would
have been re duced below zero, but not more than the aggregate Investor Default
Amount for such Monthly Period (the "Class C Investor Charge-Offs").
(c) In the event that any such reduction of the Class C
Invested Amount would cause the Class C Invested Amount to be a negative number,
the Class C Invested Amount will be reduced to zero, and, the Class B Invested
Amount will be reduced by the amount by which the Class C Invested Amount would
have been reduced below zero, but not more than the aggregate Investor Default
Amount for such Monthly Period (the "Class B Investor Charge-Offs").
(d) In the event that any such reduction of the Class B
Invested Amount would cause the Class B Invested Amount to be a negative number,
the Class B Invested Amount will be reduced to zero, and the Class A Invested
Amount will be reduced by the amount by which the Class B Invested Amount would
have been reduced below
41
zero, but not more than the aggregate Investor Default Amount for such Monthly
Period (a "Class A Investor Charge-Off"). To the extent that on any subsequent
Business Day there is a positive balance of Available Series 1993-1 Finance
Charge Collections after giving effect to subsections 4.9(a)(i) through (v), the
Servicer will apply such excess Finance Charge Collections as provided in
subsection 4.9(a)(vi) to reimburse the aggre gate amount of Class A Investor
Charge-Offs not previously reimbursed, up to the amount so available.
(e) To the extent that on any Determination Date there is a
positive balance of the Available Series 1993-1 Finance Charge Collections after
giving effect to allocations and distributions pursuant to subsections 4.9(a)(i)
through (viii), the Servicer will apply such excess Finance Charge Collections
as provided in subsection 4.9(a)(ix) to reimburse the aggregate amount of Class
B Investor Charge-Offs not previously reimbursed, up to the amount so available.
(f) To the extent that on any Determination Date there is a
positive balance of the Available Series 1993-1 Finance Charge Collections after
giving effect to allocations and distributions pursuant to subsections 4.9(a)(i)
through (ix), the Servicer will apply such excess Finance Charge Collections as
provided in subsection 4.9(a)(x) to reimburse the aggregate amount of Class C
Investor Charge-Offs not previously reimbursed, up to the amount so available.
(g) To the extent that on any Determination Date there is a
positive balance of the Available Series 1993-1 Finance Charge Collections after
giving effect to allocations and distributions pursuant to subsections 4.9(a)(i)
through (xi), the Servicer will apply such excess Finance Charge Collections as
provided in subsection 4.9(a)(xii) to reimburse the aggregate amount of Class D
Investor Charge-Offs not previously reimbursed, up to the amount so available.
Section 4.14 SHARED PRINCIPAL COLLECTIONS. Shared Principal
Collections allocated to the Series 1993-1 Certificates and to be applied
pursuant to subsections 4.9(c)(i)(z), 4.9(c)(ii)(z), 4.9(c)(iii)(z) and
4.9(c)(iv)(z) for any Business Day with re spect to the Amortization Period
shall mean an amount equal to the product of (x) Shared Principal Collections
for all Series for such Business Day and (y) a fraction, the numerator of which
is the Principal Shortfall for the Series 1993-1 Certificates for such Business
Day and the denominator of which is the aggregate amount of Principal Shortfalls
for all Series for such Business Day. For any Business Day with respect to the
Revolving Period, Shared Principal Collections allocated to the Series 1993-1
Certificates shall be zero.
42
Section 4.15 CERTAIN PREPAYMENT PREMIUMS. On any Early Pay Out
Set Aside Date, Principal Collections allocated pursuant to subsection
4.9(c)(vi) and funds allocated pursuant to the final subsection 4.9(d) shall, in
accordance with written instructions from the Servicer, be applied as follows:
(a) FIRST, if a Portfolio Imbalance Event has occurred,
to deposit in the Interest Funding Account for
distribution to the Class A Certificateholders on the
next Distribution Date, an amount equal to the lesser
of (i) such Principal Collections and (ii) the amount
of any Class A Portfolio Imbalance Premium;
(b) SECOND, to deposit in the Interest Funding Account
for distribu tion to the Class A Certificateholders
on the next Distribution Date, to the extent of any
Principal Collections remaining after giving effect
to the application pursuant to subsection 4.15(a), an
amount equal to the lesser of (i) such remaining
Principal Collections and (ii) such unpaid Class A
Early Pay Out Amount;
(c) THIRD, to deposit in the Interest Funding Account for
distribution to the Class B Certificateholders on the
next Distribution Date, to the extent of any
Principal Collections remaining after giving effect
to the application pursuant to subsections 4.15(a)
and 4.15(b), an amount equal to the lesser of (i) any
such remaining Principal Collections and (ii) the
unpaid Class B Early Pay Out Amount;
(d) FOURTH, to deposit in the Interest Funding Account
for distribution to the Class C Certificateholders on
the next Distribution Date, to the extent of any
Principal Collections remaining after giving effect
to the applications pursuant to subsections 4.15(a),
(b) and (c), an amount equal to the lesser of (i) any
such remaining Principal Collections and (ii) the
unpaid Class C Early Pay Out Amount; and
(e) FIFTH, any such remaining Principal Collections shall
be treated as Shared Principal Collections and
applied as provided in subsection 4.3(e) of the
Agreement.
Section 4.16 DEFEASANCE. On any Business Day falling prior to
the Series 1993-1 Termination Date (but with not less than ten Business Days
prior written
43
notice from the Servicer to the Holders and to the Trustee), the Servicer may,
upon instruction from Transferor, cause the Series 1993-1 Certificates to be
prepaid in full (but not in part) by causing the undivided interest in the Trust
represented by the Series 1993-1 Certificates to be conveyed to one or more
Persons (who may be the holders of a new Series issued substantially
contemporaneously with such prepayment, which new Series may have a greater
undivided interest in the Trust than Series 1993-1) for a cash purchase price in
an amount equal to the sum of (a) the Invested Amount, PLUS (b) to the extent
not available from the Interest Funding Account, accrued and unpaid interest on
the Series 1993-1 Certificates through the effective date of such prepayment as
specified below, PLUS (c) to the extent not available from funds set aside
pursuant to subsection 4.9(a)(xviii)or Section 4.15, any Class A Early Pay Out
Amount, Class B Early Pay Out Amount or Class C Early Pay Out Amount arising as
a result of such prepayment (except that each reference to "January 1, 2000" in
the definition of each such Early Pay Out Amount shall, for purposes of this
subsection, be deemed to be "March 15, 2000"). No such prepayment or conveyance
shall, however, be permitted if as a result thereof Transferor or any of its
Affiliates would increase its undivided interest in the Receivables, and the
Trustee shall be entitled to receive and rely on an officer's certificate to the
effect that no such increase will result therefrom. The purchase price shall be
directly deposited in the Principal Account for distribution to the Holders on
the next upcoming Distribution Date, which Distribution Date shall be the
effective date of the prepayment and conveyance described above.
SECTION 7. ARTICLE V OF THE AGREEMENT. Article V of the
Agreement shall read in its entirety as follows and shall be applicable only to
the Series 1993-1 Certificates:
ARTICLE IV
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
Section 5.1 DISTRIBUTIONS. (a) on each Distribution Date, the
Paying Agent shall distribute (in accordance with the Settlement Statement
delivered by the Servicer to the Trustee and the Paying Agent pursuant to
subsection 3.4(c) of the Agreement) to each Class A Certificateholder of record
on the preceding Record Date (other than as provided in subsection 2.4(d) or in
Section 12.3 of the Agreement respecting a final distribution) such
Certificateholder's PRO RATA share (based on the aggregate Undivided Interests
represented by Class A Certificates held by such Certifi cateholder) of amounts
on deposit in the Distribution Account as are payable to the Class A
Certificateholders pursuant to Sections 4.11 and 4.12 hereof by wire transfer
44
to each Class A Certificateholder to an account or accounts designated by such
Class A Certificateholder by written notice given to the Paying Agent not less
than five days prior to the related Distribution Date; PROVIDED, HOWEVER, that
the final payment in re tirement of the Class A Certificates will be made only
upon presentation and surrender of the Class A Certificates at the office or
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3 of the Agreement.
(b) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c) of
the Agreement) to each Class B Certi ficateholder of record on the preceding
Record Date (other than as provided in subsection 2.4(d) or in Section 12.3 of
the Agreement respecting a final distribution) such Certificateholder's PRO RATA
share (based on the aggregate Undivided interests represented by Class B
Certificates held by such Certificateholder) of amounts on deposit in the
Distribution Account as are payable to the Class B Certificateholders pursuant
to Section 4.11 and 4.12 hereof by wire transfer to each Class B Certificate
holder to an account or accounts designated by such Class B Certificateholder by
written notice given to the Paying Agent not less than five days prior to the
related Dis tribution Date; PROVIDED, HOWEVER, that the final payment in
retirement of the Class B Certificates will be made only upon presentation and
surrender of the Class B Certifi cates at the office or offices specified in the
notice of such final distribution delivered by the Trustee pursuant to Section
12.3.
(c) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c) of
the Agreement) to each Class C Certi ficateholder of record on the preceding
Record Date (other than as provided in subsection 2.4(d) or in Section 12.3 of
the Agreement respecting a final distribution) such Certificateholder's PRO RATA
share (based on the aggregate Undivided interests represented by Class C
Certificates held by such Certificateholder) of amounts on deposit in the
Distribution Account as are payable to the Class C Certificateholders pursuant
to Section 4.11 and 4.12 hereof by wire transfer to each Class C Certificate
holder to an account or accounts designated by such Class C Certificateholder by
written notice given to the Paying Agent not less than five days prior to the
related Dis tribution Date; PROVIDED, HOWEVER, that the final payment in
retirement of the Class C Certificates will be made only upon presentation and
surrender of the Class C Certificates at the office or offices specified in the
notice of such final distribution delivered by the Trustee pursuant to Section
12.3 of the Agreement.
45
Section 5.2 CERTIFICATEHOLDERS' STATEMENT. (a) On the 15th day
of each calendar month (or if such day is not a Business Day the next succeeding
Business Day), the Paying Agent shall forward to each Certificateholder and the
Rating Agency a statement substantially in the form of Exhibit C prepared by the
Servicer and delivered to the Trustee and the Paying Agent on the preceding
Determination Date setting forth the following information (which, in the case
of (i), (ii) and (iii) below, shall be stated on the basis of an original
principal amount of $1,000 per Certificate and, in the case of (ix) and (x),
shall be stated on an aggregate basis and on the basis of an original principal
amount of $1,000 per Certificate):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to
Certificate Principal;
(iii) the amount of such distribution allocable to
Certificate Interest;
(iv) the amount of Principal Collections received in
the Collection Account during the preceding Monthly Period and
the three preceding Monthly Periods and allocated in respect
of the Class A Certificates, the Class B Certificates, the
Class C Certificates and the Class D Certificates,
respectively;
(v) the amount of Finance Charge Collections
processed during the three preceding Monthly Periods and
allocated in respect of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D
Certificates, respectively;
(vi) the aggregate amount of Principal Receivables,
the Invested Amount, the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount, the Class D
Invested Amount, the Floating Allocation Percentage and,
during the Amortization Period, the Class A Fixed Allocation
Percentage, Class B Fixed Allocation Percentage, or Class C
Fixed Allocation Percentage as applicable, with respect to the
Principal Receivables in the Trust as of the end of the day on
the Record Date;
(vii) the aggregate outstanding balance of Accounts
which are current, current/delinquent, 30, 60, 90, 120, 150
and 180 days delinquent as of the end of the day on the Record
Date;
46
(viii) the aggregate Investor Default Amount and the
Default Amount for the preceding Monthly Period and the three
preceding Monthly Periods;
(ix) the aggregate amount of Class A Investor
Charge-Offs, Class B Investor Charge-Offs, Class C Investor
Charge-Offs and Class D Investor Charge-Offs for the three
preceding Monthly Periods;
(x) the aggregate amount of the Servicing Fees for
the three preceding Monthly Periods;
(xi) the Class A Pool Factor, the Class B Pool
Factor, the Class C Pool Factor and the Class D Pool Factor as
of the end of the last day of the Monthly Period immediately
preceding the Determination Date;
(xii) the amount paid on the Interest Rate Cap;
(xiii) the current rating from the Rating Agency for
each class of Investor Certificates;
(xiv) the aggregate amount of funds in the
Equalization Account as of the last day of the Monthly Period
immediately preceding the Distribution Date;
(xv) the Class A Certificate Rate, the Class B
Certificate Rate, the Class C Certificate Rate and the Class D
Certificate Rate; and
(xvi) the Applicable Reserve Ratio for the current
Monthly Period.
(b) ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before
January 31 of each calendar year, beginning with calendar year 1994, the Trustee
shall distribute to each Person who at any time during the preceding calendar
year was a Series 1993-1 Certificateholder, a statement prepared by the Servicer
containing the information re quired to be contained in the regular report to
Series 1993-1 Certificateholders, as set forth in subclauses (i), (ii) and (iii)
above, aggregated for such calendar year or the applicable portion thereof
during which such Person was a Series 1993-1 Certificate holder, together with
such other customary information (consistent with the treatment of the
Certificates as debt) as the Trustee or the Servicer deems necessary or
desirable to enable the Series 1993-1 Certificateholders to prepare their tax
returns. Such
47
obligations of the Trustee shall be deemed to have been satisfied to the extent
that sub stantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
SECTION 8. SERIES 1993-1 PAY OUT EVENTS. If any one of the
following events shall occur with respect to the Series 1993-1 Certificates:
(a) failure on the part of the Transferor (i) to make any
payment or deposit required to be made by the Transferor by the terms of (A) the
Agreement or (B) this Series Supplement, on or before the date occurring five
Business Days after the date such payment or deposit is required to be made
herein or (ii) duly to observe or perform in any material respect any covenants
or agreements of the Transferor set forth in the Agreement or this Series
Supplement, which failure has a material adverse effect on the Series 1993-1
Certificateholders and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Holders of Series 1993-1 Certificates
evidencing Undivided Interests aggregating not less than 50% of the Invested
Amount of this Series 1993-1, and continues to affect materially and adversely
the interests of the Series 1993-1 Certi ficateholders for such period;
(b) any representation or warranty made by the Transferor in
the Agreement or this Series Supplement, or any information contained in a
computer file or microfiche list required to be delivered by the Transferor
pursuant to Section 2.1 or 2.6 of the Agreement, (i) shall prove to have been
incorrect in any material respect when made or when delivered, which continues
to be incorrect in any material respect for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Transferor by the Trustee, or to the Transferor and
the Trustee by the Holders of the Series 1993-1 Certificates evidencing
Undivided Interests aggregating more than 50% of the Invested Amount of this
Series 1993-1, and (ii) as a result of which the interests of the Series 1993-1
Certificateholders are materially and adversely affected and continue to be
materially and adversely affected for such period; PROVIDED, HOWEVER, that a
Series 1993-1 Pay Out Event pursuant to this subsection 8(b) shall not be deemed
to have occurred hereunder if the Transferor has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of the Agreement;
48
(c) the average of the Portfolio Yields for any three
consecutive Monthly Periods is reduced to a rate which is less than the weighted
average of the Base Rates for such three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than the Minimum
Transferor Interest, (ii) the Retained Interest is less than the Minimum
Retained Interest or (iii) the amount of Principal Receivables in the Trust and
the amount on deposit in the Equalization Account shall be less than the Minimum
Aggregate Principal Receivables, in each case for 15 consecutive days;
(e) any Servicer Default shall occur which would have a
material adverse effect on the Series 1993-1 Certificateholders;
then, in the case of any event described in subparagraph (a),
(b) or (e), after the applicable grace period, if any, set forth in such
subparagraphs, the Holders of Series 1993-1 Certificates evidencing Undivided
Interests aggregating more than 50% of the Invested Amount of any class of this
Series 1993-1 by notice then given in writing to the Trustee, the Transferor and
the Servicer may declare that a pay out event (a "SERIES 1993-1 PAY OUT EVENT")
has occurred as of the date of such notice, and in the case of any event
described in subparagraphs (c) or (d), a Series 1993-1 Pay Out Event shall occur
without any notice or other action on the part of the Trustee or the Series
1993-1 Certificateholders immediately upon the occurrence of such event.
Furthermore, if a Series 1993-1 Pay Out Event shall be occur, then the Holders
of the Class A Certificates shall receive the Class A Early Pay Out Amount to
the extent of amounts allocated with respect thereto pursuant to subsection
4.9(a)(xvii)(C), the Holders of the Class B Certificates shall receive the Class
B Early Pay Out Amount to the extent of amounts allocated with respect thereto
pursuant to subsection 4.9(a)(xvii)(D) and the Holders of the Class C
Certificates shall receive the Class C Early Pay Out Amount to the extent of
amounts allocated with respect thereto pursuant to subsection 4.9(a)(xvii)(E) in
addition to payments of principal and accrued interest otherwise payable to the
Holders of the Class A Certificates, the Class B Certificates and the Class C
Certificates pursuant to the provisions hereof.
SECTION 9. SERIES 1993-1 TERMINATION. The right of the Series
1993-1 Certificateholders to receive payments from the Trust will terminate on
the first Busi ness Day following the Series 1993-1 Termination Date unless such
Series is an Affected Series as specified in Section 12.1(c) of the Agreement
and the sale contem plated therein has not occurred by such date, in which event
the Series 1993-1 Certificateholders shall remain entitled to receive proceeds
of such sale when such sale occurs.
49
SECTION 10. PERIODIC FINANCE CHARGES AND OTHER FEES. The
Transferor hereby agrees that, except as otherwise required by any Requirement
of Law, or as is deemed by the Transferor to be necessary in order for the
Transferor to maintain its credit card business, based upon a good faith
assessment by the Transferor, in its sole discretion, of the nature of the
competition in the credit card business, it shall not at any time reduce the
Periodic Finance Charges assessed on any Receivable or other fees on any Account
if, as a result of such reduction, the Transferor's reasonable expectation of
the Portfolio Yield as of such date would be less than the Base Rate.
SECTION 11. LEGENDS; TRANSFER AND EXCHANGE; RESTRICTIONS ON
TRANSFER OF SERIES 1993-1 CERTIFICATES; TAX TREATMENT.
(a) Each Series 1993-1 Certificate will bear a legend
substantially in the following form:
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW AND
THE ADDITIONAL CONDITIONS TO TRANSFER SPECIFIED IN THE AGREEMENT
REFERRED TO BELOW SHALL HAVE BEEN SATISFIED.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECU RITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
(b) Upon surrender for registration of transfer of any Series
1993-1 Certificate at the office of the Transfer Agent and Registrar,
accompanied by a certifica tion by the Series 1993-1 Certificateholder
substantially in the form attached as Exhibit D if the new purchaser is a
"qualified institutional buyer" as defined in Rule 144A under the Securities Act
of 1933, or in the form attached as Exhibit E if the new purchaser is not a
"qualified institutional buyer," and by a written instrument of transfer in the
form approved by the Transferor and the Trustee (it being understood that, until
notice to the contrary is given to Series 1993-1 Certificateholders, the
Transferor and the Trustee shall each be deemed to have approved the form of
instrument of transfer, if any printed on any definitive Series 1993-1
Certificate), executed by the registered owner, in person or by such Series
1993-1 Certificateholder's attorney thereunto duly authorized in writing, such
Series 1993-1 Certificate shall be transferred upon the register, and the
Transferor shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferees one or more new registered Series 1993-1
Certificate of any authorized denominations and of a like aggregate principal
amount and tenor. Transfers and exchanges of Series 1993-1 Certificates shall be
subject to such restrictions as shall be set forth in the text of the Series
1993-1 Certificates and such reasonable regulations as may be prescribed by the
Transferor. Successive registrations and registrations of transfers as aforesaid
may be made from time to time as desired, and each such registration shall be
noted on the register.
(c) In no event shall the Class D Certificates or any interest
therein be transferred, sold, exchanged, pledged, participated or otherwise
assigned hereunder, in whole or in part, unless: (i) the Servicer shall have
provided an Officer's Certificate to the Trustee to the effect that such sale,
exchange, pledge, participation and assignment will not materially adversely
affect the interests of the Certificateholders, (ii) the Trustee shall have been
delivered an Opinion of Counsel to the effect that (A) any securities or
interests issued in conjunction with such sale, exchange, pledge, participation
and assignment and sold to third parties will be characterized as either
indebtedness or partnership interests (other than interests in a publicly traded
partnership) for Federal and applicable state income tax purposes, (B) such
sale, exchange, pledge, participation and assignment or such issuance will not
adversely affect the Federal and applicable state income tax characterization of
any outstanding Series of Investor Certificates, and (C) such sale, exchange,
pledge, participation and assignment or such issuance will not result in the
Trust being subject to tax at the entity level for Federal or applicable state
income tax purposes, (iii) the Servicer shall have provided at least ten
Business Days prior written notice to each Rating Agency and the Trustee of such
sale, exchange, pledge, participation and assignment and shall have received
written confirmation from each Rating Agency to the effect of the original
rating of any Series or any class of any Series will not be reduced or withdrawn
as a result of such sale, exchange, pledge, participation and assignment, (iv)
the holders of any securities or interests issued in conjunction with such sale,
exchange, pledge,
50
participation and assignment (or any trustee or collateral agent on their
behalf) (A) will have no right to foreclose upon the Class D Certificates or
exercise any voting rights as a Class D Certificateholder unless and until all
outstanding Investor Certificates (other than the Class D Certificates) and all
outstanding investor certificates (other than any Transferor Retained
Certificates) have been paid in full and (B) covenant and agree that, prior to
the date which is one year and one day after the payment in full of all
outstanding investor certificates issued by the Trust, none of them will
institute against, or join any other Person in instituting against, the
Transferor any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States, and the Trustee shall have received an
Officer's Certificate to that effect.
(d) Each Certificateholder, by accepting and holding such
Certificate or interest therein, will be deemed to have represented and
warranted that it is not (i) an employee benefit plan (as defined in Section
3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Code, or (iii) any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity.
(e) The Class C Certificateholders shall comply with their
obligations under Section 3.7 of the Agreement with respect to the tax treatment
of the Class C Certificates, except to the extent that a relevant taxing
authority has disallowed such treatment. In addition, the Transferor and the
Trustee shall not be required to recognize any transfer of an interest in a
Class C Certificate unless the transferor of such interest shall deliver to the
Transferor and the Trustee an Opinion of Counsel in form and substance
satisfactory to the Transferor and the Trustee to the effect that such transfer
will not cause the Trust to be treated as a "publicly traded partnership"
taxable as a corporation under Section 7704 of the Code.
SECTION 12. RATIFICATION OF AGREEMENT. As supplemented by this
Series Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Series Supplement shall be read, taken,
and construed as one and the same instrument.
SECTION 13. COUNTERPARTS. This Series Supplement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an orig inal, but all of such counterparts shall together
constitute but one and the same instrument.
51
SECTION 14. GOVERNING LAW. THIS SERIES SUPPLEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 15. THE TRUSTEE. The Trustee shall not be responsible
in any manner whatsoever for or in respect of the sufficiency of this Series
Supplement or for or in respect of the Preliminary Statement contained herein,
all of which recitals are made solely by the Transferor.
SECTION 16. INSTRUCTIONS IN WRITING. All instructions or other
communications given by the Servicer or any other person to the Trustee pursuant
to this Series Supplement shall be in writing, and, with respect to the
Servicer, may be in cluded in a Daily Report or Settlement Statement.
SECTION 17. NEGATIVE CARRY ACCOUNT. (a) The Trustee, for the
benefit of the Series 1993-1 Certificateholders, shall establish and maintain
with a Qualified Institution, in the name of the Trust, a certain segregated
trust account (the "Negative Carry Account"). The Transferor does hereby
transfer, assign, set-over, and otherwise convey to the Trust for the benefit of
the Certificateholders, without recourse, all of its right, title and interest
in, to and under:
(i) the Negative Carry Account, all funds, and all
certificates and instruments, if any, from time to time representing or
evidencing or held in the Negative Carry Account;
(ii) all eligible investments of amounts on deposit in the
Negative Carry Account from time to time and all certificates and instruments,
if any, from time to time representing or evidencing such eligible investments;
(iii) all notes, certificates of deposit and other instruments
from time to time hereafter delivered to or otherwise possessed by the Trustee
for and on behalf of the Transferor in substitution for or in addition to any of
the then existing Negative Carry Account property;
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
52
respect of or in exchange for any and all of the existing Negative Carry Account
property; and
(v) all additional property that may from time to time
hereafter be assigned or pledged to the Trustee for the benefit of the
Certificate holders hereunder by the Transferor or by any Person on the
Transferor's behalf.
(b) Beginning on the Amortization Period Commencement Date and
continuing until the date (the "Negative Carry Fill-up Date") on which $486,000
has been deposited in the Negative Carry Account, the Servicer shall instruct
the Trustee to withdraw the following funds and deposit them into the Negative
Carry Account: (i) on the Amortization Period Commencement Date only,
notwithstanding the references to the Principal Account in the fifth sentence of
subsection 4.3(f) of the Agreement and in the first sentence of subsection
4.9(d) of this Supplement, the amount described in such sentences; (ii) the
Fixed Allocation Percentage of Principal Collections; and (iii) any amounts
allocated to subsections 4.9(a)(v), (vi), (ix), (x), (xii) and (xiii). Amounts
on deposit in the Negative Carry Account shall be allocable to the Series 1993-1
Certifi cates in payment of Negative Carry Amounts, in accordance with
subsection 4.10(a) of the Agreement. Funds in the Negative Carry Account shall
be invested at the direction of the Servicer, in Cash Equivalents with
maturities not later than the next succeeding Business Day. Any earnings on such
invested funds shall be deposited and held in the Negative Carry Account and
applied in the same manner and priority as other amounts therein.
SECTION 18. NOTICES; CREDIT AND COLLECTION POLICY COMPLIANCE
AND CHANGES; DAILY REPORTS. (a) A copy of each notice, demand, direction,
report, officer's Certificate or other certificate, election or opinion required
to be sent or delivered to the Rating Agency or the Trustee pursuant to Sections
2.6(c), 2.6(d), 2.6(e)(i), 3.5, 3.6(a) and 6.9(b) of the Agreement shall also be
sent or delivered to each Investor Certificate holder.
(b) The Transferor shall provide each Class A and each Class B
Certificateholder at least 12 days prior written notice of the amount of Class A
Principal or Class B Principal, respectively, to be paid on each Distribution
Date during the Amortization Period.
(c) The Transferor shall cause the Originators to comply with
and perform their obligations under the Credit and Collection Policy except
insofar as any failure to comply or perform would not materially and adversely
affect the rights
53
of the Trust or the Certificateholders hereunder and the Transferor shall not
cause, suffer or permit an originator to make a change to the Credit and
Collection Policy that would result in a violation of the Transferor's
obligations under Section 2.5(c) of the Agreement (regardless of any failure by
such originator to notify the Transferor of such action or to obtain the
Transferor's consent thereto). In addition, the Transferor shall provide notice
to the Certificateholders hereunder of any material change in the Credit and
Collection Policy.
(d) Upon written request by an Investor Certificateholder, the
Servicer shall furnish a copy of each Daily Report to such Investor
Certificateholder.
SECTION 19. RATINGS RECONFIRMATIONS. The Transferor shall not
be permitted to remove Accounts pursuant to Section 2.7(b) of the Agreement, to
exchange the Exchangeable Transferor Interest for a new issue of Investor
Certificates pursuant to Section 6.9(b) of the Agreement, engage in a merger,
consolidation, conveyance or transfer pursuant to Section 7.2 of the Agreement
or add Automatic Additional Accounts pursuant to clause (b) of the definition
thereof unless, in connection with such events, the Rating Agencies shall
deliver a written confirmation of their original ratings on the Investor
Certificates, to the Trustee.
54
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Amended and Restated Series 1993-1 Supplement to be
duly executed by their respective officers as of the day and year first above
written.
SRI RECEIVABLES PURCHASE CO., INC.
Transferor
By:
Name:
Title:
SPECIALTY RETAILERS, INC.
Servicer
By:
Name:
Title:
BANKERS TRUST (DELAWARE)
Trustee
By:
Name:
Title:
55
[FORM OF CLASS A INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW AND THE ADDITIONAL
CONDITIONS TO TRANSFER SPECIFIED IN THE AGREEMENT REFERRED TO BELOW
SHALL HAVE BEEN SATISFIED.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___ $_________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS A-1 CERTIFICATE,
SERIES 1993-1
Evidencing an undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business from
a portfolio of consumer revolving credit card accounts generated or to be
generated by certain subsidiaries (collectively, the "SRI SUBSIDIARIES") of
Specialty Retailers, Inc. ("SRI" or the "SERVICER") and other assets and
interests constituting the Trust under the Agreement described below.
A-1-1
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that _________ (the "CERTIFICATEHOLDER") is the
registered owner of a fractional undivided interest in the SRI Receivables
Master Trust (the "TRUST") issued pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of August 11, 1995 (the "Pooling and Servicing
Agreement"; such term to include any amendment thereto) by and between SRI
Receivables Purchase Co., Inc., as Transferor (the "TRANSFEROR"), SRI as the
Servicer, and Bankers Trust (Delaware), as Trustee (the "TRUSTEE"), and the
Series 1993-1 Supplement, dated as of July 30, 1993 (the "SERIES 1993-1
SUPPLEMENT"), among the Transferor, SRI as Servicer and the Trustee. The Pooling
and Servicing Agreement, as supplemented by the Series 1993-1 Supplement, is
herein referred to as the "Agreement"). The corpus of the Trust consists of all
of the Transferor's right, title and interest in, to and under (i) the Trust
Property (as defined in the Agreement) and (ii) the property described in
Sections 3A and 17 of the Series 1993-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class A-1 Certificates, Series 1993-1"
(the "CLASS A CERTIFICATES"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class A
Certificates, the SRI Receivables Master Trust Floating Rate Class B-1
Certificates, Series 1993-1 (the "CLASS B CERTIFICATES") and the SRI Receivables
Master Trust Floating Rate Class C-1 Certificates, Series 1993-1 (the "CLASS C
CERTIFICATES," and collectively with the Class A Certificates and the Class B
Certificates, the "OFFERED CERTIFICATES") with the intention that the Offered
Certificates will qualify under applicable tax law as indebtedness, and both the
Transferor and each holder of a Class A Certificate (a "CLASS A
CERTIFICATEHOLDER") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class A Certificates as indebtedness
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income..
No principal will be payable to the Class A Certificateholders
until the first Distribution Date in the Amortization Period. No principal will
be payable to the
A-1-2
Class B Certificateholders, Class C Certificateholders or Class D
Certificateholders until all principal payments have been made to the Class A
Certificateholders.
Interest will accrue on the unpaid principal amount of the
Class A Certificates at a per annum rate equal to 4.1325% per annum with respect
to the initial Interest Accrual Period and, with respect to each subsequent
Interest Accrual Period at a per annum rate of 0.82% in excess of LIBOR
prevailing on the related Rate De termination Date, calculated on the basis of
the actual number of days elapsed in such Subsequent Interest Accrual Period
over a year of 360 days (the "CLASS A CERTIFICATE RATE") and, except as
otherwise provided in the Agreement, will be distributed to Certif icateholders
on the third Wednesday of each March, June, September and December (or, if such
day is not a Business Day, on the next succeeding Business Day) (each a "DIS
TRIBUTION DATE"), commencing September 15, 1993. On the earlier of the December
1999 Distribution Date or the first Distribution Date following the occurrence
of a Pay Out Event interest and principal will be distributed to the Class A
Certificateholders quarterly on each Distribution Date prior to the Series
Termination Date. Interest for any Distribution Date will include accrued
interest at the Class A Certificate Rate from and including the preceding
Distribution Date or, in the case of the first Distribution Date from and
including the Closing Date, to but excluding such Distribution Date. Interest
for any Distribution Date due but not paid on any Distribution Date will be due
on the next succeeding Distribution Date together with, to the extent permitted
by applicable law, additional interest on such amount at the Class A Certificate
Rate.
Subject to the Agreement, payments of principal are limited to
the unpaid Class A Invested Amount of the Class A Certificates, which may be
less than the unpaid balance of the Class A Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class A Certificates is
due and payable no later than the January 2003 Distribution Date (or if such day
is not a Business Day, the next succeed ing Business Day) (the "SERIES
TERMINATION DATE"). After the Series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class A Certificates. In the event that the Class A Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allo cable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificate holders pro rata in final payment of the
Class A Certificates, then to the Class B Certifi cateholders pro rata in final
payment of the Class B Certificates, then to the Class C Certificateholders pro
rata in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
A-1-3
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 Agreement, or be valid for any
purpose.
A-1-4
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-1-5
[FORM OF CLASS B INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW AND THE ADDITIONAL
CONDITIONS TO TRANSFER SPECIFIED IN THE AGREEMENT REFERRED TO BELOW
SHALL HAVE BEEN SATISFIED.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___ $_________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS B-1 CERTIFICATE, SERIES 1993-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of consumer revolving credit card accounts
generated or to be generated by certain subsidiaries (collectively, the "SRI
SUBSIDIARIES") of Specialty Retailers, Inc. ("SRI" or the "SERVICER") and other
assets and interests constituting the Trust under the Agreement described below.
A-2-1
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that _________ (the "CERTIFICATEHOLDER") is the
registered owner of a fractional undivided interest in the SRI Receivables
Master Trust (the "TRUST") issued pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of August 11, 1995 (the "Pooling and Servicing
Agreement"; such term to include any amendment thereto) by and between SRI
Receivables Purchase Co., Inc., as Transferor (the "TRANSFEROR"), SRI as the
Servicer, and Bankers Trust (Delaware), as Trustee (the "TRUSTEE"), and the
Series 1993-1 Supplement, dated as of July 30, 1993 (the "SERIES 1993-1
SUPPLEMENT"), among the Transferor, SRI as Servicer and the Trustee. The Pooling
and Servicing Agreement, as supplemented by the Series 1993-1 Supplement, is
herein referred to as the "Agreement". The corpus of the Trust consists of all
of the Transferor's right, title and interest in, to and under (i) the Trust
Property (as defined in the Agreement) and (ii) the property described in
Sections 3A and 17 of the Series 1993-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class B-1 Certificates, Series 1993-1"
(the "CLASS B CERTIFICATES"), each of which represents a frac tional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class B
Certificates, the SRI Receivables Master Trust Floating Rate Class A-1
Certificates, Series 1993-1 (the "CLASS A CERTIFICATES") and the SRI Receivables
Master Trust Floating Rate Class C-1 Certificates, Series 1993-1 (the "CLASS C
CERTIFICATES," and collectively with the Class A Certificates and the Class B
Certificates, the "OFFERED CERTIFICATES") with the intention that the Offered
Certificates will qualify under applicable tax law as indebtedness, and both the
Transferor and each holder of a Class B Certificate (a "CLASS B
CERTIFICATEHOLDER") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class B Certificates as indebtedness
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income,.
A-2-2
No principal will be payable to the Class B Certificateholders
until the Class B Payment Commencement Date, which is the Distribution Date
either on or following the Distribution Date, on which the Class A Invested
Amount had been paid in full. No principal will be payable to the Class B
Certificateholders until all principal payments have been made to the Class A
Certificateholders. No principal payments will be made to the Class C
Certificateholder until the Distribution Date either on or following the
Distribution Date on which the Class B Invested Amount has been paid in full.
Interest will accrue on the unpaid principal amount of the
Class B Certificates at a per annum rate equal to 4.7025% per annum with respect
to the initial Interest Accrual Period and, with respect to each subsequent
Interest Accrual Period a per annum rate of 1.39% in excess of LIBOR prevailing
on the related Rate Determina tion Date, calculated on the basis of the actual
number of days elapsed in such subsequent Interest Accrual Period over a year of
360 days (the "CLASS B CERTIFICATE RATE"), and, except as otherwise provided in
the Agreement, will be distributed quarterly to Certificateholders on the third
Wednesday of each March, June, September and December (or, if such day is not a
Business Day, on the next succeeding Business Day) (each a "DISTRIBUTION DATE"),
commencing September 15, 1993 until such time as the Class B Invested Amount is
paid in full. Interest for any Distribution Date will in clude accrued interest
at the Class B Certificate Rate from and including the preceding Distribution
Date or, in the case of the first Distribution Date from and including the
Closing Date, to but excluding such Distribution Date. Interest for any
Distribution Date due but not paid on any Distribution Date will be due on the
next succeeding Distribution Date together with, to the extent permitted by
applicable law, additional interest on such amount at the Class B Certificate
Rate.
Subject to the Agreement, payments of principal are limited to
the unpaid Class B Invested Amount of the Class B Certificates, which may be
less than the unpaid balance of the Class B Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class B Certificates is
due and payable no later than the January, 2003 Distribution Date (or if such
day is not a Business Day, the next succeed ing Business Day) (the "SERIES
TERMINATION DATE"). After the Series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class B Certificates. In the event that the Class B Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allo cable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificate holders pro rata in final payment of the
Class A Certificates, then to the Class B Certifi cateholders pro rata in final
payment of the Class B Certificates, then to the Class C Certificateholders pro
rata in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
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 Agreement, or be valid for any
purpose.
A-2-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-2-4
[FORM OF CLASS C INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW AND THE ADDITIONAL
CONDITIONS TO TRANSFER SPECIFIED IN THE AGREEMENT REFERRED TO BELOW
SHALL HAVE BEEN SATISFIED.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___ $_________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS C-1 CERTIFICATE, SERIES 1993-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of consumer revolving credit card accounts
generated or to be generated by certain subsidiaries (collectively, the "SRI
SUBSIDIARIES") of Specialty Retailers, Inc.
A-3-1
("SRI" or the "SERVICER") and other assets and interests constituting the Trust
under the Agreement described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that ___________________ (the
"CERTIFICATEHOLDER") is the registered owner of a fractional undivided interest
in the SRI Receivables Master Trust (the "TRUST") issued pursuant to the Amended
and Restated Pooling and Servicing Agreement, dated as of August 11, 1995 (the
"POOLING AND SERVICING AGREEMENT"; such term to include any amendment thereto)
by and between SRI Receivables Purchase Co., Inc., as Transferor (the
"TRANSFEROR"), SRI as the Servicer, and Bankers Trust (Dela ware), as Trustee
(the "TRUSTEE"), and the Series 1993-1 Supplement, dated as of July 30, 1993
(the "SERIES 1993-1 SUPPLEMENT"), among the Transferor, SRI as Servicer and the
Trustee. The Pooling and Servicing Agreement, as supplemented by the Series
1993-1 Supplement, is herein referred to as the "Agreement." The corpus of the
Trust consists of all of the Transferor's right, title and interest in, to and
under (i) the Trust Property (as defined in the Agreement) and (ii) the property
described in Sections 3A and 17 of the Series 1993-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class C-1 Certificates, Series 1993-1"
(the "CLASS C CERTIFICATES"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class C
Certificates, the SRI Receivables Master Trust Floating Rate Class A-1
Certificates, Series 1993-1 (the "CLASS A CERTIFICATES") and the SRI Receivables
Master Trust Floating Rate Class B-1 Certificates, Series 1993-1 (the "CLASS B
CERTIFICATES", and collectively with the Class A Certificates and the Class B
Certificates, the "OFFERED CERTIFICATES") with the intention that the offered
Certificates will qualify under applicable tax law as in debtedness, and both
the Transferor and each holder of a Class C Certificate (a "CLASS C
CERTIFICATEHOLDER") or any interest therein by acceptance of its Certificate or
any
A-3-2
interest therein, agrees to treat the Class C Certificates for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness.
No principal will be payable to the Class C Certificateholders
until the Class C Payment Commencement Date, which is the Distribution Date
either on or following the Distribution Date, on which the Class A Invested
Amount and the Class B Invested Amount have been paid in full. No principal
payments will be payable to the Class C Certificateholder until the Distribution
Date either on or following the Distribution Date on which the Class B Invested
Amount has been paid in full.
Interest will accrue on the unpaid principal amount of the
Class C Certificates at a per annum rate equal to 6.3125% per annum with respect
to the initial Interest Accrual Period and, with respect to each subsequent
Interest Accrual Period a per annum rate of 3.00% in excess of LIBOR prevailing
on the related Rate Determina tion Date, calculated on the basis of the actual
number of days elapsed in such subsequent Interest Accrual Period over a year of
360 days (the "CLASS C CERTIFICATE RATE"), and, except as otherwise provided in
the Agreement, will be distributed to Certificateholders quarterly on the third
Wednesday of each March, June, September and December (or, if such day is not a
Business Day, on the next succeeding Business Day) (each a "DISTRIBUTION DATE"),
commencing September 15, 1993 until such time as the Class C Invested Amount is
paid in full. Interest for any Distribution Date will in clude accrued interest
at the Class C Certificate Rate from and including the preceding Distribution
Date or, in the case of the first Distribution Date from and including the
Closing Date, to but excluding such Distribution Date. Interest for any
Distribution Date due but not paid on any Distribution Date will be due on the
next succeeding Distribution Date together with, to the extent permitted by
applicable law, additional interest on such amount at the Class C Certificate
Rate.
In addition, the Transferor and the Trustee shall not be
required to recognize any transfer of an interest in a Class C Certificate
unless the transferor of such interest shall deliver to the Transferor and the
Trustee an Opinion of Counsel in form and substance satisfactory to the
Transferor and the Trustee to the effect that such transfer will not cause the
Trust to be treated as a "publicly traded partnership" taxable as a corporation
under Section 7704 of the Code.
Subject to the Agreement, payments of principal are limited to
the unpaid Class C Invested Amount of the Class C Certificates, which may be
less than the unpaid balance of the Class C Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class C Certificates is
due and payable no later than the
A-3-3
January 2003 Distribution Date (or if such day is not a Business Day, the next
succeed ing Business Day) (the "Series Termination Date"). After the Series
Termination Date neither the Trust nor the Transferor will have any further
obligation to distribute principal or interest on the Class C Certificates. In
the event that the Class C Invested Amount is greater than zero on the Series
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of interests in the Receivables or certain of the
Receivables up to 110% of the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount and the Class D Invested Amount at the close
of business on such date (but not more than the total amount of Receivables allo
cable to the Investor Certificates), and shall pay the proceeds to the Class A
Certificate holders pro rata in final payment of the Class A Certificates, then
to the Class B Certifi cateholders pro rata in final payment of the Class B
Certificates, then to the Class C Certificateholders pro rata in final payment
of the Class C Certificates and finally to the Class D Certificateholders pro
rata in final payment of the Class D Certificates.
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 Agreement, or be valid for any
purpose.
A-3-4
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class C-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-3-5
[FORM OF CLASS D INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW. THE TRANSFER OF THIS
CERTIFICATE IS PROHIBITED BY THE TERMS OF THE AGREEMENT REFERRED TO
BELOW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (1) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
NO RESALE OR TRANSFER OF THIS CERTIFICATE MAY BE
MADE.
No. ___ $_________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS D-1 CERTIFICATE, SERIES 1993-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a
A-4-1
portfolio of consumer revolving credit card accounts generated or to be
generated by certain subsidiaries (collectively, the "SRI SUBSIDIARIES") of
Specialty Retailers, Inc. ("SRI" or the "SERVICER") and other assets and
interests constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that SRI Receivables Purchase Co., Inc. (the
"CERTIFICATE HOLDER") is the registered owner of a fractional undivided interest
in the SRI Receivables Master Trust (the "TRUST") issued pursuant to the Amended
and Restated Pooling and Servicing Agreement, dated as of August 11, 1995 (the
"POOLING AND SERVICING AGREE MENT"; such term to include any amendment or
Supplement thereto) by and between SRI Receivables Purchase Co., Inc., as
Transferor (the "TRANSFEROR"), SRI as the Servicer, and Bankers Trust
(Delaware), as Trustee (the "TRUSTEE"), and the Series 1993-1 Supple ment, dated
as of July 30, 1993 (the "SERIES 1993-1 SUPPLEMENT"), among the Transfer or, SRI
as Servicer and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1993-1 Supplement, is herein referred to as the
"Agree ment." The corpus of the Trust consists of all of the Transferor's right,
title and interest in, to and under (i) the Trust Property (as defined in the
Agreement) and (ii) the property described in Sections 3A and 17 of the Series
1993-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a Series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class D-1 Certificates, Series 1993-1"
(the "CLASS D CERTIFICATES"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
By acceptance of this Certificate or any interest herein, each
Class D Certificateholder agrees that it will in no event permit the Class D
Certificates or any interest therein to be transferred, sold, exchanged,
pledged, participated or otherwise assigned hereunder, in whole or in part,
except under the conditions specified in the Series 1993-1 Supplement.
A-4-2
No principal will be payable to the Class D Certificateholders
until the Class D Payment Commencement Date, which is the Distribution Date
either on or following the Distribution Date on which the Class C Invested
Amount had been paid in full. No principal will be payable to the Class D
Certificateholders until all principal payments have first been made to the
Class A Certificateholders and then on and after the Class B Principal Payment
Commencement Date, after all principal payments have been made to the Class B
Certificateholders and then on and after the Class C Principal Payment
Commencement Date, after all payments have been made to the Class C
Certificateholders.
Interest will accrue on the unpaid principal amount of the
Class D Certificates at a per annum rate equal to 0% per annum (the "CLASS D
CERTIFICATE RATE").
Subject to the Agreement, payments of principal are limited to
the unpaid Class D Invested Amount of the Class D Certificates, which may be
less than the unpaid balance of the Class D Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class D Certificates is
due and payable no later than the January 2003 Distribution Date (or if such day
is not a Business Day, the next succeed ing Business Day) (the "SERIES
TERMINATION DATE"). After the Series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class C Certificates. In the event that the Class C Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allo cable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificate holders pro rata in final payment of the
Class A Certificates, then to the Class B Certifi cateholders pro rata in final
payment of the Class B Certificates, then to the Class C Certificateholders pro
rata in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
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 Agreement, or be valid for any
purpose.
A-4-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class D-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By:
Authorized Signatory
A-4-4
EXHIBIT D
[Form of 144A Exchange Notice and Certification]
SRI Receivables Purchase Co., Inc.
10201 Main Street
Houston, Texas 77025
Attention:
Bankers Trust
1001 Jefferson Street
Wilmington, Delaware 19801
Attention: Corporate Trust and Agency Group
Ladies and Gentlemen:
This is to notify you as to the transfer of $ of Series
1993-1, Class [A] [B] [C] Certificates (the "Certificates") of SRI Receivables
Master Trust (the "Company").
The undersigned is the holder of the Certificates and with
this notice hereby deposits with the Trustee $ principal amount of Certificates
and requests that Certificates in the same principal amount be issued and
executed by the Company and authenticated by the Trustee and registered to the
purchaser on
, 19 , as specified in the Pooling and Servicing Agreement, as supplemented
by the Series 1993-1 Supplement thereto, as follows:
Name:
Address:
Taxpayer I.D. No.:
Dominations:
The undersigned represents and warrants that the undersigned
(i) reasonably believes the purchaser is a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act of 1933 (the "Act"), (ii) such
purchaser has acquired the Certificates in a transaction effected in accordance
with the exemption from the regis tration requirements of the Act provided by
Rule 144A and, (iii) if the purchaser has
1
purchased the Certificates for one or more accounts for which it is acting as
fiduciary or agent, (A) each such account is a qualified institutional buyer and
(B) each such account is acquiring Notes for its own account or for one or more
institutional accounts for which it is acting as fiduciary or agent in a minimum
amount equivalent to not less than U.S. $250,000 for each such account.
Very truly yours,
[NAME OF HOLDER OF CERTIFICATE]
By:
[Name], [Chief Financial or other Executive
Officer]
2
REPRESENTATION LETTER
(Non-Rule 144A)
Bankers Trust (Delaware)
1001 Jefferson Street
Wilmington, Delaware 19801
Attention: Corporate Trust and Agency Group
SRI Receivables Purchase Co., Inc.
10201 Main Street
Houston, Texas 77025
Attention: Treasurer
BT Securities Corporation
130 Liberty Street
New York, New York 10004
Re: SRI Receivables Master Trust
Series 1993-1 Asset Backed Certificates
The undersigned purchaser ("Purchaser") understands that the
purchase of the above-referenced notes (the "Notes") may be made only by
institutions which are "Accredited Investors" under Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "1933 Act"), which includes
banks, savings and loan associa tions, registered brokers and dealers, insurance
companies, investment companies, and organizations described in Section
501(c)(3) of the Internal Revenue Code, corpo rations, business trusts and
partnerships, or formed for the specific purpose of acquiring the Notes offered,
with total assets in excess of $5,000,000. The undersigned represents on behalf
of the Purchaser that the Purchaser is an "Accredited Investor" within the
meaning of such definition. Purchaser has reviewed carefully the responses,
representations and warranties it is making herein.
1
REPRESENTATIONS AND WARRANTIES
Purchaser makes the following representations and warranties
in connection with Section 11(b) of the Series 1993-1 Supplement.
1. The Purchaser understands that the Series 1993-1
Certificates have not been and will not be registered under the 1933 Act and may
be resold (which resale is not currently contemplated) only if registered
pursuant to the provisions of the 1933 Act or if an exemption from registration
is available, that SRI Receivables Purchase Co., Inc. is not required to
register the Series 1993-1 Certificates and that any transfer must comply with
Section 11(b) of the Series 1993-1 Supplement relating to the Series 1993- 1
Certificates.
2. The Purchaser will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the Series
1993-1 Certificates.
3. The Purchaser is a sophisticated institutional investor and
has knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Notes and is able to
bear the economic risk of such investment. The Purchaser has been given such
information concerning the Series 1993-1 Certificates, the underlying
receivables and the SRI Receivables Master Trust as it has requested.
4. The Purchaser is acquiring the Series 1993-1 Certificates
for its own account (or for the account of one or more other institutional
investors for which it is acting as duly authorized fiduciary or agent) for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser represents that either (a) it does not
qualify as (i) an employee benefit plan (as defined in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), whether
or not it is subject to the provisions of Title 1 of ERISA, (ii) a plan
described in section 4975(e)(1) of the Internal Revenue Code of 1986, or (iii)
an entity whose underlying assets are deemed to be assets of a plan described in
(i) or (ii) above by reason of such plan's investment in the entity (as
determined under Department of Labor Regulations, 29 C.F.R. ss. 2510.3-101
(1990)) (any such entity described in clauses (i) through (iii), a "Benefit Plan
Entity")
2
or (b) if the Purchaser is an entity described in clause (a), Purchaser
represents the following:
(i) the Purchaser is not a Benefit Plan Entity with respect to
an employee benefit plan sponsored by the Transferor, the Placement Agent, the
Trustee, or the Servicer or any affiliate thereof (all as defined in the Private
Placement Memorandum); and
(ii) the person who has discretionary authority or renders
investment advice to the Purchaser with respect to the investment of plan assets
in the Series 1993-1 Certificates is not an obligor with respect to the
Receivables (as defined in the Private Placement Memorandum).
6. The Purchaser understands that such Series 1993-1
Certificates will bear a legend substantially as set forth in the form of Series
1993-1 Certificates included in the Series 1993-1 Supplement.
7. The Purchaser agrees that it will obtain from any
subsequent purchaser of the Notes substantially the same representations,
warranties and agreements contained in the foregoing paragraphs 1 through 7 and
in this paragraph 8.
Very truly yours,
Dated:-------------------By:---------------------
Name:
Title:
Number of Beneficial Holders: ---------------
3
SRI RECEIVABLES PURCHASE CO., INC.
Transferor
SPECIALTY RETAILERS, INC.
Servicer
and
BANKERS TRUST (DELAWARE)
Trustee
on behalf of the Series 1993-2 Certificateholders
----------------------------------
SERIES 1993-2 SUPPLEMENT
Dated as of July 30, 1993
to
POOLING AND SERVICING AGREEMENT
Dated as of July 30, 1993
------------------------------------
Floating Rate Class A-R
Variable Funding Certificates, Series 1993-2
Floating Rate Class B-R
Variable Funding Certificates, Series 1993-2
SRI RECEIVABLES MASTER TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1. Designation............................................................................................1
SECTION 2. Definitions............................................................................................1
SECTION 3. Reassignment and Transfer Terms.......................................................................17
SECTION 3A. Conveyance of Interest in Interest Rate Cap; Cap Proceeds Account...........................................17
SECTION 4. Delivery and Payment for the Series 1993-2 Variable Funding Certificates..............................18
SECTION 5. Form of Delivery of Series 1993-2 Certificates........................................................18
SECTION 6. Addition and Removal of Accounts......................................................................18
SECTION 7. Article IV of Agreement...............................................................................21
Section 4.4 Rights of Certificateholders......................................................................22
Section 4.5 Collections and Allocation; Payments on Exchangeable Transferor
Certificate..................................................................................22
Section 4.6 Application of Funds on Deposit in the Collection Account for the
Certificates.................................................................................23
Section 4.7 Coverage of Class A-R Required Amount for the Series 1993-2 Variable
Funding Certificates.........................................................................35
Section 4.8 Payment of Certificate Interest, Facilities Costs and Conversions and
Continuation.................................................................................36
Section 4.9 Payment of Certificate Principal..................................................................38
Section 4.10 Investor Charge-Offs.........................................................................39
Section 4.11 Shared Principal Collections.................................................................40
SECTION 8. Article V of the Agreement............................................................................41
Section 5.1 Distributions.....................................................................................41
Section 5.2 Monthly Certificateholders' Statement.............................................................42
SECTION 9. Series 1993-2 Pay Out Events..........................................................................44
i
SECTION 10. Article VI of the Agreement...........................................................................47
Section 6.15 VFC Additional Invested Amounts..............................................................47
Section 6.16 Extension....................................................................................49
SECTION 11. Series 1993-2 Termination.............................................................................51
SECTION 12. Periodic Finance Charges and Other Fees...............................................................51
SECTION 13. Legends; Transfer and Exchange; Restrictions on Transfer of Series
1993-2 Variable Funding Certificates..................................................................51
SECTION 14. Successor Trustee.....................................................................................53
SECTION 15. Notice to Facility Agent..............................................................................53
SECTION 16. Charge Account Agreements and Credit and Collection Policies..........................................54
SECTION 17. [Reserved]............................................................................................54
SECTION 18. [Reserved]............................................................................................54
SECTION 19. Automatic Additional Accounts.........................................................................54
SECTION 20. Actions by Facility Agent.............................................................................55
SECTION 21. Successor Servicer....................................................................................55
SECTION 22. Series 1993-2 Investor Exchange; Certificate Defeasance...............................................55
SECTION 23. Ratification of Agreement.............................................................................56
SECTION 24. Counterparts..........................................................................................56
SECTION 25. GOVERNING LAW...............................................................................................56
SECTION 26. The Trustee...........................................................................................56
ii
SECTION 27. Instructions in Writing...............................................................................57
SECTION 28. Amendment.............................................................................................57
</TABLE>
EXHIBITS
EXHIBIT A-1 Form of Class A-R Certificate
EXHIBIT A-2 Form of Class B-R Certificate
EXHIBIT B Form of Extension Notice
EXHIBIT C Form of Investor Certificateholder Election Notice
EXHIBIT D Form of Exchange Notice and Certification
iii
AMENDED AND RESTATED SERIES 1993-2 SUPPLEMENT, dated as of May
30, 1996 (this "SERIES SUPPLEMENT") by and among SRI RECEIV ABLES PURCHASE CO.,
INC., a corporation organized and existing under the laws of the State of
Delaware, as Transferor (the "TRANSFEROR"), SPECIALTY RETAIL ERS, INC., a
corporation organized and existing under the laws of Delaware, as Servicer (the
"SERVICER"), and BANKERS TRUST (DELAWARE), as trustee (to gether with its
successors in trust thereunder as provided in the Agreement referred to below,
the "TRUSTEE") under the Amended and Restated Pooling and Servicing Agreement
dated as of August 11, 1995 (the "AGREEMENT") among the Transferor, the Servicer
and the Trustee.
Section 6.9 of the Agreement provides, among other things,
that the Transferor and the Trustee may at any time and from time to time enter
into a supplement to the Agreement for the purpose of authorizing the issuance
by the Trustee to the Transferor, for execution and redelivery to the Trustee
for authentica tion, one or more Series of Certificates.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Certificates and shall specify the
Principal Terms thereof.
SECTION 1. DESIGNATION. There is hereby created a Series of
Investor Certificates to be issued pursuant to the Agreement and this Series
Supple ment to be known generally as the "SERIES 1993-2 VARIABLE FUNDING
CERTIFICATES." The Series 1993-2 Variable Funding Certificates shall be issued
in two Classes, which shall be designated generally as the Class A-R
Certificates, Series 1993-2 (the "CLASS A-R CERTIFICATES") and the Class B-R
Certificates, Series 1993-2 (the "CLASS B-R CERTIFICATES").
SECTION 2. DEFINITIONS. In the event that any term or
provision contained herein shall conflict with or be inconsistent with any
provision contained in the Agreement, the terms and provisions of this Series
Supplement shall govern. All Article, Section or subsection references herein
shall mean Article, Section or subsections of the Agreement, as amended or
supplemented by this Series Supple ment, except as otherwise provided herein.
All capitalized terms not otherwise defined herein are defined in the Agreement.
Each capitalized term defined herein shall relate only to the Series 1993-2
Variable Funding Certificates and to no other Series of Certificates issued by
the Trust.
1
"ADJUSTED INVESTED AMOUNT" shall mean the Class A-R Adjusted
Invested Amount or the Class B-R Adjusted Invested Amount, as applicable.
"ALTERNATE BASE RATE" shall mean a fluctuating rate per annum
on any date equal to the higher of (i) the rate of interest most recently
designated by the Facility Agent as its base rate for Dollars in New York City
and (ii) a rate of interest equal to the sum of (A) the Federal Funds Rate, plus
(B) .50%; PROVIDED that during the Amortization Period, "Alternate Base Rate"
shall instead mean a fluctuating rate per annum equal to the Federal Funds Rate
plus 1.00%. The Alternate Base Rate is not necessarily intended to be the lowest
rate of interest determined by the Facility Agent in connection with extensions
of credit. Changes in the Alternate Base Rate shall take effect immediately upon
their occurrence. The Facility Agent will endeavor promptly to notify the
Transferor of changes in the Alternate Base Rate.
"ALTERNATE BASE RATE TRANCHE" shall mean a portion of the
Class A-R Invested Amount designated by the Transferor in accordance with
Section 4.8 to accrue interest based on the Alternate Base Rate or as to which
no designation has been made.
"AMORTIZATION PERIOD COMMENCEMENT DATE" shall mean, prior to
an Extension, the earlier of the first day of the December 1999 Monthly Period
and the Pay Out Commencement Date and following an Extension, the earlier of the
date specified as such in the Extension Notice and the Pay Out Commencement
Date.
"APPLICABLE MARGIN" shall mean a percentage per annum
initially equal to (a) with respect to Alternate Base Rate Tranches, 0%; (b)
with respect to One Month LIBOR Rate Tranches, 7/8%; (c) with respect to Two
Month LIBOR Rate Tranches, 7/8%; and (d) with respect to Three Month LIBOR Rate
Tranches, 7/8%; provided that at any time after the earlier of the occurrence of
a Pay Out Event or the eighth Monthly Distribution Date following the
Amortization Period Com mencement Date, the Applicable Margin shall be 2.0%.
"APPLICABLE RESERVE RATIO" shall mean for the November Monthly
Period, the December Monthly Period and the January Monthly Period, 2.0%, and
for each other Monthly Period, zero%.
"AVAILABLE SERIES 1993-2 FINANCE CHARGE COLLECTIONS" shall
have the meaning specified in subsection 4.6(a).
2
"BASE RATE" shall mean the sum of (i) the weighted average of
the Class A-R Certificate Rate and the Class B-R Certificate Rate PLUS (ii) the
Series Servicing Fee Percentage per annum
"BORROWING BASE" shall mean, on any Business Day, the sum of
(i) the aggregate amount of Principal Receivables on such day MINUS the Minimum
Transferor Interest MINUS the Invested Amount of each Series (less any amount on
deposit in a principal account for any such Series) other than the Variable
Funding Certificates MINUS the Class B-R Invested Amount PLUS (ii) any amounts
on deposit in the Equalization Account allocated to investor certificates of any
Series and the Principal Account allocated to the Class A-R Certificates on such
Business Day.
"BUSINESS DAY" shall have the meaning set forth in the Pooling
and Servicing Agreement PROVIDED that (i) as used in the definition of "LIBOR
Rate" and "Rate Determination Date," "Business Day" shall mean a day for
dealings by and be tween banks in U.S. dollar deposits in the London interbank
eurodollar markets and (ii) for notices with respect to LIBOR Rate Tranches,
"Business Day" shall mean a day that satisfies both of the foregoing tests.
"CAP PROCEEDS ACCOUNT" shall have the meaning specified in
subsec tion 3A(b).
"CAP SETTLEMENT DATE" shall have the meaning specified in
Section 3A(b).
"CERTIFICATE RATE" shall mean the Class A-R Certificate Rate
or the Class B-R Certificate Rate.
"CLASS A-R ADJUSTED INVESTED AMOUNT" shall mean, when used
with respect to any Business Day, the Class A-R Invested Amount MINUS the amount
on deposit in the Principal Account allocated to the Class A-R Certificates.
"CLASS A-R CERTIFICATEHOLDER" shall mean each Person in whose
name a Class A-R Certificate is registered in the Certificate Register.
"CLASS A-R CERTIFICATEHOLDERS' INTEREST" shall mean the
portion of the Series 1993-2 Certificateholders' Interest evidenced by the Class
A-R Certificates.
3
"CLASS A-R CERTIFICATE RATE" shall mean for any day the
weighted average of the Tranche Rates with respect to each portion of the Class
A-R Invested Amount outstanding at such time (taking into account whether such
rate is calculated on a 360 or 365/6 day basis).
"CLASS A-R CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
"CLASS A-R FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class A-R Invested Amount at the end of the last day of the Revolving Period
and the denomi nator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amount on deposit in the
Equalization Account at the end of the last day of the Revolving Period and (b)
the sum of the numerators used to calculate the allocation percentages with
respect to Principal Collections for all Series.
"CLASS A-R FLOATING ALLOCATION PERCENTAGE" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class A-R Adjusted Invested Amount as of the end of
the preceding Business Day and the denominator of which is the greater of (a)
the sum of the amount of Principal Receivables in the Trust and the amount on
deposit in the Equalization Account as of the end of the preceding Business Day
and (b) with respect to Princi pal Collections only, the sum of the numerators
with respect to all Classes of all Series then outstanding on such Business Day
used with respect to Principal Collec tions to calculate the applicable
allocation percentage.
"CLASS A-R INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class A-R Certificates, which is $0.00.
"CLASS A-R INTEREST" shall mean, with respect to any period,
an amount equal to the amount of interest that would accrue over such period at
the Class A-R Certificate Rate on the outstanding principal balance of the Class
A-R Certificates.
"CLASS A-R INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class A-R Initial Invested
Amount, PLUS (b) the aggregate principal amount of any VFC Additional Class A-R
Invested Amounts purchased by the Class A-R Certificateholders through the end
of the
4
preceding Business Day pursuant to Section 6.15 of the Agreement MINUS (c) the
aggregate amount of principal payments made to Class A-R Certificateholders
prior to such Business Day (including, without limitation, pursuant to Section
12 of the Revolving Certificate Purchase Agreement) and MINUS (d) the excess, if
any, of the aggregate amount of Class A-R Investor Charge-Offs for all prior
Business Days over Class A-R Investor Charge-Offs reimbursed pursuant to
subsections 4.6(a)(iv), 4.6(b)(iv) and 4.6(c)(iv) and Section 4.7 prior to such
Business Day minus (e) the amount, if any, on deposit in the Defeasance Account
allocated to the Class A-R Certificates.
"CLASS A-R INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.10(b).
"CLASS A-R INVESTOR PERCENTAGE" shall mean, for any Business
Day, (a) with respect to Finance Charge Collections and Receivables in Defaulted
Accounts at any time or Principal Collections during the Revolving Period, the
Class A-R Floating Allocation Percentage and (b) with respect to Principal
Collections during the Amortization Period, the Fixed Allocation Percentage.
"CLASS A-R REQUIRED AMOUNT" shall mean the amount, if any, by
which (x) the sum of the amounts described in subsections 4.6(a)(i) and (iii)
through (v) of the Agreement during the Revolving Period or subsections
4.6(b)(i) and (iii) through (v) of the Agreement or 4.6(c)(i) and (iii) through
(v) of the Agreement during the Amortization Period, as applicable, plus the
Class A-R Floating Alloca tion Percentage of the amount described in subsection
4.6(a)(ii) of the Agreement during the Revolving Period, or subsection
4.6(b)(ii), or subsection 4.6(c)(ii) of the Agreement during the Amortization
Period, as applicable, exceeds (y) the Finance Charge Collections available for
application thereto pursuant to subsections 4.6(a), (b) or (c) of the Agreement,
as applicable, on any Business Day.
"CLASS B-R ADJUSTED INVESTED AMOUNT" shall mean, when used
with respect to any Business Day, the Class B-R Invested Amount MINUS the amount
on deposit in the Principal Account allocated to the Class B-R Certificates.
"CLASS B-R CERTIFICATEHOLDER" shall mean the Person in whose
name a Class B-R Certificate is registered in the Certificate Register.
"CLASS B-R CERTIFICATEHOLDERS' INTEREST" shall mean the
portion of the Series 1993-2 Certificateholders' Interest evidenced by the Class
B-R Certificates.
5
"CLASS B-R CERTIFICATE RATE" shall mean 0%.
"CLASS B-R CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"CLASS B-R DAILY INVESTED AMOUNT" shall have the meaning
specified in subsection 4.6(e)(ii).
"CLASS B-R FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B-R Invested Amount at the end of the last day of the Revolving Period
and the denomi nator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amount on deposit in the
Equalization Account at the end of the last day of the Revolving Period and (b)
the sum of the numerators used to calculate allocation percentages with respect
to Principal Collections for all Series.
"CLASS B-R FLOATING ALLOCATION PERCENTAGE" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class B-R Adjusted Invested Amount as of the end of
the preceding Business Day and the denominator of which is the greater of (a)
the sum of the amount of Principal Receivables in the Trust and the amount on
deposit in the Equalization Account at the end of the preceding Business Day and
(b) with respect to Principal Collections only the sum of the numerators with
respect to all Classes of all Series then outstanding on such Business Day used
with respect to Principal Collections to calculate the applicable allocation
percentage.
"CLASS B-R INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class B-R Certificates, which shall be equal to
28% of the Initial Invested Amount.
"CLASS B-R INTEREST" shall mean, on any Business Day, an
amount equal to the product of the Class B-R Certificate Rate and the Class B-R
Invested Amount as of such Business Day.
"CLASS B-R INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class B-R Initial Invested
Amount, PLUS (b) the aggregate principal amount of any VFC Additional Class B-R
Invested Amounts purchased by the Class B-R Certificateholders through the end
of the
6
preceding Business Day pursuant to Section 6.15 of the Agreement, MINUS (c) the
aggregate amount of principal payments made to Class B-R Certificateholders
prior to such Business Day, MINUS (d) the aggregate amount of Class B-R Investor
Charge-Offs for all prior Business Days, MINUS (e) the amount of Reallocated
Prin cipal Collections applied in accordance with subsection 4.7(c) of the
Agreement, MINUS (f) the amount, if any, on deposit in the Defeasance Account
allocated to the Class B-R Certificates, and PLUS (g) the sum of the aggregate
amount allocated to the Class B-R Certificates and available on all prior
Business Days pursuant to subsec tion 4.6(a)(vi), 4.6(b)(vi) and 4.6(c)(vi), for
the purpose of reimbursing amounts de ducted pursuant to the foregoing clause
(d).
"CLASS B-R INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.10(a).
"CLASS B-R INVESTOR PERCENTAGE" shall mean, for any
Distribution Date, (a) with respect to Finance Charge Collections and
Receivables in Defaulted Accounts at any time or Principal Collections during
the Revolving Period, the Class B-R Floating Allocation Percentage and (b) with
respect to Principal Collections during the Amortization Period, the Fixed
Allocation Percentage.
"CLASS B-R PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) the Distribution Date in an Amortization Period on which the
Class A-R Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 1993-2 Investor Certificates remaining after
payments have been made to the Class A-R Certificates on such Distribution Date,
the Distribution Date following the Distribution Date on which the Class A-R
Invested Amount is paid in full and (b) the Distribution Date following a sale
or repurchase of the Receivables as set forth in Sections 2.4(e), 9.2, 10.2(a),
12.1 or 12.2 of the Agreement and Section 3 of this Series Supplement.
"CLOSING DATE" shall mean July 30, 1993.
"COMMITMENT AMOUNT" shall mean $40,000,000, as such amount may
be adjusted from time to time pursuant to the Revolving Certificate Purchase
Agreement.
"COMMITMENT FEE" shall mean the Non-Usage Fee.
7
"COMMITMENT PERCENTAGE" shall mean, with respect to any Class
A-R Certificateholder, the "Revolving Percentage" of such Person as defined in
the Re volving Certificate Purchase Agreement.
"DAILY CAP PROCEEDS AMOUNT" shall mean, with respect to any
Business Day, an amount on deposit in the Cap Proceeds Account equal to the
lesser of (A) the amount determined to be deposited in the Interest Funding
Account pursuant to clause 4.6(a)(i), (b)(i) or (c)(i), as applicable, and (B)
the sum of (a) the product of (x) the quotient of (I) the amount deposited in
the Cap Proceeds Account on the immediately preceding payment date for the
Interest Rate Caps DIVIDED by (II) the number of days from payment date to
payment date for such Interest Rate Caps TIMES (y) the number of days elapsed
since the preceding Business Day and (b) the aggregate amount allocated for
transfer but not transferred prior to such day during the period since the
preceding payment date pursuant to this subclause (B).
"DEFEASANCE ACCOUNT" shall have the meaning specified in
subsection 22(b) hereof.
"DISTRIBUTION ACCOUNT" shall mean, the account established in
accordance with Section 4.2(c) of the Agreement for the benefit of the Series
1993-2 Variable Funding Certificates.
"DISTRIBUTION DATE" shall mean (i) each Monthly Distribution
Date, (ii) the last day of each Fixed Period for a LIBOR Rate Tranche, (iii) any
date on which payments are received in the Defeasance Account and (iv) with
respect to any amount invested in an Alternate Base Rate Tranche which is
converted to a LIBOR Rate Tranche (pursuant to Section 10 of the Revolving
Certificate Purchase Agree ment), the day of such conversion.
"EARLY AMORTIZATION PERIOD" shall mean the period commencing
on the Pay Out Commencement Date and ending on the earlier to occur of (i) the
date of termination of the Trust pursuant to Section 12.1 of the Agreement or
(ii) the Series 1993-2 Termination Date.
"ELECTION NOTICE" shall have the meaning specified in
subsection 6.16(a) of the Agreement.
"ENHANCEMENT" shall mean, with respect to the Class A-R
Certificates, the subordination of the Class B-R Invested Amount; PROVIDED,
HOWEVER, that the
8
holder of the Class B-R Certificate shall not be an "Enhancement Provider" for
the purposes of the Agreement or this Supplement.
"EXCESS FINANCE CHARGE COLLECTIONS" shall mean, with respect
to any Business Day, as the context requires, either (x) the amount described in
subsection 4.6(b)(viii) allocated to the Series 1993-2 Certificates but
available to cover short falls in amounts paid from Finance Charge Collections
for other Series, if any or (y) the aggregate amount of Finance Charge
Collections allocable to other Series in excess of the amounts necessary to make
required payments with respect to such Series, if any, and available to cover
shortfalls with respect to the Series 1993-2 Cer tificates.
"EXTENSION" shall mean the procedure by which all or a portion
of the Investor Certificateholders consent to the extension of the Revolving
Period to the new Amortization Period Commencement Date set forth in the
Extension Notice, pursuant to Section 6.16 of the Agreement.
"EXTENSION DATE" shall mean the last day of the July 1997
Monthly Period or if an Extension has already occurred, the date of the next
Extension Date set forth in the Extension Notice relating to the Extension then
in effect (or, if any such date is not a Business Day, the next preceding
Business Day).
"EXTENSION NOTICE" shall have the meaning specified in
subsection 6.16(a) of the Agreement.
"EXTENSION OPINION" shall have the meaning specified in
subsection 6.16(a) of the Agreement.
"EXTENSION TAX OPINION" shall have the meaning specified in
subsec tion 6.16(a) of the Agreement.
"FACILITIES COSTS" shall mean the amounts payable with respect
to increased costs and other expenses, Commitment Fees, other fees (including
the facility agent fee, if any), breakage costs, interest on overdue amounts and
any indemnity payments to the Revolving Purchasers pursuant to the Revolving
Certifi cate Purchase Agreement, including Sections 15, 17, 19, 21 and 30
thereof.
"FACILITY AGENT" shall mean National Westminster Bank Plc, New
York Branch, in its capacity as agent for the Revolving Purchasers under the
Revolving Certificate Purchase Agreement, and any successor thereto.
9
"FEDERAL FUNDS RATE" shall mean, on any day, a fluctuating
interest rate per annum equal to the rate of interest offered in the interbank
market to the Facility Agent as the overnight Federal Funds rate as of about
11:00 a.m., New York City time, on such day (or, if such day is not a Business
Day, for the next preceding Business Day) (or, if there is no quote on such day,
on the next preceding day on which there is a quote).
"FIXED ALLOCATION PERCENTAGE" shall mean for any Business Day
the percentage equivalent of a fraction, the numerator of which is the Invested
Amount at the end of the last day of the Revolving Period and the denominator of
which is the greater of (a) the sum of the aggregate amount of Principal
Receivables in the Trust and the amount on deposit in the Equalization Account
as of the end of the last day of the Revolving Period and (b) the sum of the
numerators used to calculate the allocation percentages with respect to
Principal Collections for all Series in their Revolving Periods on such Business
Day or, with respect to any Series in its Amor tization Period, for each Class
to which principal is being allocated for payment on such Business Day.
"FIXED PERIOD" shall have the meaning set forth in the
Revolving Certificate Purchase Agreement.
"FLOATING ALLOCATION PERCENTAGE" shall mean for any Business
Day the sum of the applicable Class A-R Floating Allocation Percentage and Class
B-R Floating Allocation Percentage for such Business Day.
"INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Investor Certificates of Series 1993-2, which is $0.00.
"INTEREST RATE CAP AGREEMENT" shall mean an interest rate cap
agreement in form and substance satisfactory to the Facility Agent between the
Transferor and an obligor pursuant to which the obligor will be paid its entire
consideration by the Transferor on the date of execution thereof and which
obligor will be obligated for a term ending not earlier than the Scheduled
Series 1993-2 Termination Date to make payments to the Trustee monthly with
respect to each set monthly period specified therein in an amount (if positive)
equal to the product of (i) the remainder of (A) an index rate which shall be
equal or substantially similar to the LIBOR Rate (as if the Fixed Period
referenced in the definition thereof was the applicable set monthly period)
minus (B) 12%, multiplied by (ii) a notional amount specified therein,
multiplied by (iii) the ratio of the actual number of days in such set monthly
period to 360; provided, however, that the interest rate cap agreement can
10
deviate from the terms described herein if the Transferor receives prior written
approval with respect to any such deviations from the Facility Agent and the
Rating Agency.
"INTEREST RATE CAPS" shall mean the interest rate caps
provided pursuant to Interest Rate Cap Agreements by one or more obligors, each
of which shall have a long term unsecured debt rating of not less than AAA and a
short term unsecured debt rating of A-1+ by Standard & Poor's Corporation
pursuant to the Interest Rate Cap Agreements between the Transferor and such
obligors and for which the Transferor has paid full considerations to such
obligors upon execution of such agreement unless the Trustee otherwise consents.
"INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A-R Invested Amount as
of such date and (b) the Class B-R Invested Amount as of such date.
"INVESTOR CERTIFICATEHOLDER" shall mean the Holder of record
of an Investor Certificate of Series 1993-2.
"INVESTOR CERTIFICATES" shall mean the Class A-R Certificates
and the Class B-R Certificates.
"INVESTOR CHARGE-OFFS" shall mean the sum of Class A-R
Investor Charge-Offs and Class B-R Investor Charge-Offs.
"INVESTOR DEFAULT AMOUNT" shall mean, with respect to each
Business Day, an amount equal to the product of the Default Amount for such
Business Day and the Floating Allocation Percentage applicable for such Business
Day.
"INVESTOR PERCENTAGE" shall mean for any Business Day, (a)
with respect to Finance Charge Collections and Receivables in Defaulted Accounts
at any time or Principal Collections during the Revolving Period, the Floating
Allocation Percentage and (b) with respect to Principal Collections during the
Amortization Period, the Fixed Allocation Percentage.
"INVESTOR SERVICING FEE" shall mean, for any day, the product
of (i) the Series Servicing Fee Percentage and (ii) the Adjusted Invested Amount
on such day.
"ISSUANCE DATE" shall mean the Closing Date.
11
"LIBOR RATE" shall mean, with respect to any Fixed Period for
a LIBOR Rate Tranche, the per annum rate obtained by dividing (x) the arithmetic
average (rounded upwards to the nearest 1/16th of 1%) of the rates at which
deposits in United States dollars are offered to the Reference Bank in the
interbank eurodollar market at approximately 11:00 a.m. (London time) two
Business Days before the first day of such Fixed Period in an amount
approximately equal to the principal amount of the LIBOR Rate Tranche of the
Reference Bank (in its capacity as a Revolving Purchaser) to which such period
is to apply and for a period of time equal to such Fixed Period by (y) a
percentage equal to one minus the stated maximum rate (stated as a decimal) of
all reserves required to be maintained against "Eurocurrency Liabilities" as
specified in Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR Rate Tranches
is determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Revolving Purchaser to
United States residents) which shall be zero unless the Company has notified the
Trustee otherwise.
"LIBOR RATE TRANCHE" shall mean a portion of the Class A-R
Invested Amount designated by the Transferor in accordance with Section 4.8 to
accrue interest based upon the LIBOR Rate.
"MEASURING PERIOD" shall mean, with respect to any day, the
period from the later of the Closing Date and the first day of the eleventh
Monthly Period preceding the Monthly Period in which such day occurs through
such day.
"MINIMUM RETAINED PERCENTAGE" shall mean 3.5%.
"MINIMUM TRANSFEROR PERCENTAGE" shall mean the Applicable
Reserve Ratio.
"MONTHLY DISTRIBUTION DATE" shall mean September 15, 1993 and
the fifteenth day of each calendar month thereafter or if such fifteenth day is
not a Busi ness Day, the next succeeding Business Day.
"MONTHLY PERIOD" shall have the meaning specified in the
Agreement, except that the first Monthly Period with respect to the Series
1993-2 Certificates shall begin on and include the Closing Date and shall end on
and include August 29, 1993.
12
"NON-USAGE FEE" shall have the meaning specified for that term
in Section 15 of the Revolving Certificate Purchase Agreement.
"ONE MONTH LIBOR TRANCHE" shall mean a portion of the Class
A-R Invested Amount designated by the Transferor to accrue interest at a One
Month LIBOR Rate.
"ONE MONTH LIBOR RATE" shall mean a LIBOR Rate applicable for
a Fixed Period of one month.
"PAY OUT COMMENCEMENT DATE" shall mean the date on which a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of the Agreement
or a Series 1993-2 Pay Out Event is deemed to occur pursuant to Section 9 of
this Series Supplement.
"PORTFOLIO CORRECTION AMOUNT" means the smallest amount which,
if distributed to certificateholders of the Trust in reduction of the aggregate
invested amount of all certificates upon the occurrence of a Portfolio Imbalance
Event, would result in compliance with the percentage limitation in the
definition of Portfolio Imbalance Event the violation of which gave rise to such
Portfolio Imbalance Event.
"PORTFOLIO CORRECTION DISTRIBUTION DATE" means the first
Distribution Date following the occurrence of a Portfolio Imbalance Event.
"PORTFOLIO IMBALANCE EVENT" means an event which will occur
if, on the last day of any Monthly Period occurring during the Revolving Period
(the "MEASUREMENT DAY"), (a) on each of such day and the last day of each of the
preced ing [eleven] consecutive Monthly Periods, (i) the amount of all Cash
Equivalents and other amounts on deposit in the Equalization Account exceeded
[25]% of (ii) the sum of all Principal Receivables and Cash Equivalents and
other amounts on deposit in the Equalization Account on each such day, or (b) on
each of the measurement day and the last day of the [preceding] Monthly Period,
(i) the amount of all Cash Equivalents and other amounts on deposit in the
Equalization Account exceeded [45%] of (ii) the sum of all Principal Receivables
and Cash Equivalents and other amounts on deposit in the Equalization Account on
each such day. All such amounts shall be calculated after giving effect to all
amounts to be distributed on the Distribution Date following the last day of the
applicable Monthly Period.
"PORTFOLIO YIELD" shall mean for the Series 1993-2
Certificates, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction,
13
the numerator of which is an amount equal to the sum of the aggregate amount of
Available Series 1993-2 Finance Charge Collections and the aggregate Daily Cap
Proceeds Amounts for such Monthly Period, calculated on a cash basis, MINUS the
aggregate Investor Default Amount for each day in such Monthly Period, and the
denominator of which is the average daily Invested Amount during the preceding
Monthly Period.
"PRINCIPAL SHORTFALLS" shall mean, on any Business Day, (x)
for the Series 1993-2 Variable Funding Certificates the Adjusted Invested Amount
of the class then receiving principal payments after the application of
Principal Collections on such Business Day or (y) for any other Series the
amounts specified as such in the Supplement for such other Series.
"RATING AGENCY" shall mean Standard & Poor's Ratings Group and
Duff & Phelps Credit Rating Co.
"REALLOCATED PRINCIPAL COLLECTIONS" shall have the meaning
specified in subsection 4.7(c) of the Agreement.
"REFERENCE BANK" shall mean National Westminster Bank Plc, New
York Branch.
"REQUIRED AMOUNT" shall have the meaning specified in Section
4.7.
"REQUIRED REVOLVING PURCHASERS" shall mean Revolving
Purchasers whose Commitment Percentages are, in the aggregate, more than 50%.
"REVOLVING CERTIFICATE PURCHASE AGREEMENT" shall mean the
Revolv ing Certificate Purchase Agreement, dated as of July 26, 1993 by and
among the Transferor, the Facility Agent and the Revolving Purchasers.
"REVOLVING PERIOD" shall mean (a) the period from and
including the Closing Date to, but not including, the Amortization Period
Commencement Date, or (b) with respect to an Extension, the period beginning on
the Extension Date and ending on the date specified in the Extension Notice.
"REVOLVING PURCHASERS" shall mean each purchaser of an
interest in Class A-R Certificates pursuant to the Revolving Certificate
Purchase Agreement.
14
"SCHEDULED SERIES 1993-2 TERMINATION DATE" shall mean the
January 2003 Distribution Date, unless a different date shall be set forth in an
Extension No tice.
"SERIES 1993-2" shall mean the Series of the SRI Receivables
Master Trust represented by the Series 1993-2 Variable Funding Certificates.
"SERIES 1993-2 CERTIFICATEHOLDER" shall mean the holder of
record of any Series 1993-2 Variable Funding Certificate.
"SERIES 1993-2 CERTIFICATEHOLDERS' INTEREST" shall have the
meaning specified in Section 4.4 of the Agreement.
"SERIES 1993-2 PAY OUT EVENT" shall have the meaning specified
in Section 9 of this Series Supplement.
"SERIES 1993-2 TERMINATION DATE" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the Series 1993-2
Certificates are paid in full, or (ii) the Scheduled Series 1993-2 Termination
Date.
"SERIES SERVICING FEE PERCENTAGE" shall mean 2.0% per annum.
"SERVICING FEE" shall mean for any Monthly Period, an amount
equal to the product of (i) one-twelfth, (ii) the Series Servicing Fee
Percentage and (iii) the Adjusted Invested Amount as of the preceding Record
Date, or, in the case of the first Distribution Date, the Initial Invested
Amount.
"SHARED PRINCIPAL COLLECTIONS" shall mean, on any Business
Day, as the context requires, either (a) the amount allocated to the Series
1993-2 Variable Funding Certificates which, in accordance with subsection
4.6(d), may be applied in accordance with subsection 4.3(e) of the Agreement or
(b) the amounts allocated to the investor certificates (which are not retained
by the Transferor) of all Series which the applicable Supplements for such
Series specify are to be treated as "Shared Principal Collections" and which may
be applied to cover Principal Shortfalls with respect to the Series 1993-2
Variable Funding Investor Certificates.
"SPECIAL PAYMENT DATE" shall mean each Distribution Date
following the Monthly Period in which a Pay Out Event occurs with respect to an
Early Amortization Period.
15
"SUBORDINATION PERCENTAGE" shall mean 28%.
"TERMINATION PAYMENT DATE" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an Insolvency Event and the occurrence of the Scheduled Series 1993-2
Termination Date.
"THREE MONTH LIBOR TRANCHE" shall mean a portion of the Class
A-R Invested Amount designated by the Transferor to accrue interest at a Three
Month LIBOR Rate.
"THREE MONTH LIBOR RATE" shall mean a LIBOR Rate applicable
for a Fixed Period of three months.
"TRANCHE" shall mean an Alternate Base Rate Tranche or a LIBOR
Rate Tranche.
"TRANCHE RATE" shall mean the interest rate applicable to each
portion of the Class A-R Invested Amount, as determined by the Transferor, in
accordance with subsection 4.8(b), which shall be, with respect to any Fixed
Period LIBOR Rate, or the Alternate Base Rate, plus, in each case, the
Applicable Margin with respect thereto.
"TRANSFEROR FINANCE CHARGE COLLECTIONS" shall mean on any
Business Day the product of (a) the Finance Charge Collections for such Business
Day, (b) the Transferor Percentage and (c) the Floating Allocation Percentage.
"TRANSFEROR RETAINED CERTIFICATES" shall mean investor
certificates of any Series, including the Class B-R Certificates, which the
Transferor is required to retain for so long as the Transferor is the holder of
such Certificates.
"TRUST CERTIFICATE-BACKED NOTES" means notes offered on or
after the date hereof by the Transferor that are secured in whole or in part, by
the Class D Certificates and the Transferor Certificate.
"TWO MONTH LIBOR TRANCHE" shall mean a portion of the Class
A-R Invested Amount designated by the Transferor to accrue interest at a Two
Month LIBOR Rate.
16
"TWO MONTH LIBOR RATE" shall mean a LIBOR Rate applicable for
a Fixed Period of two months.
"VFC ADDITIONAL CLASS A-R INVESTED AMOUNT" shall have the mean
ing specified in subsection 6.15 of the Agreement.
"VFC ADDITIONAL CLASS B-R INVESTED AMOUNT" shall have the mean
ing specified in subsection 6.15 of the Agreement.
"VFC ADDITIONAL INVESTED AMOUNT" shall have the meaning
specified in subsection 6.15 of the Agreement.
"VFC PRINCIPAL COLLECTIONS" shall have the meaning specified
in subsection 4.6(f) of the Agreement.
SECTION 3. REASSIGNMENT AND TRANSFER TERMS. (a) The Class A-R
Certificates shall be subject to repurchase by the Transferor at its option, in
accor dance with the terms specified in subsection 12.2(a) of the Agreement, on
any Distribution Date on or after the Distribution Date on which the Class A-R
Invested Amount is reduced to an amount less than or equal to 10% of the CLASS
A-R Invested Amount as of the last day of the Revolving Period. The deposit
required in connection with any such repurchase and final distribution on such
Certificates shall be equal to the Class A-R Invested Amount plus accrued and
unpaid interest and any accrued and unpaid Facilities Costs on the Series 1993-2
Variable Funding Certif icates through the day prior to the Distribution Date on
which the final distribution occurs.
(b) In no event shall the Class B-R Certificates or any
interest therein be transferred, sold, exchanged, pledged, participated or
otherwise assigned hereunder, in whole or in part.
(c) Each Certificateholder, by accepting and holding such
Certificate or interest therein, will be deemed to have represented and
warranted that it is not (i) an employee benefit plan (as defined in Section
3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Internal Revenue Code, or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
SECTION 3A. CONVEYANCE OF INTEREST IN INTEREST RATE CAP; CAP
PROCEEDS ACCOUNT. (a) The Transferor hereby covenants and agrees that, on or
prior
17
to the Closing Date, it shall obtain Interest Rate Caps by entering into one or
more Interest Rate Cap Agreements such that the aggregate notional amount under
all such agreements shall, at any time, be at least equal to the Invested Amount
at such time. The Transferor hereby assigns, sets-over, conveys, pledges and
grants a security interest and lien (free and clear of all other Liens) to the
Trustee for the benefit of the Series 1993-2 Certificateholders, in all of the
Transferor's right, title and interest now existing or hereafter arising in and
to the Interest Rate Cap Agreements and the Interest Rate Caps arising
thereunder, together with the Cap Proceeds Amount and all other proceeds
thereof, as collateral security for the benefit of the Series 1993-2
Certificateholders. The Transferor hereby further agrees to execute all such
instru ments, documents and financing statements and take all such further
action requested by the Trustee to evidence and perfect the assignment of the
Interest Rate Cap Agreements and the Interest Rate Caps pursuant to this Section
3A.
(b) The Trustee, for the benefit of the Series 1993-2
Certificateholders, shall establish and maintain with a Qualified Institution in
the name of the Trust, a certain segregated trust account (the "CAP PROCEEDS
ACCOUNT"). All amounts received by the Trustee pursuant to the Interest Rate
Caps on the settlement date for any Interest Rate Cap (a "CAP SETTLEMENT DATE")
shall be depos ited in the Cap Proceeds Account. Funds in the Cap Proceeds
Account shall be in vested at the direction of the Servicer, in Cash Equivalents
with maturities not later than the next succeeding Business Day. Any earnings on
such invested funds shall be deposited and held in the Cap Proceeds Account and
applied in the same manner and priority as payments pursuant to the Interest
Rate Caps.
SECTION 4. DELIVERY AND PAYMENT FOR THE SERIES 1993-2 VARIABLE
FUNDING CERTIFICATES. The Transferor shall execute and deliver the Series 1993-2
Variable Funding Certificates to the Trustee for authentication in accordance
with Section 6.1 of the Agreement. The Trustee shall deliver the Series 1993-2
Variable Funding Certificates to or upon the order of the Transferor when
authenticated in accordance with Section 6.2 of the Agreement.
SECTION 5. FORM OF DELIVERY OF SERIES 1993-2 CERTIFICATES. The
Class A-R Certificates and the Class B-R Certificates shall be delivered as
Regis tered Certificates as provided in Section 6.1.
SECTION 6. ADDITION AND REMOVAL OF ACCOUNTS. (a) Paragraph (b)
of the definition of "AUTOMATIC ADDITIONAL ACCOUNT" in Article I of the
Agreement shall read in its entirety as follows and shall be applicable only to
the Series 1993-2 Variable Funding Certificates:
18
"(b) any other consumer revolving credit card account, Receivables from
which each Rating Agency permits to be added automatically to the
Trust; PROVIDED:
(i) that the Transferor shall have (x) received notice from
each Rating Agency that the inclusion of such accounts as
Automatic Additional Accounts pursuant to this paragraph (b)
will not result in the reduc tion or withdrawal of its then
existing rating of any Class of Investor Certificates then
issued and outstanding and (y) delivered such notice to the
Trustee;
(ii) the Facility Agent on behalf of the Required Revolving
Purchas ers shall have consented in writing to including as
Automatic Addi tional Accounts the consumer revolving credit
card accounts the receivables of which have been purchased
(but the accounts of which have not been originated) by an
Originator other than in a transaction covered by (iii) below;
PROVIDED, FURTHER, that no such consent shall be required
unless and until such time as the Outstanding Balance of
Principal Receivables conveyed to the Trust (as determined on
the date such Receivables are so conveyed) pursuant to (x)
subsection 2.6(a) permitted by this clause (ii) and (y)
subsection 2.6(e)(viii), is greater than $5,000,000;
(iii) the Facility Agent on behalf of the Required Revolving
Purchas ers shall have consented in writing to including as
Automatic Addi tional Accounts the consumer revolving credit
card accounts the receivables of which have been originated
with an entity substantially all the assets or capital stock
of which have been purchased by SRI or an Affiliate of SRI;
PROVIDED, FURTHER, (A) that no such consent shall be required
with respect to any single conveyance of Receivables pursuant
to an acquisition of an entity by SRI or an Affiliate of SRI
within any Measuring Period unless the Outstanding Balance of
Prin cipal Receivables so conveyed during such Measuring
Period (as de termined on the day of each initial conveyance
to the Trust and whether initially conveyed as Automatic
Additional Accounts or Supplemental Accounts) exceeds 15% of
the Outstanding Balance of Principal Receivables in the Trust
on the day of such conveyance, and (B) that in the event of a
conveyance of Receivables pursuant to an acquisition as
contemplated hereunder, the Transferor shall in any event,
whether or not consent of the Facility Agent is required, pro
vide at least 30 days prior written notice of such acquisition
in reason able detail (including but not limited to all
information provided to each Rating Agency with respect to the
subject Receivables) to the Facility Agent and the Trustee and
a certificate of a senior officer of the Transferor stating
that the conveyance of Receivables to the Trust as a result of
such acquisition will not have a material adverse effect on
the Holders of the Class A-R Certificates;
(iv) the Facility Agent on behalf of all of the Revolving
Purchasers shall have consented in writing to including as
Automatic Additional Accounts the consumer revolving credit
card accounts the receivables of which have been originated
with an entity that is not an Affiliate of SRI at the time of
such inclusion; and
(v) appropriate UCC filings have been made."
(b) Subsections (viii), (ix) and (x) of Section 2.6(e) of the
Agreement shall read in their entirety as follows and shall be applicable only
to the Series 1993-2 Variable Funding Certificates:
"(viii) The Facility Agent on behalf of the Required Revolving
Purchasers shall have consented in writing to including as Supplemental
Accounts the credit card revolving accounts the receivables of which
have been purchased (but the accounts of which have not been
originated) by an Originator other than in a transaction covered by
(ix) below; PROVIDED, that no such consent shall be required unless and
until such time as the Outstanding Balance of the Principal Receivables
conveyed to the Trust (as determined on the date such Principal
Receivables are so conveyed) as contemplated by (x) this subsec tion
2.6(e)(viii) and (y) subsection 2.6(a) permitted by clause (ii) of para
graph (b) of the definition of "Automatic Additional Account," is
greater than $5,000,000;
(ix) The Facility Agent on behalf of the Required Revolving Purchasers
shall have provided written consent with respect to including as
Supplemental Accounts the credit card revolving accounts which have
originated with an entity substantially all the assets or capital stock
of which have been pur chased by SRI or an Affiliate thereof; PROVIDED,
that no such consent shall be required with respect to any single
conveyance of Receivables pursuant to an acquisition of an entity by
SRI or an Affiliate of SRI within any Measuring Period unless the
Outstanding Balance of Principal Receivables so conveyed
19
during such Measuring Period (as determined on the day of conveyance to
the Trust and whether conveyed as Supplemental Accounts or Automatic
Additional Accounts) exceeds 15% of the Outstanding Balance of
Principal Receivables in the Trust on the day of such conveyance;
PROVIDED, FURTHER, that in the event of a conveyance of Receivables
pursuant to an acquisition as contemplated hereunder, the Transferor
shall in any event provide at least 30 days prior written notice of
such acquisition in reasonable detail (including, but not limited to,
all information provided to each Rating Agency with respect to the
subject Receivables) to the Facility Agent and a certificate of a
senior officer of the Transferor stating that the conveyance of
Receivables to the Trust as a result of such acquisition will not have
a material adverse effect on the Holders of the Class A-R Certificates;
(x) The Facility Agent on behalf of all of the Revolving Purchasers
shall have consented in writing to including as Supplemental Accounts
the con sumer revolving credit card accounts the receivables of which
have been originated with an entity that is not an Affiliate of SRI at
the time of such inclusion; and
(xi) appropriate UCC filings have been made."
(c) Section 2.7(d) of the Agreement shall read in its entirety
as follows and shall be applicable only to the Series 1993-2 Variable Funding
Certificates:
"Notwithstanding the foregoing, and provided that there shall be no
more than one removal of Accounts in any Monthly Period and no such
removal shall cause the Transferor Interest to be less than the Minimum
Transferor Interest, the Transferor will be permitted to designate
Removed Accounts in connection with the sale by SRI or any Affiliate of
SRI of all or substantially all of the capital stock or assets of any
Originator if (A) the conditions in clauses (i), (ii)(a), (iii) and
(iv) of subsection 2.7(b) have been met and the Transferor shall have
delivered to the Trustee and the Facility Agent an Offi cer's
Certificate confirming the compliance with such conditions, (B) with
respect to the second and subsequent such sales, the Facility Agent on
behalf of the Required Revolving Purchasers has consented in writing to
such sale."
SECTION 7. ARTICLE IV OF AGREEMENT. Sections 4.1, 4.2 and 4.3
of the Agreement shall read in their entirety as provided in the Agreement.
Article IV
20
of the Agreement (except for Sections 4.1, 4.2 and 4.3 thereof) shall read in
its entirety as follows and shall be applicable only to the Series 1993-2
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 RIGHTS OF CERTIFICATEHOLDERS. The Series 1993-2
Variable Funding Certificates shall represent undivided interests in the Trust,
consisting of the right to receive, to the extent necessary to make the required
payments with respect to such Series 1993-2 Variable Funding Certificates at the
times and in the amounts specified in this Agreement, (a) the Floating
Allocation Percentage and Fixed Allocation Percentage (as applicable from time
to time) of Collections available in the Collection Account, (b) funds allocable
to the Series 1993-2 Variable Funding Certificates on deposit in the Collection
Account and the Equalization Account and (c) funds on deposit in the Interest
Funding Account, the Principal Account, the Cap Proceeds Account and the
Distribution Account (for such Series, the "SERIES 1993-2 CERTIFICATEHOLDERS'
INTEREST"). The Class B-R Invested Amount shall be subordinated to the Class A-R
Certificates to the extent provided in this Article IV. The Class B-R
Certificates will not have the right to receive pay ments of principal until the
Class A-R Invested Amount has been paid in full.
Section 4.5 COLLECTIONS AND ALLOCATION; PAYMENTS ON
EXCHANGEABLE TRANSFEROR CERTIFICATE.
(a) COLLECTIONS. The Servicer will apply or will instruct the
Trustee to apply all funds on deposit in the Collection Account and the
Equalization Account allocable to the Series 1993-2 Variable Funding
Certificates, and all funds on deposit in the Interest Funding Account, the
Principal Account, the Defeasance Account and the Distribution Account
maintained for this Series, as described in this Article IV.
(b) [Reserved]
(c) PAYMENTS TO THE HOLDER OF THE EXCHANGEABLE TRANSFEROR
CERTIFICATE. On each Business Day, the Servicer shall determine whether a Pay
Out Event is deemed to have occurred with respect to the Series 1993-2 Variable
Funding Certificates, and the Servicer shall allocate and pay Collections in
21
accordance with the Daily Report with respect to such Business Day to the Holder
of the Exchangeable Transferor Certificate as follows:
(i) For each Business Day with respect to the Revolving
Period, in addition to amounts allocated and paid to the Holder of the
Exchangeable Transferor Certificate pursuant to subsection 4.3(b) of
the Agreement, an amount equal to the product of the Class B-R Floating
Allocation Percentage and the amount of Principal Collections on such
Business Day.
(ii) For each Business Day with respect to the Amortization
Period prior to the Business Day on which an amount equal to the Class
A-R Invested Amount has been deposited in the Principal Account to be
applied to the payment of principal to the Class A-R
Certificateholders, in addition to amounts allocated and paid to the
Holder of the Exchangeable Transferor Certificate pursuant to
subsection 4.3(b) of the Agreement, an amount equal to the product of
the Class B-R Fixed Allocation Percentage and the amount of Principal
Collections on such Business Day.
(iii) For each Business Day on and after the day on which
Principal Collections are being deposited in the Principal Account
pursuant to Section 4.6(c)(iv), the amount of payments made to the
Holder of the Exchangeable Transferor Certificate shall be determined
only as provided in subsection 4.3(b) of the Agreement.
Notwithstanding the foregoing, amounts payable to the Holder
of the Exchangeable Transferor Certificate pursuant to subsections 4.5(c)(i) or
(ii) shall instead be deposited in the Equalization Account to the extent
necessary to prevent the Transferor Interest from being less than the Minimum
Transferor Interest.
The allocations to be made pursuant to this subsection 4.5(c)
also apply to deposits into the Collection Account that are treated as Principal
Collec tions, including Adjustment Payments, payment of the reassignment price
pursuant to Section 2.4(e) of the Agreement and proceeds from the sale,
disposition or liquidation of the Receivables pursuant to Section 9.2, 10.2(a),
12.1 or 12.2(b) of the Agreement and Section 3 of this Series Supplement. Such
deposits to be treated as Collections will be allocated as Finance Charge
Receivables or Principal Receiv ables as provided in the Agreement.
Section 4.6 APPLICATION OF FUNDS ON DEPOSIT IN THE COLLECTION
ACCOUNT FOR THE CERTIFICATES. (a) On each Business Day falling in the Revolving
22
Period, the Servicer shall deliver to the Trustee a Daily Report in which it
shall in struct the Trustee to withdraw, and the Trustee, acting in accordance
with such instructions, shall withdraw, to the extent (x) of the sum of (i) the
Floating Alloca tion Percentage of Finance Charge Collections available in the
Collection Account plus (ii) investment earnings on amounts on deposit in the
Principal Account (the "AVAILABLE SERIES 1993-2 FINANCE CHARGE COLLECTIONS")
plus (y) the Daily Cap Proceeds Amount, if any, the amounts required to be
withdrawn from the Collection Account and the Cap Proceeds Account pursuant to
subsections 4.6(a)(i) through 4.6(a)(xviii).
(i) CLASS A-R INTEREST. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw first from the Cap Proceeds Account
for such Business Day, to the extent of the Daily Cap Proceeds Amount,
and then from the Collection Account and deposit into the Interest
Funding Account, to the extent of Available Series 1993-2 Finance
Charge Collections for such Business Day, an amount equal to the Class
A-R Interest accrued since the preceding Business Day PLUS any Class
A-R Interest due with respect to any prior Business Day but not
previously deposited in the Interest Funding Ac count PLUS additional
interest at the Class A-R Certificate Rate for interest that has
accrued on interest that was due pursuant to this subsection but was
not previously deposited in the Interest Funding Account.
(ii) INVESTOR SERVICING FEE. On each Business Day on
which SRI or an Affiliate of SRI is not the Servicer, the Trustee,
acting in accor dance with instructions from the Servicer, shall
withdraw from the Collection Account and distribute to the Servicer, to
the extent of any Available Series 1993-2 Finance Charge Collections
remaining after giving effect to the with drawals pursuant to
subsection 4.6(a)(i) an amount equal to the lesser of (x) any such
remaining Available Series 1993-2 Finance Charge Collections and (y)
the excess of (i) the Servicing Fee for such Monthly Period plus any
unpaid Servicing Fees from prior Monthly Periods over (ii) any amounts
with respect thereto previously distributed to the Servicer during such
Monthly Period.
(iii) INVESTOR DEFAULT AMOUNT. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of any
Available Series 1993-2 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.6(a)(i) and
(ii), an amount equal to the
23
aggregate Investor Default Amount for such Business Day PLUS the unpaid
Investor Default Amount for any previous Business Day, such amount to
be treated during the Revolving Period as Shared Principal Collections.
(iv) REIMBURSEMENT OF CLASS A-R INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 1993-2 Finance Charge
Collections for such Business Day (after giving effect to the
withdrawals pursuant to subsections 4.6(a)(i) through (iii)), an amount
equal to the unreimbursed Class A-R Investor Charge-Offs, such amount
to be treated during the Revolving Period as Shared Principal
Collections.
(v) CERTAIN FACILITIES COSTS. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and deposit in the Interest
Funding Account, to the extent of any Available Series 1993-2 Finance
Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) through (iv), the portion of the
Facilities Costs consti tuting the Commitment Fees, accrued since the
preceding Business Day PLUS any such Facilities Costs due pursuant to
Section 4.6 of the Agreement with respect to any prior Business Day but
not previously deposited in the Interest Funding Account.
(vi) REIMBURSEMENT OF CLASS B-R INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 1993-2 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.6(a)(i) through (v), an amount equal to the
unreimbursed Class B-R Investor Charge-Offs, such amount during the
Revolving Period to be treated as Shared Principal Collec tions.
(vii) OTHER FACILITIES COSTS. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay to the Class A-R
Certificateholders, to the extent of any Available Series 1993-2
Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.6(a)(i) through (vi), an amount
equal to the sum of all Facilities Costs not provided for pursuant to
subsection 4.6(a)(v) which have
24
arisen prior to such Business Day.
(viii) INVESTOR SERVICING FEE. On each Business Day,
if SRI or an Affiliate of SRI is the Servicer, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer, to the extent of any
Available Series 1993-2 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.6(a)(i)
through (vii), the Investor Servicing Fee accrued since the preceding
Business Day PLUS any Investor Servicing Fee due with respect to any
prior Business Day but not distributed to the Servicer.
(ix) CLASS B-R INTEREST. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay to the Class B-R
Certificateholders to the extent of any Available Series 1993-2 Finance
Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.6(a)(i) through (viii) of the Agreement, an
amount equal to (x) the amount of interest which has accrued with
respect to the outstanding aggregate principal amount of the Class B-R
Certificates at the Class B-R Certificate Rate but which has not been
paid to the Class B-R Certificateholders PLUS (y) additional interest
at the Class B-R Certificate Rate for interest that has accrued on
interest that was due pursuant to this subsection but was not
previously paid to the Class B-R Certificateholders.
(x) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts
remaining in the Collection Account to the extent of any Available
Series 1993-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.6(a)(i) through (ix),
shall be treated as Excess Finance Charge Collections, and the Servicer
shall direct the Trustee in writing on each Business Day to withdraw
and the Trustee, acting in accordance with such instructions, shall
withdraw such amounts from the Collection Account, FIRST, make such
amounts available as Excess Finance Charge Collections to pay to
Certificateholders of other Series to the extent of shortfalls, if any,
in amounts payable to such Certificateholders from Finance Charge
Collections (but not from Excess Finance Charge Collections) allocated
to such other Series, SECOND, to pay any unpaid commercially reasonable
costs and expenses of a Successor Servicer, if any, THIRD, to make any
required Adjustment Payment that the Transferor has theretofore failed
to make pursuant to Section 3.8(a) with respect to any
25
preceding Monthly Period, and, FOURTH, pay any remaining Excess Finance
Charge Collections to the Transferor.
(b) On each Business Day prior to the last Business Day of any
Monthly Period with respect to the Amortization Period, the Servicer shall
instruct the Trustee in writing to withdraw and the Trustee, acting in
accordance with such instructions, shall withdraw, to the extent of Available
Series 1993-2 Finance Charge Collections plus the Daily Cap Proceeds Amount, if
any, the amounts re quired to be withdrawn from the Collection Account and the
Cap Proceeds Account pursuant to subsections 4.6(b)(i) through 4.6(b)(viii) of
the Agreement.
(i) CLASS A-R INTEREST. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account, to the extent of
the Daily Cap Proceeds Amount, and then from the Collection Account and
deposit in the Interest Funding Account, to the extent of Available
Series 1993-2 Finance Charge Collections for such Business Day, an
amount equal to the Class A-R Interest accrued since the preceding
Business Day PLUS any Class A-R Interest due with respect to any prior
Business Day but not previously deposited in the Interest Funding
Account, PLUS additional interest at the Class A-R Certificate Rate for
interest that has accrued on interest that was due pursuant to this
subsection but was not previously deposited in the Interest Funding
Account.
(ii) INVESTOR SERVICING FEE. On each Business Day on
which SRI or an Affiliate of SRI is not the Servicer, the Trustee,
acting in accor dance with instructions from the Servicer, shall
withdraw from the Collection Account and distribute to the Servicer, to
the extent of any Available Series 1993-2 Finance Charge Collections
remaining after giving effect to the with drawals pursuant to
subsection 4.6(b)(i) an amount equal to the lesser of (x) any such
remaining Available Series 1993-2 Finance Charge Collections and (y)
the excess of (i) the Servicing Fee for such Monthly Period plus any
unpaid Servicing Fees from prior Monthly Periods over (ii) any amounts
with respect thereto previously distributed to the Servicer during such
Monthly Period.
(iii) INVESTOR DEFAULT AMOUNT. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Available
Series 1993-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.6(b)(i) and (ii), an
amount equal to the
26
aggregate Investor Default Amount for such Business Day PLUS the unpaid
Investor Default Amount for any previous Business Day, such amount to
be applied pursuant to subsections 4.6(e)(i) or (ii) to the applicable
Class or Classes of Certificateholders on such Business Day.
(iv) REIMBURSEMENT OF CLASS A-R INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account to the extent of Available Series 1993-2 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.6(b)(i) through (iii), an amount equal to the
unreimbursed Class A-R Investor Charge-Offs, such amount to be paid
pursuant to subsections 4.6(e)(i) or (ii) to the applicable Class or
Classes of Certificateholders on such Business Day.
(v) CERTAIN FACILITIES COSTS. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and deposit in the Interest
Funding Account, to the extent of Available Series 1993-2 Finance
Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.6(b)(i) through (iv), the portion of the
Facilities Costs consti tuting the Commitment Fees, accrued since the
preceding Business Day PLUS any such Facilities Costs due pursuant to
Section 4.6 of this Agreement with respect to any prior Business Day
but not previously deposited in the Interest Funding Account or
distributed to the Class A-R Certificateholders.
(vi) REIMBURSEMENT OF CLASS B-R INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of Available Series 1993-2 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.6(b)(i) through (v), an amount equal to the
unreimbursed Class B-R Investor Charge-Offs, such amount to be applied
pursuant to subsections 4.6(e)(i) or (ii) to the applicable Class or
Classes of Certificateholders on such Business Day.
(vii) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts
remaining in the Collection Account to the extent of any Available
Series 1993-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.6(b)(i) through (vi),
shall be treated as Excess Finance Charge Collections, and the Trustee
shall deposit any such remaining Available Series 1993-2 Finance Charge
Collections into the
27
Collection Account and shall add such funds to the Available Series
1993-2 Finance Charge Collections on each subsequent Business Day in
such Monthly Period until the last Business Day of the related Monthly
Period.
(c) On the last Business Day of each Monthly Period with
respect to the Amortization Period, the Servicer shall instruct the Trustee in
writing to withdraw and the Trustee, acting in accordance with such
instructions, shall withdraw, to the extent of Available Series 1993-2 Finance
Charge Collections plus the Daily Cap Proceeds Amount, if any, the amounts
required to be withdrawn from the Collection Account and the Cap Proceeds
Account pursuant to subsections 4.6(c)(i) through 4.6(c)(x) of the Agreement.
(i) CLASS A-R INTEREST. On such Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account, to the extent of
the Daily Cap Proceeds Amount, and then from the Collection Account and
deposit in the Interest Funding Account, to the extent of Available
Series 1993-2 Finance Charge Collections for such Business Day, an
amount equal to the Class A-R Interest accrued the preceding Business
Day PLUS any Class A-R Interest due with respect to any prior Business
Day but not previously deposited in the Interest Funding Account, PLUS
additional interest at the Class A-R Certificate Rate for interest that
has accrued on interest that was due pursuant to this subsection but
was not previously deposited in the Interest Funding Account.
(ii) INVESTOR SERVICING FEE. On such Business Day, if
SRI or an Affiliate of SRI is not the Servicer, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer, to the extent of
Available Series 1993-2 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsection 4.6(c)(i), an
amount equal to the lesser of (x) any such remaining Available Series
1993-2 Finance Charge Collections and (y) the excess of (i) the
Servicing Fee for such Monthly Period plus any unpaid Servicing Fees
from prior Monthly Periods over (ii) any amounts with respect thereto
previously distributed to the Servicer during such Monthly Period.
(iii) INVESTOR DEFAULT AMOUNT. On such Business Day,
the Trustee acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of Available
Series 1993-2 Finance Charge Collections remaining after giving effect
to the
28
withdrawals pursuant to subsections 4.6(c)(i) and (ii), an amount equal
to the aggregate Investor Default Amount for such Business Day PLUS the
unpaid Investor Default Amount for any previous Business Day, such
amount to be applied pursuant to subsections 4.6(e)(i) or (ii) to the
applicable Class or Classes of Certificateholders on such Business Day.
(iv) REIMBURSEMENT OF CLASS A-R INVESTOR CHARGE-OFFS.
On such Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of Available Series 1993-2 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.6(c)(i) through (iii), an amount equal to the
unreimbursed Class A-R Investor Charge-Offs, such amount to be applied
pursuant to subsection 4.6(e)(i) or (ii) to the applicable Class or
Classes of Certificateholders on such Business Day.
(v) CERTAIN FACILITIES COSTS. On such Business Day,
the Trustee acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and deposit into the
Interest Funding Account, to the extent of Available Series 1993-2
Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.6(c)(i) through (iv), the portion
of the Facilities Costs consti tuting the Commitment Fees, PLUS any
such Facilities Costs due pursuant to Section 4.6 of the Agreement with
respect to any prior Business Day but not distributed to the Class A-R
Certificateholders.
(vi) REIMBURSEMENT OF CLASS B-R INVESTOR CHARGE-OFFS.
On such Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of Available Series 1993-2 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.6(c)(i) through (v), an amount equal to the
unreimbursed Class B-R Investor Charge-Offs, such amount to be applied
pursuant to subsections 4.6(e)(i) or (ii) to the applicable Class or
Classes of Certificateholders on such Business Day.
(vii) OTHER FACILITIES COSTS. On such Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and deposit in the Interest
Funding Account, to the extent of Available Series 1993-2 Finance
Charge Collec tions remaining after giving effect to the withdrawals
pursuant to subsections 4.6(c)(i) through (vi), an amount equal to all
Facilities Costs not provided for
29
pursuant to subsection 4.6(c)(v) which have arisen prior to such
Business Day.
(viii) INVESTOR SERVICING FEE. On such Business Day,
if SRI or an Affiliate of SRI is the Servicer, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer, to the extent of
Available Series 1993-2 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsection 4.6(c)(i)
through (vii), the Investor Servicing Fee accrued since the preceding
Business Day PLUS any Investor Servicing Fee due with respect to any
prior Business Day but not distributed to the Servicer.
(ix) CLASS B-R INTEREST. On such Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay to the Class B-R
Certificateholders to the extent of Available Series 1993-2 Finance
Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.6(c)(i) through (viii), an amount equal to
(x) the amount of interest which has accrued with respect to the
outstanding aggregate principal amount of the Class B-R Certificates at
the Class B-R Certificate Rate but which has not been paid to the Class
B-R Certificateholders PLUS (y) additional interest at the Class B-R
Certificate Rate for interest that has accrued on interest that was due
pursuant to this subsection but was not previously paid to the Class
B-R Certificateholders.
(x) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts
remaining in the Collection Account to the extent of any Available
Series 1993-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.6(c)(i) through (ix),
shall be treated as Excess Finance Charge Collections, and the Servicer
shall direct the Trustee on such Business Day to withdraw such amounts
from the Collection Account, FIRST, make such amounts available as
Excess Finance Charge Collections to pay to Certificateholders of other
Series to the extent of short falls, if any, in amounts payable to such
Certificateholders from Finance Charge Collections (but not from Excess
Finance Charge Collections) allocated to such other Series, SECOND,
then to pay any unpaid commercially reasonable costs and expenses of a
Successor Servicer, if any, THIRD, to make any required Adjustment
Payment that the Transferor has theretofore failed to make pursuant to
Section 3.8(a) with respect to any preceding Monthly
30
Period, and, FOURTH, pay any remaining Excess Finance Charge
Collections to the Transferor.
(d) For each Business Day falling in the Revolving Period, the
funds on deposit in the Collection Account to the extent of the product of (i)
the Class A-R Floating Allocation Percentage and (ii) Principal Collections with
respect to such Business Day will be treated as Shared Principal Collections and
applied, pursuant to the written direction of the Servicer in the Daily Report
for such Business Day, as provided in Subsection 4.3(e) of the Agreement.
(e) For each Business Day on and after the Amortization Period
Commencement Date, the amount of funds on deposit in the Collection Account as
described below will be distributed, pursuant to the written direction of the
Servicer in the Daily Report for such Business Day in the following priority:
(i) on and prior to the day on which an amount equal
to the Class A-R Invested Amount has been deposited in the Principal
Account to be applied to the payment of Class A-R Principal, an amount
(not in excess of the Class A-R Invested Amount) equal to the sum of
(w) the product of the Class A-R Fixed Allocation Percentage and
Principal Collections in the Col lection Account at the end of the
preceding Business Day, (x) any amount on deposit in the Equalization
Account allocated to the Class A-R Certificates on such Business Day
pursuant to subsection 4.6(h), (y) amounts to be paid pursuant to
subsections 4.6(b)(iii), (iv) and (vi) or 4.6(c)(iii), (iv) and (vi) on
such Business Day and (z) the amount of Shared Principal Collections
allocated to the Series 1993-2 Variable Funding Certificates in
accordance with Section 4.11 on such Business Day, will be deposited
into the Principal Account; and
(ii) on and after the day on which an amount equal to
the Class A-R Invested Amount has been deposited in the Principal
Account, an amount (not in excess of the Class B-R Invested Amount)
equal to the sum of (w) an amount equal to the product of the Class B-R
Fixed Allocation Percentage and Principal Collections in the Collection
Account at the end of the preceding Business Day (or, in the case of
the first Distribution Date following the date on which the Class A-R
Invested Amount is deposited in the Principal Account, if it is not on
the first day of a Monthly Period, the Class B-R Fixed Allocation
Percentage of Principal Collections from the date on which such deposit
is made), (x) any amount on deposit in the Equaliza tion Account
allocated to the Class B-R Certificates on such Business Day
31
pursuant to subsection 4.6(h), (y) the amount, if any, allocated to be
paid to the Class B-R Certificates pursuant to subsections 4.6(b)(iii)
and (vi) or 4.6(c)(iii) or (vi) with respect to such Business Day and
(z) the amount of Shared Principal Collections allocated to the Series
1993-2 Variable Funding Certificates in accordance with Section 4.11 on
such Business Day (such sum, the "CLASS B-R DAILY PRINCIPAL AMOUNT")
will be deposited into the Principal Account.
(f) Pursuant to Section 4.3(e), prior to the Amortization
Period Commencement Date, and in accordance with Section 12 of the Revolving
Certificate Purchase Agreement, the Transferor may, at its option (and under
certain conditions shall), apply Shared Principal Collections, after certain
prior applications with respect thereto pursuant to Section 4.3(e) of the
Agreement, to make payments of principal or deposits to the Principal Account
with respect to the Variable Funding Certificates. Such Shared Principal
Collections allocated to the Variable Funding Certificates ("VFC Principal
Collections") may be applied on each Business Day with respect to the Revolving
Period, at the option of the Transferor and in an amount to be determined by the
Transferor (which option shall be exercised under the circumstances described in
Section 12 of the Revolving Certificate Purchase Agreement in the amount set
forth therein), to make payments of principal or depos its to the Principal
Account either for the benefit of the Class A-R Certificateholders or, if after
giving effect to such payment, both (x) no Series 1993-2 Pay Out Event shall
have occurred and be continuing and (y) the Class B-R Invested Amount shall not
be less than the product of (1) the Subordination Percentage times (2) the
Invested Amount, to the Class A-R Certificateholders and the Class B-R
Certificate holders pro rata based on the Invested Amount of each such Class on
such Business Day. The Transferor shall deposit such funds into the Principal
Account and only make payments of such amounts from the Principal Account as
described in Section 4.9(a)(i) of this Agreement.
(g) Notwithstanding the foregoing provisions of this Section
4.6, if any holder of a Class A-R Certificate does not elect to approve an
Extension hereunder (an "EXITING INVESTOR CERTIFICATEHOLDER"), as provided in
subsection 6.16(f) of this Agreement, on each Business Day after the 60th day
prior to the Extension Date with respect to such Exiting Investor
Certificateholder, the Servicer shall instruct the Trustee in writing to pay,
and the Trustee, acting in accordance with such instructions, shall pay to the
Exiting Investor Certificateholder an amount equal to the lesser of (i) the
portion of the Class A-R Invested Amount represented by such Exiting Investor
Certificateholder's Class A-R Certificateholders' Interest in effect on the
Election Date and (ii) the amount of Shared Principal Collections allocable to
the
32
Investor Certificates pursuant to Section 4.3(e) of the Agreement on such
Business Day. Upon making any such payment to such Exiting Investor
Certificateholder, the Transferor may, at its option, apply amounts allocable to
the Transferor pursuant to subsection 4.5(c) or allocable to the Transferor with
respect to any other Transferor Retained Class pursuant to any other Supplement,
to make a payment to the Class B-R Certificates in an amount not to exceed the
amount which would cause the Class B-R Invested Amount to be equal to and not
less than the product of (1) the Subor dination Percentage times (2) the new
Invested Amount.
(h) On the first Business Day of the Amortization Period funds
on deposit in the Equalization Account will be deposited in the Principal
Account to the extent of the lesser of (x) the Invested Amount and (y) the
product of (i) the product of (A) 100% minus the Transferor Percentage minus the
fixed allocation percentage represented by any Transferor Retained Certificates
and (B) the amount on deposit in the Equalization Account at the beginning of
the Amortization Period and (ii) the Senior Equalization Account Percentage with
respect to Series 1993-2. Any funds in the Equalization Account on any
subsequent day will be allocated to the Class A-R Certificates to the extent
that Default Amounts allocated to the Transferor Interest or adjustments as
described in Section 3.8 of the Agreement would cause the Transferor Interest to
be less than the Minimum Transferor Interest and, with respect to any credit
adjustment, the Transferor has not made an Adjustment Payment to the Collection
Account in an amount equal to the least of (i) the product of (A) such reduction
below the Minimum Transferor Interest and (B) the Senior Equalization Account
Percentage with respect to Series 1993-2, (ii) the product of (A) the amount of
funds available in the Equalization Account and (B) the Senior Equalization
Account Percentage and (iii) the Class A-R Adjusted Invested Amount. On any
Determination Date that occurs during the Amortization Period and prior to the
Class B-R Principal Payment Commencement Date on which a Class B-R Investor
Charge-Off is recorded, funds in the Equalization Account shall be allocated to
the Class A-R Certificates in an amount equal to the least of (i) the amount of
such Class B-R Investor Charge-Off, (ii) the product of (A) the amount of funds
available in the Equalization Account and (B) the Senior Equalization Account
Percentage with respect to Series 1993-2 and (iii) the aggregate remaining Class
A-R Adjusted Invested Amount. The amounts allocated in the preceding two
sentences will be allocated, in accordance with written instructions from the
Servicer, to the Class A-R Certificates in an amount not to exceed the Class A-R
Invested Amount after subtracting therefrom any amounts to be deposited in the
Principal Account with respect thereto pursuant to subsections 4.6(e)(i)(w) and
(y). On and after the Class B-R Principal Payment Commencement Date any amounts
remaining on deposit in the Equalization Account and allocated to
33
the Series 1993-2 Certificates will be deposited in the Principal Account in an
amount not to exceed the Class B-R Invested Amount after subtracting therefrom
any amounts to be deposited in the Principal Account with respect thereto
pursuant to subsections 4.6(e)(ii)(w) and (y).
(i) Any application of funds pursuant to subsections
4.6(a)(x), (b)(x) or 4.6(d) shall not discharge the Transferor from its
obligation to make any Adjustment Payment pursuant to Section 3.8 of the
Agreement.
(j) The Transferor shall maintain the Class B-R Adjusted
Invested Amount at an amount greater than zero at any time that the Class A-R
Invested Amount is greater than zero.
Section 4.7 COVERAGE OF CLASS A-R REQUIRED AMOUNT FOR THE
SERIES 1993-2 VARIABLE FUNDING CERTIFICATES. (a) On each Business Day, the
Servicer shall determine the Class A-R Required Amount, if any.
(b) In the event that the Class A-R Required Amount for a
Business Day is greater than zero, the Servicer shall reflect such positive
Class A-R Required Amount on the Daily Report for such Business Day. To the
extent that any amounts are on deposit in the Equalization Account on any
Business Day, the Servicer shall apply Transferor Finance Charge Collections in
an amount equal to the excess of (x) the product of (a) the Base Rate and (b)
the product of (i) the amount on deposit in the Equalization Account and (ii)
the number of days elapsed since the previous Business Day DIVIDED BY the actual
number of days in such year OVER (y) the aggregate amount of all earnings since
the previous Business Day available from the Cash Equivalents in which funds on
deposit in the Equalization Account are invested in the manner specified in
subsections 4.6(a)(i) through (v) and (vii) or during the Amortization Period in
the manner specified in subsections 4.6(b)(i) through (v) or subsections
4.6(c)(i) through (v) and (vii), as applicable. To the extent of any remaining
Class A-R Required Amount, the Servicer shall apply all or a portion of the
Excess Finance Charge Collections of other Series with respect to such Business
Day allocable to the Series 1993-2 Variable Funding Certificates in an amount
equal to the remaining Class A-R Required Amount for such Business Day in the
manner specified in subsections 4.6(a)(i) through (v) and (vii) or during the
Amortization Period in the manner specified in subsections 4.6(b)(i) through (v)
or subsections 4.6(c)(i) through (v) and (vii), as applicable. Excess Finance
Charge Collections allocated to the Series 1993-2 Variable Funding Certificates
for any Business Day shall mean an amount equal to the product of (x) Excess
Finance Charge Collections available from all other Series for such Business Day
and (y) a
34
fraction, the numerator of which is the Class A-R Required Amount for such
Business Day remaining after the application of Transferor Finance Charge Col
lections and the denominator of which is the aggregate amount of shortfalls in
re quired amounts or other amounts to be paid from Finance Charge Collections
for all Series for such Business Day.
(c) In the event that the Class A-R Required Amount
(excluding for purposes of this subsection (c) any remaining amount thereof
arising due to shortfalls in the amounts payable pursuant to clause (v) of
subsections 4.6(a), 4.6(b) and 4.6(c)) for such Business Day exceeds the amount
of Transferor Finance Charge Collections and Excess Finance Charge Collections
allocated thereto on such Business Day, a portion of the Principal Collections
allocable to the Class B-R Certificates in an amount equal to the lesser of such
excess and the product of (i)(x) during the Revolving Period, the Class B-R
Floating Allocation Percentage or (y) during the Amortization Period, the Class
B-R Fixed Allocation Percentage and (ii) the amount of Principal Collections in
the Collection Account with respect to such Business Day shall be allocated to
the Class A-R Certificates and applied on such Business Day in accordance with
the provisions during the Revolving Period of subsections 4.6(a)(i) through (iv)
and during the Amortization Period, in accordance with the provisions of
subsections 4.6(b)(i) through (iv) or 4.6(c)(i) through (iv), as applicable,
PROVIDED, HOWEVER, that with respect to amounts applied pursuant to subsections
4.6(a)(ii), (b)(ii) and (c)(ii), such amounts shall be applied only to the
extent of the Class A-R Floating Allocation Percentage of the shortfall arising
pursuant to such subsections (any such amount so applied, "REALLOCATED PRINCIPAL
COLLECTIONS").
Section 4.8 PAYMENT OF CERTIFICATE INTEREST, FACILITIES COSTS
AND CONVERSIONS AND CONTINUATION. (a) The Trustee, acting in accordance with
instruc tions from the Servicer set forth in the Daily Report for such day,
shall withdraw from amounts on deposit in the Interest Funding Account (and, if
applicable, the Defeasance Account) and deposit in the Distribution Account (1)
on each Distribution Date occurring on the last day of a Fixed Period for any
LIBOR Rate Tranche, an amount equal to the amount of interest calculated in
accordance with Section 14 of the Revolving Certificate Purchase Agreement
accrued at the applicable Tranche Rate on the portion of the Class A-R Invested
Amount invested in such LIBOR Rate Tranche, (2) on each Distribution Date
arising pursuant to clause (iii) or (iv) of the definition thereof, the
aggregate amount of interest calculat ed in accordance with Section 14 of the
Revolving Certificate Purchase Agreement accrued at the applicable Tranche Rate
for each Alternate Base Rate Tranche on all Alternate Base Rate Tranches
occurring during the period from the immediately
35
preceding Distribution Date for such Alternate Base Rate Tranches to the
applicable Distribution Date, (3) on each Distribution Date occurring with
respect to a Monthly Distribution Date, (A) the aggregate amount of interest
calculated in accordance with Section 14 of the Revolving Certificate Purchase
Agreement accrued at the Alternate Base Rate for each Alternate Base Rate
Tranches during the period from the immediately preceding Distribution Date for
such Alternate Base Rate Tranches to the applicable Distribution Date, and (B)
the Facilities Costs accrued with respect to the preceding Monthly Period and
Class B-R Interest accrued for each day during the preceding Monthly Period, and
(4) on each Distribution Date arising pursuant to clause (iii) of the definition
thereof, all interest accrued at the applicable Tranche Rate for the portion of
the Class A-R Invested Amount invested in any outstanding LIBOR Rate Tranche
(together with any Facilities Costs assessed with respect thereto) (whereupon
the Fixed Period for such LIBOR Rate Tranche will be deemed to have ended);
PROVIDED, HOWEVER, that amounts payable pursuant to clauses (2) and (3) hereof
shall be determined after giving effect to any deposits made with respect
thereto pursuant to clauses (1) through (4) above. On each Distribution Date,
the Paying Agent shall pay in accordance with Section 5.1 of the Agreement to
(x) the Class A-R Certificateholders from the Distribution Account such amount
deposited into the Distribution Account on such day or on the related Transfer
Date or last day of a Fixed Period allocable thereto pursuant to Section 4.6 or
otherwise and (y) the Class B-R Certificateholders from the Distribution Account
the amount deposited into the Distribution Account on the related Transfer Date
allocable thereto pursuant to Section 4.6.
(b) In conjunction with Section 9 of the Revolving Certificate
Purchase Agreement, the Transferor shall initially allocate all or any portion
of the Class A-R Invested Amount in an Alternate Base Rate Tranche or a LIBOR
Rate Tranche with respect to the applicable initial Fixed Periods. In
conjunction with Section 10 of the Revolving Certificate Purchase Agreement, the
Transferor will have the option on any day, to convert all or part of an
Alternate Base Rate Tranche to a LIBOR Rate Tranche and, on the last day of any
Fixed Period of a LIBOR Rate Tranche to convert all or any part of such LIBOR
Rate Tranche to an Alternate Base Rate Tranche and/or to continue all or any
part of such LIBOR Rate Tranche as a new LIBOR Rate Tranche the Fixed Period for
which will commence on the last day of such prior Fixed Period; PROVIDED,
HOWEVER, that (i) each conversion or continua tion of Tranche will be made
ratably among the Revolving Purchasers in accordance with the respective amounts
of the Funded Revolving Purchases comprising the converted or continued Tranche;
(ii) if less than all the outstanding amount of any Tranche will be converted or
continued, the aggregate amount of such Tranche converted or continued will be
in an integral multiple of $500,000 and in a minimum
36
principal amount of $1,000,000; (iii) no outstanding LIBOR Rate Tranche may be
continued as a LIBOR Rate Tranche, and no outstanding Alternate Base Rate
Tranche may be converted into a LIBOR Rate Tranche, at any time that a Pay Out
Event has occurred and is continuing; and (iv) there shall not be more than four
separate LIBOR Rate Tranches outstanding at any one time. Whenever the Trans
feror wishes to convert and/or continue a Tranche, the Transferor shall give the
Facility Agent notice (a) in the case of a conversion to an Alternate Base Rate
Tranche, not later than one Business Day prior to the proposed conversion or
continuation date, and (b) in the case of a conversion to or continuation of a
LIBOR Rate Tranche, three Business Days before such proposed conversion or
continuation date. If the Transferor shall not have delivered a timely notice of
conversion or continuation with respect to any Tranche, such Tranche shall, at
the end of the Fixed Period applicable thereto (unless repaid pursuant to the
terms hereof), automatically be converted into or continued as an Alternate Base
Rate Tranche.
Section 4.9 PAYMENT OF CERTIFICATE PRINCIPAL.
(a) (i) On the Transfer Date preceding each Distribution Date
with respect to the Revolving Period, the Trustee, in accordance with
the instruc tions from the Servicer set forth in the Daily Report for
such day, shall withdraw from the Principal Account and deposit in the
Distribution Account an amount equal to the amount deposited in the
Principal Account pursuant to subsection 4.6(f), and on each
Distribution Date with respect to the Re volving Period, the Paying
Agent shall pay in accordance with Section 5.1 to the Class A-R
Certificateholders and, to the extent so provided pursuant to
subsection 4.6(f), the Class B-R Certificateholders from the
Distribution Account such amount deposited into the Distribution
Account on the related Transfer Date; PROVIDED, HOWEVER, that, at the
option of the Transferor and to the extent specified in the Daily
Report, such amounts on deposit in the Prin cipal Account may, on any
Business Day prior to such Transfer Date, be applied to the purchase of
VFC Additional Invested Amounts if the conditions precedent thereto
pursuant to Section 6.15 of the Agreement and Section 22 of the
Revolving Certificate Purchase Agreement have been met on such Business
Day and the Transferor has delivered an Officer's Certificate to such
effect to the Trustee and the Servicer.
(ii) On the Transfer Date preceding each Distribution
Date falling in the Amortization Period, the Trustee, acting in
accordance with in structions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and
deposit in the Distribution Account
37
an amount equal to the lesser of the Class A-R Invested Amount and the
amount on deposit in the Principal Account allocable to the Series
1993-2 Variable Funding Certificates. On each Distribution Date falling
in the Amortization Period, the Paying Agent shall pay in accordance
with Section 5.1 to the Class A-R Certificateholders from the
Distribution Account such amount deposited into the Distribution
Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B-R Principal
Payment Commencement Date and each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit in
the Distribution Account an amount equal to the lesser of the Class B-R Invested
Amount and the amount on deposit in the Principal Account allocable to the
Series 1993-2 Variable Funding Certificates (after giving effect to transfers
pursuant to Section 4.9(a)). On the Class B-R Principal Payment Commencement
Date, after the payment of any principal amounts to the Class A-R Certificates
on such day, and on each Distribu tion Date thereafter until the Class B-R
Invested Amount is paid in full, the Paying Agent shall pay (i) in accordance
with Section 5.1 to the Class B-R Certificate holders from the Distribution
Account such amount deposited into the Distribution Account on the related
Transfer Date and (ii) in accordance with Section 5.1 (as if the final
distribution) to the Class A-R Certificateholders from the Defeasance Account
the lesser of any remaining Class A-R Invested Amount (after giving effect to
clause (i) above) and the amount on deposit in the Defeasance Account.
Any amounts remaining in the Principal Account and allocable
to the Series 1993-2 Variable Funding Certificates, after the Class B-R Invested
Amount has been paid in full, will be treated as Shared Principal Collections
and applied in accordance with Section 4.3(e) of the Agreement.
Section 4.10 INVESTOR CHARGE-OFFS. (a) If, on any
Determination Date with respect to a Distribution Date on or prior to the Class
B-R Principal Payment Commencement Date the aggregate Investor Default Amount,
if any, for each Business Day in the preceding Monthly Period exceeded the
aggregate amount of Finance Charge Collections applied to the payment thereof
pursuant to subsection 4.6(a)(iii) of the Agreement during the Revolving Period
or 4.6(b)(iii) or 4.6(c)(iii) of the Agreement, as applicable, during the
Amortization Period and the amount of Transferor Finance Charge Collections,
Excess Finance Charge Collections and Reallocated Principal Collections
allocated thereto pursuant to subsections 4.7(b) and (c) of the Agreement, the
Class B-R Invested Amount will be reduced (without duplication of any reduction
pursuant to the last sentence of subsection 4.7(c)) by the
38
amount by which such aggregate Investor Default Amount exceeds the amount
applied with respect thereto during such preceding Monthly Period (a "CLASS B-R
INVESTOR CHARGE-OFF"). To the extent that on any subsequent Business Day VFC
Additional Amounts are purchased pursuant to Section 6.15, the Holder of the
Class B-R Certificates shall first deposit into the Equalization Account an
amount equal to the aggregate amount of Class B-R Investor Charge-Offs on such
Business Day and then shall purchase any other Class B-R Invested Amount
pursuant to Section 6.15. To the extent that on any subsequent Business Day
there is a remaining positive balance of Finance Charge Collections on deposit
in the Collection Account after giving effect during the Revolving Period to
subsections 4.6(a)(i) through (v) of the Agreement or during the Amortization
Period to subsections 4.6(b)(i) through (v) or subsections 4.6(c)(i) through (v)
of the Agreement, as applicable, the Servicer will apply such excess Finance
Charge Collections as provided in subsection 4.6(a)(vi) of the Agreement during
the Revolving Period or subsection 4.6(b)(vi) or 4.6(c)(vi) of the Agreement, as
applicable, during the Amortization Period to reimburse the aggregate amount of
Class B-R Investor Charge-Offs not previously reimbursed, up to the amount so
available.
(b) In the event that any such reduction of the Class B-R
Invested Amount would cause the Class B-R Invested Amount to be a negative
number, the Class B-R Invested Amount will be reduced to zero, and the Class A-R
Invested Amount will be reduced by the amount by which the Class B-R Invested
Amount would have been reduced below zero, but not more than the aggregate
Investor Default Amount for such Monthly Period (a "CLASS A-R INVESTOR
CHARGE-OFF"). To the extent that on any subsequent Business Day there is a
positive balance of Finance Charge Collections on deposit in the Collection
Account after giving effect to subsections 4.6(a)(i) through (iii) of the
Agreement during the Revolving Period or subsections 4.6(b)(i) through (iii) or
4.6(c)(i) through (iii) of the Agreement, as applicable, during the Amortization
Period, the Servicer will apply such available Finance Charge Collections as
provided in subsection 4.6(a)(iv) of the Agreement during the Revolving Period
or subsection 4.6(b)(iv) or 4.6(c)(iv) of the Agreement, as applicable, during
the Amortization Period to reimburse the aggregate amount of Class A-R Investor
Charge-Offs not previously reimbursed, up to the amount so available.
Section 4.11 SHARED PRINCIPAL COLLECTIONS. Shared Principal
Collections allocated to the Series 1993-2 Variable Funding Certificates and to
be applied pursuant to subsection 4.6(e)(i)(z) and 4.6(e)(ii)(z) for any
Business Day with respect to the Amortization Period shall mean an amount equal
to the product of (x) Shared Principal Collections for all Series for such
Business Day and (y) a
39
fraction, the numerator of which is the Principal Shortfall for the Series
1993-2 Variable Funding Certificates for such Business Day and the denominator
of which is the aggregate amount of Principal Shortfalls for all Series for such
Business Day. For any Business Day with respect to the Revolving Period, Shared
Principal Collec tions allocated to cover Principal Shortfalls with respect to
the Series 1993-2 Variable Funding Certificates shall be zero.
SECTION 8. ARTICLE V OF THE AGREEMENT. Article V of the
Agreement shall read in its entirety as follows and shall be applicable only to
the Series 1993-2 Variable Funding Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
Section 5.1 DISTRIBUTIONS. (a) On each Distribution Date, the
Paying Agent shall distribute (in accordance with the Settlement Statement or
Daily Report, as applicable, delivered by the Servicer to the Trustee and the
Paying Agent pursuant to subsection 3.4(c) of the Agreement or (b), as
applicable,) to each Class A-R Certificateholder of record on the preceding
Record Date (other than as pro vided in subsection 2.4(d) or in Section 12.3 of
the Agreement respecting a final distribution) such Certificateholder's PRO RATA
share (based on the aggregate Undivided Interests represented by Class A-R
Certificates held by such Certificate holder) of amounts on deposit in the
Distribution Account as are payable to the Class A-R Certificateholders pursuant
to Sections 4.8 and 4.9 hereof by wire transfer to an account or accounts
designated by such Class A-R Certificateholder by written notice given to the
Paying Agent not less than five days prior to the related Dis tribution Date
PROVIDED, HOWEVER, that the final payment in retirement of the Class A-R
Certificates will be made only upon presentation and surrender of the Class A-R
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3 of the Agreement.
(b) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c)) to
each Class B-R Certificate holder of record on the preceding Record Date (other
than as provided in subsection 2.4(d) or in Section 12.3 respecting a final
distribution) such Certificateholder's PRO RATA share (based on the aggregate
Undivided Interests represented by Class B-R
40
Certificates held by such Certificateholder) of amounts on deposit in the
Distribution Account as are payable to the Class B-R Certificateholders pursuant
to Sections 4.8 and 4.9 hereof by wire transfer, to an account or accounts
designated by such Class B-R Certificateholder by written notice given to the
Paying Agent not less than five days prior to the related Distribution Date;
PROVIDED, HOWEVER, that the final payment in retirement of the Class B-R
Certificate will be made only upon presentation and surrender of the Class B-R
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3.
Section 5.2 MONTHLY CERTIFICATEHOLDERS' STATEMENT. (a) On each
Distribution Date, the Paying Agent shall forward to each Certificateholder and
the Rating Agency a statement substantially in the form of Exhibit D prepared by
the Servicer and delivered to the Trustee and the Paying Agent on the preceding
Deter mination Date setting forth the following information (which, in the case
of (i), (ii) and (iii) below, shall be stated on the basis of an original
principal amount of $1,000 per Certificate and, in the case of (ix) and (x),
shall be stated on an aggregate basis and on the basis of an original principal
amount of $1,000 per Certificate), along with a copy to each Certificateholder
of each monthly statement relating to any other outstanding Series:
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Certificate
Principal;
(iii) the amount of such distribution allocable to Certificate
Interest;
(iv) the amount of Principal Collections received in the
Collection Account during the preceding Monthly Period and the three
preceding Monthly Periods allocated in respect of the Class A-R
Certificates and the Class B-R Certificates, respectively;
(v) the amount of Finance Charge Collections processed during
the three preceding Monthly Periods and allocated in respect of the
Class A-R Certificates and the Class B-R Certificates, respectively;
(vi) the aggregate amount of Principal Receivables, the
Invested Amount, the Class A-R Invested Amount, the Class B-R Invested
Amount, the Floating Allocation Percentage and, during the Amortization
41
Period, the Class A-R Fixed Allocation Percentage or Class B-R Fixed
Allo cation Percentage, as applicable, with respect to the Principal
Receivables in the Trust as of the end of the day on the Record Date;
(vii) the aggregate outstanding balance of Accounts
which are current, current/delinquent, 30, 60, 90, 120, 150 and 180
days delinquent as of the end of the day on the Record Date;
(viii) the aggregate Investor Default Amount and the
Default Amount for the preceding Monthly Period and the three preceding
Monthly Periods;
(ix) the aggregate amount of Class A-R Investor
Charge-Offs and Class B-R Investor Charge-Offs for the related Monthly
Period;
(x) the aggregate amount of the accrued Investor Servicing
Fees for the three preceding Monthly Periods;
(xi) the Portfolio Yield and the weighted average of the Base
Rates for the three preceding Monthly Periods;
(xii) the amount paid on the Interest Rate Cap;
(xiii) the amount of Automatic Additional Accounts (and the
applicable portion for each paragraph of the definition thereof) and
Supplemental Accounts added to the Trust during the Measuring Period
ended on the last day of the preceding Monthly Period;
(xiv) gross losses and recoveries for all receivables owned or
serviced by SRI during the related Monthly Period;
(xv) the amount of credit adjustments and the payment rate for
the related Monthly Period for all Receivables owned or serviced by
SRI;
(xvi) the Invested Amount of each Series then outstanding;
(xvii) the Transferor Interest, the Minimum Transferor
Interest, the Retained Interest and the Minimum Retained Interest at
the end of the related Monthly Period; and
42
(xviii) the Aggregate Principal Receivables, the amount on
deposit in the Equalization Account and the Minimum Aggregate Principal
Receivables at the end of the related Monthly Period.
(b) ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before
January 31 of each calendar year, beginning with calendar year 1994, the Trustee
shall distribute to each Person who at any time during the preceding calendar
year was a Series 1993-2 Certificateholder, a statement prepared by the Servicer
contain ing the information required to be contained in the regular monthly
report to Series 1993-2 Certificateholders, as set forth in subclauses (i), (ii)
and (iii) above, aggre gated for such calendar year or the applicable portion
thereof during which such Person was a Series 1993-2 Certificateholder, together
with such other customary information (consistent with the treatment of the
Certificates as debt) as the Trustee or the Servicer deems necessary or
desirable to enable the Series 1993-2 Certificate holders to prepare their tax
returns. Such obligations of the Trustee shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Internal Revenue Code as from time
to time in effect.
SECTION 9. SERIES 1993-2 PAY OUT EVENTS. The Pay Out Events
which can cause the commencement of the Amortization Period with respect to the
Series 1993-2 Variable Funding Certificates include the Trust Pay Out Events
described in Section 9.1 of the Agreement and the Series 1993-2 Pay Out Events
described in the following sentence. If any one of the following events shall
occur with respect to the Series 1993-2 Variable Funding Certificates:
(a) failure on the part of the Transferor (i) to make any
payment or deposit required to be made by the Transferor by the terms of (A) the
Agreement, the Revolving Certificate Purchase Agreement other than as covered by
(j) below or (B) this Series Supplement, on or before the date occurring five
Business Days after the date such payment or deposit is required to be made
herein or (ii) duly to observe or perform in any material respect any covenants
or agree ments of the Transferor set forth in the Agreement, the Revolving
Certificate Pur chase Agreement other than as covered by (j) below or this
Series Supplement, which failure has a material adverse effect on the Series
1993-2 Certificateholders and which continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Required Revolving Purchasers, and continues
to affect materially and adversely the interests of the Series 1993-2
Certificateholders for such period;
43
(b) any representation or warranty made by the Transferor in
the Agreement, the Revolving Certificate Purchase Agreement other than as
covered by (j) below or this Series Supplement, or any information contained in
a computer file or microfiche list required to be delivered by the Transferor
pursuant to Section 2.1 or 2.6 of the Agreement, (i) shall prove to have been
incorrect in any material re spect when made or when delivered, which continues
to be incorrect in any material respect for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Transferor by the Trustee, or to the Transferor and
the Trustee by the Required Revolving Purchasers, and (ii) as a result of which
the interests of the Series 1993-2 Certificateholders are materially and
adversely affected and continue to be materially and adversely affect ed for
such period; PROVIDED, HOWEVER, that a Series 1993-2 Pay Out Event pursuant to
this subsection 9(b) shall not be deemed to have occurred hereunder if the
Transferor has assigned a zero balance to an Ineligible Receivable or has made a
deposit to the Equalization Account with respect thereto as required by
subsection 2.4(d) of the Agreement or has accepted reassignment of the related
Receivable, or all of such Receivables, if applicable, during such period in
accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three
consecutive Monthly Periods is reduced to a rate which is less than the weighted
average of the Base Rates for such three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than the Minimum
Transferor Interest, (ii) the Retained Interest is less than the Minimum
Retained Interest or (iii) the amount of Principal Receivables in the Trust and
the amount on deposit in the Equalization Account shall be less than the Minimum
Aggregate Principal Receivables, in each case for 15 consecutive days;
(e) any Servicer Default shall occur which would have, or
would reasonably be expected to have, a material adverse effect on the Series
1993-2 Certificateholders;
(f) failure on the part of the Servicer to deliver the Daily
Report or Settlement Statement to the Trustee when due, which failure continues
for a period of five Business Days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given by the
Trustee to the Servicer;
44
(g) the Class B-R Invested Amount shall be less than 3% of
the aggregate outstanding principal amount of the Class A-R Certificates and the
Class B-R Certificates for five consecutive Business Days;
(h) the provider of the Interest Rate Cap shall have been
downgraded and a replacement Interest Rate Cap shall not have been obtained
within 60 days;
(i) failure on the part of the Servicer duly to observe or
perform in any respect any covenants or agreements of the Servicer set forth in
the Agreement (other than those set forth in subsection 10.1(a) thereof), which
has a material adverse effect on the Investor Certificateholders of the Class
A-R Series 1993-2 Variable Funding Certificates and which continues unremedied
for a period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, has been given to the Servicer by the
Trustee, or to the Servicer and the Trustee by the Required Revolving Purchasers
and continues to materially adversely affect the Class A-R Series 1993-2
Certificateholders for such period; or the Servicer shall delegate its duties
under the Agreement, except as permitted by Section 8.7 thereof; or any
representation, warranty or certification made by the Servicer in the Agreement
or in any certificate delivered pursuant to the Agreement shall prove to have
been incorrect when made, which has a material adverse effect on the Class A-R
Series 1993-2 Certificateholders and which continues to be incorrect in any
material respect for a period of 45 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by the Re quired
Revolving Purchasers and continues to materially adversely affect such Series
1993-2 Variable Funding Certificateholders for such period; and
(j) (i) failure to pay on a Distribution Date to any Revolving
Purchaser the full amount of Commitment Fees or other Facilities Costs which
have accrued for the immediately preceding Monthly Period (it being understood
that, solely for purposes of this clause (j), Facilities Costs other than
Commitment Fees and facility agent fees (if any) shall not be deemed to accrue
until the day that is 30 days after the date on which the Transferor receives
notice that such Facilities Costs are owing and a statement of such Facilities
Costs); or (ii) failure to pay on a Distribution Date to any Revolving Purchaser
the full amount of Yield that is due and payable on such Distribution Date,
which failure to pay is not cured within 30 days (and, for such purpose, the
first funds applied towards payment of Yield after such a failure to pay shall
be deemed to be applied to the delinquent amount and, upon payment, to cure any
such existing delinquency);
45
then, in the case of any event described in subparagraph (a), (b), (e), (f), (i)
or (j) after the applicable grace period, if any, set forth in such
subparagraphs or below, either the Trustee or the Required Revolving Purchasers
by notice then given in writing to the Transferor and the Servicer (and to the
Trustee if given by the Certifi cateholders) may declare that a pay out event (a
"Series 1993-2 Pay Out Event") has occurred as of the date of such notice, and
in the case of any event described in subparagraphs (c), (d), (g) or (h), a
Series 1993-2 Pay Out Event shall occur without any notice or other action on
the part of the Trustee or the Series 1993-2 Certificate holders immediately
upon the occurrence of such event.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in subsection 9(f) or (i) for a period of 60 days (less
the applicable grace periods specified in such subsections), shall not
constitute a Series 1993-2 Pay Out Event if such delay or failure could not be
prevented by the exercise of reasonable diligence by the Servicer and such delay
or failure was caused by an act of God or the public enemy, acts of declared or
undeclared war, public disorder, rebellion, riot or sabotage, epidemics,
landslides, lightning, fire, hurricanes, tornadoes, earth quakes, nuclear
disasters or meltdowns, floods, power outages, computer failure or similar
causes. The preceding sentence shall not relieve the Servicer from using its
best efforts to perform its obligations in a timely manner in accordance with
the terms of this Agreement and the Servicer shall provide the Trustee, any
Enhancement Provider, the Transferor and the Holders of Investor Certificates
with an Officer's Certificate giving prompt notice of such failure or delay by
it, together with a description of the cause of such failure or delay and its
efforts so to perform its obligations.
SECTION 10. ARTICLE VI OF THE AGREEMENT. Article VI (except
for Sections 6.1 through 6.14 thereof) shall read in its entirety as follows and
shall be applicable only to the Series 1993-2 Variable Funding Certificates:
Section 6.15 VFC ADDITIONAL INVESTED AMOUNTS. The Holders of
the Class A-R Certificates and the Holders of the Class B-R Certificates agree,
by acceptance of the Class A-R Certificates and the Class B-R Certificates,
respectively, that the Transferor may from time to time prior to the
Amortization Period Commencement Date for the Variable Funding Certificates
require upon satisfaction of the conditions set forth in Section 22 of the
Revolving Certificate Purchase Agreement that such Certificateholders acquire as
of any Business Day additional undivided interests in the Trust in specified
amounts (such amounts, respectively, the "VFC ADDITIONAL CLASS A-R INVESTED
AMOUNT" and the "VFC ADDITIONAL CLASS B-R INVESTED AMOUNT," and, collectively,
the "VFC ADDITIONAL INVESTED AMOUNTS"). The
46
VFC Additional Invested Amounts on any Business Day shall not exceed an amount
equal to the excess of the aggregate amount of Principal Receivables and amounts
on deposit in the Equalization Account (other than investment earnings thereon)
over the greater of (a) the sum of (i) the aggregate Invested Amount of each
Series then outstanding as of such day including the Variable Funding
Certificates (prior to the addition of such VFC Additional Invested Amount)
minus amounts on deposit in the principal funding account for any Series, if
any, and (ii) the Minimum Transferor Interest as of such day or (b) the Minimum
Aggregate Principal Receivables. The VFC Additional Class A-R Invested Amount on
any Business Day shall not exceed an amount equal to the excess of the
Commitment Amount over the Class A-R In vested Amount (prior to the addition of
such VFC Additional Class A-R Invested Amount). Each Class A-R
Certificateholder's obligation to acquire any VFC Addi tional Class A-R Invested
Amount is conditioned on the Class B-R Invested Amount after any such purchase
representing not less than the Subordination Percentage of the Invested Amount
on such Business Day after the purchase of VFC Additional Invested Amounts on
such Business Day. If the Holders of the Class A-R Certifi cates acquire such
additional interest, then in consideration of such Holder's pay ments of the VFC
Additional Class A-R Invested Amount, the Servicer shall appro priately note
such VFC Additional Class A-R Invested Amount on the related Daily Report and
direct the Trustee to pay to the Transferor such VFC Additional Invested
Amounts, and the Invested Amount of the Class A-R Certificates will be equal to
the Invested Amount of the Class A-R Certificates stated in such Daily Report.
Subject to the terms and conditions of this Agreement and the
Revolving Certificate Purchase Agreement and relying upon the representations
and warranties set forth in the Agreement, each Class A-R Certificateholder by
accep tance of its Class A-R Certificate severally agrees to purchase VFC
Additional Class A-R Invested Amounts from time to time on or after the Closing
Date until the Amortization Period Commencement Date in accordance with the
terms hereof, in an amount such that the Class A-R Invested Amount at any time
shall not exceed the lesser of (i) the Commitment Amount at such time and (ii)
the Borrowing Base at such time (after giving effect to the related increment in
the Class B-R Invested Amount).
Each purchase of VFC Additional Class A-R Invested Amounts
shall be made by the Class A-R Certificateholders ratably in accordance with
their respective Commitment Percentages; PROVIDED, HOWEVER, that the failure of
any Class A-R Certificateholder to purchase any VFC Additional Class A-R
Invested Amount shall not in itself relieve any other Class A-R
Certificateholder of its obligation to purchase any VFC Additional Class A-R
Invested Amount hereunder (it being
47
understood, however, that no Class A-R Certificateholder shall be responsible
for the failure of any other Class A-R Certificateholder to purchase any VFC
Additional Class A-R Invested Amount required to be purchased by such other
Class A-R Certificateholder). The purchase of any VFC Additional Class A-R
Invested Amount shall be in an aggregate principal amount that is not less than
(i) in the case of any LIBOR Rate Tranche, $1,000,000 and increments of $500,000
in excess thereof, and (ii) in the case of any Alternate Base Rate Tranche
$1,000,000 and shall be in an integral multiple of $500,000.
The outstanding amounts of any VFC Additional Class A-R
Invested Amount purchased by each Class A-R Certificateholder shall be evidenced
by a Class A-R Certificate to be issued on the Closing Date substantially in the
form of EXHIBIT A hereto. Each Class A-R Certificateholder shall and is hereby
authorized to record on the grid attached to its Class A-R Certificate (or at
such Class A-R Certificateholder's option, in its internal books and records)
the date and amount of any VFC Additional Class A-R Invested Amount purchased by
it, and each repay ment thereof; PROVIDED that failure to make any such
recordation on such grid or any error in such grid shall not adversely affect
such Class A-R Certificateholder's rights with respect to its Class A-R Invested
Amount and its right to receive interest pay ments in respect of the Class A-R
Invested Amount held by such Class A-R Certificateholder.
The Class B-R Invested Amount shall be maintained by the Class
B-R Certificateholder in an amount not less than $1,000. The Class B-R
Certificateholder by acceptance of its Class B-R Certificate agrees that it
shall be deemed to purchase VFC Additional Class B-R Invested Amounts at the
same time as the Class A-R Certificateholders purchase any VFC Additional Class
A-R Invested Amounts, in an amount equal to seven-eighteenths (7/18ths) of the
VFC Additional Class A-R Invested Amount.
Section 6.16 EXTENSION. (a) If a Pay Out Event has not
occurred or has occurred but has been waived or remedied on or before the 30th
Business Day preceding the Extension Date, the Transferor, in its sole
discretion, may deliver to the Trustee on or before such date a notice
substantially in the form of Exhibit B (the "EXTENSION NOTICE") to this Variable
Funding Supplement. The Trustee shall deliver a copy of the Extension Notice and
all documents annexed thereto to the Investor Certificateholders of record on
the date of receipt thereof. The Transferor shall state in the Extension Notice
that it intends to extend the Revolving Period until the later Amortization
Period Commencement Date set forth in the Extension Notice. The Extension Notice
shall also set forth the next Extension Date. The following
48
documents shall be annexed to the Extension Notice: (i) a form of the Opinion of
Counsel addressed to the Transferor and the Trustee to the effect that despite
the Extension the Trust will not be treated as an association taxable as a
corporation (the "EXTENSION TAX OPINION"); (ii) a form of the Opinion of Counsel
addressed to the Transferor and the Trustee (the "EXTENSION OPINION") to the
effect that (A) the Transferor has the corporate power and authority to effect
the Extension, and (B) the Extension has been duly authorized by the Transferor;
and (iii) a form of Investor Certificateholder Election Notice substantially in
the form of Exhibit C (the "ELECTION NOTICE") to this Variable Funding
Supplement. In addition, the Extension Notice shall state that any Investor
Certificateholder electing to approve the Extension must do so on or before the
Election Date (as defined below) by returning the annexed Election Notice
properly executed to the Trustee in the manner described below. The Extension
Notice shall also state that an Investor Certificateholder may withdraw any such
election in whole or in part on or before the Election Date, and the Transferor,
in its sole discretion, may, prior to the Election Date, withdraw its election
to extend the Revolving Period. Any Holder that elects to approve an Extension
hereunder shall deliver a duly executed Election Notice to the Trustee at the
address designated in the Extension Notice on or before 3:00 p.m., New York City
time, on or before the fifth Business Day preceding the Extension Date (such
Business Day constituting the "Election Date").
(b) No Extension shall occur until prior satisfaction of the
following conditions at the close of business on the Election Date: (i) no Pay
Out Event shall have occurred and be continuing, (ii) there shall have been
delivered to the Trustee (A) the Extension Tax Opinion and the Extension
Opinion, each addressed to the Trustee and (B) written confirmation from the
Rating Agency rating the Class A-R Variable Funding Certificates that the
Extension will not cause such Rating Agency to lower its rating below "AAA" or
withdraw its ratings of such Class A-R Certificates, (iii) all of the holders of
the Class A-R Certificates shall have elected to approve the Extension by
returning to the Trustee on or before the Election Date the executed Election
Notice annexed to the Extension Notice delivered to such Class A-R
Certificateholders pursuant to subsection 6.16(a) of the Agreement, and (iv) the
holders of a specified minimum amount of Outstanding Class B-R Certificates
shall have elected to approve of the Extension by returning to the Trustee on or
before the Election Date the executed form of Election Notice an nexed to the
Extension Notice delivered to such Class B-R Certificateholders pursuant to
subsection 6.16(a) of the Agreement. No Extension pursuant to this Section 6.16
shall occur unless all of the Holders of the Class B-R Certificates shall agree
to the Extension pursuant to the terms of the applicable Extension Notice. If
not all of the Class A-R Certificateholders give written notice of such
agreement,
49
then the Transferor shall re-notify the Class A-R Certificateholders willing to
so extend in writing that one or more Class A-R Certificateholders have declined
to so extend and such remaining Class A-R Certificateholders willing to extend
have the option of extending only for such Class A-R Certificateholders so
consenting to such extension and the outstanding Invested Amount of such
non-extending Class A-R Certificateholders shall not be extended. If no
Revolving Purchasers so consent to an extension, then the Commitment Termination
Date shall not be so extended. If, by the close of business on the Election
Date, all of the conditions stated in this subsection 6.16(b) of the Agreement
have not been satisfied and all such documents delivered to the Trustee pursuant
to this subsection 6.16(b) of the Agreement are not in form satisfactory to it,
or if the Transferor has notified the Trustee, prior to the Election Date, that
the Transferor has exercised its right to withdraw its election of an Extension,
no Extension shall occur.
(c) The execution by the required number of Investor
Certificateholders of the applicable Election Notice and return thereof to the
Trustee by the required date and time, the continued election by the Transferor
to extend the Revolving Period at the Election Date, and the compliance with all
of the provisions of this Section 6.16, shall evidence an extension or renewal
of the obligations represented by the Investor Certificates delivered in
exchange therefor, and not a novation or extinguishment of such obligations or a
substitution with respect thereto.
SECTION 11. SERIES 1993-2 TERMINATION. The right of the Series
1993-2 Variable Funding Certificateholders to receive payments from the Trust
will terminate on the first Business Day following the Series 1993-2 Termination
Date.
SECTION 12. PERIODIC FINANCE CHARGES AND OTHER FEES. The
Transferor hereby agrees that, except as otherwise required by any Requirement
of Law, or as is deemed by the Transferor to be necessary in order for the
Transferor to maintain its credit card business, based upon a good faith
assessment by the Transferor, in its sole discretion, of the nature of the
competition in the credit card business, it shall not at any time reduce the
Periodic Finance Charges assessed on any Receivable or other fees on any Account
if, as a result of such reduction, the Transferor's reasonable expectation of
the Portfolio Yield as of such date would be less than 10%.
SECTION 13. LEGENDS; TRANSFER AND EXCHANGE; RESTRICTIONS ON
TRANSFER OF SERIES 1993-2 VARIABLE FUNDING CERTIFICATES.
50
(a) Each Series 1993-2 Variable Funding Certificate will bear
a legend substantially in the following form:
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW. EACH
HOLDER OF THIS CERTIFICATE AGREES FOR THE BENEFIT OF SRI RECEIVABLES
PURCHASE CO., INC. THAT (A) NO RESALE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (2) IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (3) TO THE
TRANSFEROR, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PUR CHASER OF THIS NOTE FROM IT OF THE TRANSFER
RESTRIC TIONS REFERRED TO ABOVE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975 (E) (1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
OR (III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
(b) Upon surrender for registration of transfer of any Series
1993-2 Variable Funding Certificate at the office of the Transfer Agent and
Registrar, accompanied by a certification by the Series 1993-2 Variable Funding
Certificate holder substantially in the form attached as Exhibit D and by a
written instrument of
51
transfer in the form approved by the Transferor and the Trustee (it being
understood that, until notice to the contrary is given to Series 1993-2 Variable
Funding Certificateholders, the Transferor and the Trustee shall each be deemed
to have approved the form of instrument of transfer, if any printed on any
definitive Series 1993-2 Variable Funding Certificate), executed by the
registered owner, in person or by such Series 1993-2 Variable Funding
Certificateholder's attorney thereunto duly authorized in writing, such Series
1993-2 Variable Funding Certificate shall be trans ferred upon the register, and
the Transferor shall execute, and the Trustee shall au thenticate and deliver,
in the name of the designated transferees one or more new registered Series
1993-2 Variable Funding Certificates of any authorized denomina tions and of a
like aggregate principal amount and tenor. Transfers and exchanges of Series
1993-2 Variable Funding Certificates shall be subject to such restrictions as
shall be set forth in the text of the Series 1993-2 Variable Funding
Certificates and such reasonable regulations as may be prescribed by the
Transferor. Successive registrations and registrations of transfers as aforesaid
may be made from time to time as desired, and each such registration shall be
noted on the register.
SECTION 14. SUCCESSOR TRUSTEE. Section 11.7 of the Agreement
shall read in its entirety as provided in the Agreement and, in addition, the
following sentence shall be added to the end of subsection 11.7(c) of the
Agreement and shall be applicable only to the Series 1993-2 Variable Funding
Certificates: "Any successor trustee appointed pursuant to this Section 11.7
shall be subject to the written consent of the Facility Agent (which consent
shall not be unreasonably withheld)."
SECTION 15. NOTICE TO FACILITY AGENT. A copy of each notice,
demand, direction, report, Officer's Certificate or other certificate, election
and opinion required to be sent or delivered to the Rating Agency or the Trustee
shall also be sent or delivered and, in the case of opinions, shall be addressed
to the Facil ity Agent.
The Transferor shall give prompt notice to the Facility Agent
(if not otherwise provided for in the Pooling and Servicing Agreement or this
Variable Funding Supplement) of any deposit made pursuant to subsection 2.4(d)
or 3.8(a) of the Pooling and Servicing Agreement, any change in Charge Account
Agreements or Credit and Collection Policy pursuant to subsection Section 2.5(c)
of the Agreement or Section 16 of this Variable Funding Supplement that
constitutes a change to the Charge Account Agreements, any transfer pursuant to
subsection 2.5(f) of the Agree ment and any circumstance contemplated by
subsection 3.1(c) of the Agreement. The Servicer shall give prompt notice to the
Facility Agent of any change in the
52
depositary holding the Collection Account pursuant to subsection 4.2(a) of the
Agreement, and the Trustee shall give prompt notice to the Facility Agent of the
appointment or change of any Paying Agent pursuant to Section 6.6 of the
Agreement and any merger, conversion or consolidation of the Trustee as contem
plated by Section 11.9 of the Agreement.
SECTION 16. CHARGE ACCOUNT AGREEMENTS AND CREDIT AND
COLLECTION POLICIES. Section 2.5(c) of the Agreement shall read in its entirety
as set forth below and as so amended and restated shall be applicable only with
respect to the Series 1993-2 Variable Funding Certificates: "The Transferor
shall comply with and perform its obligations and shall cause the Originators to
comply with and perform their obligations under the Charge Account Agreements
relating to the Accounts and the Credit and Collection Policy except insofar as
any failure to comply or perform would not materially and adversely affect the
rights of the Trust or the Certifi cateholders hereunder or under the
Certificates. The Transferor may change the terms and provisions of the Charge
Account Agreements or the Credit and Collection Policy in any respect
(including, without limitation, the reduction of the required minimum monthly
payment, the calculation of the amount, or the timing, or charge offs and the
periodic finance charges and other fees to be assessed thereon) only if such
change (i) would not, in the reasonable belief of the Transferor, cause, immedi
ately or with the passage of time, a Series 1993-2 Pay Out Event to occur, (ii)
(A) if it owns a comparable segment of charge card accounts, such change is made
applicable to the comparable segment of the revolving credit card accounts owned
by the Transferor, if any, which have characteristics the same as, or
substantially similar to, the Accounts that are the subject of such change and
(B) if it does not own such a comparable segment, it will not make any such
change with the intent to materially benefit the Transferor or any Originator
over the Investor Certificateholders, except as otherwise restricted by an
endorsement, sponsorship, or other agreement between the Transferor and an
unrelated third party or by the terms of the Charge Account Agreements, and
(iii) if the Servicer is servicing charge card accounts owned by an unrelated
third party, such change would not result in the Servicer's applying a
materially higher standard of care to the servicing of such accounts than it
applies under this Agreement."
SECTION 17. [Reserved]
SECTION 18. [Reserved]
SECTION 19. AUTOMATIC ADDITIONAL ACCOUNTS. The Transferor
shall not elect to terminate or suspend the inclusion of Automatic Additional
Accounts
53
without the prior written consent of the Facility Agent acting on behalf of the
Required Revolving Purchasers.
SECTION 20. ACTIONS BY FACILITY AGENT. The Facility Agent
shall have no obligation hereunder to grant any consent or approval, to give any
direction or to take any discretionary action unless and until it has been
directed to do so by the Revolving Purchasers or the requisite percentage or
number of Revolving Purchasers as provided in the Revolving Certificate Purchase
Agreement.
SECTION 21. SUCCESSOR SERVICER. Section 10.2 of the Agreement
shall read in its entirety as provided in the Agreement and, in addition, the
following sentence should be inserted in the fifteenth line of Section 10.2(a)
between the phrase "acceptable to the Trustee." and "If such Successor Servicer
is" and shall be applicable only with respect to the Series 1993-2 Variable
Funding Certificates: "Any Successor Servicer must either (A) be approved by the
Facility Agent or (B) be a Person which (i) has a tangible net worth of at least
$50,000,000, (ii) has serviced an average of at least $1,000,000,000 of credit
or charge card receivables out standing during the previous 12 months and (iii)
has a senior long-term debt rating, as determined by at least one nationally
recognized statistical rating organization, of at least "BBB" or its equivalent,
PROVIDED, that if such Successor Servicer has no long term debt or such debt is
not rated by a nationally recognized statistical rating organization, the long
term debt rating of its parent must be at least "BBB" or its equivalent."
SECTION 22. SERIES 1993-2 INVESTOR EXCHANGE; CERTIFICATE
DEFEASANCE. (a) Pursuant to subsection 6.9(b), the Class A-R Certificateholders
may tender their Class of Series 1993-2 Certificates (and with the consent of
the Required Revolving Purchasers so may the Class B-R Certificateholders), and
the Holders of the Exchangeable Transferor Certificate may tender the
Exchangeable Transferor Certificate, in exchange for (i) one or more newly
issued Classes of Investor Certifi cates and (ii) a reissued Exchangeable
Transferor Certificate in accordance with the terms and conditions contained in
a notice of exchange delivered to the Series 1993- 2 Certificateholders. Such
notice of exchange will specify, among other things: (a) the amount and Classes
of Series 1993-2 Certificates that may be tendered, (b) the Certificate Rate
with respect to the new Series, (c) the term of the Series, (d) the method of
computing the investor percentage, (e) the manner of Enhancement, if any, with
respect to the Series and (f) the time and the manner at which the tender and
cancellation of the Series 1993-2 Certificates and the issuance of the new Class
of Certificates will be effectuated. Upon satisfaction of the conditions
contained in subsections 6.9(b) and 6.9(c), and the receipt by the Trustee of
the exchange notice
54
and the related Supplement, the Trustee shall cancel the existing Exchangeable
Transferor Certificate and the applicable Class of Series 1993-2 Certificates,
and shall issue such Series of Investor Certificates and a new Exchangeable
Transferor Certificates, each dated the Exchange Date.
(b) The Trustee, for the benefit of the Series 1993-2
Certificateholders, shall establish and maintain with a Qualified Institution in
the name of the Trust, a certain segregated trust account (the "Defeasance
Account"). At the option of the Transferor, all amounts received by the Trustee
from the issuance of new Certificates of another Series (or any Class within any
such other Series) on the settlement date for such issuance shall be deposited
in the Defeasance Account.
(c) Amounts on deposit in the Defeasance Account shall be
applied as Collections allocable to the Series 1993-2 Certificates in payment of
the Class A-R Invested Amount, accrued and unpaid interest thereon and all
accrued but unpaid Facilities Costs, in accordance with Sections 4.8 and 4.9 of
the Agreement. Any day upon which payments are received in the Defeasance
Account shall be a Distribution Date. Any funds remaining in the Defeasance
Account after all amounts payable to the Class A-R Certificateholders pursuant
to Section 4.8 and 4.9 have been paid in full shall be paid to the Transferor.
SECTION 23. RATIFICATION OF AGREEMENT. As supplemented by this
Series Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Series Supplement shall be read, taken,
and construed as one and the same instrument.
SECTION 24. COUNTERPARTS. This Series Supplement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together constitute
but one and the same instrument.
SECTION 25. GOVERNING LAW. THIS SERIES SUPPLE MENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REME DIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 26. THE TRUSTEE. The Trustee shall not be responsible
in any manner whatsoever for or in respect of the sufficiency of this Series
Supplement
55
or for or in respect of the Preliminary Statement contained herein, all of which
recitals are made solely by the Transferor.
SECTION 27. INSTRUCTIONS IN WRITING. All instructions or other
communications given by the Servicer or any other person to the Trustee pursuant
to this Series Supplement shall be in writing, and, with respect to the
Servicer, may be included in a Daily Report or Settlement Statement.
SECTION 28. AMENDMENT. The Agreement (including any
Supplement) shall not be amended by the Servicer, the Transferor and the Trustee
in reliance on the second paragraph of Section 13.1(a) without the consent of
Holders of Investor Certificates evidencing Undivided Interests aggregating not
less than 66 2/3% of the Invested Amount of the Series 1993-2 Variable Funding
Certificates.
56
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Amended and Restated Series 1993-2 Supplement to be
duly executed by their respective officers as of the day and year first above
written.
SRI RECEIVABLES PURCHASE CO., INC.
Transferor
By:
Name:
Title:
SPECIALTY RETAILERS, INC.
Servicer
By:
Name:
Title:
BANKERS TRUST (DELAWARE)
Trustee
By:
Name:
Title:
57
[FORM OF CLASS A-R INVESTOR CERTIFICATE]
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED
PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER
APPLICABLE SECURITIES LAW. EACH HOLDER OF THIS CERTIFICATE AGREES FOR THE
BENEFIT OF SRI RECEIVABLES PURCHASE CO., INC. THAT (A) NO RESALE OR OTHER
TRANSFER OF THIS CERTIFICATE MAY BE MADE EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (2) IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS, OR (3) TO THE TRANSFEROR, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
NOTE FROM IT OF THE TRANSFER RESTRICTIONS REFERRED TO ABOVE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURI TY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS
OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975 (E) (1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (III) AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
A-1-1
SRI RECEIVABLES MASTER TRUST
SERIES 1993-2, CLASS A-R ASSET BACKED CERTIFICATE,
Evidencing an undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business from
a portfolio of consumer revolving credit card accounts generated or to be
generated by certain subsidiaries (collectively, the "SRI Subsidiaries") of
Specialty Retailers, Inc. ("SRI" or the "Servicer") and other assets and
interests constituting the Trust under the Pooling and Servicing Agreement
described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that _________ (the "Certificateholder") is the
registered owner of a fractional undivided interest in the SRI Receivables
Master Trust (the "Trust") issued pursuant to the Amended and Restated Pooling
and Servic ing Agreement, dated as of August 11, 1995 (the "Agreement"; such
term to include any amendment or Supplement thereto) by and between SRI
Receivables Purchase Co., Inc., as Transferor (the "Transferor"), SRI as the
Servicer, and Bankers Trust (Delaware), as Trustee (the "Trustee"), and the
Series 1993-2 Supplement, dated as of July 30, 1993 (the "Supplement"), among
the Transferor, SRI as Servicer and the Trustee.
This Certificate is one of a series of Certificates entitled
"SRI Receiv ables Master Trust Series 1993-2 Class A-R Asset Backed
Certificates" (the "Class A-R Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under and is subject
to the terms, provisions and conditions, and entitled to the benefits, of the
Agreement, to which Agreement, as amended from time to time, the
Certificateholder by virtue of the acceptance hereof assents and by which the
Certificateholder is bound.
The Transferor has structured the Agreement, the Class A-R
Certificates and the SRI Receivables Master Trust Series 1993-2 Class B-R Asset
Backed Certificates (the "Class B-R Certificates," and collectively with the
Class A-R Certificates and the Class B-R Certificates, the "Investor
Certificates") with the intention that the Investor Certificates will qualify
under applicable tax law as indebtedness of the Transferor, and both the
Transferor and each holder of a Class A-R Certificate (a "Class A-R
Certificateholder") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class A-R Cer tificates for purposes
of federal, state and local income or franchise taxes and any other tax imposed
on or measured by income, as indebtedness of the Transferor.
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 Agreement, or be valid for any
purpose.
A-1-2
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-R Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-1-3
Exhibit A-2
[FORM OF Class B-R INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURI TIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
THE TRANSFER OF THIS CERTIFICATE IS PROHIBITED BY THE TERMS OF THE AGREEMENT
REFERRED TO BELOW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURI TY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS
OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975 (E) (1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (III) AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
A-2-1
No. ___
SRI RECEIVABLES MASTER TRUST
VARIABLE FUNDING Class B-R ASSET BACKED
CERTIFICATE, SERIES 1993-2
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of consumer revolving credit card accounts
generated or to be generated by certain subsidiaries (collectively, the "SRI
Subsidiaries") of Specialty Retailers, Inc. ("SRI" or the "Servicer") and other
assets and interests constituting the Trust under the Pooling and Servicing
Agreement described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that _________ (the "Certificateholder") is the
registered owner of a fractional undivided interest in the SRI Receivables
Master Trust (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of July 30, 1993 (the "Agreement"; such term to include any
amendment or Sup plement thereto) by and between SRI Receivables Purchase Co.,
Inc., as Transferor (the "Transferor"), SRI as the Servicer, and Bankers Trust
(Delaware), as Trustee (the "Trustee"), and the Series 1993-2 Supplement, dated
as of July 30, 1993 (the "Supplement"), among the Transferor, SRI as Servicer
and the Trustee.
This Certificate is the Class B-R Certificate referred to in
the Agreement, which represents a fractional undivided interest in the Trust,
and is issued under and is subject to the terms, provisions and conditions, and
entitled to the benefits, of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class B-R
Certificates and the SRI Receivables Master Trust Series 1993-2 Class A-R Asset
Backed Certificates (the "Class A-R Certificates," and collectively with the
Class A-R Certificates and the Class B-R Certificates, the "Investor
Certificates") with the intention that the Investor Certificates will qualify
under applicable tax law as indebtedness of the Transferor, and both the
Transferor and each holder of a Class B-R Certificate (a "Class B-R
Certificateholder") or any interest therein by acceptance
A-2-2
of its Certificate or any interest therein, agrees to treat the Class B-R
Certificates for purposes of federal, state and local income or franchise taxes
and any other tax imposed on or measured by income, as indebtedness of the
Transferor.
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 Agreement, or be valid for any
purpose.
A-2-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-R Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-2-4
FORM OF EXTENSION NOTICE
SRI RECEIVABLES MASTER TRUST, SERIES 1993-2
The undersigned, a duly authorized representative of SRI
Receivables Purchase Co., Inc., a Delaware corporation (the "Transferor"), as
Transferor pursuant to the Amended and Restated Pooling and Servicing Agreement
dated as of August 11, 1995 (the "Pooling and Servicing Agreement"), by and
between the Transferor, as transferor, Specialty Retailers, Inc., as servicer
(the "Servicer"), and Bankers Trust (Delaware), as trustee (the "Trustee"), as
supplemented by the Series 1993-2 Supplement, dated July 30, 1993 (the "Series
1993-2 Supplement"), by and between the Transferor, the Servicer and the
Trustee, (the Pooling and Servicing Agreement, as supplemented by the Series
1993-2 Supplement, or as the Pooling and Servicing Agreement may from time to
time be amended, supplemented, or modified, the "Agreement"), does hereby notify
the Trustee (or any successor Trustee) and the Investor Certificateholders:
A. Capitalized terms used but not defined in this Certificate
shall have the respective meanings set forth in the Agreement. References herein
to certain sections and subsections are references to the respective sections
and subsections of the Agreement.
B. The undersigned is a [Vice President] or more senior
officer of the Transferor who is duly authorized to execute and deliver this
Certificate on behalf of the Transferor.
C. This Certificate is being delivered pursuant to Section
6.16(a) of the Agreement.
D. The Transferor is the Transferor under the Agreement.
E. No Pay Out Event or Prospective Pay Out Event has occurred
that has not been remedied pursuant to the provisions of the Agreement.
F. The Certificate is being delivered to the Trustee on or
before the date specified in subsection 6.16(a) for such delivery.
G. NOTIFICATION OF EXTENSION
B-1
Pursuant to subsection 6.16(a) and in respect of [ , ] (the
"Current Extension Date"), the Transferor hereby notifies the Trustee and the
Investor Certificateholders of the Transferor's intention to extend the
Revolving Period in respect of Series 1993-2 on the Current Extension Date
pursuant to the provisions of Section 6.16, until the date set forth below (such
extension, the "Extension").
H. REQUIREMENTS TO COMPLETE EXTENSION
(1) Annexed hereto is an election notice (an "Election No
tice") to be returned by any Investor Certificateholder electing to approve the
Extension. No Extension shall occur unless Investor Certificateholders holding
at least the aggregate principal amount of Class A-R Certificates [and Class B-R
Certificates] set forth below[, respectively,] shall return properly executed
Election Notices approving the Extension by the Election Date (as defined
below). Any Investor Certificateholder electing to approve the Extension must
deliver a properly executed Election Notice at the office of the Trustee,
[Address], [Attention: Corpo rate Trust Department] on or before 3:00 p.m., [New
York City] time, on [ , ] (the "Election Date"). Any Investor Certificateholder
may withdraw any Election Notice delivered by it to the Trustee by notifying the
Trustee in writing at the address set forth in the previous sentence on or prior
to the Election Date.
[(2) The minimum principal amount of Class A-R Certificates
that must approve of the Extension before such Extension may occur shall equal $
.]
[(3) The minimum principal amount of Class B-R Certificates
that must approve of the Extension before such Extension may occur shall equal $
.]
(4) THE EXTENSION SHALL NOT OCCUR UNTIL PRIOR SATISFACTION OF
CERTAIN CONDITIONS PRECEDENT BY THE CLOSE OF BUSINESS ON THE ELECTION DATE,
INCLUDING [THE APPROVAL OF SUCH EXTENSION BY THE INVESTOR CERTIFICATE HOLDERS
HOLDING THE REQUIRED AGGREGATE PRINCIPAL AMOUNT OF [[Class A-R]] [AND] [[Class
B-R]] [CERTIFICATES,] THAT NO PAY OUT EVENT SHALL HAVE OCCURRED AND BE
CONTINUING, AND THAT CERTAIN LEGAL OPINIONS AND RATING AGENCY CONFIRMATIONS
SHALL HAVE BEEN DELIVERED TO THE TRANSFEROR AND THE TRUST EE PURSUANT TO SECTION
6.16(b). THE TRANSFEROR MAY IN ITS SOLE
B-2
DISCRETION WITHDRAW THIS EXTENSION NOTICE AT ANY TIME ON OR PRIOR TO THE
ELECTION DATE BY DELIVERING NOTICE OF SUCH WITHDRAWAL IN WRITING TO THE TRUSTEE.
IF ANY SUCH NOTICE OF WITHDRAWAL SHALL BE SO DELIVERED, NO EXTENSION SHALL
OCCUR.
I. NEW PROVISIONS TO BECOME EFFECTIVE ON THE
EXTENSION DATE
(1) The new Amortization Period Commencement Date shall be the
earlier of (a) [ , ] or (b) the Pay Out Commencement Date.
(2) The new Extension Date shall be [ , ].
[(3) The new Scheduled Series 1993-2 Termination Date shall be
[ , ].]
[(4) The new Scheduled Amortization Period Commencement Date
shall be the first day of the , , Monthly Period.]
[(5) The following are additional provisions that will apply
to the Investor Certificates on and after the Extension Date:
INSERT PROVISIONS]
J. Annexed hereto are the following:
(1) the form of Extension Tax Opinion.
(2) the form of Extension Opinion.
(3) the Election Notice.
B-3
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this [ ] day of [ , ].
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
B-4
FORM OF INVESTOR CERTIFICATEHOLDER ELECTION NOTICE
[INSERT NAME
AND ADDRESS OF TRUSTEE]
Re: SRI Receivables Master Trust:
ELECTION NOTICE TO EXTEND SERIES 1993-2
Ladies and Gentlemen:
The undersigned hereby elects to approve the extension of the
Revolving Period for Series 1993-2 until the Amortization Period Commencement
Date set forth in the Extension Notice dated [ , ] (the "Extension Notice") and
delivered to the undersigned pursuant Section 6.16(a) of the Pooling and
Servicing Agreement, dated as of , 1993, including the Series 1993-2 Supplement
thereto, each by and among SRI Receivables Purchase Co. Inc., as transferor,
Specialty Retailers, Inc., as servicer, and Bankers Trust (Delaware), as trustee
(the "Pooling and Servicing Agreement"). The undersigned hereby acknowledges
that com mencing on the Current Extension Date (as defined in the Extension
Notice), the terms and provisions of the Pooling and Servicing Agreement shall
be modified as set forth in the Extension Notice.
IN WITNESS WHEREOF, the undersigned registered owner(s) has
[have] executed this Election Notice as of the date set forth below.
Dated:
Name(s):
Address:
Please Print)
Signature(s):
C-1
EXHIBIT 4.11
FIRST AMENDMENT TO THE SERIES 1993-2 SUPPLEMENT
AND REVOLVING CERTIFICATE PURCHASE AGREEMENT
THIS FIRST AMENDMENT to (i) the Series 1993-2 Supplement to the Pooling and
Servicing Agreement (the "Supplement") dated as of July 30, 1993, by and among
Specialty Retailers, Inc., a Delaware corporation (the "Servicer"), SRI
Receivables Purchase Corp., Inc., a Delaware corporation (the "Transferor") and
Bankers Trust (Delaware), a Delaware banking corporation (the "Trustee"), as
trustee for the SRI Receivables Master Trust (the "Trust") (the Supplement
Amendment"), and (ii) the Revolving Certificate Purchase Agreement (the
"Purchase Agreement") dated as of July 28, 1993, by and among the Transferor,
the financial institutions parties thereto (the "Revolving Purchasers") and
National Westminister Bank Plc, New York branch (the "Facility Agent") (the
"Purchase Agreement Amendment" and together with the Supplement Amendment, the
"Amendments"), is made and entered into as of August 11, 1995 by and among the
Servicer, the Transferor, the Trustee on behalf of the Trust, the Revolving
Purchasers and the Facility Agent.
WHEREAS, the Servicer, the Trustee on behalf of the Trust and the
Transferor desire to modify and amend certain terms of the Supplement in the
manner more particularly described herein below;
WHEREAS, the Transferor, the Revolving Purchasers and the Facility Agent
desire to modify and amend certain terms of the Purchase Agreement in the manner
more particularly described herein below;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged:
SUPPLEMENT AMENDMENT
The Servicer, the Trustee on behalf of the Trust and the Transferor hereby
agree as follows:
1. Definitions. Capitalized terms used herein but not otherwise defined
shall have the meanings set forth in the Supplement, as amended by this
Supplement Amendment. The definitions of "Applicable Margin" and "Amortization
Period Commencement Date" in the Supplement are hereby amended and restated in
their entirety to read as follows:
"Applicable Margin" shall mean a percentage per annum initially equal
to (a) with respect to Alternate Base Rate Tranches, 0%; (b) with respect
to One Month LIBOR Rate Tranches, 0.50%; (c) with respect to Two Month
LIBOR Rate Tranches, 0.50%; and (d) with respect to Three Month LIBOR Rate
Tranches, 0.50%; provided that at any time after the earlier of the
occurrence of a Pay Out Event or the eighth Monthly Distribution Date
following the Amortization Period Commencement Date, the Applicable Margin
shall be 2.0%.
"Amortization Period Commencement Date" shall mean the earlier of the
first day of the December 1999 Monthly Period and the Pay Out Commencement
Date and following an Extension occurring after August 20, 1995, the
earlier of the date specified as such in the Extension Notice and the Pay
Out Commencement Date.
2. Replacement of Interest Rate Cap Agreement. The Transferor
assigns, sets over, conveys, pledges and grants a security interest and lien
(free and clear of all other Liens) to the Trustee for the benefit of the Series
1993-2 Certificateholders in all of the Transferor's right, title and interest
now existing or hereafter arising in and to the Interest Rate Cap Agreement
evidenced by the Interest Rate Protection Agreement dated August 23, 1995
between Deutsche Bank AG - New York Branch and the Transferor for a rate cap
transaction having a notional amount of $40,000,000 and having the other terms
set forth in such Confirmation (the "1995 Cap"). The Facility Agent and the
Series 1993-2 Certificateholders hereby consent to the replacement of the
existing Interest Rate Cap Agreement dated July 30, 1993 (the "1993 Cap") with
the 1995 Cap, and hereby authorize and direct the Trustee to release and convey
back to the Transferor its interest in the 1993 Cap.
3. Section 9 of the Supplement. Section 9 of the Supplement is
hereby amended as follows:
(A) Subparagraph (i) thereof is amended by deleting the word "and" at the
end thereof.
(B) Subparagraph (j) thereof is amended by adding the word "and" to the
end thereof.
(C) A new subparagraph (k) is added immediately following subparagraph (j)
thereof, to read as follows:
"(k) failure on the part of the Transferor to maintain, at all times
from and after April 3, 1996, Tangible Stockholder's Equity of
$10,000,000, where "Tangible Stockholder's Equity" means the
Transferor's stockholder's equity (computed in accordance with
generally accepted accounting principles) less Trust organization
costs and deferred income taxes;".
(D) The fifth line from the end of the penultimate paragraph thereof shall
be revised to replace the reference to subparagraphs (c), (d), (g) or
(h) with a reference to subparagraphs (c), (d), (g), (h) or (k).
PURCHASE AGREEMENT AMENDMENT
The Transferor, the Revolving Purchasers and the Facility Agent hereby
agree as follows:
4. Non-Usage Fee. The first sentence of subsection 15(a) of the
Purchase Agreement is amended in its entirety to read as follows:
As holders of Certificates, the Revolving Purchasers shall be entitled
to receive from payments made from Finance Charge Collections
allocated to the Certificates pursuant to subsections 4.6(a) (v),
4.6(b) (v) and 4.6(c) (v) of the Certificate Agreement and paid
pursuant to Section 4.8 of the Certificate Agreement a non-usage fee
(the "Non-Usage Fee") for the period from and including the Closing
Date until the Termination Date, equal to 0.25% per annum times the
daily average of the excess, if any, of (A) the Commitment Amount over
(b) the Funded Revolver Amount, such fee to be computed on the basis
of the actual number of days elapsed (including the first but
excluding the day of payment) over a year of 360 days.
GENERAL
The Servicer, the Transferor, the Trustee on behalf of the Trust, the
Revolving Purchasers and the Facility Agent hereby agree as follows:
5. Effectiveness of Amendments. The parties hereto expressly
acknowledge that the effectiveness of the Amendments is conditioned upon (a) the
execution, delivery and effectiveness of the Amended and Restated Pooling and
Servicing Agreement dated as of the date hereof (the "Pooling Agreement") by and
among the Servicer, the Transferor and the Trustee, (b) the satisfaction of all
conditions set forth in the second paragraph of Section 13.1(a) of the Pooling
Agreement including the receipt of the Opinion of Counsel and the written
confirmation of each Rating Agency described therein, (c) the satisfaction of
all the conditions set forth in Section 6.16 of the Supplement including the
delivery of the Extension Notice and the receipt of all Election Notices from
Certificate Owners and (d) payment by wire transfer to the Facility Agent of
$40,000. Upon the satisfaction of the foregoing conditions, the Amendments
shall be deemed to be effective as of the date hereof. Except as expressly set
forth above, all terms of the Supplement and the Purchase Agreement shall be and
remain in full force and effect and shall constitute the legal, valid and
binding and enforceable obligations of the parties thereto. To the extent any
terms and conditions in the Supplement or Purchase Agreement shall contradict or
be in conflict with any provisions of the Amendments, the provisions of the
Amendments shall govern.
6. Expenses. The Servicer hereby agrees to pay all reasonable
attorneys' fees incurred by National Westminster Bank Plc (New York Branch and
Nassau Branch) in connection with the Purchase Agreement Amendment.
7. Governing Law. THESE AMENDMENTS AND THE SUPPLEMENT AND PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PROTECTION OF THE PURCHASER'S OWNERSHIP OF THE PURCHASED RECEIVABLES, OR
REMEDIES HEREUNDER IN RESPECT THEREOF, MAY BE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
8. Counterparts. These Amendments may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
9. Acknowledgements. By its execution and delivery of these
Amendments in the space provided below, each of the Trustee and the holder of
the Series 1993-2 Certificates acknowledges and consents to the terms of these
Amendments.
IN WITNESS WHEREOF, the parties hereto have executed these Amendments on
the day and year first above written.
SPECIALTY RETAILERS, INC., Servicer
-----------------------------------------
By: Jerry C. Ivie
Its: Senior Vice President, Secretary and
Treasurer
SRI RECEIVABLES PURCHASE CO., INC.,
Transferor
By:
----------------------------------------
Its:
---------------------------------------
BANKERS TRUST (DELAWARE), Trustee
By:
----------------------------------------
Its:
---------------------------------------
NATIONAL WESTMINSTER BANK, Plc,
New York Branch
By:
----------------------------------------
Its:
---------------------------------------
Additionally, pursuant to Section 28 of the Supplement, National
Westminster Bank, Plc, New York Branch acknowledges and agrees to the Supplement
Amendment as well as to the amendments effected as of the date hereof to the
Pooling Agreement.
NATIONAL WESTMINSTER BANK, Plc, New York Branch
By:
-------------------------------------
Its:
------------------------------------
- --------------------------------------------------------------------------------
SRI RECEIVABLES PURCHASE CO., INC.
Transferor
SPECIALTY RETAILERS, INC.
Servicer
and
BANKERS TRUST (DELAWARE)
Trustee
on behalf of the Series 1995-1 Certificateholders
--------------------------------------------------------------
AMENDED AND RESTATED
SERIES 1995-1 SUPPLEMENT
Dated as of May 30, 1996
to
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of August 11, 1995
--------------------------------------------------------------
$21,700,000 Floating Rate Class A-1
Certificates, Series 1995-1
$1,500,000 Floating Rate Class B-1
Certificates, Series 1995-1
$1,800,000 Floating Rate Class C-1
Certificates, Series 1995-1
$5,120,000 Floating Rate Class D-1
Certificates, Series 1995-1
SRI RECEIVABLES MASTER TRUST
- --------------------------------------------------------------------------------
TABLE OF CONTENTS (cont'd)
TABLE OF CONTENTS
SECTION 1. Designation........................................................1
SECTION 2. Definitions........................................................1
SECTION 3. Reassignment Terms................................................16
SECTION 3A. Conveyance of Interest in Interest Rate Cap;
Cap Proceeds Account........................................16
SECTION 4. Delivery and Payment for the Series 1995-1 Certificates...........17
SECTION 5. Form of Delivery of Series 1995-1 Certificates....................17
SECTION 6. Article IV of Agreement...........................................17
ARTICLE IV. RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS.................................17
Section 4.4 Rights of Certificateholders............................17
Section 4.5 Collections and Allocation, Payments on
Exchangeable Transferor Certificate.................18
Section 4.6 Determination of Monthly Interest for the Series
1995-1 Certificates.................................19
Section 4.7 Determination of Principal Amounts......................20
Section 4.8 [Reserved]..............................................22
Section 4.9 Application of Funds on Deposit in the Collection
Account for the Certificates........................22
Section 4.10 Coverage of Negative Carry Amount and Required
Amount for the Series 1995-1 Certificates...........31
Section 4.11 Payment of Certificate Interest and Other Amounts......32
Section 4.12 Payment of Certificate Principal.......................32
Section 4.13 Investor Charge-Offs...................................33
Section 4.14 Shared Principal Collections...........................34
Section 4.15 Certain Prepayment Premiums. .........................35
Section 4.16 Defeasance. ..........................................35
SECTION 7. Article V of the Agreement........................................36
ARTICLE V. DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS..........................................36
Section 5.1 Distributions......................................36
Section 5.2 Certificateholders' Statement......................37
SECTION 8. Series 1995-1 Pay Out Events......................................39
SECTION 9. Series 1995-1 Termination.........................................40
SECTION 10. Periodic Finance Charges and Other Fees...........................40
SECTION 11. Legends; Transfer and Exchange; Restrictions on Transfer of
Series 1995-1 Certificates; Tax Treatment...................40
TABLE OF CONTENTS (cont'd)
SECTION 12. Ratification of Agreement........................................42
SECTION 13. Counterparts.....................................................42
SECTION 14. GOVERNING LAW....................................................42
SECTION 15. The Trustee......................................................42
SECTION 16. Instructions in Writing..........................................42
SECTION 17. Negative Carry Account...........................................43
SECTION 18. Notices; Credit and Collection Policy Compliance and Changes;
Daily Reports..............................................43
SECTION 19. Ratings Reconfirmations..........................................44
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT A-3 Form of Class C Certificate
EXHIBIT A-4 Form of Class D Certificate
EXHIBIT B [Reserved]
EXHIBIT C Form of Monthly Certificateholders' Statement
EXHIBIT D Form of 144A Exchange Note and Certification
EXHIBIT E Representation Letter [Non-Rule 144A]
AMENDED AND RESTATED SERIES 1995-1 SUPPLEMENT, dated as of May
30, 1996 (this "SERIES SUPPLEMENT") by and among SRI RECEIVABLES PURCHASE CO.,
INC., a corporation organized and existing under the laws of the State of
Delaware, as Transferor (the "TRANSFEROR"), SPECIALTY RETAILERS, INC., a
corporation organized and existing under the laws of Delaware, as Servicer (the
"SERVICER"), and BANKERS TRUST (DELAWARE), a banking corporation organized and
existing under the laws of the State of Delaware as trustee (together with its
successors in trust thereunder as provided in the Agreement referred to below,
the "TRUSTEE") under the Amended and Restated Pooling and Servicing Agreement
dated as of August 11, 1995 (the "AGREEMENT") among the Transferor, the Servicer
and the Trustee.
Section 6.9 of the Agreement provides, among other things,
that the Transferor and the Trustee may at any time and from time to time enter
into a supplement to the Agreement for the purpose of authorizing the issuance
by the Trustee to the Transferor, for execution and redelivery to the Trustee
for authentication, one or more Series of Certificates. Pursuant to Section
13.1(b) of the Agreement, the holders of at least 66 2/3% of the Investor
Certificates have consented to the amendment and restatement of this Series
Supplement and the Agreement contains no other conditions precedent to the
Trustee entering into this Series Supplement. Notwithstanding the foregoing,
Section 4.16 of Article IV hereof shall not become effective until consent
thereto has been received from 100% of the holders of the Investor Certificates.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Certificates and shall specify the
Principal Terms thereof.
SECTION 1. DESIGNATION. There is hereby created a Series of
Investor Certificates to be issued pursuant to the Agreement and this Series
Supplement to be known generally as the "SERIES 1995-1 CERTIFICATES." The Series
1995-1 Certificates shall be issued in four Classes, which shall be designated
generally as the Class A-1 Certificates, Series 1995-1 (the "CLASS A CERTIFI
CATES"), the Class B-1 Certificates, Series 1995-1 (the "CLASS B CERTIFICATES"),
the Class C-1 Certificates, Series 1995-1 (the "CLASS C CERTIFICATES") and the
Class D-1 Certificates, Series 1995-1 (the "CLASS D CERTIFICATES").
SECTION 2. DEFINITIONS. In the event that any term or
provision contained herein shall conflict with or be inconsistent with any
provision contained in the Agreement, the terms and provisions of this Series
Supplement shall govern with respect to the Series 1995-1 Certificates. All
Article, Section or subsection references herein shall mean Article, Section or
subsections of the Agreement, as amended or supplemented by this Series
Supplement, except as otherwise provided herein. All capitalized terms not
otherwise defined herein are defined in the Agreement. Each capitalized term
defined herein shall relate only to the Series 1995-1 Certificates and no other
Series of Certificates issued by the Trust.
"ADDITIONAL INTEREST" shall mean, at any time of
determination, the sum of Class A Additional Interest, Class B Additional
Interest, Class C Additional Interest and Class D Additional Interest.
- 1 -
"ADJUSTED INVESTED AMOUNT" shall mean the sum of the Class A
Adjusted Invested Amount, the Class B Adjusted Invested Amount, the Class C
Adjusted Invested Amount and the Class D Invested Amount.
"AGGREGATE EARLY PAY OUT AMOUNT" shall mean the sum of the
Class A Early Pay Out Amount, the Class B Early Pay Out Amount and the Class C
Early Pay Out Amount.
"AMORTIZATION PERIOD COMMENCEMENT DATE" shall mean the earlier
of the first day of the December 1999 Monthly Period and the Pay Out
Commencement Date.
"APPLICABLE RESERVE RATIO" shall mean for the November Monthly
Period, the December Monthly Period and the January Monthly Period, 2.0%, and
for each other Monthly Period, zero.
"AVAILABLE SERIES 1995-1 FINANCE CHARGE COLLECTIONS" shall
have the meaning specified in subsection 4.9(a).
"BASE RATE" shall mean the sum of (i) the weighted average of
the Class A Certificate Rate, the Class B Certificate Rate, the Class C
Certificate Rate and the Class D Certificate Rate plus (ii) the Series Servicing
Fee Percentage per annum.
"BUSINESS DAY" shall have the meaning set forth in the
Agreement; PROVIDED that as used in the definition of "LIBOR Rate" and "Rate
Determination Date," "Business Day" shall mean a day for dealings by and between
banks in U.S. dollar deposits in the London interbank eurodollar markets.
"CAP PROCEEDS ACCOUNT" shall have the meaning specified in
subsection 3A(b).
"CARRYOVER CLASS A INTEREST" shall mean on any Business Day in
a Monthly Period (a) any Class A Interest with respect to any Interest Accrual
Period beginning in a prior Monthly Period which has not previously been
deposited in the Interest Funding Account or paid on any previous Distribution
Date PLUS (b) any Class A Additional Interest.
"CARRYOVER CLASS B INTEREST" shall mean on any Business Day in
a Monthly Period (a) any Class B Interest with respect to any Interest Accrual
Period beginning in a prior Monthly Period which has not previously been
deposited in the Interest Funding Account or paid on any previous Distribution
Date PLUS (b) any Class B Additional Interest.
"CARRYOVER CLASS C INTEREST" shall mean on any Business Day in
a Monthly Period (a) any Class C Interest with respect to any Interest Accrual
Period beginning in a prior Monthly Period which has not previously been
deposited in the Interest Funding Account or paid on any previous Distribution
Date PLUS (b) any Class C Additional Interest.
"CLASS A ADDITIONAL INTEREST" shall have the meaning specified
in subsection 4.6(a).
- 2 -
"CLASS A ADJUSTED INVESTED AMOUNT" shall mean, when used with
respect to any Business Day, the Class A Invested Amount MINUS the amount on
deposit in the Principal Account allocated to the Class A Certificates.
"CLASS A CERTIFICATEHOLDER" shall mean the Person in whose
name a Class A Certificate is registered in the Certificate Register.
"CLASS A CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1995-1 Certificateholders' Interest evidenced by the Class A
Certificates.
"CLASS A CERTIFICATE RATE" shall mean with respect to the
Class A Certificates, 6.395% per annum with respect to the initial Interest
Accrual Period and, with respect to each subsequent interest Accrual Period a
per annum rate of .52% in excess of LIBOR prevailing on the related Rate
Determination Date, calculated on the basis of the actual number of days elapsed
in such subsequent Interest Accrual Period over a year of 360 days.
"CLASS A CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
"CLASS A CONTROLLED DISTRIBUTION AMOUNT" shall mean (i) with
respect to the Distribution Date on which the Class A Invested Amount is reduced
to zero, an amount equal to the sum of (x) $1,700,000 and (y) integral multiples
(including zero) of $2,500,000 in excess thereof not to exceed in the aggregate
the Class A Invested Amount as of such Distribution Date, and (ii) with respect
to any other Distribution Date, an amount equal to $2,500,000 and integral
multiples thereof (in each case prior to giving effect to any distribution in
respect of principal of such Certificates to be made on such Distribution Date).
"CLASS A DAILY PRINCIPAL AMOUNT" shall have the meaning
specified in subsection 4.9(c)(i).
"CLASS A EARLY PAY OUT AMOUNT" shall mean, following an Early
Repayment Event as a result of which any Class A Invested Amount is paid prior
to January 1, 2000, the present value (as of the Early Repayment Date) of the
amount of interest that would have accrued on such Class A Invested Amount from
such Early Repayment Date through January 1, 2000 at an interest rate equal to
0.52% per annum, discounted at a rate equal to LIBOR as of such Early Repayment
Date.
"CLASS A FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount at 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 and the amount on deposit in the Equalization
Account as of the end of the last day of the Revolving Period and (b) the sum of
the numerators used to calculate the allocation percentages with respect to
Principal Collections for all Series.
- 3 -
"CLASS A FLOATING ALLOCATION PERCENTAGE" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class A Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is the greater of (a) the
sum of the amount of Principal Receivables in the Trust and the amounts on
deposit in the Equalization Account at the end of the preceding Business Day and
(b) the sum of the numerators with respect to all Classes of all Series then
outstanding on such Business Day used with respect to Principal Collections, to
calculate the applicable allocation percentage.
"CLASS A INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class A Certificates, which is $21,700,000.
"CLASS A INTEREST" shall mean the interest distributable in
respect of the Class A Certificates as calculated in accordance with subsection
4.6(a).
"CLASS A INTEREST SHORTFALL" shall have the meaning specified
in subsection 4.6(a).
"CLASS A INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class A Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class A
Certificateholders prior to such Business Day, MINUS (c) the aggregate amount of
Class A Investor Charge-Offs for all prior Business Days, PLUS (d) the aggregate
amount allocated with respect to Class A Investor Charge-Offs and available on
all prior Business Days pursuant to subsection 4.9(a)(vi), for the purpose of
reinstating amounts reduced pursuant to the foregoing clause (c).
"CLASS A INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(d).
"CLASS A INVESTOR PERCENTAGE" shall mean, for any Business
Day, (a) with respect to Finance Charge Collections and Receivables in Defaulted
Accounts at any time or Principal Collections during the Revolving Period, the
Class A Floating Allocation Percentage and (b) with respect to Principal
Collections during the Amortization Period, the Class A Fixed Allocation
Percentage.
"CLASS A POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class A Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class A Invested Amount which will
occur on the following Distribution Date) to the Class A Initial Invested
Amount.
"CLASS A PORTFOLIO IMBALANCE PREMIUM" shall mean, following
the occurrence of a Portfolio Imbalance Event, the present value (as of the
Portfolio Correction Distribution Date) of the amount of interest that would
have accrued on the portion of the Class A Invested Amount to be repaid on the
Portfolio Correction Distribution Date from the Portfolio Correction
Distribution Date through the January 2001 Distribution Date at an interest rate
equal to .52% per annum, discounted at a rate equal to LIBOR as of such
Portfolio Correction Distribution Date.
- 4 -
"CLASS A PRINCIPAL" shall mean the principal distributable in
respect of the Class A Certificates as calculated in accordance with subsection
4.7(a).
"CLASS B ADDITIONAL INTEREST" shall have the meaning specified
in subsection 4.6(b).
"CLASS B ADJUSTED INVESTED AMOUNT" shall mean, when used with
respect to any Business Day, the Class B Invested Amount MINUS the amount on
deposit in the Principal Account allocated to the Class B Certificates.
"CLASS B CERTIFICATEHOLDER" shall mean the Person in whose
name a Class B Certificate is registered in the Certificate Register.
"CLASS B CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1995-1 Certificateholders' Interest evidenced by the Class B
Certificates.
"CLASS B CERTIFICATE RATE" shall mean, with respect to the
Class B Certificates, 7.375% per annum with respect to the initial Interest
Accrual Period and, with respect to each subsequent Interest Accrual Period a
per annum rate of 1.50% in excess of LIBOR prevailing on the related Rate
Determination Date, calculated on the basis of the actual number of days elapsed
in such subsequent Interest Accrual Period over a year of 360 days.
"CLASS B CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"CLASS B CONTROLLED DISTRIBUTION AMOUNT" shall mean (i) with
respect to the Distribution Date on which the Class B Invested Amount is reduced
to zero, an amount equal to $300,000 and integral multiples of $100,000 in
excess thereof not to exceed in the aggregate the Class B Invested Amount as of
such Distribution Date, and (ii) with respect to any other Distribution Date, an
amount equal to $100,000 and integral multiples thereof (in each case prior to
giving effect to any distribution in respect of principal of such Certificates
to be made on such Distribution Date).
"CLASS B DAILY PRINCIPAL AMOUNT" shall have the meaning
specified in subsection 4.9(c)(ii).
"CLASS B EARLY PAY OUT AMOUNT" shall mean, following an Early
Repayment Event as a result of which the Class B Invested Amount is paid prior
to January 1, 2000, the present value (as of the Early Repayment Date) of the
amount of interest that would have accrued on such Class B Invested Amount from
such Early Repayment Date through January 1, 2000 at an interest rate equal to
1.50%, discounted at a rate equal to LIBOR as of such Early Repayment Date.
"CLASS B FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at 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 and the amount on deposit in the Equalization
Account at the end of the last day of the Revolving Period and (b) the sum of
the
- 5 -
numerators used to calculate allocation percentages with respect to Principal
Collections for all Series.
"CLASS B FLOATING ALLOCATION PERCENTAGE" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class B Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is the greater of (a) the
sum of the amount of Principal Receivables in the Trust and the amount on
deposit in the Equalization Account as of the end of the preceding Business Day
and (b) the sum of the numerators with respect to all Classes of all Series then
outstanding on such Business Day used with respect to Principal Collections to
calculate the applicable allocation percentage.
"CLASS B INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class B Certificates, which is $1,500,000.
"CLASS B INTEREST" shall mean the interest distributable in
respect of the Class B Certificates as calculated in accordance with subsection
4.6(b).
"CLASS B INTEREST SHORTFALL" shall have the meaning specified
in subsection 4.6(b).
"CLASS B INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class B Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class B
Certificateholders prior to such Business Day, MINUS (c) the aggregate amount of
Class B Investor Charge-offs for all prior Business Days, and PLUS (d) the
aggregate amount allocated with respect to Class B Investor Charge-Offs and
available on all prior Business Days pursuant to subsection 4.9(a)(ix), for the
purpose of reinstating amounts reduced pursuant to the foregoing clause (c).
"CLASS B INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(c).
"CLASS B INVESTOR PERCENTAGE" shall mean, for any Distribution
Date, (a) with respect to Finance Charge Collections and Receivables in
Defaulted Accounts at any time or Principal Collections during the Revolving
Period, the Class B Floating Allocation Percentage and (b) with respect to
Principal Collections during the Amortization Period, the Class B Fixed
Allocation Percentage.
"CLASS B PRINCIPAL" shall mean the principal distributable in
respect of the Class B Certificates as calculated in accordance with subsection
4.7(b).
"CLASS B POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class B Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class B Invested Amount which will
occur on the following Distribution Date) to the Class B Initial Invested
Amount.
- 6 -
"CLASS B PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) the Distribution Date in an Amortization Period on which the
Class A Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 1995-1 Investor Certificates remaining after
payments have been made to the Class A Certificates on such Distribution Date,
the Distribution Date following the Distribution Date on which the Class A
Invested Amount is paid in full and (b) the Distribution Date following a sale
or repurchase of the Receivables as set forth in Sections 2.4(e), 9.2, 10.2(a),
12.1 or 12.2 of the Agreement and Section 3 of this Series Supplement.
"CLASS C ADDITIONAL INTEREST" shall have the meaning specified
in subsection 4.6(c).
"CLASS C ADJUSTED INVESTED AMOUNT" shall mean, when used with
respect to any Business Day, the Class C Invested Amount MINUS the amount on
deposit in the Principal Account allocated to the Class C Certificates.
"CLASS C CERTIFICATEHOLDER" shall mean the Person in whose
name a Class C Certificate is registered in the Certificate Register.
"CLASS C CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1995-1 Certificateholders' Interest evidenced by the Class C
Certificates.
"CLASS C CERTIFICATE RATE" shall mean, with respect to the
Class C Certificates, 7.375% per annum with respect to the initial Interest
Accrual Period and, with respect to each subsequent Interest Accrual Period a
per annum rate of 1.50% in excess of LIBOR prevailing on the related Rate
Determination Date, calculated on the basis of the actual number of days elapsed
in such subsequent Interest Accrual Period over a year of 360 days.
"CLASS C CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-3 hereto.
"CLASS C DAILY PRINCIPAL AMOUNT" shall have the meaning
specified in subsection 4.9(c)(iii).
"CLASS C EARLY PAY OUT AMOUNT" shall mean, following an Early
Repayment Event as a result of which the Class C Invested Amount is paid prior
to January 1, 2000, the present value (as of the Early Repayment Date) of the
amount of interest that would have accrued on such Class C Invested Amount from
such Early Repayment Date through January 1, 2000 at an interest rate equal to
1.50% per annum, discounted at a rate equal to LIBOR as of such Early Repayment
Date.
"CLASS C FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class C Invested Amount at 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 and the amount on deposit in the Equalization
Account as of the end of the last day of the Revolving Period and (b) the sum of
the numerators used to calculate allocation percentages with respect to
Principal Collections for all Series.
- 7 -
"CLASS C FLOATING ALLOCATION PERCENTAGE" shall mean with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class C Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is the greater of (a) the
sum of the amount of Principal Receivables in the Trust and the amount on
deposit in the Equalization Account at the end of the preceding Business Day and
(b) the sum of the numerators with respect to all Classes of all Series then
outstanding on such Business Day used with respect to Principal Collections to
calculate the applicable allocation percentage.
"CLASS C INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class C Certificates, which is $1,800,000.
"CLASS C INTEREST" shall mean the interest distributable in
respect of the Class C Certificates as calculated in accordance with subsection
4.6(c).
"CLASS C INTEREST SHORTFALL" shall have the meaning specified
in subsection 4.6(c).
"CLASS C INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class C Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class C
Certificateholders prior to such Business Day, MINUS (c) the aggregate amount of
Class C Investor Charge-Offs for all prior Business Days, and PLUS (d) the
aggregate amount allocated with respect to Class C Investor Charge-Offs and
available on all prior Business Days pursuant to subsection 4.9(a)(x), for the
purpose of reinstating amounts reduced pursuant to the foregoing clause (c).
"CLASS C INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(b).
"CLASS C INVESTOR PERCENTAGE" shall mean, for any Distribution
Date, (a) with respect to Finance Charge Collections and Receivables in
Defaulted Accounts at any time or Principal Collections during the Revolving
Period, the Class C Floating Allocation Percentage and (b) with respect to
Principal Collections during the Amortization Period, the Class C Fixed
Allocation Percentage.
"CLASS C PRINCIPAL" shall mean the principal distributable in
respect of the Class C Certificates as calculated in accordance with subsection
4.7(c).
"CLASS C POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class C Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class C Invested Amount which will
occur on the following Distribution Date) to the Class C Initial Invested
Amount.
"CLASS C PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) the Distribution Date in an Amortization Period on which the
Class B Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 1995-1 Investor Certificates remaining
- 8 -
after payments have been made to the Class B Certificates on such Distribution
Date, the Distribution Date following the Distribution Date on which the Class B
Invested Amount is paid in full and (b) the Distribution Date following a sale
or repurchase of the Receivables as set forth in Sections 2.4(e), 9.2, 10.2(a),
12.1 or 12.2 of the Agreement and Section 3 of this Series Supplement.
"CLASS D CERTIFICATEHOLDER" shall mean the Person in whose
name a Class D Certificate is registered in the Certificate Register.
"CLASS D CERTIFICATEHOLDERS' INTEREST" shall mean the portion
of the Series 1995-1 Certificateholders' Interest evidenced by the Class D
Certificates.
"CLASS D CERTIFICATE RATE" shall mean 0% per annum.
"CLASS D CERTIFICATES" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-4 hereto.
"CLASS D DAILY PRINCIPAL AMOUNT" shall have the meaning
specified in subsection 4.9(c)(iv).
"CLASS D FIXED ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class D Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the amount of
Principal Receivables in the Trust and the amount on deposit in the Equalization
Account at the end of the last day of the Revolving Period and (b) the sum of
the numerators used to calculate allocation percentages with respect to
Principal Collections for all Series.
"CLASS D FLOATING ALLOCATION PERCENTAGE" shall mean with
respect to any Business Day the percentage equivalent of a fraction, the
numerator of which is the Class D Invested Amount as of the end of the preceding
Business Day and the denominator of which is the greater of (a) the sum of the
amount of Principal Receivables in the Trust and the amount on deposit in the
Equalization Account at the end of the preceding Business Day and (b) the sum of
the numerators with respect to all Classes of all Series then outstanding on
such Business Day used with respect to Principal Collections to calculate the
applicable allocation percentage.
"CLASS D INITIAL INVESTED AMOUNT" shall mean the aggregate
initial principal amount of the Class D Certificates, which is $5,120,000.
"CLASS D INVESTED AMOUNT" shall mean, when used with respect
to any Business Day, an amount equal to (a) the Class D Initial Invested Amount,
MINUS (b) the aggregate amount of principal payments made to Class D
Certificateholders prior to such Business Day, MINUS (c) the amount deposited in
the Negative Carry Account, if any, pursuant to subsection 17(b) (other than
amounts so deposited in respect of allocations pursuant to Section
4.9(a)(xiii)), MINUS (d) the aggregate amount of Class D Investor Charge-offs
for all prior Business Days, PLUS (e) the aggregate amount allocated with
respect to Class D Investor Charge-Offs and available on all prior Business
- 9 -
Days pursuant to subsection 4.9(a)(xii), for the purpose of reinstating amounts
reduced pursuant to the foregoing clause (d) and PLUS (f) on the Class D
Principal Payment Commencement Date, an amount equal to the amount on deposit in
the Negative Carry Account.
"CLASS D INVESTOR CHARGE-OFFS" shall have the meaning
specified in subsection 4.13(a).
"CLASS D INVESTOR PERCENTAGE" shall mean, for any Business
Day, (a) with respect to Finance Charge Collections and Receivables in Defaulted
Accounts at any time or Principal Collections during the Revolving Period, the
Class D Floating Allocation Percentage and (b) with respect to Principal
Collections during the Amortization Period, the Class D Fixed Allocation
Percentage.
"CLASS D POOL FACTOR" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of the
Class D Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class D Invested Amount which will
occur on the following Distribution Date) to the Class D Initial Invested
Amount.
"CLASS D PRINCIPAL" shall mean the principal distributable in
respect of the Class D Certificates as calculated in accordance with subsection
4.7(d).
"CLASS D PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) the Distribution Date on which the Class C Invested Amount is
paid in full or, if there are no Principal Collections allocable to the Series
1995-1 Investor Certificates remaining after payments have been made to the
Class C Certificates on such Distribution Date, the Distribution Date following
the Distribution Date on which the Class C Invested Amount is paid in full and
(b) the Distribution Date following a sale or repurchase of the Receivables as
set forth in Sections 2.4(e), 9.2, 10.2(a), 12.1 and 12.2 of the Agreement and
Section 3 of this Series Supplement.
"CONTROLLED AMORTIZATION PERIOD" shall mean, with respect to
the Series 1995-1 Certificates, unless a Pay Out Event shall have occurred with
respect to such Series prior thereto, the period commencing on the Amortization
Period Commencement Date and ending upon the earliest to occur of (x) the
payment in full to the Investor Certificateholders of the Invested Amount, and
(y) the Series 1995-1 Termination Date.
"DAILY CAP PROCEEDS AMOUNT" shall mean, with respect to any
Business Day, an amount on deposit in the Cap Proceeds Account equal to the
lesser of (A) the amount determined to be deposited in the Interest Funding
Account pursuant to clause (y) of subsections 4.9(a)(i), (ii) and (iii), and (B)
the sum of (a) the product of (x) the quotient of (I) the amount deposited in
the Cap Proceeds Account on the immediately preceding payment date for the
Interest Rate Caps DIVIDED BY (II) the number of days from payment date to
payment date for such Interest Rate Caps times (y) the number of days elapsed
since the preceding Business Day and (b) the aggregate amount not transferred
prior to such day during the period since the preceding payment date pursuant to
this subclause (B).
- 10 -
"DETERMINATION DATE" shall mean the second Business Day prior
to each Distribution Date (except that, with respect to Sections 4.9(d) and
4.13, "Determination Date" shall mean the second Business Day prior to the third
Wednesday of each month, or if such Wednesday is not a Business Day, the next
succeeding Business Day).
"DISTRIBUTION DATE" shall mean September 20, 1995 and the
third Wednesday of each March, June, September and December thereafter, or if
such day is not a Business Day, the next succeeding Business Day.
"EARLY AMORTIZATION PERIOD" shall mean the period commencing
on the Pay Out Commencement Date and ending on the earlier to occur of (i) the
date of termination of the Trust pursuant to Section 12.1 of the Agreement or
(ii) the Series 1995-1 Termination Date.
"EARLY PAY OUT SET ASIDE DATE" shall mean any date during the
Amortization Period following the Trust Certificate-Backed Note Repayment Date
on which any unpaid Aggregate Early Pay Out Amount or unpaid Class A Portfolio
Imbalance Premium has not been deposited in the Interest Funding Account.
"EARLY REPAYMENT DATE" means, with respect to any Investor
Certificates, the Distribution Date(s) or other date(s) on which any Invested
Amount in respect of such Investor Certificates is paid as a result of an Early
Repayment Event.
"EARLY REPAYMENT EVENT" means the payment, prior to January 1,
2000, of Invested Amount in respect of the Class A, B or C Certificates to the
holder thereof, for any reason other than, with respect to the Class A
Certificates, (i) a Portfolio Imbalance Event or (ii) the repurchase thereof
pursuant to Section 21.
"ENHANCEMENT" shall mean, with respect to the Class A
Certificates, the subordination of the Class B Invested Amount, the Class C
Invested Amount, and the Class D Invested Amount, with respect to the Class B
Certificates, the subordination of the Class C Invested Amount and the Class D
Invested Amount, and with respect to the Class C Certificates, the subordination
of the Class D Invested Amount.
"EXCESS FINANCE CHARGE COLLECTIONS" shall mean, with respect
to any Business Day, as the context requires, either (x) the amount described in
subsection 4.9(a)(xvii) allocated to the Series 1995-1 Certificates but
available to cover shortfalls in amounts paid from Finance Charge Collections
for other Series, if any or (y) the aggregate amount of Finance Charge
Collections allocable to other Series in excess of the amounts necessary to make
required payments with respect to such Series, if any, and available to cover
shortfalls with respect to the Series 1995-1 Certificates.
"FIXED ALLOCATION PERCENTAGE" shall mean for any Distribution
Date the percentage equivalent of a fraction, the numerator of which is the
Invested Amount at the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables in the Trust and the amount on deposit in the Equalization
Account
- 11 -
as of the end of the last day of the Revolving Period and (b) the sum of the
numerators used to calcu late allocation percentages with respect to Principal
Collections for all Series.
"FLOATING ALLOCATION PERCENTAGE" shall mean for any Business
Day the sum of the applicable Class A Floating Allocation Percentage, Class B
Floating Allocation Percentage, Class C Floating Allocation Percentage, and
Class D Floating Allocation Percentage for such Business Day.
"INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Investor Certificates of Series 1995-1, which is
$30,120,000.
"INTEREST ACCRUAL PERIOD" shall mean, with respect to a
Distribution Date, the period from and including the preceding Distribution Date
to and excluding such Distribution Date; PROVIDED, HOWEVER, that the initial
Interest Accrual Period will run from the Series 1995-1 Closing Date to and
excluding the initial Distribution Date.
"INTEREST RATE CAP AGREEMENT" shall mean an interest rate cap
agreement in form and substance satisfactory to the Trustee and the Rating
Agency between the Transferor and an obligor pursuant to which the obligor will
be paid its entire consideration by the Transferor on the date of execution
thereof and which obligor will be obligated for a term ending not earlier than
the Scheduled Series 1995-1 Termination Date to make payments to the Trustee
quarterly with respect to each set quarterly period specified therein in an
amount (if positive) equal to the product of (i) the remainder of (A) an index
rate which shall be equal to LIBOR (or a similar three-month offered rate quoted
in the London interbank eurodollar market) (as if the Interest Accrual Period
referenced in the definition thereof was the applicable set quarterly period)
MINUS (B) 12%, MULTIPLIED BY (ii) a notional amount specified therein,
multiplied by (iii) the ratio of the actual number of days in such set quarterly
period to 360; PROVIDED, HOWEVER, that the interest rate cap agreement can
deviate from the terms described herein if the Transferor receives prior written
approval with respect to any such deviations from (i) the Rating Agency and (ii)
Holders of Investor Certificates representing more than 50% of the aggregate
Undivided Interests.
"INTEREST RATE CAPS" shall mean the interest rate cap or caps
provided pursuant to Interest Rate Cap Agreements by one or more obligors, each
of which shall be acceptable to the Rating Agency and shall have a long-term
unsecured debt rating of not less than AAA and a short term unsecured debt
rating of A-l+ by Standard & Poor's Corporation (the "REQUISITE CAP RATING") and
shall contain an arrangement for the replacement of such obligor or the
substitution of alternative credit enhancement provisions (any of which shall
have the Requisite Cap Ratings) in the event that such then-current interest
rate cap shall be downgraded below the Requisite Cap Ratings.
"INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A Invested Amount as
of such Business Day, (b) the Class B Invested Amount as of such Business Day,
(c) the Class C Invested Amount as of such Business Day and (d) the Class D
Invested Amount as of such Business Day.
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"INVESTOR CERTIFICATEHOLDER" shall mean the Holder of record
of an Investor Certificate of Series 1995-1.
"INVESTOR CERTIFICATES" shall mean the Class A Certificates,
the Class B Certificates, the Class C Certificates and the Class D Certificates.
"INVESTOR CHARGE-OFFS" shall mean the sum of Class A Investor
Charge-Offs, Class B Investor Charge-Offs, Class C Investor Charge-Offs and
Class D Investor Charge-Offs.
"INVESTOR DEFAULT AMOUNT" shall mean, with respect to each
Business Day, an amount equal to the product of the Default Amount for such
Business Day and the Floating Allocation Percentage applicable for such Business
Day.
"INVESTOR PERCENTAGE" shall mean for any Business Day, (a)
with respect to Finance Charge Collections and Receivables in Defaulted Accounts
at any time or Principal Collections during the Revolving Period, the Floating
Allocation Percentage and (b) with respect to Principal Collections during the
Amortization Period, the Fixed Allocation Percentage.
"ISSUANCE DATE" shall mean the Series 1995-1 Closing Date.
"LIBOR" shall mean, with respect to any Interest Accrual
Period, the rate obtained by dividing (x) the three-month rate described on the
Dow Jones Telerate System, page 3750, as of 11:00 a.m. London time on the Rate
Determination Date by (y) a percentage equal to one minus the stated maximum
rate (stated as a decimal) of all reserves required to be maintained against
"Eurocurrency Liabilities" as specified in Regulation D (or against any other
category of liabilities which includes deposits by reference to which the
interest rate on LIBOR is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of any bank to
United States residents); provided, however, with respect to clause (x) above,
in the event such rate shall not be provided, "LIBOR" shall mean (a) the
arithmetic average (rounded upwards to the nearest 1/16th of l%) of the rates at
which deposits in United States dollars are offered to four reference banks
selected by BT Securities Corp. in the interbank eurodollar market at
approximately 11:00 a.m. (London time) divided by (b) the percentage specified
in clause (y) above.
"MINIMUM RETAINED PERCENTAGE" shall mean 3.5%.
"MINIMUM TRANSFEROR PERCENTAGE" shall mean the Applicable
Reserve Ratio.
"MONTHLY PERIOD" shall have the meaning specified in the
Agreement, except that the first Monthly Period with respect to the Series
1995-1 Certificates shall begin on and include the Series 1995-1 Closing Date
and shall end on and include September 1, 1995.
"NEGATIVE CARRY ACCOUNT" shall have the meaning specified in
subsection 17(a).
"NEGATIVE CARRY AMOUNT" shall have the meaning specified in
subsection 4.10(a).
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"NEGATIVE CARRY FILL-UP DATE" shall have the meaning specified
in subsection 17(b).
"PAY OUT COMMENCEMENT DATE" shall mean the date on which a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of the Agreement
or a Series 1995-1 Pay Out Event is deemed to occur pursuant to Section 8 of
this Series Supplement.
"PORTFOLIO CORRECTION AMOUNT" means the smallest amount which,
if distributed to certificateholders of the Trust in reduction of the aggregate
invested amount of all certificates upon the occurrence of a Portfolio Imbalance
Event, would result in compliance with the percentage limitation in the
definition of Portfolio Imbalance Event the violation of which gave rise to such
Portfolio Imbalance Event.
"PORTFOLIO CORRECTION DISTRIBUTION DATE" means the first
Distribution Date following the occurrence of a Portfolio Imbalance Event.
"PORTFOLIO IMBALANCE EVENT" means an event which will occur
if, on the last day of any Monthly Period occurring during the Revolving Period
(the "MEASUREMENT DAY"), (a) on each of such day and the last day of each of the
preceding eleven consecutive Monthly Periods, (i) the amount of all Cash
Equivalents and other amounts on deposit in the Equalization Account exceeded
25% of (ii) the sum of all Principal Receivables and Cash Equivalents and other
amounts on deposit in the Equalization Account on each such day, or (b) on each
of the measurement day and the last day of the preceding Monthly Period, (i) the
amount of all Cash Equivalents and other amounts on deposit in the Equalization
Account exceeded 45% of (ii) the sum of all Principal Receivables and Cash
Equivalents and other amounts on deposit in the Equalization Account on each
such day. All such amounts shall be calculated after giving effect to all
amounts to be distributed on the Distribution Date following the last day of the
applicable Monthly Period.
"PORTFOLIO YIELD" shall mean for the Series 1995-1
Certificates, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is an amount equal to the sum
of the aggregate amount of Available Series 1995-1 Finance Charge Collections
and the aggregate Daily Cap Proceeds Amount for such Monthly Period, calculated
on a cash basis, MINUS the aggregate Investor Default Amount for such Monthly
Period, and the denominator of which is the average daily Invested Amount during
the preceding Monthly Period.
"PRINCIPAL SHORTFALLS" shall mean on any Business Day (x) for
Series 1995-1, the Invested Amount of the class then receiving principal
payments after the application of Principal Collections on such Business Day
PLUS, on and after the Trust Certificate-Backed Note Repayment Date, the unpaid
Aggregate Early Pay Out Amount and unpaid Class A Portfolio Imbalance Premium or
(y) for any other Series, the amounts specified as such in the Supplement for
such other Series.
"RATE DETERMINATION DATE" shall mean, with respect to any
Interest Accrual Period, the second Business Day before the first day of such
Interest Accrual Period.
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"RATING AGENCY" shall mean Standard & Poor's Ratings Group and
Duff & Phelps Credit Rating Co.
"REQUIRED AMOUNT" shall have the meaning specified in Section
4.10.
"REVOLVING PERIOD" shall mean the period from and including
the Series 1995-1 Closing Date to, but not including, the Amortization Period
Commencement Date.
"SCHEDULED SERIES 1995-1 TERMINATION DATE" shall mean the
January 2003 Distribution Date.
"SERIES 1995-1" shall mean the Series of the SRI Receivables
Master Trust represented by the Series 1995-1 Certificates.
"SERIES 1995-1 CERTIFICATEHOLDER" shall mean the holder of
record of any Series 1995-1 Investor Certificate.
"SERIES 1995-1 CERTIFICATEHOLDERS' INTEREST" shall have the
meaning specified in Section 4.4.
"SERIES 1995-1 CLOSING DATE" shall mean August 11, 1995.
"SERIES 1995-1 PAY OUT EVENT" shall have the meaning specified
in Section 8.
"SERIES 1995-1 PORTFOLIO CORRECTION DISTRIBUTION AMOUNT" means
the smallest Class A Controlled Distribution Amount which is greater than the
product of (i) the Portfolio Correction Amount and (ii) a fraction, the
numerator of which is the Floating Allocation Percentage, and the denominator of
which is the sum of the floating allocation percentages for each Series which is
then in its Revolving Period.
"SERIES 1995-1 TERMINATION DATE" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the Series 1995-1
Certificates are paid in full, or (ii) the Scheduled Series 1995-1 Termination
Date.
"SERIES SERVICING FEE PERCENTAGE" shall mean 2.0%.
"SERVICING FEE" shall mean for any Monthly Period, an amount
equal to the product of (i) one-twelfth, (ii) the Series Servicing Fee
Percentage and (iii) the Adjusted Invested Amount as of the preceding Record
Date, or, in the case of the first Distribution Date, the Initial Invested
Amount.
"SHARED PRINCIPAL COLLECTIONS" shall mean, as the context
requires, either (a) the amount allocated to the Series 1995-1 Investor
Certificates which, in accordance with subsections 4.9(b) and 4.9(c)(v), may be
applied in accordance with Section 4.3(e) of the Agreement or (b) the amounts
allocated to the investor certificates (other than Transferor Retained
Certificates) of other
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Series which the applicable Supplements for such Series specify are to be
treated as "Shared Principal Collections" and which may be applied to cover
Principal Shortfalls with respect to the Series 1995-1 Investor Certificates.
"TERMINATION PAYMENT DATE" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an Insolvency Event and the occurrence of the Scheduled Series 1995-1
Termination Date.
"TRANSFEROR FINANCE CHARGE COLLECTIONS" shall mean on any
Business Day the product of (a) the Finance Charge Collections for such Business
Day, (b) the Transferor Percentage and (c) the Floating Allocation Percentage.
"TRANSFEROR RETAINED CERTIFICATES" shall mean investor
certificates of any Series, including the Class D Certificates, which the
Transferor is required to retain, but only for so long as the Transferor is the
Holder of such Certificates.
"TRUST CERTIFICATE-BACKED NOTES" means notes in a principal
amount not to exceed $30,000,000 issued on or after the date hereof by the
Transferor that are secured, in whole or in part, by Class D Certificates and
the Transferor Certificate and that have an Expected Maturity Date on or before
December 15, 2000.
"TRUST CERTIFICATE-BACKED NOTE REPAYMENT DATE" shall mean the
date on which all principal and interest (at the original stated interest rate,
and excluding any premium) on the Trust Certificate-Backed Notes has been paid
or deposited into a principal reserve account for payment by the Transferor
provided that, unless and until Trust Certificate-Backed Notes have been issued,
such date shall be the effective date of this Supplement.
SECTION 3. REASSIGNMENT TERMS. The Class A Certificates, Class
B Certificates and Class C Certificates shall be subject to repurchase by the
Transferor at its option, in accordance with the terms specified in subsection
12.2(a) of the Agreement, on any Distribution Date on or after the Distribution
Date on which the sum of the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount is reduced to an amount less than or
equal to 10% of the sum of the Class A Initial Invested Amount, the Class B
Initial Invested Amount and the Class C Initial Invested Amount. The deposit
required in connection with any such repurchase and final distribution shall be
equal to the sum of the Class A Invested Amount, the Class B Invested Amount and
the Class C Invested Amount PLUS accrued and unpaid interest on such
Certificates through the day prior to the Distribution Date on which the final
distribution occurs.
SECTION 3A. CONVEYANCE OF INTEREST IN INTEREST RATE CAP; CAP
PROCEEDS ACCOUNT. (a) The Transferor hereby covenants and agrees that, on or
prior to the Series 1995-1 Closing Date, it shall obtain Interest Rate Caps by
entering into one or more Interest Rate Cap Agreements such that the aggregate
notional amount under all such agreements shall, at any time, be at least equal
to the Invested Amount at such time. The Transferor hereby assigns, sets-over,
conveys, pledges and grants a security interest and lien (free and clear of all
other Liens) to the Trustee for the benefit of the Series 1995-1
Certificateholders, in all of the Transferor's right, title and interest now
existing
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or hereafter arising in and to the Interest Rate Cap Agreements and the Interest
Rate Caps arising thereunder, together with the Cap Proceeds Amount and all
other proceeds thereof, as collateral security for the benefit of the Series
1995-1 Certificateholders. The Transferor hereby further agrees to execute all
such instruments, documents and financing statements and take all such further
action requested by the Trustee to evidence and perfect the assignment of the
Interest Rate Cap Agreements and the Interest Rate Caps pursuant to this Section
3A.
(b) The Trustee, for the benefit of the Series 1995-1
Certificateholders, shall establish and maintain with a Qualified Institution in
the name of the Trust, a certain segregated trust account (the "CAP PROCEEDS
ACCOUNT"). All amounts received by the Trustee pursuant to the Interest Rate
Caps on the settlement date for any Interest Rate Cap (a "CAP SETTLEMENT DATE")
shall be deposited in the Cap Proceeds Account. Funds in the Cap Proceeds
Account shall be invested at the direction of the Servicer, in Cash Equivalents
with maturities not later than the next succeeding Business Day. Any earnings on
such invested funds shall be deposited and held in the Cap Proceeds Account and
applied in the same manner and priority as payments pursuant to the Interest
Rate Caps.
SECTION 4. DELIVERY AND PAYMENT FOR THE SERIES 1995-1
CERTIFICATES. The Transferor shall execute and deliver the Series 1995-1
Certificates to the Trustee for authentication in accordance with Section 6.1 of
the Agreement. The Trustee shall deliver the Series 1995-1 Certificates to or
upon the order of the Transferor when authenticated in accordance with Section
6.2 of the Agreement.
SECTION 5. FORM OF DELIVERY OF SERIES 1995-1 CERTIFICATES. The
Class A Certificates, the Class B Certificates, the Class C Certificates and the
Class D Certificates, shall be delivered as Registered Certificates as provided
in Section 6.1 of the Agreement.
SECTION 6. ARTICLE IV OF AGREEMENT. Sections 4.l, 4.2 and 4.3
of the Agreement shall read in their entirety as provided in the Agreement.
Article IV of the Agreement (except for Sections 4.1, 4.2 and 4.3 thereof) shall
read in its entirety as follows and shall be applicable only to the Series
1995-1 Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 RIGHTS OF CERTIFICATEHOLDERS. The Series 1995-1
Certificates shall represent undivided interests in the Trust, consisting of the
right to receive, to the extent necessary to make the required payments with
respect to such Series 1995-1 Certificates at the times and in the amounts
specified in this Agreement, (a) the Floating Allocation Percentage and Fixed
Allocation Percentage (as applicable from time to time) of Collections available
in the Collection Account, (b) funds allocable to the Series 1995-1 Certificates
on deposit in the Equalization Account and (c) funds on deposit in the Interest
Funding Account, the Principal Account, the Cap Proceeds Account and the
Distribution Account (for such Series, the "SERIES 1995-1 CERTIFICATEHOLDERS'
- 17 -
INTEREST"). The Class B Invested Amount, the Class C Invested Amount and the
Class D Invested Amount shall be subordinated to the Class A Certificates, the
Class C Invested Amount and the Class D Invested Amount shall be subordinated to
the Class B Certificates, and the Class D Invested Amount shall be subordinated
to the Class C Certificates, in each case to the extent provided in this Article
IV. The Class B Certificates will not have the right to receive payments of
principal until the Class A Invested Amount has been paid in full. The Class C
Certificates will not have the right to receive payments of principal until the
Class A Invested Amount and the Class B Invested Amount have been paid in full.
The Class D Certificates will not have the right to receive payments of
principal until the Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount have been paid in full.
Section 4.5 COLLECTIONS AND ALLOCATION, PAYMENTS ON
EXCHANGEABLE TRANSFEROR CERTIFICATE.
(a) COLLECTIONS. The Servicer will apply or will
instruct the Trustee to apply all funds on deposit in the Collection Account and
the Equalization Account allocable to the Series 1995-1 Certificates, and all
funds on deposit in the Interest Funding Account, the Principal Account and the
Distribution Account maintained for this Series, as described in this Article
IV.
(b) [Reserved]
(c) PAYMENTS TO THE HOLDER OF THE EXCHANGEABLE
TRANSFEROR CERTIFICATE. On each Business Day, the Servicer shall determine
whether a Pay Out Event is deemed to have occurred with respect to the Series
1995-1 Certificates, and the Servicer shall allocate and pay Collections in
accordance with the Daily Report with respect to such Business Day to the Holder
of the Exchangeable Transferor Certificate as follows:
(i) For each Business Day with respect to the Revolving
Period, in addition to amounts allocated and paid to the Holder of the
Exchangeable Transferor Certificate pursuant to subsection 4.3(b) of
the Agreement, an amount equal to the product of the Class D Floating
Allocation Percentage and the amount of Principal Collections on such
Business Day.
(ii) For each Business Day with respect to the Amortization
Period prior to the Business Day on which an amount equal to the Class
C Invested Amount has been deposited in the Principal Account to be
applied to the payment of Class C Principal, in addition to amounts
allocated and paid to the Holder of the Exchangeable Transferor
Certificate pursuant to subsection 4.3(b) of the Agreement, an amount
equal to the product of the Class D Fixed Allocation Percentage and the
amount of Principal Collections on such Business Day.
(iii) For each Business Day on and after the day on which
Principal Collections are being deposited in the Principal Account
pursuant to Section 4.9(c)(iv), the amount of payments made to the
Holder of the Exchangeable Transferor Certificate shall be determined
only as provided in subsection 4.3(b) of the Agreement.
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Notwithstanding the foregoing, amounts payable to the Holders
of the Exchangeable Transferor Certificate pursuant to subsection 4.5(c)(i) or
(ii) shall instead be deposited in the Equalization Account to the extent
necessary to prevent the Transferor Interest from being less than the Minimum
Transferor Interest.
The allocations to be made pursuant to this subsection 4.5(c)
also apply to deposits into the Collection Account that are treated as
Collections, including Adjustment Payments, payment of the reassignment price
pursuant to Section 2.4(e) of the Agreement and proceeds from the sale,
disposition or liquidation of the Receivables pursuant to Section 9.2, 10.2(a),
12.1 or 12.2 of the Agreement and Section 3 of this Series Supplement, such
deposits to be treated as Collections and to be allocated as Finance Charge
Receivables or Principal Receivables as provided in the Agreement.
Section 4.6 DETERMINATION OF MONTHLY INTEREST FOR THE SERIES
1995-1 CERTIFICATES. (a) The amount of monthly interest (for the Series 1995-1
Certificates, the "CLASS A INTEREST") allocable to the Class A Certificates of
the Series 1995-1 Certificates with respect to any Monthly Period shall be an
amount equal to one-third of the product of (i) the Class A Certificate Rate and
(ii) the principal balance of the Class A Certificates as of the close of
business on the last day of the Monthly Period immediately preceding the related
interest accrual period.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "CLASS A INTEREST SHORTFALL") equal
to the excess, if any, of (x) the aggregate Class A Interest for the Interest
Accrual Period applicable to the Distribution Date over (y) the amount available
to be paid to the Class A Certificateholders in respect of interest on such
Distribution Date. If there is a Class A Interest Shortfall with respect to any
Distribution Date, an additional amount ("CLASS A ADDITIONAL INTEREST") shall be
payable as provided herein with respect to the Class A Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class A Interest Shortfall is paid to Class A
Certificateholders, equal to the product of (i) the Class A Certificate Rate and
(ii) such Class A Interest Shortfall remaining unpaid calculated on the basis of
the actual number of days in the related Interest Accrual Period over a year of
360 days. Notwithstanding anything to the contrary herein, Class A Additional
Interest shall be payable or distributed to Class A Certificateholders only to
the extent permitted by applicable law.
(b) The amount of monthly interest (for the Series 1995-1
Certificates, the "CLASS B INTEREST") allocable to the Class B Certificates of
the Series 1995-1 Certificates with respect to any Monthly Period shall be an
amount equal to one-third of the product of (i) the Class B Certificate Rate and
(ii) the Class B Invested Amount as of the close of business on the last day of
the Monthly Period immediately preceding the related Interest Accrual Period.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "CLASS B INTEREST SHORTFALL") equal
to the excess, if any, of (x) the aggregate Class B Interest for the Interest
Accrual Period applicable to the Distribution Date OVER (y) the amount available
to be paid to the Class B Certificateholders in respect of interest on such
Distribution Date. If there is a Class B Interest Shortfall with respect to any
Distribution Date, an
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additional amount ("CLASS B ADDITIONAL INTEREST") shall be payable as provided
herein with respect to the Class B Certificates on each Distribution Date
following such Distribution Date, to and including the Distribution Date on
which such Class B Interest Shortfall is paid to Class B Certificateholders,
equal to the product of (i) the Class B Certificate Rate and (ii) such Class B
Interest Shortfall remaining unpaid calculated on the basis of the actual number
of days in the related Interest Accrual Period over a year of 360 days.
Notwithstanding anything to the contrary herein, Class B Additional Interest
shall be payable or distributed to Class B Certificateholders only to the extent
permitted by applicable law.
(c) The amount of monthly interest (for the Series 1995-1
Certificates, the "CLASS C INTEREST") allocable to the Class C Certificates of
the Series 1995-1 Certificates with respect to any Monthly Period shall be an
amount equal to one-third of the product of (i) the Class C Certificate Rate and
(ii) the Class C Invested Amount as of the close of business on the last day of
the preceding Monthly Period immediately preceding the related Interest Accrual
Period.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "CLASS C INTEREST SHORTFALL") equal
to the excess, if any, of (x) the aggregate Class C Interest for the Interest
Accrual Period applicable to the Distribution Date OVER (y) the amount available
to be paid to the Class C Certificateholders in respect of interest on such
Distribution Date. If there is a Class C Interest Shortfall with respect to any
Distribution Date, an additional amount ("CLASS C ADDITIONAL INTEREST") shall be
payable as provided herein with respect to the Class C Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class C interest Shortfall is paid to Class C
Certificateholders, equal to the product of (i) the Class C Certificate Rate and
(ii) such Class C Interest Shortfall remaining unpaid calculated on the basis of
the actual number of days in the related Interest Accrual Period over a year of
360 days. Notwithstanding anything to the contrary herein, Class C Additional
Interest shall be payable or distributed to Class C Certificateholders only to
the extent permitted by applicable law.
Section 4.7 DETERMINATION OF PRINCIPAL AMOUNTS. (a) The amount
of principal (for the Series 1995-1 Certificates, the "CLASS A PRINCIPAL")
distributable from the Distribution Account with respect to the Class A
Certificates on each Distribution Date with respect to the Amortization Period
shall be equal to the largest Class A Controlled Distribution Amount which does
not exceed an amount calculated as follows: the sum of (i) an amount equal to
the product of the Class A Fixed Allocation Percentage and the aggregate amount
of Principal Collections with respect to the three preceding Monthly Periods
(or, in the case of the first Distribution Date following the Negative Carry
Fill-up Date, the Class A Fixed Allocation Percentage of Principal Collections
received after the Negative Carry Fill-up Date and the Class A Fixed Allocation
Percentage of any Principal Collection received on the Negative Carry Fill-up
Date to the extent not needed for deposit in the Negative Carry Account), (ii)
any amount on deposit in the Equalization Account allocated to the Class A
Certificates pursuant to subsection 4.9(d) with respect to the three preceding
Monthly Periods, (iii) the amount, if any, allocated to the Class A Certificates
pursuant to subsections 4.9(a)(v), (vi), (ix), (x) and (xii) and (iv) the amount
of Shared Principal Collections allocated to the Series 1995-1 Certificates with
respect to the three preceding Monthly Periods pursuant to Section 4.14;
PROVIDED, FURTHER, that with respect to any Distribution Date, Class A Principal
may not exceed
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the Class A Invested Amount; PROVIDED, FURTHER, that with respect to the
Scheduled Series 1995-1 Termination Date, the Class A Principal shall be an
amount equal to the Class A Invested Amount; PROVIDED, FURTHER, that no
distribution of Class A Principal shall be made which would reduce the Class A
Invested Amount to an amount less than $1,700,000 except for a payment in full
of the Class A Invested Amount.
(b) The amount of principal (for the Series 1995-1
Certificates, the "CLASS B PRINCIPAL") distributable from the Distribution
Account with respect to the Class B Certificates on each Distribution Date,
beginning with the Class B Principal Payment Commencement Date, shall be an
amount equal to the largest Class B Controlled Distribution Amount which does
not exceed an amount calculated as follows: the sum of (i) an amount equal to
the product of the Class B Fixed Allocation Percentage and the aggregate amount
of Principal Collections with respect to the three preceding Monthly Periods
(or, in the case of the first Distri bution Date following the date on which an
amount equal to the Class A Invested Amount is deposited in the Principal
Account to be applied to the payment of Class A Principal, the Class B Fixed
Allocation Percentage of Principal Collections from the date on which such
deposit is made), (ii) any amount on deposit in the Equalization Account
allocated to the Class B Certificates pursuant to subsection 4.9(d) with respect
to the three preceding Monthly Periods, (iii) the amount, if any, allocated to
the Class B Certificates pursuant to subsections 4.9(a)(v), (ix), (x) and (xii)
with respect to such Distribution Date and (iv) the amount of Shared Principal
Collections allocated to the Series 1995-1 Certificates with respect to the
three preceding Monthly Periods pursuant to Section 4.14 on and after the Class
B Principal Payment Commencement Date; PROVIDED, HOWEVER, that, with respect to
any Distribution Date Class B Principal shall not be distributable on any
Distribution Date in an amount less than the Class B Invested Amount; PROVIDED,
FURTHER, that with respect to any Distribution Date, Class B Principal may not
exceed the Class B Invested Amount; PROVIDED, FURTHER, that with respect to the
Scheduled Series 1995-1 Termination Date, the Class B Principal shall be an
amount equal to the Class B Invested Amount; PROVIDED, FURTHER, that no
distribution of Class A Principal shall be made which would reduce the Class B
Invested Amount to an amount less than $300,000 except for a payment in full of
the Class B Invested Amount.
(c) The amount of principal (for the Series 1995-1
Certificates, the "CLASS C PRINCIPAL") distributable from the Distribution
Account with respect to the Class C Certificates on each Distribution Date,
beginning with the Class C Principal Payment Commencement Date, shall be an
amount equal to and calculated as follows: the sum of (i) an amount equal to the
product of the Class C Fixed Allocation Percentage and the aggregate amount of
Principal Collections with respect to the three preceding Monthly Periods (or,
in the case of the first Distribution Date following the date on which an amount
equal to the Class B Invested Amount is deposited in the Principal Account to be
applied to the payment of Class B Principal, the Class C Fixed Allocation
Percentage of Principal Collections from the date on which such deposit is
made), (ii) any amounts on deposit in the Equalization Account allocated to the
Class C Certificates pur suant to subsection 4.9(d) with respect to the three
preceding Monthly Periods, (iii) the amount, if any, allocated to the Class C
Certificates pursuant to subsections 4.9(a)(v), (x) and (xii) with respect to
such Distribution Date and (iv) the amount of Shared Principal Collections
allocated to the Series 1995-1 Certificates with respect to the three preceding
Monthly Periods pursuant to Section 4.14 of the Agreement on and after the Class
C Principal Payment Commencement Date; PROVIDED that with
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respect to any Distribution Date, Class C Principal may not exceed the Class C
Invested Amount; PROVIDED, FURTHER, that with respect to the Scheduled Series
1995-1 Termination Date, the Class C Principal shall be an amount equal to the
Class C Invested Amount.
(d) The amount of principal (for the Series 1995-1
Certificates, the "CLASS D PRINCIPAL") distributable from the Distribution
Account with respect to the Class D Certificates on each Distribution Date,
beginning with the Class D Principal Payment Commencement Date, shall be an
amount equal to and calculated as follows: the sum of (i) an amount equal to the
product of the Class D Fixed Allocation Percentage of Principal Collections with
respect to the related Period (or, in the case of the first Distribution Date
following the date on which an amount equal to the Class C Invested Amount is
deposited in the Principal Account to be applied to the payment of Class C
Principal, the Class D Fixed Allocation Percentage of Principal Collections from
the date on which such deposit is made), (ii) any amount on deposit in the
Equalization Account allocated to the Class D Certificates pursuant to
subsection 4.9(d) with respect to the three preceding Monthly Periods, (iii) the
amount, if any, allocated to the Class D Certificates pursuant to subsections
4.9(a)(v) and (xii) with respect to such Distribution Date and (iv) the amount
of Shared Principal Collections allocated to the Series 1995-1 Certificates with
respect to the three preceding Monthly Periods pursuant to Section 4.14 of the
Agreement on and after the Class D Principal Payment Commencement Date;
PROVIDED, HOWEVER, that with respect to the Scheduled Series 1995-1 Termination
Date, the Class D Principal shall be an amount equal to the Class D Invested
Amount.
Section 4.8 [Reserved]
Section 4.9 APPLICATION OF FUNDS ON DEPOSIT IN THE COLLECTION
ACCOUNT FOR THE CERTIFICATES. (a) On each Business Day, the Servicer shall
deliver to the Trustee a Daily Report in which it shall instruct the Trustee to
withdraw, and the Trustee, acting in accordance with such instructions, shall
withdraw, to the extent of (x) the sum of (i) the Floating Allocation Percentage
of Finance Charge Collections available in the Collection Account and (ii)
investment earnings on amounts on deposit in the Principal Account (the
"AVAILABLE SERIES 1995-1 FINANCE CHARGE COLLECTIONS") plus (y) the Daily Cap
Proceeds Amount, if any, the amounts required to be withdrawn from the
Collection Account and the Cap Proceeds Account pursuant to subsections
4.9(a)(i) through 4.9(a)(xviii).
(i) CLASS A INTEREST. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw first from the Cap Proceeds Account,
to the extent of the Daily Cap Proceeds Amount for such Business Day,
and then from the Collection Account and deposit into the Interest
Funding Account for distribution on the next Distribution Date to the
Class A Certificateholders, to the extent of the Available Series
1995-1 Finance Charge Collections for such Business Day, an amount
equal to the lesser of (x) the Available Series 1995-1 Finance Charge
Collections and (y) the excess of (1) the sum of Class A Interest and
Carryover Class A Interest OVER (2) any amounts with respect thereto
previously deposited into the Interest Funding Account on any prior
Business Day during such Monthly Period. Notwithstanding anything to
the
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contrary herein, Carryover Class A Interest shall be payable or
distributable to Class A Cer tificateholders only to the extent
permitted by applicable law.
(ii) CLASS B INTEREST. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw first from the Cap Proceeds Account,
to the extent of the Daily Cap Proceeds Amount for such Business Day
(after giving effect to withdrawals pursuant to subsection 4.9(a)(i)),
and then from the Collection Account and deposit into the Interest
Funding Account for distribution on the next Distribution Date to the
Class B Certificateholders, to the extent of any Available Series
1995-1 Finance Charge Collections remaining after giving effect to the
withdrawal pursuant to subsection 4.9(a)(i), an amount equal to the
lesser of (x) any such remaining Available Series 1995-1 Finance Charge
Collections and (y) the excess of (1) the sum of Class B Interest and
Carryover Class B Interest OVER (2) any amounts with respect thereto
previously deposited into the Interest Funding Account on any prior
Business Day during such Monthly Period. Notwithstanding anything to
the contrary herein, Carryover Class B Interest shall be payable or
distributable to Class B Certificateholders only to the extent
permitted by applicable law.
(iii) CLASS C INTEREST. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw first from the Cap Proceeds Account,
to the extent of the Daily Cap Proceeds Amount for such Business Day
(after giving effect to withdrawals pursuant to subsection 4.9(a)(i)
and (ii) of the Agreement), and then from the Collection Account and
deposit into the Interest Funding Account for distribution on the next
Distribution Date to the Class C Certificateholders, to the extent of
any Available Series 1995-1 Finance Charge Collections remaining after
giving effect to the withdrawal pursuant to subsections 4.9(a)(i) and
(ii), an amount equal to the lesser of (x) any such remaining Available
Series 1995-1 Finance Charge Collections and (y) the excess of (1) the
sum of Class C Interest and Carryover Class C Interest OVER (2) any
amounts with respect thereto previously deposited into the Interest
Funding Account on any prior Business Day during such Monthly Period.
Notwithstanding anything to the contrary herein, Carryover Class C
Monthly Interest shall be payable or distributable to Class C
Certificateholders only to the extent permitted by applicable law.
(iv) INVESTOR SERVICING FEE. On each Business Day on
which SRI or an Affiliate of SRI is not the Servicer, the Trustee,
acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account and distribute to the Servicer, to
the extent of any Available Series 1995-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (iii), an amount equal to the lesser of
(x) any such remaining Available Series 1995-1 Finance Charge
Collections and (y) the excess of (i) the Servicing Fee for such
Monthly Period plus any unpaid Servicing Fees from prior Monthly
Periods over (ii) any amounts with respect thereto previously
distributed to the Servicer during such Monthly Period.
(v) INVESTOR DEFAULT AMOUNT. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection
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Account, to the extent of any Available Series 1995-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (iv), an amount equal to the lesser of
(x) any such remaining Available Series 1995-1 Finance Charge
Collections and (y) the sum of (1) the aggregate Investor Default
Amount for such Business Day PLUS (2) the unpaid Investor Default
Amount for any previous Business Day during such Monthly Period, such
amount to be (A) treated as Shared Principal Collections during the
Revolving Period, (B) during the Amortization Period on and prior to
the day on which an amount equal to the Class A Invested Amount is
deposited in the Principal Account, deposited in the Principal Account
for distribution to the Class A Certificateholders on the next
Distribution Date, (C) during the Amortization Period, on and after the
day on which such deposit to the Principal Account with respect to the
Class A Invested Amount has been made and on and prior to the day on
which an amount equal to the Class B Invested Amount is deposited in
the Principal Account, deposited in the Principal Account for payment
to the Class B Certificateholders on the next Distribution Date, (D)
during the Amortization Period, on and after the day on which such
deposit to the Principal Account with respect to the Class B Invested
Amount has been made and on and prior to the day on which an amount
equal to the Class C Invested Amount is deposited in the Principal
Account, deposited in the Principal Account for payment to the Class C
Certificateholders on the next Distribution Date, and (E) on and after
such deposit to the Principal Account with respect to the Class C
Invested Amount has been made, paid to the Class D Certificateholders.
(vi) REIMBURSEMENT OF CLASS A INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 1995-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (v), an amount equal to the lesser of
(x) any such remaining Available Series 1995-1 Finance Charge
Collections and (y) the unreimbursed Class A Investor Charge-Offs, such
amount during the Revolving Period to be treated as Shared Principal
Collections, and during the Amortization Period on and prior to the day
on which an amount equal to the Class A Invested Amount is deposited in
the Principal Account to be deposited in the Principal Account for
distribution to the Class A Certificateholders on the next Distribution
Date.
(vii) UNPAID CLASS B INTEREST. On each Business Day,
the Trustee, acting in accordance with the instructions from the
Servicer, shall withdraw from the Collection Account and deposit in the
Interest Funding Account for distribution to the Class B
Certificateholders on the next Distribution Date, to the extent of any
Available Series 1995-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (vi), an amount equal to the lesser of (x) any such remaining
Available Series 1995-1 Finance Charge Collections and (y) the sum of
(1) the amount of interest which has accrued with respect to the
outstanding aggregate principal amount of the Class B Certificates at
the Class B Certificate Rate but which has not been deposited into the
Interest Funding Account or paid to the Class B Certificateholders and
(2) any additional interest at the Class B Certificate Rate for
interest that has accrued on interest that was due
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during a prior Monthly Period pursuant to this subsection but was not
deposited in the Interest Funding Account or paid to the Class B
Certificateholders.
(viii) UNPAID CLASS C INTEREST. On each Business Day,
the Trustee, acting in accordance with the instructions from the
Servicer, shall withdraw from the Collection Account and deposit in the
Interest Funding Account for distribution to the Class C
Certificateholders on the next Distribution Date, to the extent of any
Available Series 1995-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (vii), an amount equal to the lesser of (x) any such remaining
Available Series 1995-1 Finance Charge Collections and (y) the sum of
(1) the amount of interest which has accrued with respect to the
outstanding aggregate principal amount of the Class C Certificates at
the Class C Certificate Rate but which has not been deposited into the
Interest Funding Account or paid to the Class C Certificateholders and
(2) any additional interest at the Class C Certificate Rate for
interest that has accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was not deposited in the
Interest Funding Account or paid to the Class C Certificateholders.
(ix) REIMBURSEMENT OF CLASS B INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 1995-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (viii), an amount equal to the lesser
of (x) any such remaining Available Series 1995-1 Finance Charge
Collections and (y) the unreimbursed Class B Investor Charge-Offs, such
amount, (i) during the Revolving Period, to be treated as Shared
Principal Collections, (ii) during the Amortization Period, on and
prior to the day on which an amount equal to the Class A Invested
Amount is deposited in the Principal Account to be deposited in the
Principal Account for distribution to the Class A Certificateholders on
the next Distribution Date, and (iii) during the Amortization Period,
on and after the day on which such deposit has been made, to be
deposited in the Principal Account for payment to the Class B
Certificateholders on the next Distribution Date.
(x) REIMBURSEMENT OF CLASS C INVESTOR CHARGE-OFFS. On
each Business Day, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Collection Account, to the
extent of any Available Series 1995-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (ix), an amount equal to the lesser of
(x) any such remaining Available Series 1995-1 Finance Charge
Collections and (y) the unreimbursed Class C Investor Charge-Offs, such
amount, (i) during the Revolving Period, to be treated as Shared
Principal Collections, (ii) during the Amortization Period, on and
prior to the day on which an amount equal to the Class A Invested
Amount is deposited in the Principal Account, to be deposited in the
Principal Account for distribution to the Class A Certificateholders on
the next Distribution Date, (iii) during the Amortization Period, on
and after the date on which such deposit has been made and prior to the
date on which an amount equal to the Class B Invested Amount is
deposited in the Principal Account, to be deposited in the Principal
Account for payment to the Class B Certificateholders on the next
Distribution Date, and (iv) during the Amorti-
- 25 -
zation Period, on and after the day on which such deposit has been made
and on and prior to the day on which an amount equal to the Class C
Invested Amount is deposited in the Principal Account, to be deposited
in the Principal Account for payment to the Class C Certificateholders
on the next Distribution Date.
(xi) CLASS D INTEREST. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and pay to the Class D
Certificateholders, to the extent of any Available Series 1995-1
Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (x), an amount
equal to the lesser of (x) any such remaining Available Series 1995-1
Finance Charge Collections and (y) the sum of (1) the amount of
interest which has accrued with respect to the outstanding aggregate
principal amount of the Class D Certificates at the Class D Certificate
Rate but which has not been paid to the Class D Certificateholders and
(2) any additional interest at the Class D Certificate Rate for
interest that has accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but not paid to the Class D
Certificateholders.
(xii) REIMBURSEMENT OF CLASS D INVESTOR CHARGE-OFFS.
On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 1995-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (xi), an amount equal to the lesser of
(x) any such remaining Available Series 1995-1 Finance Charge
Collections and (y) the unreimbursed Class D Investor Charge-Offs, such
amount, (i) during the Revolving Period, to be treated as Shared
Principal Collections, (ii) during the Amortization Period on and prior
to the day on which an amount equal to the Class A Invested Amount is
deposited in the Principal Account to be deposited in the Principal
Account for distribution to the Class A Certificateholders on the next
Distribution Date, (iii) during the Amortization Period, on and after
the day on which such deposit to the Principal Account with respect to
the Class A Invested Amount has been made and on and prior to the day
on which an amount equal to the Class B Invested Amount is deposited in
the Principal Account, deposited in the Principal Account for payment
to the Class B Certif icateholders on the next Distribution Date, (iv)
during the Amortization Period on and after the day on which such
deposit to the Principal Account with respect to the Class B Invested
Amount has been made on and prior to the day on which an amount equal
to the Class C Invested Amount is deposited in the Principal Account,
deposited in the Principal Account for payment to the Class C
Certificateholders on the next Distribution Date and (v) on and after
the day such deposit to the Principal Account with respect to Class C
Invested Amount has been made, paid to the Class D Certificateholders.
(xiii) INVESTOR SERVICING FEE. On each Business Day,
if SRI or an Affiliate of SRI is the Servicer, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer, to the extent of
Available Series 1995-1 Finance Charge Collections for such Business
Day (after giving effect to the withdrawals pursuant to subsections
4.9(a)(i) through (xii)), the Investor
- 26 -
Servicing Fee accrued since the preceding Business Day PLUS any
Investor Servicing Fee due with respect to any prior Business Day but
not distributed to the Servicer.
(xiv) [Reserved]
(xv) [Reserved]
(xvi) [Reserved]
(xvii) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts
remaining in the Collection Account to the extent of any Available
Series 1995-1 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsection 4.9(a)(i) through (xiii),
shall be treated as Excess Finance Charge Collections, and the Servicer
shall direct the Trustee in writing on each Business Day to withdraw
such amounts from the Collection Account, FIRST, to make such amounts
available to pay to Certificateholders of other Series to the extent of
shortfalls, if any, in amounts payable to such Certificateholders from
Finance Charge Collections (but not from Excess Finance Charge
Collections) allocated to such other Series, SECOND, to pay any unpaid
commercially reasonable costs and expenses of a Suc cessor Servicer, if
any, THIRD, to make any required Adjustment Payment that the Transferor
has theretofore failed to make pursuant to Section 3.8(a) with respect
to any preceding Monthly Period, and FOURTH, for the benefit of the
Transferor, to apply any remaining Excess Finance Charge Collections as
provided in clause (xviii) below; PROVIDED, HOWEVER, that on any
Business Day during any Early Amortization Period, the Trustee shall
deposit any Available Series 1995-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (a)(xvi), into the Interest Funding
Account and shall add such funds to the Available Series 1995-1 Finance
Charge Collections on each subsequent Business Day in such Monthly
Period until the last Business Day of the related Monthly Period, when
the aggregate amount of such remaining Available Series 1995-1 Finance
Charge Collections shall be distributed as Excess Finance Charge
Collections in accordance with this subsection 4.9(a)(xvii) (without
giving effect to this proviso).
(xviii) TRANSFEROR APPLICATION OF EXCESS FINANCE
CHARGE COLLECTIONS. On each Business Day the Trustee, acting in
accordance with instructions from the Servicer, shall apply, for the
benefit of the Transferor, any Excess Finance Charge Collections
pursuant to clause FOURTH of Section 4.9(a)(xvii) in the following
order:
(A) FIRST, to the extent provided in the
indenture governing the Trust Certificate-Backed Notes, to
transfer to the indenture trustee thereunder amounts required
to be paid or set aside in respect of principal and interest
on such Trust Certificate-Backed Notes;
(B) SECOND, if a Portfolio Imbalance Event
has occurred, to deposit in the Interest Funding Account for
distribution to the Class A Certificateholders on the next
Distribution Date, to the extent of any Excess Finance
- 27 -
Charge Collections remaining after giving effect to the
application pursuant to subsection 4.9(a)(xviii)(A), an amount
equal to the lesser of (1) any such remaining Excess Finance
Charge Collections and (2) the amount of any Class A Portfolio
Imbalance Premium;
(C) THIRD, if an Early Repayment Event has
occurred, to deposit in the Interest Funding Account for
distribution to the Class A Certificateholders on the next
Distribution Date, to the extent of any Excess Finance Charge
Collections remaining after giving effect to the application
pursuant to subsections 4.9(a)(xviii)(A) and (B), an amount
equal to the lesser of (1) any such remaining Excess Finance
Charge Collections and (2) the unpaid Class A Early Pay Out
Amount;
(D) FOURTH, if an Early Repayment Event has
occurred, to deposit in the Interest Funding Account for
distribution to the Class B Certificateholders on the next
Distribution Date, to the extent of any Excess Finance Charge
Collections remaining after giving effect to the application
pursuant to subsections 4.9(a)(xviii)(A) through (C), an
amount equal to the lesser of (1) any such remaining Excess
Finance Charge Collections and (2) the unpaid Class B Early
Pay Out Amount;
(E) FIFTH, if an Early Repayment Event has
occurred, to deposit in the Interest Funding Account for
distribution to the Class C Certificateholders on the next
Distribution Date, to the extent of any Excess Finance Charge
Collections remaining after giving effect to the application
pursuant to subsections 4.9(a)(xviii)(A) through (D), an
amount equal to the lesser of (1) any such remaining Excess
Finance Charge Collections and (2) the unpaid Class C Early
Pay Out Amount; and
(F) SIXTH, any remaining Excess Finance
Charge Collections shall be paid to the Transferor.
(b) For each Business Day with respect to the Revolving
Period, the funds on deposit in the Collection Account to the extent of the
product of (i) the sum of the Class A Floating Allocation Percentage, the Class
B Floating Allocation Percentage and the Class C Floating Allocation Percentage
and (ii) Principal Collections with respect to such Business Day will be treated
as Shared Principal Collections and applied, pursuant to the written direction
of the Servicer in the Daily Report for such Business Day, as provided in
subsection 4.3(e) of the Agreement.
(c) For each Business Day on and after the Amortization Period
Commencement Date, the amount of funds on deposit in the Collection Account as
described below will be distributed, pursuant to the written direction of the
Servicer in the Daily Report for such Business Day in the following priority:
- 28 -
(i) on and prior to the day on which an amount equal
to the Class A Invested Amount has been deposited in the Principal
Account to be applied to the payment of Class A Principal, an amount
(not in excess of the Class A Invested Amount) equal to the sum of (w)
the product of the Class A Fixed Allocation Percentage and Principal
Collections in the Collection Account at the end of the preceding
Business Day, (x) any amount on deposit in the Equalization Account
allocated to the Class A Certificates on such Business Day pursuant to
subsection 4.9(d), (y) amounts to be paid pursuant to subsections
4.9(a)(v), (vi), (ix), (x) and (xii) on such Business Day and (z) the
amount of Shared Principal Collections allocated to the Series 1995-1
Certificates in accordance with Section 4.14 on such Business Day (such
sum, the "CLASS A DAILY PRINCIPAL AMOUNT"), will be deposited into the
Principal Account;
(ii) on and after the day on which an amount equal to
the Class A Invested Amount has been deposited in the Principal Account
to be applied to the payment of Class A Principal, an amount (not in
excess of the Class B Invested Amount) equal to the sum of (w) an
amount equal to the product of the Class B Fixed Allocation Percentage
and Principal Collections in the Collection Account at the end of the
preceding Business Day, (x) any amount on deposit in the Equalization
Account allocated to the Class B Certificates on such Business Day
pursuant to subsection 4.9(d), (y) the amount, if any, allocated to be
paid to the Class B Certificates pursuant to subsections 4.9(a)(v),
(ix), (x) and (xii) with respect to such Business Day and (z) the
amount of Shared Principal Collections allocated to the Series 1995-1
Certificates in accordance with Section 4.14 on such Business Day (such
sum, the "CLASS B DAILY PRINCIPAL AMOUNT") will be deposited into the
Principal Account;
(iii) on and after the day on which an amount equal
to the Class B Invested Amount has been deposited in the Principal
Account to be applied to the payment of Class B Principal, an amount
(not in excess of the Class C Invested Amount) equal to the sum of (w)
an amount equal to the product of the Class C Fixed Allocation
Percentage and Principal Collections in the Collection Account at the
end of the preceding Business Day, (x) any amount on deposit in the
Equalization Account allocated to the Class C Certificates on such
Business Day pursuant to subsection 4.9(d), (y) the amount, if any,
allocated to be paid to the Class C Certificates pursuant to
subsections 4.9(a)(v), (x) and (xii) with respect to such Business Day
and (z) the amount of Shared Principal Collections allocated to the
Series 1995-1 Certificates in accordance with Section 4.14 on such
Business Day (such sum, the "CLASS C DAILY PRINCIPAL AMOUNT") will be
deposited into the Principal Account;
(iv) on and after the day on which an amount equal to
the Class C Invested Amount has been deposited in the Principal Account
to be applied to the payment of Class C Principal, an amount equal to
the sum of (v) the amount on deposit in the Negative Carry Account at
the end of the preceding Business Day, (w) an amount equal to the
product of the Class D Fixed Allocation Percentage and Principal
Collections in the Collection Account at the end of the preceding
Business Day, (x) any amount on deposit in the Equalization Account
allocated to the Class D Certificates on such Business Day pursuant to
subsection 4.9(d), (y) the amount, if any, allocated to be paid to the
Class D Certificates pursuant to subsections 4.9(a)(v) and (xii) with
respect to such Business Day and (z) subject to Section
- 29 -
4.15, the amount of Shared Principal Collections allocated to the
Series 1995-1 Certificates in accordance with Section 4.14 on such
Business Day (such sum, the "CLASS D DAILY PRINCIPAL AMOUNT") will be
distributed to the Class D Certificateholders;
(v) except on any Early Pay Out Set Aside Date, an
amount equal to the excess, if any, of (A) the product of (x) the sum
of the Class A Fixed Allocation Percentage, the Class B Fixed
Allocation Percentage and the Class C Fixed Allocation Percentage and
(y) Principal Collections in the Collection Account at the end of the
preceding Business Day over (B) the sum of the amounts deposited in the
Principal Account pursuant to clauses (i)(w), (ii)(w) and (iii)(w)
above will be treated as Shared Principal Collections and applied as
provided in subsection 4.3(e) of the Agreement; and
(vi) on any Early Pay Out Set Aside Date, an amount
equal to the excess, if any, of (A) the product of (x) the sum of the
Class A Fixed Allocation Percentage, the Class B Fixed Allocation
Percentage and the Class C Fixed Allocation Percentage and (y)
Principal Collections in the Collection Account at the end of the
preceding Business Day over (B) the sum of the amounts deposited in the
Principal Account pursuant to clauses (i)(w), (ii)(w) and (iii)(w)
above will be applied as provided in Section 4.15.
(d) On the first Business Day of the Amortization Period funds
on deposit in the Equalization Account will be deposited in the Principal
Account to the extent of the lesser of (x) the Invested Amount and (y) the
product of (i) the product of (A) 100% minus the Transferor Percentage minus the
fixed allocation percentage represented by any Transferor Retained Certificates
and (B) the amount on deposit in the Equalization Account at the beginning of
the Amortization Period and (ii) the Senior Equalization Account Percentage with
respect to Series 1995-1. Any funds in the Equalization Account on any
subsequent day will be allocated to the Class A Certificates, the Class B
Certificates and the Class C Certificates, to the extent that Default Amounts
allocated to the Transferor Interest or adjustments as described in Section 3.8
of the Agreement would cause the Transferor Interest to be less than the Minimum
Transferor Interest and, with respect to any credit adjustment, the Transferor
has not made an Adjustment Payment to the Collection Account, in an amount equal
to the least of (i) the product of (A) the amount of such reduction below the
Minimum Transferor Interest and (B) the Senior Equalization Account Percentage
with respect to Series 1995- 1, (ii) the product of (A) the amount of funds
available in the Equalization Account and (B) the Senior Equalization Account
Percentage and (iii) the sum of the Class A Adjusted Invested Amount, the Class
B Adjusted Invested Amount and the Class C Adjusted Invested Amount. On any
Determination Date that occurs during the Amortization Period and prior to the
Class D Principal Payment Commencement Date on which a Class D Investor
Charge-Off is recorded, funds in the Equalization Account shall be allocated to
the Investor Certificates (other than the Class D Certificates) in an amount
equal to the least of (i) the amount of such Class D Investor Charge-Off, (ii)
the product of (A) the amount of funds available in the Equalization Account and
(B) the Senior Equalization Account Percentage with respect to Series 1995-1 and
(iii) the aggregate remaining Class A Adjusted Invested Amount, Class B Adjusted
Invested Amount and Class C Adjusted Invested Amount. The amounts allocated in
the preceding two sentences will be allocated, in accordance with written
instructions from the Servicer, in the following order of priority: (i) to the
Class A Certificates in an amount not to exceed the Class A Invested Amount
after subtracting
- 30 -
therefrom any amounts to be deposited in the Principal Account with respect
thereto pursuant to subsections 4.9(c)(i)(w) and (y), (ii) to the Class B
Certificates in an amount not to exceed the Class B Invested Amount after
subtracting therefrom any amounts to be deposited in the Principal Account with
respect thereto pursuant to subsections 4.9(c)(ii)(w) and (y), and (iii) to the
Class C Certificates in an amount not to exceed the Class C Invested Amount
after subtracting therefrom any amounts to be deposited in the Principal Account
with respect thereto pursuant to subsections 4.9(c)(iii)(w) and (y). On the day
on which an amount equal to the Class C Invested Amount has been deposited in
the Principal Account to be applied to the payment of Class C Principal, amounts
remaining on deposit in the Equalization Account will be allocated to the Series
1995-1 Certificates and deposited in the Principal Account in an amount not to
exceed the lesser of (i) the Class D Invested Amount after subtracting therefrom
any amounts to be deposited in the Principal Account with respect thereto
pursuant to subsections 4.9(c)(iv)(w) and (y) and (ii) the product of (A) such
amounts remaining on deposit and (B) a fraction, the numerator of which is the
Class D Invested Amount and the denominator of which is the sum of the invested
amounts of all Transferor Retained Classes of Series then in amortization
periods on such day (except that, to the extent such allocation and deposit
would result in the occurrence of the Trust Certificate-Backed Note Repayment
Date, any such allocation and deposit in excess of the amount needed to cause
such Date to occur shall instead be allocated as provided in Section 4.15).
(e) On the first Business Day following the occurrence of a
Portfolio Imbalance Event, funds on deposit in the Equalization Account will, in
accordance with written instructions from the Servicer, be deposited in the
Principal Account and allocated to Series 1995-1 to the extent of the Series
1995-1 Portfolio Correction Distribution Amount.
(f) Any application of funds pursuant to subsections
4.9(a)(xvii) or 4.9(d) shall not discharge the Transferor from its obligation to
make any Adjustment Payment pursuant to Section 3.8 of the Agreement.
Section 4.10 COVERAGE OF NEGATIVE CARRY AMOUNT AND REQUIRED
AMOUNT FOR THE SERIES 1995-1 CERTIFICATES. (a) To the extent that any amounts
are on deposit in the Principal Account or the Equalization Account on any
Business Day, the Servicer shall apply Transferor Finance Charge Collections in
an amount (the "NEGATIVE CARRY AMOUNT") equal to the excess of (x) the product
of (a) the Base Rate, (b) the amounts on deposit in the Principal Account and
the Equalization Account and (c) the number of days elapsed since the previous
Business Day DIVIDED by the actual number of days in such year over (y) the
aggregate amount of all earnings since the previous Business Day available from
the Cash Equivalents in which funds on deposit in the Equal ization Account are
invested in the manner specified for application of Available Series 1995-1
Finance Charge Collections in subsections 4.9(a)(i) through (xiii). On each
Business Day on and after the Negative Carry Fill-up Date but prior to the day
on which an amount equal to the Class C Invested Amount has been deposited in
the Principal Account to be applied to payment of Class C Principal, to the
extent of any Negative Carry Amount remaining after application of Transferor
Finance Charge Collections, the Servicer shall apply all or a portion of the
amount on deposit in the Negative Carry Account to the extent of such remaining
Negative Carry Amount in the manner specified for application of Available
Series 1995-1 Finance Charge Collections in subsections 4.9(a)(i) through
(xiii).
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(b) To the extent that on any Business Day payments are being
made pursuant to any of subsections 4.9(a)(i) through (xiii), respectively, and
the full amount to be paid pursuant to any such subsection receiving payments on
such Business Day is not paid in full on such Business Day, the Servicer shall
apply all or a portion of the Excess Finance Charge Collections from other
Series with respect to such Business Day allocable to the Series 1995-1
Certificates in an amount (the "REQUIRED AMOUNT") equal to the excess of the
full amount to be allocated or paid pursuant to the applicable subsection over
the amount applied with respect thereto from Available Series 1995-1 Finance
Charge Collections, Transferor Finance Charge Collections and amounts on deposit
in the Negative Carry Account on such Business Day. Excess Finance Charge
Collections allocated to the Series 1995-1 Certificates for any Business Day
shall mean an amount equal to the product of (x) Excess Finance Charge
Collections available from all other Series for such Business Day and (y) a
fraction, the numerator of which is the Required Amount for such Business Day
and the denominator of which is the aggregate amount of shortfalls in required
amounts or other amounts to be paid from Finance Charge Collections for all
Series for such Business Day.
Section 4.11 PAYMENT OF CERTIFICATE INTEREST AND OTHER
AMOUNTS. On each Transfer Date, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
withdraw the amount on deposit in the Interest Funding Account with respect to
the three prior Monthly Periods allocable to the Series 1995-1 Certificates and
deposit such amount in the Distribution Account. On each Distribution Date, the
Paying Agent shall pay in accordance with Section 5.1 of the Agreement to (x)
the Class A Certificateholders from the Distribution Account such amount
deposited into the Distribution Account on the related Transfer Date allocable
thereto pursuant to subsection 4.9(a)(i), (xviii)(B) and (xviii)(C) and
subsection 4.15(a) and (b), (y) the Class B Certificateholders from the
Distribution Account the amount deposited into the Distribution Account
allocable thereto pursuant to subsections 4.9(a)(ii), (vii) and (xviii)(D) and
subsection 4.15(c) and (z) the Class C Certificateholders from the Distribution
Account the amount deposited into the Distribution Account allocable thereto
pursuant to subsec tions 4.9(a)(iii), (viii) and (xviii)(E) and subsection
4.15(d).
Section 4.12 PAYMENT OF CERTIFICATE PRINCIPAL. (a) On the
Transfer Date preceding each Distribution Date with respect to the Amortization
Period, the Trustee, acting in accordance with instructions from the Servicer
set forth in the Daily Report for such day, shall withdraw from the Principal
Account and deposit in the Distribution Account an amount equal to but not less
than the Class A Principal for such Distribution Date. On each Distribution Date
with respect to the Amortization Period, the Paying Agent shall pay in
accordance with Section 5.1 to the Class A Certificateholders from the
Distribution Account such amount deposited into the Distribution Account on the
related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal
Payment Commencement Date and each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit in
the Distribution Account an amount equal to but not less than the Class B
Principal for such Distribution Date. On the Class B Principal Payment
Commencement Date, after the payment of any principal amounts to the Class A
Certificates on such day, and on each Distribution Date thereafter until the
Class B Invested Amount is paid in full, the Paying Agent
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shall pay in accordance with Section 5.1 to the Class B Certificateholders from
the Distribution Account such amount deposited into the Distribution Account on
the related Transfer Date.
(c) On the Transfer Date preceding the Class C Principal
Payment Commencement Date and each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit in
the Distribution Account an amount equal to the lesser of the Class C Invested
Amount and the amount on deposit in the Principal Account allocable to the
Series 1995-1 Certificates (after giving effect to transfers pursuant to
subsection 4.12(a) and (b)). On the Class C Principal Payment Commencement Date,
after the payment of any principal amounts to the Class B Certificates on such
day, and on each Distribution Date thereafter until the Class C Invested Amount
is paid in full, the Paying Agent shall pay in accordance with Section 5.1 to
the Class C Certificateholders from the Distribution Account such amount
deposited into the Distribution Account on the related Transfer Date.
(d) On the day on which an amount equal to the Class C
Invested Amount has been deposited in the Principal Account to be applied to the
payment of Class C Principal and each Business Day thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall make payments of principal to the Class D
Certificateholder in accordance with subsection 4.9(c)(iv).
(e) On the Transfer Date preceding a Portfolio Correction
Distribution Date, the Trustee, acting in accordance with instructions from the
Servicer set forth in the Daily Report for such date, shall withdraw from the
Principal Account and deposit in the Distribution Account an amount equal to the
Series 1995-1 Portfolio Correction Distribution Amount. On the Portfolio
Correction Distribution Date, the Paying Agent shall pay in accordance with
Section 5.1 to the Class A Certificateholders from the Distribution Account such
amount deposited into the Distribution Account on the related Transfer Date.
Any amounts remaining in the Principal Account and allocable
to the Series 1995-1 Certificates, after the Class D Invested Amount has been
paid in full, will be treated as Shared Principal Collections and applied in
accordance with Section 4.3(e) of the Agreement.
Section 4.13 INVESTOR CHARGE-OFFS. (a) If, on any
Determination Date, the aggregate Investor Default Amount, if any, for each
Business Day in the preceding Monthly Period exceeded the Available Series
1995-1 Finance Charge Collections applied to the payment thereof pursuant to
subsection 4.9(a)(v) and the amount of Transferor Finance Charge Collections and
Excess Finance Charge Collections allocated thereto pursuant to subsection 4.10,
the Class D Invested Amount will be reduced by the amount by which such
aggregate Investor Default Amount exceeds the amount applied with respect
thereto during such preceding Monthly Period (the "CLASS D INVESTOR CHARGE-
OFFS").
(b) In the event that any such reduction of the Class D
Invested Amount would cause the Class D Invested Amount to be a negative number,
the Class D Invested Amount will be reduced to zero, and the Class C Invested
Amount will be reduced by the amount by which the
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Class D Invested Amount would have been reduced below zero, but not more than
the aggregate Investor Default Amount for such Monthly Period (the "CLASS C
INVESTOR CHARGE-OFFS").
(c) In the event that any such reduction of the Class C
Invested Amount would cause the Class C Invested Amount to be a negative number,
the Class C Invested Amount will be reduced to zero, and the Class B Invested
Amount will be reduced by the amount by which the Class C Invested Amount would
have been reduced below zero, but not more than the aggregate Investor Default
Amount for such Monthly Period (the "CLASS B INVESTOR CHARGE-OFFS").
(d) In the event that any such reduction of the Class B
Invested Amount would cause the Class B Invested Amount to be a negative number,
the Class B Invested Amount will be reduced to zero, and the Class A Invested
Amount will be reduced by the amount by which the Class B Invested Amount would
have been reduced below zero, but not more than the aggregate Investor Default
Amount for such Monthly Period (a "CLASS A INVESTOR CHARGE-OFF"). To the extent
that on any subsequent Business Day there is a positive balance of Available
Series 1995-1 Finance Charge Collections after giving effect to subsections
4.9(a)(i) through (v), the Servicer will apply such excess Finance Charge
Collections as provided in subsection 4.9(a)(vi) to reimburse the aggre gate
amount of Class A Investor Charge-Offs not previously reimbursed, up to the
amount so available.
(e) To the extent that on any Determination Date there is a
positive balance of the Available Series 1995-1 Finance Charge Collections after
giving effect to allocations and distri butions pursuant to subsections
4.9(a)(i) through (viii), the Servicer will apply such excess Finance Charge
Collections as provided in subsection 4.9(a)(ix) to reimburse the aggregate
amount of Class B Investor Charge-Offs not previously reimbursed, up to the
amount so available.
(f) To the extent that on any Determination Date there is a
positive balance of the Available Series 1995-1 Finance Charge Collections after
giving effect to allocations and dis tributions pursuant to subsections
4.9(a)(i) through (ix), the Servicer will apply such excess Finance Charge
Collections as provided in subsection 4.9(a)(x) to reimburse the aggregate
amount of Class C Investor Charge-Offs not previously reimbursed, up to the
amount so available.
(g) To the extent that on any Determination Date there is a
positive balance of the Available Series 1995-1 Finance Charge Collections after
giving effect to allocations and dis tributions pursuant to subsections
4.9(a)(i) through (xi), the Servicer will apply such excess Finance Charge
Collections as provided in subsection 4.9(a)(xii) to reimburse the aggregate
amount of Class D Investor Charge-Offs not previously reimbursed, up to the
amount so available.
Section 4.14 SHARED PRINCIPAL COLLECTIONS. Shared Principal
Collections allocated to the Series 1995-1 Certificates and to be applied
pursuant to subsections 4.9(c)(i)(z), 4.9(c)(ii)(z), 4.9(c)(iii)(z) and
4.9(c)(iv)(z) for any Business Day with respect to the Amortization Period shall
mean an amount equal to the product of (x) Shared Principal Collections for all
Series for such Business Day and (y) a fraction, the numerator of which is the
Principal Shortfall for the Series 1995-1 Certificates for such Business Day and
the denominator of which is the aggregate amount of Principal Shortfalls for all
Series for such Business Day. For any Business Day with respect to
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the Revolving Period, Shared Principal Collections allocated to the Series
1995-1 Certificates shall be zero.
Section 4.15 CERTAIN PREPAYMENT PREMIUMS. On any Early Pay Out
Set Aside Date, Principal Collections allocated pursuant to subsection
4.9(c)(vi) and funds allocated pursuant to the final proviso to subsection
4.9(d) shall, in accordance with written instructions from the Servicer, be
applied as follows:
(a) FIRST, if a Portfolio Imbalance Event has occurred,
to deposit in the Interest Funding Account for
distribution to the Class A Certificateholders on the
next Distribution Date, an amount equal to the lesser
of (i) such Principal Collections and (ii) the amount
of any Class A Portfolio Imbalance Premium;
(b) SECOND, to deposit in the Interest Funding Account
for distribution to the Class A Certificateholders on
the next Distribution Date, to the extent of any
Principal Collections remaining after giving effect
to the application pursuant to subsection 4.15(a), an
amount equal to the lesser of (i) such remaining
Principal Collections and (ii) such unpaid Class A
Early Pay Out Amount;
(c) THIRD, to deposit in the Interest Funding Account for
distribution to the Class B Certificateholders on the
next Distribution Date, to the extent of any
Principal Collections remaining after giving effect
to the application pursuant to subsections 4.15(a)
and 4.15(b), an amount equal to the lesser of (i) any
such remaining Principal Collections and (ii) the
unpaid Class B Early Pay Out Amount;
(d) FOURTH, to deposit in the Interest Funding Account
for distribution to the Class C Certificateholders on
the next Distribution Date, to the extent of any
Principal Collections remaining after giving effect
to the applications pursuant to subsections 4.15(a),
(b) and (c), an amount equal to the lesser of (i) any
such remaining Principal Collections and (ii) the
unpaid Class C Early Pay Out Amount; and
(e) FIFTH, any such remaining Principal Collections shall
be treated as Shared Principal Collections and
applied as provided in subsection 4.3(e) of the
Agreement.
Section 4.16 DEFEASANCE. On any Business Day falling prior to
the Series 1995-1 Termination Date (but with not less than ten Business Days
prior written notice from the Servicer to the Holders and to the Trustee), the
Servicer may, upon instruction from Transferor, cause the Series 1995-1
Certificates to be prepaid in full (but not in part) by causing the undivided
interest in the Trust represented by the Series 1995-1 Certificates to be
conveyed to one or more Persons (who may be the holders of a new Series issued
substantially contemporaneously with such prepayment, which new Series may have
a greater undivided interest in the Trust than Series 1995-1) for a cash
purchase price in an amount equal to the sum of (a) the Invested Amount, PLUS
(b) to the extent not
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available from the Interest Funding Account, accrued and unpaid interest on the
Series 1995-1 Certificates through the effective date of such prepayment as
specified below, PLUS (c) to the extent not available from funds set aside
pursuant to subsection 4.9(a)(xviii) or Section 4.15, any Class A Early Pay Out
Amount, Class B Early Pay Out Amount or Class C Early Pay Out Amount arising as
a result of such prepayment (except that each reference to "January 1, 2000" in
the definition of each such Early Pay Out Amount shall, for purposes of this
subsection, be deemed to be "March 15, 2000"). No such prepayment or conveyance
shall, however, be permitted if as a result thereof Transferor or any of its
Affiliates would increase its undivided interest in the Receivables, and the
Trustee shall be entitled to receive and rely on an Officer's Certificate to the
effect that no such increase will result therefrom. The purchase price shall be
directly deposited in the Principal Account for distribution to the Holders on
the next upcoming Distribution Date, which Distribution Date shall be the
effective date of the prepayment and conveyance described above.
SECTION 7. ARTICLE V OF THE AGREEMENT. Article V of the
Agreement shall read in its entirety as follows and shall be applicable only to
the Series 1995-1 Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
Section 5.1 DISTRIBUTIONS. (a) on each Distribution Date, the
Paying Agent shall distribute (in accordance with the Settlement Statement
delivered by the Servicer to the Trustee and the Paying Agent pursuant to
subsection 3.4(c) of the Agreement) to each Class A Certificateholder of record
on the preceding Record Date (other than as provided in subsection 2.4(d) or in
Section 12.3 of the Agreement respecting a final distribution) such
Certificateholder's PRO RATA share (based on the aggregate Undivided Interests
represented by Class A Certificates held by such Certificate holder) of amounts
on deposit in the Distribution Account as are payable to the Class A
Certificateholders pursuant to Sections 4.11 and 4.12 hereof by wire transfer to
each Class A Certificateholder to an account or accounts designated by such
Class A Certificateholder by written notice given to the Paying Agent not less
than five days prior to the related Distribution Date; PROVIDED, HOWEVER, that
the final payment in retirement of the Class A Certificates will be made only
upon presentation and surrender of the Class A Certificates at the office or
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3 of the Agreement.
(b) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c) of
the Agreement) to each Class B Certificateholder of record on the preceding
Record Date (other than as provided in subsection 2.4(d) or in Section 12.3 of
the Agreement respecting a final distribution) such Certificateholder's PRO RATA
share (based on the aggregate Undivided interests represented by Class B
Certificates held by such Certificateholder) of amounts on deposit in the
Distribution Account as are payable to the Class B Certificateholders pursuant
to Section 4.11 and 4.12 hereof by wire transfer to each Class B
Certificateholder to an account or accounts designated by such Class B
Certificateholder by written notice given to the Paying Agent not less than five
days prior to the related Distribution Date; PROVIDED, HOWEVER, that
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the final payment in retirement of the Class B Certificates will be made only
upon presentation and surrender of the Class B Certificates at the office or
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
(c) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c) of
the Agreement) to each Class C Certificateholder of record on the preceding
Record Date (other than as provided in subsection 2.4(d) or in Section 12.3 of
the Agreement respecting a final distribution) such Certificateholder's PRO RATA
share (based on the aggregate Undivided interests represented by Class C
Certificates held by such Certificateholder) of amounts on deposit in the
Distribution Account as are payable to the Class C Certificateholders pursuant
to Section 4.11 and 4.12 hereof by wire transfer to each Class C
Certificateholder to an account or accounts designated by such Class C
Certificateholder by written notice given to the Paying Agent not less than five
days prior to the related Distribution Date; PROVIDED, HOWEVER, that the final
payment in retirement of the Class C Certificates will be made only upon
presentation and surrender of the Class C Certificates at the office or offices
specified in the notice of such final distribution delivered by the Trustee
pursuant to Section 12.3 of the Agreement.
Section 5.2 CERTIFICATEHOLDERS' STATEMENT. (a) On the 15th day
of each calendar month (or if such day is not a Business Day the next succeeding
Business Day), the Paying Agent shall forward to each Certificateholder and the
Rating Agency a statement substantially in the form of Exhibit C prepared by the
Servicer and delivered to the Trustee and the Paying Agent on the preceding
Determination Date setting forth the following information (which, in the case
of (i), (ii) and (iii) below, shall be stated on the basis of an original
principal amount of $1,000 per Certificate and, in the case of (ix) and (x),
shall be stated on an aggregate basis and on the basis of an original principal
amount of $1,000 per Certificate):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to
Certificate Principal;
(iii) the amount of such distribution allocable to
Certificate Interest;
(iv) the amount of Principal Collections received in
the Collection Account during the preceding Monthly Period and the
three preceding Monthly Periods and allocated in respect of the Class A
Certificates, the Class B Certificates, the Class C Certificates and
the Class D Certificates, respectively;
(v) the amount of Finance Charge Collections
processed during the three preceding Monthly Periods and allocated in
respect of the Class A Certificates, the Class B Certificates, the
Class C Certificates and the Class D Certificates, respectively;
(vi) the aggregate amount of Principal Receivables,
the Invested Amount, the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount, the Class D Invested Amount, the
Floating Allocation Percentage and, during the
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Amortization Period, the Class A Fixed Allocation Percentage, Class B
Fixed Allocation Percentage, or Class C Fixed Allocation Percentage as
applicable, with respect to the Principal Receivables in the Trust as
of the end of the day on the Record Date;
(vii) the aggregate outstanding balance of Accounts
which are current, current/delinquent, 30, 60, 90, 120, 150 and 180
days delinquent as of the end of the day on the Record Date;
(viii) the aggregate Investor Default Amount and the
Default Amount for the preceding Monthly Period and the three preceding
Monthly Periods;
(ix) the aggregate amount of Class A Investor
Charge-Offs, Class B Investor Charge-Offs, Class C Investor Charge-Offs
and Class D Investor Charge-Offs for the three preceding Monthly
Periods;
(x) the aggregate amount of the Servicing Fees for
the three preceding Monthly Periods;
(xi) the Class A Pool Factor, the Class B Pool
Factor, the Class C Pool Factor and the Class D Pool Factor as of the
end of the last day of the Monthly Period immediately preceding the
Determination Date;
(xii) the amount paid on the Interest Rate Cap;
(xiii) the current rating from the Rating Agency for
each class of Investor Certificates;
(xiv) the aggregate amount of funds in the
Equalization Account as of the last day of the Monthly Period
immediately preceding the Distribution Date;
(xv) the Class A Certificate Rate, the Class B
Certificate Rate, the Class C Certificate Rate and the Class D
Certificate Rate; and
(xvi) the Applicable Reserve Ratio for the current
Monthly Period.
(b) ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before
January 31 of each calendar year, beginning with calendar year 1996, the Trustee
shall distribute to each Person who at any time during the preceding calendar
year was a Series 1995-1 Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in the regular report to
Series 1995-1 Certificateholders, as set forth in subclauses (i), (ii) and (iii)
above, aggregated for such calendar year or the applicable portion thereof
during which such Person was a Series 1995-1 Certificateholder, together with
such other customary information (consistent with the treatment of the
Certificates as debt) as the Trustee or the Servicer deems necessary or
desirable to enable the Series 1995-1 Certificateholders to prepare their tax
returns. Such obligations of the Trustee shall be deemed to have been satisfied
to the extent that substantially comparable information shall be
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provided by the Trustee pursuant to any requirements of the Internal Revenue
Code as from time to time in effect.
SECTION 8. SERIES 1995-1 PAY OUT EVENTS. If any one of the
following events shall occur with respect to the Series 1995-1 Certificates:
(a) failure on the part of the Transferor (i) to make
any payment or deposit required to be made by the Transferor by the terms of (A)
the Agreement or (B) this Series Supplement, on or before the date occurring
five Business Days after the date such payment or deposit is required to be made
herein or (ii) duly to observe or perform in any material respect any covenants
or agreements of the Transferor set forth in the Agreement or this Series
Supplement, which failure has a material adverse effect on the Series 1995-1
Certificateholders and which con tinues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Holders of Series 1995-1 Certificates
evidencing Undivided Interests aggregating not less than 50% of the Invested
Amount of this Series 1995-1, and continues to affect materially and adversely
the interests of the Series 1995-1 Certificateholders for such period;
(b) any representation or warranty made by the
Transferor in the Agreement or this Series Supplement, or any information
contained in a computer file or microfiche list required to be delivered by the
Transferor pursuant to Section 2.1 or 2.6 of the Agreement, (i) shall prove to
have been incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Trans feror by the Trustee, or to the
Transferor and the Trustee by the Holders of the Series 1995-1 Certificates
evidencing Undivided Interests aggregating more than 50% of the Invested Amount
of this Series 1995-1, and (ii) as a result of which the interests of the Series
1995-1 Certificateholders are materially and adversely affected and continue to
be materially and adversely affected for such period; PROVIDED, HOWEVER, that a
Series 1995-1 Pay Out Event pursuant to this subsection 8(b) shall not be deemed
to have occurred hereunder if the Transferor has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three
consecutive Monthly Periods is reduced to a rate which is less than the weighted
average of the Base Rates for such three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than
the Minimum Transferor Interest, (ii) the Retained Interest is less than the
Minimum Retained Interest or (iii) the amount of Principal Receivables in the
Trust and the amount on deposit in the Equalization Account shall be less than
the Minimum Aggregate Principal Receivables, in each case for 15 consecutive
days;
(e) any Servicer Default shall occur which would have
a material adverse effect on the Series 1995-1 Certificateholders;
- 39 -
then, in the case of any event described in
subparagraph (a), (b) or (e), after the applicable grace period, if any, set
forth in such subparagraphs, the Holders of Series 1995-1 Certificates
evidencing Undivided Interests aggregating more than 50% of the Invested Amount
of any class of this Series 1995-1 by notice then given in writing to the
Trustee, the Transferor and the Servicer may declare that a pay out event (a
"SERIES 1995-1 PAY OUT EVENT") has occurred as of the date of such notice, and
in the case of any event described in subparagraphs (c) or (d), a Series 1995-1
Pay Out Event shall occur without any notice or other action on the part of the
Trustee or the Series 1995-1 Certificateholders immediately upon the occurrence
of such event.
SECTION 9. SERIES 1995-1 TERMINATION. The right of the Series
1995-1 Certificateholders to receive payments from the Trust will terminate on
the first Business Day following the Series 1995-1 Termination Date unless such
Series is an Affected Series as specified in Section 12.1(c) of the Agreement
and the sale contemplated therein has not occurred by such date, in which event
the Series 1995-1 Certificateholders shall remain entitled to receive proceeds
of such sale when such sale occurs.
SECTION 10. PERIODIC FINANCE CHARGES AND OTHER FEES. The
Transferor hereby agrees that, except as otherwise required by any Requirement
of Law, or as is deemed by the Transferor to be necessary in order for the
Transferor to maintain its credit card business, based upon a good faith
assessment by the Transferor, in its sole discretion, of the nature of the
competition in the credit card business, it shall not at any time reduce the
Periodic Finance Charges assessed on any Receivable or other fees on any Account
if, as a result of such reduction, the Transferor's reasonable expectation of
the Portfolio Yield as of such date would be less than the Base Rate.
SECTION 11. LEGENDS; TRANSFER AND EXCHANGE; RESTRICTIONS ON
TRANSFER OF SERIES 1995-1 CERTIFICATES; TAX TREATMENT.
(a) Each Series 1995-1 Certificate will bear a legend
substantially in the following form:
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
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AMENDED, OR (III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS
BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
(b) Upon surrender for registration of transfer of any Series
1995-1 Certificate at the office of the Transfer Agent and Registrar,
accompanied by a certification by the Series 1995-1 Certificateholder
substantially in the form attached as Exhibit D if the new purchaser is a
"qualified institutional buyer" as defined in Rule 144A under the Securities Act
of 1933, or in the form attached as Exhibit E if the new purchaser is not a
"qualified institutional buyer," and by a written instrument of transfer in the
form approved by the Transferor and the Trustee (it being understood that, until
notice to the contrary is given to Series 1995-1 Certificateholders, the
Transferor and the Trustee shall each be deemed to have approved the form of
instrument of transfer, if any printed on any definitive Series 1995-1
Certificate), executed by the registered owner, in person or by such Series
1995-1 Certificateholder's attorney thereunto duly authorized in writing, such
Series 1995-1 Certificate shall be transferred upon the register, and the
Transferor shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferees one or more new registered Series 1995-1
Certificate of any authorized denominations and of a like aggregate principal
amount and tenor. Transfers and exchanges of Series 1995-1 Certificates shall be
subject to such restrictions as shall be set forth in the text of the Series
1995-1 Certificates and such reasonable regulations as may be prescribed by the
Transferor. Successive registrations and registrations of transfers as aforesaid
may be made from time to time as desired, and each such registration shall be
noted on the register.
(c) In no event shall the Class D Certificates or any interest
therein be transferred, sold, exchanged, pledged, participated or otherwise
assigned hereunder, in whole or in part, unless: (i) the Servicer shall have
provided an Officer's Certificate to the Trustee to the effect that such sale,
exchange, pledge, participation and assignment will not materially adversely
affect the interests of the Certificateholders, (ii) the Trustee shall have been
delivered an Opinion of Counsel to the effect that (A) any securities or
interests issued in conjunction with such sale, exchange, pledge, participation
and assignment and sold to third parties will be characterized as either
indebtedness or partnership interests (other than interests in a publicly traded
partnership) for Federal and applicable state income tax purposes, (B) such
sale, exchange, pledge, participation and assignment or such issuance will not
adversely affect the Federal and applicable state income tax characterization of
any outstanding Series of Investor Certificates (other than the Class D
Certificates, as to the characterization of which Counsel shall express no
opinion), and (C) such sale, exchange, pledge, participation and assignment or
such issuance will not result in the Trust being subject to tax at the entity
level for Federal or applicable state income tax purposes, (iii) the Servicer
shall have provided at least ten Business Days prior written notice to each
Rating Agency and the Trustee of such sale, exchange, pledge, participation and
assignment and shall have received written confirmation from each Rating Agency
to the effect of the original rating of any Series or any class of any Series
will not be reduced or withdrawn as a result of such sale, exchange, pledge,
participation and assignment, (iv) the holders of any securities or interests
issued in conjunction with such sale, exchange, pledge, participation and
assignment (or any trustee or collateral agent on their behalf) (A) will have no
right to foreclose upon the Class D Certificates or exercise any voting rights
as a Class D Certificateholder unless and until all outstanding Investor
Certificates (other than the Class D Certificates) and all outstanding investor
certificates (other than any Transferor Retained
- 41 -
Certificates) have been paid in full and (B) covenant and agree that, prior to
the date which is one year and one day after the payment in full of all
outstanding investor certificates issued by the Trust, none of them will
institute against, or join any other Person in instituting against, the
Transferor any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States, and the Trustee shall have received an
Officer's Certificate to that effect.
(d) Each Certificateholder, by accepting and holding such
Certificate or interest therein, will be deemed to have represented and
warranted that it is not (i) an employee benefit plan (as defined in Section
3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Code, or (iii) any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity.
(e) The Class C Certificateholders shall comply with their
obligations under Section 3.7 of the Agreement with respect to the tax treatment
of the Class C Certificates, except to the extent that a relevant taxing
authority has disallowed such treatment. In addition, the Transferor and the
Trustee shall not be required to recognize any transfer of an interest in a
Class C Certificate unless the transferor of such interest shall deliver to the
Transferor and the Trustee an Opinion of Counsel in form and substance
satisfactory to the Transferor and the Trustee to the effect that such transfer
will not cause the Trust to be treated as a "publicly traded partnership"
taxable as a corporation under Section 7704 of the Code.
SECTION 12. RATIFICATION OF AGREEMENT. As supplemented by this
Series Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supple mented by this Series Supplement shall be read,
taken, and construed as one and the same instru ment.
SECTION 13. COUNTERPARTS. This Series Supplement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together constitute
but one and the same instrument.
SECTION 14. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 15. THE TRUSTEE. The Trustee shall not be responsible
in any manner whatsoever for or in respect of the sufficiency of this Series
Supplement or for or in respect of the Preliminary Statement contained herein,
all of which recitals are made solely by the Transferor.
SECTION 16. INSTRUCTIONS IN WRITING. All instructions or other
communications given by the Servicer or any other person to the Trustee pursuant
to this Series Supplement shall be in writing, and, with respect to the
Servicer, may be included in a Daily Report or Settlement Statement.
- 42 -
SECTION 17. NEGATIVE CARRY ACCOUNT. (a) The Trustee, for the
benefit of the Series 1995-1 Certificateholders, shall establish and maintain
with a Qualified Institution, in the name of the Trust, a certain segregated
trust account (the "NEGATIVE CARRY ACCOUNT"). The Transferor does hereby
transfer, assign, set-over, and otherwise convey to the Trust for the benefit of
the Certificateholders, without recourse, all of its right, title and interest
in, to and under:
(i) the Negative Carry Account, all funds, and all
certificates and instruments, if any, from time to time representing or
evidencing or held in the Negative Carry Account;
(ii) all eligible investments of amounts on deposit
in the Negative Carry Account from time to time and all certificates
and instruments, if any, from time to time representing or evidencing
such eligible investments;
(iii) all notes, certificates of deposit and other
instruments from time to time hereafter delivered to or otherwise
possessed by the Trustee for and on behalf of the Transferor in
substitution for or in addition to any of the then existing Negative
Carry Account property;
(iv) all interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the
existing Negative Carry Account property; and
(v) all additional property that may from time to
time hereafter be assigned or pledged to the Trustee for the benefit of
the Certificateholders hereunder by the Transferor or by any Person on
the Transferor's behalf.
(b) Beginning on the Amortization Period Commencement Date and
continuing until the date (the "NEGATIVE CARRY FILL-UP DATE") on which $87,000
has been deposited in the Negative Carry Account, the Servicer shall instruct
the Trustee to withdraw the following funds and deposit them into the Negative
Carry Account: (i) on the Amortization Period Commencement Date only,
notwithstanding the references to the Principal Account in the fifth sentence of
subsection 4.3(f) of the Agreement and in the first sentence of subsection
4.9(d) of this Supplement, the amount described in such sentences; (ii) the
Fixed Allocation Percentage of Principal Collections; and (iii) any amounts
allocated to subsections 4.9(a)(v), (vi), (ix), (x), (xii) and (xiii). Amounts
on deposit in the Negative Carry Account shall be allocable to the Series 1995-1
Certificates in payment of Negative Carry Amounts, in accordance with subsection
4.10(a). Funds in the Negative Carry Account shall be invested at the direction
of the Servicer, in Cash Equivalents with maturities not later than the next
succeeding Business Day. Any earnings on such invested funds shall be depos ited
and held in the Negative Carry Account and applied in the same manner and
priority as other amounts therein.
SECTION 18. NOTICES; CREDIT AND COLLECTION POLICY COMPLIANCE
AND CHANGES; DAILY REPORTS. (a) A copy of each notice, demand, direction,
report, officer's Certificate or other certif icate, election or opinion
required to be sent or delivered to the Rating Agency or the Trustee
- 43 -
pursuant to Sections 2.6(c), 2.6(d), 2.6(e)(i), 3.5, 3.6(a) and 6.9(b) of the
Agreement shall also be sent or delivered to each Investor Certificateholder.
(b) The Transferor shall provide each Class A and
each Class B Certificateholder at least 12 days prior written notice of the
amount of Class A Principal or Class B Principal, respectively, to be paid on
each Distribution Date during the Amortization Period.
(c) The Transferor shall cause the Originators to
comply with and perform their obligations under the Credit and Collection Policy
except insofar as any failure to comply or perform would not materially and
adversely affect the rights of the Trust or the Certificateholders hereunder and
the Transferor shall not cause, suffer or permit an originator to make a change
to the Credit and Collection Policy that would result in a violation of the
Transferor's obligations under Section 2.5(c) of the Agreement (regardless of
any failure by such originator to notify the Transferor of such action or to
obtain the Transferor's consent thereto). In addition, the Transferor shall
provide notice to the Certificateholders hereunder of any material change in the
Credit and Collection Policy.
(d) Upon written request by an Investor Certificateholder, the
Servicer shall furnish a copy of each Daily Report to such Investor
Certificateholder.
SECTION 19. RATINGS RECONFIRMATIONS. The Transferor shall not
be permitted to remove Accounts pursuant to Section 2.7(b) of the Agreement, to
exchange the Exchangeable Transferor Interest for a new issue of Investor
Certificates pursuant to Section 6.9(b) of the Agreement, engage in a merger,
consolidation, conveyance or transfer pursuant to Section 7.2 of the Agreement
or add Automatic Additional Accounts pursuant to clause (b) of the definition
thereof unless, in connection with such events, the Rating Agencies shall
deliver a written confirmation of their original ratings on the Investor
Certificates, to the Trustee.
SECTION 20. AMENDMENTS TO THE POOLING AND SERVICING AGREEMENT
AND SERIES 1995-1 SUPPLEMENT. Neither the Agreement nor this Supplement shall be
amended in reliance on the second paragraph of Section 13.1(a) of the Agreement
(but not including the second proviso thereto) without the consent of the
holders of Class A Certificates evidencing Undivided Interests aggregating not
less than a majority of the Class A Invested Amount. The Transferor shall
provide the Class A Certificateholders with written notice of any proposed
amendment not less than 20 Business Days prior to the proposed date of
effectiveness (the "PROPOSED EFFECTIVENESS DATE") of such proposed amendment
(which date may be extended by notice of the Transferor to the Class A
Certificateholders).
SECTION 21. REPURCHASE OF CERTIFICATES UPON FAILURE TO OBTAIN
CONSENT. In the event that, by the Proposed Effectiveness Date with respect to a
proposed amendment subject to Section 20 hereof, (i) the Transferor shall have
satisfied all of the conditions specified in the second paragraph of Section
13.1(a) of the Agreement but (ii) the requisite consent of Class A
Certificateholders shall not have been obtained, then the Transferor shall have
the option, but not the obligation, to repurchase Class A Certificates held by
any holder who did not consent to such proposed amendment. Notice that the
Transferor intends to exercise such option must be given to the Class A
Certificateholders from whom such repurchase will be effected within ten
Business Days
- 44 -
after the Proposed Effectiveness Date. Such repurchase shall occur on the first
Distribution Date that is more than 30 days after the date on which such notice
is given. The purchase price for such repurchase shall be the Invested Amount of
the Certificates to be repurchased, plus accrued and unpaid interest thereon
through such Distribution Date, and shall be paid for in immediately available
funds on such Distribution Date.
- 45 -
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Amended and Restated Series 1995-1 Supplement to be
duly executed by their respective offi cers as of the day and year first above
written.
SRI RECEIVABLES PURCHASE CO., INC.
Transferor
By: /s/ JAMES A. MARCUM
Name: James A. Marcum
Title: Executive Vice President
SPECIALTY RETAILERS, INC.
Servicer
By: /s/ JAMES A. MARCUM
Name: James A. Marcum
Title: Executive Vice President
BANKERS TRUST (DELAWARE)
Trustee
By: /s/ M. LISA WILLIAMS
Name: M. Lisa Williams
Title: Assistant Secretary
[FORM OF CLASS A INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___ $________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS A-1 CERTIFICATE,
SERIES 1995-1
Evidencing an undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business from
a portfolio of consumer revolving credit card accounts generated or to be
generated by certain subsidiaries (collectively, the "SRI SUBSIDIARIES") of
Specialty Retailers, Inc. ("SRI" or the "SERVICER") and other assets and
interests constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that ________ (the "CERTIFICATEHOLDER") is the
registered owner of a fractional undivided interest in the SRI Receivables
Master Trust (the "TRUST") issued pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of August 11, 1995 (the "POOLING AND SERVICING
AGREEMENT"; such term to include any amendment thereto) by and between SRI
Receivables Purchase Co., Inc., as Transferor (the "TRANSFEROR"), SRI as the
Servicer, and Bankers Trust (Delaware), as Trustee (the "TRUSTEE"), and the
Series 1995-1 Supplement, dated as
A-1-1
of August 11, 1995 (the "SERIES 1995-1 SUPPLEMENT"), among the Transferor, SRI
as Servicer and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1995-1 Supplement, is herein referred to as the
"AGREEMENT"). The corpus of the Trust consists of all of the Transferor's right,
title and interest in, to and under (i) the Trust Property (as defined in the
Agreement) and (ii) the property described in Sections 3A and 17 of the Series
1995-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a Series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class A-1 Certificates, Series 1995-1"
(the "CLASS A CERTIFICATES"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class A
Certificates, the SRI Receivables Master Trust Floating Rate Class B-1
Certificates, Series 1995-1 (the "CLASS B CER TIFICATES") and the SRI
Receivables Master Trust Floating Rate Class C-1 Certificates, Series 1995-1
(the "CLASS C CERTIFICATES," and collectively with the Class A Certificates and
the Class B Certificates, the "OFFERED CERTIFICATES") with the intention that
the Offered Certificates will qualify under applicable tax law as indebtedness,
and both the Transferor and each holder of a Class A Certificate (a "CLASS A
CERTIFICATEHOLDER") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class A Certificates as indebtedness
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income.
No principal will be payable to the Class A Certificateholders
until the first Distribution Date in the Amortization Period. No principal will
be payable to the Class B Certifi cateholders, Class C Certificateholders or
Class D Certificateholders until all principal payments have been made to the
Class A Certificateholders.
Interest will accrue on the unpaid principal amount of the
Class A Certificates at a per annum rate equal to 5.875% per annum with respect
to the initial Interest Accrual Period and, with respect to each subsequent
Interest Accrual Period at a per annum rate of 0.52% in excess of LIBOR
prevailing on the related Rate Determination Date, calculated on the basis of
the actual number of days elapsed in such Subsequent Interest Accrual Period
over a year of 360 days (the "CLASS A CERTIFICATE RATE") and, except as
otherwise provided in the Agreement, will be distributed to Certificateholders
on the third Wednesday of each March, June, September and December (or, if such
day is not a Business Day, on the next succeeding Business Day) (each a
"DISTRIBUTION DATE"), commencing September 20, 1995. On the earlier of the
December 1999 Distribution Date or the first Distribution Date following the
occurrence of a Pay Out Event interest and principal will be distributed to the
Class A Certificateholders quarterly on each Distribution Date prior to the
Series Termination Date. Interest for any Distribution Date will include accrued
interest at the
A-1-2
Class A Certificate Rate from and including the preceding Distribution Date or,
in the case of the first Distribution Date from and including the Series 1995-1
Closing Date, to but excluding such Distribution Date. Interest for any
Distribution Date due but not paid on any Distribution Date will be due on the
next succeeding Distribution Date together with, to the extent permitted by
applicable law, additional interest on such amount at the Class A Certificate
Rate.
Subject to the Agreement, payments of principal are limited to
the unpaid Class A Invested Amount of the Class A Certificates, which may be
less than the unpaid balance of the Class A Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class A Certificates is
due and payable no later than the January 2003 Distribution Date (or if such day
is not a Business Day, the next succeeding Business Day) (the "SERIES
TERMINATION DATE"). After the series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class A Certificates. in the event that the Class A Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allocable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificateholders pro rata in final payment of the
Class A Certificates, then to the Class B Certificateholders pro rata in final
payment of the Class B Certificates, then to the Class C Certificateholders pro
rata in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
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 Agreement, or be valid for any
purpose.
A-1-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-1-4
[FORM OF CLASS B INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (1) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
No.___ $_________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS B-1 CERTIFICATE, SERIES 1995-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of consumer revolving credit card accounts
generated or to be generated by certain subsidiaries (collectively, the "SRI
SUBSIDIARIES") of Specialty Retailers, Inc. ("SRI" or the "SERVICER") and other
assets and interests constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co, Inc., SRI or any affiliate of either of them.)
This certifies that ________ (the "CERTIFICATEHOLDER") is the
registered owner of a fractional undivided interest in the SRI Receivables
Master Trust (the "TRUST") issued pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of August 11, 1995 (the "POOLING AND SERVICING
AGREEMENT"; such term to include any amendment thereto) by and between SRI
Receivables Purchase Co., Inc., as Transferor (the "TRANSFEROR"), SRI as the
Servicer, and Bankers Trust (Delaware), as Trustee (the "TRUSTEE"), and the
Series 1995-1 Supplement, dated as of August 11, 1995 (the "SERIES 1995-1
SUPPLEMENT"), among the Transferor, SRI as Servicer and
A-2-1
the Trustee. The Pooling and Servicing Agreement, as supplemented by the Series
1995-1 Supplement, is herein referred to as the "AGREEMENT". The corpus of the
Trust consists of all of the Transferor's right, title and interest in, to and
under (i) the Trust Property (as defined in the Agreement) and (ii) the property
described in Sections 3A and 17 of the Series 1995-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a Series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class B-1 Certificates, Series 1995-1"
(the "CLASS B CERTIFICATES"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificate holder is bound.
The Transferor has structured the Agreement, the Class B
Certificates, the SRI Receivables Master Trust Floating Rate Class A-1
Certificates, Series 1995-1 (the "CLASS A CER TIFICATES") and the SRI
Receivables Master Trust Floating Rate Class C-1 Certificates, Series 1995-1
(the "CLASS C CERTIFICATES," and collectively with the Class A Certificates and
the Class B Certificates, the "OFFERED CERTIFICATES") with the intention that
the Offered Certificates will qualify under applicable tax law as indebtedness,
and both the Transferor and each holder of a Class B Certificate (a "CLASS B
CERTIFICATEHOLDER") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class B Certificates as indebtedness
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income.
No principal will be payable to the Class B Certificateholders
until the Class B Payment Commencement Date, which is the Distribution Date
either on or following the Distribution Date, on which the Class A Invested
Amount had been paid in full. No principal will be payable to the Class B
Certificateholders until all principal payments have been made to the Class A
Certificateholders. No principal payments will be made to the Class C
Certificateholder until the Distribution Date either on or following the
Distribution Date on which the Class B invested Amount has been paid in full.
Interest will accrue on the unpaid principal amount of the
Class B Certificates at a per annum rate equal to 7.375% per annum with respect
to the initial Interest Accrual Period and, with respect to each subsequent
Interest Accrual Period a per annum rate of 1.50% in excess of LIBOR prevailing
on the related Rate Determination Date, calculated on the basis of the actual
num ber of days elapsed in such subsequent Interest Accrual Period over a year
of 360 days (the "CLASS B CERTIFICATE RATE"), and, except as otherwise provided
in the Agreement, will be distributed quarterly to Certificateholders on the
third Wednesday of each March, June, September and December (or, if such day is
not a Business Day, on the next succeeding Business Day) (each a "DISTRIBUTION
DATE"), commencing September 20, 1995 until such time as the Class B Invested
Amount is paid in full. Interest for any Distribution Date will include accrued
interest at the Class B Certificate Rate from and including the preceding
Distribution Date or, in the case of the first Distribution Date from
A-2-2
and including the Series 1995-1 Closing Date, to but excluding such Distribution
Date. Interest for any Distribution Date due but not paid on any Distribution
Date will be due on the next succeeding Distribution Date together with, to the
extent permitted by applicable law, additional interest on such amount at the
Class B Certificate Rate.
Subject to the Agreement, payments of principal are limited to
the unpaid Class B Invested Amount of the Class B Certificates, which may be
less than the unpaid balance of the Class B Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class B Certificates is
due and payable no later than the January 2003 Distribution Date (or if such day
is not a Business Day, the next succeeding Business Day) (the "SERIES
TERMINATION DATE"). After the Series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class B Certificates. In the event that the Class B Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allocable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificateholders pro rata in final payment of the
Class A Certificates, then to the Class B Certificateholders pro rata in final
payment of the Class B Certificates, then to the Class C Certificateholders pro
rata in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
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 Agreement, or be valid for any
purpose.
A-2-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-2-4
[FORM OF CLASS C INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW AND THE ADDITIONAL
CONDITIONS TO TRANSFER SPECIFIED IN THE AGREEMENT REFERRED TO BELOW
SHALL HAVE BEEN SATISFIED.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
No. ___ $________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS C-1 CERTIFICATE, SERIES 1995-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of consumer revolving credit card accounts
generated or to be generated by certain subsidiaries (collectively, the "SRI
SUBSIDIARIES") of Specialty Retailers, Inc. ("SRI" or the "SERVICER") and other
assets and interests constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that ___________ (the "CERTIFICATEHOLDER") is
the registered owner of a fractional undivided interest in the SRI Receivables
Master Trust (the "TRUST") issued pursuant to the Amended and Restated Pooling
and Servicing Agreement, dated as of August 11, 1995 (the "POOLING AND SERVICING
AGREEMENT"; such term to include any amendment thereto) by and between SRI
Receivables Purchase Co., Inc., as Transferor (the "TRANSFEROR"), SRI as the
Servicer, and Bankers Trust (Delaware), as Trustee (the "TRUSTEE"), and the
Series 1995-1 Supplement, dated as
A-3-1
of August 11, 1995 (the "SERIES 1995-1 SUPPLEMENT"), among the Transferor, SRI
as Servicer and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1995-1 Supplement, is herein referred to as the
"AGREEMENT." The corpus of the Trust consists of all of the Transferor's right,
title and interest in, to and under (i) the Trust Property (as defined in the
Agree ment) and (ii) the property described in Sections 3A and 17 of the Series
1995-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a Series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class C-1 Certificates, Series 1995-1"
(the "CLASS C CERTIFICATES"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificate holder is bound.
The Transferor has structured the Agreement, the Class C
Certificates, the SRI Receivables Master Trust Floating Rate Class A-1
Certificates, Series 1995-1 (the "CLASS A CERTIFI CATES") and the SRI
Receivables Master Trust Floating Rate Class B-1 Certificates, Series 1995-1
(the "CLASS B CERTIFICATES", and collectively with the Class A Certificates and
the Class B Certificates, the "OFFERED CERTIFICATES") with the intention that
the offered Certificates will qualify under applicable tax law as indebtedness,
and both the Transferor and each holder of a Class C Certificate (a "CLASS C
CERTIFICATEHOLDER") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the Class C Certificates for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness.
No principal will be payable to the Class C Certificateholders
until the Class C Payment Commencement Date, which is the Distribution Date
either on or following the Distribution Date, on which the Class A Invested
Amount and the Class B Invested Amount have been paid in full. No principal
payments will be payable to the Class C Certificateholder until the Distribution
Date either on or following the Distribution Date on which the Class B Invested
Amount has been paid in full.
Interest will accrue on the unpaid principal amount of the
Class C Certificates at a per annum rate equal to 7.375% per annum with respect
to the initial Interest Accrual Period and, with respect to each subsequent
Interest Accrual Period a per annum rate of 1.50% in excess of LIBOR prevailing
on the related Rate Determination Date, calculated on the basis of the actual
number of days elapsed in such subsequent Interest Accrual Period over a year of
360 days (the "CLASS C CERTIFICATE RATE"), and, except as otherwise provided in
the Agreement, will be distributed to Certificateholders quarterly on the third
Wednesday of each March, June, September and December (or, if such day is not a
Business Day, on the next succeeding Business Day) (each a "DIS TRIBUTION
DATE"), commencing September 20, 1995 until such time as the Class C Invested
Amount is paid in full. Interest for any Distribution Date will include accrued
interest at the Class C Certificate Rate from and including the preceding
Distribution Date or, in the case of the first
A-3-2
Distribution Date from and including the Closing Date, to but excluding such
Distribution Date. Interest for any Distribution Date due but not paid on any
Distribution Date will be due on the next succeeding Distribution Date together
with, to the extent permitted by applicable law, additional interest on such
amount at the Class C Certificate Rate.
In addition, the Transferor and the Trustee shall not be
required to recognize any transfer of an interest in a Class C Certificate
unless the transferor of such interest shall deliver to the Transferor and the
Trustee an Opinion of Counsel in form and substance satisfactory to the
Transferor and the Trustee to the effect that such transfer will not cause the
Trust to be treated as a "publicly traded partnership" taxable as a corporation
under Section 7704 of the Code.
Subject to the Agreement, payments of principal are limited to
the unpaid Class C Invested Amount of the Class C Certificates, which may be
less than the unpaid balance of the Class C Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class C Certificates is
due and payable no later than the January 2003 Distribution Date (or if such day
is not a Business Day, the next succeeding Business Day) (the "SERIES
TERMINATION DATE"). After the Series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class C Certificates. In the event that the Class C Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allocable to the investor Certificates), and shall pay the
proceeds to the Class A Certificateholders pro rata in final payment of the
Class A Certificates, then to the Class B Certificateholders pro rata in final
payment of the Class B Certificates, then to the Class C Certificateholders pro
rata in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
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 Agreement, or be valid for any
purpose.
A-3-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class C-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By: BANKERS TRUST COMPANY
as Authenticating Agent
By:
Authorized Signatory
A-3-4
[FORM OF CLASS D INVESTOR CERTIFICATE]
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW. THE TRANSFER OF THIS
CERTIFICATE IS PROHIBITED BY THE TERMS OF THE AGREEMENT REFERRED TO
BELOW.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SRI
RECEIVABLES PURCHASE CO., INC. THAT SUCH PURCHASER IS NOT (1) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986 AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY.
NO RESALE OR TRANSFER OF THIS CERTIFICATE MAY BE MADE.
No. ___ $________
SRI RECEIVABLES MASTER TRUST
FLOATING RATE CLASS D-1 CERTIFICATE, SERIES 1995-1
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of consumer revolving credit card accounts
generated or to be generated by certain subsidiaries (collectively, the "SRI
SUBSIDIARIES") of Specialty Retailers, Inc. ("SRI" or the "SERVICER") and other
assets and interests constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of SRI
Receivables Purchase Co., Inc., SRI or any affiliate of either of them.)
This certifies that SRI Receivables Purchase Co., Inc. (the
"CERTIFICATEHOLDER") is the registered owner of a fractional undivided interest
in the SRI Receivables Master Trust (the "TRUST") issued pursuant to the Amended
and Restated Pooling and Servicing Agreement, dated as of August 11, 1995 (the
"POOLING AND SERVICING AGREEMENT"; such term to include any amendment or
A-4-1
Supplement thereto) by and between SRI Receivables Purchase Co., Inc., as
Transferor (the "TRANSFEROR"), SRI as the Servicer, and Bankers Trust
(Delaware), as Trustee (the "TRUSTEE"), and the Series 1995-1 Supplement, dated
as of August 11, 1995 (the "SERIES 1995-1 SUPPLEMENT"), among the Transferor,
SRI as Servicer and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1995-1 Supplement, is herein referred to as the
"AGREEMENT." The corpus of the Trust consists of all of the Transferor's right,
title and interest in, to and under (i) the Trust Property (as defined in the
Agreement) and (ii) the property described in Sections 3A and 17 of the Series
1995-1 Supplement.
This Certificate does not purport to summarize the Agreement
and reference is made to that 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. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a Series of Certificates entitled "SRI
Receivables Master Trust Floating Rate Class D-1 Certificates, Series 1995-1"
(the "CLASS D CERTIFICATES"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
By acceptance of this Certificate or any interest herein, each
Class D Certificateholder agrees that it will in no event permit the Class D
Certificates or any interest therein to be transferred, sold, exchanged,
pledged, participated or otherwise assigned hereunder, in whole or in part,
except under the conditions specified in the Series 1995-1 Supplement.
No principal will be payable to the Class D Certificateholders
until the Class D Payment Commencement Date, which is the Distribution Date
either on or following the Distribution Date on which the Class C Invested
Amount had been paid in full. No principal will be payable to the Class D
Certificateholders until all principal payments have first been made to the
Class A Certificateholders and then on and after the Class B Principal Payment
Commencement Date, after all principal payments have been made to the Class B
Certificateholders and then on and after the Class C Principal Payment
Commencement Date, after all payments have been made to the Class C
Certificateholders.
Interest will accrue on the unpaid principal amount of the
Class D Certificates at a per annum rate equal to 0% per annum (the "CLASS D
CERTIFICATE RATE").
Subject to the Agreement, payments of principal are limited to
the unpaid Class D Invested Amount of the Class D Certificates, which may be
less than the unpaid balance of the Class D Certificates pursuant to the terms
of the Agreement. All principal of and interest on the Class D Certificates is
due and payable no later than the January 2003 Distribution Date (or if such day
is not a Business Day, the next succeeding Business Day) (the "SERIES
TERMINATION DATE"). After the Series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class C Certificates. in the event that the Class C Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
A-4-2
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allocable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificateholders pro rata in final payment of the
Class A Certificates, then to the Class B Certificateholders pro rata in final
payment of the Class B Certificates, then to the Class C Certificateholders pro
rata in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
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 Agreement, or be valid for any
purpose.
A-4-3
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed under its official seal.
SRI RECEIVABLES PURCHASE CO., INC.
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class D-1 Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
BANKERS TRUST (DELAWARE),
as Trustee
By:
Authorized Signatory
A-4-4
[Form of 144A Exchange Notice and Certification]
__________________, 199__
SRI Receivables Purchase Co., Inc.
10201 Main Street
Houston, TX 77025
Attention: ______________________
Bankers Trust (Delaware)
1001 Jefferson Street
Wilmington, Delaware 19801
Attention: Corporate Trust and Agency Group
Ladies and Gentlemen:
This is to notify you as to the transfer of $_________ of
Series 1995-1, Class [A] [B] [C] Certificates (the "CERTIFICATES") of SRI
Receivables Master Trust (the "COMPANY").
The undersigned is the holder of the Certificates and with
this notice hereby deposits with the Trustee $__________ principal amount of
Certificates and requests that Certificates in the same principal amount be
issued and executed by the Company and authenticated by the Trustee and
registered to the purchaser on _______________ 19__, as specified in the Pooling
and Servicing Agreement, as supplemented by the Series 1995-1 Supplement
thereto, as follows:
Name:
Address:
Taxpayer I.D. No.:
Denominations:
The undersigned represents and warrants that the undersigned
(i) reasonably believes the purchaser is a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act of 1933 (the "ACT"), (ii) such
purchaser has acquired the Certificates in a transaction effected in accordance
with the exemption from the registration requirements of the Act provided by
Rule 144A and, (iii) if the purchaser has purchased the Certificates for one or
more accounts for which it is acting as fiduciary or agent, (A) each such
account is a qualified institutional buyer and (B) each such account is
acquiring Notes for its own account or for one or more institutional accounts
for
- 1 -
which it is acting as fiduciary or agent in a minimum amount equivalent to not
less than U.S. $250,000 for each such account.
Very truly yours,
[NAME OF HOLDER OF CERTIFICATE]
By:
[Name], [Chief Financial
or other Executive Officer]
- 2 -
REPRESENTATION LETTER
(Non-Rule 144A)
Bankers Trust (Delaware)
1001 Jefferson Street
Wilmington, Delaware 19801
Attention: Corporate Trust and Agency Group
SRI Receivables Purchase Co., Inc.
10201 Main Street
Houston, TX 77025
Attention: Treasurer
BT Securities Corporation
130 Liberty Street
New York, New York 10004
Re: SRI Receivables Master Trust
Series 1995-1 Asset Backed Certificates
The undersigned purchaser ("PURCHASER") understands that the
purchase of the above-referenced notes (the "NOTES") may be made only by
institutions which are "Accredited Investors" under Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "1933 ACT"), which includes
banks, savings and loan associations, registered brokers and dealers, insurance
companies, investment companies, and organizations described in Section
501(c)(3) of the Internal Revenue Code, corporations, business trusts and
partnerships, or formed for the specific purpose of acquiring the Notes offered,
with total assets in excess of $5,000,000. The undersigned represents on behalf
of the Purchaser that the Purchaser is an "Accredited Investor" within the
meaning of such definition. Purchaser has reviewed carefully the responses,
representations and warranties it is making herein.
REPRESENTATIONS AND WARRANTIES
Purchaser makes the following representations and warranties
in connection with Section 11(b) of the Series 1995-1 Supplement.
1. The Purchaser understands that the Series 1995-1
Certificates have not been and will not be registered under the 1933 Act and may
be resold (which resale is not currently con templated) only if registered
pursuant to the provisions of the 1933 Act or if an exemption from registration
is available, that SRI Receivables Purchase Co., Inc. is not required to
register the Series 1995-1 Certificates and that any transfer must comply with
Section 11(b) of the Series 1995-1 Supplement relating to the Series 1995-1
Certificates.
2. The Purchaser will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the Series
1995-1 Certificates.
3. The Purchaser is a sophisticated institutional investor and
has knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Notes and is able to
bear the economic risk of such investment. The Purchaser has been given such
information concerning the Series 1995-1 Certificates, the underlying
receivables and the SRI Receivables Master Trust as it has requested.
4. The Purchaser is acquiring the Series 1995-1 Certificates
for its own account (or for the account of one or more other institutional
investors for which it is acting as duly authorized fiduciary or agent) for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser represents that either (a) it does not
qualify as (i) an employee benefit plan (as defined in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), whether
or not it is subject to the provisions of Title 1 of ERISA, (ii) a plan
described in section 4975(e)(1) of the Internal Revenue Code of 1986, or (iii)
an entity whose under lying assets are deemed to be assets of a plan described
in (i) or (ii) above by reason of such plan's investment in the entity (as
determined under Department of Labor Regulations, 29 C.F.R. 2510.3-101 (1990))
(any such entity described in clauses (i) through (iii), a "BENEFIT PLAN
ENTITY") or (b) if the Purchaser is an entity described in clause (a), Purchaser
represents the following:
(i) the Purchaser is not a Benefit Plan Entity with
respect to an employee benefit plan sponsored by the Transferor, the Placement
Agent, the Trustee, or the Servicer or any affiliate thereof (all as defined in
the Private Placement Memorandum); and
(ii) the person who has discretionary authority or
renders investment advice to the Purchaser with respect to the investment of
plan assets in the Series 1995-1 Certificates is not an obligor with respect to
the Receivables (as defined in the Private Placement Memorandum).
6. The Purchaser understands that such Series 1995-1
Certificates will bear a legend substantially as set forth in the form of Series
1995-1 Certificates included in the Series 1995-1 Supplement.
7. The Purchaser agrees that it will obtain from any
subsequent purchaser of the Notes substantially the same representations,
warranties and agreements contained in the foregoing paragraphs 1 through 6 and
in this paragraph 7.
- 2 -
Very truly yours,
Dated: By:
Name:
Title:
Number of Beneficial Holders: _________
- 3 -
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of May 30, 1996
among
SRI RECEIVABLES PURCHASE CO., INC.
as Purchaser
and
THE ORIGINATORS PARTIES HERETO
- 1 -
TABLE OF CONTENTS
PAGE
I DEFINITIONS..........................................................2
1.01 Certain Defined Terms.......................................2
1.02. Accounting and UCC Terms...................................12
II AMOUNTS AND TERMS OF THE PURCHASES..................................12
2.01. The Purchases..............................................12
2.02. Delivery of Receivables....................................14
2.03. Payments and Computations..................................14
2.04. Ineligible Receivables; Repurchase of Receivables..........16
2.05 Customer Service Adjustments...............................17
2.06. Addition of Originators; Merger of Originators.............18
2.07. Addition of Accounts.......................................18
2.08. Removal of Accounts........................................19
III CONDITIONS TO PURCHASES.............................................20
3.01. Conditions Precedent to Purchaser's Initial Purchase.......20
3.02. Conditions Precedent to Each Originator's Sale.............20
IV REPRESENTATIONS AND WARRANTIES......................................22
4.01. Representations and Warranties of the Purchaser............22
4.02. Representations and Warranties of Each of the Originators..22
(a) Organization and Good Standing....................23
(b) Due Qualification.................................23
(c) Due Authorization.................................23
(d) No Conflicts......................................23
(e) Taxes.............................................23
(f) No Violation......................................24
(g) No Proceedings....................................24
(h) All Consents Required.............................24
(i) Bona Fide Receivables.............................24
(j) Place of Business.................................24
(k) Use of Proceeds...................................24
(l) Purchase Termination Event........................25
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(m) Not an "Investment Company"........................25
(n) Software...........................................25
(o) Tradenames.........................................25
(p) ERISA Liens........................................25
(q) ERISA and the Code.................................25
4.03. Representations and Warranties of Each Originator Relating
to this Agreement and the Receivables.......................25
(a) Binding Obligation; Valid Sale and Assignment......25
(b) Notice of Breach...................................27
V GENERAL COVENANTS....................................................28
Section 5.01. Covenants of Each Originator.......................28
(a) Receivables to be Accounts, General Intangibles or
Chattel Paper......................................28
(b) Security Interests.................................28
(c) Charge Account Agreements and Credit and Collection
Policies...........................................28
(d) Delivery of Collections............................29
(e) Conveyance of Accounts.............................29
(f) Notice of Liens....................................29
(g) Compliance with Laws, Etc..........................29
(h) Preservation of Corporate Existence................29
(i) Visitation Rights..................................29
(j) Keeping of Records and Books of Account............29
(k) Performance and Compliance with Receivables and
Charge Account Agreements..........................30
(l) Location of Records................................30
(m) Furnishing Copies, Etc.............................30
(n) Obligation to Record and Report....................30
(o) Continuing Compliance with the UCC.................30
(p) In-Store Payments..................................31
(q) Payments...........................................31
(r) Further Action Evidencing Purchases................31
(s) Change in Business.................................32
5.02. Mergers.....................................................32
5.03. Transfer of Account Relationships...........................32
5.04. Purchaser Covenant Regarding Sale Treatment.................32
5.05. Tradename License...........................................32
VI PURCHASE TERMINATION EVENTS..........................................33
6.01. Purchase Termination Events.................................33
VII INDEMNIFICATION......................................................35
- ii -
7.01. Indemnities by the Originators..............................35
7.02. Indemnities by the Purchaser................................36
VIII MISCELLANEOUS........................................................37
8.01. Amendment...................................................37
8.02. Notices, Etc................................................37
8.03. No Waiver: Remedies.........................................37
8.04. Binding Effect..............................................37
8.05. Governing Law...............................................37
8.06. Costs, Expenses and Taxes...................................38
8.07. Acknowledgment of Assignments...............................38
8.08. No Petition in Bankruptcy...................................38
EXHIBIT A Form of Additional Originator Agreement....................A-1
- iii -
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
dated as of May 30, 1996 (this "AGREEMENT"), is among those Originators set
forth on SCHEDULE I (each an "ORIGINATOR" and, together with any Originator
permitted to be added as an Originator under the terms of this Agreement, the
"ORIGINATORS") and SRI RECEIVABLES PURCHASE CO., INC., a Delaware corporation
(the "PURCHASER").
WITNESSETH:
WHEREAS, each of the Originators intends to sell Receivables
to the Purchaser on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, this Agreement was originally executed on, and dated
as of, July 30, 1993;
WHEREAS, the Originators under this Agreement as of July 30,
1993 (the "INITIAL ORIGINATORS") were Palais Royal, Inc., a Texas corporation
("PALAIS"), 3 Beall Brothers 3, Inc., a Texas corporation ("BEALLS") and Fashion
Bar, Inc., a Colorado corporation ("FASHION BAR");
WHEREAS, Bealls and Fashion Bar have each merged with and into
Palais effective as of August 2, 1993, rendering Palais the sole Originator
under the Agreement on the date hereof;
WHEREAS, this Agreement has been amended and restated as of
August 11, 1995, and amended by the First Amendment to Amended and Restated
Receivables Purchase Agreement dated April 4, 1996, and is being amended and
restated on the date hereof; and
WHEREAS, the Purchaser desires to purchase Receivables from
each Originator on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"ACCOUNT" shall mean (a) each credit card account established
pursuant to a Charge Account Agreement between an Originator and any Person, the
Receivables from which are designated for sale by an Originator to the
Purchaser, which is identified by (i) an account number, (ii) the amount of
Receivables outstanding in such Account as of the Cut-Off Date and (iii) the
amount of Principal Receivables in such Account as of its Cut-Off Date, in each
case in the computer file or microfiche list delivered to the Purchaser pursuant
to this Agreement, (b) each Automatic Additional Account, and (c) each
Supplemental Account identified in each file or list delivered to the Purchaser.
The definition of Account shall include each Transferred Account but shall not
include any Purged Accounts. The term "Account" shall be deemed to refer to a
Supplemental Account only from and after the Addition Date with respect thereto,
and the term "Account" shall be deemed to refer to any Removed Account only
prior to the Removal Date with respect thereto.
"ACCOUNT PROPERTY" has the meaning specified in SECTION 2.01.
"ADDITION DATE" shall mean each date as of which Receivables
under Supplemental Accounts are designated for sale to the Purchaser pursuant to
SECTION 2.07.
"ADDITIONAL ORIGINATOR" has the meaning specified in SECTION
2.06.
"ADDITIONAL ORIGINATOR AGREEMENT" has the meaning specified
in Section 2.06.
"AFFILIATE" means, with respect to a particular Person, (a)
any Person that, directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person, or (b) any Person who is a director
or officer or general partner (i) of such Person, (ii) of any subsidiary of such
Person, or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(i) to vote 5% or more of the securities having ordinary voting power to elect
the directors of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"AUTHORIZED OFFICERS" means those officers of the Persons
designated in SCHEDULE II hereto (or in such other Schedule as may be delivered
to the parties hereto from time to time) as duly authorized to execute and
deliver this Agreement and any instruments or documents in connection herewith
on behalf of such Persons and to take, from time to time, all other actions on
behalf of the Originators in connection herewith.
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"AUTOMATIC ADDITIONAL ACCOUNT" shall mean
(a) a consumer revolving credit card account (or any
successor credit card account designations used by an Originator)
coming into existence after the applicable Cut-Off Date:
(i) which is originated by an Originator during the normal
operation of such Originator's credit card business and is not acquired
by such Originator from another credit card issuer;
(ii) which was in existence and owned by such Originator on
the date on which Receivables generated in such account are to be first
sold to the Purchaser and is in existence at the close of business on
the date it is to be first sold to the Purchaser;
(iii) which is payable in Dollars; and
(iv) the Receivables in which have not been charged off
prior to the date of their designation for sale to the Purchaser; or
(b) any other consumer revolving credit card account,
Receivables from which the Purchaser permits to be automatically sold
to the Purchaser.
"BUSINESS DAY" means any day other than (a) a Saturday or a
Sunday, (b) another day on which an Originator is closed, as set forth on a list
furnished to the Purchaser on or before December 1 of the year preceding the
year to which such list relates or (c) another day on which banking institutions
in New York, New York (or such other city(ies) designated by the Purchaser) are
authorized or obligated by law or executive order to be closed; PROVIDED,
HOWEVER, that Originators shall not designate, in the aggregate, more than 8
days in each year (excluding Saturdays and Sundays) under clause (b) as
non-Business Days, of which no more than four (inclusive of Saturdays and
Sundays) shall be consecutive.
"CHARGE ACCOUNT AGREEMENT" means the agreement, which may
consist of more than one document, pursuant to which a Person is obligated to
pay for purchased merchandise or services under a credit plan that permits such
Person to purchase merchandise and services on credit, together with any finance
charges and other charges related thereto, as such agreement may be amended,
modified or supplemented from time to time; PROVIDED, that only agreements
between such Person and (i) an Originator or (ii) the creditor of an account
designated as an Automatic Additional Account or Supplemental Account under this
Agreement shall be considered a Charge Account Agreement hereunder.
"CLOSING DATE," with respect to Receivables originated by an
Originator, means the date of the initial purchase of such Receivables under
this Agreement.
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"COLLECTIONS" shall mean all payments received by the
Originator in respect of the Receivables, in the form of cash, checks or any
other form of payment in accordance with the Charge Account Agreement in effect
from time to time on any Receivables.
"CREDIT AND COLLECTION POLICY" means the credit, collection,
customer relations and service policies that apply to an Eligible Account, as
such policies currently exist and as such policies may be amended, modified or
supplemented from time to time subject to SECTION 5.01(C).
"CUT-OFF DATE" shall mean, for Receivables in Accounts owned
by each Initial Originator, July 30, 1993, and for Receivables in Accounts owned
by each Additional Originator, the date specified as such in the Additional
Originator Agreement.
"DATE OF PROCESSING" shall mean, with respect to any
transaction, the date on which such transaction is first recorded on an
Originator's or the Purchaser's computer master file of consumer revolving
credit card accounts (without regard to the effective date of such recordation).
"DEFAULTED ACCOUNT" shall mean each Account with respect to
which, in accordance with the Credit and Collection Policy of the applicable
Originator, such Originator has charged off the Receivables in such Account as
uncollectible; an Account shall become a Defaulted Account on the day on which
such Receivables are recorded as charged off as uncollectible on the
Originator's computer master file of consumer credit card revolving accounts.
Notwithstanding any other provision hereof, any Receivables in a Defaulted
Account that are Ineligible Receivables shall be treated as Ineligible
Receivables rather than Receivables in Defaulted Accounts.
"DEFAULTED RECEIVABLE" means a Receivable in a Defaulted
Account.
"DEFAULTED RECEIVABLE RECEIPTS" has the meaning specified in
the definition of "Recoveries."
"DEFAULTED RECEIVABLE REPURCHASE AMOUNT" has the meaning
specified in subsection 2.04(c)(ii).
"DISTRIBUTION DATE" shall mean the fifteenth day of each
month or, if such fifteenth day is not a Business Day, the next succeeding
Business Day.
"DOLLARS", "$", or "U.S. $" shall mean United States dollars.
"ELIGIBLE ACCOUNT" shall mean, as of the Closing Date (or,
with respect to Supplemental Accounts as of each Addition Date and with respect
to Automatic Additional Accounts, as of the date the Receivables arising in such
Accounts are designated for sale to the Purchaser), each Account owned by an
Originator:
(a) which is payable in Dollars;
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(b) which has not been identified by such Originator
in its computer files as an account as to which such
Originator has any confirmed record of any fraud- related
activity by the Obligor;
(c) which has not been sold or pledged to any other
party and which does not have Receivables which have been sold
or pledged to any other party;
(d) which was created in accordance with the Credit
and Collection Policy of such Originator at the time of
creation of such account or the Receivables of which the
Purchaser permits to be sold automatically to the Purchaser;
(e) the Receivables in which such Originator has not
charged off (or required to be charged off) in its customary
and usual manner for charging off Receivables in such Accounts
as of the Closing Date (or, with respect to Supplemental
Accounts as of the Addition Date and with respect to Automatic
Additional Accounts, as of the date the Receivables of such
Accounts are first designated for sale to the Purchaser)
unless such Account is subsequently reinstated; and
(f) which is not an Automatic Additional Account
which the Purchaser and any Originator have elected to exclude
from sale under this Agreement.
"ELIGIBLE RECEIVABLE" means a Receivable that satisfies each
of the following criteria:
(a) it arises under an Eligible Account;
(b) it constitutes an "account," a "general
intangible" or "chattel paper" as defined in Article 9 of the
UCC as then in effect in the Relevant UCC State;
(c) it is, at the time of its transfer to the
Purchaser, the legal, valid and binding obligation of a Person
or is guaranteed by a Person who (i) is living, (ii) is not a
minor under the laws of his/her state of residence and (iii)
is competent to enter into a contract and incur debt (or with
respect to obligations from Persons who do not qualify under
clauses (ii) or (iii), is so guaranteed by a Person who
qualifies under clauses (i), (ii) and (iii)); PROVIDED,
HOWEVER that (1) no more than 10% of all Eligible Receivables
shall be from Obligors which are (x) non-U.S. Persons or (y)
the United States, a state of any instrumentality thereof and
(2) no such Receivables shall be obligations of any Affiliate
(other than directors, officers and employees) of the
Transferor; and PROVIDED, FURTHER, that no more than 6% of all
Eligible Receivables shall be from Obligors which are non-U.S.
Persons, unless the Rating Agency provides its written consent
to an increase in such percentage;
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(d) it and the underlying Charge Account Agreement
do not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation,
rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) that
could reasonably be expected to have an adverse impact on the
amount of Collections thereunder, and the Originator of such
Receivable is not in violation of any such laws, rules or
regulations in any respect material to such Charge Account
Agreement;
(e) all material consents, licenses, or
authorizations of, or registrations with, any governmental
authority required to be obtained or given in connection with
the creation of such Receivable or the execution, delivery,
creation and performance of the underlying Charge Account
Agreement have been duly obtained or given and are in full
force and effect as of the date of the creation of such
Receivable;
(f) at the time of its sale to the Purchaser, the
Purchaser will have good and marketable title free and clear
of all Liens and security interests arising under or through
the Purchaser (other than Permitted Liens);
(g) it is not a Defaulted Receivable or a Receivable
owing from a bankrupt Obligor; and
(h) it arises under a Charge Account Agreement that
has been duly authorized by the applicable Originator and
which, together with such Receivable, is in full force and
effect and constitutes the legal, valid and binding obligation
of the Obligor of such Receivable enforceable against such
Obligor in accordance with its terms and is not subject at the
time of transfer to the Purchaser to any dispute, offset,
counterclaim or defense whatsoever.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or
not incorporated) that is a member of a group of which any Originator is a
member and which is treated as a single employer under Section 414 of the Code
and the regulations promulgated and rules issued thereunder.
"EXCESS CASH" means all cash and cash equivalents held by the
Purchaser in excess of any other due and owing obligations of the Purchaser and
any reserves against future obligations which the Purchaser deems reasonably
necessary or prudent to establish and maintain.
"FINANCE CHARGE COLLECTIONS" shall mean with respect to any
Business Day Collections received with respect to each Finance Charge
Receivable.
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"FINANCE CHARGE RECEIVABLES" shall mean all amounts billed
from time to time to the Obligors on any Account in respect of (i) Periodic
Finance Charges, (ii) over limit fees, (iii) late charges, (iv) returned check
fees, (v) annual membership fees and annual service charges, if any, (vi)
transaction charges, (vii) all other fees and charges, and (viii) Recoveries.
"GOVERNMENTAL AUTHORITY" means the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"INCIPIENT PURCHASE TERMINATION EVENT" means any condition,
act or event specified in SECTION 6.01 that, with the giving of notice or the
lapse of time, or both, would become a Purchase Termination Event.
"INELIGIBLE RECEIVABLES" has the meaning specified in SECTION
2.04(A).
"INITIAL ORIGINATORS" has the meaning specified in the
recitals.
"INITIAL OUTSTANDING BALANCE" of a Receivable means the
Outstanding Balance of such Receivable on the Initiation Date of such
Receivable.
"INITIATION DATE" means, with respect to any Receivable, the
Business Day following the Date of Processing of such Receivable.
"IN-STORE PAYMENT" means any payment made by an Obligor with
respect to a Receivable by delivery of cash, a check or money order, or any
other form of payment to a cashier or other employee of any SRI Store.
"LIBOR" shall mean the rate obtained by dividing (x) the
three-month rate described on the Dow Jones Telerate System, p. 3750, as of
11:00 a.m. London time by (y) a percentage equal to one minus the stated maximum
rate (stated as a decimal) of all reserves required to be maintained against
"Eurocurrency Liabilities" as specified in Regulation D (or against any other
category of liabilities which includes deposits by reference to which the
interest rate on LIBOR is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of any bank to
United States residents) which shall be zero unless the Company has notified the
Trustee otherwise; PROVIDED, HOWEVER, with respect to clause (x) above, in the
event such rate shall not be provided, "LIBOR" shall mean (a) the arithmetic
average (rounded upwards to the nearest 1/16th of 1%) of the rates at which
deposits in United States dollars are offered to four reference banks selected
by BT Securities Corp. in the interbank Eurodollar market at approximately 11:00
a.m. (London time) divided by (b) the percentages profiled in clause (y) above.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment, participation or equity interest, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any kind or nature
7
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the UCC (other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing.
"LOCK BOXES" has the meaning specified in SECTION 2.01.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which any Originator or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"MONTHLY PERIOD" shall mean the period from and including the
first day of each fiscal month of the Originators to and including the last day
of each such fiscal month.
"NET OWNERSHIP INTEREST" means, with respect to any
Receivable, an amount equal to the aggregate Initial Outstanding Balance of such
Receivable, plus interest or finance charges accrued on such Receivable to such
time less the cumulative amount of Collections with respect to such Receivable
actually received by the Purchaser or the applicable Originator prior to such
time as such Net Ownership Interest may be adjusted from time to time pursuant
to Section 2.05.
"OBLIGOR" means a Person obligated to make payments with
respect to a Receivable arising under an Account pursuant to a Charge Account
Agreement.
"ORIGINATOR" has the meaning specified in the preamble.
"OUTSTANDING BALANCE" means, with respect to a Receivable on
any day, the aggregate amount owed by the Obligor thereunder as of the close of
business on the prior Business Day (net of returns and adjustments).
"PERIODIC FINANCE CHARGES" shall have, with respect to any
Account, the meaning specified in the Charge Account Agreement applicable to
such Account for finance charges (due to periodic rate) or any similar term.
"PERMITTED LIEN" shall mean with respect to the Receivables:
(i) Liens in favor of the Purchaser created pursuant to this Agreement; (ii)
Liens in favor of any transferee of the Purchaser; and (iii) Liens which secure
the payment of taxes, assessments and governmental charges or levies, if such
taxes are either (a) not delinquent or (b) being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves in accordance with generally accepted accounting principles shall have
been established, but only so long as such proceedings could not subject the
Purchaser or any transferee of the Purchaser to any civil or criminal penalty
8
or liability or involve any risk of loss, sale or forfeiture of any property,
rights or interests covered by this Agreement.
"PERSON" means any legal person, including an individual,
corporation, partnership, association, joint venture, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of a
similar nature.
"POOLING AGREEMENT" shall mean the Pooling and Servicing
Agreement dated as of July 30, 1993 by and among the Bankers Trust (Delaware),
as Trustee, the Purchaser, as Transferor and Specialty Retailers, Inc., as
Servicer, as amended, supplemented and modified from time to time.
"PRINCIPAL COLLECTIONS" shall mean with respect to any
Business Day the Collections received with respect to each Principal Receivable.
"PRINCIPAL RECEIVABLES" shall mean amounts shown on the
Purchaser's records as amounts payable by Obligors with respect to Eligible
Receivables on any Account other than such amounts that are Finance Charge
Receivables or Receivables in Defaulted Accounts and shall include, without
limitation, amounts payable for purchases of goods or services. A Receivable
shall be deemed to have been created at the end of the day on the Date of
Processing of such Receivable. In calculating the aggregate amount of Principal
Receivables on any day, the amount of Principal Receivables shall be reduced by
the aggregate amount of credit balances in the Accounts on such day.
"PURCHASE CONSIDERATION" means, with respect to each purchase
of newly created Receivables from an Originator on the Initiation Date of such
Receivables, the aggregate consideration payable by the Purchaser to such
Originator equal to the Purchase Price of such Receivables, which shall be paid
pursuant to SECTION 2.03, either in cash, an increase in the principal amount of
the Revolving Note, or a combination thereof.
"PURCHASE DATE" has the meaning specified in SECTION 2.01(A).
"PURCHASE PRICE" means the product of (i) the Outstanding
Balance of Receivables tendered to the Purchaser pursuant to SECTION 2.02(A) and
(ii) the Purchase Price Percentage.
"PURCHASE PRICE PERCENTAGE" means a percentage that shall be
agreed upon from time to time (but no less frequently than once each calendar
quarter) by the Purchaser and the Originators which reflects a fair market
discounted net present value of the Outstanding Balance of Receivables
(including the expected stream of Finance Charge Receivables) to be transferred
to the Purchaser by the Originators, expressed as a percentage of such
Outstanding Balance. Such percentage may be greater or less than 100%. The
calculation of such discounted net present value shall take into account:
9
(i) the expected yield on the Receivables, reduced by costs
to the Purchaser of financing the Receivables and paying the Servicing
Fee;
(ii) the expected losses on the Receivables (based upon
historical losses on the Receivables and such other factors as shall be
agreed between Purchaser and the Originators), net of the expected
benefits to the Purchaser generated as a result of the Originators'
obligation to repurchase Ineligible Receivables, Defaulted Receivables
and Receivables as to which certain representations or warranties have
been breached pursuant to SECTION 2.04;
(iii) a reasonable expected rate of return on capital of the
Purchaser from its purchase of Receivables; and
(iv) such other factors as may be mutually agreed between the
Purchaser and the Originator and as are customarily reflected in an
arm's-length purchase and sale of comparable private label credit card
receivables.
The Purchase Price Percentage shall be calculated prospectively with respect to
Receivables transferred on and after the date of such calculation. In no event
shall the Purchase Price Percentage (i) be adjusted retroactively to account for
the actual performance of previously purchased Receivables or for the
Purchaser's actual rate of return on previously purchased Receivables or (ii) be
increased from and after the occurrence of, and during the continuation of, any
Pay Out Event or any event which would, upon the giving of notice or the passage
of time or both, constitute a Pay Out Event.
"PURCHASE TERMINATION DATE" means the date on which the
Purchaser's obligation to purchase Receivables shall terminate pursuant to
SECTION 6.01.
"PURCHASE TERMINATION EVENT" has the meaning specified in
SECTION 6.01.
"PURCHASER" has the meaning specified in the preamble.
"PURCHASES" has the meaning specified in SECTION 2.01(A).
"PURGED ACCOUNT" shall mean an Account that has an Outstanding
Balance of zero and has been terminated pursuant to the applicable Credit and
Collection Policy due to an extended period of inactivity.
"RECEIVABLE" means, with respect to any Obligor, any account
or general intangible representing the indebtedness of such Obligor under a
Charge Account Agreement arising in an Account from a sale of merchandise or
services, and includes the right to payment of any interest or finance charges
and other obligations of such Obligor with respect thereto. Each Receivable
includes, without limitation, all rights of the Originator under the applicable
Charge Account
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Agreement. Each increase in the Outstanding Balance of any Receivable (other
than any such increase resulting from the accrual of interest or finance charges
or other fees with respect to such Receivable) shall, for purposes of ARTICLE
II, constitute a separate Principal Receivable.
"RECEIVABLES STATEMENT" has the meaning specified in SECTION
2.02(A).
"RECOVERIES," with respect to any period, shall mean the
PRODUCT of (i) any amounts received during such period ("DEFAULTED RECEIVABLE
RECEIPTS") with respect to Receivables in Accounts which previously became
Defaulted Accounts and (ii) the fraction resulting from (A) one MINUS (B) a
fraction, the numerator of which is the cumulative aggregate Defaulted
Receivable Repurchase Amount paid by the Originators during the preceding six
full Monthly Periods pursuant to SECTION 2.04(C), and the denominator of which
is the total principal amount of Receivables which become Defaulted Receivables
during such six Monthly Periods.
"RELEVANT UCC STATE" means each jurisdiction in which the
filing of a UCC financing statement is necessary or desirable to evidence the
Purchases.
"REMOVAL DATE" shall mean the date mutually designated by an
Originator and the Purchaser for removal of a Removed Account.
"REMOVED ACCOUNTS" shall have the meaning specified in
SECTION 2.08(A).
"REPURCHASE AMOUNT" shall have the meaning specified in
SECTION 2.04(B).
"REQUIREMENTS OF LAW" for any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority in
each case applicable to or binding upon such Person or to which such Person is
subject, whether federal, state or local, including, without limitation, usury
laws, the federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System.
"REVOLVING NOTE" shall mean a note in the form of EXHIBIT A
hereto issued to an Originator, which shall contain the terms set forth in
SECTION 2.03.
"SETTLEMENT DATE" means the date upon which the Purchaser and
any Originator shall reconcile any amounts owed to each other, except amounts
payable in respect of Purchases of Receivables, which date shall occur at least
once each fiscal month.
"SETTLEMENT PERIOD" means a period from and including a
Settlement Date to but excluding the next following Settlement Date.
"SETTLEMENT STATEMENT" means a statement, dated the last day
of each Settlement Period, reflecting the adjustments and credits pursuant to
SECTION 2.05 for such Settlement Period
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and for any Receivables being sold or repurchased by the Originator on the date
thereof, substantially in the form of EXHIBIT A hereto, signed by an Authorized
Officer of an Originator.
"SRI" shall mean Specialty Retailers, Inc., a corporation
organized under the laws of the State of Delaware.
"SRI CREDIT CARD BANK" means a bank that is an Affiliate of
SRI and which qualifies as a bank under federal or state banking law.
"SRI STORE" means any merchant which sells merchandise or
services on credit pursuant to a Charge Account Agreement.
"SRI SUB" means SRI Receivables, Inc., a Delaware corporation.
"SUPPLEMENTAL ACCOUNTS" shall have the meaning specified in
SECTION 2.07(B).
"TRANSFERRED ACCOUNT" shall mean an Account with respect to
which a new credit account number has been issued by the Originator under
circumstances resulting from a lost or stolen credit card and not requiring
standard application and credit evaluation procedures under the Credit and
Collection Policy, and which can be traced or identified by reference to or by
way of the computer files or microfiche lists delivered to the Purchaser
pursuant to this Agreement or as an account into which an Account has been
transferred.
"UCC" means the Uniform Commercial Code, as amended from time
to time, as in effect in the applicable jurisdiction.
Section 1.02. ACCOUNTING AND UCC TERMS. All accounting terms
not specifically defined herein shall be construed in accordance with United
States generally accepted accounting principles ("U.S. GAAP"); and all terms
used in Article 9 of the UCC that are used but not specifically defined herein
are used herein as defined therein.
[End of Article I]
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.01. THE PURCHASES. (a) Each Originator does hereby
sell, transfer, assign, and otherwise convey to the Purchaser, without recourse,
all of its right, title and interest in, to and under (collectively, the
"PURCHASES"):
(i) all right, title and interest of such Originator
in and to the Receivables existing on the Cut-Off Date for
such Originator and thereafter created and arising in
connection with the Accounts and any accounts that meet the
definition of
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Automatic Additional Accounts, including, without limitation,
all accounts, contract rights, chattel paper, instruments,
general intangibles and other obligations of any Obligor with
respect to any such Receivables, then or thereafter existing,
whether or not arising out of or in connection with the sale
or lease of goods or the rendering of services, including
without limitation, the right to payment of any interest,
Finance Charge Receivables, returned check fees or late
charges and other obligations of an Obligor with respect to
any such Receivables, and all rights in and to all security
agreements, and other contracts securing or otherwise relating
to any such accounts, contract rights, chattel paper,
instruments, general intangibles or obligations (any and all
such security agreements and other contracts being the
"RELATED CONTRACTS");
(ii) all guarantees, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of any Receivables;
(iii) all payment and enforcement rights (but not any
obligations) to, in and under the Related Contracts;
(iv) the following:
(A) any lock box account relating to the
Receivables (the "LOCK BOXES") and all funds, and all
certificates and instruments, if any, from time to
time representing or evidencing or held in the Lock
Boxes (the "ACCOUNT PROPERTY");
(B) all notes, certificates of deposit and
other instruments from time to time hereafter
delivered to or otherwise possessed by an Originator
for and on behalf of the Purchaser in substitution
for or in addition to any of the then existing
Account Property; and
(C) all interest, dividends, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any and all of the
existing Account Property;
(v) proceeds of any and all of the Purchases
described in subparagraphs (i) through (iv) above (including,
without limitation, Recoveries and proceeds that constitute
property of the types described in clauses (i) through (iv)
above) and, to the extent not otherwise included, all payments
under insurance (whether or not the Trustee is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any
of such foregoing Purchases;
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from each Originator on the Closing Date and on the Initiation Date of any such
subsequently created Receivable during the period from the Closing Date with
respect to such Originator until the Purchase Termination Date with respect to
such Originator (each such date, including each such Closing Date, being a
"PURCHASE DATE").
(b) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase by the
Purchaser and a sale by the applicable Originator of the Receivables and not as
a lending transaction. The sale of Receivables by any Originator hereunder shall
be without recourse to, or representation or warranty of any kind (express or
implied) by, such Originator or any other Originator, except as otherwise
specifically provided herein. If, notwithstanding the express intent of the
parties hereto, it is determined that this Agreement does not constitute a valid
sale, transfer and assignment by the Originators to the Purchaser of the
Purchases, each Originator shall be deemed to have granted to the Purchaser a
"security interest" (as defined in the UCC as in effect in the Relevant UCC
State) in such property of the Originators which comprises the Purchases
described herein, and this Agreement shall be deemed to constitute a security
agreement under the UCC in effect in the Relevant UCC State.
Section 2.02. DELIVERY OF RECEIVABLES. (a) On each Business
Day prior to the Purchase Termination Date, each Originator shall deliver, or
shall cause to be delivered, all of its Receivables to the Purchaser by
delivering to the Purchaser a statement or report (a "RECEIVABLES STATEMENT")
specifying to the Purchaser the aggregate outstanding principal balance of such
Receivables.
(b) Upon the fulfillment of the conditions set forth in
ARTICLE III, the delivery to the Purchaser of the Receivables Statement and
payment of the Purchase consideration as provided in Section 2.03, all such
Originator's right, title and interest in and to such Receivables shall have
been sold, assigned, transferred, conveyed and set over to the Purchaser.
Section 2.03. PAYMENTS AND COMPUTATIONS. (a) Subject to
Section 2.03(b), the Purchase Price for Receivables purchased from an Originator
pursuant to Section 2.01 shall be paid or provided for on the Purchase Date of
such Receivables (i) first by payment in cash in immediately available funds (to
the extent of Excess Cash, after such application to pay other Originators
pursuant to this Section 2.03 as Purchaser has elected to make) and (ii) then by
increasing the principal amount of the Revolving Note issued to such Originator
by the amount of the Purchase Price that is not paid pursuant to clause (i)
(such increase to be made by notation thereon). The failure of an Originator to
note the increase of the principal amount of the Revolving Note thereon shall
not relieve the Purchaser from its obligations to such Originator.
(b) $35,177,048.02 of the Receivables sold by Palais Royal,
Inc. to the Purchaser on the Closing Date are to be conveyed by Palais to the
Purchaser as a capital contribution in exchange for 999 shares of common stock
of the Purchaser which, together with the 1 share of common stock purchased by
Palais Royal, Inc. on July 30, 1993, represent all of the outstanding common
stock of the Purchaser. All Ineligible Receivables transferred by Palais Royal,
Inc. to the
14
Purchaser shall be deemed to be a capital contribution to the Purchaser. In the
event that the Revolving Note may not be drawn to pay a portion of the Purchase
Price by reason of the limitation contained in SECTION 2.03(C)(VIII), then
Palais Royal, Inc. shall be permitted (but not required) to transfer Receivables
to the Purchaser as a capital contribution.
(c) The Purchaser shall pay all amounts to be paid in cash
with respect to the Purchases to the Originator (or such other person as is
designated by such Originator) on the date of the Purchase thereof and shall pay
all amounts in respect of principal of and interest on any Revolving Note in
accordance with the terms thereof. Each Revolving Note shall contain the
following terms:
(i) interest shall accrue on the outstanding principal amount
of each Revolving Note at a per annum rate of interest (calculated on
the basis of a 360-day year of twelve 30- day months) equal to LIBOR +
5%;
(ii) the outstanding principal of and accrued interest on each
Revolving Note shall be payable out of Excess Cash;
(iii) all amounts paid with respect to an outstanding
Revolving Note shall be allocated first to accrued interest until all
such interest is paid, and then to outstanding principal;
(iv) an Originator shall only be permitted to look to Excess
Cash for payment of the Revolving Note and to the extent that such
amounts are insufficient, such Originator shall not have any claim
against the Purchaser or additional recourse against the Purchaser
(other than with respect to Excess Cash available in the future) and
such Revolving Note shall be fully subordinated to the rights of any
other creditors of the Purchaser;
(v) no Revolving Note may be sold or otherwise transferred;
PROVIDED that nothing shall prevent the Revolving Note from being
pledged to any creditor of the Originators or SRI or such creditor from
exercising its rights under such pledge;
(vi) the Purchaser may offset any amount due and owing by the
applicable Originator against any amount due and owing by the Purchaser
to such Originator under the terms of the Revolving Note;
(vii) the Purchaser, at its option, may repay all or any
portion of the accrued interest on and principal of any Revolving Note
at any time; and
(viii) no draw shall be made on a Revolving Note issued to an
Originator if, at the time of such draw, the tangible net worth of the
Purchaser (computed in accordance with U.S. GAAP) is less than
$10,000,000.
15
(d) All payments hereunder to an Originator shall be made not
later than the close of business (New York City time) on the date specified
therefor in lawful money of the United States of America in same day funds to
the bank account designated in writing by such Originator to the Purchaser from
time to time.
(e) Whenever any payment to be made hereunder shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
Section 2.04. INELIGIBLE RECEIVABLES; REPURCHASE OF
RECEIVABLES. (a) In the event of a breach of any representations and warranties
set forth in Section 4.02(i) or Sections 4.03(a)(iii) through (xii) with respect
to a Receivable sold by an Originator, or in the event that a Receivable is not
an Eligible Receivable as a result of the failure to satisfy the conditions set
forth in the definition of Eligible Receivable, each such Receivable which is
the subject of such breach or is not an Eligible Receivable shall be designated
an "INELIGIBLE RECEIVABLE" and the applicable Originator shall pay the
Outstanding Balance (including any Finance Charge Receivables) of such
Ineligible Receivable to the Purchaser either, at the option of the Purchaser,
in the form of cash or a reduction of the Revolving Note, and such Originator
shall either be deemed to have made a contribution of equity, or shall be issued
stock, equal in value to such cash or reduction; PROVIDED, HOWEVER, that if such
representations and warranties with respect to such Receivable shall
subsequently be true and correct in all material respects as if such Receivable
had been created on such day or such Receivable shall subsequently satisfy the
conditions set forth in the definition of Eligible Receivable, such Receivable
shall be designated an Eligible Receivable, and the principal amount of the
Revolving Note shall increase by the principal amount of such Receivable
(determined in accordance with the procedures set forth in the definition of
Principal Receivable).
(b) In the event of a breach of any of the representations and
warranties set forth in Sections 4.02(a), (b) and (c) and 4.03(a)(i) and (ii),
the Purchaser may direct the Originators to repurchase an amount of Receivables
as designated by the Purchaser, and the Originators shall be obligated to
repurchase such Receivables on a date specified by the Purchaser (such date, the
"REPURCHASE DATE") occurring within such applicable period on the terms and
conditions set forth below; PROVIDED, HOWEVER, that no such reassignment shall
be required to be made if, at any time during such applicable period, the
representations and warranties contained in Sections 4.02(a), (b) and (c) and
Sections 4.03(a)(i) and (ii) shall then be true and correct in all material
respects. The Originators shall, on the Business Day (in next day funds)
preceding the Repurchase Date, deposit an amount equal to the principal amount
of such Receivables as are designated by the Purchaser (the "REPURCHASE
AMOUNT"). On the Distribution Date following the Transfer Date on which such
amount has been paid in full to the Purchaser, the Receivables and all monies
due or to become due with respect thereto and all proceeds of the Receivables
allocated to the Receivables for which the Repurchase Amount has been paid shall
be released to the Originators after payment of all amounts otherwise due
hereunder on or prior to such dates and the Purchaser shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be prepared by and as are reasonably
requested by the Originators to vest in the Originators or its designee or
assignee, all right, title and interest of the Purchaser in and to such
Receivables,
16
all monies due or to become due with respect thereto and all proceeds of such
Receivables. If the Purchaser gives notice directing the Originators to accept
reassignment as provided above, the obligation of the Originators to accept
reassignment of the applicable Receivables and pay the Repurchase Amount
pursuant to this Section 2.04(b) shall constitute the sole remedy respecting a
breach of the representations and warranties contained in Sections 4.02(a), (b)
and (c) and 4.03(a)(i) and (ii) available to the Purchaser.
(c) (i) On each Distribution Date with respect to a Monthly
Period during each fiscal year of an Originator, such Originator may
(but shall not be required to) repurchase from the Purchaser all
Defaulted Receivables purchased by the Purchaser from the Trust
pursuant to Section 2.4(f) of the Pooling Agreement on such
Distribution Date and originated by such Originators.
(ii) An Originator electing to exercise its option to
repurchase Defaulted Receivables originated by such Originator shall,
on the Transfer Date (in next day funds) preceding each Distribution
Date, deposit an amount equal to the principal amount of such Defaulted
Receivables (the "DEFAULTED RECEIVABLE REPURCHASE AMOUNT") into the
Collection Account. On such Distribution Date, such repurchased
Defaulted Receivables and all monies due or to become due with respect
thereto and all proceeds of such repurchased Defaulted Receivables
allocated to such repurchased Defaulted Receivables for which the
Defaulted Receivable Repurchase Amount has been paid shall be released
to such Originator after payment of all amounts otherwise due hereunder
on or prior to such dates and such Originator shall execute and deliver
such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be prepared by and as
are reasonably requested by such Originator to vest in such Originator
or its designees or assigns, all right, title and interest of the
Purchaser in and to such repurchased Defaulted Receivables, all monies
due or to become due with respect thereto and all proceeds of such
repurchased Defaulted Receivables. Thereafter, such Defaulted
Receivables shall not be considered Receivables for any purpose
hereunder.
(iii) In consideration for such Originator's exercise
of its option to repurchase Defaulted Receivables as set forth in this
subsection (c), so long as such Originator complies with such
obligation, such Originator shall retain any amounts which do not
constitute Recoveries received by such Originator with respect to
Defaulted Receivables.
Section 2.05 CUSTOMER SERVICE ADJUSTMENTS. A Receivable may be
adjusted downward because (i) of a rebate, refund, unauthorized charge or
billing error to an Obligor, (ii) such Receivable was created in respect of
merchandise which was refused or returned by an Obligor, (iii) of any other
condition which requires such reduction without receiving Collections therefor
and without charging off such Receivable as uncollectible, or (iv) such
Receivable is discovered to have been created through a fraudulent or
counterfeit charge (each, a "CUSTOMER SERVICE ADJUSTMENT"). The aggregate amount
of all Customer Service Adjustments made with respect to Receivables transferred
by an Originator during any Settlement Period (increased as appropriate by an
amount
17
equal to any premium paid with respect to such Receivables) shall be payable to
the Purchaser by such Originator and shall be due no later than the Settlement
Date that occurs at the end of such Settlement Period. Such payments shall be
made in cash.
Section 2.06. ADDITION OF ORIGINATORS; MERGER OF ORIGINATORS.
Notwithstanding anything to the contrary in this Agreement, any direct or
indirect wholly-owned subsidiary of SRI (whether now in existence or acquired or
created after the date hereof) may at any time become an Originator hereunder,
whether in addition to or in substitution for one or more then-existing
Originators (each such additional or substitute Originator, an "ADDITIONAL
ORIGINATOR"); PROVIDED, that, (i) at the time such direct or indirect
wholly-owned subsidiary becomes an Additional Originator, such direct or
indirect wholly-owned subsidiary shall execute an agreement (an "ADDITIONAL
ORIGINATOR AGREEMENT") in which such Additional Originator (a) agrees to sell
Receivables to the Purchaser on the terms and subject to the conditions set
forth in this Agreement, and becomes a party to this Agreement, (b) complies
with the conditions set forth in SECTION 3.01, (c) makes the representations and
warranties set forth in SECTION 4.02 and 4.03 and (d) agrees to comply with the
covenants set forth in ARTICLE V and (ii) the Purchaser shall have consented in
writing to the inclusion of the Additional Originator pursuant to this SECTION
2.06. An agreement substantially in the form attached hereto as EXHIBIT A shall
be an acceptable Additional Originator Agreement. Following the addition or
substitution of any Additional Originator, the term "Originator" as used in this
Agreement shall include for all purposes such Additional Originator. Nothing
herein shall prevent one or more Originators from merging with and into a direct
or indirect wholly-owned subsidiary of SRI (whether or not such direct or
indirect wholly-owned subsidiary is a then-existing Originator) and, in the
event of such merger, such surviving corporation shall be deemed an "Originator"
for purposes of this Agreement; PROVIDED that any such surviving corporation
must (a) agree in writing to sell Receivables to the Purchaser on the terms and
subject to the conditions set forth in this Agreement and become a party to this
Agreement, (b) comply with the conditions set forth in SECTION 3.01, (c) make
the representations and warranties set forth in SECTION 4.02 and 4.03 and (d)
agree in writing to comply with the covenants set forth in ARTICLE V; PROVIDED
FURTHER that in the event of any merger of Originators which are then a party to
this Agreement, the conditions set forth in (a), (b) and (c) shall be deemed
satisfied.
Section 2.07. ADDITION OF ACCOUNTS. (a) Unless the Purchaser
or any Originator otherwise elects (which either can do at its option, subject
to Section 2.07(b)), all Accounts which meet the definition of Automatic
Additional Accounts shall be included as Accounts from and after the date upon
which such Automatic Additional Accounts are created and all Receivables in such
Automatic Additional Accounts, whether such Receivables are then existing or
thereafter created, shall be sold automatically to the Purchaser. For all
purposes of this Agreement, all receivables of such Automatic Additional
Accounts shall be treated as Receivables upon their creation and shall be
subject to the eligibility criteria specified in the definitions of "Eligible
Receivable" and "Eligible Account."
(b) Notwithstanding an Originator's election to terminate or
suspend the inclusion of Automatic Additional Accounts, the Purchaser may
require such Originator to designate
18
additional credit card accounts or any successor credit card account designation
accounts ("SUPPLEMENTAL ACCOUNTS") to be included as Accounts in such amount as
designated by the Purchaser.
Section 2.08. REMOVAL OF ACCOUNTS. The Purchaser and any
Originator may from time to time mutually designate Accounts which will no
longer be subject to this Agreement and, following such designation, no
Receivables created under such Accounts will be sold to the Purchaser hereunder
(the "REMOVED ACCOUNTS").
[End of Article II]
19
ARTICLE III
CONDITIONS TO PURCHASES
Section 3.01. CONDITIONS PRECEDENT TO PURCHASER'S INITIAL
PURCHASE. The obligation of the Purchaser to purchase Receivables hereunder on
the occasion of the initial Purchase from any Originator is subject to the
conditions precedent that the Purchaser shall have received on or before the
date of such Purchase the following, each (unless otherwise indicated) dated the
day of such initial sale and in form and substance satisfactory to the
Purchaser:
(i) a copy of duly adopted resolutions of the Board of
Directors of such Originator authorizing this Agreement, the documents
to be delivered by such Originator hereunder and the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary
of such Originator;
(ii) a duly executed certificate of the Secretary or an
Assistant Secretary of such Originator certifying the names and true
signatures of the Authorized Officers authorized on behalf of such
Originator to sign this Agreement or any instruments or documents in
connection with this Agreement;
(iii) (A) executed UCC-1 financing statements with respect to
the Receivables, naming such Originator as seller and the Purchaser as
purchaser, in proper form for filing in such jurisdiction in which the
Purchaser deems it necessary or desirable to perfect the Purchaser's
ownership thereof under the UCC or comparable law of such jurisdiction
and (B) evidence that all other actions necessary or, in the opinion of
the Purchaser, desirable or required to perfect the Purchaser's
ownership of the Receivables sold hereunder have been duly taken; and
(iv) a letter signed by such Originator or such other of its
Affiliates which is a party to any then current Lock-Box Agreements,
which Agreements are listed on SCHEDULE IV, in form and substance
satisfactory to the Purchaser, which letter shall be acknowledged by
the lock-box bank.
Section 3.02. CONDITIONS PRECEDENT TO EACH ORIGINATOR'S SALE.
The obligation of each Originator to make its initial sale of Receivables
hereunder is subject to the condition precedent that such Originator shall have
received on or before the date of such sale the following, each (unless
otherwise indicated) dated the day of such initial sale and in form and
substance satisfactory to such Originator:
(a) a copy of duly adopted resolutions of the Board of
Directors of the Purchaser authorizing this Agreement, the documents to
be delivered by the Purchaser hereunder and the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary
of the Purchaser; and
20
(b) a duly executed certificate of the Secretary or Assistant
Secretary of the Purchaser certifying the names and true signatures of
the officers authorized on its behalf to sign this Agreement and the
other documents to be delivered by it hereunder.
[End of Article III]
21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants as to itself as follows:
(a) It (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its condition (financial or
otherwise), operations, properties or prospects, (ii) has the requisite
corporate power and authority to effect the transactions contemplated
hereby, and (iii) has all requisite corporate power and authority and
the legal right to own, pledge, mortgage and operate its properties,
and to conduct its business as now or currently proposed to be
conducted.
(b) The execution, delivery and performance by it of this
Agreement and all instruments and documents to be delivered hereunder
by it, and the transactions contemplated hereby and thereby, (i) are
within its corporate powers, have been duly authorized by all necessary
corporate action, including the consent of shareholders where required,
and do not (A) contravene its charter or by-laws, (B) violate any law
or regulation or any order or decree of any court or governmental
instrumentality, (C) conflict with or result in the breach of, or
constitute a default under, any indenture, mortgage or deed of trust or
any material lease, agreement or other instrument binding on or
affecting it or any of its respective subsidiaries or any of its
properties or (D) result in or require the creation or imposition of
any Lien except as created or imposed hereunder, and no transaction
contemplated hereby requires compliance on its part with any bulk sales
act or similar law, and (ii) do not require the consent, authorization
by or approval of or notice to or filing or registration with, any
governmental body, agency, authority, regulatory body or any other
Person other than those which have been obtained except for the filing
of the financing statements referred to in SECTION 3.01 hereof. This
Agreement has been duly executed and delivered by the Purchaser and
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms.
(c) There is no pending or, to its knowledge after due
inquiry, threatened action or proceeding affecting the Purchaser before
any court, governmental agency or arbitrator that may reasonably be
expected to materially and adversely affect its condition (financial or
otherwise), operations, properties or prospects, or that purports to
affect the legality, validity or enforceability of this Agreement, and
none of the transactions contemplated hereby is or, to its knowledge is
threatened to be, restrained or enjoined (temporarily, preliminarily or
permanently).
Section 4.02. REPRESENTATIONS AND WARRANTIES OF EACH OF THE
ORIGINATORS. Each Originator hereby severally represents and warrants to the
Purchaser that, as of the Closing Date
22
with respect to such Originator and as to matters involving (x) Supplemental
Accounts, as of the applicable Addition Date and (y) Automatic Additional
Accounts, as of the date the Receivables of such Accounts are designated for
sale to the Purchaser:
(a) ORGANIZATION AND GOOD STANDING. Such Originator is a
corporation duly organized and validly existing in good standing under
the laws of the jurisdiction of its incorporation and has full
corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such
business is presently conducted, and to execute, deliver and perform
its obligations under this Agreement.
(b) DUE QUALIFICATION. Such Originator is duly qualified to do
business and is in good standing (or is exempt from such requirement)
in any state required in order to conduct business, and has obtained
all necessary licenses and approvals with respect to such Originator
required under federal and applicable state law.
(c) DUE AUTHORIZATION. The execution and delivery of this
Agreement and the consummation of the transactions provided for in this
Agreement have been duly authorized by such Originator by all necessary
corporate action on its part and this Agreement will remain, from the
time of its execution, an official record of such Originator. This
Agreement has been duly executed and delivered by such Originator and
constitutes the legal, valid and binding obligation of such Originator,
enforceable against such Originator in accordance with its terms.
(d) NO CONFLICTS. The execution, delivery and performance of
this Agreement, the performance of the transactions contemplated by
this Agreement, and the fulfillment of the terms hereof by such
Originator, do not (i) contravene its charter or by-laws, (ii) violate
any provision of, or require any filing (except for the filings under
the UCC required by this Agreement, each of which has been duly made
and is in full force and effect), registration, consent or approval
under, any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability
to such Originator, except for such filings, registrations, consents or
approvals as have already been obtained and are in full force and
effect, (iii) result in a breach of or constitute a default or require
any consent under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which such Originator is a
party or by which it or its properties may be bound or affected except
those as to which a consent or waiver has been obtained and is in full
force and effect and an executed copy of which has been delivered to
the Purchaser, or (iv) result in, or require, the creation or
imposition of any lien upon or with respect to any of the properties
now owned or hereafter acquired by such Originator other than as
specifically contemplated by this Agreement.
(e) TAXES. Such Originator has filed all tax returns (federal,
state and local) required to be filed and has paid or made adequate
provision for the payment of all taxes,
23
assessments and other governmental charges due from such Originator or
is contesting any such tax assessment or other governmental charge in
good faith through appropriate proceedings. Such Originator knows of no
basis for any material additional tax assessment for any fiscal year
for which adequate reserves have not been established.
(f) NO VIOLATION. The execution and delivery of this
Agreement, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict
with or violate any Requirements of Law applicable to such Originator.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of such Originator, threatened against
such Originator before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement,
(iii) seeking any determination or ruling that, in the reasonable
judgment of such Originator, would materially and adversely affect the
performance by such Originator of its obligations under this Agreement
or (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement.
(h) ALL CONSENTS REQUIRED. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental
body or official relating to such Originator and required in connection
with the execution and delivery of this Agreement, the performance of
the transactions contemplated by this Agreement and the fulfillment of
the terms hereof, have been obtained.
(i) BONA FIDE RECEIVABLES. Each Receivable sold hereunder by
such Originator is or will be an account receivable arising out of such
Originator's performance (or, in the case of an Account that is an
Automatic Additional Account pursuant to clause (b) of the definition
of Automatic Additional Account, the performance of the owner of such
Account at the time such Receivable was originated) in accordance with
the terms of the Charge Account Agreement giving rise to such
Receivable. Such Originator has no knowledge at the time of the sale of
such Receivable to the Purchaser hereunder of any fact which should
have led it to expect that such Eligible Receivable would not be
enforceable against the Obligor when due.
(j) PLACE OF BUSINESS. The principal place of business of such
Originator is as indicated for such Originator on SCHEDULE I hereto,
and the offices where such Originator keeps its records concerning the
Receivables and related contracts are as indicated for such Originator
on SCHEDULE III hereto.
(k) USE OF PROCEEDS. As of the Closing Date, no proceeds of
the sale of any Receivables will be used by such Originator to purchase
or carry any margin security.
24
(l) PURCHASE TERMINATION EVENT. No Purchase Termination Event
or Incipient Purchase Termination Event has occurred and is continuing
for such Originator.
(m) NOT AN "INVESTMENT COMPANY". Such Originator is not an
"investment company" or "controlled" by an "investment company" within
the meaning of the Investment Company Act, or is exempt from all
provisions of such Act.
(n) SOFTWARE. All of the computer hardware and software
necessary to collect the Receivables is described on SCHEDULE VI.
(o) TRADENAMES. SCHEDULE VII lists all of the tradenames of
each Originator for the six-year period preceding the date such
Originator became a party to this Agreement.
(p) ERISA LIENS. Such Originator owns the Receivables free and
clear of any liens, claims (including but not limited to claims of
ownership) or encumbrances, including but not limited to federal ERISA
liens and claims arising pursuant to 31 U.S.C.
Section 3713.
(q) ERISA AND THE CODE. The execution and delivery of this
Agreement and the transactions contemplated hereby do not and will not
involve any transaction by any Originator that is prohibited under
Section 406(a) of ERISA or in connection with which an excise tax could
be imposed pursuant to Section 4975(a) or (b) of the Internal Revenue
Code of 1986, as amended (the "CODE"), by reason of the prohibited
transactions described in Section 4975(c)(1) (A), (B), (C) or (D) of
the Code.
The representations and warranties set forth in this Section
4.02 shall survive the sale and assignment of the respective Receivables to the
Purchaser pursuant to this Agreement. Each Originator shall be deemed each time
that it delivers or causes to be delivered a Receivables Statement to severally
represent and warrant to the Purchaser, as of the related Purchase Date, that
the representations and warranties of such Originator set forth in Section 4,02,
are true and correct as of such date. Upon discovery by such Originator or the
Purchaser of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the other.
Section 4.03. REPRESENTATIONS AND WARRANTIES OF EACH
ORIGINATOR RELATING TO THIS AGREEMENT AND THE RECEIVABLES.
(a) BINDING OBLIGATION; VALID SALE AND ASSIGNMENT. Each
Originator hereby severally represents and warrants to the Purchaser that as of
the date each Receivable is sold hereunder:
(i) This Agreement constitutes the legal, valid and binding
obligation of such Originator, enforceable against such Originator in
accordance with its terms, except (A) as
25
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general, and (B) as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity).
(ii) This Agreement constitutes a valid sale, transfer,
assignment, set-over and conveyance to the Purchaser of all right,
title and interest of such Originator in and to the Receivables now
existing or hereafter created and arising in connection with the
Accounts, all monies due or to become due with respect thereto
(including all Finance Charge Receivables), all other proceeds of such
Receivables, and such Receivables and all proceeds thereof will be held
by the Purchaser free and clear of any Lien of any Person claiming
through or under such Originator or any of its Affiliates except for
Permitted Liens.
(iii) Such Originator is not insolvent and has adequate
capital to conduct its business as it is presently being conducted.
(iv) Such Originator is the legal and beneficial owner of all
right, title and interest in and to each Receivable conveyed to the
Purchaser by such Originator and each such Receivable has been or will
be sold to the Purchaser free and clear of any Lien other than
Permitted Liens.
(v) All consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by such Originator in connection with
the sale of such Originator's Receivables to the Purchaser have been
duly obtained, effected or given and are in full force and effect.
(vi) Such Originator has clearly and unambiguously marked its
primary computer records and its primary microfiche storage files
regarding such Originator's Receivables as the property of the
Purchaser and shall maintain such records in a manner that will
properly reflect the Purchaser's interest in such Receivables.
(vii) Each Account classified as an "Eligible Account" by such
Originator in any document or report delivered hereunder will satisfy
the requirements contained in the definition of Eligible Account at the
time of such delivery and each Receivable classified as an "Eligible
Receivable" by such Originator in any document or report delivered
hereunder will satisfy the requirements contained in the definition of
Eligible Receivable at the time of such delivery.
(viii) All information with respect to the Accounts and the
Receivables provided to the Purchaser by such Originator was true and
correct in all material respects as of the Closing Date with respect to
such Originator, or with respect to Supplemental Accounts as of each
Addition Date and with respect to Automatic Additional Accounts, as of
the day
26
Receivables arising under each such Account are designated for sale to
the Purchaser, as the case may be.
(ix) Each of such Originator's Receivables has been conveyed
to the Purchaser free and clear of any Lien of any Person claiming
through or under such Originator or any of its Affiliates (other than
Permitted Liens) and in compliance in all material respects with all
Requirements of Law applicable to such Originator.
(x) With respect to each of such Originator's Receivables then
existing, all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by such Originator in connection with
the conveyance of such Receivable to the Purchaser have been duly
obtained, effected or given and are in full force and effect.
(xi) Each Receivable sold to the Purchaser on such day has
been conveyed to the Purchaser by the applicable Originator in
compliance, in all material respects, with all Requirements of Law
applicable to such Originator and, with respect to each such
Receivable, all consents, licenses, approvals or authorizations of or
registrations or declarations with, any Governmental Authority required
to be obtained, effected or given by such Originator in connection with
the conveyance of such Receivable to the Purchaser have been duly
obtained, effected or given and are in full force and effect.
(b) NOTICE OF BREACH. The representations and warranties set
forth in this SECTION 4.03 shall survive the sale and assignment of the
respective Receivables to the Purchaser. Upon discovery by the applicable
Originator or the Purchaser of a breach of any of the representations and
warranties set forth in this SECTION 4.03, the party discovering such breach
shall give prompt written notice to the other party mentioned above. Such
Originator agrees to cooperate with the Purchaser or any agent of the Purchaser
in attempting to cure any such breach.
[End of Article IV]
27
ARTICLE V
GENERAL COVENANTS
Section 5.01. COVENANTS OF EACH ORIGINATOR. So long as the
Purchaser shall have any Net Ownership Interest in any Receivables sold by any
Originator or until the Purchase Termination Date shall have occurred with
respect to all the Originators, whichever is later, each Originator covenants
that:
(a) RECEIVABLES TO BE ACCOUNTS, GENERAL INTANGIBLES OR CHATTEL
PAPER. Such Originator will take no action to cause any Receivable to
be evidenced by any instrument (as defined in the UCC as in effect in
the Relevant UCC State). Such Originator will take no action to cause
any Receivable to be anything other than an "account," "general
intangible" or "chattel paper" (each as defined in the UCC as in effect
in the Relevant UCC State).
(b) SECURITY INTERESTS. Except for the conveyances hereunder,
such Originator will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on
any Receivable, whether now existing or hereafter created, or any
interest therein; such Originator will immediately notify the Purchaser
of the existence of any Lien on any Receivable; and such Originator
shall defend the right, title and interest of the Purchaser in, to and
under the Receivables, whether now existing or hereafter created,
against all claims of third parties claiming through or under such
Originator; PROVIDED, HOWEVER, that nothing in this SECTION 5.01(B)
shall prevent or be deemed to prohibit such Originator from suffering
to exist upon any of the Receivables any Permitted Lien.
(c) CHARGE ACCOUNT AGREEMENTS AND CREDIT AND COLLECTION
POLICIES. Such Originator shall comply with and perform its obligations
under any Charge Account Agreement to which such Originator is a party
that relates to the Accounts and the Credit and Collection Policy
except insofar as any failure to comply or perform would not materially
and adversely affect the rights of the Purchaser. Such Originator shall
apply payments by obligors in the following order: (i) finance charges;
(ii) other charges or fees; and (iii) the unpaid principal balance of
purchases allocated first to the longest outstanding receivable. Such
Originator may change the terms and provisions of such Charge Account
Agreements or the Credit and Collection Policy in any respect
(including, without limitation, the reduction of the required minimum
monthly payment, the calculation of the amount, or the timing, of
chargeoffs and the Periodic Finance Charges and other fees to be
assessed thereon) only (i) (A) if it owns a comparable segment of
charge card accounts, such change is made applicable to the comparable
segment of the revolving credit card accounts owned by such Originator,
if any, which have characteristics the same as, or substantially
similar to, the Accounts that are the subject of such change and (B) if
it does not own such a comparable segment, it will not make any such
change with the intent to materially benefit such Originator over the
Purchaser, except as otherwise restricted by an endorsement,
sponsorship, or other agreement between such Originator and an
unrelated third party or by
28
the terms of the Charge Account Agreements and (ii) if such change is
permitted by the Purchaser.
(d) DELIVERY OF COLLECTIONS. In the event that such Originator
receives Collections, such Originator agrees to pay to the Purchaser or
such other Person designated by the Purchaser all payments received by
such Originator in respect of the Receivables as soon as practicable
after receipt thereof by such Originator (but in no event later than
the second Business Day following the date of receipt).
(e) CONVEYANCE OF ACCOUNTS. Such Originator covenants and
agrees that it will not, without the consent of the Purchaser or unless
such Account is a Removed Account, convey, assign, exchange or
otherwise transfer any Account to any Person other than Purchaser prior
to the termination of this Agreement.
(f) NOTICE OF LIENS. Such Originator shall notify the
Purchaser promptly after becoming aware of any Lien on any Receivable
other than Permitted Liens.
(g) COMPLIANCE WITH LAWS, ETC. Such Originator shall comply in
all material respects with all applicable laws, rules, regulations and
orders applicable to the Receivables, including, without limitation,
rules and regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy, where failure to so comply could
reasonably be expected to have an adverse impact on the amount of
Collections thereunder.
(h) PRESERVATION OF CORPORATE EXISTENCE. Except as
contemplated by Section 2.06, each Originator shall, to the extent it
remains a party to this Agreement, preserve and maintain in all
material respects its corporate existence, corporate rights (charter
and statutory) and corporate franchises.
(i) VISITATION RIGHTS. At any reasonable time during normal
business hours and from time to time, such Originator shall permit (i)
the Purchaser, or any Person designated by the Purchaser, to examine
and make copies of and abstracts from the records, books of account and
documents (including, without limitation, computer tapes and disks) of
such Originator relating to Receivables owned or to be purchased by the
Purchaser hereunder and to the underlying Charge Account Agreements and
(ii) the Purchaser, or Person designated by the Purchaser (upon the
giving of appropriate notice to the Purchaser) to visit the properties
of such Originator for the purpose of examining such records, books of
account and documents, and to discuss the affairs, finances and
accounts of such Originator relating to the Receivables or to such
Originator's performance hereunder with any of its officers or
directors and with its independent certified public accountants.
(j) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Such Originator
shall maintain and implement, or cause to be maintained or implemented,
administrative and operating
29
procedures reasonably necessary or advisable for the collection of all
such Receivables, and, until the delivery to the Purchaser, keep and
maintain, or cause to be kept and maintained, all documents, books,
records and other information reasonably necessary or advisable for the
collection of all such Receivables.
(k) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CHARGE
ACCOUNT AGREEMENTS. Such Originator shall at its expense take all
actions on its part reasonably necessary to maintain in full force and
effect its rights under all Charge Account Agreements to which such
Originator is a party.
(l) LOCATION OF RECORDS. Such Originator shall keep its chief
place of business and chief executive office, and the offices where it
keeps the records concerning the Receivables and all underlying Charge
Account Agreements (and all original documents relating thereto), at
the address or addresses of such Originator specified in SCHEDULE III
hereto or upon written notice to the Purchaser, at such other locations
in a jurisdiction where all action required by SECTION 5.01(O) shall
have been taken and completed and be in full force and effect.
(m) FURNISHING COPIES, ETC. Such Originator shall furnish to
the Purchaser (i) upon the Purchaser's request, a certificate of an
Authorized Officer of such Originator certifying, as of the date
thereof, that no Purchase Termination Event has occurred and is
continuing and setting forth the computations used such Authorized
Officer of such Originator in making such determination; (ii) as soon
as possible and in any event within five days after the occurrence of
any Purchase Termination Event or Incipient Purchase Termination Event,
a statement of an Authorized Officer of such Originator setting forth
details of such Purchase Termination Event or Incipient Purchase
Termination Event and the action that such Originator proposes to take
or has taken with respect thereto; (iii) promptly after obtaining
knowledge that a Receivable was, at the time of the Purchaser's
purchase thereof, not an Eligible Receivable, notice thereof; (iv) on
the Business Day following the request, a computer file or microfiche
list containing a true and correct list of all Accounts, identified by
account numbers and the outstanding balance of the Receivable in such
Account; and (v) promptly following the Purchaser's request therefor,
such other information, documents, records or reports with respect to
the Receivables or the underlying Charge Account Agreements or the
conditions or operations, financial or otherwise, of such Originator,
as the Purchaser may from time to time reasonably request.
(n) OBLIGATION TO RECORD AND REPORT. Such Originator shall
record each Purchase as a sale on its books and records, reflect each
Purchase in its financial statements, tax returns and other applicable
documents as a sale and recognize gain or loss, as the case may be, on
each Purchase.
(o) CONTINUING COMPLIANCE WITH THE UCC. Each Originator shall,
without limiting the requirements of SECTION 5.01(S), at its expense,
preserve, continue, and maintain
30
or cause to be preserved, continued, and maintained the Purchaser's
valid and properly protected title to each Receivable purchased
hereunder, including, without limitation, filing or recording UCC
financing statements in each relevant jurisdiction prior to or
substantially contemporaneously with any Purchases.
(p) IN-STORE PAYMENTS. In the event that such Originator or
any SRI Store receives any amounts in respect of Collections of
Receivables, including, without limitation, all In-Store Payments, such
Originator or SRI Store shall deposit or otherwise credit, or cause to
be deposited or otherwise credited, as soon as reasonably practicable
but in any event not later than the close of business on the second
Business Day following the date of processing of such Collections, to
an account designated by the Purchaser, an amount equal to the amount
so received and hold such amount in trust for the Purchaser pending
such remittance.
(q) PAYMENTS. Each Originator shall instruct Obligors to
deliver payments to such Originator's Lock Box (if any), the Purchaser
or such other Person who may be servicing the Receivables; PROVIDED
this section shall not apply to In-Store Payments.
(r) FURTHER ACTION EVIDENCING PURCHASES. (i) Such Originator
agrees that from time to time, at its expense, it will promptly execute
and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable or that the Purchaser may
reasonably request, to protect or more fully evidence the Purchaser's
ownership, right, title and interest in the Receivables sold by such
Originator and its rights under the Charge Account Agreements with
respect thereto, or to enable the Purchaser to exercise or enforce any
such rights. Without limiting the generality of the foregoing, each
Originator will upon the request of the Purchaser (A) execute and file
such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or, in the
opinion of the Purchaser, desirable, (B) indicate on its books and
records that Receivables have been sold and assigned to the Purchaser,
and provide to the Purchaser, upon request, copies of any such records
and (C) contact customers to confirm and verify Receivables.
(ii) Such Originator hereby irrevocably authorizes the
Purchaser to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Receivables sold
by such Originator, or the underlying Charge Account Agreements with
respect thereto, without the signature of such Originator where
permitted by law.
(iii) If such Originator fails to perform any of its
agreements or obligations under this Agreement, the Purchaser may (but
shall not be required to) perform, or cause performance of, such
agreements or obligations, and the expenses of the Purchaser incurred
in connection therewith shall be payable by such Originator as provided
in SECTION 8.05.
31
(s) CHANGE IN BUSINESS. Such Originator shall (i) not make any
change in the nature of its business as conducted on the date hereof
that could reasonably be expected to have a material adverse effect on
the value or collectability of the Receivables and (ii) promptly notify
the Purchaser of any change of name or new trade names of such
Originator.
Section 5.02. MERGERS. None of the Originators will merge into
another entity unless permitted pursuant to Section 2.06.
Section 5.03. TRANSFER OF ACCOUNT RELATIONSHIPS. Nothing in
this Agreement shall prohibit the transfer of any account relationship
(including, without limitation, any Charge Account Agreement and any related
books and records) by any Originator to any other Originator or to any
Additional Originator, whether by assignment and assumption of such accounts or
by such Originator's or Additional Originator's initiation of replacement
accounts and the termination of existing accounts as balances thereunder are
paid; PROVIDED that prior to such transfer the Originator transferring the
account relationship will deliver to the Purchaser an opinion of counsel,
reasonably acceptable to the Purchaser, to the effect that the Purchaser's
ownership interest in such account relationship will not be adversely affected
by such transfer.
Section 5.04. PURCHASER COVENANT REGARDING SALE TREATMENT. The
Purchaser shall record each Purchase as a purchase on its books and records and
reflect each Purchase in its financial statements, tax returns and other
applicable documents as a purchase.
Section 5.05. TRADENAME LICENSE. Each Originator hereby grants
to the Purchaser a non-exclusive and, except to the extent provided below,
non-transferable license to use the various tradenames (the "LICENSED NAMES")
listed in SCHEDULE VII with respect to such Originator and any other tradenames
used by such Originator on or after the date hereof. This license and the rights
of use hereunder are only for use in connection with the billing and collection
of Receivables sold under this Agreement. This license and the right of use of
the Licensed Name hereunder may be transferred by the Purchaser to the extent
necessary to collect the Receivables in a commercially reasonable manner. The
rights of use granted under this license are limited to such uses of the
Licensed Names as are reasonably necessary to the collection by the Purchaser in
a commercially reasonable manner of the Receivables and are further subject to
maintaining the then current standards of quality of the business of the
Originators. The license is limited to actions taken in accordance with the
terms of this Agreement and shall expire on the expiration of a reasonable time
for the collection of all Receivables. Notwithstanding any other provisions to
the contrary in this Agreement or in any other agreement between the parties, no
other uses or display of the Licensed Names shall be made by Purchaser except as
granted in this paragraph.
[End of Article V]
32
ARTICLE VI
PURCHASE TERMINATION EVENTS
Section 6.01. PURCHASE TERMINATION EVENTS. If any of the
following events (each a "PURCHASE TERMINATION EVENT") shall occur and be
continuing:
(i) Any Originator or the Purchaser shall consent to the
appointment of a bankruptcy trustee or receiver or liquidator in any
bankruptcy proceeding or any other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to all or substantially all of its Accounts or a decree or
order of a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a bankruptcy trustee or receiver
or liquidator in any bankruptcy proceeding or any other insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceeding, or for the winding up or liquidation of its affairs, shall
have been entered against such Originator or Purchaser, or such
Originator or Purchaser shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or such Originator shall become unable for
any reason to sell Receivables to the Purchaser in accordance with the
provisions of this Agreement; or the Purchaser shall become unable for
any reason to purchase Receivables from the Originators in accordance
with the provisions of this Agreement;
(ii) the Internal Revenue Service shall file notice of a lien
pursuant to Section 6321 of the Code with regard to any of the assets
of any Originator, or the Pension Benefit Guaranty Corporation shall,
or shall indicate its intention to, file notice of a lien pursuant to
Section 4068 of ERISA with regard to any of the assets of any
Originator, and (in either case) the aggregate amount secured or to be
secured, by such lien exceeds $500,000, and such lien shall not be
released within 30 days following the filing date for such lien;
(iii) any Originator or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of any Originator or its
respective ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been or will
be increased over the amounts required to be contributed to such
Multiemployer Plans by such Originator or such ERISA Affiliates for the
plan year immediately preceding the plan year in which such
notification is received by an amount exceeding $500,000, and any Lien
arising therefrom is not released within 30 days following the filing
date for such lien; or
33
(iv) any Originator shall be unable to transfer Receivables to
Purchaser for five consecutive Business Days by reason of the
limitation on draws under the Revolving Note specified in SECTION
2.03(C)(VIII) and shall be unwilling or unable to contribute
Receivables pursuant to SECTION 2.03(B);
then the Purchaser's obligation to purchase Receivables from such
Originator as to which such Purchase Termination Event relates or, if
such Purchase Termination Event relates to the Purchaser, from all
Originators shall automatically be terminated upon the happening of
such event.
[End of Article VI]
34
ARTICLE VII
INDEMNIFICATION
Section 7.01. INDEMNITIES BY THE ORIGINATORS. Without
limiting any other rights that the Purchaser may have hereunder or
under applicable law, each Originator hereby agrees to indemnify the
Purchaser from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) (all the foregoing being
collectively referred to as "INDEMNIFIED AMOUNTS") arising out of or
resulting from this Agreement or in respect of any Receivable or any
Charge Account Agreement, excluding, however, Indemnified Amounts to
the extent resulting from gross negligence or willful misconduct on the
part of the Purchaser; PROVIDED, HOWEVER, that except as expressly
provided in Section 2.04 and in this Section 7.01 below, in no event
will any Originator have any indemnity or other obligation hereunder or
otherwise with respect to any loss suffered in respect of any Eligible
Receivable sold to the Purchaser in accordance with this Agreement, the
parties hereby acknowledging that such sales are to be without
recourse. Without limiting or being limited by the foregoing, but
subject to the proviso in the immediately preceding sentence, each
Originator shall pay on demand to the Purchaser any and all amounts
necessary to indemnify the Purchaser from and against any and all
Indemnified Amounts relating to or resulting from:
(a) reliance on any representation or warranty or
statement made or deemed made by such Originator (or any of
its officers) under or in connection with this Agreement or in
any certificate delivered pursuant hereto that, in either
case, shall have been false or incorrect in any material
respect when made or deemed made;
(b) the failure by such Originator to comply with any
applicable law, rule or regulation of any Governmental
Authority with respect to any Receivable or the related Charge
Account Agreement of such Originator, or the nonconformity of
any Receivable or the related Charge Account Agreement of such
Originator with any such applicable law, rule or regulation;
(c) the failure to have filed, or any delay in
filing, financing statements or other similar instruments or
documents under the UCC of any applicable jurisdiction or
other applicable laws with respect to any Receivables of such
Originator;
(d) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable of such Originator (including,
without limitation, a defense based on such Receivable or the
related Charge Account Agreement not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other
35
claim resulting from the sale of the merchandise or services
related to any such Receivable or the furnishing or failure to
furnish such merchandise or services;
(e) any failure of such Originator to perform its
duties or obligations under this Agreement or the applicable
Charge Account Agreement;
(f) any products liability claim arising out of or in
connection with merchandise, insurance or services that are
the subject of any charge pursuant to any Charge Account
Agreement of such Originator;
(g) the commingling of Collections of Receivables at
any time with other funds of such Originator;
(h) any set-off by any creditor of an Originator
(other than any Obligor) against Collections; or
(i) any investigation, litigation or proceeding
related to this Agreement or in respect of any Receivable or
any Charge Account Agreement of such Originator.
Notwithstanding the foregoing, no Originator shall
under any circumstances be required to indemnify the Purchaser for any
Indemnified Amounts that result from any delay in the collection of any
Receivables or any default by an Obligor with respect to any
Receivables.
Section 7.02. INDEMNITIES BY THE PURCHASER. Without
limiting any other rights that any Originator may have hereunder or
under applicable law, the Purchaser hereby agrees to indemnify such
Originator from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) arising out of or resulting from
such Originator's reliance on any representation or warranty made by
the Purchaser in this Agreement or in any certificate delivered
pursuant hereto that, in either case, shall have been false or
incorrect in any material respect when made or deemed made.
[End of Article VII]
36
ARTICLE VIII
MISCELLANEOUS
Section 8.01. AMENDMENT. This Agreement and the
rights and obligations of the parties hereunder may not be changed
orally, but only by an instrument in writing signed by the Purchaser
and the Originator affected thereby.
Section 8.02. NOTICES, ETC. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, transmitted, cabled or delivered, if to any
Originator, at its address set forth in SCHEDULE I hereto; and if to
the Purchaser, at its address at 10201 Main Street, Houston, Texas
77025, Attention: President (with copies to such Persons as may be
designated by the Purchaser from time to time). All such notices and
communications shall when mailed, telegraphed, telexed, transmitted or
cabled be effective when deposited in the mails, delivered to the
telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, except that
notices to the Purchaser pursuant to ARTICLE II shall not be effective
until received by the Purchaser.
Section 8.03. NO WAIVER: REMEDIES. No failure on the
part of the Purchaser to exercise, and no delay in exercising, any
right under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 8.04. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of each Originator and the
Purchaser and their respective successors and assigns, except that no
Originator shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Purchaser.
This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in
full force and effect as between the Purchaser and each Originator
until such time, after the Purchase Termination Date applicable to such
Originator, as the Purchaser shall not have any Net Ownership Interest
in any Receivables; PROVIDED, HOWEVER, that the indemnification
provisions of ARTICLE VIII shall be continuing and shall survive any
termination of this Agreement.
Section 8.05. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY
OR
37
PROTECTION OF THE PURCHASER'S OWNERSHIP OF THE PURCHASED RECEIVABLES,
OR REMEDIES HEREUNDER IN RESPECT THEREOF MAY BE GOVERNED BY THE LAWS OF
A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 8.06. COSTS, EXPENSES AND TAXES. In addition
to the limited rights of indemnification granted to the Purchaser under
ARTICLE VII hereof, the Originators jointly and severally agree to pay
on demand all costs and expenses of the Purchaser in connection with
the preparation, execution and delivery of this Agreement and the
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Purchaser
with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and all costs and
expenses (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the
documents to be delivered hereunder. In addition, the Originators
jointly and severally agree to pay any and all stamp and other taxes
and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement or the
other documents to be delivered hereunder, and agree to hold the
Purchaser harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omitting to pay
such taxes and fees.
Section 8.07. ACKNOWLEDGMENT OF ASSIGNMENTS. This
Agreement (i) may not be assigned by any Originator and (ii) may not be
assigned by the Purchaser, except in each case in connection with a
sale of substantially all of the Receivables or by operation of law.
Section 8.08. NO PETITION IN BANKRUPTCY. Each
Originator severally covenants and agrees that prior to the date which
is three years after the Purchase Termination Date for the last
Originator which is a party to this Agreement, it will not institute
against or join any other Person in instituting against the Purchaser
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United
States or any State of the United States. Each Originator shall not be
permitted, and hereby waives all rights, to set-off amounts owed to
such Originator by the Purchaser against amounts owed by any Originator
hereunder to the Purchaser.
[End of Article VIII]
38
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
THE ORIGINATOR:
PALAIS ROYAL, INC.
/s/ JAMES A. MARCUM
--------------------------
By: James A. Marcum
Its: Chief Financial Officer
THE PURCHASER:
SRI RECEIVABLES PURCHASE CO., INC.
/s/ JAMES A. MARCUM
---------------------------
By: James A. Marcum
Its: Executive Vice President
39
Schedule I to the
Receivables Purchase Agreement
LIST OF ORIGINATORS
CHIEF PLACE OF BUSINESS,
JURISDICTION OF CHIEF EXECUTIVE OFFICE AND
NAME OF ORIGINATOR INCORPORATION MAILING ADDRESS
10201 Main Street
Palais Royal, Inc. Texas Houston, TX 77025
Schedule II to the
Receivables Purchase Agreement
LIST OF AUTHORIZED OFFICERS
SELLER NAME TITLE
Schedule III to the
Receivables Purchase Agreement
LOCATION OF RECORDS
Palais Royal, Inc.
Location of
Physical Records: 10201 Main Street
Houston, TX 77025
Location of
Related Account
Contracts: 1020 Willow Creek
Jacksonville, TX 75766
Schedule IV to the
Receivables Purchase Agreement
LOCK-BOX BANKS
Palais Royal, Inc.
Lock-Box
Account Number: 101-8190029
Address of
Lock-Box Bank: Norwest Bank of Denver
1700 Lincoln
Denver, CO 80274
Mailing Address of
Lock-Box Bank: Norwest Bank of Denver
P.0, Box 1265
Denver, CO 80201
Schedule V to the
Receivables Purchase Agreement
[Reserved]
Schedule VI to the
Receivables Purchase Agreement
SOFTWARE & HARDWARE
At point of sale, NCR 2152 registers and Symbol UPC
scanners are used to enter sales which are captured by an Innovative
Electronics in-store-processor [ISP] and sent on dedicated circuits to
the IBM 9221 model 191 mainframe for credit authorizations and posting
each night. STC 4480 model 20 and 22 cassette tape drives are used to
produce the off-site backups. All of the A/R software was developed
in-house. The register and ISP software is from NCR and Innovative
Electronics respectively. Store payments are processed in the same way.
Mail payments are processed by an NCR 7770-3801
Remittance Processing System running NCR software. A tape is
transmitted to the mainframe each day.
New accounts which were mailed in are processed for
scoring on a Fair-Isaac packaged system called the Micro-ASAP 6000
System. A tape is transmitted to the mainframe each day. Speedy
applications are sent real time to Trans-Union for approval, scoring
and to set account limits.
Accounts in collections are called on a Davox
packaged system. Tapes are transmitted back and forth with the
mainframe. The collection system is in-house developed software. Bad
checks are processed by a PC using software written by a contractor.
The billing system was also developed in-house, but
uses Group 1 software for mail optimization.
Schedule VII to the
Receivables Purchase Agreement
TRADENAMES
Palais Royal, Inc. "Palais Royal"
"Fashion Bar"
"Stage"
"Hannah"
"FB Petite"
"FB Careers"
"FB Ltd"
"Bealls"
SEVENTH AMENDMENT
TO REVOLVING CREDIT AGREEMENT
Seventh Amendment to Revolving Credit Agreement dated as of February 1,
1996 (the "Seventh Amendment"), by and among SPECIALTY RETAILERS, INC., a
Delaware corporation ("SRI"), PALAIS ROYAL, INC., a Texas corporation (the
"Borrower"), THE FIRST NATIONAL BANK OF BOSTON and the other lending
institutions listed on Schedule 1 to the Credit Agreement (as hereinafter
defined) (the "Banks") and THE FIRST NATIONAL BANK OF BOSTON, as agent for the
Banks (in such capacity, the "Agent"), amending certain provision of the
Revolving Credit Agreement dated as of January 28, 1994 (as amended and in
effect from time to time, the "Credit Agreement") by and among SRI, the
Borrower, the Banks and the Agent. Terms not otherwise defined herein which are
defined in the Credit Agreement shall have the same respective meanings herein
as therein.
WHEREAS, SRI, the Borrower, the Banks and the Agent have agreed to modify
certain terms and conditions of the Credit Agreement as specifically set forth
in this Seventh Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
(S)1. AMENDMENT TO (S)10 OF THE CREDIT AGREEMENT. Section 10 of the
Credit Agreement is hereby amended as follows:
(a) Section 10.2 of the Credit Agreement is amended by deleting the amount
"$28,000,000" and substituting therefor the amount "$31,000,000".
(S)2. CONDITIONS TO EFFECTIVENESS. This Seventh Amendment shall become
effective when the Agent receives a counterpart of this Seventh Amendment
executed by SRI, the Borrower, the Banks and the Agent.
(S)3. REPRESENTATIONS AND WARRANTIES. Each of SRI and the Borrower hereby
repeats, on and as of the date hereof, each of the representations and
warranties made by it in (S)7 of the Credit Agreement, provided, that all
references therein to the Credit Agreement shall refer to such Credit Agreement
as amended hereby.
(S)4. RATIFICATION, ETC. Except as expressly amended hereby, the Credit
Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Seventh Amendment shall be read and construed as a
single agreement.
2
All references in the Credit Agreement or any related agreement or instrument to
the Credit Agreement shall hereafter refer to the Credit Agreement as amended
hereby.
(S)5. NO WAIVER. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of SRI, the
Borrower or any rights of the Agent or the Banks consequent thereon.
(S)6. COUNTERPARTS. This Seventh Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(S)9. GOVERNING LAW. THIS SEVENTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
IN WITNESS WHEREOF, the parties hereto have executed this Seventh Amendment
as a document under seal as of the date first above written.
SPECIALTY RETAILERS, INC.
By: /s/ Jerry C. Ivie
----------------------------------------
Title: Senior Vice President, Secretary and
Treasurer
PALAIS ROYAL, INC.
By: /s/ Jerry C. Ivie
----------------------------------------
Title: Senior Vice President, Secretary and
Treasurer
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By: /s/ Brian Geraghty
----------------------------------------
Title: Vice President
UNION BANK
By: /s/ Anita Hollingsworth
----------------------------------------
Title: Vice President
4
RATIFICATION OF GUARANTY
The undersigned guarantor (the "Guarantor") hereby acknowledges and
consents to the foregoing Seventh Amendment as of February 1, 1996 and agrees
that the Guaranty dated as of January 28, 1994, in favor of the Agent for the
benefit of the Agent and the Banks, and all other Loan Documents to which the
Guarantor is a party remain in full force and effect, and the Guarantor confirms
and ratifies all of its obligations thereunder.
SPECIALTY RETAILERS, INC.
By: /s/ Jerry C. Ivie
----------------------------------------
Title: Senior Vice President, Secretary and
Treasurer
EIGHTH AMENDMENT
TO REVOLVING CREDIT AGREEMENT
Eighth Amendment to Revolving Credit Agreement dated as of May 30, 1996
(the "Eighth Amendment"), by and among SPECIALTY RETAILERS, INC., a Delaware
corporation ("SRI"), PALAIS ROYAL, INC., a Texas corporation (the "Borrower"),
THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions listed on
SCHEDULE 1 to the Credit Agreement (as hereinafter defined) (the "Banks") and
THE FIRST NATIONAL BANK OF BOSTON, as agent for the Banks (in such capacity, the
"Agent"), amending certain provision of the Revolving Credit Agreement dated as
of January 28, 1994 (as amended and in effect from time to time, the "Credit
Agreement") by and among SRI, the Borrower, the Banks and the Agent. Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, SRI, the Borrower, the Banks and the Agent have agreed to
modify certain terms and conditions of the Credit Agreement as specifically set
forth in this Eighth Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SS.1. AMENDMENT TOSS.1 OF THE CREDIT AGREEMENT. Section 1 of the Credit
Agreement is hereby amended as follows:
(a) The definition of "Consolidated Operating Cash Flow" is hereby
amended by inserting immediately after the words "the Acquisition" a comma and
the words "the Kline Acquisition, the Mammoth Acquisition and the Szolds
Acquisition".
(b) The definition of "Receivables Purchase Agreement" is hereby
amended by deleting such definition in its entirety and restating it as follows:
RECEIVABLES PURCHASE AGREEMENT. The Amended and Restated
Receivables Purchase Agreement by and among the Borrower and the
Receivables Subsidiary dated as of May 30, 1996.
(c) By inserting the following definitions in the appropriate
alphabetical order:
RECEIVABLES SUBSIDIARY NOTES. The promissory notes issued by
the Receivables Subsidiary on May 30, 1996 in the aggregate principal
amount of not more than $30,000,000, and which notes are secured by the
Transferor Retained Certificates (as such term is defined in the
Pooling and Servicing Agreement)
-2-
and/or rights in the Transferor Interest (as such term is defined in
the Pooling and Servicing Agreement) and are in form and substance
reasonably satisfactory to the Agent.
UHLMAN. Uhlmans Inc., an Ohio corporation.
UHLMAN ACQUISITION. The acquisition by the Borrower of 100% of
the capital stock of Uhlman pursuant to the terms of the Uhlman
Purchase Agreement and the subsequent merger of Uhlman with and into
the Borrower, with the Borrower being the surviving entity.
UHLMAN PURCHASE AGREEMENT. The Securities Purchase Agreement
dated May 9, 1996 between the Borrower and the other parties thereto,
which agreement shall be in form and substance satisfactory to the
Agent.
SS.2. AMENDMENT TO SS.8 OF THE CREDIT AGREEMENT. Section 8 of the
Credit Agreement is hereby amended by inserting at the end of ss.8.14 the
following:
SS.8.15. USE OF PROCEEDS OF RECEIVABLES SUBSIDIARY NOTES. The
Borrower will cause the Receivables Subsidiary to use 100% of the
proceeds of the Receivables Subsidiary Notes (a) to repay all
intercompany Indebtedness owed by the Receivables Subsidiary to the
Borrower; and/or (b) to make a cash dividend to the Borrower. In
addition, the Borrower shall use all such proceeds received from the
Receivables Subsidiary to effect the Uhlman Acquisition, and, in the
event such Uhlman Acquisition does not occur, the Borrower shall use
such proceeds for working capital and general corporate purposes.
SS.3. AMENDMENT TO SS.9 OF THE CREDIT AGREEMENT. Section 9 of the
Credit Agreement is hereby amended as follows:
(a) Section 9.1 of the Credit Agreement is hereby amended by (a)
deleting the word "and" which appears at the end of ss.9.1(n); (b) deleting the
period which appears at the end of ss.9.1(o) and substituting in place thereof a
semicolon and the word "and"; and (c) inserting immediately after the text of
ss.9.1(o) the following:
"(p) Indebtedness of the Receivables Subsidiary evidenced by
the Receivables Subsidiary Notes."
(b) Section 9.2 of the Credit Agreement is hereby amended by (a)
deleting the word "and" which appears at the end of ss.9.2(xi); (b) deleting the
period which appears at the end of ss.9.2(xii) and substituting in place thereof
a semicolon and the word "and"; and (c) inserting immediately after the text of
ss.9.2(xii) the following:
(xiii) liens in favor of the holders of the Receivables
Subsidiary Notes on the Transferor Retained Certificates and the
Transferor Interest (as such terms are defined in the Pooling and
Servicing Agreement).
-3-
(c) Section 9.4 of the Credit Agreement is hereby amended by deleting
the last sentence of ss.9.4 in its entirety and restating such sentence as
follows:
In addition, the Borrower will not permit its Subsidiaries to, directly or
indirectly, make any Distributions prior to the repayment by such Subsidiary of
all intercompany indebtedness of such Subsidiary, PROVIDED, HOWEVER, so long as
no Default or Event of Default has occurred or is continuing or would exist as a
result thereof, the Receivables Subsidiary shall be permitted to make
Distributions to the Borrower prior to the repayment of all of its intercompany
indebtedness (a) in an amount not to exceed the amount of Defaulted Receivables
(as defined in the Receivables Purchase Agreement) repurchased by the Borrower
from the Receivables Subsidiary pursuant to the terms and conditions set forth
in the Receivables Purchase Agreement and Pooling and Servicing Agreement, and
provided that such Distribution is made by the end of the calendar month in
which the Borrower purchased such Defaulted Receivables and (b) in an amount not
to exceed 100% of the proceeds received by the Receivables Subsidiary from the
issuance of the Receivables Subsidiary Notes, provided such Distribution is made
by not later than June 15, 1996.
(d) Section 9.5.1 of the Credit Agreement is hereby amended by deleting
ss.9.5.1 in its entirety and restating it as follows:
"9.5.1. MERGERS AND ACQUISITIONS. Neither SRI nor the Borrower
will become a party to any merger or consolidation, or agree to or
effect any asset acquisition or stock acquisition (other than the
acquisition of assets in the ordinary course of business consistent
with past practice or the merger of SRI and the Borrower) except the
Borrower may effect the Acquisition, the Kline Acquisition, the Mammoth
Acquisition, the Szolds Acquisition and the Uhlman Acquisition,
PROVIDED, that (a) no Default or Event of Default has occurred or is
continuing or would exist after giving effect thereto; (b) the Borrower
has provided the Agent with prior written notice of each of the
Acquisition, the Kline Acquisition, the Mammoth Acquisition, the Szolds
Acquisition and the Uhlman Acquisition; (c) the aggregate total
consideration for (i) the Acquisition does not exceed, in the
aggregate, $21,400,000, and the consideration for assets acquired in
the Acquisition other than the Purchased Receivables does not exceed
$5,000,000 in the aggregate; (ii) the Kline Acquisition does not
exceed, in the aggregate, $200,000; (iii) the Mammoth Acquisition does
not exceed, in the aggregate, $1,800,000; (iv) the Szolds Acquisition
does not exceed, in the aggregate, $500,000, and (v) the Uhlman
Acquisition does not exceed, in the aggregate, $30,000,000, (d) the
Borrower has demonstrated to the Agent based on a PRO FORMA Compliance
Certificate covenant compliance with ss.10 on a PRO FORMA basis
immediately prior to and after giving effect to each of the
Acquisition, the Kline Acquisition, the Mammoth Acquisition, the Szolds
Acquisition and the Uhlman Acquisition on the assumption that each such
acquisition occurred at the beginning of the covenant calculations
period and (e) prior to giving effect the the Uhlman
-4-
Acquisition, the Borrower has provided the Agent with (i) a copy of the
Uhlman Purchase Agreement; (ii) a letter from the Borrower and SRI
detailing any changes to the Perfection Certificate of the Borrower or
SRI as a result of the Uhlman Acquisition; (iii) evidence satisfactory
to the Agent that the assets to be acquired pursuant to the Uhlman
Acquisition will be acquired free and clear of any and all liens and
encumbrances, which evidence shall include but not be limited to,
copies of filed UCC-3 termination statements and mortgage discharges,
if any; and (iv) any UCC-1 financing statements and other documents and
instruments requested by the Agent in order to grant to the Agent for
the benefit of the Banks and the Agent a perfected first priority
security interest in the assets acquired pursuant to the Uhlman
Acquisition which constitute general intangibles.
In the event any new Subsidiary is formed as a result of or in
connection with the Acquisition, the Kline Acquisition, the Mammoth
Acquisition, the Szolds Acquisition or the Uhlman Acquisition, and such
Subsidiary is not immediately merged with and into the Borrower with
the Borrower being the surviving entity, the Loan Documents shall be
amended and/or supplemented as necessary to make the terms and
conditions of the Loan Documents applicable to such Subsidiary, and
such Subsidiary shall be required to execute and deliver to the Agent
(a) a guaranty satisfactory to the Agent guaranteeing the Obligations
of the Borrower to the Agent and the Banks and (b) a security agreement
and such other security documents as the Agent and the Banks shall
require in order to grant to the Agent for the benefit of the Agent and
the Banks a first priority perfected security interest in all of such
new Subsidiary's assets.
SS.4. AMENDMENT TO ss.10 OF THE CREDIT AGREEMENT. Section 10.1 of the
Credit Agreement is hereby amended by deleting the table set forth in ss.10.1 in
its entirety and restating it as follows:
PERIOD RATIO
Fiscal quarter ending May 4, 1996 1.30:1.00
Fiscal quarter ending August 3, 1996
through November 2, 1996 1.15:1.00
Fiscal quarter ending February 1, 1997 1.20:1.00
Each fiscal quarter thereafter 1.30:1.00
SS.5. CONDITIONS TO EFFECTIVENESS. This Eighth Amendment shall not
become effective until the Agent receives the following:
(a) a counterpart of this Eighth Amendment executed by SRI, the
Borrower, the Banks and the Agent;
-5-
(b) a pro forma Compliance Certificate demonstrating compliance with
ss.10 of the Credit Agreement on a pro forma basis immediately prior to and
after giving effect to the Proposed Uhlman Acquisition on the assumption that
such acquisition occurred at the beginning of the covenant calculation period;
(c) a copy of the Amended and Restated Receivables Purchase Agreement,
which agreement shall be in form and substance satisfactory to the Agent;
(d) a copy of the Receivables Subsidiary Notes, which notes shall be in
form and substance satisfactory to the Agent;
(e) evidence satisfactory to the Agent that all necessary consents have
been obtained to consummate the transactions contemplated by this Eighth
Amendment;
(f) corporate resolutions of each of SRI, the Borrower and the
Receivables Subsidiary authorizing the transactions contemplated by this Eighth
Amendment and the Receivables Subsidiary Notes;
(g) a legal opinion of Kirkland & Ellis, counsel to SRI, the Borrower
and the Receivables Subsidiary, as to authorization, execution and delivery of
this Eighth Amendment, the Amended and Restated Receivables Purchase Agreement
and the Receivables Purchase Notes, and an opinion that the transactions
contemplated by this Eighth Amendment and by the issuance of the Receivables
Subsidiary Notes (including, but not limited to the granting of a lien on
certain of the assets of the Receivables Subsidiary as contemplated thereby) are
permitted under the Senior Notes Indenture, the Senior Subordinated Notes
Indenture, the SRI Subordinated Notes Indenture and the ARI Indenture; and
(h) payment to the Agent for the respective accounts of the Banks of an
amendment fee in the amount of $131,250.
SS.6. CONDITIONS SUBSEQUENT. The Borrower shall, by not later than June
15, 1996 deliver to the Agent results satisfactory to the Agent of an updated
title rundown on the Mortgaged Property. Failure to so comply with this ss.6
shall constitute an Event of Default under the Credit Agreement.
SS.7. CONSENT TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT.
Upon the effectiveness of this Eighth Amendment, the Agent consents to the
Borrower entering into the Amended and Restated Receivables Purchase Agreement
dated as of May 30, 1996 among the Receivables Subsidiary and the Borrower, so
long as such agreement is in form and substance substantially similar to the
draft of such agreement delivered to the Agent on May 17, 1996.
SS.8. REPRESENTATIONS AND WARRANTIES. Each of SRI and the Borrower
hereby repeats, on and as of the date hereof, each of the representations and
warranties made by it in ss.7 of the Credit Agreement, PROVIDED, that all
references therein to the Credit Agreement shall refer to such Credit Agreement
as amended hereby.
-6-
SS.9. RATIFICATION, ETC. Except as expressly amended hereby, the Credit
Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Eighth Amendment shall be read and construed as a
single agreement. All references in the Credit Agreement or any related
agreement or instrument to the Credit Agreement shall hereafter refer to the
Credit Agreement as amended hereby.
SS.10. NO WAIVER. Nothing contained herein shall constitute a waiver
of, impair or otherwise affect any Obligations, any other obligation of SRI, the
Borrower or any rights of the Agent or the Banks consequent thereon.
SS.11. COUNTERPARTS. This Eighth Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
SS.12. GOVERNING LAW. THIS EIGHTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-7-
IN WITNESS WHEREOF, the parties hereto have executed this Eighth
Amendment as a document under seal as of the date first above written.
SPECIALTY RETAILERS, INC.
By:____________________________________
Title:
PALAIS ROYAL, INC.
By:____________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By:____________________________________
Title:
UNION BANK OF CALIFORNIA, N.A.
By:____________________________________
Title:
-8-
RATIFICATION OF GUARANTY
The undersigned guarantor (the "Guarantor") hereby acknowledges and
consents to the foregoing Eighth Amendment as of May 30, 1996 and agrees that
the Guaranty dated as of January 28, 1994, in favor of the Agent for the benefit
of the Agent and the Banks, and all other Loan Documents to which the Guarantor
is a party remain in full force and effect, and the Guarantor confirms and
ratifies all of its obligations thereunder.
SPECIALTY RETAILERS, INC.
By:____________________________________
Title:
THIRD AMENDMENT
TO REVOLVING CREDIT AGREEMENT
Third Amendment to Revolving Credit Agreement dated as of February 1, 1996
(the "Third Amendment"), by and among SPECIALTY RETAILERS, INC., a Delaware
corporation ("SRI"), PALAIS ROYAL, INC., a Texas corporation (the "Borrower"),
THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions listed on
Schedule 1 to the Credit Agreement (as hereinafter defined) (the "Banks") and
THE FIRST NATIONAL BANK OF BOSTON, as agent for the Banks (in such capacity, the
"Agent"), amending certain provision of the Revolving Credit Agreement dated as
of March 31, 1995 (as amended and in effect from time to time, the "Credit
Agreement") by and among SRI, the Borrower, the Banks and the Agent. Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, SRI, the Borrower, the Banks and the Agent have agreed to modify
certain terms and conditions of the Credit Agreement as specifically set forth
in this Third Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
(S)1. AMENDMENT TO (S)9 OF THE CREDIT AGREEMENT. Section 9 of the Credit
Agreement is hereby amended as follows:
(a) Section 9.2 of the Credit Agreement is amended by deleting the amount
"$28,000,000" and substituting therefor the amount "$31,000,000".
(S)2. CONDITIONS TO EFFECTIVENESS. This Third Amendment shall become
effective when the Agent receives a counterpart of this Third Amendment executed
by SRI, the Borrower, the Banks and the Agent.
(S)3. REPRESENTATIONS AND WARRANTIES. Each of SRI and the Borrower hereby
repeats, on and as of the date hereof, each of the representations and
warranties made by it in (S)6 of the Credit Agreement, provided, that all
references therein to the Credit Agreement shall refer to such Credit Agreement
as amended hereby.
(S)4. RATIFICATION, ETC. Except as expressly amended hereby, the Credit
Agreement and all documents, instruments and agreements related thereto are
hereby ratified and confirmed in all respects and shall continue in full force
and effect. The Credit Agreement and this Third Amendment shall be read and
construed as a single agreement. All references in the Credit Agreement or any
related
2
agreement or instrument to the Credit Agreement shall hereafter refer to the
Credit Agreement as amended hereby.
(S)5. NO WAIVER. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of SRI, the
Borrower or any rights of the Agent or the Banks consequent thereon.
(S)6. COUNTERPARTS. This Third Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(S)7. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
as a document under seal as of the date first above written.
SPECIALTY RETAILERS, INC.
By: /s/ Jerry C. Ivie
----------------------------------------
Title: Senior Vice President, Secretary and
Treasurer
PALAIS ROYAL, INC.
By: /s/ Jerry C. Ivie
----------------------------------------
Title: Senior Vice President, Secretary and
Treasurer
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By: /s/ Brian Geraghty
----------------------------------------
Title: Vice President
UNION BANK
By: /s/ Anita Hollingsworth
----------------------------------------
Title: Vice President
4
RATIFICATION OF GUARANTY
The undersigned guarantor (the "Guarantor") hereby acknowledges and
consents to the foregoing Third Amendment as of February 1, 1996 and agrees that
the Guaranty dated as of March 31, 1995, in favor of the Agent for the benefit
of the Agent and the Banks, and all other Loan Documents to which the Guarantor
is a party remain in full force and effect, and the Guarantor confirms and
ratifies all of its obligations thereunder.
SPECIALTY RETAILERS, INC.
By: /s/ Jerry C. Ivie
---------------------------------------
Title: Senior Vice President, Secretary and
Treasurer
FOURTH AMENDMENT
TO REVOLVING CREDIT AGREEMENT
Fourth Amendment to Revolving Credit Agreement dated as of May 30, 1996
(the "FOURTH AMENDMENT"), by and among SPECIALTY RETAILERS, INC., a Delaware
corporation ("SRI"), PALAIS ROYAL, INC., a Texas corporation (the "BORROWER"),
THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions listed on
SCHEDULE 1 to the Credit Agreement (as hereinafter defined) (the "BANKS") and
THE FIRST NATIONAL BANK OF BOSTON, as agent for the Banks (in such capacity, the
"AGENT"), amending certain provision of the Revolving Credit Agreement dated as
of March 31, 1995 (as amended and in effect from time to time, the "CREDIT
AGREEMENT") by and among SRI, the Borrower, the Banks and the Agent. Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, SRI, the Borrower, the Banks and the Agent have agreed to
modify certain terms and conditions of the Credit Agreement as specifically set
forth in this Fourth Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SS.1. AMENDMENT TOSS.1 OF THE CREDIT AGREEMENT. Section 1 of the Credit
Agreement is hereby amended as follows:
(a) The definition of "Consolidated Operating Cash Flow" is hereby
amended by inserting immediately after the words "the original cash portion of
the purchase price for any assets purchased in any acquisition permitted by
ss.8.5.1" the words "other than the Uhlman Acquisisiton"
(b) The definition of "Receivables Purchase Agreement" is hereby
amended by deleting such definition in its entirety and restating it as follows:
RECEIVABLES PURCHASE AGREEMENT. The Amended and Restated
Receivables Purchase Agreement by and among the Borrower and the
Receivables Subsidiary dated as of May 30, 1996.
(c) By inserting the following definitions in the appropriate
alphabetical order:
RECEIVABLES SUBSIDIARY NOTES. The promissory notes issued by
the Receivables Subsidiary on May 30, 1996 in the aggregate principal
amount of not more than $30,000,000, and which notes are secured by the
Transferor Retained Certificates (as such term is defined in the
Pooling and Servicing Agreement)
-2-
and/or rights in the Transferor Interest (as such term is defined in
the Pooling and Servicing Agreement) and are in form and substance
reasonably satisfactory to the Agent.
UHLMAN. Uhlmans Inc., an Ohio corporation.
UHLMAN ACQUISITION. The acquisition by the Borrower of 100% of
the capital stock of Uhlman pursuant to the terms of the Uhlman
Purchase Agreement and the subsequent merger of Uhlman with and into
the Borrower, with the Borrower being the surviving entity.
UHLMAN PURCHASE AGREEMENT. The Securities Purchase Agreement
dated May 9, 1996 between the Borrower and the other parties thereto,
which agreement shall be in form and substance satisfactory to the
Agent.
SS.2. AMENDMENT TO SS.8 OF THE CREDIT AGREEMENT. Section 8 of the
Credit Agreement is hereby amended by inserting at the end of ss.7.14 the
following:
SS.7.15. USE OF PROCEEDS OF RECEIVABLES SUBSIDIARY NOTES. The
Borrower will cause the Receivables Subsidiary to use 100% of the
proceeds of the Receivables Subsidiary Notes (a) to repay all
intercompany Indebtedness owed by the Receivables Subsidiary to the
Borrower; and/or (b) to make a cash dividend to the Borrower. In
addition, the Borrower shall use all such proceeds received from the
Receivables Subsidiary to effect the Uhlman Acquisition, and, in the
event such Uhlman Acquisition does not occur, the Borrower shall use
such proceeds for working capital and general corporate purposes.
SS.3. AMENDMENT TO SS.8 OF THE CREDIT AGREEMENT. Section 8 of the
Credit Agreement is hereby amended as follows:
(a) Section 8.1 of the Credit Agreement is hereby amended by (a)
deleting the word "and" which appears at the end of ss.8.1(m); (b) deleting the
period which appears at the end of ss.8.1(n) and substituting in place thereof a
semicolon and the word "and"; and (c) inserting immediately after the text of
ss.9.1(n) the following:
"(o) Indebtedness of the Receivables Subsidiary evidenced by
the Receivables Subsidiary Notes."
(b) Section 8.2 of the Credit Agreement is hereby amended by (a)
deleting the word "and" which appears at the end of ss.8.2(x); (b) deleting the
period which appears at the end of ss.8.2(xi) and substituting in place thereof
a semicolon and the word "and"; and (c) inserting immediately after the text of
ss.8.2(xi) the following:
(xii) liens in favor of the holders of the Receivables
Subsidiary Notes on the Transferor Retained Certificates and the
Transferor Interest (as such terms are defined in the Pooling and
Servicing Agreement).
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(c) Section 8.4 of the Credit Agreement is hereby amended by deleting
the last sentence of ss.8.4 in its entirety and restating such sentence as
follows:
In addition, the Borrower will not permit its Subsidiaries to, directly
or indirectly, make any Distributions prior to the repayment by such
Subsidiary of all intercompany indebtedness of such Subsidiary,
PROVIDED, HOWEVER, so long as no Default or Event of Default has
occurred or is continuing or would exist as a result thereof, the
Receivables Subsidiary shall be permitted to make Distributions to the
Borrower prior to the repayment of all of its intercompany indebtedness
(a) in an amount not to exceed the amount of Defaulted Receivables (as
defined in the Receivables Purchase Agreement) repurchased by the
Borrower from the Receivables Subsidiary pursuant to the terms and
conditions set forth in the Receivables Purchase Agreement and Pooling
and Servicing Agreement, and provided that such Distribution is made by
the end of the calendar month in which the Borrower purchased such
Defaulted Receivables and (b) in an amount not to exceed 100% of the
proceeds received by the Receivables Subsidiary from the issuance of
the Receivables Subsidiary Notes, provided such Distribution is made by
not later than June 15, 1996.
(d) Section 8.5.1 of the Credit Agreement is hereby amended by deleting
ss.8.5.1 in its entirety and restating it as follows:
"8.5.1. MERGERS AND ACQUISITIONS. Neither SRI nor the Borrower
will become a party to any merger or consolidation, or agree to or
effect any asset acquisition or stock acquisition (other than the
acquisition of assets in the ordinary course of business consistent
with past practice or the merger of SRI and the Borrower) except the
Borrower may effect the Szolds Acquisition and the Uhlman Acquisition,
PROVIDED, that (a) no Default or Event of Default has occurred or is
continuing or would exist after giving effect thereto; (b) the Borrower
has provided the Agent with prior written notice of each of the Szolds
Acquisition and the Uhlman Acquisition; (c) the aggregate total
consideration for the Szolds Acquisition does not exceed, in the
aggregate, $500,000 and the aggregate total consideration for the
Uhlman Acquisition does not exceed, in the aggreagate, [$30,000,000];
(d) the Borrower has demonstrated to the Agent based on a PRO FORMA
Compliance Certificate covenant compliance with ss.9 on a PRO FORMA
basis immediately prior to and after giving effect to each of the
Szolds Acquisition and the Uhlman Acquisition on the assumption that
each such acquisition occurred at the beginning of the covenant
calculations period; and (e) prior to giving effect to the Uhlman
Acquisition, the Borrower has provided the Agent with (i) a copy of the
Uhlman Purchase Agreement and (ii) evidence satisfactory to the Agent
that the assets to be acquired pursuant to the Uhlman Acquisition will
be acquired free and clear of any and all liens and encumbrances, which
evidence shall include but not be limited to, copies of filed UCC-3
termination statements and mortgage discharges, if any.
-4-
In the event any new Subsidiary is formed as a result of or in
connection with any acquisition permitted by this ss.8.5.1, and such
Subsidiary is not immediately merged with and into the Borrower with
the Borrower being the surviving entity, the Loan Documents shall be
amended and/or supplemented as necessary to make the terms and
conditions of the Loan Documents applicable to such Subsidiary, and
such Subsidiary shall be required to execute and deliver to the Agent a
guaranty satisfactory to the Agent guaranteeing the Obligations of the
Borrower to the Agent and the Banks."
SS.4. AMENDMENT TO ss.9 OF THE CREDIT AGREEMENT. Section 9.1 of the
Credit Agreement is hereby amended by deleting the table set forth in ss.9.1 in
its entirety and restating it as follows:
PERIOD RATIO
Fiscal quarter ending May 4, 1996 1.30:1.00
Fiscal quarter ending August 3, 1996
through November 2, 1996 1.15:1.00
Fiscal quarter ending February 1, 1997 1.20:1.00
Each fiscal quarter thereafter 1.30:1.00
SS.5. CONDITIONS TO EFFECTIVENESS. This Fourth Amendment shall not
become effective until the Agent receives the following:
(a) a counterpart of this Fourth Amendment executed by SRI, the
Borrower, the Banks and the Agent;
(b) a pro forma Compliance Certificate demonstrating compliance with
ss.9 of the Credit Agreement on a pro forma basis immediately prior to and after
giving effect to the Uhlman Acquisition on the assumption that such acquisition
occurred at the beginning of the covenant calculation period;
(c) a copy of the Amended and Restated Receivables Purchase Agreement,
which agreement shall be in form and substance satisfactory to the Agent;
(d) a copy of the Receivables Subsidiary Notes, which notes shall be in
form and substance satisfactory to the Agent;
(e) evidence satisfactory to the Agent that all necessary consents have
been obtained to consummate the transactions contemplated by this Eighth
Amendment;
(f) corporate resolutions of each of SRI, the Borrower and the
Receivables Subsidiary authorizing the transactions contemplated by this Eighth
Amendment and the Receivables Subsidiary Notes; and
-5-
(g) a legal opinion of Kirkland & Ellis, counsel to SRI, the Borrower
and the Receivables Subsidiary, as to authorization, execution and delivery of
this Eighth Amendment, the Amended and Restated Receivables Purchase Agreement
and the Receivables Purchase Notes, and an opinion that the transactions
contemplated by this Eighth Amendment and by the issuance of the Receivables
Subsidiary Notes (including, but not limited to the granting of a lien on
certain of the assets of the Receivables Subsidiary as contemplated thereby) are
permitted under the Senior Notes Indenture, the Senior Subordinated Notes
Indenture, the SRI Subordinated Notes Indenture and the ARI Indenture.
SS.6. CONSENT TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT.
Upon the effectiveness of this Eighth Amendment, the Agent consents to the
Borrower entering into the Amended and Restated Receivables Purchase Agreement
dated as of May 30, 1996 among the Receivables Subsidiary and the Borrower, so
long as such agreement is in form and substance substantially similar to the
draft of such agreement delivered to the Agent on May 17, 1996.
SS.7. REPRESENTATIONS AND WARRANTIES. Each of SRI and the Borrower
hereby repeats, on and as of the date hereof, each of the representations and
warranties made by it in ss.6 of the Credit Agreement, PROVIDED, that all
references therein to the Credit Agreement shall refer to such Credit Agreement
as amended hereby.
SS.8. RATIFICATION, ETC. Except as expressly amended hereby, the Credit
Agreement and all documents, instruments and agreements related thereto are
hereby ratified and confirmed in all respects and shall continue in full force
and effect. The Credit Agreement and this Fourth Amendment shall be read and
construed as a single agreement. All references in the Credit Agreement or any
related agreement or instrument to the Credit Agreement shall hereafter refer to
the Credit Agreement as amended hereby.
SS.9. NO WAIVER. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of SRI, the
Borrower or any rights of the Agent or the Banks consequent thereon.
SS.10. COUNTERPARTS. This Fourth Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
SS.11. GOVERNING LAW. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
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IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment as a document under seal as of the date first above written.
SPECIALTY RETAILERS, INC.
By:____________________________________
Title:
PALAIS ROYAL, INC.
By:____________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By:____________________________________
Title:
UNION BANK OF CALIFORNIA, N.A.
By:____________________________________
Title:
-7-
RATIFICATION OF GUARANTY
The undersigned guarantor (the "Guarantor") hereby acknowledges and
consents to the foregoing Fourth Amendment as of May 30, 1996 and agrees that
the Guaranty dated as of March 31, 1995, in favor of the Agent for the benefit
of the Agent and the Banks, and all other Loan Documents to which the Guarantor
is a party remain in full force and effect, and the Guarantor confirms and
ratifies all of its obligations thereunder.
SPECIALTY RETAILERS, INC.
By:____________________________________
Title:
SECURITIES PURCHASE AGREEMENT
AMONG
PALAIS ROYAL, INC.
AND
ROGER S. VAIL
SHARON K. VAIL
JAMES L. STAINBROOK
MELISSA A. UHLMAN
FRED W. UHLMAN, JR.
ROBERT M. UHLMAN
AND
VIRGINIA U. NADER
MAY __, 1996
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS................................................1
SECTION 2. THE BASIC TRANSACTION......................................7
(a) Purchase and Sale of Shares................................7
(b) Assumption of Liabilities/Transfer of Assets...............7
(c) Escrow.....................................................7
(d) Purchase Price.............................................7
(e) Other Transactions at Closing..............................7
(f) The Closing................................................8
(g) Deliveries at the Closing..................................8
(h) Merger.....................................................8
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS..............9
(a) Capacity of Sellers........................................9
(b) Valid and Binding..........................................9
(c) Noncontravention...........................................9
(d) Brokers' Fees.............................................10
(e) Shares....................................................10
(f) Organization, Qualification, Corporate Power..............10
(g) Capitalization............................................10
(h) Noncontravention..........................................11
(i) Brokers' Fees.............................................11
(j) Title to Assets...........................................11
(k) Subsidiaries..............................................11
(l) Financial Statements......................................11
(m) Recent Events.............................................12
(n) Undisclosed Liabilities...................................14
(o) Legal Compliance..........................................15
(p) Tax Matters...............................................15
(q) Real Property.............................................16
(r) Intellectual Property.....................................19
(s) Tangible Assets...........................................20
(t) Inventory.................................................20
(u) Contracts.................................................21
(v) Notes and Accounts Receivable/Payable.....................22
(w) Powers of Attorney........................................22
(x) Insurance.................................................23
(y) Litigation................................................23
(z) Product Liability.........................................24
(aa) Employees.................................................24
(bb) Employee Benefits.........................................24
(cc) Guaranties................................................27
(dd) Environment, Health, and Safety...........................27
(ee) Certain Business Relationships With the Seller............27
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(ff) Disclosure................................................28
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER...............28
(a) Organization of the Buyer.................................28
(b) Authorization of Transaction..............................28
(c) Noncontravention..........................................28
(d) Brokers' Fees.............................................29
(e) Investment................................................29
(f) Financial Statements......................................29
SECTION 5. PRE-CLOSING COVENANTS.....................................29
(a) General...................................................29
(b) Notices and Consents......................................29
(c) Operation of Business.....................................30
(d) Preservation of Business..................................30
(e) Full Access...............................................30
(f) Notice of Developments....................................31
(g) Exclusivity...............................................31
(h) Closing Books.............................................31
SECTION 6. CONDITIONS TO CLOSING.....................................31
(a) Conditions to Obligation of the Buyer.....................31
(b) Conditions to Obligation of the Sellers...................34
SECTION 7. POST-CLOSING COVENANTS....................................35
(a) General...................................................35
(b) Litigation Support........................................35
(c) Transition................................................35
(d) Confidentiality...........................................36
(e) Covenant Not to Compete...................................36
(f) Severance Benefits to Certain Employees...................37
(g) Termination of Certain Benefit Plans......................38
(h) Continuation of Insurance.................................39
(i) Miscellaneous Indemnities.................................39
SECTION 8. TAX MATTERS...............................................40
(a) Section 338(h)(10) Election...............................40
(b) Tax Periods Beginning Before and Ending After the
Closing Date..............................................40
(c) Cooperation on Tax Matters................................40
(d) Certain Taxes.............................................41
(e) Allocation of Purchase Price..............................41
SECTION 9. SURVIVAL AND INDEMNITY....................................41
(a) Survival of Representations and Warranties................41
(b) Indemnification Provisions for Benefit of the Buyer
.........................................................42
(c) Maximum Liability for Certain Breaches....................42
(d) Satisfaction of Claims....................................42
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(e) Indemnification Provisions for Benefit of the Sellers.
.........................................................43
(f) Matters Involving Third Parties...........................43
(g) Determination of Adverse Consequences.....................45
(h) Indemnification Provisions Exclusive......................45
SECTION 10. TERMINATION...............................................45
(a) Termination of Agreement..................................45
(b) Effect of Termination.....................................45
SECTION 11. MISCELLANEOUS.............................................46
(a) Press Releases and Public Announcements...................46
(b) No Third Party Beneficiaries..............................46
(c) Entire Agreement..........................................46
(d) Succession and Assignment.................................46
(e) Counterparts..............................................46
(f) Headings..................................................46
(g) Notices...................................................47
(h) Sellers' Representative...................................47
(i) Governing Law.............................................48
(j) Amendments and Waivers....................................48
(k) Severability..............................................48
(l) Expenses..................................................49
(m) Construction..............................................49
(n) Incorporation of Exhibits and Schedules...................49
(o) Specific Performance......................................49
(p) Submission to Jurisdiction................................49
SCHEDULE 1-A EXCLUDED ASSETS
SCHEDULE 1-B STOCKHOLDER NOTES
SCHEDULE 1-C TRUCKING BUSINESS EMPLOYEES
SCHEDULE 1-D EQUIPMENT LEASES
SCHEDULE 4(F) SRI FINANCIAL STATEMENTS
SCHEDULE 7(F) SEVERANCE BENEFITS
EXHIBIT A-1, A-2 - FORM OF RELATED PARTY LEASES
EXHIBIT B - FORM OF ASSUMPTION AGREEMENT
EXHIBIT C - HISTORICAL FINANCIAL STATEMENTS
EXHIBIT D - FORM OF ESCROW AGREEMENT
EXHIBIT E - FORM OF INTERIM SERVICES AGREEMENT
DISCLOSURE SCHEDULE - EXCEPTIONS TO REPRESENTATIONS AND
WARRANTIES
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SECURITIES PURCHASE AGREEMENT
Agreement entered into as of May __, 1996, by and among Palais
Royal, Inc. a Texas corporation (the "BUYER"), Roger S. Vail
("VAIL") and Sharon K. Vail, James L. Stainbrook, Melissa A.
Uhlman, Fred W. Uhlman, Jr., Robert M. Uhlman and Virginia U. Nader
(together with Vail, the "SELLERS"). The Buyer and the Sellers are
referred to collectively herein as the "PARTIES."
This Agreement contemplates a transaction in which the Buyer will
purchase all of the shares of capital stock of Uhlmans Inc., an Ohio corporation
(the "COMPANY") from the Sellers for cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
SECTION 1. DEFINITIONS.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation
D promulgated under the Securities Act.
"ADVERSE CONSEQUENCES" means damages, dues, penalties, fines,
costs, amounts paid in settlement, losses, expenses and fees suffered or paid by
any Person to the extent such amounts are not recovered by such Person from its
insurers.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Code ss.1504(a) or any similar group defined under a similar
provision of state, local, or foreign law.
"ASSUMED LIABILITIES" means (i) any Liability existing or
arising in respect of any Excluded Asset, any Trucking Business Employee or the
Trucking Business and (ii) all costs and expenses of the Company in connection
with this Agreement and the transactions contemplated hereby other than the
professional fees of Ernst & Young, L.L.P. payable with respect to the
preparation of the financial statements delivered pursuant to ss. 3(l) or ss.
6(a)(xiv).
"AVAILABLE EMPLOYEES" means all of the Company's employees
other than the Sellers (excluding Melissa Uhlman), the Trucking Business
Employees and any employee who is absent from
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work due to long-term (i.e., more than 45 days) disability (not including
maternity leave) or who is on job discontinuance.
"BANK AGREEMENT" means the Loan Agreement between the
Company, National City Bank, NBD Bank, N.A. and National City Bank
Northwest dated June 1, 1995, as amended through February 1, 1996.
"BASIS" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
"CLOSING" has the meaning set forth in ss.2(f) below.
"CLOSING DATE" has the meaning set forth in ss.2(f) below.
"CLOSING FINANCIAL STATEMENTS" means the unaudited balance
sheet and statements of income, changes in stockholders equity and cash flow for
the Company for that portion of the fiscal year commencing on February 3, 1996
and ending on the fiscal month immediately preceding the Closing Date by at
least 15 days, prepared in accordance with GAAP.
"CODE" means the Internal Revenue Code of 1986, as
amended.
"DEFINED BENEFIT PLAN" means the Retirement Benefit Plan
for Employees of Fred W. Uhlman & Co.
"DISCLOSURE SCHEDULE" has the meaning set forth in ss.3
below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth
in ERISA ss.3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth
in ERISA ss.3(1).
-2-
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
"EQUIPMENT LEASES" means the leasehold improvement lease
between Milliken Partners Limited Partnership and the Company for the Big
Rapids, Michigan store and the leasehold improvement lease between First Weston,
Ltd. and the Company for the Delaware, Ohio store, copies of which are attached
as SCHEDULE 1-D.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"ESCROW AGREEMENT" means the escrow agreement to be entered
into between the Buyer, the Sellers and the escrow agent named therein in the
form attached as EXHIBIT D.
"EXCLUDED ASSETS" means the assets described on Schedule 1-A
attached hereto, being the assets associated with the Trucking Business and
various other assets.
"EXECUTIVE COMPENSATION AGREEMENTS" means the Stock
Appreciation Rights granted by the Company to Mason and to Steketee dated April
6, 1994, and the Employment Protection Agreement between the Company and
Steketee dated April 6, 1994.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in
ss.302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FIDUCIARY" has the meaning set forth in ERISA ss.3(21).
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"FINANCIAL STATEMENTS" means, as of the date hereof, the
financial statements referred to in ss.3(l)below and, as of the Closing Date,
the Closing Financial Statements.
"FUNDED DEBT" means bank term and revolver, Stockholder Notes
and all other notes and obligations of the Company as described in note 2 of the
Company's Most Recent Balance Sheet (including the current maturities portion of
all such debt).
"GAAP" means United States generally accepted accounting
principles as at the date of this Agreement.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
"INTELLECTUAL PROPERTY" means all of the following which are
owned by, issued to or licensed to the Company, together with all income,
royalties, damages and payments due or payable in respect thereof as of the
Closing or thereafter: patents, patent applications and inventions and any
reissue, continuation, continuation-in-part, division, extension or
reexamination thereof; trademarks, service marks, trade dress, logos, trade
names and corporate names, together with all goodwill associated therewith;
copyrights; and all registrations, applications and renewals for any of the
foregoing; trade secrets, know-how, confidential and proprietary information,
customer and supplier lists and related information; all other proprietary
rights including all rights associated with the credit card business of the
Company; and computer software (including, without limitation, data and related
documentation).
"LIABILITY" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MASON" means James Mason.
"MOST RECENT BALANCE SHEET" means the balance sheet
contained within the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" means the audited balance
sheet as at the Most Recent Fiscal Year End and statements of income, changes in
stockholders' equity and cash flow for the fiscal year then ended.
"MOST RECENT FISCAL YEAR END" means February 3, 1996.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA
ss.3(37).
-4-
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PARENT" means Specialty Retailers, Inc., a Delaware
corporation.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED TAX DISTRIBUTION" means: (i) the September 1995
distribution to Sellers for their Subchapter S tax liability for the fiscal year
ended January 31, 1995 as disclosed in the Most Recent Financial Statements;
(ii) the distribution to be made by the Company to the Sellers prior to the
Closing in an amount computed in the Ordinary Course of Business to cover
Sellers' Subchapter S tax liability for the fiscal year of the Company ended
February 3, 1996; and (iii) any distribution approved of in writing by the Buyer
which may be necessary to be made at or before Closing to pay Sellers'
Subchapter S taxes on income of the Company though the Closing computed in the
Ordinary Course of Business (specifically excluding any gain associated with an
election under ss.338(h)(10) of the Code).
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in
ERISA ss.406 and Code ss.4975.
"PURCHASE PRICE" has the meaning set forth in ss.2(d)
below.
"RELATED PARTY LEASES" means the master leases between
the Company and First Weston, Ltd. and Milliken Partners Limited
Partnership, respectively, dated the Closing Date and in the forms
attached as EXHIBITS A-1 and A-2, respectively.
"REPORTABLE EVENT" has the meaning set forth in ERISA
ss.4043.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
-5-
"SECURITIES EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, OTHER THAN (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"SELLERS' KNOWLEDGE" means the knowledge of any of the
Sellers, Mason, Steketee or Pier Borra.
"SHARES" means the 8,271 shares of common stock of the
Company.
"STEKETEE" means Richard W. Steketee, Jr.
"STOCKHOLDER NOTES" means the promissory notes listed on
Schedule 1-B.
"SUBSIDIARY" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"SURVEY" has the meaning set forth in ss.6(i) below.
"TAX" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss.59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TRUCKING BUSINESS" means the business currently conducted
with the assets comprising of trucks, trailers and related tools, supplies and
miscellaneous equipment used in the Company's trucking operation, including:
owned and leased tractors and trailers, the receivables related to such trucking
operations,
-6-
the Trucking Business Employees and each and every Liability and obligation of
the Company related thereto, including, but not limited to, equipment leases and
real property rental arrangements for the Company's truck garage on Napoleon
Road in Bowling Green, Ohio.
"TRUCKING BUSINESS EMPLOYEES" means those employees of the
Company listed on Schedule 1-C.
SECTION 2. THE BASIC TRANSACTION.
(a) PURCHASE AND SALE OF SHARES. On and subject to the terms
and conditions of this Agreement, the Buyer agrees to purchase from the Sellers,
and the Sellers agree to sell, transfer, convey, and deliver to the Buyer, all
of the Shares at the Closing for the consideration specified below in this ss.2.
(b) ASSUMPTION OF LIABILITIES/TRANSFER OF ASSETS. On and
subject to the terms and conditions of this Agreement, the Sellers agree to
cause the transfer of the Excluded Assets out of the Company and to assume and
become responsible for all of the Assumed Liabilities at or prior to the
Closing.
(c) ESCROW.
(i) On the date of this Agreement, the Buyer shall pay into
escrow pursuant to the terms of the Escrow Agreement the amount of
$400,000.00, which amount shall be held and distributed in accordance
with the terms of the Escrow Agreement.
(ii) On the Closing Date, the Buyer shall pay into escrow on
behalf of the Sellers and pursuant to the terms of the Escrow Agreement
the amount of $600,000.00, which amount shall be held and distributed
in accordance with the terms of the Escrow Agreement.
(d) PURCHASE PRICE. The Buyer agrees to pay to the Sellers at
the Closing $12,000,000 LESS (i) $416,000, being the estimated amount of the
unfunded deficiency in the Company's Defined Benefit Plan as at December 31,
1995 and (ii) the amounts paid into escrow by the Buyer pursuant to ss.2(c)
above (the "PURCHASE PRICE"). The Purchase Price is payable by wire transfer or
delivery of other immediately available funds to such account as the Sellers may
specify.
-7-
(e) OTHER TRANSACTIONS AT CLOSING. The Buyer agrees to cause
the Company to pay at Closing by certified or bank check:
(i) STOCK APPRECIATION RIGHTS; to Mason the amount of
$20,628.00 and to Steketee the amount of $6,590.00 as
consideration for the repurchase from Mason and Steketee
respectively of the stock appreciation rights granted to each
of them as though fully vested;
(ii) STOCKHOLDER NOTES; to each of the holders of the
Stockholder Notes, the balance outstanding with respect to
such holder's Stockholder Note including accrued interest;
(iii) EQUIPMENT LEASES; to the lessors under the
Equipment Leases, the amount required to purchase the
equipment subject thereto; and
(iv) BANK AGREEMENT; to the lender thereunder, all
amounts required to repay the indebtedness outstanding
under the Bank Agreement.
(f) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at a place acceptable to the
parties hereto commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually determine (the
"Closing Date").
(g) DELIVERIES AT THE CLOSING. At the Closing, (i) the Sellers
will deliver to the Buyer the certificates in respect of the Shares together
with executed stock powers in relation thereto and the documents referred to in
ss.6(a); and (ii) the Buyer will deliver to the Sellers the consideration
specified in ss.2(d) above and the documents referred to in ss.6(b).
(h) MERGER. At the Closing or as soon as practical thereafter,
the Company shall be merged with and into the Buyer (the "Merger") and the
separate corporate existence of the Company shall thereupon cease. The Buyer
shall be the surviving corporation in the Merger and shall continue to be
governed by the Texas Business Corporation Act (the "TBCA"). The separate
corporate existence of the Buyer with all its rights, privileges, powers and
franchises shall continue unaffected by the Merger. The parties hereto shall
cause a certificate of merger (the "Certificate of Merger"), meeting the
requirements of Section 5.04 of the TBCA, to be properly executed and filed in
accordance with the TBCA and shall cause the execution and filing of any further
documentation required by Ohio General Corporation Law (including
-8-
Section 1701.81 thereof) with respect to the Merger. The Merger shall be
effective at the time and on the date of the filing of the Certificate of Merger
in accordance with the TBCA, or at such other time and date as may be specified
in the Certificate of Merger.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
Each of the Sellers represents and warrants to the Buyer that the
statements contained in this ss.3 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this ss.3), except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Buyer, and Vail and
Stainbrook on behalf of the Sellers (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this ss.3.
(a) CAPACITY OF SELLERS. Each of the Sellers has full legal
capacity, power and authority to enter into, execute and deliver this Agreement
and to perform his or her obligations hereunder.
(b) VALID AND BINDING. This Agreement constitutes the valid
and legally binding obligation of each of the Sellers, enforceable in accordance
with its terms.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Sellers is subject or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which any of the Sellers is a party or by
which any Seller is bound or to which any Seller's assets are subject (or result
in the imposition of any Security Interest upon any such assets). No Seller is
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in ss.2 above).
-9-
(d) BROKERS' FEES. No Seller has any Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
(e) SHARES. Except for pledges to secure borrowings by any
Seller which will be released at Closing, each Seller holds of record and owns
beneficially the number of Shares set forth next to his or its name in ss.3(e)
of the Disclosure Schedules, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. No Seller is a party to any option,
warrant, purchase right, or other contract or commitment that could require such
Seller to sell, transfer, or otherwise dispose of any capital stock of the
Company (other than this Agreement). No Seller is a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of any
capital stock of the Company.
(f) ORGANIZATION, QUALIFICATION, CORPORATE POWER. The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation. The Company is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Company has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used by
it.ss.3(f) of the Disclosure Schedule lists the directors and officers of the
Company. The Sellers have delivered to the Buyer correct and complete copies of
the articles of incorporation and code of regulations of the Company (as amended
to date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of the
Company are correct and complete. The Company is not in default under or in
violation of any provision of its
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articles of incorporation or code of regulations.
(g) CAPITALIZATION. The Shares comprise the entire authorized
capital stock of the Company. All of the Shares are issued and outstanding, have
been duly authorized, are validly issued, fully paid, and nonassessable, and are
held of record by the respective Sellers as set forth in ss.3(e) of the
Disclosure Schedule. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company.
(h) NONCONTRAVENTION. Except as set forth in ss.3(h) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rules, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which the Company is subject or any provision of the charter
or bylaws of the Company or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets). The Company is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement except as described in ss.5(b).
(i) BROKERS' FEES. The Company has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(j) TITLE TO ASSETS. Subject to the qualifications set forth
in ss.3(q) in respect of any interests in real property, the Company has good
and marketable title to, or a valid leasehold interest in, the properties and
assets used by it, located on its premises, or shown on the Most Recent Balance
Sheet or acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary Course
of Business since the date of the Most Recent Balance Sheet.
-11-
(k) SUBSIDIARIES. The Company has no Subsidiaries.
(l) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT C are
audited balance sheets and statements of income, changes in stockholder's
equity, and cash flow as of and for the fiscal years ended January 31, 1994,
January 31, 1995, and February 3, 1996 for the Company prepared in accordance
with Regulation S-X of the Securities Act together with an unqualified report of
independent auditors Ernst & Young L.L.P. in respect thereof. The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Company as of such dates and the
results of operations of the Company for such periods, are correct and complete
in all material respects, and are consistent with the books and records of the
Company (which books and records are correct and complete).
(m) RECENT EVENTS. Since January 31, 1995, other than as
specifically disclosed in the Most Recent Financial Statements and seasonal
losses since February 3, 1996 consistent with the Company's performance in
recent years, there has not been any material adverse change in the business,
financial condition, operations, results of operations, or currently anticipated
prospects of the Company. Without limiting the generality of the foregoing,
since that date:
(i) other than any disposition of the Excluded
Assets, the Company has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) other than with respect to the Excluded Assets,
renewals of leases in the Ordinary Course of Business and a lease for
additional space at Cadillac, Michigan, the Company has not entered
into any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving annual
payments of more than $10,000 or outside the Ordinary Course of
Business;
(iii) no party (including the Company) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $10,000 to which the Company is a party
or by which it is bound;
-12-
(iv) other than in respect of the Company's security
system, the Company has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) other than in respect of leasehold improvements to the
Company's Big Rapids, Michigan store, the Company has not made any
capital expenditure (or series of related capital expenditures) either
involving more than $10,000 or outside the Ordinary Course of Business;
(vi) the Company has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $10,000 or outside the
Ordinary Course of Business;
(vii) the Company has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either
involving more than $10,000 singly or $10,000 in the aggregate (other
than pursuant to the revolving credit facility provided for in the Bank
Agreement);
(viii) the Company has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) the Company has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $10,000 or outside the Ordinary Course of
Business;
(x) the Company has not granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
articles of incorporation or code of regulations of the Company which
has not been disclosed under ss.3(f);
(xii) the Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants,
or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
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(xiii) other than a Permitted Tax Distribution, the
Company has not declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(xiv) the Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to
its property in excess of $10,000;
(xv) other than any disposition of the Excluded Assets,
the Related Party Leases, the Equipment Leases and advances which have
been repaid prior to the date hereof, the Company has not made any loan
to, or entered into any other transaction with, the Sellers or any of
their respective Affiliates outside the Ordinary Course of Business;
(xvi) the Company has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) the Company has not granted any increase in the
base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xviii) other than the adoption of a ss.401(k) Plan (and any
vesting thereunder), the granting of amounts under the Executive
Compensation Agreements and, the payment of bonuses for the fiscal
years 1995 and 1996 in the Ordinary Course of Business, the Company has
not granted, adopted, amended, modified or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee
Benefit Plan);
(xix) the Company has not made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xx) other than contributions aggregating not more than
$10,000 per year, the Company has not made or pledged to make any
charitable or other contribution;
(xxi) the Company has not paid any amount to any third
party with respect to any Liability or obligation (including any costs
and expenses the Company has incurred
-14-
or may incur in connection with this Agreement and the transactions
contemplated hereby) which if not so paid would have constituted an
Assumed Liability as of the Closing other than normal payments on such
obligations in the Ordinary Course of Business;
(xxii) there has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Company; and
(xxiii) the Company has not committed to any of the
foregoing.
(n) UNDISCLOSED LIABILITIES. The Company has no Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability), except for (i) Liabilities set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) (ii) Liabilities which have
arisen after the Most Recent Fiscal Year End in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law) and (iii) the Liabilities described in ss.7(f) and Schedule
3(n).
(o) LEGAL COMPLIANCE. To Sellers' Knowledge each of the
Company, its predecessors and Affiliates has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(p) TAX MATTERS.
(i) The Company has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Company (whether or not shown on any Tax Return) have been
paid. The Company currently is not the beneficiary of any extension of time
within which to file any Tax Return. The Company has no Liability for any claim,
assessed or otherwise, made by an authority in a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of the
Company that arose in connection with any failure (or alleged failure) to pay
any Tax.
-15-
(ii) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
(iii) Neither the Company nor any director or officer (or
employee responsible for Tax matters) of the Company expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of the Company
either (A) claimed or raised by any authority in writing or (B) as to which the
Sellers or any directors and officers (and employees responsible for Tax
matters) of the Company has knowledge based upon personal contact with any agent
of such authority. ss.3(p) of the Disclosure Schedule lists all federal, state,
local, and foreign income Tax Returns filed with respect to the Company for
taxable periods ended on or after December 31, 1991, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are the
subject of audit. The Seller shall deliver to the Buyer within 10 days after the
date of this Agreement correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Company since December 31, 1991.
(iv) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The unpaid Taxes of the Company, including any such Taxes
that may arise as a result of the Closing pursuant to Code ss.1374, do not
exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto).
(vi) The Company has not made any payments, is not obligated
to make any payments and is not a party to any agreement that under certain
circumstance could oblige it to make any payment that will not be deductible
under Code ss.280G. The Company is not a party to any Tax allocation or sharing
agreement. The Company (A) has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return and (B) has no Liability for the Taxes of
any Person as a transferee or successor, by contract, or otherwise.
-16-
(vii) The Company (i) has made a timely and valid election to
be treated as an "S corporation" for federal and all applicable state and local
tax law purposes effective on February 1, 1987, (ii) has maintained its status
as a "small business corporation" within the meaning of section 1361(b) of the
Code, or any comparable provision of state or local law, at all times since the
effective date of such election, and (iii) at no time since such date has such S
corporation election been terminated or revoked pursuant to section 1362 of the
Code or any comparable provision of state or local law.
(viii) SCHEDULE 3(P)(VIII) accurately and completely sets
forth the Company's adjusted tax basis in its assets as at the Most Recent
Fiscal Year End.
(q) REAL PROPERTY.
(i) The Company owns no real property. ss.3(q)(i) of the
Disclosure Schedule lists and includes a legal description of all real property
that is the subject of the Related Party Leases.
With respect to each such parcel of real property, except as disclosed in
ss.3(q)(i) of the Disclosure Schedule:
(A) the identified owner has good title to the parcel
of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for real
estate mortgages, installments of special assessments not yet
delinquent and recorded easements, covenants, and other
restrictions which do not impair the current use or occupancy
of the property subject thereto;
(B) there are no pending or, to the Sellers'
Knowledge, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other
matters affecting adversely the current use or occupancy
thereof;
(C) to the Sellers' Knowledge the buildings and other
improvements located on such parcel (together, the
"IMPROVEMENTS") have received all approvals of governmental
authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have
been operated and maintained in accordance with applicable
laws, rules, and regulations;
(D) other than the Related Party Leases and the
leases for other space in the Improvements and agreements for
leased departments, in each case as detailed on ss.3(q)(i) of
the Disclosure Schedule, there are no leases, subleases,
licenses, concessions, or other agreements, written or oral,
granting to any party or parties the right of use or occupancy
of any portion of the parcel of real property;
(E) there are no outstanding options or rights of
first refusal to anyone other than the Company to purchase the
parcel of real property, or any portion thereof or interest
therein;
(F) except for the operators of leased departments
and the tenants of other space in the Improvements specified
on ss.3(q)(i) of the Disclosure Schedule there are no parties
in possession of the parcel of real property, other than the
Company as tenant under the Related Party Leases;
(G) all Improvements are supplied with utilities
and other services necessary for their operation; and
-17-
(H) each parcel of real property abuts on and has
direct vehicular access to a paved public road.
(ii) ss.3(q)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the Company.
ss.3(q)(ii) of the Disclosure Schedule also identifies the leased or subleased
properties for which title insurance policies are to be procured in accordance
with ss.5(h)(ii) below. The Sellers have delivered to the Buyer correct and
complete copies of the leases and subleases listed in ss.3(q)(ii) of the
Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in ss.3(q)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect subject to the
rights of creditors generally under applicable laws and to the
rights of any prior mortgagees of the fee interest in the
property which is the subject of the lease or sublease;
(B) upon receipt of any landlord consents identified
as necessary on ss.3(q)(ii) of the Disclosure Schedule, the
lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the
-18-
consummation of the transactions contemplated hereby subject
to the rights of creditors generally under applicable laws and
to the rights of any prior mortgagees of the fee interest in
the property which is the subject of the lease or sublease;
(C) no party to the lease or sublease is in breach or
default, and to the Sellers' Knowledge no event has occurred
which, with notice or lapse of time, would constitute a breach
or default or permit termination, modification, or
acceleration thereunder;
(D) no party to the lease or sublease has repudiated
any provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(F) with respect to each sublease, to the Sellers'
Knowledge, the representations and warranties set forth in
subsections (A) through (F) above are true and correct with
respect to the underlying lease;
(G) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(H) except for the operators of leased departments as
defined on ss.3(q)(ii) of the Disclosure Schedule, there are
no parties in possession of the leased premises, other than
the Company as tenant under a lease disclosed in ss.3(q) of
the Disclosure Schedule;
(I) to the Sellers' Knowledge, all Improvements
located on the leased or subleased premises have received all
approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and
have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(J) all Improvements located on the leased or
subleased premises are supplied with utilities and other
services necessary for the current operation of said
facilities; and
(K) to the Sellers' Knowledge the owner of the
facility leased or subleased has good and marketable
-19-
title to the parcel of real property, free and clear of any
Security Interest, easement, covenant, or other restriction,
except to the extent the same is junior to the applicable
lease or sublease, except for Security Interests granted or
created by the owner, real estate taxes, installments of
assessments not yet delinquent and easements, covenants, and
other restrictions which do not impair the current use or
occupancy of the property subject thereto.
(iii)other than real property comprising part of the Excluded
Assets, the real property described on Schedules 3(q)(i) and 3(q)(ii)
constitutes all real property used in connection with the Company's business.
(r) INTELLECTUAL PROPERTY.
(i) ss.3(r)(i) of the Disclosure Schedule hereto sets forth a
complete and correct list (including expiration dates) of all (a) patented or
registered Intellectual Property and pending patent applications or other
applications for registrations of any Intellectual Property owned or filed by
the Company; (b) all trade names and unregistered trademarks used by the Company
in connection with its business; and (c) all license agreements relating to the
Intellectual Property to which the Company is a party.
(ii) Except as set forth in ss.3(r)(ii) of the Disclosure
Schedule, with respect to the Intellectual Property: (a) the Company owns and
possesses all right, title and interest an and to, or has a valid and
enforceable license to use, the Intellectual Property necessary for the
operation of the Company's business as currently conducted; (b) no claim by any
third party contesting the validity, enforceability, use or ownership of any of
the Intellectual Property has been made or, to the knowledge of the Company, is
threatened; (c) the Company has not received any notices of any infringement or
misappropriation by any third party with respect to the Intellectual Property;
(d) the Company has not infringed, misappropriated or otherwise conflicted with
any proprietary rights of any third parties; and (e) all of the Intellectual
Property owned or used by the Company immediately prior to the Closing will be
owned or available for use by the Company immediately after the Closing.
(s) TANGIBLE ASSETS. The Company owns or leases all buildings,
machinery, equipment, and other tangible assets used or useful in the conduct of
its business as presently conducted and as presently proposed to be conducted.
Each such tangible
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asset has been maintained in accordance with normal industry
practice, is in operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used and
presently is proposed to be used.
(t) INVENTORY. All inventory of the Company is (a) of good and
merchantable quality for sale in the Ordinary Course of Business as first
quality goods at normal markups and not damaged, crushed, defaced, defective,
obsolete or shopworn, or subject to recall or (b)(i) nonsalable but returnable
to vendors for credit at its net realizable value (as reflected in the Company's
books and less any costs of returning such goods) and not in excess of $110,000
or (ii) except for markdowns on last season's merchandise on a point-of-sale
basis, marked down by the Company to a saleable price and reflected on the Most
Recent Financial Statements delivered to the Buyer hereunder, and (c) in
conformity with all applicable government requirements. Any inventory that is
nonsalable and nonreturnable to vendors has been marked down to $0 for financial
statement purposes. Except for markdowns on last season's merchandise on a
point-of-sale basis, which markdowns are currently being promoted, and seasonal
products retained in the Ordinary Course of Business for future sale, all
markdowns shall be accrued on the Closing Financial Statements to the extent not
already taken to realize the normally maintained margins upon future sales and
recorded in the Company's books and records to properly reflect the value of the
inventory in the Ordinary Course of Business consistent with past practices.
(u) CONTRACTS. ss.3(u) of the Disclosure Schedule lists the
following contracts and other agreements to which the Company is a party and
which are not being terminated at Closing:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $10,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a loss to the Company, or involve consideration in
excess of $50,000;
(iii) any agreement concerning a partnership or joint venture;
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(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$10,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition
with anyone other than the Parent;
(vi) any agreement involving any Seller or any Affiliate of a
Seller (other than the Company) other than the Related Party Leases;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees (other than the Executive Compensation
Agreements);
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits
(other than the Executive Compensation Agreements);
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or currently
anticipated prospects of the Company's business being acquired pursuant
to this Agreement, other than the Bank Agreement; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
The Sellers have delivered to the Buyer a correct and complete copy of each
written agreement listed in ss.3(u) of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in ss.3(u) of the Disclosure Schedule. With respect to
each such agreement: (A) the agreement is legal, valid, binding, enforceable,
and in full force and effect subject to creditors rights generally; (B) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby subject to creditors
-22-
rights generally; (C) no party is in breach or default, and to Sellers'
Knowledge no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(v) NOTES AND ACCOUNTS RECEIVABLE/PAYABLE. To the Sellers'
Knowledge, all notes and accounts receivable of the Company are reflected
properly on its books and records, are valid receivables subject to no setoffs
or counterclaims (other than for returned goods) are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company. As of the Most Recent Fiscal Year End, except in
respect of disputed items, no accounts payable by the Company were past due and
there has been no change in the payment terms or aging of such accounts since
the immediately preceding fiscal year end.
(w) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
(x) INSURANCE. ss.3(x) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Seller has been a party,
a named insured, or otherwise the beneficiary of coverage at any time within the
past 10 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated
and operate) of coverage; and
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(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements together with three years of loss
experience under any such arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in ss.2 above);
(C) no party to the policy is in breach or default (including with respect to
the payment of premiums or the giving of notices), and to Sellers' Knowledge no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination, modification, or acceleration,
under the policy; and (D) no party to the policy has repudiated any provision
thereof. The Company has been covered during the past 10 years by insurance in
scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period. ss.3(x) of the Disclosure Schedule
describes any self-insurance arrangements affecting the Seller.
(y) LITIGATION. ss.3(y) of the Disclosure Schedule sets forth
each instance in which the Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or to the Sellers'
Knowledge, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in ss.3(y) of the Disclosure Schedule could result in
any material adverse change in the business, financial condition, operations,
results of operations, or future prospects of the Company. No Seller nor any
director or officer (or employee with responsibility for litigation matters) of
the Company has any reason to believe that there is any Basis for any such
action, suit, proceeding, hearing, or investigation.
(z) PRODUCT LIABILITY. The Company has no Liability (and to
Sellers' Knowledge there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
it giving rise to any such Liability) arising out of any injury to individuals
or property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by the Seller.
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(aa) EMPLOYEES. To the knowledge of the Sellers and the
directors and officers (and employees with responsibility for employment
matters) of the Company, no executive, key employee, or group of employees has
any plans to terminate employment with the Company other than employees who are
also Sellers and the Trucking Employees. The Company is not party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. None of the Sellers and the directors and officers (and employees with
responsibility for employment matters) of the Company has any knowledge of any
unfair labor practice committed by the Company or of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company.
(bb) EMPLOYEE BENEFITS.
(i) ss.3(bb) of the Disclosure Schedule lists each Employee
Benefit Plan that the Company maintains or to which the Company
contributes.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements of
ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each such Employee Benefit Plan.
The requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code ss.4980B have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of the Company. All premiums or
other payments for all periods ending on or before the Closing
Date have been paid with respect to each such Employee Benefit
Plan which is an Employee Welfare Benefit Plan.
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(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code ss.401(a) and has received a
favorable determination letter from the Internal Revenue
Service or has been filed within the remedial amendment period
with all changes required by the 1986 Tax Reform Act.
(E) Except as disclosed in the notes to the Most
Recent Financial Statements, the market value of assets under
each such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) equals or
exceeds the accumulated benefit obligation for such employee
pension benefit plan as determined in accordance with GAAP and
shown in the Most Recent Financial Statements.
(F) The Sellers have delivered to the Buyer correct
and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Company
maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted or
threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the
-26-
assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or threatened. None of the
Sellers nor any director or officer (and employees with
responsibility for employee benefits matters) of the Company
has any knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(C) The Company has not incurred, none of the Sellers
nor any director or officer (or employees with responsibility
for employee benefits matters) of the Company has any reason
to expect that the Seller will incur; any Liability to the
PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or
under the Code with respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(D) The Company does not contribute to, or ever has
been required to contribute to any Multiemployer Plan or has
any Liability (including withdrawal Liability) under any
Multiemployer Plan.
(iii) Other than the plans referred to in ss.7(f)(C) and
ss.7(g), the Company does not maintain or ever has maintained or
contribute, ever has contributed, or ever has been required to
contribute to any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code ss.4980B).
(cc) GUARANTIES. Except for liability in its capacity as a
partner of Milliken Partners, Limited, the Company is not a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
(dd) ENVIRONMENT, HEALTH, AND SAFETY.
(i) To the Sellers' Knowledge, Each of the Company, its
predecessors and Affiliates has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence, to
the Sellers' Knowledge each of the Company, its predecessors and
Affiliates has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other
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authorizations which are required under, and has complied with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health, and Safety Laws.
(ii) To the Sellers' Knowledge, the Company has no Liability
(and none of the Company, its predecessors or Affiliates has handled or
disposed of any substance, arranged for the disposal of any substance,
exposed any employee or other individual to any substance or condition,
or owned or operated any property or facility in any manner that could
form the Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any
of the Company, its predecessors or Affiliates giving rise to any
Liability) for damage to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health,
and Safety Law.
(iii) To the Sellers' Knowledge, all properties and equipment
used in the business of the Company, its predecessors or Affiliates
have been free of friable asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-trans- dichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
(ee) CERTAIN BUSINESS RELATIONSHIPS WITH THE SELLER. Except as
set forth in ss.3(ee) of the Disclosure Schedule and otheR than the Related
Party Leases and the Equipment Leases and advances to Affiliates of the Seller
which have been repaid prior to or will be repaid on Closing, none of the
Sellers nor any of their respective Affiliates has been involved in any
transaction with the Company within the past 12 months, and neither the Sellers
nor any of their respective Affiliates owns any asset, tangible or intangible,
which is used in the business of the Company.
(ff) DISCLOSURE. The representations and warranties contained
in this ss.3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this ss.3 not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer represents and warrants to the Sellers that
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the statements contained in this ss.4 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this ss.4).
(a) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder and under the Related
Party Leases. Without limiting the generality of the foregoing, the board of
directors of the Buyer has duly authorized the execution, delivery and
performance of this Agreement and the Related Party Leases by the Buyer. This
Agreement constitutes, and when executed by the Buyer the Related Party Leases
will constitute, the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). The Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement except as described in ss.5(b).
(d) BROKERS' FEES. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
(e) INVESTMENT. The Buyer is not acquiring the Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
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(f) FINANCIAL STATEMENTS. Attached hereto as Schedule 4(f) are
the audited balance sheet and statement of income, changes in stockholder's
equity, and cash flow as of and for the fiscal year ended February 3, 1996, for
the Parent, which financial statements (including the notes thereto) have been
prepared in accordance with GAAP, present fairly the financial condition of the
Parent as of such date and the results of operations of the Parent for such
period and are correct and complete in all material respects.
SECTION 5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period
between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use its best efforts to
take all action and to do all things necessary or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.6 below).
(b) NOTICES AND CONSENTS. The Sellers will give any notices to
third parties, and the Sellers will obtain any third party consents described in
ss.3(c) and (h) above. Each of the Parties will give any notices to, make any
filings with, and use its best efforts to obtain any authorizations, consents,
and approvals of governments and governmental agencies in connection with the
matters referred to in ss.3(c) and (h) and ss.4(c) above. Without limiting the
generality of the foregoing, each of the Parties will file any Notification and
Report Forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the Hart-Scott-Rodino Act, will use its best efforts
to obtain an early termination of the applicable waiting period, and will make
any further filings pursuant thereto that may be necessary or advisable in
connection therewith. The Buyer will pay the filing fees incurred in connection
with the Hart-Scott-Rodino filings.
(c) OPERATION OF BUSINESS. The Sellers will ensure that the
Company does not engage in any practice, take any action, or enter into any
transaction of the sort described in ss.3(m) above. In addition, the Sellers
will ensure that the Company does not (i) declare, set aside, or pay any
dividend or make any distribution with respect to its capital stock (other
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than Permitted Tax Distributions) or redeem, purchase, or otherwise acquire any
of its capital stock, (ii) pay any amount to any third party with respect to any
Assumed Liability or obligation (including any costs and expenses the Sellers
have incurred or may incur in connection with this Agreement and the
transactions contemplated hereby), (iii) make any change in its accounting
practices, procedures or methods or its cash management practices; or (iv)
except for a Permitted Tax Distribution, the termination of the Executive
Compensation Agreements or any disposition of the Excluded Assets, make any
agreement or arrangement or consummate any property transfer or other
transaction with any of its Affiliates, officers, stockholders or employees
including, without limitation, any (A) loan or advance of funds to any such
person, or (B) the creation or discharge of any intercompany account; PROVIDED;
that the disposition of the Excluded Assets shall be consummated so that the
Company has no residual liability in respect of any assets (including any lease)
disposed of.
(d) PRESERVATION OF BUSINESS. The Sellers will ensure that the
Company keeps its business and properties substantially intact, including its
present operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
(e) FULL ACCESS. Upon reasonable prior notice to the Sellers,
the Sellers shall give the Buyer and its authorized representatives (including
their independent public accountants, environmental consultants, attorneys and
any other consultants the Buyer reasonably deems necessary) reasonable access
during normal business hours to the Company's executive officers, employees,
properties, books and records, and bankers and shall furnish the Buyer and its
respective authorized representatives with such financial and operating data and
other information concerning the business and properties of the Company as the
Buyer may from time to time reasonably request.
(f) NOTICE OF DEVELOPMENTS. Each Party will give prompt
written notice to the other Party of any material adverse development causing a
breach of any of the representations and warranties of it in ss.3 or ss.4 above
or any of the conditions set forth in ss.6 below.
(g) EXCLUSIVITY. The Sellers will not (i) solicit, initiate,
or encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Company (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
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any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing.
(h) CLOSING BOOKS. The Sellers shall cause the Company to be
in a position to close its books as at the Closing and to prepare the Closing
Financial Statements.
SECTION 6. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of
the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Sellers shall have performed and complied with all of
their respective covenants hereunder in all material respects through
the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Buyer to own the
Shares;
(iv) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in ss.6(a)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated and the Sellers and the Buyer shall have
received all other authorizations, consents, and approvals of
governments and governmental agencies referred to in ss.3(c) and (h)
and ss.4(c) above;
(vi) the Related Party Leases shall have been entered
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into by each of the persons party thereto (other than the Buyer)
together with memoranda thereof in form satisfactory for recording and
shall be in full force and effect and there shall be no default under
any of them;
(vii) the Sellers have obtained and delivered to the Buyer the
consents described in ss.3(h) of the Disclosure Schedule, other than
any consent required pursuant to the Bank Agreement;
(viii) the Sellers shall have entered into an assumption
agreement in the form attached as EXHIBIT B with respect to the Assumed
Liabilities;
(ix) the Sellers shall have delivered releases from the
counter parties to the stock appreciation rights unconditionally
releasing the Company from its obligations thereunder upon payment of
termination amounts not exceeding $27,218 in aggregate;
(x) the Sellers shall have delivered executed amendments of
the First Weston head office lease, the First Weston hanging warehouse
lease, the Robert M. Uhlman Flat Warehouse lease, providing that such
leases are terminable by the Company's on one month's notice and
without additional cost to the Company;
(xi) the Sellers shall have delivered releases from each of
the holders of the Stockholder Notes and the lessors of the Equipment
Leases unconditionally releasing the Company from its obligations under
the Stockholder Notes and Equipment Leases respectively;
(xii) the Sellers shall have delivered releases from the
Milliken Partnership and each of its partners (other than the Company)
unconditionally releasing the Company from and indemnifying the Company
with respect to, Liabilities arising out of the Company's acting or
purporting to act as general partner of the Partnership;
(xiii) Vail shall have delivered the Interim Services
Agreement in the form attached as EXHIBIT E hereto executed by the
parties thereto and in full force and effect;
(xiv) the Sellers shall have delivered at least 2 days before
Closing (A) the Closing Financial Statements (B) the unaudited balance
sheet as at the end of, and statement of income, changes in
stockholders' equity and cashflow for, the first fiscal quarter of 1996
prepared in accordance with
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Regulation S-X of the Securities Act and (C) the projected unaudited
balance sheet as of the Closing Date and statement of income, changes
in stockholders' equity and cash flow for the period from February 3,
1996 through the Closing Date, for the Company each prepared in
accordance with GAAP;
(xv) the Buyer shall have received from counsel to the Sellers
an opinion in form and substance satisfactory to Buyer's counsel,
addressed to the Buyer and dated as of the Closing Date;
(xvi) the Buyer shall have obtained on terms and conditions
satisfactory to it all of the financing it needs in order to consummate
the transactions contemplated hereby and fund the working capital
requirements of the Company after the Closing;
(xvii) all actions to be taken by the Sellers in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer; and
(xviii) there shall be no material adverse difference between
the financial position of the Company as disclosed in the Most Recent
Financial Statements delivered on the date hereof and that disclosed in
the Closing Financial Statements except for those arising as a direct
result of seasonal losses since February 3, 1996 consistent with the
Company's performance in recent years, the making of a Permitted Tax
Distributions or the absence of Excluded Assets.
(b) CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of
each Seller to consummate the transactions to be performed by him or her in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in ss.4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
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administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contem plated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified above
in ss.6(b)(i)-(iii) is satisfied in all respects;
(v) the Related Party Leases shall have been entered into by
the Buyer together with memoranda thereof in form satisfactory for
recording and shall be in full force and effect and there shall be no
default under any of them;
(vi) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated and the Seller and the Buyer shall have
received all other authorizations, consents, and approvals of
governments and governmental agencies referred to in ss.3(c) and (h)
and ss.4(c) above;
(vii) the Sellers shall have received from counsel to the
Buyer an opinion in form and substance satisfactory to Sellers'
counsel, addressed to the Sellers and dated as of the Closing Date; and
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
SECTION 7. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period
following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such
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further instruments and documents by such Party or any of its Affiliates) as any
other Party reasonably may request, at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under ss.9 below). The Sellers acknowledge and agree that from and
after the Closing the Buyer will be entitled to possession of all documents,
books, records (including Tax records), agreements, and financial data of any
sort relating to the Company other than those related solely to Excluded Assets;
provided that copies of all such documents shall be made available to the
Sellers from time to time as the Sellers may reasonably request.
(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Seller, each of the other Parties will
cooperate with the contesting or defending Party and his or its counsel in the
contest or defense, make available his or its personnel, and provide such
testimony and access to his or its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under ss.9 below).
(c) TRANSITION. None of the Sellers will take any action that
is designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. The Sellers will refer all
customer inquiries relating to the businesses of the Company to the Company from
and after the Closing.
(d) CONFIDENTIALITY. All information disclosed in writing,
whether before or after the date hereof, pursuant to this Agreement or in
connection with the transactions contemplated by, or the discussions and
negotiations preceding, this Agreement to any other Party (or its
representatives) shall be kept confidential by such other Party and its
representatives and shall not be used by any Persons other than potential
financing sources of the Buyer and otherwise as contemplated by this Agreement,
except to the extent that (a) such information is known by the recipient when
received, (b) such information is or hereafter becomes lawfully obtainable from
other sources, (c) it
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is necessary or appropriate to disclose such information to a governmental body
having jurisdiction over the Party from whom disclosure is sought, (d) any
requirement of law or governmental rule or regulation requires otherwise, or (e)
such duty as to confidentiality is waived in writing by the other Party. If this
Agreement is terminated, each Party shall use all reasonable best efforts to
return upon written request from any other Party all documents (and
reproductions thereof) received by it or its representatives from such other
Party (and, in the case of reproductions, all such reproductions made by the
receiving party) that include information not within the exceptions contained in
the first sentence of this ss.7(d), unless the recipients provide assurances
reasonably satisfactory to the requesting party that such documents have been
destroyed.
(e) COVENANT NOT TO COMPETE. For a period of three years from
and after the Closing Date, neither Vail nor Sharon K. Vail will engage directly
or indirectly in any business that the Company conducts as of the Closing Date
in Ohio, Michigan or Indiana, other than the Trucking Business; provided,
however, that no owner of less than 1% of the outstanding stock of any publicly
traded corporation shall be deemed to engage solely by reason thereof in any of
its businesses. Further, during the three year period commencing on the Closing
Date neither Vail, Sharon K. Vail nor James L. Stainbrook will solicit the
employment, services or business (as the case may be) of (i) any of the
Available Employees employed by the Company during, the 3-year period commencing
on the Closing Date or the 180-day period commencing on the date any such
Available Employee is terminated by the Company, whichever lapses first, or (ii)
any present or future customers or suppliers of the Company (except, in the case
of customers and suppliers, in connection with the Trucking Business and except,
in the case of terminated employees, with the prior written consent of the
Company, such consent not to be unreasonably withheld). As consideration for the
undertakings given in this ss.7(e) and provided that no Party is in breach of
any such undertaking the Company shall pay to Vail three annual payments of
$150,000 each, payable in equal quarterly installments in arrears. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this ss.7(e) is invalid or unenforceable, the Parties agree that
the court making the determination of invalidity or unenforceability shall have
the power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
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(f) SEVERANCE BENEFITS TO CERTAIN EMPLOYEES.
(A) The Buyer shall cause the Company to pay to each of James
L. Stainbrook, Mason and Steketee the severance and other benefits
described on Schedule 7(f) at the times and subject to the conditions
set forth on that Schedule.
(B) Further, the Buyer shall cause the Company to pay to each
Available Employee (other than Mason and Steketee) who is employed in
the Company's central office or central distribution center or who is a
store manager or supervisor, and whose employment with the Company is
terminated (other than for cause) or who resigns after being demoted or
subjected to a reduction in pay (other than for cause), in each case
during the six (6) month period commencing on the Closing Date,
severance payments equal to at least one (1) week of his or her
compensation for each full year of service with the Company, but not
less than; (i), in the case of hourly wage employees, three (3) weeks
of compensation or (ii), in the case of the salaried employees listed
on Schedule 7(f) twelve (12) weeks of compensation (including during
that twelve (12) week period a contribution by the Company equal to
what would have been payable by the Company with respect to such
employee under the Company's health care plan, such contribution to be
used to satisfy in part amounts payable by that employee with respect
to COBRA). Any Available Employee (other than Mason and Steketee) who
is not entitled to receive the severance benefit provided in the
preceding sentence and whose employment with the Company is terminated
(other than for cause) or who resigns immediately after being demoted
or subjected to a reduction in pay (other than for cause) shall be
entitled to receive from the Company severance payments computed
pursuant to the Parent's plan applicable at the relevant time based
upon such employee's service with the Company at that time. All severed
employees shall also receive any vacation pay accrued in accordance
with the Company's written vacation policy and shall be entitled to
participate in one session of group counseling and up to 3 hours of
private counseling as part of a program to be arranged by the Company
at the Company's expense. The Buyer agrees (subject to compliance with
ERISA) to offer all Available Employees employed by the Company and who
would have been entitled to participate in the Company's current 401(k)
plan as at July 1, 1996, the right to participate as at July 1, 1996,
without regard to any eligibility or waiting period, in the section
401(k) plan operated by the Parent as at the Closing for the benefit of
the Parent's employees.
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(C) The Sellers agree to indemnify the Buyer and the Company
for the amount by which;
(i) the Closing Date value of certain unbooked
pension benefit to retirees of the Company, McGinnis and
Nicolls, as determined by Ernst & Young;
(ii) the Closing Date value of certain unbooked (or
included in the Company's books as transition obligations)
bridge health care benefits to retirees of the Company, as
determined by Ernst & Young;
(iii) 20% of the amount paid to Mason and 60% of the
amount paid to Steketee pursuant to ss.2(e)(i) above; and
(iv) the total of the amounts identified on Schedule
7(f) as being part of the amount chargeable to the Sellers
pursuant to this ss.7(f)(C) (being various portions of the
amounts payable by the Company pursuant to ss.7(f)(A) and
ss.7(f)(B)(ii)).
exceed in aggregate $500,000.00, such amount to be payable to the
Company as provided in Schedule 7(f) out of the escrow pursuant to the
terms of the Escrow Agreement.
(D) The Buyer agrees to use the proceeds from the current
insurance policy held by the Company with respect to Ann McHuron to
purchase annuities which will yield $600 per month, payable to Ann
McHuron on her retirement.
(g) TERMINATION OF CERTAIN BENEFIT PLANS. The Sellers agree to
cause the Company to "freeze" its 401(k) plan prior to the Closing. The Sellers
will supervise the Company's termination of the Defined Benefit Plan and the
Company's 401(k) plan as soon as practicable after the Closing and will have
sole discretion with respect to the appointment of attorneys, accountants and
actuaries involved in the termination process. The Company will co-operate with
respect to such terminations and will provide the funds necessary (as certified
by the trustees of the relevant plan) to terminate such plans. If appropriate
documentation terminating the Defined Benefit Plan and the Company's 401(k) plan
has not been filed with the PGBC and the Internal Revenue Service within
six-month of Closing the Company
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may proceed to terminate the benefit plan or plans with respect to
which no such filing has been made without the involvement of the Sellers and
may engage such persons as the Company deems appropriate. The amount by which
the total of all costs and expenses (including the amount of any under funding)
associated with the termination of the Company's 401(k) plan or the Defined
Benefit Plan, or both (whether conducted by the Sellers or the Company), exceeds
the under funding estimate deducted pursuant to ss.2(d) will be payable by the
Sellers to the Company by deduction from the escrow pursuant to the terms of the
Escrow Agreement and the Sellers indemnify the Company with respect to any such
amounts paid by the Company. If the total amount of such costs and expenses is
less than the under funding estimate deducted pursuant to ss.2(d), the Company
will reimburse the difference to the Sellers. The Company will, in determining
the amount, if any, payable by the Sellers under this Section, credit the
Sellers with interest on the amount of the underfunding estimate deducted
pursuant to ss.2(d) at the rate equal to that accruing on amounts held pursuant
to the Escrow Agreement from the date of the Closing for up to six months.
(h) CONTINUATION OF INSURANCE. For so long as the Sellers'
indemnity under ss. 9 remains in effect, the Buyer shall maintain in full force
and effect insurance coverage substantially equivalent to that coverage
maintained by the Buyer in the Ordinary Course of Business; PROVIDED, that in
circumstances where such coverage is less than (or has a greater deductible
than) the coverage maintained by the Company in the Ordinary Course of business
on the date hereof, the Sellers shall have no indemnity obligation to the Buyer
pursuant to this Agreement to the extent of such difference.
(i) MISCELLANEOUS INDEMNITIES. The Sellers agree to indemnify
the Buyer on demand for the following amounts (i) the amount, if any, by which
the Funded Debt of the Company as at the Most Recent Fiscal Year End was in
excess of $14,680,000, (ii) the amount, if any, by which the total amount
properly payable to terminate the stock appreciation rights described in
ss.2(e)(i) exceeds the amounts set forth in that section, (iii) the amount, if
any, by which the amount required to terminate the Equipment Leases at the
Closing exceeds $309,480 plus any interest due thereon since May 31, 1995 to the
date of Closing, (iv) the amount, if any, by which the amount required to repay
the Stockholder Notes at the Closing exceeds $1,113,265 plus any interest due
since May 31, 1996 to the date of Closing,(v) half of the amount paid by the
Company with respect to the counseling provided for severed employees pursuant
to ss. 7(f)B and (vi) amounts paid by the Company pursuant to ss.7(f)(B) with
respect to health care benefits during any period for which severance is
chargeable to the Sellers pursuant to ss.7(f)(c)(iv).
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SECTION 8. TAX MATTERS.
The following provisions shall govern the allocation of responsibility as
between Buyer and Sellers for certain tax matters following the Closing Date:
(a) SECTION 338(H)(10) ELECTION. The Sellers agree, if so
directed by the Buyer, to join with Buyer in making an election under Section
338(h)(10) of the Code (and any corresponding elections under state, local, or
foreign tax law) (collectively, a "Section 338(h)(10) Election") with respect to
the purchase and sale of the stock of the Company hereunder.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of the Company for Tax periods which begin before the Closing
Date and end after the Closing Date.
(c) COOPERATION ON TAX MATTERS.
(i) The Buyer, the Company and the Sellers shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The Company and the Sellers agree (A) to retain all books
and records with respect to Tax matters pertinent to the Company
relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent
notified by the Buyer or the Sellers, any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so
requests, the Company or the Sellers, as the case may be, shall allow
the other party to take possession of such books and records.
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(ii) The Buyer and the Sellers further agree, upon
request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(iii) The Buyer and the Sellers further agree, upon
request, to provide the other party with all information that either
party may be required to report pursuant to section 6043 of the Code
and all Treasury Department Regulations promulgated thereunder.
(d) CERTAIN TAXES. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees, if any, relating to the
transfer of the Shares hereunder, shall be paid by the Sellers when due, and the
Sellers will, at their own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable law, the
Buyer will, and will cause its affiliates to, join in the execution of any such
Tax Returns and other documentation.
(e) ALLOCATION OF PURCHASE PRICE. The Parties agree that the
Purchase Price and the liabilities of the Company will be allocated to the
assets of the Company for Tax purposes in accordance with Section 1060 of the
Code and as determined by the Company. The Buyer, the Company and the Sellers
will file all Tax Returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
SECTION 9. SURVIVAL AND INDEMNITY.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties hereto and the rights to
indemnification provided under thisss.9 shall survive the Closing and
shall continue (i), in the case of the representations and warranties
contained inss.3(a), (b), (c), (e), the first sentence of (f), (g), and
(j), andss.(4)(a), (b), (c) and (e) and the rights of indemnification
with respect thereto, forever; (ii), in the case of the representations
and warranties contained inss.3(p) andss.3(dd) and the rights of
indemnification with respect thereto, until all applicable statutes of
limitation have expired; (iii), in the case of all other
representations and warranties and the rights of indemnification with
respect thereto, the second anniversary of the Closing Date; PROVIDED,
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that in the event either Party gives written notice to the other Party
that either (x) a Third Party Claim has been received or (y) the
notifying Party has become aware of facts, events or circumstances, in
any such case which such Party believes in good faith may give rise to
a Third Party Claim for indemnification pursuant to this ss.9, prior to
the expiration oF the relevant survival period for the representation
or warranty to which such Third Party Claim relates, such
representation or warranty shall continue with respect only to such
Third Party Claim until such Third Party Claim is finally resolved.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
Subject to the provision of ss.9(c) below, in the event any of thE Sellers
breaches (or in the event any third party alleges facts that, if true, would
mean such Seller has breached) any of its representations, warranties, and
covenants contained in this Agreement, each of the Sellers jointly and severally
agrees to indemnify the Buyer from and against any Adverse Consequences the
Buyer or the Company may suffer resulting from, arising out of, relating to, or
caused by the breach (or the alleged breach) including by virtue of any Assumed
Liability becoming a Liability of the Company. Any indemnification payable by
the Sellers to the Buyer pursuant to this ss.9(b) shall be paid within
twenty-five dayS of Buyer's request therefor.
(c) MAXIMUM LIABILITY FOR CERTAIN BREACHES. The Buyer shall
have no claim for indemnification and no Seller shall have any obligation to
indemnify and reimburse the Buyer pursuant to ss.9(b) in respect of any breach
of a representation or warranty referred to in ss.9(a)(ii) or (iii) (but
excluding a breach of ss.3(p)) unless and until the aggregate of all claims for
indemnification for breaches of the representations and warranties referred to
in ss.9(a)(ii) or (iii) (but excluding a breach of ss.3(p)) exceeds $200,000
whereupon all amounts (including the aforementioned $200,000) may be claimed and
are recoverable hereunder. The Sellers' liability with respect to the
representations and warranties referred to in ss.9(a)(iii) shall in no event
exceed the sum of $1,500,000. Notwithstanding anything in this Agreement to the
contrary, the provisions of this ss.9(c) shall not apply to any claims made with
respect to the breach of any other provision of this Agreement; including any
representations or warranties contained in this Agreement and not specifically
referred to in this ss.9(c).
(d) SATISFACTION OF CLAIMS. Notwithstanding any other
provision of this ss.9, the Buyer shall satisfy any claims it might have against
the Sellers under this Agreement with respect to breaches of the representations
and warranties contained in this Agreement first, in accordance with provisions
of the Escrow Agreement by recourse to the funds and assets held from time to
time pursuant to the terms of the Escrow Agreement until such funds and assets
are exhausted and thereafter by recourse to the Sellers who shall be jointly and
severally liable for the payment of any such claims which by the terms of this
ss.9 survive the termination of the Escrow Agreement. Payment shall be made to
the claimant within twenty-five days after it has become due under this
Agreement.
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(e) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS. In
the event the Buyer breaches (or in the event any third party alleges facts
that, if true, would mean the Buyer has breached) any of its representations,
warranties, and covenants contained in this Agreement, the Buyer and the Company
each agrees to indemnify the Sellers from and against any Adverse Consequences
the Sellers may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach). Further, the Buyer
and the Company shall hold each of the Sellers harmless, on an after-tax
basis,from any federal income tax liability of that Seller equal to the amount
determined by multiplying (A) any net ordinary income with respect to the sale
of the Company hereunder generated solely by that Seller making a Section
338(h)(10) election pursuant to ss.8 hereof and (B) any difference between the
federal tax rate applicable to individual capital gains and to the ordinary
income referred to in subparagraph (A) (not to exceed the difference between
39.6% and 28%). Net ordinary income for this purpose shall not include any gain
with respect to the sale of capital assets (including any net gain on the sale
of operating assets under Section 1231 of the Code). A tax determination
pursuant to this Section shall be deemed to be a claim by a third party subject
to the provisions of ss.9(f) hereof. Any indemnification payable by the Buyer
pursuant to this ss.9(e) shall be paid within twenty-five days of Sellers'
written demand therefore accompanied by supporting documentation.
(f) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnifi cation against any other
Party (the "Indemnifying Party") under this ss.9, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
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(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
15 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business
interests of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with ss.9(f)(ii) above,
(A) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not
to be withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in ss.9(f)(ii) above
is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party
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promptly and periodically for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and expenses), and
(C) the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this ss.9.
(g) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
take into account the time cost of money in determining Adverse Consequences for
purposes of this ss.9. All indemnification payments under this ss.9 shall be
deemed adjustments to the Purchase Price.
(h) INDEMNIFICATION PROVISIONS EXCLUSIVE. The foregoing
indemnification provisions are intended to provide the exclusive remedies of the
parties hereunder. Any other statutory, equitable, or common law remedy any
Party may have for breach of representation, warranty, or covenant is hereby
waived; PROVIDED, however, that nothing in this Agreement derogates from any
remedy any party may have for a breach of a representation, warranty or covenant
based on common law fraud.
SECTION 10. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement by mutual written consent at any time prior to the Closing; the Buyer
may terminate this Agreement by giving written notice to the Sellers on or
before the tenth Business Day following the date of this Agreement if the Buyer
is not reasonably satisfied with the results of its continuing business, legal,
and accounting due diligence regarding the Company, the Sellers may terminate
this Agreement pursuant to ss. ____ of the Escrow Agreement and; any Party may
unilaterally terminate this Agreement by giving written notice to the other
Parties at any time prior to the Closing if the Closing shall not have occurred
on or before June 30, 1996, by reason of the failure of any condition precedent
under ss.6 hereof (unless the failure results primarily from the breach of any
representation, warranty, or covenant contained in this Agreement by the Party
seeking unilateral termination);
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to ss.10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach and any remedies provided
under the Escrow Agreement) and each Party shall return to any other Party from
whom it has obtained information and documents, such information and documents
and any copies thereof.
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SECTION 11. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Party which cannot be unreasonably withheld; PROVIDED, HOWEVER,
that any Party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
(b) NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party except that the Buyer may assign its rights
hereunder to any wholly-owned subsidiary of it or the Parent without the
Sellers' consent and the Sellers may assign their rights hereunder together with
any transfer of their Shares to one another or to members of their immediate
families or trusts solely for any of them, without the Buyer's or the Parent's
consent.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by FedEx or other nationally recognized courier,
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
IF TO THE SELLERS:
Roger S. Vail
4269 River Road
Toledo, Ohio 43614
WITH A COPY TO:
Barton L. Wagenman, Esq.
Shumaker, Loop & Kendrick
1000 Jackson
Toledo, Ohio 43624-1573
IF TO THE BUYER OR THE PARENT:
James A. Marcum
Specialty Retailers, Inc.
10201 Main Street
Houston, Texas 77025
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) SELLERS' REPRESENTATIVE. Each of the Sellers irrevocably
and unconditionally constitutes and appoints Vail to be his or her agent and
attorney-in-fact in connection with all matters pertaining to this Agreement
with the authority to:
(i) amend or waive any provision of this
-48-
Agreement (other than this ss.11(h)), provided that no such
amendment shall affect the rights or obligations of one Seller
vis-a-vis another Seller except in proportion to the
percentage of the Purchase Price received by each Seller;
(ii) give and receive all notices required or
permitted to be given or received on behalf of Sellers and to
make any claims against Buyer;
(iii)take any and all other action required or
permitted to be taken by Sellers pursuant to this Agreement;
and
(iv) make all claims on behalf of the Sellers and
settle and compromise all claims made by the Sellers, the
Buyer or the Company with respect to this Agreement.
The Sellers further agree that Vail shall be fully protected and saved harmless
by the Sellers in exercising, or in declining to exercise, any power provided
herein, as he in his sole discretion shall determine to be in the interest of
the Sellers. In the event of the death, resignation or other incapacity of Vail,
his successor under this provision shall be appointed by the Sellers or their
successors according to a majority of their shares of the Purchase Price
received. The Buyer is entitled to rely on any action taken or instrument
executed by Vail pursuant to this ss.11(h)and shall have no duty to inquire into
the circumstances in which such action is taken or such instrument is executed.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) SEVERABILITY. Any term or provision of this
-49-
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(l) EXPENSES. Each of the Buyer, the Parent and the Sellers,
will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
(m) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
(p) SUBMISSION TO JURISDICTION. Each of the Parties submits to
the non-exclusive jurisdiction of any state or federal court sitting in New
York, New York or Toledo, Ohio in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of
-50-
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on the other Party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in ss.11(g) above. Nothing in this ss.11(p), however,
shall affect the right of any Party to bring any action or proceeding arising
out of or relating to this Agreement in any other court or to serve legal
process in any other manner permitted by law or in equity. Each Party agrees
that a final judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other manner provided by
law or in equity.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the date first above written.
PALAIS ROYAL, INC.
By:-----------------------------
Name:
Title:
- --------------------------------
ROGER S. VAIL
- --------------------------------
SHARON K. VAIL
- --------------------------------
JAMES L. STAINBROOK
- --------------------------------
MELISSA A. UHLMAN
- --------------------------------
FRED W. UHLMAN, JR.
- -----------------------------------
ROBERT M. UHLMAN
- -----------------------------------
VIRGINIA U. NADER
-51-
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<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE SPECIALTY RETAILERS, INC. CONSOLIDATED
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
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<PERIOD-END> MAY-05-1996
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<INVENTORY> 166,303
<CURRENT-ASSETS> 250,735
<PP&E> 96,901
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0
0
<OTHER-SE> 27,477
<TOTAL-LIABILITY-AND-EQUITY> 395,985
<SALES> 163,177
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<TOTAL-COSTS> 38,947
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<INCOME-PRETAX> 8,103
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<CHANGES> 0
<NET-INCOME> 5,059
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