TRANSFER AND ADMINISTRATION AGREEMENT
TRANSFER AND ADMINISTRATION AGREEMENT (this "Agreement"),
dated as of June 30, 1999, by and among SAKS CREDIT CORPORATION, a
Delaware corporation, as transferor (the "Transferor"), SAKS
INCORPORATED, a Tennessee corporation ("Saks") as servicer (the
"Servicer"), ENTERPRISE FUNDING CORPORATION, a Delaware corporation
("EFC"), as a Conduit, NATIONSBANK, N.A., a national banking
association (together with its successors, "NationsBank"), as agent
for the Conduits and the Bank Investors (in such capacity, the
"Agent"), as a Class Agent, and individually as a Bank Investor and
the other Class Agents, Conduits and Bank Investors party hereto.
PRELIMINARY STATEMENT
WHEREAS, the Transferor desires to convey, transfer and
assign, undivided percentage interests in certain accounts
receivable, and the Conduits and the Bank Investors desire to
accept conveyance, transfer and assignment of such undivided
percentage interests, subject to the terms and conditions of this
Agreement,
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Account" shall mean each credit card account established
pursuant to an Account Agreement that is identified by account
number and by the Outstanding Principal Balance as of the Cut-Off
Date and listed on the Account Schedule. [List should include
current list of Mercantile accounts and existing list of
transitional accounts.]
"Account Agreement" shall mean the agreements and Federal
Truth in Lending Statement for Accounts, in substantially the form
attached as Exhibit A to this Agreement as such agreements or
statement may be amended, modified or otherwise changed from time
to time. [Attach forms for both Mercantile and transitional
accounts]
"Account Schedule" shall mean the schedule of Accounts (which
schedule may be in the form of a computer file or microfiche) of
the Transferor attached as Schedule A to this Agreement.
"Accrued Interest Component" means, with respect to each
Conduit, for any Collection Period, that portion of the Interest
Component of all Related Commercial Paper of such Conduit
outstanding at any time during such Collection Period which has
accrued from the first day through the last day of such Collection
Period, whether or not such Related Commercial Paper matures during
such Collection Period, based on the actual number of days in such
Collection Period that such Related Commercial Paper was
outstanding.
"Additional Investment Certificate" shall mean a certificate,
in substantially the form of Exhibit _ attached hereto,
appropriately completed and signed by an authorized officer of the
Servicer.
"Adjusted LIBOR Rate" means, with respect to each Class, with
respect to any period during which the return to the Bank Investors
or the Liquidity Provider of such Class is to be calculated by
reference to the London interbank offered rate, a rate which is
0.50% in excess of a rate per annum equal to the sum (rounded
upwards, if necessary, to the next higher 1/100 of 1%) of (A) the
rate obtained by dividing (i) the applicable LIBOR Rate by (ii) a
percentage equal to 100% minus the reserve percentage, if any, that
is used for determining any maximum reserve requirement as
specified in Regulation D (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that
is applicable to the applicable Class Agent during such period in
respect of eurocurrency or eurodollar funding, lending or
liabilities (or, if more than one percentage shall be so
applicable, the daily average of such percentage for those days in
such period during which any such percentage shall be applicable)
plus (B) the then daily net annual assessment rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) as estimated by
such Class Agent for determining the current annual assessment, if
any, payable by such Class Agent to the Federal Deposit Insurance
Corporation in respect of eurocurrency or eurodollar funding,
lending or liabilities.
"Administrative Agent" shall mean (i) NationsBank, as
administrative agent for EFC, (ii) [other Conduits], and (iii) with
respect to any other Conduit the financial institution or other
Person identified as Administrative Agent for such Conduit in any
supplement hereto.
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's
assets or properties in favor of any other Person (including any
UCC financing statement or any similar instrument filed against
such Person's assets or properties), provided, however, that an
Adverse Claim shall not be considered to exist with respect to a
Receivable solely as a result of an interest in such Receivable
existing in favor of either (x) the consignor of the merchandise
sold in connection with the creation of such Receivable or (y) the
owner of a leased department which sold the merchandise the sale of
which resulted in the creation of such Receivable.
"Affected Assets" means, collectively, the Receivables and the
Related Security, Collections and Proceeds relating thereto.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such Person. A Person
shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person,
whether through ownership of voting stock, by contract or
otherwise.
"Agent" means NationsBank, N.A., in its capacity as agent for
each Conduit and each Bank Investor, and any successor thereto
appointed pursuant to Article IX
"Aggregate Interest Component" means, with respect to each
Conduit, the sum of the Interest Components of all issued and
outstanding Related Commercial Paper of such Conduit.
"Aggregate Unpaids" means, with respect to each Class and the
Agent, at any time, an amount equal to the sum of (i) the aggregate
accrued and unpaid Carrying Costs for such Class at such time, (ii)
all amounts of the type included in the definition of "Carrying
Costs," with respect to each Conduit, which may accrue after such
time, (iii) the Net Investment for such Class at such time, (iv)
all other amounts owed (whether due or accrued) hereunder by the
Transferor to Class Agent, the Conduit and the Bank Investors of
such Class at such time, and (v) such Class's Class Share of all
other amounts owed (whether due or accrued) to the Agent at such
time.
"Arrangement Fee" means the fee payable by the Transferor to
the Administrative Agent of each Class pursuant to Section 2.7
hereof, the terms of which are set forth in the Fee Letter for each
such Class.
"Assignment Amount" with respect to a Bank Investor shall mean
at any time an amount equal to the lesser of (i) such Bank
Investor's Pro Rata Share of the Net Investment of its Class at
such time, (ii) such Bank Investor's unused Commitment, and (iii)
such Bank Investor's Pro Rata Share of the Net Receivables Balance
at such time.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement substantially in the form of Exhibit G
attached hereto.
"Bank Investors" shall mean, (i) with respect to the Class of
which EFC is a member, NationsBank and its successors and
assigns,(ii) [other Classes], and (iii) with respect to any other
Class, the financial institutions specified as such in any
supplement hereto and their respective successors and permitted
assigns.
"Bank Loan Agreement" means the Credit Agreement (364 Day
Facility) by and among Saks as Borrower, NationsBank as
Administrative Agent NationsBanc Montgomery Securities LLC as Lead
Arranger, Morgan Guaranty Trust Company of New York and The Chase
Manhattan Bank, as Co-Syndication Agents, Citibank, N.A., as
Documentation Agent and the Lenders from time to time party
thereto, dated September 17, 1998.
"Bankruptcy Code" means Title 11 of the United States Code, as
amended and modified from time to time.
"Base Rate" means, a rate per annum equal to the greater of
(i) the prime rate of interest announced by the applicable
Liquidity Provider (or, if there is more than one Liquidity
Provider with respect to a Class, then by the related Class Agent)
from time to time, changing when and as said prime rate changes
(such rate not necessarily being the lowest or best rate charged by
such Liquidity Provider (or, if there is more than one Liquidity
Provider with respect to a Class, then by the related Class Agent))
and (ii) the sum of (a) 1.50% and (b) the rate equal to the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by such
Liquidity Provider (or, if there is more than one Liquidity
Provider with respect to a Class, then by the related Class Agent)
from three Federal funds brokers of recognized standing selected by
it.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which the Transferor, or any
ERISA Affiliate of the Transferor is, or at any time during the
immediately preceding six years was, an "employer" as defined in
Section 3(5) of ERISA.
"Business Day" means any day excluding Saturday, Sunday and
any day on which banks in New York, New York, Charlotte, North
Carolina, Birmingham, Alabama or Chicago, Illinois are authorized
or required by law to close, and, when used with respect to the
determination of any Adjusted LIBOR Rate or any notice with respect
thereto, any such day which is also a day for trading by and
between banks in United States dollar deposits in the London
interbank market.
"Buyer's Percentage Interest" shall mean; for each Class, the
percentage equivalent of the fraction computed in accordance with
Section 2.1(e) hereof as follows:
NI
-----
RB
Where:
NI = the Net Investment for such Class at the time of such
computation less.
RB = the aggregate Net Receivables Balance at the time of such
computation.
Notwithstanding the foregoing computation, the Buyer's
Percentage Interest for any Class shall not exceed 100% and upon
the Termination Date, the Buyer's Percentage Interest with respect
to each Class shall be and remain fixed until such time as all
Aggregate Unpaids shall have been paid in full.
"Capitalized Leases" shall mean capital leases and subleases,
as defined in the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 13, dated November 1976, as
amended.
"Carrying Costs" shall mean, with respect to each Class, for
any Collection Period, the sum of (i) the sum of the dollar amount
of the related Conduit's obligations for such Collection Period
determined on an accrual basis in accordance with GAAP consistently
applied (a)(1) to pay interest with respect to Purchased Interests
pursuant to the provisions of the applicable Liquidity Provider
Agreement (such interest to be calculated based on the Adjusted
LIBOR Rate, provided that if a Termination Event shall have
occurred (other than a Termination Event set forth in Section
7.1(i) or 7.1(j)), such interest shall be calculated at the Base
Rate plus 2.00%) outstanding at any time during such Collection
Period accrued from the first day through the last day of such
Collection Period, whether or not such interest is payable during
such Collection Period and (2) to pay interest with respect to
amounts disbursed by the applicable Credit Support Provider
pursuant to the related Credit Support Agreement outstanding at any
time during such Collection Period, accrued from the first day
through the last day of such Collection Period, whether or not such
interest is payable during such Collection Period, (b) to pay the
Accrued Interest Component of its Related Commercial Paper with
respect to any Collection Period (for purposes of this clause (b),
Related Commercial Paper shall include Commercial Paper issued by
such Conduit to fund its Net Investment-even if such Commercial
Paper is issued in an amount in excess of such Net Investment), (c)
to pay the Dealer Fee with respect to such Related Commercial Paper
issued during such Collection Period, (d) to pay any past due
interest not paid in clauses (a) and (b) with respect to prior
Collection Periods and (e) to pay the costs of such Conduit with
respect to the operation of Sections 8.1 8.2. 8.3 and 8.4, (ii) the
Program Fee and the Facility Fee accrued from the first day through
the last day of such Collection Period whether or not such amount
is payable during such Collection Period and (iii) all interest
amounts due the related Bank Investors in accordance with Section
2.3(c), (d) and (e).
"Certificate" means the certificate issued to the Agent for
the benefit of the Conduits and the Bank Investors pursuant to
Section 2.1(d) hereof.
"Class" shall mean, as applicable, each of the following
groups: (i) EFC, as the Conduit for such Class, and the Bank
investors for such Class (as designated in the definition of "Bank
Investors"), (ii) [other Classes], and (iii) any other group which
is designated as a Class in any supplement hereto, which group
shall consist of a single multi-seller commercial paper conduit and
one or more related Bank Investors, in each case which Class shall
include the respective assigns and participants of the members
thereof.
"Class Agent" shall mean, (i) with respect to the Class of
which EFC is a member, NationsBank, (ii) [other Classes], and (iii)
with respect to any other Class, the financial institution or other
Person identified as the Class Agent for such Class in any
supplement hereto.
"Class Share" means, for each Class, the Net Investment of
such Class divided by the sum of the Net Investments of all Classes
or, if the Net Investment for all Classes have been reduced to zero
and any Aggregate Unpaids remain unpaid, "Class Share" shall be
determined for each Class by dividing the Aggregate Unpaids with
respect to that Class by the aggregate Aggregate Unpaids for all
Classes.
"Closing Date" means July 1, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means, with respect to any Class, such
Person to which the related Conduit shall have granted a security
interest to secure its obligations under Commercial Paper or its
obligations to any Liquidity Provider or, if such a security
interest has not been so granted, the applicable Class Agent.
"Collection Account" means the account, established by the
Agent, for the benefit of the Conduits and the Bank Investors,
pursuant to Section 2.12.
"Collection Period" shall mean each calendar month; provided,
that the first Collection Period shall begin on the Closing Date
and shall end on the last day of the calendar month containing the
Closing Date.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including,
without limitation, all Recoveries and collections of Finance
Charges, if any, and cash proceeds of Related Security with respect
to such Receivable.
"Commercial Paper" means, with respect to each Conduit the
promissory notes of such Conduit issued by such Conduit in the
commercial paper market.
"Commitment" shall mean, for each Bank Investor, the
commitment of such Bank Investor to make acquisitions from the
Transferor or the related Conduit in accordance herewith in an
amount not to exceed (i) for NationsBank, [other current Bank
Investors], the dollar amount set forth opposite such Bank
Investor's signature on the signature pages hereto under the
heading "Commitment" minus the dollar amount of any Commitment or
portion thereof assigned pursuant an Assignment and Assumption
Agreement in accordance with Section 9.7 hereof prior to the time
of determination, plus the dollar amount of any increase to such
Bank Investor's Commitment consented to by such Bank Investor prior
to the time of determination, (ii) in the case of a Bank Investor
for any other Class, the amount set forth in any supplement hereto
for the related Class, minus the dollar amount of any Commitment or
portion thereof assigned pursuant an Assignment and Assumption
Agreement in accordance with Section 9.7 hereof prior to the time
of determination, plus the dollar amount of any increase to such
Bank Investor's Commitment consented to by such Bank Investor prior
to the time of determination, and (iii) in the case of any
permitted assignee of a Bank Investor pursuant to Section 9.7
hereof, the amount set forth in the Assignment and Assumption
Agreement pursuant to which such assignee acquired its interest in
the applicable Transferred Interest and the applicable Net
Investment, minus the dollar amount of any Commitment or portion
thereof assigned pursuant an Assignment and Assumption Agreement in
accordance with Section 9.7 hereof prior to the time of
determination, plus the dollar amount of any increase to such Bank
Investor's Commitment consented to by such Bank Investor prior to
the time of determination.
"Commitment Termination Date" means, with respect to each
Class, June 29, 2000, or such later date to which the Commitment
Termination Date for a Class may be extended by Transferor, the
Class Agent for such Class and the Bank Investors of such Class not
later than 30 days prior to the then current Commitment Termination
Date for such Class.
"Conduit" shall mean, with respect to any Class, the member of
such Class which is a multi-seller commercial paper conduit.
"Conduit Assignee" shall mean any commercial paper conduit
administered by (i) NationsBank or Bank of America National Trust
and Savings Association and designated by NationsBank from time to
time to accept an assignment from EFC of all or a portion of the
Net Investment or (ii) any other Class Agent and designated by such
Class Agent from time to time to accept an assignment from the
related Conduit of all or a portion of the Net Investment.
"Credit Guidelines" shall mean the Servicer's credit and
collection policy or policies and practices relating to Accounts
and Receivables existing on the date hereof and referred to in
Exhibit B attached hereto, subject to the terms of the respective
Account Agreements, as modified and as supplemented from time to
time in compliance with Section 5.2(c).
"Credit Support Agreement" means, with respect to each
Conduit, the agreement between such Conduit and the applicable
Credit Support Provider evidencing the obligation of such Credit
Support Provider to provide credit support to such Conduit in
connection with the issuance by such Conduit of its Commercial
Paper.
"Credit Support Provider" means, with respect to each Conduit,
the Person or Persons who provides credit support to such Conduit
in connection with the issuance by such Conduit of its Commercial
Paper.
"Cut-Off Date" shall mean [June] 1999.
"DAF" shall mean Dillard Asset Funding Company, a Delaware
business trust.
"Dealer Fee" shall, with respect to each Conduit, have the
meaning assigned in the applicable Fee Letter for such Conduit.
"Deemed Collections" means any Collections on any Receivable
deemed to have been received pursuant to Section 2.8(a) or (b)
hereof
"Defaulted Receivable" means a Receivable: (i) as to which
any payment, or part thereof, remains unpaid on the last day7of the
seventh calendar month in which the related Obligor has failed to
make a qualifying minimum payment on a delinquent Account; (ii) as
to which the Transferor or the Servicer has received notice of the
death of, or the filing of a bankruptcy petition against, the
Obligor more than 30 days before the date of determination; (iii)
that has been identified by the Transferor or the Servicer as
uncollectible; or (iv) which, consistent with the Credit
Guidelines, should be written off as uncollectible.
"Delinquent Receivable" means a Receivable: (i) as to which
any payment or part thereof, remains unpaid for more than 30 days
from the original due date for such Receivable and (ii) which is
not a Defaulted Receivable.
"Determination Date" shall mean with respect to any Collection
Period, the twelfth day of the succeeding calendar month or, if
such twelfth day is not a Business Day, the Business Day next
succeeding such twelfth day.
"Discount Percentage" shall mean the percentage designated by
the Transferor pursuant to Section 2.5(e).
"Discount Receivables" shall have the meaning specified in
Section 2.5(e).
"Discount Receivable Collections" shall mean, for any day, the
product of (a) a fraction the numerator of which is the amount of
Discount Receivables and the denominator of which is the sum of the
Outstanding Principal Balance of the Receivables and the Discount
Receivables, in each case at the end of the prior Collection Period
and (b) Principal Collections (without giving effect to Discount
Receivables Collections) on such day.
"Early Collection Fee" means, with respect to each Class, for
any funding period during which the portion of the Net Investment
of such Class that was allocated to such funding period is reduced
for any reason whatsoever, the excess, if any, of (i) the
additional interest that would have accrued during such funding
period if such reductions had not occurred over (ii) the income, if
any, received by the recipient of such reductions from investing
the proceeds of such reductions.
"Eligible Account" shall mean, as of the Closing Date, each
Account in existence and owned by NGBL:
(a) that is payable in United States Dollars in the United
States;
(b) the credit card or cards related to which have not been
reported lost or stolen or designated fraudulent;
(c) that is not an Account as to which any of the Receivables
existing thereunder are Defaulted Receivables;
(d) that was created by [Saks Fifth Avenue], Mercantile or
NBGL in accordance with, or under standards no less stringent than,
the Credit Guidelines and, if created by [Saks Fifth Avenue] or
Mercantile, was purchased by NGBL from [Saks Fifth Avenue] or
Mercantile, respectively; and
(e) that respect to which NGBL has good title thereto, free
and clear of all Adverse Claims; and
(f) the Obligor on which has not been identified by the
Servicer or the Transferor in its computer files as having (i)
died, (ii) commenced, or had commenced in respect of such Obligor,
a case, action or proceeding under any law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking relief with respect to such Obligor's debts, or
seeking to have such Obligor adjudicated bankrupt or insolvent, or
to have a receiver, trustee, custodian or other similar official
appointed for such Obligor or for all or any substantial part of
such Obligor's assets or (iii) made a general assignment of such
Obligor's assets for the benefit of such Obligor's creditors, which
assignment is then in full force and effect.
"Eligible Investments" means any of the following (a)
negotiable instruments or securities represented by instruments in
bearer or registered or in book-entry form which evidence
(i) obligations fully guaranteed by the United States of America;
(ii) time deposits in, or bankers' acceptances issued by, any
depositary institution or trust company incorporated under the laws
of the United States of America or any state thereof and subject to
supervision and examination by Federal or state banking or
depositary institution authorities; provided, however, that at the
time of investment or contractual commitment to invest therein, the
certificates of deposit or short-term deposits, if any, or
long-term unsecured debt obligations (other than such obligation
whose rating is based on collateral or on the credit of a Person
other than such institution or trust company) of such depositary
institution or trust company shall have a credit rating from
Moody's and S&P of at least "P-1" and "A-1" respectively, in the
case of the certificates of deposit or short-term deposits, or a
rating not lower than one of the two highest investment categories
granted by Moody's and by S&P; (iii) certificates of deposit
having, at the time of investment or contractual commitment to
invest therein, a rating from Moody's and S&P of at least "P-1" and
"A-1," respectively; or (iv) investments in money market funds
rated in the highest investment category or otherwise approved in
writing by the applicable rating agencies; (b) demand deposits in
any depositary institution or trust company referred to in clause
(a)(ii) above; (c) commercial paper (having original or remaining
maturities of no more than 30 days) having, at the time of
investment or contractual commitment to invest therein, a credit
rating from Moody's and S&P of at least "P-1" and "A-1,"
respectively; (d) Eurodollar time deposits having a credit rating
from Moody's and S&P of at least "P-1" and "A-1," respectively; and
(e) repurchase agreements involving any of the Eligible Investments
described in clauses (a)(i), (a)(iii) and (d) hereof so long as the
other party to the repurchase agreement has, at the time of
investment therein, a rating from Moody's and S&P of at least "P-1"
and "A-1," respectively.
"Eligible Receivable" means, at any time, any Receivable:
(a) with respect to which, the related Account is an Eligible
Account;
(b) that (i) was originated by [Saks Fifth Avenue],
Mercantile or an Affiliate of Mercantile, or NBGL; (ii) was
purchased by the Transferor from [Saks Fifth Avenue], Mercantile or
an Affiliate of Mercantile or N`BGL pursuant to the Receivable
Purchase Agreement; and (iii) to which the Transferor has good
title thereto, free and clear of all Adverse Claims;
(c) that (together with the Collections and Related Security
related thereto) has been the subject of a valid transfer and
assignment from the Transferor to the Agent, on behalf of the
Conduits and the Bank Investors, of all of the Transferor's right,
title and interest therein;
(d) that arises pursuant to an Account with respect to which
[Saks Fifth Avenue] or Mercantile (if and to the extent
applicable), the Transferor and NGBL have performed their
respective obligations, including, without limitation, shipment of
the merchandise and/or the performance of the services purchased
thereunder;
(e) a purchase of which with the proceeds of Commercial Paper
would constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended;
(f) that is an "account," a "general intangible" or "chattel
paper" within the meaning of Article 9 of the UCC of all applicable
jurisdictions;
(g) that has arisen under an Account that is in full force
and effect and constitutes the legal, valid and binding obligation
of the related Obligor, enforceable against such Obligor in
accordance with its terms and is not subject to any litigation,
right of rescission, dispute, offset counterclaim or other defense
(except any potential reduction for returned merchandise);
(h) that was created in compliance, in all material respects,
with all laws, rules and regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to truth
in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices, privacy and
usury) and pursuant to an Account Agreement which complies, in all
material respects, with all such laws, rules and regulations;
(i) that (A) unless originated by [Saks Fifth Avenue] or
Mercantile or an Affiliate of Mercantile prior to the Closing Date,
satisfies all applicable requirements of the Credit Guidelines, (B)
has not been waived or modified except in accordance with the
Credit Guidelines and (C) is assignable without the consent of, or
notice to, the Obligor thereunder;
(j) with respect to which all material consents, licenses,
approvals or authorizations of, or registrations or declarations
with, any Governmental Authority required to be obtained, effected
or given by [Saks Fifth Avenue] or Mercantile, of applicable, or
NBGL in connection with the creation of such Receivable or the
execution, delivery, creation and performance by [Saks Fifth
Avenue] or Mercantile, if applicable, or by NBGL of the Account
Agreement pursuant to which such Receivable was created have been
duly obtained, effected or given and are in full force and effect;
(k) the assignment of which by the Transferor does not
violate, conflict or contravene any applicable law, rules,
regulations, orders or writs or any contractual or other
restriction, limitation or encumbrance;
(1) is not, on the Closing Date, a Defaulted Receivable; and
(m) is serviced by the Servicer or by a sub-servicer that is
an Affiliate of the Servicer or that is otherwise satisfactory to
the Agent and each Class Agent.
"ERISA" means the U. S. Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means, with respect to any Person, (i) any
corporation which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of Code) as such
Person; (H) a trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code)
with such Person; or (iii) a member of the same affiliated service
group (within the meaning of Section 414(n) of the Code) as such
Person, any corporation described in clause (i) above or any trade
or business described in clause (ii) above.
"Event of Bankruptcy" means, with respect to any Person, (i)
that such Person (a) shall generally not pay its debts as such
debts become due, (b) shall admit in writing its inability to pay
its debts generally or (c) shall make a general assignment for the
benefit of creditors; (ii) that any proceeding shall be instituted
by or against such Person seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other
similar official for it or any substantial part of its property or
(iii) if such Person is a corporation or other business entity,
such Person or any Subsidiary of such Person shall take any
corporate or other formal action as applicable, to authorize any of
the actions set forth in the preceding clauses (i) or (ii).
"Excluded Taxes" shall have the meaning specified in Section
8.3 hereof.
"Facility Fee" means, with respect to each Class, the fee
payable by the Transferor to the applicable Class Agent for
distribution to the Bank Investors of such Class pursuant to
Section 2.7(a) hereof, the terms of which are set forth in the Fee
Letter for such Class.
"Facility Limit" shall mean, (i) with respect to the Class of
which EFC is a member, $__________________ and (ii) [other
Classes], (iii) with respect to any other Class, the amount
indicated in any supplement hereto for such Class; provided that in
each case such amount may not at any time exceed the aggregate
Commitments for the related Bank Investors.
"Fee Letter" means, with respect to each Class, the letter
agreement dated the date hereof among the Transferor, Saks, the
applicable Conduit and the applicable Class Agent on behalf of the
Bank Investors of such Class, in each case with respect to the fees
to be paid by the Transferor hereunder, as amended, modified or
supplemented from time to time.
"Finance Charge Collections" shall mean that portion of the
Collections with respect to the Receivables which are properly
designated in the Accounts as Finance Charges, together with (i)
any Recoveries (net of liquidation expenses, if any) in respect of
Defaulted Receivables and Related Security with respect thereto and
(ii) all Discount Receivable Collections.
"Finance Charges" means, with respect to an Account any
periodic finance charges, late fees, returned check or NSF charges
or similar charges owing by an Obligor pursuant to such Account.
"GAAP" means generally accepted accounting principles as 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
accounting profession, which are in effect as of the date of this
Agreement.
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantor" means Saks, as the Guarantor under the Saks
Guaranty, and its successors and assigns.
"Guaranty" means, with respect to any Person any agreement by
which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or
otherwise becomes liable upon, the obligation of any other Person,
or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any
other creditor of such other Person against loss, including,
without limitation, any comfort letter, operating agreement or
take-or-pay contract and shall include, without limitation, the
contingent liability of such Person in connection with any
application for a letter of credit.
"Incremental Transfer" means a Transfer which is made pursuant
to Section 2.2(a) hereof.
"Indebtedness" means, with respect to any Person, without
duplication, such Person's (i) obligations for borrowed money
evidenced by a promissory note, bond or similar written obligation,
including, without limitation, conditional sales or similar title
retention agreements, (ii) obligations representing the deferred
purchase price of property other than accounts payable arising in
the ordinary course of such Person's business on terms customary in
the trade, (iii) obligations, whether or not assumed, secured by
hens or payable out of the proceeds or production from property now
or hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments,
and all liabilities of such Person by way of endorsements (other
than for collection or deposit in the ordinary course of business),
(v) Capitalized Lease obligations, (vi) obligations for which such
Person is obligated pursuant to a Guaranty, (vii) all Contingent
Obligations (as defined in the Bank Loan Agreement), (viii) all
obligations arising in connection with such Person's interest rate
hedging activities, but excluding all accounts payable and
accruals, in each case in the ordinary course of business and only
so long as payment therefor is due within one year; provided, that
in no event shall the term Indebtedness include surplus and
retained earnings, minority interest in Subsidiaries, lease
obligations (other than pursuant to Capitalized Lease obligations),
reserves for deferred income taxes and investment credits, other
deferred credits and reserves, and deferred compensation
obligations.
"Indemnified Amounts" has the meaning specified in Section 8.1
hereof.
"Indemnified Parties" has the meaning specified in Section 8.1
hereof.
"Interest Component" shall mean, (i) with respect to any
Commercial Paper issued on an interest-bearing basis, the interest
payable on such Commercial Paper at its maturity and (ii) with
respect to any Commercial Paper issued on a discount basis, the
portion of the face amount of such Commercial Paper representing
the discount incurred in respect thereof (including any dealer
commissions to the extent included as part of such discount).
"Investor Report" means a report, in substantially the form
attached hereto as Exhibit E or in such other form as is mutually
agreed to by the Transferor and the Agent, furnished by the
Servicer pursuant to Section 2.10 or 4.1(bb) hereof.
"Law" means any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction,
writ, decree or award of any Official Body.
"LIBOR Rate" means, with respect to any Collection Period, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in U. S. dollars at
approximately 11: 00 a.m. (London time) two London Business Days
before the first day of such Collection Period for a term of one
month. If for any reason such rate is not available, the term
"LIBOR Rate" shall mean, for any Collection Period, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in dollars at approximately 11:00 a.m.
(London time) two London Business Days before the first day of such
Collection Period for a term of one month; provided, however, if
more than one rate is specified on the Reuters Screen LIBO Page,
the applicable rate shall be the arithmetic mean of all such rates.
"Liquidity Provider" means, with respect to each Conduit, the
Person or Persons who will provide liquidity support to such
Conduit in connection with the issuance by such Conduit of its
Commercial Paper.
"Liquidity Provider Agreement" means the agreement between a
Conduit and the applicable Liquidity Provider evidencing the
obligation of the Liquidity Provider to provide liquidity support
to such Conduit in connection with the issuance by such Conduit of
its Commercial Paper.
"Majority Investors" shall mean, at any time, the Agent and
those Bank Investors which hold Commitments aggregating in excess
of 5 1 % of the aggregate of the Facility Limits for all Classes as
of such date.
"Material Adverse Effect" means any event or condition which
would have a material adverse effect on (i) the collectability of
the Receivables, (ii) the condition (financial or otherwise),
businesses or properties of the Transferor or Saks and its
Subsidiaries, taken as a whole, (iii) the ability of the Transferor
or Saks and its Subsidiaries, taken as a whole, to perform its
respective obligations under the Transaction Documents to which it
is a party or (iv) the interests of the Agent any Conduit or any
Bank Investor under the Transaction Documents.
"Maximum Buyer's Percentage Interest" means 88.5%.
"Mercantile" means Mercantile Stores Company Inc., a Delaware
corporation, and any Affiliate thereof, which shall include DAF.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001 (a)(3) of ERISA which is or was at any time during
the current year or the immediately preceding five years
contributed to by the Transferor or any ERISA Affiliate of the
Transferor on behalf of its employees.
"NBGL" means National Bank of the Great Lakes, a national
banking association, or any successor thereto by merger or
consolidation.
"Net Investment" means, with respect to each Class, the
Transfer Price paid by the Conduit or the related Bank Investors of
such Class, as applicable, less the aggregate amount of Collections
received and applied by the Agent to reduce such Net Investment
pursuant to Section 2.4 hereof, provided that such Net Investment
shall be restored and reinstated in the amount of any Collections
so received and applied if at any time the distribution of such
Collections is rescinded or must otherwise be returned for any
reason, and provided further that such Net Investment may be
increased by the amount described in Section 9.9(c) as described
therein.
"Net Portfolio Yield" shall mean, with respect to any
Collection Period, the annualized percentage equivalent of a
fraction, the numerator of which is the amount of Finance Charge
Collections allocated to the Net Investment during the Collection
Period less the sum of the Carrying Costs for all Classes for such
Collection Period less the aggregate Outstanding Principal Balance
of all Receivables which became Defaulted Receivables during such
Collection Period and allocated to the Net Investment during the
Collection Period less the Servicing Fee with respect to such
Collection Period and the denominator of which is the daily average
Net Investment for all Classes during such Collection Period.
"Net Receivables Balance" means the aggregate Outstanding
Principal Balance of Eligible Receivables, excluding the aggregate
balance of any Discount Receivables at such time.
"Net Worth" means, with respect to any Person and at any time,
an amount equal to such Person's net worth, calculated in
accordance with GAAP.
"Obligor" means any Person obligated to make payments under an
Account including any guarantor thereunder.
"Official Body" means any government or political subdivision
or any agency, authority, bureau, central bank, commission,
department or instrumentality of any such government or political
subdivision, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Other Transferor" means any Person other than the Transferor
that has entered into a receivables purchase agreement or transfer
and administration agreement with the Company.
"Outstanding Principal Balance" means, with respect to any
Receivable at any time, the then outstanding principal amount
thereof excluding any accrued and outstanding Finance Charges
related thereto and giving effect to the amount of any credit
balances and other adjustments existing with respect to such
Receivable on such day. The outstanding principal amount of any
Defaulted Receivables shall be considered to be zero for the
purposes of any determination hereunder of the aggregate
Outstanding Principal Balance of the Receivables or the Net
Receivables Balance.
"Person" means any corporation, limited liability company,
natural person, firm, joint venture, partnership, trust
unincorporated organization, enterprise, government or any
department agency or instrumentality of any government.
"Potential Termination Event" means an event that, but for the
passage of time or the giving of notice, or both, would constitute
a Termination Event.
"Principal Collections" shall mean with respect to any
Collection Period, all Collections received during such period
other than Finance Charge Collections.
"Pro Rata Share" means, for a Bank Investor, the Commitment of
such Bank Investor divided by the sum of the Commitments of all
Bank Investors in such Bank Investor's Class.
"Proceeds" means "proceeds" as defined in Section 9-306(l) of
the applicable UCC.
"Program Fee" means, with respect to each Class, the fee
payable by the Transferor to the Conduit of such Class pursuant to
Section 2.7 hereof, the terms of which are set forth in the Fee
Letter for such Class.
"Purchased Interest" means the interest in the Receivables
acquired by a Liquidity Provider through purchase pursuant to the
terms of the Liquidity Provider Agreement.
"Receivable" means the indebtedness owed to NBGL by any
Obligor under an Account (without giving effect to any transfer
under the Receivable Purchase Agreement or the predecessor
agreement thereto), whether constituting an account chattel paper,
instrument investment property or general intangible, arising
originally in connection with the sale or lease of merchandise or
the rendering of services, and includes the right to payment of any
Finance Charges and other obligations of such Obligor with respect
thereto.
"Receivable Purchase Agreement" means the Receivable Purchase
Agreement dated as of June 30, 1999 by and between the Transferor,
as buyer, and NBGL, as seller, as such agreement may be amended,
modified or supplemented from time to time. Such term shall
include any agreement document or instrument (including any bill of
sale) pursuant to which the Transferor may have acquired any
interest in any Receivables originated by [Saks Fifth Avenue] or
Mercantile or any Affiliate of Mercantile. [NBGL in this agreement
should provide representations and warranties as to the
receivables-even those it did not create (or at a minimum, NBGL
should have a buy-back obligation similar to that which it would
have if it actually made representations and warranties as to the
receivables it did not create).]
"Records" means all Account Agreements and other documents,
books, records and other information (including, without
limitation, computer programs, tapes, discs, punch cards, data
processing software and related property and rights) maintained
with respect to Receivables and the related Obligors.
"Recoveries" shall mean all amounts received or collected by
the Servicer with respect to Defaulted Receivables.
"Related Commercial Paper" shall mean, with respect to each
Conduit Commercial Paper issued by such Conduit the proceeds of
which were used to acquire, or refinance the acquisition of, an
interest in Receivables.
"Related Security" means with respect to any Receivable, all
of the Transferor's rights, title and interest, if any, in, to and
under:
(i) the merchandise (including returned or repossessed
merchandise), if any, the sale of which gave rise to such
Receivable;
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to
secure payment of such Receivable, whether pursuant to the
Account related to such Receivable or otherwise, together with
all financing statements signed by an Obligor describing any
collateral securing such Receivable;
(iii) all guarantees, indemnities, warranties, insur-
ance (and proceeds and premium refunds thereof) or other
agreements or arrangements of any kind from time to time
supporting or securing payment of such Receivable whether
pursuant to the Account related to such Receivable or
otherwise;
(iv) all Records related to such Receivable; and
(v) all rights and remedies of the Transferor under the
Receivable Purchase Agreement, together with all financing
statements filed by the Transferor against NBGL in connection
therewith; and
(vi) all Proceeds of any of the foregoing.
"Remittance Date" shall mean the sixteenth day of each month
of the Transferor beginning July 16, 1999, or, if such day is not
a Business Day, the Business Day next succeeding such sixteenth
day.
"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 Regulations B and Z of the
Board of Governors of the Federal Reserve System).
"Saks" means Saks Incorporated, a Tennessee corporation.
"Saks Guaranty" means the Guaranty and Purchase Agreement
dated as of the date hereof, between Saks and the Agent, on behalf
of each Conduit and each Bank Investor, substantially in the form
attached hereto as Exhibit C.
"Section 8.2 Costs" has the meaning specified in Section
8.2(d) hereof.
"Section 8.2 Item" means this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the
Transferred Interest the Receivables or payments of amounts due
under this Agreement or any Indemnified Party's obligation to
advance funds hereunder, under the Liquidity Provider Agreement or
the credit support furnished by the Credit Support Provider or
otherwise in respect of this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the
Transferred Interest or the Receivables.
"Servicer" means at any time the Person then authorized
pursuant to Section 6.1 to service, administer and collect
Receivables.
"Servicer Advance" shall have the meaning specified in Section
2.5(d).
"Servicer Default" has the meaning specified in Section 6.4
hereof.
"Servicing Fee" means the fee payable by the Conduits and/or
the Bank Investors to the Servicer in an amount equal to 2.0% per
annum (calculated on the basis of actual days elapsed divided by a
year consisting of 360 days) on the average daily amount of the sum
of the Net Investments for all classes, subject to adjustment as
set forth in Section 6.2(b) hereof. Such fee shall accrue from the
date of the initial purchase of an interest in the Receivables to
the date on which the Buyer's Percentage Interest for each Class is
reduced to zero. Such fee shall be payable only from Collections
pursuant to, and subject to the priority of payments set forth in,
Section 2.4 hereof, except as otherwise provided in Section 6.2(b)
hereof.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings
Services, a division of McGraw-Hill Companies, Inc.
"Subsidiary" of a Person means any Person more than 50% of the
outstanding voting interests of which shall at any time be owned or
controlled, directly or indirectly, by such Person or by one or
more Subsidiaries of such Person or any similar business
organization which is so owned or controlled.
"Taxes" shall have the meaning specified in Section 8.3
hereof.
"Telerate Page 3750" shall mean the British Bankers
Association Libor Rates (determined at 11:00 a.m. London time) that
are published by Telerate.
"Termination Date" means the earliest of (i) the Business Day
designated by the Transferor to each Conduit and/or each Bank
Investor as the Termination Date at any time following 30 days'
written notice to each such Person, (ii) the date of termination of
the commitment of any Liquidity Provider under any Liquidity
Provider Agreement (iii) the date of termination of the commitment
of any Credit Support Provider under any Credit Support Agreement,
(iv) the day upon which a Termination Date is declared or
automatically occurs pursuant to Section 7.2(a) hereof and (v) the
Commitment Termination Date for any Class.
"Termination Event" means an event described in Section 7.1
hereof.
"Transaction Costs" has the meaning specified in Section
8.4(a) hereof.
"Transaction Documents" means, collectively, this Agreement,
each Fee Letter, the Certificate, the Transfer Certificate, the
Receivable Purchase Agreement the Saks Guaranty and all of the
other instruments, documents and other agreements executed and
delivered by the Transferor, NBGL or Saks in connection with any of
the foregoing, in each case, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Transfer" means a conveyance, transfer and assignment by the
Transferor to a Conduit or to the Bank Investors of a Class, as
applicable, of an undivided percentage ownership interest in
Receivables hereunder.
"Transfer Certificate" has, with respect to each Class, the
meaning specified in Section 2.1(a) hereof.
"Transfer Date" shall mean the date of any Incremental
Transfer hereunder.
"Transfer Price" means with respect to any Incremental
Transfer, the amount paid to the Transferor by the Conduit or
related Bank Investors of a Class as described in the applicable
Transfer Certificate.
"Transferor" means Saks Credit Corporation, a Delaware
corporation, and its successors and permitted assigns.
"Transferred Interest" means, with respect to each Class, at
any time of determination, an undivided percentage ownership
interest of the members of such Class in (i) each and every then
outstanding Receivable, (ii) all Related Security, if any, with
respect to each such Receivable, (iii) all Collections with respect
thereto and (iv) any Proceeds of the foregoing, which undivided
ownership interest shall be equal to the Buyer's Percentage
Interest for the applicable Class at such time, and only at such
time (without regard to prior calculations). The Transferred
Interest for each Class in each Receivable, together with Related
Security, Collections and Proceeds with respect thereto, shall at
all times be equal to the Transferred Interest for such Class in
each other Receivable, together with Related Security, Collections
and Proceeds with respect thereto. To the extent that the
Transferred Interest for a Class shall decrease as a result of a
recalculation of the Buyer's Percentage Interest for such Class,
the Agent on behalf of the Conduit or the Bank Investors in such
Class, as applicable, shall be considered to have reconveyed to the
Transferor an undivided percentage ownership interest in each
Receivable, together with Related Security, Collections and
Proceeds with respect thereto, in an amount equal to such decrease
such that in each case the Transferred Interest for such Class in
each Receivable shall be equal to the Transferred Interest for such
Class in each other Receivable.
"UCC" means, with respect to any state, the Uniform Commercial
Code as from time to time in effect in such state.
"U.S." or "United States" means the United States of America.
"United States Dollars" or "$" means lawful currency of the
United States.
SECTION 1.2. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as
defined in such Article 9.
SECTION 1.3. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time
from a specified date to a later specified date, the word "from"
means "from and including" the words "to" and "until" each means
"to but excluding" and the word "within" means "from and excluding
a specified date and to and including a later specified date."
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility. Upon the terms and subject to the
conditions herein set forth, the Transferor shall sell, convey,
transfer and assign to the Conduit or the Bank Investors of any
Class, as applicable, and (x) each Conduit may, at its sole option,
accept such conveyance, transfer and assignment from the
Transferor, and (y) the Bank Investors of each Class shall, if the
related Conduit determines not to so accept and if requested,
accept such conveyance, transfer and assignment from the
Transferor, in each case without recourse except as provided
herein, of an undivided percentage ownership interest in each of
the Receivables, together with Related Security, Collections and
Proceeds with respect thereto, from time to time. By accepting any
conveyance, transfer and assignment hereunder, none of any Conduit
any Bank Investor nor the Agent assumes or shall have any
obligations or liability under any of the Accounts.
SECTION 2.2. Transfers, Certificates, Eligible Receivables.
(a) Transfers. (i) Upon the terms and subject to the
conditions herein set forth and provided that neither the
Termination Date nor the Commitment Termination Date for the
applicable Class shall have occurred, the Transferor may sell,
convey, transfer and assign to the Conduit or the Bank Investors of
any Class, as applicable, and (x) each Conduit may, at its sole
option, accept such conveyance, transfer and assignment from the
Transferor, and (y) the Bank Investors of each Class shall, if the
related Conduit determines not to so accept and if requested,
accept such conveyance, transfer and assignment from the
Transferor, in each case without recourse except as provided
herein, of an undivided percentage ownership interest in each of
the Receivables, together with Related Security, Collections and
Proceeds with respect thereto (each, an "Incremental Transfer)";
provided that after giving effect to the issuance of Related
Commercial Paper, if applicable, by any Conduit accepting an
Incremental Transfer to fund the applicable Transfer Price of any
Incremental Transfer and the payment to the Transferor of such
Transfer Price, the sum of the Net Investment of the related Class
plus the Interest Component of all outstanding Related Commercial
Paper of such Conduit would not exceed the Facility Limit for such
Class; and, provided further, that, after giving effect to such
Incremental Transfer, the Buyer's Percentage Interest for such
Class, shall not exceed such Class's Class Share of the Maximum
Buyers Percentage Interest; and provided further however, that the
representations and warranties set forth in Sections 3. 1 and 3.2
shall be true and correct both immediately before and immediately
after giving effect to any such Incremental Transfer and the
payment to the Transferor of the applicable Transfer Price and an
Additional Investment Certificate, dated a date within two (2) days
of date of the proposed Incremental Transfer shall have been
delivered by the Servicer to each Class Agent with respect to such
Incremental Transfer.
The Transferor shall, by notice to the Agent given by
telecopy, offer to convey, transfer and assign to either the
Conduit or the Bank Investors of any Class, as applicable,
undivided percentage ownership interests in the Receivables and the
other Affected Assets relating thereto at least two (2) Business
Days prior to the proposed date of any Incremental Transfer. Each
such notice shall specify (w) whether such request is made to the
Conduit or the Bank Investors of such Class (it being understood
and agreed that once the Bank Investors of such Class acquire any
Transferred Interest hereunder, such Bank Investors shall be
required to purchase all Transferred Interest held by the related
Conduit in accordance with Section 9.9 and thereafter such Conduit
shall no longer accept any additional Incremental Transfers
hereunder), (x) the desired Transfer Price (which shall be at least
$1,000,000 or integral multiples of $100, 000 in excess thereof)
or, to the extent that the then available unused portion of the
Facility Limit for such Class is less than such amount such lesser
amount equal to such available portion of such Facility Limit), and
(y) the desired date of such Incremental Transfer. The Agent will
promptly notify the applicable Conduit or each of the applicable
Bank Investors (which such notice shall be deemed given if given to
the related Class Agent), as the case may be, of the Agent's
receipt of any request for an Incremental Transfer to be made to
such Person. To the extent that any such Incremental Transfer is
requested of a Conduit, such Conduit shall accept or reject such
offer by notice given to the Transferor and the Agent by telephone
or telecopy by no later than the close of its business on the
Business Day following its receipt of any such request. Each
notice of proposed Transfer shall be irrevocable and binding on the
Transferor and the Transferor shall indemnify each Conduit and each
Bank Investor against any loss or expense incurred by such Conduit
or such Bank Investor, either directly or indirectly (including
through the related Liquidity Provider Agreement) as a result of
any failure by the Transferor to complete such Incremental Transfer
including, without limitation, any loss or expense incurred by any
Conduit or any Bank Investor, either directly or indirectly
(including pursuant to the related Liquidity Provider Agreement) by
reason of the liquidation or reemployment of funds acquired by such
Conduit (or the related Liquidity Provider) or any Bank Investor
(including, without limitation, funds obtained by issuing
commercial paper or promissory notes or obtaining deposits as loans
from third parties) for any Conduit or any Bank Investor to fund
such Incremental Transfer.
On the date of the initial Incremental Transfer with respect
to each Class, the Agent (at the direction of the applicable Class
Agent), on behalf of the Conduit or the Bank Investors of such
Class, as applicable, shall deliver written confirmation to the
Transferor of the Transfer Price applicable to such initial
Incremental Transfer and the Transferor shall deliver to the Agent
(with a copy to the applicable Class Agent) a Transfer Certificate
in the form of Exhibit F hereto (for each Class, a "Transfer
Certificate"). The Agent shall indicate the amount of the initial
Incremental Transfer for each Class together with the date thereof
on the grid attached to the applicable Transfer Certificate. On
the date of each subsequent Incremental Transfer with respect to a
Class, the Agent (at the direction of the applicable Class Agent)
shall send written confirmation to the Transferor of the Transfer
Price applicable to such Incremental Transfer for such Class. The
Agent shall indicate the amount of each Incremental Transfer for a
Class together with the date thereof as well as any decrease in the
Net Investment for a Class on the grid attached to the applicable
Transfer Certificate. The Transfer Certificate of each Class shall
evidence the Incremental Transfers of such Class. Upon the request
of any Class Agent the Agent shall provide a copy, by facsimile, of
the Transfer Certificate of any Class.
By no later than 11:00 a.m. (New York time) on any Transfer
Date, the Conduit or each Bank Investor of the applicable Class, as
the case may be, shall remit its share (which, in the case of an
Incremental Transfer to such Bank Investors, shall be equal to such
Bank Investor's Pro Rata Share) of the aggregate Transfer Price for
such Class for such Incremental Transfer to the account of the
Agent specified therefor from time to time by the Agent by notice
to such Persons. The obligation of each Bank Investor to remit its
Pro Rata Share of any such Transfer Price shall be several from
that of each other Bank Investor in such Class, and the failure of
any such Bank Investor to so make such amount available to the
Agent shall not relieve any other Bank Investor of such Class of
its obligation hereunder. Following each Incremental Transfer and
the Agent's receipt of funds from the Conduit or the related Bank
Investors of a Class as aforesaid, the Agent shall remit the
Transfer Price for such Class to the Transferor's account at the
location indicated in Section 10.3 hereof, in immediately available
funds. Unless the Agent shall have received notice from the
Conduit or any related Bank Investor of a Class, as applicable,
that such Person will not make its share of any Transfer Price
relating to any Incremental Transfer available on the applicable
Transfer Date therefor, the Agent may (but shall have no obligation
to) make such Conduit's or any such related Bank Investor's share
of any such Transfer Price available to the Transferor in
anticipation of the receipt by the Agent of such amount from such
Conduit or such related Bank Investor. To the extent such Conduit
or any such Bank Investor fails to remit any such amount to the
Agent after any such advance by the Agent on such Transfer Date,
such Conduit or such related Bank Investor, on the one hand, and
the Transferor, on the other hand, shall be required to pay such
amount, together with interest thereon at a per annum. rate equal
to the Federal funds rate (as determined in accordance with clause
(ii) of the definition of "Base Rate"), in the case of such Conduit
or any such related Bank Investor, or the Base Rate, in the case of
the Transferor, to the Agent upon its demand therefor (provided
that such Conduit shall have no obligation to pay such interest
amounts except to the extent that it shall have sufficient funds to
pay the face amount of its Commercial Paper in full). Until such
amount shall be repaid, such amount shall be deemed to be Net
Investment for the applicable Class paid by the Agent and the Agent
shall be deemed to be the owner of a Transferred Interest
hereunder. Upon the payment of such amount to the Agent (x) by the
Transferor, the amount of the aggregate Net Investment for such
Class shall be reduced by such amount or (y) by such Conduit or
such related Bank Investor, such payment shall constitute such
Person's payment of its share of the applicable Transfer Price for
such Transfer.
(b) Reinvestment Transfers. On each Business Day occurring
after the initial Incremental Transfer with respect to a Class
hereunder and prior to the Termination Date the Transferor hereby
agrees to convey, transfer and assign to the Agent on behalf of the
Conduit or the related Bank Investors of each Class, as applicable,
then owning Transferred Interest, and in consideration of the
Transferor's agreement to maintain at all times prior to the
Termination Date a Net Receivables Balance in an amount at least
sufficient to maintain the Buyers' Percentage Interest for each
Class at an amount not greater than such Class's Class Share of the
Maximum Buyers' Percentage Interest each Conduit of such Class may,
and the related Bank Investors of such Class shall (in either case,
to the extent such Persons then own any Transferred Interest),
agree to purchase from the Transferor undivided percentage
ownership interests in each and every Receivable, together with
Related Security, Collections and Proceeds with respect thereto, to
the extent that Collections are available for such Transfer in
accordance with Section 2.5 hereof, such that after giving effect
to such Transfer, (i) the amount of the Net Investment of such
Class at the close of business on such Business Day shall be equal
to the amount of Net Investment of such Class at the close of the
business on the Business Day immediately preceding such Business
Day plus the Transfer Price of any Incremental Transfer for such
Class made on such day, if any, and (ii) the Transferred Interest
of such Class in each Receivable, together with Related Security,
Collections and Proceeds with respect thereto, shall be equal to
the Transferred Interest of such Class in each other Receivable,
together with Related Security, Collections and Proceeds with
respect thereto.
(c) All Transfers. Each Transfer with respect to a Class
shall constitute a purchase by the Conduit or the Bank Investors'
of such Class of undivided percentage ownership interests in each
and every Receivable, together with Related Security, Collections
and Proceeds with respect thereto, then existing, as well as in
each and every Receivable, together with Related Security,
Collections and Proceeds with respect thereto, which arises at any
time after the date of such Transfer. The Conduit's or the Bank
Investors' of each Class, as applicable, aggregate undivided
percentage ownership interest in the Receivables, together with the
Related Security, Collections and Proceeds with respect thereto,
shall equal the Buyers' Percentage Interest for such Class in
effect from time to time. Each Conduit's and each Bank Investor's
undivided percentage ownership interest in the Affected Assets
shall equal such Person's ratable share (determined on the basis of
the relationship that such Person's share of the Net Investment for
such Person's Class bears to the aggregate Net Investment for the
Conduit and all Bank Investors in such Person's Class at such time)
of the Buyers' Percentage Interest for such Person's Class of the
Affected Assets at such time.
(d) Certificate. The Transferor shall issue to the Agent the
Certificate, in the form of Exhibit M, on or before the date
hereof.
SECTION 2.3. Fundings.
(a) Before the Termination Date; Transferred Interest Held by
Conduit. At all times hereafter before the Termination Date, if a
Conduit has not transferred its interest in the Transferred
Interest to the Bank Investors of such Class, the Transferor may,
subject to such Conduit's approval and the limitations described
below, request that the Net Investment of such Class be allocated
among one or more funding periods, so that the aggregate amounts so
allocated at a times shall equal the Net Investment of such Class.
The Transferor shall give such Conduit irrevocable notice by
telephone of the new requested funding period(s) at least two
Business Days before the expiration of any then existing funding
period; provided, however, that the related Class Agent may select,
in its sole discretion, any such new funding period if (i) the
Transferor fails to provide such notice on a timely basis or (ii)
the related Class Agent determines, in its sole discretion, that
the funding period requested by the Transferor is unavailable or
for any reason commercially undesirable. Each Conduit confirms that
it is its intention to fund all or substantially all of the Net
Investment of its Class held by it by issuing its Related
Commercial Paper; provided that the related Class Agent may
determine, from time to time, in its sole discretion, that funding
such Net Investment by means of the related Conduit's Commercial
Paper is not possible or is not desirable for any reason. With
respect to any Conduit if the related Liquidity Provider acquires
from such Conduit a Purchased Interest with respect to the
Receivables pursuant to the terms of the applicable Liquidity
Provider Agreement the related Liquidity Provider, may exercise the
right of selection granted to such Conduit hereby. The initial
funding period applicable to any such Purchased Interest of any
Conduit shall be a period of not greater than 14 days and shall
accrue Carrying Costs on the basis of the Base Rate. Thereafter,
provided that the Termination Date shall not have occurred,
Carrying Costs with respect thereto shall accrue on the basis of
either the Base Rate or the Adjusted L113OR Rate, as determined by
the related Class Agent. In the case of any funding period
outstanding upon the Termination Date, such funding period shall
end on such date.
(b) After the Termination Date, Transferred Interest Held by
a Conduit. At all times on and after the Termination Date, with
respect to the Transferred Interest of a Class held by any Conduit
if such Transferred Interest has not been transferred to the
related Bank Investors, the related Class Agent shall select all
funding periods and rates applicable thereto. With respect to any
Conduit, if the related Liquidity Provider acquires from such
Conduit (or continues to hold) a Purchased Interest with respect to
the Receivables pursuant to the terms of the applicable Liquidity
Provider Agreement the related Class Agent shall determine all
funding periods applicable thereto and Carrying Costs with respect
thereto shall accrue on the basis of the Base Rate.
(c) Before the Termination Date, Transferred Interest Held by
Bank Investors. If the Transferred Interest of any Class has been
transferred to the Bank Investors of such Class pursuant to Section
9.9 before the Termination Date, the initial funding period
applicable to the portion of the Net Investment of a Class held by
such Bank Investors shall be a period of not greater than 14 days
and shall accrue Carrying Costs for such Bank Investors on the
basis of the Base Rate. Thereafter, provided that the Termination
Date shall not have occurred, Carrying Costs for such Bank
Investors shall accrue with respect thereto on the basis of either
the Base Rate or the Adjusted LIBOR Rate, at the Transferor's
option. The Transferor shall give the applicable Class Agent
irrevocable notice by telephone of the new requested funding period
and rate at least two Business Days before the expiration of any
then existing funding period. In the case of any funding period
outstanding upon the occurrence of the Termination Date, such
funding period shall end on the date of such occurrence.
(d) After the Termination Date, Transferred Interest Held by
Bank Investors. At all times on and after the Termination Date, if
the Transferred Interest of a Class held by the related Conduit
shall have been transferred to the Bank Investors of such, the
related Class Agent shall select all funding periods and rates
applicable thereto.
(e) Eurodollar Rate Protection, Illegality. (i) If the
applicable Class Agent is unable to obtain on a timely basis the
information necessary to determine the LIBOR Rate for any proposed
funding period, then:
(A) such Class Agent shall forthwith notify the related
Conduit or the related Bank Investors, as applicable, and the
Transferor and the Agent that the Adjusted LIBOR Rate cannot
be determined for such funding period, and
(B) while such circumstances exist none of the Conduit
any Bank Investor or the Class Agent of such Class shall
reallocate the Net Investment for such Class allocated to any
then existing funding period ending during such period, to a
funding period which Carrying Costs for such Class accrue on
the basis of the Adjusted LIBOR Rate.
(ii) If, with respect to any outstanding funding period
during which Carrying Costs for any Class accrue on the basis of
the Adjusted L103OR Rate, the related Liquidity Provider or the
related Bank Investors; as applicable, notify the related Class
Agent that they are unable to obtain matching deposits in the
London interbank market to fund the purchase or maintenance of the
applicable Transferred Interest or that the Adjusted LE30R Rate
applicable to such Transferred Interest will not adequately reflect
the cost to the Person of funding or maintaining its respective
Transferred Interest for such funding period, then the related
Class Agent shall forthwith so notify the Transferor, whereupon
neither such Class Agent nor such Liquidity Provider nor any
related Bank Investor, as applicable, shall, while such
circumstances exist, reallocate the Net Investment of its Class
allocated to any funding period ending during such period, to a
funding period which accrues Carrying Costs of such Class on the
basis of the Adjusted LIBOR Rate.
(iii) Notwithstanding any other provision of this
Agreement, if the Conduit or any related Bank Investor of a Class,
as applicable, shall notify the applicable Class Agent that such
Person has determined (or has been notified by the related
Liquidity Provider) that the introduction of or any change in or in
the interpretation of any Law makes it unlawful (either for such
Conduit such related Bank Investor, or such Liquidity Provider, as
applicable), or any central bank or other governmental authority
asserts that it is unlawful, for such Conduit, such related Bank
Investor or such Liquidity Provider, as applicable, to fund the
purchases or maintenance of the applicable Transferred Interest at
the Adjusted LIBOR Rate, then (x) as of the effective date of such
notice from such Person to the applicable Class Agent the
obligation or ability of such Conduit or such related Bank
Investor, as applicable, to fund its purchase or maintenance of
such Transferred Interest at the Adjusted LI13OR Rate shall be
suspended until such Person notifies such Class Agent that the
circumstances causing such suspension no longer exist and (y) the
Net Investment of such Class held by such Person allocated to each
funding period which accrues Carrying Costs on the basis of the
Adjusted LIBOR Rate in which such Person owns an interest shall
either (1) if such Person may lawfully continue to maintain such
Transferred Interest at the Adjusted LIBOR Rate until the last day
of the applicable funding period, be reallocated on the last day of
such funding period to another funding period in respect of which
the Net Investment of such Person's Class allocated thereto accrues
Carrying Costs on a basis other than the Adjusted LIBOR Rate or (2)
if such Person shall determine that it may not lawfully continue to
maintain such Transferred Interest at the Adjusted LIBOR Rate until
the end of the applicable funding period, such Person's share of
the Net Investment of such Person's Class allocated to such funding
period shall be deemed to accrue Carrying Costs on the basis of the
Base Rate from the effective date of such notice until the end of
such funding period.
SECTION 2.4. Carrying Costs, Fees and Other Costs and
Expenses. Notwithstanding the limitation on recourse under Section
2.1 hereof, the Transferor shall pay, as and when due in accordance
with this Agreement, all fees hereunder, including any Early
Collection Fee, Carrying Costs, all amounts payable pursuant to
Article VIII hereof, if any, and the Servicing Fees. On each
Remittance Date, the Transferor shall pay to the Agent, on behalf
of each Conduit or the related Bank Investors, as applicable, an
amount equal to the accrued and unpaid Carrying Costs with respect
to such Class for the related Collection Period. The Transferor
shall pay to the Agent, on behalf of each Conduit, on each day on
which Related Commercial Paper that is issued by such Conduit, the
Dealer Fee for such Conduit with respect to such Related Commercial
Paper. Nothing in this Agreement shall limit in any way the
obligations of the Transferor to pay the amounts set forth in this
Section 2.3. Any amounts received by the Agent on behalf of any
Conduit or any Bank Investor pursuant to this Section 2.4 shall be
paid by the Agent to the applicable Class Agent for the benefit of
the related Conduit and/or the related Bank Investors, as
applicable, at such account as such Class Agent shall designate to
the Agent from time to time. Each Class Agent shall pay such
amounts to the related Conduit and the related Bank Investors, as
applicable, at such account as such Person shall designate to such
Class Agent from time to time.
SECTION 2.5. Allocations of Collections; Non-Liquidation
Settlement and Reinvestment Procedures, Servicer Advances. (a) On
each Determination Date, the Servicer shall allocate all
Collections received during the preceding Collection Period as
Finance Charge Collections or Principal Collections. Principal
Collections shall be applied by the Servicer as described in
subsection (b) below. On each Remittance Date, with respect to
each Class, the product of (A) the daily average of the Buyers'
Percentage Interest for such Class over the preceding Collection
Period and (B) the aggregate Finance Charge Collections for such
preceding Collection Period shall be applied, without duplication,
by the Servicer as follows:
(i) first, to the retention by the Servicer of any
unreimbursed Servicer Advances made by the Servicer in respect of
such Class for costs accrued with respect to such Collection Period
and;
(ii) second, to the Agent for the benefit of the Conduit
or the Bank Investors of such Class, as applicable, the payment of
any accrued and unpaid Carrying Costs for such Class for such
Collection Period;
(iii) third, if Sak's, Inc. or an Affiliate is not
the Servicer, to the payment to the Servicer of such Class's Class
Share of any Servicing Fee due and owing;
(iv) fourth, to the payment of all amounts due and unpaid
from the Transferor under Section 2.9(a) as a result of such
Class's Class Share of dilutive items and the Buyer's Percentage
Interest for such Class being greater than such Class's Class Share
of the Maximum Buyer's Percentage Interest, which payment shall be
treated as a portion of Principal Collections allocable to such
Class and applied pursuant to Section 2.5(b) below;
(v) fifth, with respect to any Remittance Date occurring
on or after the Termination Date, to the payment of the Buyers'
Percentage Factor for such Class of the outstanding balance of
Receivables which have become Defaulted Receivables during such
Collection Period, which payment shall be treated as a portion of
Principal Collections allocable to such Class and applied pursuant
to Section 2.5(b) below;
(vi) sixth, to the extent any Finance Charge Collections
remain after application in accordance with clauses (i) through (v)
above, to the other Classes (on a pro rata basis based on the
relation of the respective Net Investments of each such Class to
the sum of the respective Net Investments of all such Classes;
provided, that with respect to any Class for which all amounts in
clauses (i) through (v) have been paid in full, such Class shall
receive no Finance Charge Collections pursuant to this clause (vi)
and such Class's Net Investment shall not be considered for
purposes of this parenthetical) to be applied with respect to each
such Class in accordance with clauses (i) through (v) above;
(vii) seventh, if Sak's, Inc. or an Affiliate is the
Servicer, to the retention by the Servicer of such Class's Class
Share of any Servicing Fee due and owing;
(viii) eighth, to the extent any Finance Charge
Collections remain after application in accordance with clauses (i)
through (vii) above, (A) if prior to the Termination Date such
excess amounts shall be paid to the Transferor and (B) if on or
after the Termination Date such excess amounts shall be paid to the
Agent for the benefit of the Conduit or the Bank Investors of such
Class, as applicable, in reduction of the Net Investment of such
Class.
On each Remittance Date, subject to Section 2.5(c), the
product of (A) one minus the sum of the daily average of the
Buyer's Percentage Interest for all Classes over the preceding
Collection Period and (B) the aggregate Finance Charge Collections
for the preceding Collection Period shall be remitted to the
Transferor.
(b) On each Remittance Date prior to the Termination Date,
(i) the Servicer shall allocate to each Class the Buyers'
Percentage Interest for such Class of Principal Collections
received during the related Collection Period and not previously
applied or accounted for and, at the Transferor's option, (A) pay
such amount to the Transferor, for the benefit of the Conduit
and/or the Bank Investors of such Class, and the Transferor shall
apply such amount toward the purchase of additional undivided
percentage interests in each Receivable pursuant to Section 2.2(b),
or (B) pay such amount to the Agent for the benefit of the Conduit
or the Bank Investors of such Class, as applicable, in reduction of
the Net Investment for such Class and (ii) the Servicer shall pay
to the Transferor the portion of such Principal Collections not
allocated to any Transferred Interest and remaining after any
reallocations pursuant to Section 2.5(c) below.
On each Remittance Date on or subsequent to the Termination
Date, the Servicer shall allocate to each Class the Buyers'
Percentage Interest for such Class of all Principal Collections
received during the related Collection Period and not previously
applied or accounted for and pay such amount to the Agent for the
benefit of the Conduit or the Bank Investors of such Class, as
applicable, in reduction of the Net Investment for such Class. In
the event the Termination Date occurs as a result of a Termination
Event, the portion of such Principal Collections not allocated to
the Transferred Interest and remaining after any reallocations
pursuant to Section 2.5(c) below shall be distributed to the Agent,
for the benefit of the Conduit or the Bank Investors of each Class,
allocated to each Class, based on each Class's Class Share of such
remaining Principal Collections, in reduction of the Net Investment
for the related Class and, in the case of any other Termination
Date, the portion of such Principal Collections not allocated to
the Transferred Interest and remaining after any allocations
pursuant to Section 2.5(c) below shall be distributed to the
Transferor.
(c) If on any Remittance Date, after giving effect to clauses
(i) through (vi) of Section 2.5(a), an insufficiency exists for any
Class with respect to the Buyers' Percentage Factor for such Class
of Finance Charge Collections, then, in such event, on such
Remittance Date such Class's Class Share of the amount of Finance
Charge Collections distributable or allocable to the Transferor,
and to the extent any such insufficiency continues to remain, such
Class's Class Share of the amounts distributable to the Transferor
pursuant to Section 2.5(b), shall be reduced by the amount of such
insufficiency, and such amount(s) shall be applied as Finance
Charge Collections allocable to the Transferred Interest for such
Class and shall be applied and distributed with respect to such
Class in accordance with the priority set forth in clauses (i)
through (vi) of Section 2.5(a).
(d) In the event that, on any date, any Conduit does not have
sufficient funds to pay the Interest Component of such Conduit's
matured or maturing Related Commercial Paper or any Dealer Fee due
and payable by such Conduit on such day, the Servicer, acting upon
written notice from the applicable Administrative Agent shall make
an advance in an amount equal to such costs and any such Dealer Fee
due and payable on such day (in respect of any such Class, a
"Servicer Advance") and pay to the Agent for the benefit of such
Conduit, the amount of such advance.
(e) The Transferor shall have the option to designate a fixed
or variable percentage (the "Discount Percentage") of up to 4% of
all Receivables other than Receivables constituting Finance Charges
and Receivables in Defaulted Accounts, created on and after any
date of determination to be treated as finance charge receivables
("Discount Receivables") in accordance with the provisions of this
Section 2.5(e), which percentage shall remain fixed and in effect
until such time as the Transferor has provided a subsequent
designation to the Class Agents. The Transferor shall have the
option to increase the Discount Percentage to a percentage not
greater than 4% or to reduce the Discount Percentage, provided that
no such designation shall become effective that would cause a
Termination Event to occur and the Servicer shall so certify to the
Class Agents, the Conduits and the Bank Investors prior to any such
change becoming effective.
(f) Any amounts received by the Agent on behalf of any
Conduit or any Bank Investor pursuant to this Section 2.5 shall be
paid by the Agent to the applicable Class Agent for the benefit of
the related Conduit and/or the related Bank Investors, as
applicable, at such account as such Class Agent shall designate to
the Agent from time to time. Each Class Agent shall pay such
amounts to the related Conduit and the related Bank Investors, as
applicable, at such account as such Person shall designate to such
Class Agent from time to time.
SECTION 2.6. Liquidation Settlement Procedures. If, on the
Termination Date the Buyers' Percentage Interest for any Class is
greater than such Class's Class Share of the Maximum Buyers'
Percentage Interest then the Transferor shall immediately pay to
the Agent, for the benefit of the Conduit or the Bank Investors of
such Class, as applicable, an amount equal to the amount that, when
applied in reduction of the Net Investment for such Class, will
result in a Buyers' Percentage Interest for such Class less than or
equal to such Class's Class Share of the Maximum Buyers' Percentage
Interest. Any and all such amounts shall be paid by the Agent to
the applicable Class Agent for the benefit of the related Conduit
or the related Bank Investors, as applicable, and applied by such
Class Agent to the reduction of the Net Investment for such Class.
On each Remittance Date occurring on and following the Termination
Date, Principal Collections shall be applied in accordance with
Section 2.5(b).
Following the date on which the Net Investment for a Class
shall be reduced to zero and all other Aggregate Unpaids due to
such Class have been paid in full, (i) the Servicer shall recompute
the Buyers' Percentage Interest for such Class as zero, (ii) the
Agent, on behalf of the Conduit and the Bank Investors of such
Class, shall be considered to have reconveyed to the Transferor all
of such Conduit's and such Bank Investors' right, title and
interest in and to the Affected Assets (including the Transferred
Interest for such Class), (iii) the Servicer shall pay to the
Transferor such Class's Class Share of any remaining Collections
set aside and held by the Servicer and (iv) the Agent on behalf of
the Conduit and the Bank Investors of such Class, shall execute and
deliver to the Transferor, at the Transferor's expense, such
documents or instruments as are necessary to terminate such
Conduit' s and such Bank Investors' respective interests in the
Affected Assets. Any such documents shall be prepared by or on
behalf of the Transferor.
SECTION 2.7. Fees. The Transferor shall pay the following
non-refundable fees:
(a) On each Remittance Date, to each Conduit solely for its
own account the Program Fee due to such Conduit, and to the Class
Agents, for distribution to the Bank Investors of each Class, the
Facility Fee related to such Class.
(b) On the date of execution hereof, to each Administrative
Agent solely for its own account, the Arrangement Fee due to such
Administrative Agent.
SECTION 2.8. Protection of Ownership Interest of the Conduits
and the Bank Investors. (a) The Transferor agrees that it will
from time to time, at its expense, promptly execute and deliver all
instruments and documents and take all actions as may be necessary
or as the Agent may reasonably request in order to perfect or
protect the Transferred Interests of each Class or to enable the
Agent, the Class Agents, the Conduits or the Bank Investors to
exercise or enforce any of their respective rights hereunder.
Without limiting the foregoing the Transferor will upon the request
of the Agent or any Class Agent, in order to accurately reflect
this purchase and sale transaction, execute and file such financing
or continuation statements or amendments thereto or assignments
thereof (as permitted pursuant to Section 10.7 hereof) as may be
requested by them. The Transferor will, upon request of the Agent
or any Class Agent obtain such additional search reports as the
Agent or any Class Agent shall request. To the fullest extent
permitted by applicable law, the Agent shall be permitted to sign
and file continuation statements and amendments thereto and
assignments thereof without the Transferor's signature.
Photographic or other reproduction of this Agreement or any
financing statement shall be sufficient as a financing statement.
The Transferor agrees that it will, at the Transferor's
expense, on or before the Closing Date, indicate clearly and
unambiguously in its master data processing records and on any
storage containers containing Records that an interest in each of
the Receivables created in connection with the Accounts that has
been transferred to the Agent for the benefit of the Conduits and
the Bank Investors pursuant to this Agreement by affixing thereon
the following legend: "AN INTEREST IN EACH OF THE RECEIVABLES IN
THESE FILES HAS BEEN ASSIGNED TO NATIONSBANK, N.A., AS AGENT FOR
THE BENEFIT OF CERTAIN INVESTORS AND FOR NATIONSBANK, N.A., AS A
BANK INVESTOR PURSUANT TO THE TRANSFER AND ADMINISTRATION AGREEMENT
DATED AS OF JUNE 30,1999, AS AMENDED FROM TIME TO TIME, AMONG SAKS
CREDIT CORPORATION, SAKS INCORPORATED, NATIONSBANK, N.A. AND
CERTAIN INVESTORS."
The Transferor further agrees to deliver or to cause the
Servicer to deliver to the Agent a computer file or microfiche list
containing a true and complete list of all Accounts, identified by
account number and by Receivable balance as of a date as near in
time to the Cut-Off Date as is reasonably practicable. Such file or
list shall be marked as the Account Schedule and Schedule A to this
Agreement, delivered to the Agent as confidential and proprietary
property of the Transferor, and is incorporated into and made a
part of this Agreement.
The Transferor will not change its name, identity or corporate
structure (within the meaning of Section 9-402(7) of the UCC as in
effect in the state in which the Transferor's principal business
office is located), nor relocate its chief executive office or any
office where Records are kept unless it shall have: (i) given the
Agent at least thirty days prior notice thereof and (ii) prepared
at Transferor's expense and delivered to the Agent all financing
statements, instruments and other documents necessary to preserve
and protect the Transferred Interest of each Class or reasonably
requested by the Agent in connection with such change or
relocation. Any filings under the UCC or otherwise that are
occasioned by such change in name or location shall be made at the
expense of the Transferor.
SECTION 2.9. Deemed Collections, Application of Payments.
(a) If on any day the Outstanding Principal Balance of a Receivable
is either (x) reduced as a result of any defective, rejected or
returned merchandise or services, any discount, credit, rebate,
dispute, warranty claim, repossessed or returned goods, chargeback
allowance or any billing adjustment or (y) reduced or canceled as
a result of a setoff or offset in respect of any claim by any
Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction) or (z) any other downward
adjustments to the balance of such Receivable without receiving
Collections therefor and before such Receivable becomes a Defaulted
Receivable, the amount of such cancellation, reduction or
adjustment shall thereafter be deducted from the aggregate
Outstanding Principal Balance of the Receivables.
(b) If on any day any of the representations or warranties in
Article III was or becomes untrue with respect to a Receivable
(whether on or after the date of any transfer of an interest
therein to the Agent the Conduits or the Bank Investors as
contemplated hereunder), such Receivable shall thereafter not be
included in any calculation of the aggregate Outstanding Principal
Balance of the Receivables.
(c) On or before each Remittance Date, the Transferor will
pay, with respect to each Class, to the Agent, for the benefit of
the Conduit or the Bank Investors of such Class, as applicable, an
amount equal to the lesser of (1) such Class's Class Share of the
amount, if any, of cancellations, reductions or adjustments
pursuant to Section 2.9(a) for the related Collection Period and
(2) such Class's Class Share of the amount, if any, by which the
Net Investment of the related Class would otherwise exceed the
product of (A) such Class's Class Share of the Maximum Buyer's
Percentage Interest on such Remittance Date and (B) the Net
Receivables Balance on such Remittance Date (after giving effect to
the adjustments of Sections 2.9(a) and (b) and to all other
Collections with respect to the related Collection Period). Any
amount paid pursuant to this Section 2.9(c) shall be treated as a
Collection and allocated, with other Collections, in accordance
with Section 2.5(a) on such Remittance Date.
SECTION2.10. Payments and Computations, Etc. All amounts to
be paid or deposited by the Transferor or the Servicer hereunder
shall be paid or deposited in accordance with the terms hereof no
later than 11:00 a.m. (New York City time) on the day when due in
immediately available funds; if such amounts are payable to or for
the benefit or account of a Conduit or a Bank Investor they shall
be paid to or deposited with the Agent in the account indicated in
Section 10.3 hereof, until otherwise notified by the Agent or the
applicable Class Agent. The Transferor shall, to the extent
permitted by law, pay, with respect to each Class, to the Agent,
for the benefit of the Conduit or the Investors of such Class, as
applicable, upon demand, interest on all amounts not paid or
deposited when due hereunder at a rate equal to 2% per annum plus
the Base Rate. All computations of interest and all per annum fees
hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first but excluding the last
day) elapsed. Any computations by the Agent or the applicable
Class Agent of amounts payable by the Transferor hereunder shall be
binding upon the Transferor absent manifest error.
SECTION 2.11. Reports. On each Determination Date, the
Servicer shall prepare and forward to the Agent, each Class Agent
and each Administrative Agent (i) an Investor Report as of the end
of the last day of the immediately preceding Collection Period and
(ii) such other information as the Agent, each Class Agent or each
Administrative Agent may reasonably request.
SECTION 2.12. Collection Account. There shall be established
by the Agent on the day of the initial Transfer hereunder and
maintained, for the benefit of the Conduits and the Bank Investors,
with the Agent a segregated account (the "Collection Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Conduits and the Bank
Investors. On and after the occurrence of (i) a Servicer Default
or (ii) a Termination Event the Servicer shall remit daily and
before the close of business on the second Business Day following
receipt to the Collection Account all Collections received with
respect to any Receivables. Funds on deposit in the Collection
Account (other than investment earnings) shall be invested by the
Agent in Eligible Investments that will mature so that such funds
will be available before the Remittance Date following such
investment. On each Remittance Date, all interest and earnings
(net of losses and investment expenses) on funds on deposit in the
Collection Account shall be retained in the Collection Account and
be available to make any distributions required to be made pursuant
to Section 2.5(a). On the date on which the Net Investment for
each Class and all other Aggregate Unpaids for each Class have been
paid in full, any funds remaining on deposit in the Collection
Account shall be paid to the Transferor.
SECTION 2.13. Sharing of Payments, Etc. If a Conduit or a
Bank Investor (for purposes of this Section only, being a
"Recipient") shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of setoff, or
otherwise) on account of Transferred Interest owned by it (other
than pursuant to Section 2.6, or Article VIII and other than as a
result of the differences in the timing of the applications of
Collections pursuant to Section 2.4 or 2.5) in excess of its
ratable share of payments on account of Transferred Interest
obtained by the Conduits and/or the Bank Investors entitled
thereto, such Recipient shall forthwith purchase from the Conduits
and/or the Bank Investors entitled to a share of such amount
participations in the Transferred Interests owned by such Persons
as shall be necessary to cause such Recipient to share the excess
payment ratably with each such other Person entitled thereto;
provided, however, that if all or any portion of such excess
payment is thereafter recovered from such Recipient, such purchase
from each such other Person shall be rescinded and each such other
Person shall repay to the Recipient the purchase price paid by such
Recipient for such participation to the extent of such recovery,
together with an amount equal to such other Person's ratable share
(according to the proportion of (a) the amount of such other
Person's required payment to (b) the total amount so recovered from
the Recipient) of any interest or other amount paid or payable by
the Recipient in respect of the total amount so recovered.
SECTION 2.14. Right of Setoff. Without in any way limiting
the provisions of Section 2.13, each of each Conduit and each Bank
Investor is authorized (in addition to any other rights it may
have) at any time after the occurrence of the Termination Date or
during the continuance of a Potential Termination Event to set-off,
appropriate and apply (without presentment demand, protest or other
notice which are hereby expressly waived) any deposits and any
other indebtedness held or owing by any such Conduit or any such
Bank Investor to, or for the account of, the Transferor against the
amount of the Aggregate Unpaids owing by the Transferor to such
Person (even if contingent or unmatured).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the
Transferor. The Transferor represents and warrants to the Agent,
each Class Agent each Conduit and each Bank Investor that:
(a) Corporate Existence and Power. The Transferor is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all
corporate power and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is now
conducted. The Transferor is duly qualified to do business in, and
is in good standing in, every other jurisdiction in which the
nature of its business requires it to be so qualified, except where
the failure to be so qualified or in good standing would not have
a Material Adverse Effect.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Transferor of this
Agreement, each Fee Letter, the Certificate, the Transfer
Certificate and the other Transaction Documents to which the
Transferor is a party are within the Transferor's corporate powers,
have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any Official
Body or official thereof (except as contemplated by Section 2.8
hereof), and do not contravene, or constitute a default under, any
provision of applicable law, rule or regulation or of the
Certificate of Incorporation or Bylaws of the Transferor or of any
agreement, judgment, injunction, order, writ, decree or other
instrument binding upon the Transferor or result in the creation or
imposition of any Adverse Claim on the assets of the Transferor or
any of its Subsidiaries (except as contemplated by Section 2.8
hereof).
(c) Binding Effect. Each of this Agreement, each Fee Letter,
the Certificate and the other Transaction Documents to which the
Transferor is a party constitutes, and the Transfer Certificate
upon payment of the Transfer Price set forth therein will
constitute, the legal, valid and binding obligation of the
Transferor, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other
similar laws affecting the rights of creditors generally.
(d) Perfection. Immediately preceding each Transfer, the
Transferor shall be the owner of all of the Receivables, free and
clear of all Adverse Claims. Within ten days following any
Transfer and each recomputation of any Transferred Interest all
financing statements and other documents required to be recorded or
filed in order to perfect and protect such Transferred Interest
against all creditors of and purchasers from the Transferor will
have been duly filed in each filing office necessary for such
purpose and all filing fees and taxes, if any, payable in
connection with such filings shall have been paid in full.
(e) Accuracy of Information. All information heretofore
furnished by the Transferor to any Conduit, any Bank Investor, the
Agent, any Class Agent or any Administrative Agent for purposes of
or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter
furnished by the Transferor to any such Person will be, true and
accurate in every material respect, on the date such information is
stated or certified.
(f) Tax Status. The Transferor 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, assessments
and other governmental charges.
(g) Action, Suits. Except as set forth in Exhibit H hereof,
there are no actions, suits or proceedings pending, or to the
knowledge of the Transferor threatened, against or affecting the
Transferor or any Affiliate of the Transferor or their respective
properties, in or before any court, arbitrator or other body, which
may, individually or in the aggregate, have a Material Adverse
Effect.
(h) Use of Proceeds. No proceeds of any Transfer will be
used by the Transferor to acquire any "Margin Stock" as defined in
Regulations T, U and X of the Federal Reserve Board.
(i) Place of Business. The principal place of business and
chief executive office of the Transferor is located at the address
of the Transferor indicated in Section 11.3 hereof and the offices
where the Transferor keeps all its Records are located at the
address(es) described on Exhibit I or at such other locations
notified to the Agent in accordance with Section 2.8 hereof in
jurisdictions where all action required by Section 2.8 hereof has
been taken and completed.
(j) Good Title. Upon each Incremental Transfer and each
recomputation. of any Transferred Interest of a Class, the Agent on
behalf of the Conduits and the Bank Investors shall acquire or
maintain, as applicable a valid and perfected first priority
undivided percentage ownership interest to the extent of such
Transferred Interest or a first priority perfected security
interest in the Receivables existing on the date of such Transfer
and recomputation and in the Related Security and Collections with
respect thereto free and clear of any Adverse Claim.
(k) Tradenames, Etc. As of the date hereof: (i) the
Transferor has only the subsidiaries and divisions listed on
Exhibit J hereto and (ii) the Transferor has, within the last five
years, operated only under the tradenames identified in Exhibit J
hereto, and, within the last five years, has not changed its name
or organizational form, merged with or into or consolidated with
any other corporation or business entity (except Younkers Credit
Corporation which was merged with and into the Transferor in 1998)
or been the subject of any proceeding under Title 11, United States
Code (Bankruptcy).
(1) Nature of Receivables. Each Receivable represented by
the Transferor or the Servicer to be an Eligible Receivable
(including in any Investor Report or other report delivered
pursuant to Section 2.11 hereof), in fact satisfies at such time
the definition of "Eligible Receivable" set forth herein and is an
"eligible asset" as defined in Rule 3a-7 under the Investment
Company Act of 1940, as amended.
(m) Coverage Requirement. Amount of Receivables. The Buyer's
Percentage Interest for each Class does not exceed the Maximum
Buyer's Percentage Interest for such Class. As of the Cut-Off Date,
the aggregate Outstanding Principal Balance of the Receivables in
existence was at least $______________.
(n) Credit Guidelines. Since June 2, 1999, there have been
no material changes in Saks' Credit Guidelines other than as
permitted hereunder.
(o) Collections and Servicing, Material Adverse Effect.
Since June 2, 1999, there has been no material adverse change in
the ability of the Servicer (to the extent it is an Affiliate of
the Transferor) to service and collect the Receivables or a
Material Adverse Effect.
(p) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination
Event or a Potential Termination Event.
(q) Not an Investment Company. The Transferor is not, and is
not controlled by, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or is exempt from
all provisions of such Act.
(r) ERISA. Each of the Transferor and its ERISA Affiliates
is in compliance in all material respects with ERISA and no lien
exists in favor of the Pension Benefit Guaranty Corporation on any
of the Receivables.
(s) Bulk Sales. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(t) Year 2000 Compliance. The Transferor has initiated a
review and assessment of all computer applications (including, but
not limited to those of its suppliers, vendors, customers and any
third party servicers), which are related to or involved in the
origination, collection, management or servicing of the Receivables
(the "Receivables Systems") and presently believes that such
Receivables Systems are reasonably expected to be able to perform
properly in all material respects date-sensitive functions for all
dates before and after January 1, 2000 (that is be "Year 2000
Compliant").
Any document, instrument, certificate or written notice
delivered to the Company hereunder shall be deemed a representation
and warranty by the Transferor.
SECTION 3.2. Representations and Warranties of Saks. Saks
represents and warrants to the Agent each Class Agent each Conduit
and each Bank Investor that'.
(a) Corporate Existence and Power. Saks is a corporation
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate
power and all material governmental licenses, authorizations,
consents and approvals required to carry on its business in each
jurisdiction in which its business is now conducted. The Servicer
is duly qualified to do business in, and is in good standing in,
every other jurisdiction in which the nature of its business
requires it to be so qualified, except where the failure to be so
qualified or in good standing would not have a Material Adverse
Effect.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by Saks of this Agreement
and the other Transaction Documents to which it is a party are
within Saks' corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of,
or filing with, any governmental body, agency or official (except
as contemplated by Section 2.8), and do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the charter or Bylaws of Saks or of any agreement,
judgment, injunction, order, decree or other instrument binding
upon Saks or result in the creation or imposition of any lien on
assets of Saks or any of its Subsidiaries (except as contemplated
by Section 2.8.
(c) Binding Effect. Each of this Agreement and each other
Transaction Document to which it is a party constitutes the legal,
valid and binding obligation of Saks enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the rights of creditors generally.
(d) Accuracy of Information. All information heretofore
furnished by Saks in writing to the Transferor, any Conduit, any
Bank Investor, the Agent, any Class Agent or any Administrative
Agent for purposes of or in connection with this Agreement and each
other Transaction Document to which it is a party, or any
transaction contemplated hereby or thereby is, and all such
information hereafter furnished by Saks to any such Person will be,
true and accurate in every material respect on the date such
information is stated or certified.
(e) Tax Status. Saks 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, assessments and other
governmental charges except those taxes, assessments and
governmental charges that Saks is challenging in good faith and
with respect to which adequate reserves have been established.
(f) Action, Suits. Except as set forth in Exhibit H attached
hereto (as such exhibit may be amended from time to time), there
are no actions, suits or proceedings pending, or to the knowledge
of Saks threatened, against or seeking to prevent the issuance of
the Certificate or the consummation of any of the transactions
contemplated by this Agreement, or otherwise affecting Saks or any
Affiliate of Saks or their respective properties, in or before any
court, arbitrator or other body, which may, individually or in the
aggregate, have a Material Adverse Effect.
(g) Collections and Servicing. Since June 2, 1999, there has
been no material adverse change in the ability of Saks to service
and collect the Receivables.
(h) Not an Investment Company. Saks is not an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended, or is exempt from all provisions of such Act.
(i) ERISA. Saks is in compliance in all material respects
with ERISA.
(j) Year 2000 Compliance. Saks has initiated a review and
assessment of all computer applications (including, but not limited
to those of its suppliers, vendors, customers and any third party
servicers), which are related to or involved in the origination,
collection, management or servicing of the Receivables (the
"Receivables System") and presently believes that such Receivable
Systems are reasonably expected to be able to perform properly in
all material respects date-sensitive functions for all dates before
and after January 1, 2000 (that is be "Year 2000 Compliant").
(k) Collections and Servicing, Material Adverse Effect.
Since June 2, 1999, there has been no material adverse change in
the ability of the Servicer to service and collect the Receivables
or any other Material Adverse Effect relating to the Servicer.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing. On or before the date of
execution hereof, the Transferor shall deliver to the Agent the
following documents, instruments and fees all of which shall be in
form and substance acceptable to the Agent and to each Class Agent:
(a) A copy of the resolutions of the Board of Directors of
the Transferor, certified by its Secretary or Assistant Secretary,
approving the execution, delivery and performance by the Transferor
of this Agreement and the other Transaction Documents to which the
Transferor is a party.
(b) A copy of the resolutions of the Board of Directors of
Saks, certified by its Secretary or Assistant Secretary approving
the execution, delivery and performance by Saks of the Saks
Guaranty and the other Transaction Documents to which Saks is a
party.
(c) The Articles of Incorporation of the Transferor certified
by the Secretary of State or other similar official of the State of
Delaware dated a date reasonably near to the date hereof.
(d) The Articles of Incorporation of Saks, certified by the
Secretary of State or other similar official of the State of
Tennessee dated a date reasonably near to the date hereof.
(e) A Good Standing Certificate for the Transferor issued by
the Secretary of State or a similar official of the State of
Delaware and certificates of qualification as a foreign corporation
issued by the Secretaries of State or other similar officials of
each jurisdiction where such qualification is material to the
transactions contemplated by this Agreement and the other
Transaction Documents, in each case, dated a date reasonably near
to the date hereof.
(f) A Good Standing Certificate for Saks issued by the
Secretary of State or a similar official of the State of Tennessee
and certificates of qualification as a foreign corporation issued
by the Secretary of State or a similar official of the State of
Alabama, dated a date reasonably near to the date hereof
(g) A Certificate of the Secretary or an Assistant Secretary
of the Transferor substantially in the form of Exhibit L attached
hereto.
(h) A Certificate of the Secretary or an Assistant Secretary
of Saks, substantially in the form of Exhibit L attached hereto.
(i) Copies of proper financing statements (Form UCC-1), dated
a date reasonably near to the date hereof, naming the Transferor as
the debtor in favor of the Agent, for the benefit of the Conduits
and the Bank Investors, as secured party, or other similar
instruments or documents as may be necessary or in the reasonable
opinion of the Agent desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Agent's
undivided percentage interest in all Receivables and the Related
Security and Collections relating thereto.
(j) Copies of proper financing statements (Form UCC-1), dated
a date reasonably near to the date hereof naming [each of] NBGL and
[Saks Fifth Avenue] as the seller/debtor in favor of the Transferor
as buyer/secured party and the Agent, for the benefit of the
Conduits and the Bank Investors, as assignee of the secured party
or other similar instruments or documents as may be necessary or in
the reasonable opinion of the Agent desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect the
Transferor's ownership interest in all Receivables.
(k) Copies of proper financing statements (Form UCC-3), if
any, necessary to terminate all security interests and other rights
of any person in Receivables previously granted by Transferor or
NBGL.
(1) Certified copies of request for information or copies
(Form UCC-11) (or a similar search report certified by parties
acceptable to the Agent) dated a date reasonably near to the date
hereof listing all effective financing statements that name the
Transferor, NBGL and [Saks Fifth Avenue] (under their present names
and any previous names) as debtor and that are filed in
jurisdictions in which the filings were made pursuant to items (i)
and (j) above, together with copies of such financing statements
(none of which shall cover any Receivables, Accounts or Account
Agreements).
(m) One or more legal opinions of Alston & Bird, LLP, special
counsel to the Transferor and Saks, in form and substance
satisfactory to the Agent and each Class Agent addressing (i)
nonconsolidation matters and (ii) the effectiveness of the interest
in the receivables granted or conveyed by NBGL to the Transferor in
the event of the insolvency, liquidation or receivership of NBGL [a
so-called "FIREA opinion"].
(n) An opinion of Alston & Bird, LLP, special counsel to the
Transferor and Saks, covering perfection and enforceability
matters, and an opinion from Charles Hansen, Vice President and
Associate General Counsel of Saks, with respect to certain
corporate matters, in form and substance satisfactory to the Agent
and each Class Agent.
(o) A computer tape setting forth, as of the Cut-Off Date,
all of the Receivables, the Outstanding Principal Balances thereon
as of the Cut-Off Date and such other information as the Agent may
reasonably request.
(p) An executed copy of this Agreement, each Fee Letter, the
Saks Guaranty and each of the other Transaction Documents to be
executed by Saks, the Servicer or the Transferor.
(q) The Transfer Certificate, duly executed by the
Transferor.
(r) The Certificate, duly executed by the Transferor and
appropriately completed.
(r) The Arrangement Fees in accordance with Section 2.7(b).
(t) Such other documents, instruments, certificates and
opinions as the Agent shall reasonably request.
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of Transferor. At all
times from the date hereof to the later to occur of (i) the
Termination Date or (ii) the date on which the Net Investment for
each Class and all other Aggregate Unpaids for each Class have been
paid in full, in cash, unless the Agent shall otherwise consent in
writing:
(a) Financial Reporting. The Transferor will maintain, for
itself and each of its Subsidiaries, if any, a system of accounting
established and administered in accordance with GAAP, and furnish
to the Agent and each Class Agent:
(i) Annual Reporting. Within one hundred days after the
close of the Transferor's and the Servicer's fiscal years,
(beginning with the fiscal year ending January 31, 1999)
audited financial statements, prepared in accordance with GAAP
on a consolidated basis for (x) the Transferor and (y) for the
Servicer and its Subsidiaries, in each case, including balance
sheets as of the end of such period, related statements of
operations, shareholder's equity and cash flows, accompanied
by an unqualified audit report certified by independent
certified public accountants, acceptable to the Agent,
prepared in accordance with GAAP and, upon the Agent's request
any management letter prepared by said accountants and
accompanied by a certificate of the Chief Financial Officer,
Chairman, President, Treasurer or any Executive Vice President
of the Transferor stating that no Termination Event or
Potential Termination Event exists, or, if any Termination
Event or Potential Termination Event exists, stating the
nature and status thereof.
(ii) Quarterly Reporting. Within fifty days after the
close of the first three quarterly periods of each of the
Transferor's and the Servicer's fiscal years, for (x) the
Transferor and (y) for the Servicer's and its Subsidiaries, in
each case, consolidated unaudited balance sheets as at the
close of each such period and consolidated related statements
of operations and cash flows for the period from the beginning
of such fiscal year to the end of such quarter, all certified
by its Chief Financial Officer, Chairman, President Treasurer
or any Executive Vice President.
(iii) Compliance Certificate. Together with the
financial statements required hereunder, a compliance
certificate signed by the Chief Financial Officer, Chairman,
President Treasurer or any Executive Vice President of the
Transferor or the Servicer, as applicable, stating that (x)
the attached financial statements have been prepared in
accordance with GAAP and accurately reflect the financial
condition of the Transferor or the Servicer, as applicable,
and (y) to the best of such Person's knowledge, no Termination
Event or Potential Termination Event exists, or if any
Termination Event or Potential Termination Event exists,
stating the nature and status thereof.
(iv) Shareholders Statements and Reports. Promptly upon
the furnishing thereof to the shareholders of the Servicer,
copies of all financial statements, reports and proxy
statements so furnished.
(v) S.E.C. Filings. Promptly upon the effectiveness
thereof, copies of all effective registration statements
(excluding any registration statements on Form S-8 or any
successor thereto), and promptly upon the filing thereof,
copies of annual, quarterly, monthly or other regular reports
which the Servicer or any Subsidiary of the Servicer files
with the Securities and Exchange Commission.
(vi) Notice of Termination Events or Potential
Termination Events. As soon as possible, and in any event
within two days after the occurrence of each Termination Event
or each Potential Termination Event, a statement of the Chief
Financial Officer or Chief Accounting Officer of the
Transferor setting forth details of such Termination Event or
Potential Termination Event and the action that the Transferor
proposes to take with respect thereto.
(vii) Change in Credit Guidelines and Debt Ratings.
Within thirty days after the date any material change in or
amendment to the Credit Guidelines is made, a copy of the
Credit Guidelines then in effect indicating such change or
amendment. Within fifteen days after the date of any change
in the Servicer's public or private debt rating from any
rating agency that has been requested by the Servicer to
provide such rating, if any, a written certification of the
Servicer's public and private debt ratings after giving effect
to any such change.
(viii) Credit Guidelines. Within ten Business Days of
the request of the Agent or any Class Agent, a complete copy
of the Credit Guidelines then in effect.
(ix) ERISA. Promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event (as defined in Article IV of ERISA) which the
Transferor, any ERISA Affiliate of the Transferor files under
ERISA with the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or which
the Transferor or any ERISA Affiliates of the Transferor
receives from the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor.
(x) Other Information. Such other information
(including non-financial information) as the Agent, any Class
Agent or any Administrative Agent may from time to time
reasonably request with respect to Saks, the Transferor or any
Subsidiary of any of the foregoing.
(b) Conduct of Business. The Transferor will carry on and
conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain validly existing
and in good standing in its jurisdiction of incorporation and
maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
(c) Compliance with Laws. The Transferor will comply with
all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it or its respective
properties may be subject.
(d) Furnishing of Information and Inspection of Records. The
Transferor will furnish to the Agent or any Class Agent from time
to time such information with respect to the Receivables as such
Person may reasonably request including, without limitation,
listings identifying the Obligor and the Outstanding Principal
Balance for each Receivable. The Transferor will at any time and
from time to time during regular business hours permit the Agent
any Class Agent or their respective agents or representatives, (i)
to examine and make copies of and take abstracts from all Records
and (ii) to visit the offices and properties of the Transferor for
the purpose of examining such Records, and to discuss matters
relating to Receivables or the Transferor's performance hereunder
and under the other Transaction Documents to which such Person is
a party with any of the officers, directors, employees or
independent public accountants of the Transferor having knowledge
of such matters.
(e) Keeping of Records and Books of Account. The Transferor
will maintain and implement administrative and operating procedures
(including without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain, all documents, books,
records and other information reasonably necessary or advisable for
the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new
Receivable and all Collections of and adjustments to each existing
Receivable). The Transferor will give the Agent and each Class
Agent notice of any material change in the administrative and
operating procedures of the Transferor referred to in the previous
sentence.
(f) Performance and Compliance with Accounts. The
Transferor, at its expense, will timely and fully perform and
comply with all material provisions, covenants and other promises
required to be observed by the Transferor under the Accounts
related to the Receivables.
(g) Credit Guidelines. The Transferor will comply in all
material respects with the Credit Guidelines in regard to
each Receivable and the related Account.
(h) Collections Received. The Transferor will hold in trust,
and deposit immediately, but in any event not later than the close
of business on the second Business Day following its receipt
thereof, to the Collection Account all Collections received from
time to time by the Transferor, as the case may be.
(i) Sale Treatment. The Transferor will not account for
(other than for tax purposes) or otherwise treat the transactions
contemplated hereby in any manner other than a sale of an undivided
percentage ownership interest in the Receivables by the Transferor
to the Conduits and/or the Bank Investors, as applicable. In
addition, the Transferor shall, and shall cause Saks or any other
direct or indirect parent of the Transferor to, disclose (in a
footnote or otherwise) in all of its respective financial
statements (including any such financial statements consolidated
with any other Persons' financial statements) the existence and
nature of the transaction contemplated hereby and the interest of
the Transferor (in the case of any such parent's financial
statements), the Conduits and the Bank Investors in the Affected
Assets.
(j) Separate Business. The Transferor shall at all times (a)
to the extent the Transferor's office is located in the offices of
Saks or any Affiliate of Saks, pay fair market rent for its
executive office space located in the offices of Saks or any
Affiliate of Saks, (b) have at all times at least two members of
its board of directors who are not and, within the immediately
preceding two years, have not been employees, officers or directors
of Saks or any Affiliate of Saks or of any major creditor of Saks
or any Affiliate of Saks and are persons who are familiar and have
experience with asset securitization, (c) maintain the Transferor's
books, financial statements, accounting records and other corporate
documents and records separate from those of Saks or any other
entity, (d) not commingle the Transferor's assets with those of
Saks or any other entity, (e) act solely in its corporate name and
through its own authorized officers and agents, (f) make
investments directly or through brokers engaged and paid by the
Transferor or its agents (provided that if any such agent is an
Affiliate of the Transferor it shall be compensated at a fair
market rate for its services), (g) separately manage the
Transferor's liabilities from those of Saks or any Affiliates of
Saks and pay its own liabilities, including all administrative
expenses, from its own separate assets, and (h) pay from the
Transferor's assets all obligations and indebtedness of any kind
incurred by the Transferor. The Transferor shall abide by all
corporate formalities, including the maintenance of current minute
books and the holding of regular board of directors meetings, and
the Transferor shall cause its financial statements to be prepared
in accordance with GAAP in a manner that indicates the separate
existence of the Transferor and its assets and liabilities. The
Transferor shall (i) pay all its liabilities, (ii) not assume the
liabilities of Saks or any Affiliate of Saks, (iii) not lend funds
or extend credit to Saks or any Affiliate of Saks except pursuant
to the purchase of accounts receivable, (iv) not guarantee the
liabilities of Saks or any Affiliates of Saks and (v) not own the
stock of, or any other beneficial interest in, any subsidiaries or
any other entity. The officers and directors of the Transferor (as
appropriate) shall make decisions with respect to the business and
daily operations of the Transferor independent of, and not dictated
by, any controlling entity. The Transferor shall not engage in any
business not permitted by its Certificate of Incorporation as in
effect on the Closing Date.
(k) Corporate Documents. The Transferor shall not amend,
alter, change or repeal any Articles of its Articles of
Incorporation without the prior written consent of the Agent.
(1) Year 2000 Compliance. The Transferor will promptly
notify the Agent (and the Agent shall forward such notice to each
Class Agent) in the event the Transferor discovers or determines
that any computer application (including those of its suppliers,
vendors and customers) that is necessary for the origination,
collection, management, or servicing of the Receivables will not be
Year 2000 Compliant on or before September 1, 1999 and thereafter.
The Transferor will deliver simultaneously with any quarterly or
annual financial statements or reports to be delivered under this
Agreement, a letter or other statement signed by an appropriate
officer that to the knowledge of such officer, no material event
problems or conditions have occurred which would prevent or delay
in any material respect the Transferor's plan to become Year 2000
Compliant.
SECTION 5.2. Negative Covenants of the Transferor. During
the term of this Agreement, unless the Agent and each Class Agent
shall otherwise consent in writing:
(a) No Sales, Liens, Etc. Except as otherwise provided
herein, the Transferor will not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist
any Adverse Claim upon (or the filing of any financing statement)
or with respect to (i) any of the Affected Assets, or (ii) any
account in which Collections may be deposited, or assign any right
to receive income in respect thereof.
(b) No Extension or Amendment of Receivables. Except as
otherwise permitted in this Section 5.2 and in Section 6.2 hereof,
the Transferor will not extend, amend or otherwise modify the terms
of any Receivable, or amend, modify or waive any term or condition
of any Account related thereto. The Transferor further covenants
that, except as otherwise required by any Requirement of Law, it
shall not and shall not cause, give consent or otherwise permit the
Servicer at any time to, reduce the periodic finance charges
assessed on any Receivable or other fees on any Account if, as a
result of such reduction, the reasonable expectation of the Net
Portfolio Yield as of such date would be less than 1.00% and unless
(a) such reduction is made applicable to the comparable segment of
the consumer revolving credit accounts owned and serviced by the
Transferor or the Servicer, and their respective Affiliates, as
applicable that have characteristics the same as, or substantially
similar to, the Accounts that are the subject of such change or (b)
if it does not own such a comparable segment, it will not make any
such change with the intent to materially benefit itself over any
Conduit or any Bank Investor.
(c) Performance of Account Agreements. The Transferor will
comply with and perform its obligations under the applicable
Account Agreements, if any, relating to the Accounts and the Credit
Guidelines except insofar as any such failure to comply or perform
would not materially and adversely affect the rights of any Conduit
the Agent, or any Bank Investor in the Receivables or the
collectability of the Receivables. The Transferor shall not change
the terms and provisions of the Account Agreements or the Credit
Guidelines in any respect (including, without limitation, the
calculation of the amount and the timing of uncollectible
Receivables) except to the extent (a) such change is made
applicable to the comparable segment of the consumer revolving
credit accounts owned and serviced by the Transferor or the
Servicer, and their respective Affiliates, as applicable that have
characteristics the same as, or substantially similar to, the
Accounts that are the subject of such change or (b) if it does not
own such a comparable segment, it will not make any such change
with the intent to materially benefit itself over any Conduit, the
Agent, or any Bank Investor, and such change does not materially
and adversely affect the rights of any Conduit, the Agent or any
Bank Investor in the Receivables or the collectability of the
Receivables. References to the Receivables in this paragraph shall
be deemed to refer to the Receivables in the aggregate.
(d) No Change in Business or Credit Guidelines. The
Transferor will not make any change in the character of its
business or in the Credit Guidelines, which change would, in either
case, impair the collectability of any substantial portion of the
Receivables or otherwise result in a Material Adverse Effect.
(e) No Mergers, Etc. The Transferor will not (i) consolidate
or merge with or into any other Person (except any Subsidiary of
Saks that is a special purpose entity designed to be a bankruptcy-
remote financing vehicle where the successor entity, if not the
Transferor, assumes the obligations of the Transferor hereunder) or
(ii) sell, lease or transfer all or substantially all of its assets
to any other Person except in securitization transactions in the
ordinary course of business.
(f) Change of Name, Etc. The Transferor will not change its
name, identity or structure or the location of its chief executive
office, unless at least 10 days before the effective date of any
such change the Transferor delivers to the Agent such documents,
instruments or agreements, executed by the Transferor as are
necessary to reflect such change and to continue the perfection of
the Agent's ownership interests or security interests in the
Affected Assets.
(g) Other Debt. Except as provided for herein, the
Transferor will not create, incur, assume or suffer to exist any
indebtedness whether current or funded, or any other liability
other than (i) indebtedness of the Transferor representing fees,
expenses and indemnities arising hereunder, (ii) except in
connection with the purchase of accounts receivable and (iii) other
indebtedness incurred in the ordinary course of its business in an
amount not to exceed $9,750 at any time outstanding, to be past
due.
(h) ERISA Matters. The Transferor will not (i) engage or
permit any of its ER1SA Affiliates to engage in any prohibited
transaction (as defined in Section 4975 of the Code and Section 406
of ERISA) for which an exemption is not available or has not
previously been obtained from the U.S. Department of Labor; (ii)
permit to exist any accumulated funding deficiency (as defined in
Section 302(a) of ERISA and Section 412(a) of the Code) or funding
deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to any
Multiemployer Plan that the Transferor or any ERISA Affiliate of
the Transferor is required to make under the agreement relating to
such Multiemployer Plan or any law pertaining thereto; (iv)
terminate any Benefit Plan so as to result in any liability; or (v)
permit to exist any occurrence of any reportable event described in
Title IV of ERISA which represents a material risk of a liability
to the Transferor or any ERISA Affiliate of the Transferor under
ERISA or the Code.
SECTION 5.3. Minimum Net Worth of Transferor. On or after
the Closing Date, the Transferor shall at all times have a Net
Worth of at least $10,000,000.
SECTION 5.4. Covenants of the Servicer. At all times from
the date hereof to the later to occur of (i) the Termination Date
or (ii) the date on which the Net Investment for each Class and all
other Aggregate Unpaids for each Class have been paid in full, in
cash, the Servicer covenants that unless the Agent and each Class
Agent shall otherwise consent in writing:
(a) Compliance with Requirements of Law. The Servicer shall
duly satisfy its obligations in all material respects on its part
to be fulfilled under or in connection with each Receivable and the
related Account, will maintain in effect all material
qualifications required under Requirements of Law in order to
service properly each Receivable and the related Account and will
comply in all material respects with all other Requirements of Law
in connection with servicing each Receivable and the related
Account the failure to comply with which would have a material
adverse effect on the Conduits or the Bank Investors.
(b) No Rescission or Cancellation. The Servicer shall not
permit any rescission or cancellation of a Receivable except as
ordered by a court of competent jurisdiction or other Governmental
Authority or in the ordinary course of its business and in
accordance with the Credit Guidelines.
(c) Protection of Rights. The Servicer shall take no action,
nor omit to take any action, which would impair the rights of the
Agent, any Conduit or any Bank investor in any Receivable or the
related Account.
(d) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any
governmental body or official required in connection with the
execution and delivery by the Servicer of this Agreement, the
performance by the Servicer of the transactions contemplated by
this Agreement and the fulfillment by the Servicer of the terms
hereof, have been obtained.
(e) Custodian. The Servicer will, at its own cost and
expense, (i) maintain the books and records with respect to the
Accounts and the Receivables and copies of all documents relating
to each Account as custodian for the Conduits and the Bank
Investors and (ii) clearly and unambiguously mark such books and
records that indicate the Receivables have been sold to the
Transferor and simultaneously assigned to the Agent, for benefit of
the Conduits and the Bank Investors, pursuant to this Agreement.
(f) No Extension or Amendment of Receivables. Except as
otherwise permitted in Sections 5.2 and 6.2 hereof, the Servicer
will not extend, amend or otherwise modify the terms of any
Receivable, or amend, modify or waive any term or condition of any
Account related thereto. The Servicer further covenants that,
except as otherwise required by any Requirement of Law, it shall
not reduce the periodic finance charges assessed on any Receivable
or other fees on any Account if, as a result of such reduction, the
reasonable expectation of the Net Portfolio Yield as of such date
would be less than 1.00% and unless (a) such reduction is made
applicable to the comparable segment of the consumer revolving
credit accounts owned and serviced by the Servicer that have
characteristics the same as, or substantially similar to, the
Accounts that are the subject of such change or (b) if it does not
own such a comparable segment, it will not make any such change
with the intent to materially benefit the Servicer or any Affiliate
of the Servicer over any Conduit or any Bank Investor.
(g) No Change in Business. The Servicer will not make any
change in the character of its business which would impair the
collectability of any Receivable or otherwise result in a Material
Adverse Effect.
(h) No Mergers, Etc. Saks shall not (i) consolidate with or
merge into any other Person unless Saks shall be the surviving
corporation or (ii) sell, lease or transfer substantially all of
its assets except to a wholly owned subsidiary of Saks.
(i) Year 2000 Compliance. The Servicer will promptly notify
the Agent (and the Agent shall forward such notice to each Class
Agent) in the event the Servicer discovers or determines that any
computer application (including those of its suppliers, vendors and
customers) that is necessary for the origination, collection,
management or servicing of the Receivables will not be Year 2000
Compliant on or before September 1, 1999 and thereafter. The
Servicer will deliver simultaneously with any quarterly or annual
financial statements or reports to be delivered under this
Agreement, a letter or other statement signed by an appropriate
officer that to the knowledge of such officer, no material event
problems or conditions have occurred which would prevent or delay
in any material respect the Servicer's plan to become Year 2000
Compliant.
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Servicer. The servicing,
administering and collection of the Receivables shall be conducted
by such Person (the "Servicer") so designated from time to time in
accordance with this Section 6.1. Saks is hereby designated as,
and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. The Servicer may not
delegate any of its rights, duties or obligations hereunder, or
designate a substitute Servicer, without the prior written consent
of each Class Agent (except to an Affiliate of the Servicer), and
provided that the Servicer shall continue to remain solely liable
for the performance of the duties as Servicer hereunder
notwithstanding any such delegation hereunder. The Agent may, and
upon the direction of the Majority Investors, the Agent shall,
after the occurrence of a Servicer Default or any other Termination
Event, designate as Servicer any Person (including itself) to
succeed Saks or any successor Servicer, on the condition in each
case that any such Person so designated shall agree to perform the
duties and obligations of the Servicer pursuant to the terms
hereof. The Servicer and the Agent may notify any Obligor of the
Transferred Interests.
SECTION 6.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such
action as may be necessary or advisable to collect each Receivable
from time to time, all in accordance with applicable laws, rules
and regulations, with reasonable care and diligence, and in
accordance with the Credit Guidelines. Each of the Transferor,
each Conduit, the Agent, each Class Agent and each Bank Investor
hereby appoints as its agent the Servicer, from time to time
designated pursuant to Section 6. 1 hereof, to enforce its
respective rights and interests in and under the Affected Assets.
To the extent permitted by applicable law, the Transferor hereby
grants to any Servicer appointed hereunder an irrevocable power of
attorney to take any and all steps in the Transferor's name and on
behalf of the Transferor necessary or desirable, in the reasonable
determination of the Servicer, to collect all amounts due under any
and all Receivables, including, without limitation, endorsing the
Transferor's name on checks and other instruments representing
Collections and enforcing such Receivables and the related
Accounts. The Servicer shall set aside for the account of the
Transferor and the Conduits and/or the Bank Investors their
respective allocable shares of the Collections of Receivables in
accordance with Sections 2.5 and 2.6 hereof. The Servicer shall
segregate and deposit to the Agent's account the Agent's (on behalf
of the Conduits and the Bank Investors) allocable share of
Collections of Receivables when required pursuant to Article II
hereof. The Transferor shall deliver to the Servicer and the
Servicer shall hold in trust for the Transferor and the Agent on
behalf of each Conduit and each Bank Investor, in accordance with
their respective interests, all Records which evidence or relate to
Receivables or Related Security. Notwithstanding anything to the
contrary contained herein, the Agent shall have the absolute and
unlimited right to direct the Servicer (whether the Servicer is
Saks or any other Person) to commence or settle any legal action to
enforce collection of any Receivable or to foreclose upon or
repossess any Related Security. The Servicer shall not make the
Agent, any Class Agent, any Conduit or any Bank Investor a party to
any litigation without the prior written consent of such Person.
(b) The Servicer shall, as soon as practicable following
receipt thereof, turn over to the Transferor any collections of any
indebtedness of any Person which is not on account of a Receivable.
If the Servicer is not the Transferor or an Affiliate of the
Transferor, the Servicer, by giving three Business Days' prior
written notice to the Agent, may revise the percentage used to
calculate the Servicing Fee for each Class, so long as the revised
percentage will not result in a Servicing Fee for such Class that
exceeds 110% of the reasonable and appropriate out-of-pocket costs
and expenses of such Servicer incurred in connection with the
performance of its obligations hereunder as documented to the
reasonable satisfaction of the applicable Class Agent for each
Class, provided, however, that at any time the Buyer's Percentage
Interest for any Class would otherwise equal or exceeds 100%, any
compensation to the Servicer in excess of the 2.0% Servicing Fee
initially provided for herein shall be an obligation of the
Transferor and shall not be payable, in whole or in part, from
Collections. The Servicer, if other than the Transferor or an
Affiliate of the Transferor, shall, as soon as practicable upon
demand, deliver to the Transferor all Records in its possession
which evidence or relate to indebtedness of an Obligor which is not
a Receivable.
(c) On or before March 31 of each year, beginning March 31,
2000, the Servicer shall cause a firm of independent public
accountants (who may also render other services to the Servicer,
the Transferor, or any Affiliate of any of the foregoing) to
furnish a report to the Agent to the effect that they have (i)
compared the information contained in a sample of the Investor
Reports delivered during the immediately preceding calendar year
with the information contained in the Accounts and the Servicer's
records and computer systems for such period, and that, on the
basis of such examination and comparison, such firm is of the
opinion that the information contained in the Investor Reports
selected reconciles with the information contained in the Accounts
and the Servicer's records and computer system and that the
servicing of the Receivables has been conducted in compliance with
this Agreement, and (ii) confirmed by testing the mathematical
accuracy of the information set forth in the Investor Reports
delivered during such calendar year, except, in each case for (A)
such exceptions as such firm shall believe to be immaterial (which
exceptions need not be enumerated) and (B) such other exceptions as
shall be set forth in such statement.
(d) Notwithstanding anything to the contrary contained in
this Article VI, the Servicer, if not the Transferor or any
Affiliate of the Transferor, shall have no obligation to collect
enforce or take any other action described in this Article VI with
respect to any indebtedness that is not included in the Transferred
Interest other than to deliver to the Transferor the collections
and documents with respect to any such indebtedness as described in
Section 6.2(b) hereof.
SECTION 6.3. Rights After Designation of New Servicer. At
any time following the designation of a Servicer (other than the
Transferor or any Affiliate of the Transferor) pursuant to Section
6. 1 hereof:
(i) The Agent (at the direction of the Majority
Investors) may direct that payment of all amounts payable
under any Receivable be made directly to the Agent or its
designee.
(ii) The Transferor shall, at the Agent's (at the
direction of the Majority Investors) request and at the
Transferor's expense, give notice of the Agent's, the
Transferor's and/or the Bank Investors' ownership of
Receivables to each Obligor and direct that payments be made
directly to the Agent or its designee.
(iii) The Transferor shall, at the Agent's (at the
direction of the Majority Investors) request (A) assemble all
of the Records, and shall make the same available to the Agent
or its designee at a place selected by the Agent or its
designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting
Collections of Receivables in a manner acceptable to the Agent
and shall, promptly upon receipt, remit all such cash, checks
and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(iv) The Transferor hereby authorizes the Agent to take
any and all steps in the Transferor's name and on behalf of
the Transferor and the Seller necessary or desirable, in the
determination of the Agent to collect all amounts due under
any and all Receivables, including, without limitation,
endorsing the Transferor's name on checks and other
instruments representing Collections and enforcing such
Receivables and the related Accounts.
SECTION 6.4. Servicer Default. The occurrence of any one or
more of the following events shall constitute a Servicer Default:
(a) the Servicer or, to the extent that the Transferor or any
Affiliate of the Transferor is then acting as Servicer, the
Transferor or such Affiliate, as applicable, shall fail (i) to
observe or perform any term, covenant or agreement hereunder (other
than as referred to in clauses (ii) or (iii) of this Section
6.4(a)) or under any of the other Transaction Documents to which
such Person is a party or by which such Person is bound, and such
failure shall remain unremedied for 30 days, or (ii) to make any
payment or deposit required to be made by it hereunder when due or
the Servicer shall fail to observe or perform any term, covenant or
agreement on the Servicer's part to be performed under Section 2.7
hereof or (iii) to observe or perform any term, covenant or
agreement under Sections 5.4(a), 5.4(b), 5.4(c), 5.4(f) or 5.4(g);
(b) any representation, warranty, certification or statement
made by the Servicer or the Transferor or any Affiliate of the
Transferor (in the event that the Transferor or such Affiliate is
then acting as the Servicer) in this Agreement the Saks Guaranty or
in any of the other Transaction Documents or in any certificate or
report delivered by it pursuant to any of the foregoing shall prove
to have been incorrect in any material respect when made or deemed
made;
(c) failure or the default by the Servicer or any of its
Subsidiaries in the performance of any material term, provision or
condition contained in any agreement under which any Indebtedness
greater than $20,000,000 was created or is governed, if such event
is an "event of default" or "default" under any such agreement;
(d) any Event of Bankruptcy shall occur with respect to the
Servicer or any of its Subsidiaries; or
(e) there shall have occurred any material adverse change in
the operations of the Servicer and its Subsidiaries, taken as a
whole, since the end of the last fiscal year ending before the date
of its appointment as Servicer hereunder or any other event shall
have occurred which, in the commercially reasonable judgment of the
Agent, materially and adversely affects the Servicer's ability to
either collect the Receivables or to perform under this Agreement.
SECTION 6.5. Responsibilities of the Transferor. Anything
herein to the contrary notwithstanding the Transferor shall (i)
perform all of the Transferor's obligations under the Accounts
related to the Receivables, if any, to the same extent as if
interests in such Receivables had not been sold hereunder and the
exercise by the Agent any Class Agent any Conduit and any Bank
Investor of their rights hereunder shall not relieve the Transferor
from such obligations and (ii) pay when due any taxes, including
without limitation, any sales taxes, if any, payable in connection
with the Receivables and their creation and satisfaction. Neither
the Agent, any Class Agent any Conduit nor any Bank Investor shall
have any obligation or liability with respect to any Receivable or
related Accounts, nor shall it be obligated to perform any of the
obligations of the Transferor thereunder.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1. Termination Events. The occurrence of any one
or more of the following events shall constitute a Termination
Event:
(a) the Transferor or the Servicer shall fail to make any
payment or deposit to be made by it hereunder when due hereunder,
or Saks shall fail to make any payment or deposit to be made under
the Saks Guaranty when due thereunder; or
(b) any representation, warranty, certification or statement
made by the Transferor, the Servicer or Saks in this Agreement, the
Saks Guaranty, any other Transaction Document to which it is a
party or in any other document delivered pursuant hereto or thereto
shall prove to have been incorrect in any material respect when
made or deemed made; or
(c) the Transferor, Saks or the Servicer shall default in the
performance of any payment or undertaking (other than those covered
by clause (a) above) (i) to be performed or observed under Sections
5.1(a)(vi), 5.1(a)(vii), 5.1(b), 5.1(c), 5.1(f), 5.1(g), 5.1(h),
5.1(i), 5.1(k), 5.2(a), 5.2(c), 5.2(e) or 5.2(h) or Section 5.3 or
(ii) to be performed or observed under any other provision hereof
and such default in the case of this clause (ii) shall continue for
ten days; or
(d) any Event of Bankruptcy shall occur with respect to the
Transferor, Saks or any Subsidiary of the Transferor or Saks; or
(e) the Agent on behalf of the Conduits and/or the Bank
Investors, shall, for any reason, fail or cease to have a valid and
perfected first priority ownership or security interest in the
Affected Assets free and clear of any Adverse Claims; or
(f) a Servicer Default shall have occurred; or
(g) (i) the Buyer's Percentage Interest for any Class exceeds
such Class's Class Share of the Maximum Buyer's Percentage
Interest, unless the Transferor reduces the Net Investment for such
Class or increases the balance of the Affected Assets on the next
Business Day so as to reduce the Buyer's Percentage Interest for
such Class to less than or equal to such Class's Class Share of the
Maximum Buyer's Percentage Interest, (ii) at any time any Class's
Class Share of the Net Receivables Balance shall be less than the
Net Investment for such Class or (iii) the Net Investment for any
Class plus the Aggregate Interest Component of all outstanding
Related Commercial Paper of the related Conduit shall exceed the
Facility Limit for such Class at any time; or
(h) the average Net Portfolio Yield for any three consecutive
Collection Periods is less than 1.00%; or
(i) any Liquidity Provider shall have given notice that an
event of default has occurred and is continuing under any of its
respective agreements with the related Conduit; or
(j) the Commercial Paper issued by a Conduit shall not be
rated at least "A2" by Standard & Poor's and at least "P2" by
Moody's; or
(k) Saks' or the Servicer's senior unsecured long-term debt
rating falls below "BB" or "Bal" by S&P or Moody's, respectively,
or the breach of any covenant set forth in the Bank Loan Agreement;
or
(1) NGBL sells, assigns, hypothecates, grants a security
interest in or otherwise transfers or purports to transfer any
interest in any Account other than pursuant to the Receivable
Purchase Agreement.
SECTION 7.2. Termination. (a) Upon the occurrence of any
Termination Event, the Agent may, or at the direction of the
Majority Investors shall, by notice to the Transferor and the
Servicer declare the Termination Date to have occurred; provided,
however, that in the case of any event described in Section 7.1(d),
7.1(e), 7.1(g)(i) or 7.1(j) above, Termination Date shall be deemed
to have occurred automatically upon the occurrence of such event.
Upon any such declaration or automatic occurrence, the Agent shall
have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided
under the UCC of the applicable jurisdiction and other applicable
laws, all of which rights shall be cumulative.
(b) At all times after the declaration or automatic
occurrence of the Termination Date pursuant to Section 7.2(a)
(unless only a Termination Event set forth in Section 7.1(i) or
7.1(j) shall have occurred), the Carrying Costs for each Class
shall thereafter be calculated on the basis of the Base Rate plus
2.00% for all existing and future funding periods.
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities by the Transferor. Without limiting
any other rights which the Agent, any Class Agent, any Conduit or
any Bank Investor may have hereunder or under applicable law, the
Transferor hereby agrees to indemnify each Conduit each Bank
Investor, the Agent, each Class Agent, each Administrative Agent,
each Liquidity Provider and each Credit Support Provider and any
successors and permitted assigns and their respective officers,
directors and employees (collectively, the "Indemnified Parties")
from and against any and all damages, losses, claims, liabilities,
costs and expenses, including, without limitation, reasonable
attorneys' fees (which such attorneys may be employees of any
Indemnified Party) and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against
or incurred by any of them in any action or proceeding between the
Transferor, the Servicer and any of the Indemnified Parties or
between any of the Indemnified Parties and any third party or
otherwise arising out of or as a result of this Agreement, the
other Transaction Documents, the ownership or maintenance, either
directly or indirectly, by the Agent, any Conduit or any Bank
Investor of any Transferred Interest or any of the other
transactions contemplated hereby or thereby, excluding, however,
(i) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of an Indemnified
Party or (ii) recourse (except as otherwise specifically provided
in this Agreement) for uncollectible Receivables. Without limiting
the generality of the foregoing the Transferor shall indemnify each
Indemnified Party for Indemnified Amounts relating to or resulting
from:
(i) any representation or warranty made by the
Transferor or the Servicer or any officers of the Transferor
or the Servicer under or in connection with this Agreement any
of the other Transaction Documents, any Investor Report or any
other information or report delivered by the Transferor or the
Servicer pursuant hereto, which shall have been false or
incorrect in any material respect when made or deemed made;
(ii) the failure by the Transferor, the Servicer or (in
the case of an Account) [Saks Fifth Avenue] or NGBL to comply
with any applicable law, rule or regulation with respect to
any Receivable or the related Account, or the nonconformity of
any Receivable or the related Account with any such applicable
law, rule or regulation;
(iii) the failure to vest and maintain vested in the
Agent, an undivided first priority, perfected percentage
ownership interest, to the extent of any Transferred Interest,
in the Affected Assets free and clear of any Adverse Claim or
(y) to create or maintain a valid and perfected first priority
security interest in favor of the Agent for the benefit of the
Conduits and/or the Bank Investors, in the Affected Assets as
contemplated pursuant to Section 11.11, free and clear of any
Adverse Claim;
(iv) the failure to file, or any delay in filing,
financing statements, continuation statements, or other
similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect
to any of the Affected Assets;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable (including without limitation, a defense based on
such Receivable or the related Account not being the legal,
valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim
resulting from the sale of merchandise or services related to
such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vi) any products liability claim or personal injury or
property damage suit or other similar or related claim or
action of whatever sort arising out of or in connection with
merchandise or services which are the subject of any
Receivable;
(vii) the transfer of an ownership interest in any
Receivable other than an Eligible Receivable;
(viii) the failure by the Transferor, NBGL or the
Servicer to comply with any term, provision or covenant
contained in this Agreement or any of the other Transaction
Documents to which it is a party or to perform any of its
respective duties under the Accounts;
(ix) any repayment by any Indemnified Party of any amount
previously distributed in reduction of Net Investment for such
Indemnified Party's Class which such Indemnified Party
believes in good faith is required to be made;
(x) the commingling by the Transferor, Saks or the
Servicer of Collections of Receivables at any time with other
funds;
(xi) any investigation, litigation or proceeding related
to this Agreement any of the other Transaction Documents, the
use of proceeds of Transfers by the Transferor or Saks, the
ownership of Transferred Interests, or any Receivable, Related
Security or Account;
(xii) any inability to obtain any judgment in or utilize
the court or other adjudication system of, any state in which an
Obligor may be located as a result of the failure of the Transferor
or the Servicer to qualify to do business or file any notice of
business activity report or any similar report; and
(xiii) any action taken by the Transferor, NBGL or the
Servicer in the enforcement or collection of any Receivable;
provided, however, that if any Conduit enters into agreements for
the purchase of interests in receivables from one or more Other
Transferors, such Conduit shall allocate such Indemnified Amounts
which are in connection with the related Liquidity Provider
Agreement the related Credit Support Agreement or the credit
support furnished by the related Credit Support Provider to the
Transferor and each Other Transferor; and provided, further, that
if such Indemnified Amounts are attributable to the Transferor or
the Servicer and not attributable to any Other Transferor, the
Transferor shall be solely liable for such Indemnified Amounts or
if such Indemnified Amounts are attributable to Other Transferors
and not attributable to the Transferor or the Servicer, such Other
Transferors shall be solely liable for such Indemnified Amounts.
SECTION 8.2. Indemnity for Taxes, Reserves and Expenses. (a)
If after the date hereof, the adoption of any Law or bank
regulatory guideline or any amendment or change in the
interpretation of any existing or future Law or bank regulatory
guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any
directive of any Official Body (in the case of any bank regulatory
guideline, whether or not having the force of Law):
(i) shall subject any Indemnified Party to any tax, duty or
other charge (other than Excluded Taxes) with respect to this
Agreement, the other Transaction Documents, the ownership,
maintenance or financing of any Transferred Interest, the
Receivables or payments of amounts due hereunder, or shall change
the basis of taxation of payments to any Indemnified Party of
amounts payable in respect of any Section 8.2 Item (except for
changes in the rate of general corporate, franchise, net income or
other income tax imposed on such Indemnified Party by the
jurisdiction in which such Indemnified Party's principal executive
office is located);
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System (other than any such
requirement used to determine any Adjusted LIBOR Rate))
against assets of, deposits with or for the account of, or
credit extended by, any Indemnified Party or shall impose on
any Indemnified Party or on the United States market for
certificates of deposit or the London interbank market any
other condition affecting any Section 8.2 Item; or
(iii) imposes upon any Indemnified Party any other
expense (including, without limitation, reasonable attorneys!
fees and expenses, and expenses of litigation or preparation
therefor in contesting any of the foregoing) with respect to
any Section 8.2 Item,
and the result of any of the foregoing is to increase the cost to
such Indemnified Party with respect to this Agreement the other
Transaction Documents, the ownership, maintenance or financing of
any Transferred Interest the Receivables, the obligations
hereunder, the funding of any purchases hereunder, any Liquidity
Provider Agreement or any Credit Support Agreement by an amount
deemed by such Indemnified Party to be material, then, within ten
days after demand by such Indemnified Party through the Agent, the
Transferor shall pay to the Agent (and the Agent shall pay to the
applicable Class Agent), for the benefit of such Indemnified Party,
such additional amount or amounts as will compensate such
Indemnified Party for such increased cost or reduction.
(b) If any Indemnified Party shall have determined that after
the date hereof, the adoption of any applicable Law or bank
regulatory guideline regarding capital adequacy, or any change
therein, or any change in the interpretation thereof by any
Official Body, or any directive regarding capital adequacy (in the
case of any bank regulatory guideline, whether or not having the
force of law) of any such Official Body, has or would have the
effect of reducing the rate of return on capital of such
Indemnified Party (or its parent) as a consequence of such
Indemnified Party's obligations hereunder or with respect hereto to
a level below that which such Indemnified Party (or its parent)
could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Indemnified Party to
be material, then from time to time, within ten days after demand
by such Indemnified Party through the Agent the Transferor shall
pay to the Agent for the benefit of such Indemnified Party, such
additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction.
(c) The Agent will promptly notify the Transferor of any
event of which it has knowledge, occurring after the date hereof,
which will entitle an Indemnified Party to compensation pursuant to
this Section 8.2. A notice by the Agent or the applicable
Indemnified Party claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In
determining such amount the Agent or any applicable Indemnified
Party may use any reasonable averaging and attributing methods.
(d) Anything in this Section 8.2 to the contrary
notwithstanding if a Conduit enters into agreements for the
acquisition of interests in receivables from one or more Other
Transferors, such Conduit shall allocate the liability for any
amounts under this Section 8.2 which are in connection with a
related Liquidity Provider Agreement a related Credit Support
Agreement or the credit support provided by a related Credit
Support Provider ("Section 8.2 Costs") to the Transferor and each
Other Transferor; provided, however, that if such Section 8.2 Costs
are attributable to the Transferor, or the Servicer and not
attributable to any Other Transferor, the Transferor shall be
solely liable for such Section 8.2 Costs or if such Section 8.2
Costs are attributable to Other Transferors and not attributable to
the Transferor or the Servicer, such Other Transferors shall be
solely liable for such Section 8.2 Costs.
SECTION 8.3. Taxes. All payments made hereunder by the
Transferor or the Servicer (each, for purposes of this Section 8.3,
a "Payor") to any Conduit, any Bank Investor, any Class Agent or
the Agent (each, for purposes of this Section 8.3, a "recipient")
shall be made free and clear of, and without deduction for, any
present or future income, excise, stamp or franchise taxes and any
other taxes, fees, duties, withholdings or other charges of any
nature whatsoever imposed by any taxing authority on any recipient
(or any assignee of such parties) (such non-excluded items being
called "Taxes"), but excluding franchise taxes and taxes imposed on
or measured by the recipient' s net income or gross receipts
("Excluded Taxes"). In the event that any withholding or deduction
from any payment made by the payor hereunder is required in respect
of any Taxes, then such payor shall:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such
payment to such authority; and
(c) pay to the recipient such additional amount or amounts as
is necessary to ensure that the net amount actually received by the
recipient will equal the full amount such recipient would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any recipient
with respect to any payment received by such recipient hereunder,
the recipient may pay such Taxes and the payor will promptly pay
such additional amounts (including any penalties, interest or
expenses) as shall be necessary in order that the net amount
received by the recipient after the payment of such Taxes
(including any Taxes on such additional amount) shall equal the
amount such recipient would have received had such Taxes not been
asserted.
If the payor fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the recipient the
required receipts or other required documentary evidence, the payor
shall indemnify the recipient for any incremental Taxes, interest
or penalties that may become payable by any recipient as a result
of any such failure.
SECTION 8.4. Other Costs, Expenses and Related Matters.
(a) The Transferor agrees, upon receipt of a written invoice, to
pay or cause to be paid, and to save each Conduit each Bank
Investor, each Class Agent and the Agent harmless against liability
for the payment of, all reasonable out-of-pocket expenses
(including without limitation, attorneys', accountants' and other
third parties' fees and expenses, any filing fees and expenses
incurred by officers or employees of any such Person or intangible,
documentary or recording taxes incurred by or on behalf of any such
Person (i) in connection with the negotiation, execution, delivery
and preparation of this Agreement, the other Transaction Documents
and any documents or instruments delivered pursuant hereto and
thereto and the transactions contemplated hereby or thereby
(including, without limitation, the perfection or protection of any
Transferred Interest) and (ii) from time to time (a) relating to
any amendments, waivers or consents under this Agreement and the
other Transaction Documents, (b) arising in connection with any
such Persons' enforcement or preservation of rights (including
without limitation, the perfection and protection of any
Transferred Interest under this Agreement), or (c) arising in
connection with any audit dispute, disagreement litigation or
preparation for litigation involving this Agreement or any of the
other Transaction Documents (all of such amounts, collectively,
"Transaction Costs").
(b) The Transferor shall pay the allocable Class Agent for
the account of the related Conduit and the related Bank Investors,
as applicable, on demand any Early Collection Fee due to the
related Class on account of the receipt by such Conduit or such
Bank Investors of any amounts applied in reduction of the Net
Investment for such Class on any day other than a Remittance Date
or the last day of any applicable funding period (in the case of
any LIBOR-based funding).
SECTION 8.5. Reconveyance Under Certain Circumstances. The
Transferor agrees to accept the reconveyance from the Agent, on
behalf of the Conduits and/or the Bank Investors, of all
Transferred Interests if the Agent notifies the Transferor of a
material breach of any representation or warranty made or deemed
made pursuant to Article III of this Agreement and Transferor shall
fail to cure such breach within 15 days (or, in the case of the
representations and warranties in Sections 3.1(d) and 3.1(j), three
days) of such notice. The reconveyance price shall be paid by the
Transferor to the Agent, for the account of the Conduits and/or the
Bank Investors, as applicable, in immediately available funds on
such 15th day (or 3rd day, if applicable) in an amount equal to the
aggregate of the Aggregate Unpaids for each Class.
ARTICLE IX
THE AGENT; BANK COMMITMENT
SECTION 9.1. Authorization and Action of Agent. (a) Each
Conduit and each Bank Investor hereby irrevocably appoints and
authorizes the Agent to act as its agent under this Agreement and
the other Transaction Documents with such powers and discretion as
are specifically delegated to the Agent by the terms of this
Agreement and the other Transaction Documents, together with such
other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 9.5 and the
first sentence of Section 9.6 hereof shall include its affiliates
and its own and its affiliates' officers, directors, employees, and
agents): (a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a
trustee or fiduciary for any Conduit or any Bank Investor; (b)
shall not be responsible to any Conduit or any Bank Investor for
any recital, statement, representation, or warranty (whether
written or oral) made in or in connection with any Transaction
Document or any certificate or other document referred to or
provided for in, or received by any of them under, any Transaction
Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Transaction Document, or any
other document referred to or provided for therein or for any
failure by any of the Transferor, Saks or the Servicer or any other
Person to perform any of its obligations thereunder; (c) shall not
be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements
by any of the Transferor, Saks or the Servicer or the satisfaction
of any condition or to inspect the property (including the books
and records) of any of the Transferor, Saks or the Servicer or any
of their Subsidiaries or affiliates; (d) shall not be required to
initiate or conduct any litigation or collection proceedings under
any Transaction Document; and (e) shall not be responsible for any
action taken or omitted to be taken by it under or in connection
with any Transaction Document, except for its own gross negligence
or willful misconduct. The Agent may employ agents and attorneys-
in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care.
SECTION 9.2. Agent's Reliance, Etc. The Agent shall be
entitled to rely upon any certification, notice, instrument,
writing, or other communication (including, without limitation, any
thereof by telephone or telecopy) believed by it to be genuine and
correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel for any of the Transferor, Saks or
the Servicer), independent accountants, and other experts selected
by the Agent. As to any matters not expressly provided for by this
Agreement the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to
refrain from aci6ng (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority
Investors, and such instructions shall be binding on each Conduit
and each Bank Investor; provided, however, that the Agent shall not
be required to take any action that exposes the Agent to personal
liability or that is contrary to any Transaction Document or
applicable law or unless it shall first be indemnified to its
satisfaction by the Bank Investors against any and all liability
and expense which may be incurred by it by reason of taking any
such action.
SECTION 9.3. Termination Event or Potential Termination
Event. The Agent shall not be deemed to have knowledge or notice
of the occurrence of a Potential Termination Event or a Termination
Event unless the Agent has received written notice from a Conduit,
a Bank Investor or the Transferor specifying such Potential
Termination Event or Termination Event and stating that such notice
is a "Notice of Termination Event or Potential Termination Event".
In the event that the Agent receives such a notice of the
occurrence of a Potential Termination Event or Termination Event,
the Agent shall give prompt notice thereof to each Class Agent each
Conduit and each Bank Investor. The Agent shall (subject to
Section 9.2 hereof) take such action with respect to such Potential
Termination Event or Termination Event as shall reasonably be
directed by the Majority Investors, provided that, unless and until
the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Potential Termination Event or
Termination Event as it shall deem advisable in the best interest
of the Conduits and each Bank Investor.
SECTION 9.4. Rights as Bank Investor. With respect to its
Commitment, NationsBank (and any successor acting as Agent) in its
capacity as a Bank Investor hereunder shall have the rights and
powers specified hereunder as the rights and powers of a Bank
Investor and may exercise the same as though it were not acting as
the Agent, and the term "Bank Investor" shall, unless the context
otherwise indicates, include NationsBank in its individual
capacity. NationsBank (and any successor acting as Agent) and its
affiliates may (without having to account therefor to any Conduit
or any Bank Investor) accept deposits from, lend money to, make
investments in, provide services to, and generally engage in any
kind of lending, trust or other business with any of the
Transferor, Saks and the Servicer or any of their Subsidiaries or
affiliates as if it were not acting as Agent and NationsBank (and
any successor acting as Agent) and its affiliates may accept fees
and other consideration from any of the Transferor, Saks and the
Servicer or any of their Subsidiaries or Affiliates for services in
connection with this Agreement or otherwise without having to
account for the same to any Conduit or any Bank Investor.
SECTION 9.5. Indemnification of the Agent. Each Bank
Investor agrees to indemnify the Agent (to the extent not
reimbursed by the Transferor), ratably in accordance with its
respective Pro Rata Share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent (including by a
Conduit or a Bank Investor) in any way relating to or arising out
of this Agreement or any other Transaction Document or the
transactions contemplated thereby or any action taken or omitted by
the Agent under this Agreement or any other Transaction Document
provided that no Bank Investor shall be liable for any of the
foregoing to the extent they arise from the gross negligence or
willful misconduct of the Person indemnified. Without limitation
of the foregoing, each Bank Investor agrees to reimburse the Agent,
ratably in accordance with its respective Pro Rata Share, promptly
upon demand for any out-of-pocket expenses (including attorneys'
fees) incurred by the Agent in connection with the administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement and
the other Transaction Documents, to the extent that such expenses
are incurred in the interests of or otherwise in respect of the
Bank Investors hereunder and/or thereunder and to the extent that
the Agent is not reimbursed for such expenses by the Transferor.
The agreements contained in this Section shall survive payment in
full of the aggregate of the Net Investment for all Classes and all
other amounts payable under this Agreement.
SECTION 9.6. Non-Reliance. Each Class Agent, each Conduit and
each Bank Investor agrees that it has, independently and without
reliance on the Agent, a Class Agent, a Conduit or a Bank Investor,
and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Receivables, the
Transferor, Saks, and the Servicer and their respective
Subsidiaries and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent, a Class
Agent a Conduit or a Bank Investor, and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action
under the Transaction Documents. Except for notices, reports, and
other documents and information expressly required to be furnished
to a Class Agent, a Conduit or a Bank Investor by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide a Class Agent, a Conduit or a Bank Investor with any credit
or other information concerning the affairs, financial condition,
or business of any of the Transferor, Saks or the Servicer or any
of their Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.
SECTION 9.7. Resignation of Agent. The Agent may resign at
any time by giving notice thereof to each Class Agent each Conduit,
each Bank Investor and the Transferor. Upon any such resignation,
the Majority Investors shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the
Majority Investors and shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Conduits
and the Bank Investors, appoint a successor Agent which shall be a
commercial bank organized under the laws of the United States
having combined capital and surplus of at least $100,000,000. Upon
the acceptance of any appointment as Agent hereunder by a
successor, such successor shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges, and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent the provisions of
this Article IX shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was
acting as Agent.
SECTION 9.8. Payments by the Agent. Unless specifically
allocated to a Bank Investor pursuant to the terms of this
Agreement all amounts received by the Agent on behalf of the Bank
Investors shall be immediately paid by the Agent to the applicable
Class Agent for the benefit of the related Bank Investors and the
Class Agent shall pay such amounts to the applicable related Bank
Investors (at their respective accounts specified herein or in
their respective Assignment and Assignment and Assumption
Agreements, as applicable) in accordance with their respective
related pro rata interests in the Net Investment on the Business
Day received by the Class Agent, unless such amounts are received
after 12:00 noon on such Business Day, in which case such Class
Agent shall use its reasonable efforts to pay such amounts to such
Bank Investors on such Business Day, but, in any event, shall pay
such amounts to the Bank Investors not later than the following
Business Day.
SECTION 9.9. Bank Commitment; Assignment to Bank Investors.
(a) Bank Commitment. At any time on or prior to the Commitment
Termination Date for a Class (i) upon the occurrence of a
Termination Event that results in the Termination Date or (ii) at
the option of the Conduit of such Class, and upon such Conduit's
giving notice to the Transferor, the Transferor hereby requests and
directs that such Conduit assign its interest in the Transferred
Interest for such Class and the Net Investment for such Class in
whole to the Bank Investors of such Class pursuant to this Section
9.9(a) and the Transferor hereby agrees to pay the amounts
described in Section 9.9(d) below. No further documentation or
action on the part of any Conduit shall be required to exercise the
rights set forth in the immediately preceding sentence, other than,
in the case of clause (i) of such sentence, receipt of notice by
the Bank Investors of such Class from the applicable Class Agent
that a Termination Date has occurred or, in the case of clause (ii)
of such sentence, the giving of the notice set forth in such clause
and the delivery by the applicable Class Agent of a copy of such
notice to the Bank Investors of such Class (the date of the receipt
of a notice referred to in such clauses being the "Effective
Date"). Each Bank Investor hereby agrees, unconditionally and
irrevocably and under all circumstances, without setoff,
counterclaim or defense of any kind, to pay the full amount of its
Assignment Amount on such Effective Date to the related Conduit in
immediately available funds to an account designated by the
applicable Class Agent. Upon payment of its Assignment Amount,
each Bank Investor shall acquire its Pro Rata Share of the
Transferred Interest for such Class and the Net Investment for such
Class and shall assume its respective portion of such Conduit's
obligations hereunder, and such Conduit shall be released from such
portion of such obligations. If, by 2:00 P.M. (New York time) on
the Effective Date, one or more Bank Investors of a Class (each, a
"Defaulting Bank Investor", and each Bank Investor of such Class
other than any Defaulting Bank Investor being referred to as a
"Non-Defaulting Bank Investor") fails to pay its Assignment Amount
as specified in this Section 9.9 (the aggregate amount not so made
available to the applicable Conduit being herein called the
"Assignment Amount Deficit"), then the applicable Class Agent
shall, by no later than 2:30 P.M. (New York time) on the Effective
Date, instruct each Non-Defaulting Bank Investor to pay, by no
later than 3:00 P.M. (New York time) on the Effective Date, in
immediately available funds, to the account designated by the
applicable Class Agent, an amount equal to the lesser of (x) such
Non-Defaulting Bank Investor's proportionate share (based upon the
relative Commitments of the Non-Defaulting Bank Investors of such
Class) of the applicable Assignment Amount Deficit and (y) its
unused Commitment. A Defaulting Bank Investor shall forthwith,
upon demand, pay to the applicable Class Agent for the ratable
benefit of the Non-Defaulting Bank Investors all amounts paid by
each Non-Defaulting Bank Investor on behalf of such Defaulting Bank
Investor, together with interest thereon for each day from the date
a payment was made by a Non-Defaulting Bank Investor until the date
such Non-Defaulting Bank Investor has been paid such amounts in
full at a rate per annum equal to the rate determined in accordance
with clause (i) of the definition of "Base Rate" plus two percent
(2%). In addition, if, after giving effect to the provisions of
the immediately preceding sentence, any such Assignment Amount
Deficit continues to exist, each such Defaulting Bank Investor
shall pay interest to the applicable Class Agent on such Defaulting
Bank Investor's portion of such remaining Assignment Amount Deficit
at a rate per annum equal to the rate determined in accordance with
clause (i) of the definition of "Base Rate" plus two percent (2%),
for each day from the Effective Date until the date such Defaulting
Bank Investor shall pay its portion of such remaining Assignment
Amount Deficit in full to the applicable Conduit. Upon any
assignment by a Conduit to the related Bank Investors contemplated
hereunder, such Conduit shall cease to make any additional
Incremental Transfers hereunder.
(b) Assignment by a Bank Investor.
(i) No Bank Investor may assign all or any portion of its
Commitment or interest in any Transferred Interest or Net
Investment for its Class and its rights and obligations hereunder
to any Person unless approved in writing by the Transferor (which
approval shall not be unreasonably withheld), the related
Administrative Agent, on behalf of the related Conduit and the
related Class Agent. In connection with any such assignment by a
Bank Investor to another Person, the assignor shall deliver to the
assignee an Assignment and Assumption Agreement duly executed,
assigning to such assignee all or any portion of (A) such
assignor's Commitment and other obligations hereunder and (B) such
assignor's pro rata interest in the Transferred Interest of its
Class and the Net Investment of its Class and other rights
hereunder, and such assignor shall promptly execute and deliver all
further instruments and documents, and take all further action,
that the assignee may reasonably request in order to protect, or
more fully evidence the assignee's right, title and interest in and
to such interest and to enable the Agent and the applicable Class
Agent, on behalf of such assignee, to exercise or enforce any
rights hereunder and under the other Transaction Documents to which
such assignor is or, immediately prior to such assignment, was a
party. Upon any such assignment (i) the assignee shall have all of
the rights and obligations of the assignor hereunder and under the
other Transaction Documents to which such assignor is or,
immediately prior to such assignment was a party with respect to
such assignor's Commitment and interest in the Transferred Interest
of its Class and the Net Investment of its Class for all purposes
of this Agreement, the Saks Guaranty and under the other
Transaction Documents to which such assignor is or, immediately
prior to such assignment, was a party and (ii) the assignor shall
have no further obligations with respect to the portion of its
Commitment hereunder which has been assigned and shall relinquish
its rights with respect to the portion of its interest in the
Transferred Interest of its Class and the Net Investment of its
Class which has been assigned for all purposes of this Agreement
and under the other Transaction Documents to which such assignor is
or, immediately prior to such assignment was a party. No such
assignment shall be effective unless a fully executed copy of the
related Assignment and Assumption Agreement shall be delivered to
the Agent and the related Class Agent, the Transferor and Saks.
All costs and expenses of the Agent and any Class Agent incurred in
connection with any assignment hereunder shall be borne by the
Transferor. No Bank Investor [with respect to the Class of which
EFC is a member] shall enter into any Assignment and Assumption
Agreement hereunder without also simultaneously assigning an equal
portion of its interest in the related Liquidity Provider
Agreement.
(ii) By executing and delivering an Assignment and Assumption
Agreement, the assignor and assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i)
other than as provided in such Assignment and Assumption Agreement,
the assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement the
Saks Guaranty, the other Transaction Documents or any other
instrument or document furnished pursuant hereto or thereto or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value or this Agreement, the Saks Guaranty, the
other Transaction Documents or any such other instrument or
document; (ii) the assignor makes no representation or warranty and
assumes no responsibility with respect to the financial condition
of the Transferor, N`BGL or the Servicer or the performance or
observance by the Transferor, NBGL or the Servicer of any of their
respective obligations under this Agreement, the Receivable
Purchase Agreement, the other Transaction Documents or any other
instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement the
Saks Guaranty and such other instruments, documents and information
as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption Agreement and
to purchase such interest; (iv) such assignee will, independently
and without reliance upon the Agent or any Class Agent, or any of
their respective Affiliates, or the assignor and based on such
agreements, documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Transaction
Documents; (v) such assignee appoints and authorizes the Agent and
the applicable Class Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement, the Saks
Guaranty, and the other Transaction Documents and any other
instrument or document furnished pursuant hereto or thereto as are
delegated to the Agent and such Class Agent, as applicable, by the
terms hereof or thereof, together with such powers as are
reasonably incidental thereto and to enforce its respective rights
and interests in and under this Agreement, the Saks Guaranty, the
other Transaction Documents, the Receivables, the Collections and
the Related Security; (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which
by the terms of this Agreement the Saks Guaranty and the other
Transaction Documents are required to be performed by it as the
assignee of the assignor; and (vii) such assignee agrees that it
will not institute against any Conduit party hereto any proceeding
of the type referred to in Section 10.9 prior to the date which is
one year and one day after the payment in full of all Commercial
Paper issued by such Conduit.
(c) Transferor's Obligation to Pay Certain Amounts,
Additional Assignment Amount. The Transferor shall pay to the
applicable Class Agent for the account of the applicable Conduit in
connection with any assignment by such Conduit to the related Bank
Investors pursuant to Section 9.9(a), an aggregate amount equal to
all Carrying Costs of such Conduit to accrue through the end of
each outstanding funding period plus all other Aggregate Unpaids of
the related Class (other than the Net Investment of such Class).
If the Transferor fails to make payment of such amounts at or prior
to the time of assignment by such Conduit to the related Bank
Investors, such amount shall be paid by such related Bank Investors
(in accordance with their respective Pro Rata Shares) to such
Conduit as additional consideration for the interests assigned to
such related Bank Investors and the amount of the "Net Investment"
of such Class hereunder held by such related Bank Investors shall
be increased by an amount equal to the additional amount so paid by
such related Bank Investors. Any amounts received by a Class Agent
hereunder for the benefit of a Conduit shall be paid by such Class
Agent to the related Conduit.
(d) Administration of Agreement After Assignment by a Conduit
to related Bank Investors. After any assignment by a Conduit to
the related Bank Investors pursuant to Section 9.9(a) (and the
payment of all amounts owing to such Conduit in connection
therewith), all rights of the related Administrative Agent and the
related Collateral Agent set forth herein shall be deemed to be
afforded to the related Class Agent on behalf of such Bank
Investors instead of either such party.
(e) Payments after Assignment by a Conduit to related Bank
Investors. After any assignment by a Conduit to the related Bank
Investors pursuant to Section 9.9(a), all payments to be made
hereunder by the Transferor or the Servicer to such Conduit shall
be made to the applicable Class Agent' s account as such account
shall have been notified to the Transferor and the Servicer. In
the event that the aggregate of the Assignment Amounts paid by such
Bank Investors pursuant to Section 9.9(a) is less than the Net
Investment of such Class of the related Conduit on the date of such
assignment then to the extent payments made hereunder in respect of
the Net Investment of such Class exceed the aggregate of the
Assignment Amounts for such Class, such excess shall be remitted by
the applicable Class Agent to the related Conduit. Any amounts
received by a Class Agent pursuant to this paragraph (e) shall be
paid by such Class Agent to the related Conduit and the related
Bank Investors, as applicable, at such account as such Person shall
designate to such Class Agent from time to time.
(f) Downgrade of Bank Investor. If at any time prior to any
assignment by a Conduit to the related Bank Investors as
contemplated pursuant to Section 9.9(a), the short term debt rating
of any such Bank Investor shall be "A-2" or "P-2" from Standard &
Poor's or Moody's, respectively, with negative credit implications,
such Bank Investor, upon request of the related Class Agent, shall,
within 30 days of such request, assign its rights and obligations
hereunder to another financial institution (which institution's
short term debt shall be rated at least "A-2" and "P-2" from
Standard & Poors and Moody's, respectively, and which shall not be
so rated with negative credit implications and which is acceptable
to such Conduit and such Class Agent). If the short term debt
rating of a Bank Investor shall be "A-3" or "P-3", or lower, from
Standard & Poor's or Moody's, respectively (or such rating shall
have been withdrawn by Standard & Poor's or Moody's), such Bank
Investor, upon request of the related Class Agent, shall, within
five (5) Business Days of such request, assign its rights and
obligations hereunder to another financial institution (which
institution's short term debt shall be rated at least "A-2" and
"P-2" from Standard & Poor's and Moody's, respectively, and which
shall not be so rated with negative credit implications and which
is acceptable to such Conduit and such Class Agent). In either
such case, if any such Bank Investor shall not have assigned its
rights and obligations under this Agreement within the applicable
time period described above, the related Conduit shall have the
right to require such Bank Investor to pay to the related Class
Agent an amount equal to such Bank Investor's Commitment for
deposit by the related Class Agent into an account, in the name of
the related Class Agent, which shall be in satisfaction of such
Bank Investor's obligations to pay its Assignment Amount upon an
assignment from such Conduit in accordance with Section 9.9(a)
hereof. The amount on deposit in such account shall be invested by
the related Class Agent in Eligible Investments and such Eligible
Investments shall be selected by the related Class Agent in its
sole discretion. Such Class Agent shall remit to such Bank
Investor, monthly, the income thereon. Nothing in the three
preceding sentences shall affect or diminish in any way any such
downgraded Bank Investor's Commitment to the Transferor or such
Conduit or such downgraded Bank Investor's other obligations and
liabilities hereunder and under the other Transaction Documents.
SECTION 9.10. Authorization and Action of Class Agents. (a)
Each Conduit and each Bank Investor of each Class hereby
irrevocably appoints and authorizes the Class Agent of such Class
to act as its agent under this Agreement and the other Transaction
Documents with such powers and discretion as are specifically
delegated to such Class Agent by the terms of this Agreement and
the other Transaction Documents, together with such other powers as
are reasonably incidental thereto. Each Class Agent (which term as
used in this sentence and in Section 9.14 and the first sentence of
Section 9.6 hereof shall include its affiliates and its own and its
affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set
forth in this Agreement and shall not be a trustee or fiduciary for
any Conduit or any Bank Investor; (b) shall not be responsible to
any Conduit or any Bank Investor for any recital, statement
representation, or warranty (whether written or oral) made in or in
connection with any Transaction Document or any certificate or
other document referred to or provided for in, or received by any
of them under, any Transaction Document, or for the value,
validity, effectiveness, genuineness, enforceability, or
sufficiency of any Transaction Document, or any other document
referred to or provided for therein or for any failure by any of
the Transferor, Saks or the Servicer or any other Person to perform
any of its obligations thereunder; (c) shall not be responsible for
or have any duty to ascertain, inquire into, or verify the
performance or observance of any covenants or agreements by any of
the Transferor, Saks or the Servicer or the satisfaction of any
condition or to inspect the property (including the books and
records) of any of the Transferor, Saks or the Servicer or any of
their Subsidiaries or affiliates; (d) shall not be required to
initiate or conduct any litigation or collection proceedings under
any Transaction Document; and (e) shall not be responsible for any
action taken or omitted to be taken by it under or in connection
with any Transaction Document except for its own gross negligence
or willful misconduct. Each Class Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence
or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care.
SECTION 9.11. Class Agents' Reliance, Etc. Each Class Agent
shall be entitled to rely upon any certification, notice,
instrument, writing, or other communication (including, without
limitation, any thereof by telephone or telecopy) believed by it to
be genuine and correct and to have been signed, sent or made by or
on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for any of the
Transferor, Saks or the Servicer), independent accountants, and
other experts selected by such Class Agent. As to any matters not
expressly provided for by this Agreement, each Class Agent shall
not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the
instructions of the Bank Investors of its Class which hold
Commitments aggregating in excess of [51%] [66 and 2/3%] of the
aggregate of the Facility Limit for such Class as of such date, and
such instructions shall be binding on each Conduit and each Bank
Investor of such Class; provided, however, that each Class Agent
shall not be required to take any action that exposes such Class
Agent to personal liability or that is contrary to any Transaction
Document or applicable law or unless it shall first be indemnified
to its satisfaction by the Bank Investors against any and all
liability and expense which may be incurred by it by reason of
taking any such action.
SECTION 9.12. Termination Event or Potential Termination
Event. No Class Agent shall be deemed to have knowledge or notice
of the occurrence of a Potential Termination Event or a Termination
Event unless such Class Agent has received written notice from a
Conduit a Bank Investor, the Agent or the Transferor specifying
such Potential Termination Event or Termination Event and stating
that such notice is a "Notice of Termination Event or Potential
Termination Event". In the event that a Class Agent receives such
a notice of the occurrence of a Potential Termination Event or
Termination Event, the Agent shall give prompt notice thereof to
the Agent each related Conduit and each related Bank Investor.
Each Class Agent shall (subject to Section 9.11 hereof) take such
action with respect to such Potential Termination Event or
Termination Event as shall reasonably be directed by the Bank
Investors of its Class which hold Commitments aggregating in excess
of 5 1 % of the aggregate of the Facility Limit for such Class as
of such date, provided that unless and until such Class Agent shall
have received such directions, such Class Agent may (but shall not
be obligated to) take such action, or refrain from taking such
action, with respect to such Potential Termination Event or
Termination Event as it shall deem advisable in the best interest
of the Conduits and each Bank Investor of its Class.
SECTION 9.13. Rights as Bank Investor. With respect to its
Commitment, NationsBank (and any successor acting as Class Agent
for the Class of which EFC is a member) in its capacity as a Bank
Investor hereunder shall have the rights and powers specified
hereunder as the rights and powers of a Bank Investor and may
exercise the same as though it were not acting as the Class Agent
for the Class of which EFC is a member, and the term "Bank
Investor" shall, unless the context otherwise indicates, include
NationsBank in its individual capacity. NationsBank (and any
successor acting as Class Agent for the Class of which EFC is a
member) and its affiliates may (without having to account therefor
to any Conduit or any Bank Investor) accept deposits from, lend
money to, make investments in, provide services to, and generally
engage in any kind of lending, trust or other business with any of
the Transferor, Saks and the Servicer or any of their Subsidiaries
or affiliates as if it were not acting as Class Agent for the Class
of which EFC is a member, and NationsBank (and any successor acting
as Class Agent for the Class of which EFC is a member) and its
affiliates may accept fees and other consideration from any of the
Transferor, Saks and the Servicer or any of their Subsidiaries or
Affiliates for services in connection with this Agreement or
otherwise without having to account for the same to any Conduit or
any Bank Investor.
SECTION 9.14. Indemnification of the Class Agents. Each Bank
Investor agrees to indemnify the related Class Agent (to the extent
not reimbursed by the Transferor), ratably in accordance with its
respective Pro Rata Share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against such Class Agent (including by
a Conduit or a Bank Investor) in any way relating to or arising out
of this Agreement or any other Transaction Document or the
transactions contemplated thereby or any action taken or omitted by
such Class Agent under this Agreement or any other Transaction
Document, provided that no Bank Investor shall be liable for any of
the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Person indemnified. Without limitation
of the foregoing, each Bank Investor agrees to reimburse the
related Class Agent ratably in accordance with its respective Pro
Rata Share, promptly upon demand for any out-of-pocket expenses
(including attorneys' fees) incurred by such Class Agent in
connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and the other Transaction
Documents, to the extent that such expenses are incurred in the
interests of or otherwise in respect of the Bank Investors
hereunder and/or thereunder and to the extent that such Agent is
not reimbursed for such expenses by the Transferor. The agreements
contained in this Section shall survive payment in full of the
aggregate of the Net Investment for all Classes and all other
amounts payable under this Agreement.
SECTION 9.15. Resignation of a Class Agent. A Class Agent
may resign at any time by giving notice thereof to the Agent, each
related Conduit, each related Bank Investor and the Transferor.
Upon any such resignation, the Bank Investors of its Class which
hold Commitments aggregating in excess of [51%] [66 and 2/3%] of
the aggregate of the Facility Limit for such Class as of such date
shall have the right to appoint a successor Class Agent. If no
successor Class Agent shall have been so appointed by the such
Persons and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation,
then the retiring Class Agent may, on behalf of the Conduits and
the Bank Investors of its Class, appoint a successor Class Agent
which shall be a commercial bank organized under the laws of the
United States having combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as a Class
Agent hereunder by a successor, such successor shall thereupon
succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Agent, and the
retiring Class Agent shall be discharged from its duties and
obligations hereunder. After any retiring Class Agent's
resignation hereunder as a Class Agent, the provisions of this
Article IX shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting
as Class Agent.
SECTION 9.16. Payments by the Class Agents. Unless
specifically allocated to a Bank Investor pursuant to the terms of
this Agreement, all amounts received by any Class Agent on behalf
of the Bank Investors of its Class shall be immediately paid by
such Class Agent to the applicable related Bank Investors (at their
respective accounts specified herein or in their respective
Assignment and Assignment and Assumption Agreements, as applicable)
in accordance with their respective related pro rata interests in
the Net Investment of the related Class on the Business Day
received by the Class Agent, unless such amounts are received after
12:00 noon on such Business Day, in which case such Class Agent
shall use its reasonable efforts to pay such amounts to such Bank
Investors on such Business Day, but in any event, shall pay such
amounts to the Bank Investors not later than the following Business
Day.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Term of Agreement. This Agreement shall
terminate on the date following the Termination Date upon which the
Net Investment of each Class has been reduced to zero, all accrued
Carrying Costs for such Class and Servicing Fees allocable to such
Class have been paid in full and all other Aggregate Unpaids for
each Class have been paid in full, in each case, in cash; provided,
however, that (i) the rights and remedies of the Agent, any Class
Agent, any Conduit any Bank Investor and any Administrative Agent
with respect to any representation and warranty made or deemed to
be made by the Transferor pursuant to this Agreement, (ii) the
indemnification and payment provisions of Article VIII, and (iii)
the agreement set forth in Section 10.9 hereof, shall be continuing
and shall survive any termination of this Agreement.
SECTION 10.2. Waivers, Amendments. (a) No failure or delay
on the part of the Agent any Class Agent, any Conduit, any
Administrative Agent or any Bank Investor in exercising any power,
right or remedy under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
power, right or remedy preclude any other further exercise thereof
or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive
of any rights or remedies provided by law.
(b) Any provision of this Agreement or any other Transaction
Document may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Transferor, the
Servicer, each Conduit and the Majority Investors (and, if Article
IX or the rights or duties of the Agent are affected thereby, by
the Agent); provided that no such amendment or waiver shall, unless
signed by each Bank Investor directly affected thereby, (i)
increase the Commitment of a Bank Investor, (ii) reduce the Net
Investment for the related Class or rate of interest to accrue
thereon or any fees or other amounts payable hereunder, (iii)
postpone any date fixed for the payment of any scheduled
distribution in respect of the Net Investment for the related Class
or interest with respect thereto or any fees or other amounts
payable hereunder or for termination of any Commitment, (iv) change
the percentage of the Commitments of Bank Investors which shall be
required for the Bank Investors or any of them to take any action
under this Section or any other provision of this Agreement, (v)
release all or substantially all of the property with respect to
which a security or ownership interest therein has been granted
hereunder to the Agent or the Bank Investors or (vi) extend or
permit the extension of the Commitment Termination Date for any
Class. In the event the Agent requests a Conduit's or a Bank
Investor's consent pursuant to the foregoing provisions and the
Agent does not receive a consent (either positive or negative) from
such Conduit or such Bank Investor within 10 Business Days of such
Conduit's or such Bank Investor's receipt of such request then such
conduit or such Bank Investor (and its percentage interest
hereunder) shall be disregarded in determining whether the Agent
shall have obtained sufficient consent hereunder.
SECTION 10.3. Notices. Except as provided below, all
communications and notices provided for hereunder shall be in
writing (including telecopy or electronic facsimile transmission or
similar writing) and shall be given to the other party at its
address or telecopy number set forth below or at such other address
or telecopy number as such party may hereafter specify for the
purposes of notice to such party. Each such notice or other
communication shall be effective (i) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in
this Section 10.3 and confirmation is received, (ii) if given by
mail, three (3) Business Days following such posting, if postage
prepaid, or if sent via-U. S. certified or registered mail, (iii)
if given by overnight courier, one (1) Business Day after deposit
thereof with a national overnight courier service, or (iv) if given
by any other means, when received at the address specified in this
Section 10.3. However, anything in this Section 10.3 to the
contrary notwithstanding, the Transferor hereby authorizes each
Conduit to effect funding period and interest rate selections based
on telephonic notices made by any Person which such Conduit in good
faith believes to be acting on behalf of the Transferor. The
Transferor agrees to deliver promptly to the applicable Conduit a
written confirmation of each telephonic notice signed by an
authorized officer of Transferor. However, the absence of such
confirmation shall not affect the validity of such notice. If the
written confirmation differs in any material respect from the
action taken by the applicable Conduit the records of such Conduit
shall govern absent manifest error.
If to a Conduit at its address set forth on the signature
pages hereto:
If to the Transferor:
Saks Credit Corporation
Telephone:
Telecopy:
Payment Information:
NATIONSBANK, N.A.
ABA
Account
Reference
If to the Servicer:
Saks Incorporated
Telephone:
Telecopy:
If to the Agent or the Administrative Agent with respect to EFC:
NationsBank, N.A.
Bank of America Corporate Center, 10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath
Asset Backed Securitization Group
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
Payment Information:
NationsBank, N.A.
ABA 053-000-196
for the account of NationsBank Charlotte
Account No. 109360165000
Attn.: Camille Zerbinos
If to a Bank Investor, at its address set forth on the signature
pages hereto or of the Assignment and Assumption Agreement pursuant
to which is became a party hereto. Each person whose telecopy
number and address is set forth above may change such telecopy
number or address by giving notice to each other party hereto.
SECTION 10.4. Governing Law, Submission to Jurisdiction,
Integration.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW. EACH OF THE TRANSFEROR, SAKS AND
THE SERVICER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each of
the Transferor, Saks and Servicer hereby irrevocably waives, to the
fullest extent it may effectively do so, any objection which it may
now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum. Nothing in this Section 10.4 shall affect the
right of the Agent, any Class Agent, any Conduit or any Bank
Investor to bring any action or proceeding against any of the
Transferor, Saks or the Servicer or its respective property in the
courts of other jurisdictions.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING OUT OF,
CONNECTED WITH, RELATING TO OR INCIDENTAL TO THE RELATIONSHIP
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS.
(c) This Agreement contains the final and complete
integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the
entire Agreement among the parties hereto with respect to the
subject matter hereof superseding all prior oral or written
understandings.
(d) The Transferor, Saks and the Servicer each hereby appoint
[CT Corporation, Saks located at 1633 Broadway, New York, New York
10019], as the authorized agent upon whom process may be served in
any action arising out of or based upon this Agreement the Saks
Guaranty, the other Transaction Documents to which such Person is
a party or the transactions contemplated hereby or thereby that may
be instituted in the United States District Court for the Southern
District of New York and of any New York State court sitting in The
City of New York by any Conduit the Agent, any Class Agent, any
Bank Investor, any Administrative Agent or any assignee of any of
them.
SECTION 10.5. Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall
constitute one and the same Agreement.
SECTION 10.6. Successors and Assigns. (a) This Agreement
shall be binding on the parties hereto and their respective
successors and assigns; provided, however, that neither the
Transferor, the Servicer nor Saks may assign any of its rights or
delegate any of its duties hereunder or under the Receivable
Purchase Agreement or under any of the other Transaction Documents
to which it is a party without the prior written consent of the
Agent. No provision of this Agreement shall in any manner restrict
the ability of any Conduit or any Bank Investor to assign,
participate, grant security interests in, or otherwise transfer any
portion of any Transferred Interest held by it.
(b) Without limiting the foregoing, each Conduit may, from
time to time, with prior or concurrent notice to Transferor and
Servicer, in one transaction or a series of transactions, assign
all or a portion of the Transferred Interest for the related Class
held by it and the Net Investment for the related Class held by it
and its rights and obligations under this Agreement and any other
Transaction Documents to which it is a party to a related Conduit
Assignee. Upon and to the extent of such assignment by such
Conduit to such Conduit Assignee, (i) such Conduit Assignee shall
be the owner of the assigned portion of such Transferred Interest
and such Net Investment, (ii) the related administrative agent for
such Conduit Assignee will act as the Administrative Agent for such
Conduit Assignee, with all corresponding rights and powers, express
or implied, granted to such Administrative Agent hereunder or under
the other Transaction Documents, (iii) such Conduit Assignee and
its liquidity support provider(s) and credit support provider(s)
and other related parties shall have the benefit of all the rights
and protections provided to the related Conduit and its Liquidity
Support Provider(s) and Credit Support Provider(s), respectively,
herein and in the other Transaction Documents (including, without
limitation, any limitation on recourse against such Conduit
Assignee or related parties, any agreement not to file or join in
the filing of a petition to commence an insolvency proceeding
against such Conduit Assignee, and the right to assign to another
Conduit Assignee as provided in this paragraph), (iv) such Conduit
Assignee shall assume all (or the assigned or assumed portion) of
the related Conduit' s obligations, if any, hereunder or any other
Transaction Document, and such Conduit shall be released from such
obligations, in each case to the extent of such assignment, and the
obligations of such Conduit and such Conduit Assignee shall be
several and not joint, (v) all distributions in respect of the Net
Investment of the related Class shall be made to the applicable
agent or administrative agent, as applicable, on behalf of such
Conduit and such Conduit Assignee on a pro rata basis according to
their respective interests, (vi) the definition of the term "CP
Rate" with respect to the portion of the Net Investment of the
related Class funded with commercial paper issued by such Conduit
from time to time shall be determined in the manner set forth in
the definition of "CP Rate" applicable to such Conduit on the basis
of the interest rate or discount applicable to commercial paper
issued by such Conduit Assignee (rather than such Conduit), (vii)
the defined terms and other terms and provisions of this Agreement
and the other Transaction Documents shall be interpreted in
accordance with the foregoing, and (viii) if requested by the Agent
or administrative agent with respect to the Conduit Assignee, the
parties will execute and deliver such further agreements and
documents and take such other actions as the Agent or such
administrative agent may reasonably request to evidence and give
effect to the foregoing. No assignment by a Conduit to a related
Conduit Assignee of all or any portion of the Net Investment shall
in any way diminish the related Bank Investors' obligation under
Section 9.9 to fund any Incremental Transfer not funded by such
Conduit or such Conduit Assignee or to acquire from such Conduit or
such Conduit Assignee all or any portion of the related Net
Investment.
(c) In the event that a Conduit makes an assignment to a
related Conduit Assignee in accordance with Section 10.6 (b)
hereof, the related Bank Investors: (i) if requested by the
related Liquidity Provider shall terminate their participation in
the related Liquidity Provider Agreement to the extent of such
assignment (ii) if requested by the related Liquidity Provider,
shall execute a participation agreement with respect to the
liquidity provider agreement related to such Conduit Assignee, to
the extent of such assignment the terms of which shall be
substantially similar to those of the participation agreement
entered into by such Bank Investor with respect to the related
Liquidity Provider Agreement (or which shall be otherwise
reasonably satisfactory to the related Liquidity Provider and such
Bank Investors), (iii) if requested by the related Conduit, shall
enter into such agreements as requested by such Conduit pursuant to
which they shall be obligated to provide funding to the related
Conduit Assignee on substantially the same terms and conditions as
is provided for in this Agreement in respect of such Conduit (or
which agreements shall be otherwise reasonably satisfactory to such
Conduit and such Bank Investors), and (iv) shall take such actions
as the Agent shall reasonably request in connection therewith.
(d) Each of the Transferor, Saks and the Servicer hereby
agrees and consents to the assignment by a Conduit from time to
time of all or any part of its rights under, interest in and title
to this Agreement and the Transferred Interest of its Class to any
related Liquidity Provider. In addition, each of the Transferor,
Saks and the Servicer hereby consents to and acknowledges the
assignment by a Conduit of all of its rights under, interest in and
title to this Agreement and the Transferred Interest of its Class
to the Collateral Agent.
SECTION 10.7. Waiver of Confidentiality. Each of the
Transferor, Saks and the Servicer hereby consents to the disclosure
of any non-public information with respect to it received by any
Conduit the Agent any Class Agent any Bank Investor or any
Administrative Agent to any Conduit, the Agent any Class Agent any
nationally recognized rating agency rating a Conduit's Commercial
Paper, any Administrative Agent, any Collateral Agent, any Bank
Investor or potential Bank Investor, any Liquidity Provider or any
Credit Support Provider in relation to this Agreement.
SECTION 10.8. Confidentiality Agreement. Each of the
Transferor, Saks and the Servicer hereby agrees that it will not
disclose the contents of this Agreement or any other proprietary or
confidential information of any Conduit, the Agent, any
Administrative Agent, any Collateral Agent any Liquidity Provider
or any Bank Investor to any other Person except (i) its auditors
and attorneys, employees or financial advisors (other than any
commercial bank) and any nationally recognized rating agency,
provided such auditors, attorneys, employees, financial advisors or
rating agencies are informed of the highly confidential nature of
such information or (ii) as otherwise required by applicable law or
order of a court of competent jurisdiction.
SECTION 10.9. No Bankruptcy Petition Against the Conduits.
Each of the Transferor, the Servicer and Saks hereby covenants and
agrees that, prior to the date which is one year and one day after
the payment in full of all outstanding Commercial Paper or other
indebtedness of any Conduit it will not institute against, join any
other Person in instituting against or encourage or assist any
other Person in instituting against, or encourage or assist any
other Person in instituting against, such Conduit 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.
SECTION 10.10. Limited Recourse. Notwithstanding anything to
the contrary contained in this Agreement, the obligations of any
Conduit under this Agreement and all other Transaction Documents
are solely the corporate obligations of such conduit and shall be
payable solely to the extent of funds received from the Transferor
in accordance herewith or from any party to any Transaction
Document in accordance with the terms thereof in excess of funds
necessary to pay matured and maturing Commercial Paper. Any
amounts not paid by a Conduit in accordance with the foregoing
shall not constitute a claim within the meaning of the Bankruptcy
Code.
SECTION 10.11. Characterization of the Transactions
Contemplated by the Agreement. It is the intention of the parties
that the transactions contemplated hereby constitute the sale of
all Transferred Interests, conveying good title thereto free and
clear of any Adverse Claims to the Agent on behalf of the Conduits
and the Bank Investors, as applicable, and that any Transferred
Interest not be part of the Transferor's estate in the event of an
insolvency. If, notwithstanding the foregoing, the transactions
contemplated hereby should be deemed a financing, the parties
intend that the Transferor shall be deemed to have granted to the
Agent, on behalf of the Conduits and the Bank Investors, and the
Transferor hereby grants to the Agent on behalf of the Conduits and
the Bank Investors, a first priority perfected and continuing
security interest in all of the Transferor's right title and
interest in, to and under the Receivables, together with Related
Security, Collections and Proceeds with respect thereto, and
together with all of the Transferor's rights under the Receivable
Purchase Agreement with respect to the Receivables and with respect
to any obligations thereunder of NBGL with respect to the
Receivables, and that this Agreement shall constitute a security
agreement under applicable law. The Transferor hereby assigns to
the Agent on behalf of the Conduits and the Bank Investors, all of
its rights and remedies under the Receivable Purchase Agreement
with respect to the Receivables and with respect to any obligations
thereunder of NBGL with respect to the Receivables.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Transfer and Administration Agreement as of the date
first written above.
ENTERPRISE FUNDING CORPORATION, as
a Conduit
By: __________________________________
Name:
Title:
Notice Address: Enterprise Funding Corporation
c/o Global Securitization Services, LLC
25 West 43dStreet
Suite 704
New York, New York 10036
Attention: Kevin Bums, Vice President
Telephone: (212) 302-8331
Telecopy: (212) 302-8767
SAKS CREDIT CORPORATION, as
Transferor
By: __________________________________
Name:
Title:
SAKS INCORPORATED, as Servicer
By: ___________________________________
Name:
Title:
Commitment NATIONSBANK, N.A., as Agent as Class
$_________ Agent and as a Bank Investor
By: __________________________________
Name:
Title:
[OTHER BANK INVESTORS]