EXHIBIT 4.1
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JCP RECEIVABLES, INC.
and
▇. ▇. ▇▇▇▇▇▇ COMPANY, INC.
Servicer
and
THE FUJI BANK AND TRUST COMPANY
Trustee
on behalf of the Certificateholders
of the JCP Master Credit Card Trust
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MASTER
POOLING AND SERVICING AGREEMENT
Dated as of September 5, 1988
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; ESTIMATIONS
Section 1.1 Definitions........................................................1
Section 1.2 Other Definitional Provisions.....................................20
Section 1.3 Estimation of Finance Charge Receivables; Daily Allocation
of Collections....................................................20
ARTICLE II
TRANSFER OF RECEIVABLES; ISSUANCE OF CERTIFICATES
Section 2.1 Transfer of Receivables...........................................23
Section 2.2 Acceptance by Trustee.............................................25
Section 2.3 Representations and Warranties of JCPR Relating to JCPR...........25
Section 2.4 Representations and Warranties of JCPR Relating to the
Agreement and any Supplement and the Receivables..................27
Section 2.5 Covenants of JCPR.................................................32
Section 2.6 Addition of Accounts..............................................34
Section 2.7 Removal of Accounts...............................................38
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to
the Servicer......................................................40
Section 3.2 Servicing Compensation............................................41
Section 3.3 Representations and Warranties of the Servicer....................42
Section 3.4 Reports and Records for the Trustee; Bank Account Statements......44
Section 3.5 Annual Servicer's Certificate.....................................45
Section 3.6 Annual Independent Public Accountants' Servicing Report...........45
Section 3.7 Tax Treatment.....................................................46
Section 3.8 Notices to JCPenney...............................................46
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders......................................46
Section 4.2 Establishment of Investor Accounts................................47
Section 4.3 Collections and Allocations.......................................49
Section 4.4 Defaulted Accounts................................................52
Section 4.5 Monthly Payments..................................................52
Section 4.6 Payment of Certificate Interest with respect to each Series.......55
Section 4.7 Payment of Certificate Principal with respect to each Series......55
Section 4.8 Adjustments for Miscellaneous Credits.............................56
Section 4.9 JCPR's or Servicer's Failure to Make a Deposit or Payment.........57
Section 4.10 Letter of Credit..................................................57
ARTICLE V
DISTRIBUTIONS AND REPORTS
TO INVESTOR CERTIFICATEHOLDERS
Section 5.1 Distributions.....................................................58
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Section 5.2 Monthly Certificateholders' Statement.............................58
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates..................................................60
Section 6.2 Authentication of Certificates....................................61
Section 6.3 Registration of Transfer and Exchange of Certificates ............61
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates.................63
Section 6.5 Persons Deemed Owners.............................................63
Section 6.6 Appointment of Paying Agent.......................................64
Section 6.7 Access to List of Certificateholders' Names and Addresses.........64
Section 6.8 Authentication Agent..............................................65
Section 6.9 Book-Entry Certificates for any Series............................67
Section 6.10 Notices to Clearing Agency of any Series..........................68
Section 6.11 Definitive Certificates for any Series Initially Issued as
Book-Entry Certificates...........................................68
Section 6.12 Delivery of Exchangeable Certificate, etc.........................69
ARTICLE VII
OTHER MATTERS RELATING TO JCPR
Section 7.1 Liability of JCPR.................................................73
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, JCPR, etc.........................................73
Section 7.3 Limitation on Liability of JCPR...................................73
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer.........................................74
Section 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer......................................74
Section 8.3 Limitation on Liability of the Servicer and Others................74
Section 8.4 Indemnification of the Trust and the Trustee......................75
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Section 8.5 The Servicer Not to Resign......................................75
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables.......................................76
Section 8.7 Delegation of Duties............................................76
Section 8.8 Examination of Records..........................................76
ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events..................................................77
Section 9.2 Additional Rights Upon the Occurrence of Certain Events.........79
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults...............................................80
Section 10.2 Trustee to Act; Appointment of Successor........................82
Section 10.3 Notification to Certificateholders..............................84
Section 10.4 Waiver of Past Defaults.........................................85
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee...............................................85
Section 11.2 Certain Matters Affecting the Trustee...........................87
Section 11.3 Trustee Not Liable for Recitals In Certificates.................89
Section 11.4 Trustee May Own Certificates....................................89
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses.................89
Section 11.6 Eligibility Requirements for Trustee............................90
Section 11.7 Resignation or Removal of Trustees..............................90
Section 11.8 Successor Trustee...............................................91
Section 11.9 Merger or Consolidation of Trustee..............................91
Section 11.10 Appointment of Co-Trustee or Separate Trustee...................91
Section 11.11 Tax Returns.....................................................93
Section 11.12 Trustee May Enforce Claims Without Possession of
Certificates....................................................93
Section 11.13 Suits for Enforcement...........................................94
Section 11.14 Rights of Certificateholders to Direct Trustee..................94
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Section 11.15 Representations and Warranties of Trustee.......................94
Section 11.16 Maintenance of Office or Agency.................................95
Section 11.17 Requests for Agreement..........................................95
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust.............................................95
Section 12.2 Repurchase and Final Maturity Date of Investor Certificates
with Respect to Any Series.......................................96
Section 12.3 Final Distributions..............................................98
Section 12.4 JCPR's Termination Rights........................................99
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment........................................................99
Section 13.2 Protection of Right, Title and Interest to Trust................101
Section 13.3 Limitation on Rights of Certificateholders......................102
Section 13.4 Governing Law...................................................103
Section 13.5 Notices.........................................................103
Section 13.6 Severability of Provisions......................................103
Section 13.7 Assignment......................................................103
Section 13.8 Certificates Nonassessable and Fully Paid.......................104
Section 13.9 Further Assurances..............................................104
Section 13.10 No Waiver; Cumulative Remedies..................................104
Section 13.11 Counterparts....................................................104
Section 13.12 Third-Party Beneficiaries.......................................104
Section 13.13 Actions by Certificateholders...................................104
Section 13.14 Merger and Integration..........................................105
Section 13.15 JCPenney as Servicer for JCPR...................................105
Section 13.16 Payments to JCPR................................................105
Section 13.17 Headings........................................................105
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EXHIBITS
Exhibit A: Form of Investor Certificate
Exhibit B: Form of Exchangeable Certificate
Exhibit C: Form of Supplement
Exhibit D: Form of Receivables Purchase Agreement
Exhibit E: Form of Transfer Agreement of Receivables in Additional
Accounts
Exhibit F: Form of Initial Report
Exhibit G: Form of Monthly Servicer's Certificate
Exhibit H: Form of Annual Servicer's Certificate
Exhibit I: Form of Monthly Payment Instructions and Notification
to the Trustee
Exhibit J: Form of Monthly Certificateholders' Statement
Exhibit K: Form of Opinion of Counsel with Respect to
Additional Accounts
Exhibit L: Form of Annual Opinion of Counsel
Exhibit M: Credit Card Agreement
Exhibit N: Form of Depository Agreement
Exhibit O: Form of Retransfer Agreement
Exhibit P: Form of Opinion with Respect to Amendments
SCHEDULES
Schedule 1 List of Accounts
Schedule 2 List of Investor Accounts
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MASTER POOLING AND SERVICING AGREEMENT, dated as of September 5, 1988, by
and among JCP RECEIVABLES, INC., a Delaware corporation ("JCPR"), ▇. ▇. PENNEY
COMPANY, INC., a Delaware corporation ("JCPenney"), as Servicer, and THE FUJI
BANK AND TRUST COMPANY, a banking corporation organized and existing under the
laws of New York.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and for the benefit of
the Certificateholders:
ARTICLE I
DEFINITIONS; ESTIMATIONS
Section 1.1 Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings:
"Account" shall mean each JCPenney credit card account in one of JCPenney's
Cycles which is an Eligible Account on the Cut Off Date, which is established
pursuant to a Credit Card Agreement and which is identified by account number
and by Receivable balance as of the Cut Off Date and shall also include
Additional Accounts (which may be in the same or different JCPenney Cycles) as
of each Addition Date identified in each computer file or microfiche list
delivered to the Trustee by JCPR pursuant to Section 2.6. The term "Account"
shall also be deemed to refer to an Additional Account, but only from and after
the Addition Date with respect thereto, and the term "Account" shall be deemed
to refer to any Removed Account prior to but not after the Removal Date with
respect thereto.
"Addition Date" shall mean, with respect to any Additional Accounts, the
date five Business Days after the period or date when such Additional Accounts
are required or permitted to be added as Accounts pursuant to subsections 2.6(a)
or (b) or the date such Additional Account is added as an Account pursuant to
subsection 2.6(c).
"Additional Accounts" shall mean the Accounts dedicated to the Trust in
accordance with the procedures set forth in Section 2.6.
"Adjusted Investor Amount" shall mean, on any date of determination when
used with respect to any Series, an amount equal to (a) the Investor Amount for
such Series on such date, minus (b) the amount, if any, to be deposited into the
Distribution Account
for the benefit of such Series on the next succeeding Transfer Date pursuant to
subsection 4.5(b), plus (c) the amount, if any, to be deposited into the
Distribution Account on the next succeeding Transfer Date pursuant to subsection
4.5(c) for such Series.
"Affiliate" of any specified Person, shall mean any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Aggregate Adjusted Investor Amount" shall mean the sum of the Adjusted
Investor Amounts with respect to all Series of Investor Certificates then issued
and outstanding.
"Aggregate Investor Amount" shall mean the sum of the Investor Amounts with
respect to all Series of Investor Certificates then issued and outstanding.
"Aggregate Investor Percentages" shall mean the sum of the Investor
Percentages with respect to all Series of Investor Certificates then issued and
outstanding; provided, however, that the Aggregate Investor Percentage shall
never at any given time be greater than 100%.
"Agreement" shall mean this Master Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Amortization Commencement Date" shall, with respect to any Series, be the
date specified in the Supplement relating to such Series.
"Amortization Period" shall mean, with respect to any Series, the period
following the Revolving Period.
"Applicants" shall have the meaning specified in Section 6.7.
"Authorized Newspapers" shall mean each newspaper of general circulation in
Now York, New York, or in any other place specified by JCPR, printed in the
English
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language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays.
"Available L/C Amount" shall mean, with respect to any Series, the amount
available to be drawn under the Letter of Credit relating to such Series, if
any, from time to time, as provided by the relevant Letter of Credit.
"Average Principal Receivables" shall mean, for any specified period, an
amount equal to (a) the sum of the aggregate amount of Principal Receivables at
the end of each day during such period divided by (b) the number of days in such
period.
"Bankruptcy Event" shall have the meaning specified in Section 9.2.
"Base Rate" shall mean, with respect to any Series, the Certificate Rate
for such Series plus the annualized percentage equivalent of a fraction the
numerator of which is the sum of (a) the Investor Monthly Servicing Fee for such
Series and (b) the Investor Monthly Facility Fee for such Series, and the
denominator of which is the Investor Amount for such Series as of the last day
of the preceding Monthly Period.
"Book-Entry Certificates" shall mean certificates evidencing a beneficial
interest in any Series of Investor Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.9 and as specified in Section 6.12; provided, that after the
occurrence of a condition whereupon book-entry registration and transfer are no
longer permitted and Definitive Certificates are to be issued to the Certificate
Owners, such Certificates shall no longer be "Book-Entry Certificates."
"Business Day" shall mean each day which is neither a Saturday, a Sunday
nor any other day on which banking institutions or trust companies in the State
or City of New York or the State of Texas are authorized or obligated by law or
required by executive order or government decree to be closed.
"Cardholder Monthly Payment Rate" shall mean, with respect to any Monthly
Period, a fraction, the numerator of which is the total Collections processed
during such Monthly Period and the denominator of which is the total Receivables
at the beginning of such Monthly Period.
"Carry-Over Finance Charge Amount" shall have the meaning specified in
subsection 1.3(iii).
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"Certificate" shall mean any one of any Series of Investor Certificates or
the Exchangeable Certificate.
"Certificateholder" or "Holder" shall mean the Person in whose name a
Certificate is registered in the Certificate Register.
"Certificate Interest" shall mean interest payable in respect of the
Investor Certificates pursuant to Section 4.6.
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Principal" shall mean principal payable in respect of the
Investor Certificates pursuant to Section 4.7.
"Certificate Rate" shall mean, with respect to any Series, the percentage
per annum (or the percentage determined using the formula for determining such
percentage) stated in the applicable Supplement, calculated in each case on the
basis of a 360-day year consisting of twelve 30-day months provided that, if so
provided in the applicable Supplement, in the case of the Monthly Period in
which such Series is first issued, such rate shall be calculated for the number
of actual days from the date specified in such Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.3, providing for the registration of the Certificates and transfers
and exchanges thereof.
"Clearing Agency" shall mean, with respect to any Series, an organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the date of issuance
of such Series of Certificates.
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"Collections" shall mean all payments (including Insurance Proceeds and
Recoveries) received by the Servicer in respect of the Receivables, in the form
of cash, checks, wire transfers, ATM transfers or other form of payment in
accordance with the Credit Card Agreement in effect from time to time on any
Receivable. A Collection processed on an Account (other than a Defaulted
Account) in excess of the aggregate amount of Receivables in such Account as of
the Date of Processing of such Collection shall be deemed to be a payment in
respect of Principal Receivables to the extent of such excess.
"Collection Account" shall have the meaning specified in Section 4.2.
"Collections Deposit Day" shall mean the Business Day next preceding a
Transfer Date.
"Corporate Trust Office" shall mean the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of the execution of this Agreement is located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attn: Corporate Trust
Department.
"Credit Adjustment" shall have the meaning specified in Section 4.8(a).
"Credit Card Agreement" shall mean the JCPenney Retail Installment Credit
Agreement (Revolving Credit Agreement), JCPenney form 2218, attached as Exhibit
M, or a variant thereof reflecting a particular state's usury and retail
installment sales laws, as such agreement may be amended, modified or otherwise
changed from time to time.
"Credit Card Guidelines" shall mean JCPenney's policies and procedures
relating to the operation of its credit card business, including, without
limitation, the policies and procedures for determining the creditworthiness of
credit card customers, the extension of credit to credit card customers, the
terms on which repayments are required to be made, and relating to the
maintenance of credit card accounts and collection of credit card receivables,
as such policies and procedures may be amended from time to time.
"Credit Insurance" shall mean life, accident, health, disability or other
insurance of an Obligor to JCPenney to insure payment of any amount owing by
such Obligor under an Account and which proceeds of such insurance are payable
to JCPenney upon such Obligor's death or disability.
"Cut Off Date" shall mean September 5, 1988.
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"Cycle" shall mean, with respect to any Account, the monthly billing cycle
for such Account as determined in accordance with the Credit Card Guidelines as
in effect on the date of this Agreement.
"Cycle Billing Date" shall mean, with respect to any Account, the date on
which bills are processed for the Cycle which includes such Account.
"Daily Series Finance Charge Allocation" shall, with respect to any Series,
have the meaning specified in subsection 4.3(b)(i).
"Daily Series Principal Allocation" shall, with respect to any Series, have
the meaning specified in subsection 4.3(b)(ii).
"Date of Collection" shall mean any date during any Monthly Period that
Collections are processed by the Servicer.
"Date of Processing" shall mean, with respect to any transaction, the date
on which such transaction is first recorded on the Servicer's computer master
file of accounts (without regard to the effective date of such recordation).
"Debtor Relief Laws" shall mean the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
"Default Amount" shall mean, with respect to any Monthly Period, the result
of multiplying (i) the excess, if any, of the aggregate amount of Receivables in
Defaulted Accounts charged off during such Monthly Period over Recoveries
collected during such Monthly Period times (ii) 1.00 minus the percentage of
Receivables (other than Receivables in Defaulted Accounts) constituting Finance
Charge Receivables determined as of the end of the last day of such Monthly
Period in accordance with subsection 1.3.
"Defaulted Account" shall mean each Account with respect to which, in
accordance with the Credit Card Guidelines or the Servicer's customary and usual
servicing procedures for servicing credit card receivables comparable to the
Receivables, the Servicer has charged off the Receivables in such Account as
uncollectible; an Account shall become a Defaulted Account on the day on which
such Receivables are
6
recorded as charged off on the Servicer's computer master file of accounts
(regardless of whether such Receivables are charged off before or after the Cut
Off Date or Addition Date of such Account, as the case may be).
"Deficiency Amount" shall have the meaning specified in Section 4.5(a).
"Definitive Certificates" shall have the meaning specified in Section 6.9.
"Depository Agreement" shall mean, with respect to any Series, the
agreement among JCPR, the Trustee and the initial Clearing Agency, with respect
to such Series substantially in the form attached hereto as Exhibit N.
"Determination Date" shall mean the seventh calendar day prior to each
Transfer Date.
"Distribution Account" shall have the meaning specified in subsection
4.2(c).
"Distribution Date" shall mean, with respect to any Series, the fifteenth
day of the month after the month such Series is first issued and the fifteenth
day of each calendar month thereafter, or, if any such fifteenth day is not a
Business Day, the next succeeding Business Day.
"Drawing Date" shall have the meaning specified in Section 4.5.
"Eligible Account" shall mean, as of the Cut Off Date (or, with respect to
Additional Accounts, as of the relevant Notice Date in respect of Additional
Accounts added pursuant to subsection 2.6 (a) or (b) or as of the date such
Account is added to a Cycle in respect of Additional Accounts added pursuant to
subsection 2.6(c)) each Account:
(a) which is payable in United States dollars; and
(b) which is serviced in any credit service center of JCPenney
which is located in the United States.
"Eligible Receivable" shall mean each Receivable:
(a) which has arisen under an Eligible Account;
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(b) which was created in compliance, in all material respects,
with all Requirements of Law applicable to JCPenney and JCPR and pursuant to a
Credit Card Agreement which complies, in all material respects, with all
Requirements of Law applicable to JCPenney and JCPR;
(c) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given by JCPenney and JCPR in
connection with the creation of such Receivable or the execution, delivery and
performance by JCPenney and JCPR of the Credit Card Agreement pursuant to which
such Receivable was created, have been duly obtained, effected or given and are
in full force and effect as of such date of creation;
(d) as to which, at the time of the creation of such Receivable,
JCPenney, JCPR or the Trust had good and marketable title thereto free and clear
of all Liens arising under or through JCPenney or JCPR (other than Liens
permitted pursuant to subsection 2.5(b));
(e) which is the legal, valid and binding payment obligation of
the Obligor thereon, enforceable against such Obligor in accordance with its
terms, except as such enforceability may be limited by applicable Debtor Relief
Laws, and except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity); and
(f) which constitutes an "account" under and as defined in
Article 9 of the UCC as then in effect in any state where the Servicer's chief
executive offices or books and records relating to the Receivables are located.
"Exchange" shall mean the procedure described under Section 6.12.
"Exchangeable Certificate" shall mean the certificate executed by JCPR and
authenticated by the Trustee, substantially in the form of Exhibit B and
exchangeable as provided in Section 6.12 for one or more Series of Investor
Certificates and a reissued Exchangeable Certificate.
"Exchange Date" shall have the meaning, with respect to any Series issued
pursuant to an Exchange, specified in Section 6.12.
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"Exchange Notice" shall have the meaning, with respect to any Series issued
pursuant to an Exchange, specified in Section 6.12.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Facility Fee Percentage" shall mean, with respect to any Series, the
percentage stated in the applicable Supplement.
"Final Maturity Date" shall mean, with respect to any Series of
Certificates, the final maturity date stated in the applicable Supplement.
"Final Trust Termination Date" shall have the meaning specified in Section
12.1(a).
"Finance Charge" shall mean Periodic Finance Charges, late charges,
returned check fees and Special Fees.
"Finance Charge Account" shall have the meaning specified in subsection
4.2(b).
"Finance Charge Collections" shall, with respect to any Series, have the
meaning specified in subsection 4.5(a).
"Finance Charge Receivables" shall mean Receivables, if any, created in
respect of Finance Charges, excluding any such Receivables in Defaulted
Accounts.
"FSLIC" shall mean the Federal Savings and Loan Insurance Corporation.
"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.
"Ineligible Receivable" shall have the meaning specified in subsection
2.4(d).
"Initial Closing Date" shall have the meaning specified in subsection
3.4(a).
"Initial Investor Amount" shall mean, with respect to any Series, the
amount stated in the applicable Supplement.
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"Insurance Proceeds" shall mean any amounts paid to the Servicer pursuant
to any Credit Insurance policies covering any Obligor with respect to
Receivables under such Obligor's Account.
"Insurance Receivables" shall mean all Receivables payable by Obligors for
purchase of insurance other than Receivables for Credit Insurance.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Investor Account" shall mean each of the Finance Charge Account, the
Principal Account and the Distribution Account.
"Investor Amount" shall mean, on any date of determination, when used with
respect to any Series, an amount equal to (a) the Initial Investor Amount, minus
(b) the aggregate amount of payments of Certificate Principal paid to the
Investor Certificateholders of such Series pursuant to Section 4.7 prior to such
date of determination, minus (c) the amount on deposit in the Principal Account
for the account of such Series and the amount of Collections processed as of the
end of the day prior to such date of determination for deposit in the Principal
Account for the account of such Series but which have not yet been deposited
into the Principal Account, minus (d) the excess, if any, of the aggregate
amount of Investor Charge Offs with respect to such Series, over Investor Charge
Offs with respect to such Series reimbursed to such Series pursuant to
subsection 4.5(c) prior to such date of determination.
"Investor Certificateholder" shall mean the Holder of record of an Investor
Certificate.
"Investor Certificates" shall mean any one of the certificates executed by
JCPR and authenticated by the Trustee substantially in the form of Exhibit A.
"Investor Charge Off" shall, with respect to any Series, have the meaning
specified in subsection 4.4(b).
"Investor Default Amount" shall mean, with respect to each Series and for
any Monthly Period, an amount equal to the product of (i) the Default Amount for
such Monthly Period times (ii) the applicable Investor Percentage for such
Series at the beginning of such Monthly Period.
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"Investor Monthly Facility Fee" shall, with respect to each Series, have
the meaning specified in Section 4.10.
"Investor Monthly Servicing Fee" shall, with respect to each Series, have
the meaning specified in Section 3.2.
"Investor Net Recoveries" shall mean, with respect to any Series and for
any Monthly Period, an amount equal to the product of (i) the Net Recoveries for
such Monthly Period times (ii) the applicable Investor Percentage for such
Series at the end of the last day of such Monthly Period.
"Investor Percentage" shall mean, with respect to any Series on any date of
determination (unless otherwise specified in the applicable Supplement) when
used with respect to Principal Receivables, Finance Charge Receivables, Investor
Net Recoveries and Receivables in Defaulted Accounts, the percentage equivalent
of a fraction the numerator of which shall be the Investor Amount for such
Series at the end of the last day of the prior Monthly Period and the
denominator of which shall be the aggregate amount of Principal Receivables as
of the and of such day, provided that, as of the end of any day that the
Investor Amount for any Series is reduced to zero, the Investor Percentage of
such Series shall be reduced to zero for each day following such date, provided
further, that if such Investor Amount subsequently increases above zero, the
applicable Investor Percentage shall be calculated without regard to the
foregoing proviso.
"JCPenney" shall mean ▇. ▇. ▇▇▇▇▇▇ Company, Inc., a Delaware corporation.
"JCPR" shall mean JCP Receivables, Inc., a Delaware corporation.
"JCPR Amount" shall mean, on any date of determination, the aggregate
amount of Principal Receivables at the end of the day immediately prior to such
date of determination, minus the Aggregate Investor Amount at the end of such
day.
"JCPR Percentage" shall mean, on any date of determination, when used with
respect to Principal Receivables, Finance Charge Receivables, Net Recoveries and
Receivables in Defaulted Accounts, the percentage equivalent of a fraction equal
to one minus the fraction calculated on such date with respect to such
categories of Receivables in accordance with the definition of Aggregate
Investor Percentage; provided, however, that the JCPR Percentage shall never be
less than zero.
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"L/C Drawing" shall mean any drawing made under a Letter of Credit.
"Letter of Credit" shall mean, with respect to any Series, the letter of
credit, surety arrangement, guaranty contract, or other form of credit
enhancement facility, if any, (other than any Repurchase Letter of Credit)
issued by a bank or other financial institution, obtained by JCPR in accordance
with the applicable Supplement. More than one Letter of Credit may be issued
with respect to any Series for the purposes specified in such Supplement.
"Letter of Credit Agreement" shall mean, with respect to any Series, the
agreement between JCPR, JCPenney and the Letter of Credit Bank, if any, with
respect to the related Letter of Credit for such Series.
"Letter of Credit Bank" shall mean, with respect to any Series, the issuer
of the applicable Letter of Credit.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the Uniform Commercial Code (other than any such
financing statement filed for informational purposes only) or comparable law of
any jurisdiction to evidence any of the foregoing; provided, however, that any
assignment pursuant to Section 7.2 shall not be deemed to constitute a Lien.
"Mandatory Repurchase Amount" shall mean, with respect to any Series, the
amount specified, or determined in accordance with a formula or percentage
specified, in the Supplement relating to such Series.
"Minimum JCPR Percentage" shall mean, with respect to any Series, the
amount stated in the most recently executed Supplement, provided that, if a
Supplement for any Series specifically states a percentage below which the
Minimum JCPR Percentage may not be reduced, than the Minimum JCPR Percentage
shall not be less than the percentage so stated as long as such Series is
outstanding.
"Monthly Facility Fee" shall have the meaning specified in Section 4.10.
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"Monthly Period" shall mean the period from and including the beginning of
the first day of the calendar month preceding a related Determination Date to
and including the end of the last day of such calendar month.
"Monthly Servicing Fee" shall have the meaning specified in Section 3.2.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Net Recoveries" shall mean, with respect to any Monthly Period, the
excess, if any, of Recoveries collected during such Monthly Period over the
aggregate amount of Receivables in Defaulted Accounts charged off during such
Monthly Period.
"Notice Date" shall have the meaning specified in Section 2.6.
"Obligor" shall mean, with respect to any Account, the Person or Persons
obligated to make payments with respect to such Account, including any guarantor
thereof.
"Officer's Certificate" shall mean a certificate signed by any officer of
JCPR or the Servicer and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
counsel for, or an employee of, JCPR or the Servicer and who shall be reasonably
acceptable to the Trustee.
"Optional Repurchase Percentage" shall mean, with respect to any Series,
the amount, if any, expressed as a percentage of the Initial Investor Amount of
such Series, stated in the applicable Supplement as the amount which will cause
the purchase provisions of Section 12.2(a) to apply to such Series.
"Paying Agent" shall mean any paying agent appointed pursuant to Section
6.6 and shall initially be the Corporate Trust Office of the Trustee.
"Pay Out Commencement Date" shall mean the date on which a Pay Out Event is
deemed to occur pursuant to Section 9.1.
"Pay Out Event" shall have the meaning, with respect to any Series,
specified in Section 9.1.
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"Periodic Finance Charges" shall mean the finance charges specified in the
Credit Card Agreements.
"Permitted Investments" shall mean (a) negotiable instruments or securities
represented by instruments in bearer or registered 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 (including the Trustee or any affiliate or agent of the Trustee, acting
in their respective commercial capacities) organized 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 the Trust's 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 (or, in the case of a depositary institution or trust company
which is the principal subsidiary of a holding company, the long-term unsecured
debt holdings of such holding company) shall have a credit rating from Moody's
and Standard & Poor's of P-1 and A-1+, respectively, in the case of the
certificates of deposit or short-term deposits, or a rating from Moody's of Aa3
and from Standard & Poor's of AA in the case of the long-term unsecured debt
obligations, or such time deposits are fully insured by the FSLIC or the FDIC;
(iii) certificates of deposit having, at the time of the Trust's investment or
contractual commitment to invest therein, a rating from Moody's and Standard &
Poor's of P-1 and A-1+, respectively; and (iv) investments in money market funds
rated in the highest investment category or otherwise approved in writing by
Moody's and Standard & Poor's, (b) demand deposits in the name of the Trust or
the Trustee in any depositary institution or trust company referred to in (a)
(ii) above and (c) securities not represented by an instrument, which are
registered in the name of the Trustee upon books maintained for that purpose by
or on behalf of the issuer thereof and identified on books maintained for that
purpose by the Trustee as held for the benefit of the Trust or the
Certificateholders, and consisting of shares of an open end diversified
investment company which is registered under the Investment Company Act of 1940,
as amended, and which (i) invests its assets exclusively in obligations of or
guaranteed by the United States of America or any instrumentality or agency
thereof having in each instance a final maturity date of less than one year from
their date of purchase or other Permitted Investments, (ii) seeks to maintain a
constant net asset value per share and (iii) has aggregate net assets of not
less than $100,000,000 on the date of purchase of such shares, and which is
acceptable to the rating agencies that initially rated the Certificates
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without causing a reduction in their ratings of the Certificates (as confirmed
in writing by such rating agencies).
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Pool Factor" shall mean, with respect to any Series and any Monthly
Period, a number carried out to seven decimals representing the ratio of the
applicable Adjusted Investor Amount as of the end of the last day of the
preceding Monthly Period to the applicable Initial Investor Amount.
"Portfolio Yield" shall mean, with respect to any Series and any Monthly
Period, the annualized percentage equivalent of a fraction the numerator of
which is the amount of Finance Charge Receivables deposited in the Finance
Charge Account pursuant to Section 4.3 and allocated to such Series, calculated
on a cash basis after subtracting the Investor Default Amount of such Series for
such Monthly Period, and the denominator of which is the Investor Amount of such
Series as of the last day of the preceding Monthly Period.
"Principal Account" shall have the meaning specified in subsection 4.2(b).
"Principal Receivable" shall mean each Receivable other than Finance Charge
Receivables and Receivables in Defaulted Accounts. A Principal Receivable shall
be deemed to have been created at the end of the day on the Date of Processing
of such Receivable. In calculating the aggregate amount of Principal Receivables
on any day, the amount of Principal Receivables shall be reduced by the
aggregate amount of credit balances in the Accounts on such day. Any Principal
Receivables which JCPR is unable to transfer, as provided in subsection 2.5(e),
shall not be included in calculating the aggregate amount of Principal
Receivables.
"Principal Terms" shall have the meaning, with respect to any Series issued
pursuant to an Exchange, specified in Section 6.12.
"Publication Date" shall have the meaning specified in Section 9.2.
"Qualified Institution" shall have the meaning specified in subsection
4.2(a).
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"Rating Agency" shall mean, with respect to each Series, the rating agency
or rating agencies that rated the Series of Certificates, including, if
applicable, Moody's and/or Standard & Poor's.
"Receivable" shall mean any amount owing by the Obligors under an Account
(including amounts in Defaulted Accounts) from time to time, including, without
limitation, amounts owing for the payment of goods and services, Periodic
Finance Charges, late charges, returned check fees, Special Fees and premiums
for Credit Insurance, if any, but shall exclude therefrom for all purposes
Insurance Receivables unless provided to the contrary in any Supplement.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement between JCPenney and JCPR, dated the date hereof, governing the terms
and conditions upon which JCPR is acquiring the initial Receivables transferred
to the Trust on the Initial Closing Date and all additional Eligible Receivables
arising in the Accounts from JCPenney on a daily basis and to require JCPenney
to transfer all of the Receivables generated or to be generated in any
Additional Accounts for purposes of this Agreement, in the form attached hereto
as Exhibit D (or in a form substantially similar thereto), as such agreement may
be amended, modified or otherwise changed from time to time.
"Record Date" shall mean with respect to any Distribution Date, the last
Business Day of the preceding Monthly Period.
"Recoveries" shall mean all amounts received, including Insurance Proceeds,
by the Servicer with respect to Receivables which have previously been charged
off as uncollectible (and regardless of whether such Receivables were charged
off before or after the Cut Off Date or Addition Date, as the case may be,
relating to the applicable Account), after deducting, in the case of each such
amount received, a percentage of such amount which in the good faith judgment of
the Servicer represents the amount of out-of-pocket costs incurred by the
Servicer during the preceding fiscal year (or other, more recent, period deemed
appropriate by the Servicer) as a percentage of collections during such period
in respect of charged-off receivables in all JCPenney credit card accounts
(including the Accounts) serviced by the Servicer.
"Removal Date" shall have the meaning specified in Section 2.7.
"Removal Notice Date" shall mean the fifth Business Day prior to a Removal
Date.
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"Removed Accounts" shall have the meaning specified in Section 2.7.
"Repurchase Deposit Amount" shall mean, with respect to any Series and any
Transfer Date, an amount equal to the Adjusted Investor Amount for such Series
determined as of the end of the Monthly Period preceding such Transfer Date.
"Repurchase L/C Amount" shall mean, with respect to any Series, the amount,
if any, available to be drawn pursuant to subsection 12.2(a) under the
Repurchase Letter of Credit relating to such Series, if any, as provided by the
related Repurchase Letter of Credit.
"Repurchase Letter of Credit" shall mean, with respect to any Series, the
letter of credit, surety arrangement, guaranty contract, or other form of credit
enhancement facility, if any, issued by a bank or other financial institution,
obtained by JCPR in accordance with the applicable Supplement solely for the
purposes set forth in subsection 12.2(a).
"Repurchase Letter of Credit Bank" shall mean, with respect to any Series,
the issuer of the applicable Repurchase Letter of Credit.
"Requirements of Law" for any Person shall mean the certificate of
incorporation or articles of association and bylaws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and retail installment sales acts).
"Response" shall have the meaning specified in Section 9.2(a).
"Responsible Officer" shall mean the Chairman or any Vice Chairman of the
Board of Directors or Trustees of the Trustee, the Chairman or Vice Chairman of
the Executive or Standing Committee of the Board of Directors or Trustees of the
Trustee, the President, any Executive Vice President, Senior Vice President,
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant or
Deputy Cashier, any Trust Officer or Assistant Trust Officer, the Controller and
any Assistant Controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers and also, with respect to a particular matter, any other
17
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Retransfer Agreement" shall have the meaning specified in subsection
2.7(b)(ii).
"Revolving Period" shall mean, with respect to each Series, the period from
and including the Closing Date for such Series, up to but not including the
earlier of the day that the Amortization Period begins for such Series an
specified in the applicable Supplement or the Pay Out Commencement Date for such
Series.
"Scheduled Trust Termination Date" shall mean September 5, 2088.
"Series" shall mean the initial Series of Investor Certificates and any
Series of Investor Certificates issued pursuant to an Exchange performed under
Section 6.12.
"Servicer" shall mean initially JCPenney and thereafter any Person
appointed as successor as herein provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section 10.1.
"Servicing Fee Percentage" shall mean, with respect to any Series, the
percentage stated in the applicable Supplement.
"Servicing Officer" shall mean any employee of the Servicer involved in, or
responsible for, the administration and servicing of the Receivables whose name
appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
"Special Fees" shall mean Receivables which are fees which are not now but
may from time to time be assessed on the Accounts.
"Standard & Poor's" shall mean Standard & Poor's Corporation.
"Stated L/C Amount" shall mean, with respect to any Series, the "Stated
Amount" or equivalent as specified in the Letter of Credit.
"Successor Servicer" shall have the meaning specified in Section 10.2.
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"Supplement" shall mean, with respect to any Series, a supplement to this
Agreement complying with the terms of Section 6.12, executed in conjunction with
an Exchange.
"Termination Notice" shall have the meaning specified in Section 10.1.
"Transfer Agent and Registrar" shall have the meaning specified in Section
6.3 and shall initially be the Trustee's corporate trust office.
"Transfer Agreement" shall have the meaning specified in subsection
2.6(d)(iii).
"Transfer Date" shall mean the Business Day next preceding each
Distribution Date.
"Trust" shall mean the trust created by this Agreement, the corpus of which
shall consist of the Receivables now existing or hereafter transferred thereto
in accordance herewith and all monies due or to become due with respect thereto,
all proceeds (including, without limitation, all amounts defined as "proceeds"
in Section 9-306 of the UCC as in effect in any state where the Servicer's chief
executive offices or books and records relating to the Receivables are located)
of the Receivables and Insurance Proceeds relating thereto and such funds as
from time to time are deposited in the Collection Account, the Finance Charge
Account, the Principal Account and the Distribution Account, all of JCPR's
rights, remedies, powers and privileges with respect to the Receivables under
the Receivables Purchase Agreement and the benefits of any Letter of Credit and
any Repurchase Letter of Credit.
"Trustee" shall mean the institution executing this Agreement as Trustee,
or its successor in interest, or any successor or additional trustee appointed
as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to time,
as in effect in any specified jurisdiction.
"Undivided Interest" shall mean the undivided interest in the Trust
evidenced by a Certificate.
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Section 1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) The agreements, representations and warranties of JCPR in
this Agreement in its capacities as JCPR and those of JCPenney in its capacity
an Servicer shall be deemed to be the agreements, representations and warranties
of JCPR and JCPenney, respectively, solely in each such capacity for so long as
they act in each such capacity under this Agreement.
(c) the words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement or any
Supplement as a whole and not to any particular provision of this Agreement or
such Supplement; and Section, subsection, Schedule and Exhibit references
contained in this Agreement or any Supplement are references to Sections,
subsections, Schedules and Exhibits in or to this Agreement or any Supplement
unless otherwise specified.
Section 1.3 Estimation of Finance Charge Receivables; Daily Allocation of
Collections.
Except as expressly stated in this Section and in Section 4.3(e), (a) the
amount of Finance Charge Receivables in each Account and in all Accounts on any
date of determination, and the percentage of all Collections in respect thereof,
shall be determined as set forth in clauses (i) through (vii) below, (b) the
amount of Principal Receivables in each Account and in all Accounts on any date
of determination, and the percentage of all Collections in respect thereof,
shall be equal to the total amount of Receivables in such Account or Accounts,
or the amount of such Collection pursuant to clause (a) above, minus the
percentage thereof determined to be, or to be a Collection in respect of,
Finance Charge Receivables and (c) the amount of Receivables in any Defaulted
Account shall be deemed to be zero.
(i) Subject to clauses (v), (vi) and (vii) below, at the
close of business on each Cycle Billing Date for any Cycle of which any
Accounts are included in the Trust, the amount of Finance Charge
Receivables of all Accounts in such Cycle shall be equal to (A) the amount
of Finance Charges charged to all Accounts in such Cycle on
20
such date plus (B) the Carry-Over Finance Charge Amount, as defined below,
for such Cycle.
(ii) Subject to clauses (v), (vi) and (vii) below, on each
Date of Processing during the period commencing on the Date of Processing
next following such Cycle Billing Date through and including the next
succeeding Cycle Billing Date for such Cycle, Collections of Receivables
from all Accounts in such Cycle shall first be deemed to be Collections in
respect of Finance Charge Receivables until the aggregate amount of Finance
Charge Receivables so deemed to be collected during such period shall equal
(A) the amount of Finance Charge Receivables in all Accounts in such Cycle
at the beginning of such period multiplied by (B) a fraction, the numerator
of which is the number of Dates of Processing which have elapsed during
such period through and including the Date of Processing for which such
determination is being made and the denominator of which is the total
number of Dates of Processing in such period.
(iii) If, at the close of business on any Cycle Billing Date
which is the end of any period described in clause (ii) above, the amount
of Finance Charge Receivables in all Accounts in such Cycle as of the
beginning of such period (determined pursuant to clause (i) above), minus
the Finance Charge Receivables in all Defaulted Accounts in such Cycle
which were written off during the Monthly Period preceding such Cycle
Billing Date, exceeds the total amount of Collections applied as Finance
Charge Receivables for all Accounts in such Cycle during such period, such
excess shall be the "Carry-Over Finance Charge Amount" for such Cycle and
shall be added to the Finance Charges charged on such Cycle Billing Date
pursuant to clause (i)(B) above. The Carry-Over Finance Charge Amount with
respect to any Accounts shall be zero as of the Cycle Billing Date next
preceding (A) the Initial Closing Date in the case of Accounts which are
not Additional Accounts, and (B) the applicable Addition Date in the case
of Additional Accounts.
(iv) For all Accounts in any Cycle, on each day during any
period described in clause (ii) above, the aggregate amount of Finance
Charge Receivables outstanding on such day shall be equal to (A) the amount
of Finance Charge Receivables outstanding as of the
21
close of business on the Cycle Billing Date for all Accounts in such Cycle
preceding such date of determination, as determined pursuant to clause (i)
above, minus (B) the cumulative amount of Collections deemed to be in
respect of Finance Charge Receivables for all Accounts in such Cycle during
such period pursuant to clause (ii) above.
(v) On any day of determination, the amount of Finance
Charge Receivables in any Account in any Cycle shall be equal to the
aggregate amount of Finance Charge Receivables in all Accounts in such
Cycle on such day, as determined pursuant to clause (iv) above, multiplied
by a fraction, the numerator of which is the amount of Receivables in such
Account on such day and the denominator of which is the aggregate amount of
Receivables in all Accounts in such Cycle on such day.
(vi) If any accounts become Accounts on a day other than the
Cycle Billing Date for such Accounts' Cycle and other Accounts in such
Cycle have been dedicated to the Trust, (a) the percentages of Receivables
in such Accounts deemed to be Finance Charge Receivables and Principal
Receivables as of the first day Receivables in such Accounts are
transferred to the Trust shall be the same as the percentages of the other
Accounts in such Cycle on such day and (b) the amount of Collections of
Receivables of all Accounts in such Cycle deemed, pursuant to clause (ii)
above, to be in respect of Finance Charge Receivables on each Date of
Processing during the period from the day Receivables in such Additional
Accounts are first transferred to the Trust through and including the next
Cycle Billing Date for such Cycle shall be increased by an amount equal to
the amount of Finance Charge Receivables in such Additional Accounts on the
first day of such period divided by the number of Dates of Processing in
such period. If any accounts become Accounts on a day other than the Cycle
Billing Date for such Accounts' Cycle and no other Accounts in such Cycle
have been dedicated to the Trust, the amount of Finance Charge Receivables
and Principal Receivables in such Accounts on the first day Receivables in
such Accounts are transferred to the Trust, and the portion of all
Collections in respect thereof during the period from the day Receivables
in such Accounts are first transferred to the Trust through and including
the next Cycle Billing Date for such Cycle, shall be determined in
accordance with the procedures set forth in clauses (i) through (v) above
22
as if such Accounts had first become Accounts on the Cycle Billing Date
next preceding the day that such Accounts were first transferred to the
Trust.
(vii) If any Accounts become Removed Accounts (a) the
percentages of Receivables in such Removed Accounts deemed to be Finance
Charge Receivables and Principal Receivables in such Removed Accounts as of
the day such Accounts are removed from the Trust shall be the same as
portions of the other Accounts in such Removed Accounts' Cycle on such day
and (b) the amount of Collections of Receivables of all Accounts in such
Cycle deemed, pursuant to clause (ii) above, to be in respect of Finance
Charge Receivables on each Date of Processing during the period from the
day such Removed Accounts are removed from the Trust through and including
the next Cycle Billing Date for such Cycle shall be decreased by an amount
equal to the amount of Finance Charge Receivables in such Removed Accounts
on the first day of such period divided by the number of Dates of
Processing in such period.
Notwithstanding the foregoing, the Servicer may adopt, as set forth in an
Officer's Certificate, a different method of determining the amount of Finance
Charge Receivables which in the good faith judgment of the Servicer is designed
more accurately to reflect the portions of Receivables and Collections
constituting Finance Charge Receivables.
ARTICLE II
TRANSFER OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 Transfer of Receivables. JCPR does hereby transfer, assign
and set-over to the Trust for the benefit of the Certificateholders, without
recourse, (a) all right, title and interest of JCPR in, to and under the
Receivables now existing and hereafter created (other than Receivables in
Additional Accounts), all monies due or to become due with respect thereto
(including all Finance Charge Receivables), all proceeds thereof and Insurance
Proceeds relating thereto and (b) and all of JCPR's rights, remedies, powers and
privileges with respect to such Receivables under the Receivables Purchase
Agreement.
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In connection with such transfer, JCPR agrees to record and file, and to
cause JCPenney to record and file as required by the Receivables Purchase
Agreement, at its or JCPenney's own expense, a financing statement with respect
to the Receivables now existing and hereafter created (other than Receivables in
Additional Accounts) for the transfer of accounts (as defined in Section 9-106
of the UCC as in effect in any state where JCPR's or the Servicer's chief
executive offices or books and records relating to the Receivables are located)
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the acquisition of the Receivables by
JCPR from JCPenney and the transfer of the Receivables from JCPR to the Trust,
and to deliver a file-stamped copy of such financing statements or other
evidence of such filings (which may, for purposes of this Section 2.1, consist
of telephone confirmations of such filings) to the Trustee on or prior to the
date of initial issuance of the Certificates.
In connection with such transfer, JCPR further agrees, at its own expense,
on or prior to the Initial Closing Date (i) to indicate in its computer files
and to cause JCPenney to indicate on its computer files as required by the
Receivables Purchase Agreement that Receivables created in connection with the
Accounts (other than any Additional Accounts) have been sold to JCPR in
accordance with the Receivables Purchase Agreement and transferred to the Trust
pursuant to this Agreement for the benefit of the Certificateholders and (ii) to
deliver to the Trustee (or cause JCPenney so to do) a computer file or
microfiche list containing a true and complete list of all such Accounts,
identified by account number and by the Receivables balance as of the Cut Off
Date. Such file or list shall be marked as Schedule I to this Agreement,
delivered to the Trustee as confidential and proprietary, and is hereby
incorporated into and made a part of this Agreement.
The parties intend that JCPR shall be deemed hereunder to have granted to
the Trustee a first perfected security interest in all of JCPR's right, title
and interest in, to and under the Receivables now existing and hereafter created
(other than Receivables in Additional Accounts), all monies due or to become due
with respect thereto (including Finance Charge Receivables), all proceeds
thereof and Insurance Proceeds relating thereto and all of JCPR's rights,
remedies, powers and privileges with respect to such Receivables under the
Receivables Purchase Agreement and that this Agreement shall constitute a
security agreement under applicable law.
Pursuant to the request of JCPR, the Trustee has caused Certificates in
authorized denominations evidencing the entire interest in the Trust to be duly
authenticated and delivered to or upon the order of JCPR pursuant to Section
6.2.
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Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf of
the Trust, of all right, title and interest previously held by JCPR in, to and
under the Receivables now existing and hereafter created (other than Receivables
in Additional Accounts), all monies due or to become due with respect thereto
(including all Finance Charge Receivables), all proceeds thereof and Insurance
Proceeds relating thereto, and declares that it shall maintain such right, title
and interest, upon the trust herein set forth, for the benefit of all
Certificateholders. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Agreement, JCPR delivered
to the Trustee the computer file or microfiche list described in the third
paragraph of Section 2.1.
(b) The Trustee hereby agrees not to disclose to any Person any
of the account numbers or other information contained in the computer files or
microfiche lists delivered to the Trustee by JCPR pursuant to Sections 2.1 and
2.6, except as is required in connection with the performance of its duties
hereunder or in enforcing the rights of the Certificateholders or to a Successor
Servicer appointed pursuant to Section 10.2. The Trustee agrees to take such
measures as shall be reasonably requested by JCPR or JCPenney to protect and
maintain the security and confidentiality of such information, and, in
connection therewith, shall allow JCPR and JCPenney to inspect the Trustee's
security and confidentiality arrangements from time to time during normal
business hours. The Trustee shall provide JCPR and JCPenney with written notice
five days prior to any disclosure pursuant to this subsection 2.2(b).
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3 Representations and Warranties of JCPR Relating to JCPR. JCPR
hereby represents and warrants to the Trust, with respect to any Series of
Certificates, as of the date of the related Supplement and the related Closing
Date, unless otherwise stated in such Supplement that:
(a) Organization and Good Standing. JCPR is a corporation duly
organized and validly existing in good standing under the laws of the State of
Delaware, and has full corporate power, authority and right to own its property
and conduct its business an such property is presently owned and such business
is presently conducted, and to execute, deliver and perform its obligations
under this Agreement and any
25
Supplement and to execute and deliver to the Trustee the Certificates pursuant
hereto or thereto.
(b) Due Qualification. JCPR is neither required to qualify, nor
to register, as a foreign corporation in any state other than the State of Texas
in order to conduct business, and has obtained all necessary licenses and
approvals with respect to JCPR required under federal and Delaware law.
(c) Due Authorization. The execution and delivery of this
Agreement, any Supplement and the Receivables Purchase Agreement and the
execution and delivery to the Trustee of the Certificates by JCPR and the
consummation of the transactions provided for in this Agreement, any Supplement
and the Receivables Purchase Agreement have been duly authorized by JCPR by all
necessary corporate action on the part of JCPR.
(d) No Conflict. The execution and delivery of this Agreement,
any Supplement and the Receivables Purchase Agreement and the Certificates, the
performance of the transactions contemplated by this Agreement, any Supplement
and the Receivables Purchase Agreement and the fulfillment of the terms hereof
and thereof will not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which JCPR in a party or by which it or any of its property
is bound.
(e) No Violation. The execution and delivery of this Agreement,
any Supplement, the Receivables Purchase Agreement and the Certificates, the
performance of the transactions contemplated by this Agreement, any Supplement
or the Receivables Purchase Agreement and the fulfillment of the terms hereof or
thereof will not conflict with or violat6 any Requirements of Law applicable to
JCPR.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of JCPR, threatened against JCPR, before any
court, regulatory body, administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Agreement, any
Supplement, the Receivables Purchase Agreement or the Certificates, (ii) seeking
to prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, any Supplement, the Receivables
Purchase Agreement or the Certificates, (iii) seeking any determination or
ruling that, in the reasonable judgment of JCPR, would materially and adversely
affect the performance by JCPR of its obligations under
26
this Agreement, any Supplement or the Receivables Purchase Agreement, (iv)
seeking any determination or ruling that would materially and adversely affect
the validity or enforceability of this Agreement, any Supplement, the
Receivables Purchase Agreement or the Certificates or (v) seeking to affect
adversely the income tax attributes of the Trust.
(g) Eligibility of Accounts. As of the Cut Off Date, each Account
was an Eligible Account .
(h) All Consents Required. All appraisals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery of this
Agreement, any Supplement, the Receivables Purchase Agreement and the
Certificates, the performance of the transactions contemplated by this
Agreement, any Supplement or the Receivables Purchase Agreement, and the
fulfillment of the terms hereof or thereof, have been obtained.
(i) Notice of Breach. The representations and warranties set
forth in this Section 2.3 shall survive the transfer of the respective
Receivables to the Trust, and termination of the rights and obligations of the
Servicer pursuant to Section 10.1. Upon discovery by JCPR, the Servicer or the
Trustee of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the others.
Section 2.4 Representations and Warranties of JCPR Relating to the
Agreement and any Supplement and the Receivables.
(a) Binding Obligation, Valid Transfer and Security Interest.
JCPR hereby represents and warrants to the Trust, with respect to any Series of
Certificates, as of the date of the related Supplement and the related Closing
Date, unless otherwise stated in such Supplement, and an of any Addition Date
that:
(i) This Agreement and any Supplement, and, in the case of
Additional Accounts, the related Transfer Agreement, each constitute a
legal, valid and binding obligation of JCPR, enforceable against JCPR in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity).
27
(ii) This Agreement and the Receivables Purchase Agreement,
collectively, constitute either (A) a valid transfer to the Trust of all
right, title and interest of JCPR and JCPenney in, to and under the
Receivables now existing and hereafter created (other than Receivables in
Additional Accounts), all monies due or to become due with respect thereto
(including all Finance Charge Receivables), and all proceeds (as defined in
the UCC as in effect in any state where JCPR's, JCPenney's or the
Servicer's chief executive offices or books and records relating to the
Receivables are located) thereof and Insurance Proceeds relating thereto,
and such property will be held by the Trust free and clear of any Lien of
any Person claiming through or under JCPR or JCPenney, except for (x) Liens
permitted under subsection 2.5(b), (y) the interest of the Holder of the
Exchangeable Certificate and (z) JCPR's right to receive interest accruing
on, and investment earnings in respect of, the Finance Charge Account and
the Principal Account as provided in this Agreement and any Supplement or
(B) a grant of a security interest (as defined in the UCC as in effect in
any state where JCPR's, JCPenney's or the Servicer's chief executive
offices or books and records relating to the Receivables are located) in
such property to the Trust, which is enforceable with respect to existing
Receivables (other than Receivables in Additional Accounts), all monies due
or to become due with respect thereto, the proceeds thereof, and Insurance
Proceeds relating thereto upon execution and delivery of this Agreement,
the Receivables Purchase Agreement and any Supplement, and which will be
enforceable with respect to such Receivables hereafter created, all monies
due or to become due with respect thereto, the proceeds thereof and
Insurance Proceeds relating thereto, upon such acquisition. If this
Agreement or any Transfer Agreement constitutes the grant of a security
interest to the Trust in such property, upon the filing of the financing
statement described in Section 2.1 and in the case of the Receivables
hereafter created and proceeds thereof and Insurance Proceeds relating to
such Receivables, upon such creation, the Trust shall have a first priority
perfected security interest in such property, except for Liens permitted
under subsection 2.5(b). Neither JCPR, JCPenney nor any Person claiming
through or under JCPR or JCPenney shall have any claim to or interest in
the Principal Account, the Finance Charge Account or the Distribution
Account, except for JCPR's right to receive interest accruing on, and
investment earnings in respect of, the Finance Charge Account
28
and Principal Account as provided in this Agreement and any Supplement,
the right of the Holder of the Exchangeable Certificate to receive payments
from the Finance Charge Account and Principal Account in accordance with
subsections 4.3(c)(iii) and 4.5(e), if applicable, and, if this Agreement
and any Supplement constitutes the grant of a security interest in such
property, except for the interest of JCPR in such property as a debtor for
purposes of the UCC as in effect in any state where JCPR's, JCPenney's or
the Servicer's chief executive offices or books and records relating to the
Receivables are located.
(b) Eligibility of Receivables. JCPR hereby represents and
warrants to the Trust as of the Initial Closing Date that (i) each Receivable
then existing is an Eligible Receivable, (ii) each Receivable then existing has
been transferred to the Trust free and clear of any Lien of any Person claiming
through or under JCPR (other than Liens permitted under subsection 2.5(b)) and
in compliance, in all material respects, with all Requirements of Law applicable
to JCPR and (iii) with respect to each Receivable then existing, all consents,
licenses, approvals or authorizations of or registrations or declarations with
any Governmental Authority required to be obtained, effected or given by JCPR in
connection with the transfer of such Receivable to the Trust have been duly
obtained, effected or given and are in full force and effect. On each day on
which any new Receivable is created, JCPR shall be deemed to represent and
warrant to the Trust that (i) each such Receivable is an Eligible Receivable,
(ii) each such Receivable has been transferred to the Trust free and clear of
any Lien of any Person claiming through or under JCPR (other than Liens
permitted under subsection 2.5(b)) and in compliance, in all material respects,
with all Requirements of Law applicable to JCPR, (iii) with respect to each such
Receivable, all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by JCPR or the Servicer in connection with the
transfer of each such Receivable to the Trust have been duly obtained, effected
or given and are in full force and effect and (iv) the representations and
warranties set forth in subsection 2.4(a) are true and correct with respect to
each such Receivable as if made on such day.
(c) Notice of Breach. The representations and warranties set
forth in this Section 2.4 shall survive the transfer of the respective
Receivables to the Trust, and termination of the rights and obligations of the
Servicer pursuant to Section 10.1. Upon discovery by JCPR, the Servicer or the
Trustee of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the others.
29
(d) Transfer of Ineligible Receivables. In the event of a breach of
any representation and warranty set forth in subsection 2.4(b) hereof or
subsection 4.1(1) of the Receivables Purchase Agreement, within 60 days (or with
the prior written consent of a Responsible Officer of the Trustee, such longer
period specified in such consent) of the earlier to occur of the discovery of
such breach by JCPR, or receipt by JCPR of written notice of such breach given
by the Trustee or Servicer, JCPR shall accept a retransfer of each Principal
Receivable to which such breach relates (an "Ineligible Receivable") on the
terms and conditions set forth below; provided, however, that no such retransfer
shall be required to be made with respect to such Ineligible Receivable if, on
any day within such 60-day period (or such longer period as may be specified in
the consent), either (i) the representations and warranties in the second
sentence of subsection 2.4(b) hereof or Section 4.1(1) of the Receivables
Purchase Agreement, as the case may be, with respect to such Ineligible
Receivable shall then be true and correct in all material respects with respect
to such Ineligible Receivable as if such Ineligible Receivable had been created
on such day or (ii) the aggregate amount of Ineligible Receivables outstanding
at any time and with respect to which such representations and warranties
continue to be incorrect in any material respect does not in the sole reasonable
judgment of an officer of JCPR have a material adverse effect on the interest of
the Trust in the Receivables as a whole, including the ability of the Servicer
in JCPR's sole reasonable judgment to collect the Receivables. JCPR shall
accept a retransfer of each such Ineligible Receivable by directing the Servicer
to deduct the principal balance of each such Ineligible Receivable from the
aggregate amount of Principal Receivables used to calculate the JCPR Amount. On
and after the date of such retransfer, each Ineligible Receivable so
retransferred shall not be included in the calculation of the Investor
Percentage, the JCPR Percentage or the JCPR Amount. In the event that the
exclusion of an Ineligible Receivable from the calculation of the JCPR Amount
would cause the JCPR Amount to be a negative number, on the date of retransfer
of such Receivable JCPR shall make a deposit in the Collection Account in
immediately available funds in an amount equal to the amount by which the JCPR
Amount would be reduced below zero. The amounts so deposited are to be treated
for all purposes hereof as Collections on such Ineligible Receivables. Such
deposit shall be considered a prepayment in full of the Ineligible Receivable
and shall be applied in accordance with Section 4.3. Upon each retransfer to
JCPR of such Ineligible Receivable, the Trust shall automatically and without
further action be deemed to transfer, assign and set-over to JCPR, without
recourse, representation or warranty, all the right, title and interest of the
Trust in, to and under such Ineligible Receivable, all monies due or to become
due with respect thereto, all proceeds thereof and Insurance Proceeds relating
thereto. The Trustee shall execute such documents and instruments of transfer
and take such other actions as
30
shall reasonably be requested by JCPR to effect the transfer of such Ineligible
Receivable pursuant to this subsection. The obligation of JCPR to accept
retransfer of any Ineligible Receivable shall constitute the sole remedy
respecting any breach of the representations and warranties set forth in
subsection 2.4(b) with respect to such Receivable available to
Certificateholders or the Trustee on behalf of Certificateholders.
(e) Retransfer of Trust Portfolio. In the event of a breach of any of
the representations and warranties set forth in subsection 2.4(a) hereof or
Section 4.1(j) or (k) of the Receivables Purchase Agreement, either the Trustee,
or the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 25% of the Aggregate Investor Amount, by notice then
given in writing to JCPR (and to the Trustee and the Servicer, if given by the
Investor Certificateholders), may direct JCPR to accept retransfer of all of the
Receivables after 45 days of such notice, or within such longer period as may be
specified in such notice, and JCPR shall be obligated to accept retransfer of
such Receivables on a Distribution Date first occurring after such applicable
period on the terms and conditions set forth below; provided, however, that no
such retransfer shall be required to be made if, at any time during such
applicable period the representations and warranties contained in subsection
2.4(a) or subsection 4.1(j) or (k) of the Receivables Purchase Agreement, as the
case may be, shall then be true and correct in all material respects. JCPR
shall deposit on the Transfer Date (in next day funds) for the related
Distribution Date an amount equal to the deposit amount provided in the next
sentence for such Receivables in the Distribution Account for distribution to
the Investor Certificateholders pursuant to Section 12.3. The deposit amount for
such retransfer will be equal to (i) the Aggregate Adjusted Investor Amount at
the end of the day on the last day of the Monthly Period preceding the
Distribution Date on which the retransfer is scheduled to be made, plus (ii) an
amount equal to all interest accrued but unpaid on the Investor Certificates of
each Series at the relevant Certificate Rates through such last day, less the
amount transferred to the Distribution Account from the Finance Charge Account
on such Transfer Date in respect of Certificate Interest for such Series.
Payment of the deposit amount and all other amounts in the Distribution Account
in respect of the preceding Monthly Period shall be considered a prepayment in
full of the Receivables represented by the Investor Certificates. On the
Distribution Date following the Transfer Date on which such amount has been
deposited in full into the Distribution Account, the Receivables and all monies
due or to become due with respect thereto and all proceeds of the Receivables
and Insurance Proceeds relating thereto shall be transferred to JCPR, and the
Trustee shall execute and deliver such instruments of transfer, in each case
without recourse, representation or warranty, as shall be reasonably requested
by JCPR to vest in JCPR, or its designee or assignee (including JCPenney as
contemplated by the provisions of
31
the Receivables Purchase Agreement corresponding to this subsection 2.4(e)), all
right, title and interest of the Trust in, to and under the Receivables, all
monies due or to become due with respect thereto (including all Finance Charge
Receivables) and all proceeds thereof and Insurance Proceeds relating thereto.
If the Trustee or the Investor Certificateholders give a notice directing JCPR
to accept a retransfer as provided above, the obligation of JCPR to accept a
retransfer of the Receivables pursuant to subsection 2.4(e) shall constitute the
sole remedy respecting a breach of the representations and warranties contained
in subsection 2.4(a) available to the Investor Certificateholders or the Trustee
on behalf of the Investor Certificateholders.
(f) Periodic Finance Charges and Other Fees. JCPR hereby represents
and warrants to the Trust that JCPR and JCPenney have entered into the
Receivables Purchase Agreement and that, pursuant thereto, JCPenney has
covenanted and agreed that, except as otherwise required by any Requirements of
Law or as is deemed by JCPenney to be necessary in order for JCPenney to
maintain its business on a competitive basis based on a good faith assessment by
JCPenney of the nature of its competition in its business, JCPenney shall not
reduce at any time (x) the Periodic Finance Charges assessed in respect of any
Accounts, or (y) any other fees charged on any of the Accounts, if as a result
of such reduction, JCPenney's reasonable expectation of the Portfolio Yield as
of such date would be less than the highest of the Base Rates for the Series
then outstanding.
(g) Credit Card Agreements and Guidelines. JCPR hereby represents and
warrants to the Trust that, pursuant to the Receivables Purchase Agreement,
JCPenney has covenanted and agreed to comply with and perform its obligations
under the Credit Card Agreements relating to the Accounts and the Credit Card
Guidelines, except insofar as any failure so to comply or conform would not
materially and adversely affect the rights of the Trust or the
Certificateholders hereunder or under the Certificates. In that regard, except
as aforesaid, and so long as such changes are made applicable to comparable
segments of the revolving credit card accounts owned and serviced by JCPenney
which have characteristics the same as, or substantially similar to, the
Accounts which are subject hereto, JCPenney shall be free to change the terms
and provisions of such Credit Card Agreements or the Credit Card Guidelines in
any respect (including, without limitation, the calculation of the amount, or
the timing, of charge-offs).
Section 2.5 Covenants of JCPR. JCPR hereby covenants that:
32
(a) Receivables Not to be Evidenced by Promissory Notes or Chattel
Paper. JCPR will take no action to cause any Receivable to be evidenced by any
"instrument" (as defined in the UCC as in effect in any state where JCPR's or
the Servicer's chief executive offices or books and records relating to such
Receivable is located). Each Receivable shall be payable pursuant to a contract
which does not create a Lien on any goods purchased thereunder; provided,
however, that any such Receivable which shall be payable pursuant to a contract
which shall be governed by Florida law may provide for the retention of a
security interest in any goods purchased by the Obligor, except those goods that
are considered real property under Florida law.
(b) Security Interests. Except for the transfers hereunder, JCPR will
not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Receivable, whether now
existing or hereafter created, or any interest therein; JCPR will immediately
notify the Trustee of the existence of any Lien on any Receivable; and JCPR
shall defend the right, title and interest of the Trust in, to and under the
Receivables, whether now existing or hereafter created, against all claims of
third parties claiming through or under JCPR; provided, however, that nothing in
this subsection 2.5(b) shall prevent or be deemed to prohibit JCPR from
suffering to exist upon any of the Receivables any Liens for state, municipal or
other local taxes if such taxes shall not at the time be due and payable or if
JCPR shall currently be contesting the validity thereof in good faith by
appropriate proceedings and shall have set aside on its books adequate reserves
with respect thereto; provided, further, however, that nothing in this
subsection 2. 5(b) shall prevent or be deemed to prohibit JCPR from selling,
pledging, assigning, transferring or granting a participation interest in the
Exchangeable Certificate or the Undivided Interest in the Trust evidenced
thereby to JCPenney in accordance with the terms of the Receivables Purchase
Agreement or as full or partial consideration for any Receivables of JCPenney
purchased by JCPR thereunder.
(c) Account Allocations.
(i) In the event that JCPR is unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this
Agreement or any Supplement (including, without limitation, by reason of
the occurrence of a Bankruptcy Event or its inability to obtain Receivables
from JCPenney for any reason) then, in any such event, (A) JCPR agrees to
instruct the Servicer to allocate and pay to the Trust, after the date of
such inability, payments received in respect of the Accounts giving rise to
such Receivables first to the total amount of
33
Principal Receivables from such Accounts transferred to the Trust; and (B)
JCPR agrees to have such amounts applied as Collections in accordance with
Section 4.3. If such event shall occur, it shall be deemed a Pay Out Event
immediately upon the occurrence thereof. The parties hereto agree that
Finance Charge Receivables, whenever created, with respect to Principal
Receivables which have been transferred to the Trust shall continue to be a
part of the Trust notwithstanding any cessation of the transfer of
additional Principal Receivables to the Trust and Collections with respect
thereto shall continue to be allocated and paid in accordance with Section
4.3.
(ii) In the event that pursuant to subsection 2.4(d), JCPR
accepts a retransfer of an Ineligible Receivable as a result of a breach of
the representations and warranties in subsection 2.4(b) relating to such
Receivable, then, in any such event, JCPR agrees to instruct the Servicer
to allocate payments received in respect of the Account giving rise to such
Receivable first to the total amount of Receivables of the appropriate
Obligor retained in the Trust and thereafter to the total amount owing by
such Obligor on any Ineligible Receivable retransferred to JCPR.
(d) Delivery of Collections. JCPR agrees to pay to the Servicer all
payments received by JCPR in respect of the Receivables as soon as practicable
after receipt thereof by JCPR.
(e) Nonconveyance of Accounts. JCPR covenants and agrees that it will
enforce the provisions of the Receivables Purchase Agreement prohibiting
JCPenney from conveying, assigning, exchanging or otherwise transferring the
Accounts to any Person prior to the termination of this Agreement and any
Supplement pursuant to Article XII hereof.
(f) Regulatory Filings. JCPR shall make any filings, reports,
notices, applications, registrations with, and to seek any consents or
authorizations from the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or advisable to
comply with any federal or state securities or reporting requirements laws.
Section 2.6 Addition of Accounts.
34
(a) If during any period of 30 consecutive days, the JCPR Amount
averaged over that period is less than the Minimum JCPR Percentage of the
Average Principal Receivables, JCPR shall, under the terms of the Receivables
Purchase Agreement, require JCPenney to transfer the Receivables of additional
Eligible Accounts to be included as Accounts, and JCPR shall purchase
Receivables in such Additional Accounts under the Receivables Purchase Agreement
and transfer such Receivables to the Trust, in a sufficient amount so that the
average of the JCPR Amount as a percent of the Average Principal Receivables
during such 30 day period would have, if the Receivables from such Accounts had
been transferred to the Trust on the first day of such 30 day period, at least
equaled the Minimum JCPR Percentage.
(b) In addition to its obligation under subsection 2.6(a), JCPR may,
but shall not be obligated to, from time to time, agree with JCPenney to
designate Additional Accounts to be included as Accounts.
(c) At any time that the Receivables in substantially all the Eligible
Accounts of any Cycle have been transferred to the Trust, then on each day that
an Eligible Account is added to such Cycle such Eligible Account shall, until
notice from JCPR to the Trustee to the contrary, automatically be included as an
Additional Account effective as of such data of inclusion in such Cycle.
(d) JCPR agrees that any Receivables from Additional Accounts shall
first be sold by JCPenney to JCPR and transferred by JCPR to the Trust under
subsection 2.6(a), (b) or (c) upon and subject to the following conditions:
(i) On or before the fifth Business Day (the "Notice Date") prior
to the Addition Date in respect of Additional Accounts added pursuant to
subsection 2. 6(a) or (b), JCPR shall give the Trustee and the Servicer
written notice that such Additional Accounts will be included and
specifying the approximate aggregate amount of the Receivables to be
transferred;
(ii) JCPR (A) shall require JCPenney to transfer Receivables only
in Eligible Accounts, and (B) shall, if the designation of Additional
Accounts is made pursuant to subsection 2.6(b) and if the sum of Principal
Receivables in the Trust as of the related Notice Date after giving effect
to the addition of such Additional Accounts would exceed $50,000,000 more
than the greater of (x) the amount of Principal Receivables in the Trust on
the Initial Closing Date and (y) the amount
35
of Principal Receivables in the Trust on the most recent date when the
terms of this subsection 2.6(d)(ii)(B) were complied with, deliver a letter
from a Rating Agency to the Trustee by the Addition Date confirming that
the addition of such Additional Accounts will not adversely affect the
rating of any Series of Investor Certificates which has been rated by such
Rating Agency;
(iii) On or prior to the Addition Date, in respect of Additional
Accounts added pursuant to subsection 2.6(a) or (b), and on or before five
Business Days after the first day of the Monthly Period next succeeding the
Monthly Period in which Additional Accounts were added pursuant to
subsection 2.6(c), JCPR shall have delivered to the Trustee a written
transfer agreement (including an acceptance by the Trustee on behalf of the
Trust for the benefit of the Investor Certificateholders) in substantially
the form of Exhibit E (the "Transfer Agreement") and shall have indicated
in its computer files and caused JCPenney to indicate in its computer files
that the Receivables created in connection with such Additional Accounts
have been sold by JCPenney to JCPR and transferred by JCPR to the Trust;
and shall have delivered (or caused JCPenney so to do) to the Trustee a
computer file or microfiche list containing a true and complete list of all
Additional Accounts identified by account number and the aggregate amount
of the Receivables in such Additional Accounts as of the Addition Date in
respect of Additional Accounts added pursuant to subsection 2.6(a) or (b)
or as of such fifth Business Day of the month in respect of Additional
Accounts added during the preceding month pursuant to subsection 2.6(c),
which computer file or microfiche list shall be marked as Schedule 1 to the
Transfer Agreement, delivered to the Trustee as confidential and
proprietary, shall be as of the date of such Transfer Agreement and
incorporated into and made a part of such Transfer Agreement, this
Agreement and any Supplement;
(iv) JCPR shall represent and warrant that (x) each Additional
Account is, as of the applicable Addition Date, an Eligible Account, (y) in
the case of an addition pursuant to subsection 2.6(a) or 2.6(b), no
selection procedures believed by JCPR to be materially adverse to the
interests of the Investor Certificateholders or the Letter of Credit Banks
were utilized in selecting the Additional Accounts from the available
Eligible Accounts of JCPenney or, in the case of an addition
36
pursuant to subsection 2.6(c), in adding any such Additional Account to
any Cycle, and (z) as of the Addition Date, neither JCPR nor JCPenney is
insolvent;
(v) JCPR shall represent and warrant that, as of the Addition
Date, the Transfer Agreement and Receivables Purchase Agreement,
collectively, constitute either (x) a valid transfer or, in the case of
Accounts added pursuant to subsection 2.6(c), confirmation of transfer to
the Trust of all right, title and interest of JCPR and JCPenney in, to and
under the Receivables then existing and thereafter to be created, all
monies due or to become due with respect thereto (including all Finance
Charge Receivables), and all proceeds (including, without limitation,
"proceeds" as defined in the UCC as in effect in any state where JCPR's,
JCPenney's or the Servicer's chief executive offices or books and records
relating to the Receivables are located) of such Receivables and Insurance
Proceeds relating thereto and all of JCPR's rights, remedies, powers and
privileges with respect to such Receivables under the Receivables Purchase
Agreement, and such property will be held by the Trust free and clear of
any Lien of any Person claiming through or under JCPR or JCPenney, except
for (i) Liens permitted under subsection 2.5(b), (ii) the interest of the
Holder of the Exchangeable Certificate and (iii) JCPR's right to receive
interest accruing on, and investment earnings in respect of, the Finance
Charge Account and the Principal Account as provided in this Agreement and
any Supplement or (y) a grant of a security interest (as defined in the UCC
as in effect in any state where JCPR's, JCPenney's or the Servicer's chief
executive offices or books and records relating to the Receivables are
located) in such property to the Trust, which is enforceable with respect
to then existing Receivables of the Additional Accounts, all monies due or
to become due with respect thereto, the proceeds thereof and Insurance
Proceeds relating thereto upon the transfer of such Receivables to the
Trust, and which will be enforceable with respect to the Receivables
thereafter created in respect of Additional Accounts, the proceeds thereof
and Insurance Proceeds relating thereto upon such transfer; and (z) if the
Transfer Agreement constitutes the grant of a security interest to the
Trust in such property, upon the filing of a financing statement as
described in Section 2.1 with respect to such Additional Accounts and in
the case of the Receivables of Additional Accounts thereafter created and
the proceeds thereof, and Insurance Proceeds relating to such
37
Receivables, upon such transfer, the Trust shall have a first priority
perfected security interest in such property, except for Liens permitted
under subsection 2.5(b);
(vi) JCPR shall, on the Addition Date for Additional Accounts
added pursuant to subsection 2.6 (a) or (b), deliver a certificate of a
Vice President or more senior officer confirming the items set forth in
paragraphs (ii), (iii), (iv) and (v) above; and
(vii) JCPR shall, on the Addition Date for Additional Accounts
added pursuant to subsection 2. 6 (a) or (b), deliver an Opinion of Counsel
with respect to the Receivables in the Additional Accounts substantially in
the form of Exhibit K.
(e) JCPR shall provide to each Rating Agency prior written notice each
time Additional Accounts are added to the Trust pursuant to subsection 2.6(a) or
(b).
Section 2.7 Removal of Accounts.
(a) Subject to the conditions set forth below, under the terms of the
Receivables Purchase Agreement, JCPR may designate from time to time, Accounts
no longer to be designated for inclusion in the Trust (the "Removed Accounts");
provided, however, that JCPR shall not make more than one such designation in
any Monthly Period. On or before the fifth Business Day (the "Removal Notice
Date") prior to the date on which Removed Accounts shall be designated (the
"Removal Date"), JCPR shall give the Trustee and the Servicer written notice
that the Receivables from such Removed Accounts are to be retransferred to JCPR.
(b) JCPR shall be permitted to designate and require retransfer to it
of the Receivables from Removed Accounts only upon satisfaction of the following
conditions:
(i) JCPR (a) shall designate Removed Accounts having a minimum
aggregate amount of Principal Receivables as of the related Removal Notice
Date equal to at least 2% of the Principal Receivables in the Trust as of
such Removal Notice Date, and (b) shall deliver a letter from each Rating
Agency that has rated any Series to the Trustee by
38
such Removal Date confirming that the removal of such Removed Accounts will
not adversely affect the rating of such Series of Investor Certificates;
(ii) On each Removal Date, the Trustee shall deliver to JCPR a
written retransfer in substantially the form of Exhibit O (the "Retransfer
Agreement") and JCPR shall deliver to the Trustee a computer file,
microfiche or written list containing a true and complete schedule
identifying all Removed Accounts specifying for each such Removed Account,
as of the Removal Notice Date, its account number and the aggregate amount
of Receivables therein. Such computer file, microfiche or written list
shall be as of the date of such Retransfer Agreement incorporated into and
made a part of this Agreement and any Supplement;
(iii) JCPR shall represent and warrant as of each Removal Date
that (a) the list of Removed Accounts, as of the Removal Notice Date,
complies in all material respects with the requirements of (ii) above; (b)
no selection procedure used by JCPR which is adverse to the interests of
the Investor Certificateholders or the Letter of Credit Banks was utilized
in selecting the Removed Accounts; and (c) as of the Removal Notice Date
and as of the Removal Date, neither JCPenney nor JCPR is insolvent;
(iv) The removal of any Receivables of any Removed Accounts on
any Removal Date shall not, in the reasonable belief of JCPR, cause a Pay
Out Event, or an event which with notice or lapse of time or both would
constitute a Pay Out Event, with respect to any Series to occur; and
(v) JCPR shall have delivered to the Trustee a certificate of an
officer of JCPR confirming the items set forth in (i) through (iv) above.
The Trustee may conclusively rely on such certificate, shall have no duty
to make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon satisfaction of the above conditions, the Trustee shall execute and
deliver the Retransfer Agreement to JCPR, and the Receivables from the Removed
Accounts shall no longer constitute a part of the Trust.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to the
Servicer.
(a) In connection with and in consideration for the acquisition
of the Receivables by JCPR from JCPenney in accordance with the Receivables
Purchase Agreement, and on behalf of JCPR to facilitate the secured credit-
enhanced financing for JCPR contemplated by this Agreement, JCPenney agrees to
act as the Servicer under this Agreement. The Investor Certificateholders by
their acceptance of the Investor Certificates consent to JCPenney acting as
Servicer.
(b) Notwithstanding subsection 6.3(b), the Servicer shall service
and administer the Receivables and shall collect payments due under the
Receivables in accordance with its customary and usual servicing procedures for
servicing credit card receivables comparable to the Receivables and in
accordance with the Credit Card Guidelines and shall have full power and
authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing and subject to Section 10.1, the Servicer is hereby
authorized and empowered (i) to make withdrawals from the Collection Account as
set forth in this Agreement, (ii) unless such power and authority is revoked by
the Trustee on account of the occurrence of a Servicer Default pursuant to
Section 10.1, to instruct the Trustee to make withdrawals and payments from the
Principal Account and the Finance Charge Account in accordance with such
instructions as set forth in this Agreement, (iii) unless such power and
authority is revoked by the Trustee on account of the occurrence of a Servicer
Default pursuant to Section 10.1, to make draws on any Letter of Credit as set
forth in this Agreement, and (iv) to execute and deliver, on behalf of the Trust
for the benefit of the Certificateholders, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables. The Trustee agrees that it shall
promptly follow the instructions of the Servicer to withdraw funds from the
Principal Account and the Finance Charge Account and make drawings under any
Letter of Credit. The Trustee shall furnish the Servicer with
40
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder.
(c) (i) In the event that JCPR is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of this
Agreement and any Supplement (including, without limitation, by reason of
the occurrence of a Bankruptcy Event or its inability to obtain Receivables
from JCPenney for any reason) then, in any such event, (A) the Servicer
agrees to allocate and pay to the Trust, after such date, all Collections
in respect of the Accounts giving rise to such Receivables first to the
total amount of Principal Receivables from such Accounts transferred to the
Trust.
(ii) In the event that pursuant to subsection 2.4(d), JCPR
accepts a retransfer of an Ineligible Receivable as a result of a breach of
the representations and warranties in subsection 2.4(b) relating to such
Receivable, then, in any such event, the Servicer agrees to allocate
payments received in respect of the Account giving rise to such Receivable
first to the total amount of Receivables of the appropriate Obligor
retained in the Trust and thereafter to the total amount owing by such
Obligor on any Ineligible Receivables retransferred to JCPR.
(d) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other credit card receivables.
(e) The Servicer shall not be required to maintain fidelity bond
coverage insuring against losses through wrongdoing of its officers and
employees who are involved in the servicing of credit card receivables.
Section 3.2 Servicing Compensation. As compensation for its servicing
activities hereunder and reimbursement for its expenses as set forth in the
immediately following paragraph, the Servicer shall be entitled to receive a
monthly servicing fee in respect of any Monthly Period (or portion thereof)
prior to the termination of the Trust pursuant to Section 12.1, payable in
arrears on each Transfer Date in an amount equal to the total for all Series of
the following amount calculated for each Series: 1/12th of the product of (A)
the Servicing Fee Percentage for such Series times (B) the sum of (i) a pro rata
portion (based on the Investor Amount of each Series) of the JCPR Amount
41
and (ii) the applicable Investor Amount as of the first day of the related
Monthly Period, or portion thereof (the "Monthly Servicing Fee"). The share of
the Monthly Servicing Fee allocable to each Series of the Investor
Certificateholders with respect to any Monthly Period (or portion thereof) shall
be equal to one-twelfth the product of (A) the Servicing Fee Percentage for such
Series, and (B) the Adjusted Investor Amount for such Series on the first day of
such Monthly Period or on the Closing Date for such Series, as the case may be,
(with respect to such Series, the "Investor Monthly Servicing Fee") and shall be
paid to the Servicer pursuant to Section 4.5. The remainder of the Monthly
Servicing Fee shall be paid by JCPR and in no event shall the Trust, the Trustee
or the Investor Certificateholders be liable for the share of the Monthly
Servicing Fee to be paid by JCPR and no drawing may be made under any Letter of
Credit with respect thereto. In the case of the Monthly Period in which a
Closing Date occurred for any Series, the Monthly Servicing Fee and the Investor
Monthly Servicing Fee with respect to such Series shall accrue from the date
interest begins to accrue with respect to such Series.
The Servicer's expenses include the reasonable fees and disbursements of
independent accountants and all other expenses incurred by the Servicer in
connection with its activities hereunder; provided that the Servicer shall not
be liable for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation any federal, state or local income or franchise
taxes or any other tax imposed on or measured by income (or any interest or
penalties with respect thereto or arising from a failure to comply therewith).
The Servicer shall be required to pay such expenses for its own account and
shall not be entitled to any payment therefor other than the Monthly Servicing
Fee.
Section 3.3 Representations and Warranties of the Servicer. The Servicer
hereby makes the following representations and warranties on which the Trustee
has relied in accepting the Receivables in trust and in authenticating
Certificates:
(a) Organization and Good Standing. The Servicer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate power, authority and right to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement, any Supplement and the Receivables Purchase
Agreement.
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(b) Due Qualification. The Servicer is qualified as a foreign
corporation in any state where it is required to be so qualified to service the
Receivables as required by this Agreement and has obtained all necessary
licenses and approvals as required under federal and state law, in each case,
where the failure to be so qualified, licensed or approved, could reasonably be
expected materially and adversely to affect the ability of the Servicer to
comply with the terms of this Agreement.
(c) Due Authorization. The execution, delivery, and performance of
this Agreement, any Supplement and the Receivables Purchase Agreement have been
duly authorized by the Servicer by all necessary corporate action on the part of
the Servicer.
(d) Binding Obligation. This Agreement, any Supplement and the
Receivables Purchase Agreement constitute a legal, valid and binding obligation
of the Servicer, enforceable in accordance with its terms, except as
enforceability may be limited by Debtor Relief Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) No Violation. The execution and delivery of this Agreement, any
Supplement and the Receivables Purchase Agreement by the Servicer, and the
performance of the transactions contemplated by this Agreement, any Supplement
and the Receivables Purchase Agreement and the fulfillment of the terms hereof
and thereof applicable to the Servicer, will not conflict with, violate, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, any Requirements of
Law applicable to the Servicer or any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which the Servicer is a party or by which
it is bound.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of the Servicer, threatened against the Servicer
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this Agreement or
any Supplement, seeking any determination or ruling that, in the reasonable
judgment of the Servicer, would materially and adversely affect the performance
by the Servicer of its obligations under this Agreement, any Supplement or the
Receivables Purchase Agreement, or seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of this
Agreement, any Supplement or the Receivables Purchase Agreement.
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Section 3.4 Reports and Records for the Trustee; Bank Account Statements.
(a) Initial Report. On the day on which the Series A Investor
Certificates are issued (the "Initial Closing Date"), the Servicer shall prepare
and deliver to the Trustee, the related Letter of Credit Bank, ▇▇▇▇▇'▇ and
Standard & Poor's an Officer's Certificate substantially in the form of Exhibit
F setting forth the Servicer's best estimate of (i) the aggregate amount of
Principal Receivables as of the end of the second day preceding the Closing Date
and (ii) the aggregate amount of Finance Charge Receivables as of the end of the
second day preceding the Initial Closing Date.
(b) Daily Reports. On each Business Day, the Servicer shall prepare
and make available at the office of the Servicer for inspection by the Trustee a
record setting forth (i) the aggregate amount of Collections processed by the
Servicer on the preceding Business Day and (ii) the aggregate amount of
Receivables as of the close of business on the preceding Business Day.
(c) Monthly Servicer's Certificate. For each Series, on each
Determination Date, the Servicer shall forward to the Trustee, the Paying Agent,
any Rating Agency and the appropriate Letter of Credit Bank a certificate of a
Servicing Officer substantially in the form of Exhibit G setting forth (i) the
aggregate amount of Collections processed during the preceding Monthly Period,
(ii) the aggregate amount of the Investor Percentage of Collections of Principal
Receivables processed by the Servicer pursuant to Section 4.3 during the
preceding Monthly Period for such Series, (iii) the aggregate amount of the
Investor Percentage of Collections of Finance Charge Receivables and Net
Recoveries processed by the Servicer pursuant to Section 4.3 during the
preceding Monthly Period for such Series, (iv) the aggregate amount of
Receivables and the balance on deposit in, or to be deposited on the Collections
Deposit Date in, the Finance Charge Account and the Principal Account with
respect to Collections processed as of the end of the last day of the preceding
Monthly Period for such Series, (v) the aggregate amount, if any, of drawings
pursuant to Section 4.5 or 4.9 under the appropriate Letter of Credit required
to be made on the succeeding Drawing Date, (vi) the aggregate amount to be paid
to the Letter of Credit Bank, JCPR or JCPenney, as the case may be, from the
Finance Charge Account pursuant to Section 4.5, (vii) the Stated L/C Amount and
Available L/C Amount, in each case as of the opening of business on the
succeeding Drawing Date and the close of business on the succeeding Distribution
Date, (viii) the statement required by Section 5.2 and (ix) the sum of all
amounts payable to the Investor Certificateholders of such Series on the
succeeding Distribution Date in respect of Certificate Interest and Certificate
Principal.
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Section 3.5 Annual Servicer's Certificate. The Servicer will deliver to
the Trustee, any Letter of Credit Bank, and any Rating Agency on or before April
15 of each calendar year, beginning with April 15, 1989, an Officer's
Certificate substantially in the form of Exhibit H stating that (a) a review of
the activities of the Servicer during the preceding calendar year and of its
performance under this Agreement was made under the supervision of the officer
signing such certificate and (b) to the best of such officer's knowledge, based
on such review, the Servicer has fully performed all its obligations under this
Agreement throughout such year, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such certificate may be
obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
Section 3.6 Annual Independent Public Accountants' Servicing Report.
(a) On or before April 15 of each calendar year, beginning with
April 15, 1989, the Servicer shall cause Peat Marwick Main & Co. or another firm
of nationally recognized independent public accountants (who may also render
other services to the Servicer or JCPR) to furnish a report covering the
preceding annual period to the effect that such accountants have applied certain
agreed-upon procedures to certain documents and records relating to the
servicing of Accounts under this Agreement, compared the information contained
in the Servicer's certificates delivered during the period covered by such
report with such documents and records and that no matters came to the attention
of such accountants that caused them to believe that such servicing was not
conducted in compliance with Sections 3.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9 and
8.8 of this Agreement, except for such exceptions as such firm shall believe to
be immaterial and such other exceptions as shall be set forth in such statement.
In addition, each report shall set forth the agreed-upon procedures performed. A
copy of such report may be obtained by any Investor Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
(b) On or before April 15 of each calendar year, beginning with
April 15, 1989, the Servicer shall cause Peat Marwick Main & Co. or another firm
of nationally recognized independent public accountants (who may also render
other services to the Servicer or JCPR) to furnish a report to the Trustee to
the effect that they have compared the mathematical calculations of each amount
set forth in the monthly certificates forwarded by the Servicer pursuant to
subsection 3.4(c) during the period covered by such report (which shall be the
period from January 1, to and including
45
December 31 of such calendar year) with the Servicer's computer reports which
were the source of such amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in agreement, except for
such exceptions as they believe to be immaterial and such other exceptions as
shall be set forth in such statement. A copy of such report may be obtained by
any Investor Certificateholder by a request in writing to the Trustee addressed
to the Corporate Trust Office.
Section 3.7 Tax Treatment. JCPR has structured this Agreement, any
Supplement and the Investor Certificates to facilitate a secured, credit-
enhanced financing on favorable terms with the intention that the Investor
Certificates will constitute indebtedness of JCPR for federal income and state
and local tax purposes; and JCPR and each Investor Certificateholder by
acceptance of its Certificate agrees to recognize and report the Investor
Certificates as indebtedness of JCPR for purposes of federal, state and local
income or franchise taxes and any other tax imposed on or measured by income,
and to report all receipts and payments relating thereto in a manner that is
consistent with such characterization.
Section 3.8 Notices to JCPenney. In the event that JCPenney is no longer
acting as Servicer, any Successor Servicer appointed pursuant to Section 10.2
shall deliver or make available to JCPenney each certificate and report required
to be prepared, forwarded or delivered thereafter pursuant to Sections 3.4, 3.5
and 3.6.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders. Each Series of Investor
Certificates shall represent Undivided Interests in the Trust, including the
benefits of any Letter of Credit issued with respect to such Series and the
right to receive the Collections and other amounts at the times and in the
amounts specified in this Article IV to be deposited in Investor Accounts for
the account of such Series or paid to the Investor Certificateholders of such
Series; provided, however, that the aggregate interest represented by such
Certificates at any time in the Principal Receivables shall not exceed an amount
equal to the Aggregate Investor Amount at such time. The Exchangeable
Certificate shall represent the remaining Undivided Interest in the Trust,
including the right to receive the Collections and other amounts at the times
and in the amounts specified in this Article IV to be paid to JCPR as Holder of
the Exchangeable
46
Certificate, provided, however, that the aggregate interest represented by such
Certificate at any time in the Principal Receivables shall not exceed the JCPR
Amount at such time and such Certificate shall not represent any interest in the
Investor Accounts or the benefits of any Letter of Credit or Repurchase Letter
of Credit, except for JCPR's right to receive interest accruing on, and
investment earnings in respect of, the Finance Charge Account and Principal
Account as provided in this Agreement, right of JCPR or the Holder of the
Exchangeable Certificate to receive payments from the Finance Charge Account and
Principal Account in accordance with subsections 4.3(c)(iii) and 4.5(e) and, if
this Agreement or any Supplement constitutes the grant of a security interest in
such property, except for the interest of JCPR in such property as a debtor for
purposes of the UCC as in effect in any state where JCPR's or the Servicer's
chief executive offices and books and records relating to the Receivables are
located.
Section 4.2 Establishment of Investor Accounts.
(a) The Collection Account. The Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Trust, or
cause to be established and maintained, with an office or branch located in the
state designated by the Servicer of a depository institution or trust company
(which may include the Trustee) organized under the laws of the United States of
America or any one of the states thereof a non-interest bearing segregated
account (the "Collection Account") bearing a designation clearly indicating that
the funds deposited therein are held in trust for the benefit of the
Certificateholders; provided, however, that at all times the certificates of
deposit, short-term deposits or commercial paper (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 depository institution or trust company
shall have a credit rating from the applicable Rating Agency of P-1, A-1 or its
equivalent, respectively, and which is a member of the FDIC or FSLIC (a
"Qualified Institution"). Pursuant to Section 3.1(b), the Servicer shall have
the revocable power to withdraw funds from the Collection Account for the
purposes of carrying out its duties hereunder.
(b) The Finance Charge Account and Principa1 Account. The Trustee,
for the benefit of the Investor Certificateholders, shall establish and maintain
in the name of the Trust, with an office or branch of a Qualified Institution,
two segregated trust accounts (the "Finance Charge Account" and the "Principal
Account," respectively), bearing a designation clearly indicating that the funds
therein are held for the benefit of the Investor Certificateholders. Pursuant to
authority granted to it hereunder, the Servicer shall have the revocable power
to instruct the Trustee to withdraw funds from the Finance Charge Account and
Principal Account for the
47
purpose of carrying out the Servicer's duties hereunder. The Principal Account
and the Finance Charge Account shall be book-entry accounts of the Trustee;
provided that the Qualified Institution at all times shall maintain accurate
records reflecting each transaction in the Principal Account and the Finance
Charge Account and shall provide copies of such records to the Trustee and that
funds held therein shall at all times be held in trust for the benefit of the
Investor Certificateholders.
(c) The Distribution Account. The Trustee, for the benefit of the
Investor Certificateholders, shall cause to be established and maintained in the
name of the Trust, with an office or branch of a Qualified Institution, a non-
interest bearing segregated demand deposit account (the "Distribution Account")
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Investor Certificateholders. The Paying
Agent shall have the revocable authority to make withdrawals from the
Distribution Account.
(d) Administration of the Investor Accounts. Funds on deposit in the
Principal Account and the Finance Charge Account shall at all times be invested
in Permitted Investments for the benefit of JCPR; provided, that any such
investment shall mature and such funds shall be available for withdrawal on or
prior to the Transfer Date following the Record Date occurring in the Monthly
Period in which such funds were processed for collection. The Qualified
Institution which maintains such Accounts shall maintain for the benefit of the
Investor Certificateholders and the Servicer possession of the negotiable
instruments or securities evidencing the Permitted Investments described in
clause (a) of the definition thereof from the time of purchase thereof until the
time of sale or maturity. At the end of each month, all interest and earnings
(net of losses and investment expenses) on funds on deposit in the Principal
Account and the Finance Charge Account shall be deposited in a separate deposit
account with a Qualified Institution in the name of JCPR, which shall not
constitute a part of the Trust, or shall otherwise be turned over by the Trustee
to JCPR not less frequently than monthly. Subject to the restrictions set forth
above, JCPR shall have the authority to instruct the Qualified Institution with
respect to the investment of funds on deposit in the Principal Account and the
Finance Charge Account. For purposes of determining the availability of funds
or the balances in the Finance Charge Account and the Principal Account for any
reason under this Agreement, all investment earnings on such funds shall be
deemed not to be available or on deposit. Schedule 2, which is hereby
incorporated into and made a part of this Agreement, identifies each of the
Collection Account and the Investor Accounts by setting forth the account number
of such account, the account designation of such account and the name of the
institution with which such account has been established.
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Section 4.3 Collections and Allocations.
(a) Collections. The Servicer shall deposit all Collections in
the Collection Account as promptly as possible after the Date of Processing of
such Collections, but in no event later than the second Business Day following
such Date of Processing; provided, however, that for so long as, and only so
long as (i) JCPenney is the Servicer, (ii) the short term debt rating of
JCPenney is not reduced below A-1/P-1 by either Rating Agency; and (iii) there
is no Servicer Default under Section 10.1, JCPR may, in its discretion, permit
the Servicer to retain Collections and not deposit them in the Collection
Account until the next Collections Deposit Day, at which time such Collections,
netted as provided in subsection 4.3(d), shall be deposited in the Collection
Account; provided, further, however, that JCPR may not permit the Servicer to
retain Collections and the Servicer will be required to make daily deposits of
Collections to the Collection Account in accordance with this subsection 4.3(a)
for a period of five consecutive Business Days commencing within 30 days before
or after each anniversary of the Initial Closing Date.
The Servicer shall, as described in subsection 4.3(c), withdraw the
required amounts from the Collection Account and deposit such amounts into the
Principal Account or the Finance Charge Account or pay such amounts to the
Holder of the Exchangeable Certificate or to the other persons entitled thereto
pursuant to this Agreement. The Servicer shall make such deposits or payments
on the date indicated therein, if applicable, by wire transfer in next day
funds.
(b) Allocations Among Series. Prior to the close of business on the
day any Collections are deposited in the Collection Account, the Servicer shall:
(i) determine the portion allocable to each Series of the
aggregate amount of Collections processed in respect of Finance Charge
Receivables on such day (the "Daily Series Finance Charge Allocation"),
which portion shall be equal to the product of (A) the aggregate amount of
such Collections in respect of Finance Charge Receivables, multiplied by
(B) the Investor Percentage of such Series applicable to Finance Charge
Receivables as of such day; and
(ii) determine the portion allocable to each Series of the
aggregate amount of Collections processed in respect of Principal
Receivables on such day (the "Daily Series Principal Allocation"), which
49
portion shall be equal to the product of (A) the aggregate amount of such
Collections in respect of Principal Receivables, multiplied by (B) the
Investor Percentage of such Series applicable to Principal Receivables as
of such day.
(c) Allocations and Payments. The Servicer shall, prior to the close
of business on the day any Collections are deposited in the Collection Account,
pay or deposit the following amounts as set forth below, except as provided in
subsection 4.3(f):
(i) For each Series in its Revolving Period:
(A) Allocate to, and deposit in the Finance Charge Account
for the account of the applicable Series, an amount equal to the Daily
Series Finance Charge Allocation for such Series for such day; and
(B) Allocate and pay to JCPR an amount equal to the Daily
Series Principal Allocation for such Series for such day;
(ii) For each Series in its Amortization Period:
(A) Allocate to, and deposit in the Finance Charge Account
for the account of the applicable Series, an amount equal to the Daily
Series Finance Charge Allocation for such Series for such day; and
(B) Allocate to, and deposit in the Principal Account for
the account of the applicable Series, an amount equal to the Daily Series
Principal Allocation for such Series for such day;
(iii) For the Exchangeable Certificate: Throughout the existence
of the Trust, the Servicer shall pay to the Holder of the Exchangeable
Certificate an amount equal to the product of (A) the applicable JCPR
Percentage and (B) the aggregate amount of such Collections deposited in
the Collection Account in respect of Principal Receivables and Finance
Charge Receivables, respectively, on such day.
(d) Net Payments. So long as JCPenney is the Servicer and JCPenney,
as Servicer, is making deposits to the Collection Account in accordance with the
first proviso to subsection 4.3(a), JCPenney, acting as Servicer and as agent
for
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JCPR, may make a net payment to the Collection Account on the Collections
Deposit Day in the amount of all Collections received by JCPenney since the
previous Collections Deposit Date, minus all amounts payable to JCPenney or JCPR
on or before the next succeeding Transfer Date in accordance with subsection
4.3(c) and subsections 4.5(d) and (e) and, in such event, JCPenney will, on the
Collections Deposit Date, retain, or pay to JCPR, as the case may be, all
amounts payable to JCPenney or JCPR as aforesaid in lieu of the payments
required to be made under said subsections.
(e) Investor Net Recoveries. On each Determination Date, the Servicer
shall calculate with respect to each Series the Investor Net Recoveries for such
Series, if any, for the Monthly Period next preceding such Determination Date.
On or before the Transfer Date next following such Determination Date, (i) with
respect to each Series in its Amortization Period, the Servicer shall transfer
the amount of Investor Net Recoveries, if any, for each such Series from the
amount on deposit in the Principal Account for the account of such Series to the
Finance Charge Account for the account of such Series and (ii) for each Series
in its Revolving Period, JCPR shall deposit the amount of Investor Net
Recoveries, if any, for each such Series in the Finance Charge Account for the
account of such Series. If JCPR shall fail to make such deposit in full, the
Servicer shall deposit any deficiency on behalf of JCPR and shall be entitled to
deduct the amount of such deposit from future payments to JCPR hereunder.
(f) Reallocation of Collections. (i) No payment may be made in
respect of Collections of Principal Receivables or Finance Charge
Receivables to JCPR pursuant to Section 4.3(c)(i)(B) or to the Holder of
the Exchangeable Certificate pursuant to Section 4.3(c)(iii) if the JCPR
Amount is zero or to the extent any payment in respect of Principal
Receivables would be greater than the JCPR Amount.
(ii) If any amount is not paid to JCPR or to the Holder of the
Exchangeable Certificate pursuant to the preceding clause (i), then on the
Date of Processing on which such payment is not made, in respect of the
amount of Collections of Finance Charge Receivables and Principal
Receivables not so paid on such day, and on each remaining Date of
Processing in such Monthly Period, the Investor Percentage of each
outstanding Series and the JCPR Percentage shall be determined by
substituting as the denominator of the fraction used to determine the
Investor Percentage of each such Series the greater of (A) the aggregate
amount of Principal Receivables as of the end of such day or (B) the
Aggregate Investor Amount as of the end of such day. The Investor
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Percentages and JCPR Percentages so determined shall be used in applying
the provisions of this Section 4.3 on each such Date of Processing.
(iii) Payments which would be made to JCPR pursuant to
subsection 4.3(c)(i)(B) but for the operation of subsection 4.3(f)(i) shall
be retained in the Collection Account and (A) so long as a Pay Out Event
shall not have occurred with respect to one or more particular Series, the
amounts retained in respect of such Series shall be paid to JCPR pursuant
to such subsection 4.3(c)(i)(B) as and to the extent such payment is
permitted under clauses (i) and (ii) of this subsection 4.3(f) or (B) if a
Pay Out Event shall have occurred with respect to one or more particular
Series, the amounts retained in respect of such Series shall be applied as
if such amounts had been Collections in respect of Principal Receivables
processed on the applicable Pay Out Commencement Date.
Section 4.4 Defaulted Accounts.
(a) On each Determination Date, the Servicer shall calculate with
respect to each Series the Investor Default Amount for such Series, if any, for
the Monthly Period next preceding such Determination Date.
(b) If on any Transfer Date the Investor Default Amount with
respect to any Series for the Monthly Period next preceding such Transfer Date
exceeds the sum of (a) such Series' Finance Charge Collections remaining after
giving effect to the withdrawal pursuant to subsection 4.5(a) on such Transfer
Date plus (b) (i) the Available L/C Amount, if any, for the Letter of Credit
relating to such Series as of the last day of the preceding month minus (ii) the
amount of drawings, if any, made or to be made pursuant to subsection 4.5(a)
under such Letter of Credit on the Drawing Date occurring during the Monthly
Period in which such Determination Date occurs, the Investor Amount for such
Series shall be reduced by the amount of such excess (an "Investor Charge Off").
Investor Charge Offs may be reimbursed only pursuant to subsection 4.5(c).
Section 4.5 Monthly Payments. On each Determination Date, the Servicer
shall instruct the Trustee to withdraw and the Trustee, acting in accordance
with such instructions, shall withdraw on the succeeding Transfer Date the
amounts required to be withdrawn from the Finance Charge Account pursuant to
subsections 4.5(a), (b), (c), (d) and (e). On each Determination Date, the
Servicer shall also notify the Trustee
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of the amounts to be drawn by the Servicer under the Letters of Credit with
respect to each Series pursuant to subsections 4.5(a), (b), (c) and (d) on the
first Business Day prior to the succeeding Transfer Date (a "Drawing Date"),
specifying in such notice the aggregate amount of the drawing to be made on such
Drawing Date. Each such instruction and notice required by this Section 4.5
shall be in substantially the form of Exhibit I hereto.
(a) Current Certificate Interest with respect to each Series. With
respect to each Series, on each Transfer Date, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw from the Finance Charge
Account to the extent funds were available from Collections processed during the
preceding Monthly Period and deposited for the account of such Series pursuant
to subsection 4.3(c) or 4.3(e) (with respect to each Series, "Finance Charge
Collections"), (i) first an amount equal to interest at the Certificate Rate for
such Series for the Monthly Period ended prior to such Transfer Date on the
Adjusted Investor Amount for such Series determined as of the opening of
business on the first day of such Monthly Period, and (ii) then, an amount equal
to the amount of any unpaid Deficiency Amounts with respect to such Series, as
defined below, and on such Transfer Date the Trustee shall deposit such funds
into the Distribution Account for payment to the Certificateholders of such
Series. If the Finance Charge Collections with respect to such Series would be
less than the amount required to be deposited pursuant to this subsection
4.5(a), on the Drawing Date preceding such Transfer Date the Servicer shall make
a drawing under each Letter of Credit relating to such Series, if any, in the
amount of such deficiency (up to the Available L/C Amount) and on the related
Transfer Date the proceeds from such drawings shall be deposited into the
Distribution Account for the benefit of such Series. If the amounts described in
this subsection 4.5(a) are insufficient to pay such interest to any Series in
respect of any Monthly Period, payments to the Certificateholders of such Series
will be reduced by the amount of such deficiency. The amount, if any, of such
deficiency for any month shall be referred to as the "Deficiency Amount," with
respect to such Series. Interest shall not accrue on Deficiency Amounts.
(b) Defaults with respect to each Series. With respect to each
Series, on each Transfer Date, after giving effect to the withdrawal pursuant to
subsection 4.5(a), the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from such Series' Finance Charge Collections an amount
equal to the Investor Default Amount for such Series, if any, for the preceding
Monthly Period (less the aggregate amount of Investor Charge Offs in respect of
such Monthly Period) and shall (i) during the Revolving Period for such Series,
apply such amount for such Series in accordance with subsection 4.3(c)(i)(B) and
(ii) during the Amortization Period for any
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Series, deposit such amount into the Distribution Account for distribution to
the Investor Certificateholders of such Series on the Distribution Date
immediately following such Transfer Date. If such Series' Finance Charge
Collections would be less than the amount required to be deposited with respect
to such Series pursuant to this subsection 4.5(b), on the Drawing Date preceding
such Transfer Date the Servicer shall make a drawing under the Letter of Credit,
if any, relating to such Series in the amount of such deficiency relating to the
Series (up to the Available L/C Amount after giving effect to the drawing
pursuant to subsection 4.5(a)) and on the related Transfer Date the proceeds
from such drawings shall be deposited for the benefit of such Series as provided
in the next preceding sentence.
(c) Reimbursement of Investor Charge Offs with respect to each Series.
With respect to each Series, on each Transfer Date after giving effect to the
withdrawals, drawings and transfers pursuant to subsections 4.5(a) and (b), the
Trustee, acting in accordance with instructions of the Servicer, shall withdraw
from such Series' Finance Charge Collections an amount equal to the aggregate
amount of Investor Charge Offs for such Series, if any, which have not
theretofore been reimbursed pursuant to this subsection 4.5(c) and (i) shall pay
such amount for such Series during its Revolving Period in accordance with
subsection 4.3(c)(i)(B) and (ii) during the Amortization Period for such Series,
shall deposit such amount for such Series into the Distribution Account for
distribution to the Certificateholders of such Series on the Distribution Date
immediately following such Transfer Date. If such Series' Finance Charge
Collections would be less than the amount required to be deposited with respect
to such Series pursuant to this subsection 4.5(c), on the Drawing Date preceding
such Transfer Date the Servicer, shall make a drawing under the Letter of
Credit, if any, relating to such Series in the amount of such deficiency (up to
the Available L/C Amount after giving effect to the drawings pursuant to
subsections 4.5(a) and (b)) and on the related Transfer Date the proceeds from
such drawing shall be deposited as provided in the next preceding sentence. On
the date of any such reimbursement, the Investor Amount for such Series shall be
increased by the amount of such reimburse ment of Investor Charge Offs
allocated to or drawn under the Letter of Credit relating to such Series.
(d) Investor Monthly Servicing Fee and Investor Monthly Facility Fee
with respect to each Series. With respect to each Series on each Transfer Date,
after giving effect to the withdrawals pursuant to subsections 4.5(a), (b) and
(c) the Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from such Series' Finance Charge Collections an amount equal to the
Investor Monthly Servicing Fee and the Investor Monthly Facility Fee for such
Series accrued in respect of the
54
preceding Monthly Period, plus all accrued and unpaid Investor Monthly Servicing
Fees and Investor Monthly Facility Fees for such Series in respect of previous
Monthly Periods, and the Trustee shall pay such Servicing Fees to the Servicer
and such Facility Fees to JCPR. If such Series' Finance Charge Collections would
be less than the amount required to be paid to the Servicer and JCPR with
respect to such Series pursuant to this subsection 4.5(d), on the Drawing Date
preceding such Transfer Date, the Servicer shall make a drawing under the Letter
of Credit relating to such Series in the amount of the deficiency in the amount
payable in respect of Investor Monthly Servicing Fees and the Investor Monthly
Facility Fee for such Series (up to the Available L/C Amount after giving effect
to the drawings pursuant to subsections 4.5(a), (b) and (c)), and on the related
Transfer Date the proceeds from such drawing shall be paid to the Servicer and
JCPR. In the event that there are not sufficient Finance Charge Collections and
Letter of Credit drawings to pay all such fees, the shortfall shall be shared
pro rata by the Servicer and JCPR.
(e) Payments to the Letter of Credit Banks or JCPR with respect to
each Series. With respect to each Series, on each Transfer Date, after giving
effect to the withdrawals pursuant to subsections 4.5(a), (b), (c) and (d), the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw all the remaining Finance Charge Collections. The Trustee shall
transfer such funds out of the Trust to the Letter of Credit Bank, if any, for
such Series for application by such Letter of Credit Bank in accordance with the
related Letter of Credit Agreement, provided that if a Letter of Credit shall
not have been issued with respect to such Series or if, and to the extent, the
Letter of Credit Agreement shall provide for direct payment to JCPR in the
circumstances then existing, then the Trustee shall transfer such funds to JCPR.
Neither the Trustee nor the Certificateholders shall have any rights in any
funds held by the Letter of Credit Bank or paid to JCPR.
Section 4.6 Payment of Certificate Interest with respect to each Series.
With respect to each Series, on each Distribution Date, the Paying Agent shall
pay in accordance with Section 5.1 to the Certificateholders of such Series from
the Distribution Account the amount deposited into the Distribution Account for
the account of such Series pursuant to subsection 4.5(a) on the related Transfer
Date.
Section 4.7 Payment of Certificate Principal with respect to each Series.
(a) On each Determination Date, with respect to each Series in the
Amortization Period, the Servicer shall instruct the Trustee to withdraw for
such Series, and on each related Transfer Date the Trustee shall withdraw from
the Principal Account
55
and deposit in the Distribution Account for the benefit of such Series the
amount deposited for such Series in the Principal Account for the account of
such Series pursuant to subsection 4.3(c)(ii)(B) in respect of the preceding
Monthly Period or 4.3(f)(iii)(B) for the benefit of such Series; provided that
with respect to the final Transfer Date, the Trustee shall withdraw from the
amounts deposited in the Principal Account for the benefit of such Series, and
deposit into the Distribution Account for the benefit of such Series an amount
which is no greater than the Adjusted Investor Amount for each Series as of the
end of the day on the second Record Date preceding such Distribution Date.
(b) On each Distribution Date occurring after a deposit is made
pursuant to subsection 4.7(a), the Paying Agent shall pay in accordance with
Section 5.1 to the Certificateholders of each Series from the Distribution
Account, the amount deposited into the Distribution Account for the benefit of
such Series pursuant to subsections 4.5(a), (b) and (c) and 4.7(a) on the
related Transfer Date.
Section 4.8 Adjustments for Miscellaneous Credits.
(a) JCPR shall be obligated to reduce on a net basis each Monthly
Period the aggregate amount of Principal Receivables used to calculate the JCPR
Amount as provided in this Section 4.8 (a "Credit Adjustment") with respect to
any Principal Receivable (i) which was created in respect of merchandise refused
or returned by the Obligor thereunder or as to which the Obligor thereunder has
asserted a counterclaim or defense, (ii) which is reduced by the Servicer by any
rebate, refund, chargeback or adjustment, (iii) which was created through a
fraudulent or counterfeit charge, as determined and allocated to the Accounts in
the good faith judgment of the Servicer, or (iv) which was removed from an
Account and transferred to another JCPenney account which is not an Account by
reason of a request by the Obligor to change Cycles.
(b) In the event that the exclusion of the amount of a Credit
Adjustment from the calculation of the JCPR Amount would cause the JCPR Amount
to be an amount less than zero, JCPR shall make a deposit, no later than the
Business Day following the Date of Processing of such Credit Adjustment, in the
Collection Account in immediately available funds, in an amount equal to the
amount by which such Credit Adjustment exceeds the JCPR Amount on such Date of
Processing. Such deposit shall be applied in accordance with Section 4.3 and
treated as a Collection for all purposes hereof.
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Section 4.9 JCPR's or Servicer's Failure to Make a Deposit or Payment.
(a) If the Servicer or JCPR fails to make, or give instructions
to make, any payment or deposit (other than as required by subsection 2.4(e) or,
except as specifically provided in the Supplement relating to the applicable
Series, subsection 12.2(a)) required to be made or given by the Servicer or
JCPR, respectively, at the time specified in this Agreement (including
applicable grace periods), the Trustee shall make such payment from the
applicable Investor Account without instruction from the Servicer or shall make
a drawing under the appropriate Letter of Credit (on the basis of the amount of
any such payment or deposit allocable to the Series supported by such Letter of
Credit) in an amount equal to the amount of such payment or deposit. The
Servicer shall, upon request of the Trustee, promptly provide the Trustee with
all information necessary to allow the Trustee to make such a payment or
drawing. Such funds or the proceeds of such drawing shall be applied by the
Trustee in the manner in which such payment or deposit should have been made by
JCPR or the Servicer, as the case may be.
(b) If a drawing is made pursuant to subsection 4.9(a) because of
a failure of the Servicer or JCPR to make, or give instructions to make, any
payment or deposit required to be made or given by the Servicer or JCPR from
sources other than a draw under the Letter of Credit, the Servicer or JCPR, as
the case may be, shall, as appropriate, make the required payment, deposit or
transfer or give the Trustee instructions to transfer the required payment or
deposit in respect of which such drawing was made to the appropriate Letter of
Credit Bank on the basis of amounts drawn.
Section 4.10 Letter of Credit. JCPR hereby represents that, and to the
extent provided in the applicable Supplement, (a) the Letter of Credit, if any,
and Repurchase Letter of Credit, if any, for each Series will be obtained by it
or on its behalf and payable to the Trustee for the benefit of the
Certificateholders of such Series, (b) it has entered or will enter into the
Letter of Credit Agreement for each Series, if any, and (c) each Letter of
Credit and Repurchase Letter of Credit, respectively, permits or will permit the
Trustee or the Servicer acting as the Trustee's attorney-in-fact to make
drawings or otherwise receive payments from time to time in an amount up to the
Available L/C Amount for such Letter of Credit at such time, and the Repurchase
L/C Amount for such Repurchase Letter of Credit, respectively, for the purposes
set forth in this Agreement and the applicable Supplement. As compensation for
arranging for Letters of Credit and Repurchase Letters of Credit or for
arranging other forms of credit enhancement hereunder from time to time, JCPR
shall be entitled to receive a monthly facility fee in respect of any Monthly
Period (or portion thereof) prior to the termination of the Trust
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pursuant to Section 12.1, payable in arrears on each Transfer Date in an amount
equal to the total for all Series of the following amount calculated for each
Series: 1/12th of the product of (A) the Facility Fee Percentage for such
Series, and (B) the Adjusted Investor Amount for such Series on the first day of
such Monthly Period or on the Closing Date for such Series, as the case may be
(in the aggregate, the "Monthly Facility Fee" and, with respect to such Series,
the "Investor Monthly Facility Fee"), which fees shall be paid to JCPR pursuant
to Section 4.5. In the case of the Monthly Period in which a Closing Date
occurred for any Series, the Monthly Facility Fee and the Investor Monthly
Facility Fee with respect to such Series shall accrue from the date interest
first begins to accrue with respect to such Series.
ARTICLE V
DISTRIBUTIONS AND REPORTS
TO INVESTOR CERTIFICATEHOLDERS
Section 5.1 Distributions. On each Distribution Date, the Paying Agent
shall distribute (in accordance with the certificate delivered by the Servicer
to the Trustee pursuant to subsection 3.4(c)) to each Investor Certificateholder
of record of any Series on the preceding Record Date (other than as provided in
Section 2.4 or in Section 12.3 hereof respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided Interests
represented by Investor Certificates of such Series held by such
Certificateholder) of amounts on deposit in the Distribution Account as are
payable to the Investor Certificateholders of such Series pursuant to Sections
4.6 and 4.7 hereof by check mailed to each Certificateholder, except that with
respect to Certificates registered in the name of the nominee of a Clearing
Agency, such distribution shall be made in immediately available funds.
Section 5.2 Monthly Certificateholders' Statement. (a) On each
Distribution Date, the Paying Agent shall forward to each Certificateholder of
any Series, and any applicable Rating Agency a statement substantially in the
form of Exhibit J prepared by the Servicer setting forth the following
information (which, in the case of (i), (ii) and (iii) below, shall be stated on
the basis of an original principal amount of $1,000 per Certificate of each
Series and, in the case of (ix) and (x) shall be stated on an aggregate basis
and on the basis of an original principal amount of $1,000 per Certificate of
such Series):
(i) the total amount distributed to such Series;
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(ii) the amount of such distribution allocable to Certificate
Principal of such Series;
(iii) the amount of such distribution allocable to Certificate
Interest of such Series;
(iv) the aggregate amount of Collections of Principal
Receivables processed during the preceding Monthly Period and allocated in
respect of the Investor Certificates of such Series;
(v) the aggregate amount of Collections of Finance Charge
Receivables and Net Recoveries, if any, processed during the preceding
Monthly Period and allocated in respect of Investor Certificateholders of
such Series;
(vi) the aggregate amount of Principal Receivables, the
Investor Amount and the Investor Amount as a percentage of the aggregate
amount of the Principal Receivables in the Trust as of the end of the day
on the last day of the preceding month for such Series;
(vii) the aggregate outstanding balance of Accounts which are
one, two, three, four, five and six or more months delinquent as of the end
of the day on the last day of the preceding month;
(viii) the Investor Default Amount for such Series for the
preceding Monthly Period;
(ix) the aggregate amount of Investor Charge Offs for such
Series for the preceding Monthly Period;
(x) the aggregate amount of Investor Charge Offs for such
Series reimbursed on the Transfer Date immediately preceding such
Distribution Date;
(xi) the amount of the Investor Monthly Servicing Fee for such
Series for the preceding Monthly Period;
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(xii) the amount of any Investor Monthly Facility Fee for
such Series for the preceding Monthly Period;
(xiii) the Available L/C Amount for such Series, if any, as of
the close of business on such Distribution Date;
(xiv) the Pool Factor for such Series; and
(xv) any other information specified in the Supplement with
respect to such Series.
(b) Annual Certificateholders' Tax Statement. On or before
January 31 of each calendar year, beginning with calendar year 1989, JCPR shall
furnish to each Person who at any time during the preceding calendar year was an
Investor Certificateholder a statement prepared by the Servicer containing the
information required to be contained in the regular monthly report to Investor
Certificateholders, as set forth in subclauses (i), (ii) and (iii) above
aggregated for such calendar year or the applicable portion thereof during which
such Person was an Investor Certificateholder, together with such other
customary information (consistent with the treatment of the Certificates as
debt, as provided in Section 3.7 hereof) as the Trustee or the Servicer deems
necessary or desirable to enable the Investor Certificateholders to prepare
their tax returns. Such obligations of JCPR shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by JCPR pursuant to any requirements of the Internal Revenue Code, as
from time to time in effect.
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. The Investor Certificates of each Series
and the Exchangeable Certificate shall be substantially in the form of Exhibits
A and B, respectively, and shall, upon issue, be executed and delivered by JCPR
to the Trustee for authentication and redelivery as provided in Sections 2.1,
6.2, 6.11 and 6.12. The Investor Certificates shall be issuable in a minimum
denomination of $1,000 Undivided Interest and integral multiples thereof and
shall be issued upon initial issuance of any Series as a single Certificate in
an original principal amount equal to the Initial Investor Amount for such
Series. The Exchangeable Certificate shall be issued in one Certificate. Each
Certificate shall be executed by manual or facsimile signature on
60
behalf of JCPR by an authorized officer of JCPR. Certificates bearing the manual
or facsimile signature of the individual who was, at the time when such
signature was affixed, authorized to sign on behalf of JCPR or the Trustee shall
not be rendered invalid, notwithstanding that such individual has ceased to be
so authorized prior to the authentication and delivery of such Certificates or
does not hold such office at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement or any applicable Supplement, or
be valid for any purpose, unless there appears on such Certificate a certificate
of authentication substantially in the form provided for herein executed by or
on behalf of the Trustee by the manual signature of a duly authorized signatory,
and such certificate upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Section 6.2 Authentication of Certificates. Contemporaneously with the
transfer of the Receivables, whether now existing or hereafter created (other
than Receivables in Additional Accounts) and the other components to the Trust,
the Trustee shall authenticate and deliver the Investor Certificate for the
initial Series issued hereunder, upon the order of JCPR, to the managing
underwriter for the sale of the Book-Entry Certificates evidenced by such
Investor Certificate, and against payment to JCPR of the Initial Investor Amount
for such Series (net of any purchase discount or underwriting discounts). The
Trustee shall deliver the Exchangeable Certificate to JCPR simultaneously with
its delivery to JCPR of the Investor Certificate for such Series. The
Certificates shall be duly authenticated by or on behalf of the Trustee, in
authorized denominations equal to (in the aggregate) in the case of the Investor
Certificates, the Initial Investor Amount for such Series, and, in the case of
the Exchangeable Certificate, in a denomination equal to the JCPR Amount from
time to time, and together evidencing the entire ownership of the Trust as of
the Initial Closing Date.
Section 6.3 Registration of Transfer and Exchange of Certificates. (a)
The Trustee shall cause to be kept at the office or agency to be maintained by a
transfer agent and registrar (the "Transfer Agent and Registrar") in accordance
with the provisions of Section 11.16 a register (the "Certificate Register") in
which, subject to such reasonable regulations as it may prescribe, the Transfer
Agent and Registrar shall provide for the registration of the Investor
Certificates and of transfers and exchanges of the Investor Certificates as
herein provided. The Trustee is hereby initially appointed Transfer Agent and
Registrar for the purpose of registering the Investor Certificates and transfers
and exchanges of the Investor Certificates as herein provided. The Trustee
shall be permitted to resign as Transfer Agent and Registrar upon 30 days
written notice to
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JCPR. In the event that the Trustee shall no longer be the Transfer Agent and
Registrar, the Trustee shall appoint a successor Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Investor Certificate at
any office or agency of the Transfer Agent and Registrar maintained for such
purpose, JCPR shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Investor
Certificates in authorized denominations of like aggregate Undivided Interests
and Series.
At the option of an Investor Certificateholder, Investor Certificates may
be exchanged for other Investor Certificates of the same Series and authorized
denominations of like Undivided Interests, upon surrender of the Investor
Certificates to be exchanged at any such office or agency. Whenever any
Investor Certificates are so surrendered for exchange, JCPR shall execute, and
the Trustee shall authenticate and deliver, the Investor Certificates which the
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form satisfactory
to the Trustee and the Transfer Agent and Registrar duly executed by the
Certificateholder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Investor
Certificates.
All Investor Certificates surrendered for registration of transfer and
exchange shall be cancelled and disposed of in a manner satisfactory to JCPR and
the Trustee.
(b) It is the understanding of the parties to this Agreement that
JCPenney has particular expertise in performing the functions given by this
Agreement to the Servicer and that the Investor Certificateholders will be
purchasing Certificates relying on JCPenney's exercising such expertise in
performing such functions. As provided in Sections 8.5 and 8.7, the Servicer is
not permitted to resign, except as otherwise permitted in such sections, and the
parties understand that the Servicer's performance of its servicing functions
and the quality of the Receivables will best be ensured if JCPR or JCPenney
retains the Exchangeable Certificate. Accordingly, except as provided in
Section 7.2, the Exchangeable Certificate, or any interest therein, shall not be
transferred, assigned, exchanged, or otherwise transferred other than from JCPR
to JCPenney.
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(c) The Transfer Agent and Registrar will maintain at its expense
in the Borough of Manhattan, The City of New York, an office or offices or
agency or agencies where Investor Certificates may be surrendered for
registration of transfer or exchange.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Transfer Agent and Registrar, or
JCPR and the Transfer Agent and Registrar receives evidence to each of its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
is delivered to JCPR, the Transfer Agent and Registrar and the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee that such Certificate has been
acquired by a bona fide purchaser, JCPR shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
aggregate Undivided Interest. In connection with the issuance of any new
Certificate under this Section 6.4, the Trustee or the Transfer Agent and
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Transfer Agent
and Registrar) connected therewith. Any duplicate Certificate issued pursuant
to this Section 6.4 shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, JCPR and the Trustee, the Paying
Agent, the Transfer Agent and Registrar and any agent of any of them may treat
the person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 5.1
and for all other purposes whatsoever, and neither JCPR and the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary; provided, however, that in
determining whether the holders of Investor Certificates evidencing the
requisite Undivided Interests have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Investor Certificates owned by
JCPR, the Servicer or any Affiliate thereof shall be disregarded and deemed not
to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Investor Certificates which a Responsible
Officer in the Corporate Trust Office of the Trustee knows to be so owned shall
be so disregarded. Investor Certificates so owned which have
63
been pledged in good faith shall not be disregarded and may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Investor Certificates and that
the pledgee is not JCPR, the Servicer or an Affiliate thereof.
Section 6.6 Appointment of Paying Agent. (a) The Paying Agent shall
make distributions to Investor Certificateholders of each Series from the
Distribution Account pursuant to Section 5.1. Any Paying Agent shall have the
revocable power to withdraw funds from the Distribution Account for the purpose
of making distributions referred to above. The Trustee may revoke such power
and remove the Paying Agent, if the Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be the
Trustee. The Trustee shall be permitted to resign as Paying Agent upon 30 days'
written notice to JCPR. In the event that the Trustee shall no longer be the
Paying Agent, the Trustee shall appoint a Qualified Institution to be successor.
Each Paying Agent must be acceptable to JCPR. The provisions of Sections 11.1,
11.2 and 11.3 shall apply to the Trustee also in its role as Paying Agent, for
so long as the Trustee shall act as Paying Agent.
(b) The Trustee shall cause the Paying Agent (other than itself)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums, if any,
hold by it for payment to the Investor Certificateholders in trust for the
benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders and shall agree, and if the Trustee is
the Paying Agent it hereby agrees, that it shall comply with all requirements of
the Internal Revenue Code regarding the withholding of payments in respect of
federal income taxes due from Certificate Owners by the Trustee.
Section 6.7 Access to List of Certificateholders' Names and Addresses. The
Trustee will furnish or cause to be furnished by the Transfer Agent and
Registrar to JCPR or the Paying Agent, within five Business Days after receipt
by the Trustee of a request therefor from JCPR or the Paying Agent,
respectively, in writing, a list in such form as the JCPR or the Paying Agent
may reasonably require, of the names and addresses of the Investor
Certificateholders as of the most recent Record Date for payment of
distributions to Investor Certificateholders. If Holders of Investor
Certificates (the "Applicants") evidencing Undivided Interests aggregating not
less than 5% of the Aggregate Investor Amount apply in writing to the Trustee,
and such application states that the Applicants desire to communicate with other
Investor
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Certificateholders with respect to their rights under this Agreement or under
the Investor Certificates and is accompanied by a copy of the communication
which such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses, shall
afford or shall cause the Transfer Agent and Registrar to afford such Applicants
access during normal business hours to the most recent list of
Certificateholders held by the Trustee and shall give the Servicer notice that
such request has been made, within five Business Days after the receipt of such
application. Such list shall be as of a date no more than 45 days prior to the
date of receipt of such Applicants' request. Every Certificateholder, by
receiving and holding a Certificate, agrees with the Trustee that neither the
Trustee, the Transfer Agent and Registrar, nor any of their respective agents
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Certificateholders hereunder, regardless of
the source from which such information was obtained.
Section 6.8 Authentication Agent. (a) The Trustee may appoint one or
more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of Certificates. Whenever reference is made in this Agreement to the
authentication of Certificates by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and a certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be acceptable to JCPR.
(b) Any institution succeeding to the corporate agency business of
an authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to JCPR. The Trustee may at any
time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to JCPR. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the Trustee or JCPR, the
Trustee promptly may appoint a successor authenticating agent. Any successor
authenticating agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an authenticating agent.
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No successor authenticating agent shall be appointed unless acceptable to the
Trustee and JCPR.
(d) The Trustee agrees to pay each authenticating agent from time to
time reasonable compensation for its services under this Section 6.8, and the
Trustee shall be entitled to be reimbursed and JCPR shall reimburse the Trustee
for such reasonable payments actually made, subject to the provisions of Section
11.5.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be applicable
to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
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This is one of the Certificates described in the Pooling and Servicing
Agreement.
_________________________
_________________________
as Authenticating Agent
for the Trustee,
By: ______________________
Authorized Office
Section 6.9 Book-Entry Certificates for any Series. As provided in any
Supplement, the Investor Certificates of each Series, upon original issuance,
may be issued in the form of a single typewritten Certificate representing the
Book-Entry Certificates, to be delivered to The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, JCPR. Such Investor Certificates
shall initially be registered on the Certificate Register in the name of CEDE &
Co., the nominee of the Clearing Agency, and no Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
Investor Certificates, except as provided in Section 6.11. Unless and until
definitive, fully registered Investor Certificates (the "Definitive
Certificates") have been issued to Certificate Owners of such Series pursuant to
Section 6.11:
(i) the provisions of this Section 6.9 shall be in full force
and effect;
(ii) JCPR, the Servicer, the Paying Agent, the Transfer Agent
and Registrar and the Trustee may deal with the related Clearing Agency and
the related Clearing Agency Participants for all purposes (including the
making of distributions on the Investor Certificates) as the authorized
representatives of such Certificate Owners;
(iii) with respect to such Series, to the extent that the
provisions of this Section 6.9 conflict with any other provisions of this
Agreement or any applicable Supplement, the provisions of this Section 6.9
shall control; and
(iv) the rights of Certificate Owners of such Series shall be
exercised only through such Clearing Agency and such Clearing
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Agency Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Depository Agreement,
unless and until Definitive Certificates are issued pursuant to Section
6.11, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Investor Certificates to such Clearing
Agency Participants.
Section 6.10 Notices to Clearing Agency of any Series.
Whenever notice or other communication to the Certificateholders is
required under this Agreement or any Supplement, unless and until Definitive
Certificates shall have been issued to Certificate Owners of any Series pursuant
to Section 6.11, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Investor Certificates to the
Clearing Agency.
Section 6.11 Definitive Certificates for any Series Initially Issued as
Book-Entry Certificates.
If (i)(A) JCPR advises the Trustee in writing that the Clearing Agency of
any Series is no longer willing or able properly to discharge its
responsibilities under the related Depository Agreement, and (B) the Trustee or
JCPR is unable to locate a qualified successor, (ii) JCPR, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through such Clearing Agency with respect to one or more Series or (iii) after
the occurrence of a Servicer Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Investor Amount of such Series
advise the Trustee and the related Clearing Agency through the related Clearing
Agency Participants in writing that the continuation of a book-entry system
through such Clearing Agency is no longer in the best interests of the
Certificate Owners, the Trustee shall notify all Certificate Owners of the
applicable Series through such Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Certificates of such Series to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Investor Certificates of such Series by the related Clearing Agency, accompanied
by registration instructions from the related Clearing Agency for registration,
the Trustee shall issue the Definitive Certificates for such Series. Neither
JCPR nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of such Definitive Certificates all
references herein to
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obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates of such Series and the Trustee
shall recognize the Holders of the Definitive Certificates of such Series as
Certificateholders hereunder.
Section 6.12 Delivery of Exchangeable Certificate, etc.
(a) Upon any Exchange, the Trustee shall issue to JCPR under
Section 6.1 for execution and redelivery to the Trustee for authentication under
Section 6.2 one or more Series of Investor Certificates. Any such Series of
Investor Certificates shall be substantially in the form of Exhibit A and shall
bear, upon its face, the designation for such Series to which it belongs so
selected by JCPR. All Investor Certificates of a particular Series shall be
identical in all respects except for the denominations thereof and shall be
equally and ratably entitled as provided herein to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Agreement and the applicable Supplement.
(b) JCPR may deliver the Exchangeable Certificate to the Trustee
in exchange for (i) one or more newly issued Series of Investor Certificates and
(ii) a reissued Exchangeable Certificate (any such delivery, an "Exchange").
JCPR may perform an Exchange by notifying the Trustee, in writing, at least five
Business Days in advance (an "Exchange Notice") of the date upon which the
Exchange is to occur (an "Exchange Date"). Any Exchange Notice shall state the
designation of any Series to be issued on the Exchange Date and, with respect to
each such Series: (a) its Initial Investor Amount which, in the aggregate, may
not be greater than the current principal amount of the Exchangeable
Certificate, (b) its Certificate Rate and (c) the Letter of Credit Bank, if any,
and Repurchase Letter of Credit Bank, if any, which is expected to provide
credit enhancement with respect to it. On the Exchange Date, the Trustee shall
issue any such Series upon delivery to it of the following:
(a) a Supplement in form satisfactory to the Trustee executed by
JCPR and JCPenney and specifying the Principal Terms of such Series,
(b) the applicable Letter of Credit, if any, and Repurchase
Letter of Credit, if any,
(c) if any Series is outstanding that has been rated by a Rating
Agency, the Trustee shall have received, with respect to each such Series
the written
69
advice of each such Rating Agency that the issuance of such new Series will
not result in such Rating Agency's reducing or withdrawing its rating of
such outstanding Series, or if no Series is outstanding that has been rated
by a Rating Agency, the Trustee shall have received a letter from a
nationally recognized investment banking firm stating, in substance, that
the issuance of such new Series should not have an adverse effect on the
timing or amount of payments to the Holders of any Series then outstanding
or, if they would have such an adverse effect on any Series, that such
adverse effect is permitted by the terms of the Supplement pursuant to
which the adversely affected Series was issued,
(d) an Officer's Certificate of JCPR stating that the issuance
of such Series pursuant to the Exchange on the Exchange Date shall not, in
the reasonable belief of JCPR, cause a Pay Out Event, or an event which
with notice or lapse of time or both would constitute a Pay Out Event, with
respect to any Series to occur,
(e) an Opinion of Counsel to the effect that the Investor
Certificates issued pursuant to the Exchange should be treated as debt for
federal income tax purposes,
(f) a Letter of Credit Agreement, if any, executed by JCPR and
the Letter of Credit Bank, and
(g) the existing Exchangeable Certificate, to the Trustee.
Upon satisfaction of such conditions, the Trustee shall cancel the existing
Exchangeable Certificate and issue, as provided above, such Series of Investor
Certificates and a new Exchangeable Certificate dated the Exchange Date.
(c) In conjunction with the issuance of the first Series of
Certificates on the date hereof and hereafter in conjunction with an Exchange,
the parties hereto shall execute a Supplement. Any Supplement shall be
substantially in the form of Exhibit C and shall specify, with respect to any
Series of Investor Certificates:
(i) its name or designation;
(ii) an Initial Investor Amount;
70
(iii) a Certificate Rate (or formula for the determination
thereof);
(iv) an Amortization Commencement Date;
(v) the Servicing Fee Percentage;
(vi) the Letter of Credit Bank, if any;
(vii) the Stated L/C Amount, if any;
(viii) a Mandatory Repurchase Amount and Optional Repayment
Percentage, if any;
(ix) the Repurchase Letter of Credit Bank, if any;
(x) the Repurchase L/C Amount, if any;
(xi) the Base Rate;
(xii) the percentages, if any, applicable to such Series
pursuant to subsections 9.1(h) and 9.1(i);
(xiii) the Facility Fee Percentage, if any;
(xiv) any additional terms relating to the acquisition or
full payment of such Series of Investor Certificates;
(xv) the Final Maturity Date;
(xvi) the Minimum JCPR Percentage;
(xvii) the extent to which, and terms upon which, if any,
any portion of the payments, to be made to JCPR pursuant to subsection
4.3(c)(i)(B) or the Holder of the Exchangeable Certificate pursuant to
subsection 4.3(c)(iii) shall be made available for distribution to the
Certificateholders of such Series; and
71
(xviii) any other relevant terms permitted hereby, including,
without limitation,
(A) the method of determining the Investor Percentages
(which need not be the same at all times such Series is outstanding and
which may vary as among Principal Receivables, Finance Charge Receivables,
Receivables in Defaulted Accounts and other items) applicable to such
Series and any one or more other Series then outstanding, to the extent
permitted hereunder or permitted in the Supplement under which such
outstanding Series was created, or issued thereafter,
(B) the method of allocating and paying Collections of
items allocable to such Series among JCPR, the Certificateholders of such
Series or any other Person or among such Series and any one or more other
Series then outstanding, to the extent permitted hereunder or permitted in
the Supplement under which such outstanding Series was created, or issued
thereafter,
(C) provisions creating different or additional security
(including Letters of Credit and other credit enhancement facilities) for
the payment of such Series,
(D) provisions subordinating such Series to other Series,
stating that such Series shall be senior to one or more other Series (but
only to the extent the Supplement under which such other Series was created
stated that such Series may be made subordinate) or subordinating all or a
portion of the JCPR Amount to one or more Series, and
(E) any other amendment or supplement to any term hereof
which is explicitly made applicable only to the Series designated in such
Supplement
(all such terms, the "Principal Terms" of such Series). JCPR shall also specify
in such Supplement the Person or Persons to whom the authenticated Series of
Certificates shall be delivered by the Trustee and the amount of any payment
therefor.
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ARTICLE VII
OTHER MATTERS RELATING
TO JCPR
Section 7.1 Liability of JCPR. JCPR shall be liable in accordance
herewith to the extent of the obligations specifically undertaken by JCPR
hereunder.
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations
of, JCPR, etc. (a) JCPR shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person.
(b) The obligations of JCPR hereunder shall not be assignable nor
shall any Person succeed to the obligations of JCPR hereunder except in
accordance with the provisions of the Receivables Purchase Agreement.
(c) JCPR shall not amend Articles 3 or 10 or the last sentence of
Article 6 of its Certificate of Incorporation without the consent of the Holders
of Investor Certificates evidencing Undivided Interests aggregating not less
than two-thirds of the Aggregate Investor Amount. JCPR shall deliver to the
Rating Agencies a copy of any request sent to the Holders of Investor
Certificates for any such consent.
Section 7.3 Limitation on Liability of JCPR. Neither JCPR nor any of the
directors or officers or employees or agents of JCPR shall be under any
liability to the Trust, the Trustee, the Certificateholders or any other Person
for any action taken or for refraining from the taking of any action pursuant to
this Agreement whether arising from express or implied duties under this
Agreement or any Supplement; provided, however, that this provision shall not
protect JCPR or any such person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of its willful misconduct hereunder. JCPR
and any director or officer or employee or agent of JCPR may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
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ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer. The Servicer shall not consolidate with or merge into any
other corporation or convey or transfer its properties and assets substantially
as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and,
if the Servicer is not the surviving entity, shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee in
form satisfactory to the Trustee, the performance of every covenant and
obligation of the Servicer hereunder; and
(ii) the Servicer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolida-
tion, merger, conveyance or transfer and such supplemental agreement comply
with this Section 8.2 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 8.3 Limitation on Liability of the Servicer and Others. Except
as provided in Section 8.4 with respect to the Trust and the Trustee, neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or for refraining
from the taking of any action in its capacity as Servicer pursuant to this
Agreement or any Supplement; provided, however, that this provision shall not
protect the Servicer or any such person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of its willful misconduct
hereunder. The
74
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Receivables in
accordance with this Agreement which in its reasonable opinion may involve it in
any expense or liability.
Section 8.4 Indemnification of the Trust and the Trustee. The Servicer
shall indemnify and hold harmless the Trust and the Trustee from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
any acts, omissions or alleged acts or omissions arising out of activities of
the Trust or the Trustee pursuant to this Agreement or any Supplement, including
those arising from acts or omissions of the Servicer pursuant to this Agreement
or any Supplement, including, but not limited to any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim; provided, however, that the Servicer shall not indemnify the Trust or the
Trustee if such acts, omissions or alleged acts or omissions constitute fraud,
negligence, breach of fiduciary duty or wilful misconduct by the Trustee;
provided further, that the Servicer shall not indemnify the Trust, the Trustee,
any Investor Certificateholders or any Certificate Owners for any liabilities,
costs or expenses of the Trust with respect to any action taken by the Trustee
at the request of such Investor Certificateholders; provided further, that the
Servicer shall not indemnify the Trust, any Investor Certificateholders or any
Certificate Owners as to any losses, claims or damages incurred by any of them
in their capacities as investors, including without limitation losses incurred
as a result of defaulted Receivables or Receivables which are written off as
uncollectible, and provided further, that the Servicer shall not indemnify the
Trust, any Investor Certificateholders or the Certificate Owners for any
liabilities, costs or expenses of the Trust, such Investor Certificateholders or
the Certificate Owners arising under any tax law, including without limitation
any federal, state or local income or franchise taxes or any other tax imposed
on or measured by income (or any interest or penalties with respect thereto or
arising from a failure to comply therewith) required to be paid by the Trust,
such Investor Certificateholders or such Certificate Owners in connection
herewith to any taxing authority. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
Section 8.5 The Servicer Not to Resign. The Servicer shall not resign
from the obligations and duties hereby imposed on it except upon determination
that (i) the performance of its duties hereunder is or becomes impermissible
under applicable law
75
and (ii) there is no reasonable action which the Servicer could take to make the
performance of its duties hereunder permissible under applicable law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.2 hereof. If the Trustee is unable
within 120 days of the date of such determination to appoint a Successor
Servicer, the Trustee shall serve as Successor Servicer hereunder but shall have
continuing authority to appoint a Successor Servicer.
Section 8.6 Access to Certain Documentation and Information Regarding the
Receivables. The Servicer shall provide to the Trustee access to the
documentation regarding the Accounts and the Receivables in such cases where the
Trustee is required in connection with the enforcement of the rights of the
Investor Certificateholders, or by applicable statutes or regulations to review
such documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to the
Servicer's normal security and confidentiality procedures and (iv) at offices
designated by the Servicer. Nothing in this Section 8.6 shall derogate from the
obligation of JCPR, the Trustee or the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors and the failure of
the Servicer to provide access as provided in this Section 8.6 as a result of
such obligation shall not constitute a breach of this Section 8.6.
Section 8.7 Delegation of Duties. In the ordinary course of business,
the Servicer may at any time delegate any duties hereunder to any Person who
agrees to conduct such duties in accordance with the Credit Card Guidelines and
this Agreement. Any such delegations shall not relieve the Servicer of its
liability and responsibility with respect to such duties, and shall not
constitute a resignation within the meaning of Section 8.5 hereof.
Section 8.8 Examination of Records. The Servicer shall clearly and
unambiguously identify each Account (including any Additional Account designated
pursuant to Section 2.6) in its computer or other records to reflect that the
Receivables arising in such Account have been sold to JCPR and transferred by
JCPR to the Trust pursuant to this Agreement. The Servicer shall, prior to the
sale or transfer to a third party of any receivable held in its custody, examine
its computer and other records to determine that such receivable is not a
Receivable.
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ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the following events shall
occur during the Revolving Period with respect to any Series of Investor
Certificates:
(a) failure on the part of JCPR or JCPenney (i) to make any payment
or deposit required by the terms of this Agreement or the related Supplement on
or before the date occurring five Business Days after the date such payment or
deposit is required to be made herein, or (ii) duly to observe or perform in any
material respect any other material covenants or agreements of JCPR or JCPenney
set forth in this Agreement or the related Supplement or of JCPenney set forth
in the Receivables Purchase Agreement and assigned to the Trust, which continues
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to JCPR
and JCPenney by the Trustee, or to JCPR, JCPenney and the Trustee by the Holders
of Investor Certificates evidencing Undivided Interests aggregating not less
than 25% of the Aggregate Investor Amount of the related Series; or
(b) any representation or warranty made by JCPR or JCPenney in this
Agreement or the related Supplement or any information contained in a computer
file or microfiche list required to be delivered by JCPR pursuant to Section 2.1
or 2.6 shall prove to have been incorrect in any material respect when made or
when delivered, which continues to be incorrect in any material respect for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to JCPR and JCPenney by
the Trustee, or to JCPR, JCPenney and the Trustee by the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 25% of the
Aggregate Investor Amount of the related Series and as a result of which the
interests of such Series of Investor Certificateholders are materially and
adversely affected, or if such failure cannot be cured within such 60 day period
owing to causes beyond the control of JCPR or JCPenney, as the case may be, if
JCPR or JCPenney shall fail to proceed promptly to cure the same and thereafter
prosecute the curing of such failure with diligence and continuity; provided,
however, that a Pay Out Event shall not be deemed to have occurred hereunder
with respect to such Series, if JCPR has accepted a retransfer of the related
Receivable, or all of such Receivables, if applicable, during such period (or
such longer period as the Trustee may specify) in accordance with the provisions
hereof; or
77
(c) JCPR or JCPenney shall (a) become insolvent, (b) fail to pay its
debts generally as they become due, (c) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, (d) become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as a creditor or claimant, and, in the event such
proceeding is involuntary, the petition instituting same is not dismissed within
90 days after its filing, or (e) become unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement; or
(d) the average Portfolio Yield of such Series for any three
consecutive Monthly Periods is reduced to a rate which is less than the Base
Rate of such Series; or
(e) the Trust shall become an "investment company" within the meaning
of the Investment Company Act of 1940, as amended; or
(f) JCPR shall fail to transfer Receivables from Additional Accounts
to the Trust, as required by subsection 2.6(a) hereof, and such failure shall
continue for a period of 30 days after notice thereof from the Trustee to JCPR;
or
(g) any Servicer Default shall occur which would have a material
adverse effect on the Holders of the Investor Certificates of such Series; or
(h) the Available L/C Amount for such Series shall be less than the
percentage, if any, set forth in the Supplement relating to such Series; or
(i) the average Cardholder Monthly Payment Rate for any three
consecutive Monthly Periods is less than the percentage, if any, set forth in
the Supplement relating to such Series;
then (i) in the case of any event described in subparagraph (a) or (b), a Pay
Out Event will be deemed to have occurred with respect to any Series only if,
after the applicable grace period set forth in such subparagraphs, either the
Trustee or the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 25% of the Investor Amount of such Series by notice
given in writing to JCPR and the Servicer (and to the Trustee if given by the
Certificateholders) declare that a pay out event (a "Pay Out Event") has
occurred as of the date of such notice, (ii) in the case of any event described
in subparagraph (g), a Pay Out Event will be deemed to have occurred with
respect to all Series only if either the Trustee or the Holders of Investor
Certificates
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evidencing Undivided Interests aggregating not less than 25% of the Aggregate
Investor Amount by notice given in writing to JCPR and the Servicer (and to the
Trustee if given by the Certificateholders) declare that a Pay Out Event has
occurred as of the date of such notice and (iii) in the case of any event
described in subparagraphs (c), (d), (e), (f), (h) or (i), a Pay Out Event shall
occur (with respect to all Series in the case of subparagraph (c) or (e), and
with respect only to the affected Series in the case of subparagraph (d), (f),
(h) or (i) without any notice or other action on the part of the Trustee or the
Investor Certificateholders, immediately upon the occurrence of such event.
Section 9.2 Additional Rights Upon the Occurrence of Certain Events. (a)
If JCPR voluntarily seeks, consents to or acquiesces in the benefit or benefits
of any Debtor Relief Law or becomes a party to (or is made the subject of) any
proceeding provided for by any Debtor Relief Law, other than as a creditor or
claimant, and, in the event such proceeding is involuntary, the petition
instituting same is not dismissed within 90 days after its filing (a "Bankruptcy
Event"), JCPR shall on the date of such Bankruptcy Event immediately cease to
transfer Principal Receivables to the Trust and shall promptly give notice to
the Trustee of such Bankruptcy Event. Notwithstanding any cessation of the
transfer to the Trust of additional Principal Receivables, Finance Charge
Receivables, whenever created, accrued in respect of Principal Receivables which
have been transferred to the Trust shall continue to be a part of the Trust.
Within 15 days of the Bankruptcy Event, the Trustee shall (i) publish a notice
in the Authorized Newspapers that a Bankruptcy Event has occurred and that the
Trustee intends to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and (ii) send written notice to the Investor
Certificateholders describing the provisions of this Section 9.2 and requesting
instructions from such Holders, which notice shall request each Investor
Certificateholder to advise the Trustee in writing that it elects one of the
following options: (i) the Investor Certificateholder wishes the Trustee to
instruct the Servicer not to sell, dispose of or otherwise liquidate the
Receivables, or (ii) the Investor Certificateholder wishes the Trustee to
instruct the Servicer to sell, dispose of or otherwise liquidate the
Receivables, (iii) the Investor Certificateholder refuses to advise the Trustee
as to whether or not the Trustee should instruct the Servicer to sell, dispose
of or otherwise liquidate the Receivables. If after 90 days from the day notice
pursuant to clause (i) above is first published (the "Publication Date"), the
Trustee shall not have received written instructions of Holders of Investor
Certificates representing Undivided Interests aggregating in excess of 50% of
the Aggregate Investor Amount to the effect that the Trustee shall not instruct
the Servicer to sell, dispose of, or otherwise liquidate the Receivables, the
Trustee, subject to the following proviso, shall proceed to sell, dispose of, or
otherwise liquidate the Receivables in a commercially reasonable
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manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids; provided, however, no such sale, disposition
or liquidation, whether in whole or in part, of the Receivables shall be
consummated until and unless the Trustee shall have first received written
instructions as aforementioned, other written response or affirmative refusal to
provide a written response (in each case, a "Response") from Holders of
Aggregate Investor Certificates representing Undivided Interests aggregating in
excess of 50% of the Aggregate Investor Amount. The Trustee may obtain a prior
determination from such conservator or receiver that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable. The
provisions of Sections 9.1 and 9.2 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to subsection (a) above shall be treated as Collections on
the Receivables and shall be allocated and deposited in accordance with the
provisions of Section 4.3; provided that the Trustee shall determine
conclusively the amount of such proceeds which are allocable to Finance Charge
Receivables and the amount of such proceeds which are allocable to Principal
Receivables. On the day following the Distribution Date on which such proceeds
are scheduled to be distributed to the Investor Certificateholders, the Trust
shall terminate.
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Trustee pursuant to Section 4.5
or to make a drawing under any Letter of Credit on or before the date occurring
five Business Days after the date such payment, transfer, deposit or drawing or
such instruction or notice is required to be made or given, as the case may be,
under the terms of this Agreement or any Supplement; or
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement or any Supplement which has a material adverse effect on the
Certificateholders, which continues unremedied for a period of 60 days after the
date on
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which written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee, or to the Servicer and the
Trustee by the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 25% of the Aggregate Investor Amount; or the Servicer
shall delegate its duties under this Agreement, except as permitted by Section
8.7; or
(c) any representation, warranty or certification made by the
Servicer in this Agreement, any Supplement or in any certificate delivered
pursuant to this Agreement or any Supplement shall prove to have been incorrect
when made, which has a material adverse effect on the rights of the
Certificateholders and which continues to be incorrect in any material respect
for a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Trustee, or to the Servicer and the Trustee by the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 25% of the
Aggregate Investor Amount, or if such failure cannot be cured within such 60-day
period owing to causes beyond the control of Servicer, if Servicer shall fail to
proceed promptly to cure the same and thereafter prosecute the curing of such
failure with diligence and continuity; or
(d) the Servicer shall (a) become insolvent, (b) fail to pay its
debts generally as they become due, (c) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, or (d) become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as a creditor or claimant, and, in the event such
proceeding is involuntary, the petition instituting same is not dismissed within
90 days after its filing;
then, so long as such Servicer Default shall not have been remedied, either the
Trustee, or the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 51% of the Aggregate Investor Amount, by notice then
given in writing to the Servicer (and to the Trustee if given by the Investor
Certificateholders) (a "Termination Notice"), may terminate all of the rights
and obligations of the Servicer as Servicer under this Agreement and in and to
the Receivables and the proceeds thereof (other than its rights and interest, if
any, as Holder of the Exchangeable Certificate under this Agreement). After
receipt by the Servicer of such Termination Notice, and on the date that a
Successor Servicer shall have been appointed by the Trustee pursuant to Section
10.2, all authority and power of the Servicer under this Agreement shall pass to
and be vested in a Successor Servicer; and, without limitation, the Trustee is
hereby authorized and empowered (upon the failure of the Servicer to cooperate)
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, all documents and other
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instruments upon the failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such transfer of servicing
rights. The Servicer agrees to cooperate with the Trustee and such Successor
Servicer in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing hereunder, including, without limitation, the
transfer to such Successor Servicer of all authority of the Servicer to service
the Receivables provided for under this Agreement, including, without
limitation, all authority over all Collections which shall on the date of
transfer be held by the Servicer for deposit, or which have been deposited by
the Servicer, in the Collection Account, the Finance Charge Account or, the
Principal Account, or which shall thereafter be received with respect to the
Receivables, and in assisting the Successor Servicer and in enforcing all rights
to Insurance Proceeds. The Servicer shall promptly transfer its electronic
records relating to the Receivables to the Successor Servicer in such electronic
form as the Successor Servicer may reasonably request and shall promptly
transfer to the Successor Servicer all other records, correspondence and
documents necessary for the continued servicing of the Receivables in the manner
and at such times as the Successor Servicer shall reasonably request. To the
extent that compliance with this Section 10.1 shall require the Servicer to
disclose to the Successor Servicer information of any kind which the Servicer
reasonably deems to be confidential, the Successor Servicer shall be required
to enter into such customary licensing and confidentiality agreements as the
Servicer shall deem necessary to protect its interest. The Servicer shall, on
the date of any servicing transfer, transfer all of its rights and obligations,
if any, under the Letter of Credit to the Successor Servicer.
Section 10.2 Trustee to Act; Appointment of Successor. (a) On and after
the receipt by the Servicer of a Termination Notice pursuant to Section 10.1,
the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Termination Notice or otherwise
specified by the Trustee in writing or, if no such date is specified in such
Termination Notice, or otherwise specified by the Trustee, until a date mutually
agreed upon by the Servicer and Trustee. The Trustee shall as promptly as
possible after the giving of a Termination Notice appoint a successor servicer
(the "Successor Servicer"), subject to the consent of the Letter of Credit
Banks, which shall not be unreasonably withheld, and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Trustee. The Trustee may obtain bids from any potential successor servicer. If
the Trustee is unable to obtain any bids from any potential successor servicer
and JCPenney delivers an officer's certificate to the effect that it cannot in
good faith cure the Servicer Default which gave rise to a transfer of servicing,
then the Trustee shall offer JCPR the right to accept retransfer of all the
Receivables and JCPR may accept retransfer of all the
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Receivables, provided, however, that if the long-term unsecured debt obligations
of JCPenney are not rated at the time of such purchase at least Baa-3 by
Moody's, no such retransfer shall occur unless JCPR shall deliver an Opinion of
Counsel reasonably acceptable to the Trustee that such retransfer would not
constitute a fraudulent conveyance of JCPR. The retransfer deposit amount for
such a retransfer shall be equal to the higher of the sum of, with respect to
each Series (i) the outstanding principal balance of the Investor Certificates,
plus accrued interest thereon, at the Certificate Rate for each Series, through
the date of retransfer and (ii) the average bid price quoted by two recognized
dealers for a similar security rated in the highest rating category by Moody's
and Standard & Poor's and having a remaining maturity substantially similar to
the remaining maturity of such Series. In the event that a Successor Servicer
has not been appointed and has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Trustee without further action shall
automatically be appointed the Successor Servicer. Notwithstanding the above,
the Trustee shall, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established financial institution having a
net worth of not less than $100,000,000 and whose regular business includes the
servicing of credit card receivables as the Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer except for the references in Sections
8.4 and 11.5 which shall continue to include JCPenney; provided, however, that
(i) JCPenney shall not indemnify the Trust or the Trustee if the acts, omissions
or alleged acts or omissions upon which a claim for indemnification arises
pursuant to Section 8.4 constitute fraud, negligence, breach of fiduciary duty
or misconduct by a Successor Servicer and (ii) JCPenney shall not pay or
reimburse the Trustee pursuant to Section 11.5 for any expense, disbursement or
advance of the Trustee related to or arising as a result of the negligence or
bad faith of the Successor Servicer. The Successor Servicer shall expressly be
authorized, subject to Section 8.7, to delegate any of its duties hereunder to
JCPenney on and after the date of any transfer of servicing pursuant to this
Article X. Any Successor Servicer, by its acceptance of its appointment, will
automatically agree to be bound by the terms and provisions of any Letter of
Credit Agreement to the extent that such terms apply to the Servicer.
(c) In connection with such appointment and assumption, the Trustee
shall be entitled to such compensation, or may make such arrangements for the
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compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of the Monthly Servicing Fees permitted to the Servicer
pursuant to Section 3.2; provided, further, however, that in the event such
Successor Servicer is not an Affiliate of JCPenney, the Investor Monthly
Facility Fee payable pursuant to subsection 4.5(d) for each Series shall be
reduced to zero and the Investor Monthly Servicing Fee payable pursuant to
Section 3.2 for each Series shall be increased by the amount of such reduction
for such Series. JCPR agrees that if the Servicer is terminated hereunder, it
will agree, at the request of the Trustee or any Successor Servicer, to deposit
a portion of the Collections in respect of Finance Charge Receivables that it is
entitled to receive pursuant to subsection 4.3 (c) (iii), as applicable, to pay
its share of the compensation of the Successor Servicer.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.1 and shall pass to and be vested in JCPR and,
without limitation, JCPR is hereby authorized and empowered to execute and
deliver, on behalf of the Successor Servicer, as attorney-in-fact or otherwise,
all documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Successor Servicer agrees to cooperate with JCPR in
effecting the termination of the responsibilities and rights of the Successor
Servicer to conduct servicing on the Receivables. The Successor Servicer shall
transfer its electronic records relating to the Receivables to JCPR or, at its
discretion, JCPenney in such electronic form as JCPR or JCPenney, as the case
may be, may reasonably request and shall transfer all other records,
correspondence and documents to JCPR in the manner and at such times as JCPR
shall reasonably request. To the extent that compliance with this Section 10.2
shall require the Successor Servicer to disclose to JCPR or JCPenney information
of any kind which the Successor Servicer deems to be confidential, JCPR or
JCPenney, as appropriate, shall be required to enter into such customary
licensing and confidentiality agreements as the Successor Servicer shall deem
necessary to protect its interests.
Section 10.3 Notification to Certificateholders. Upon the occurrence of
any Servicer Default, the Servicer shall give prompt written notice thereof to
the Trustee and the Trustee shall give notice to the Investor Certificateholders
at their respective addresses appearing in the Certificate Register. Upon any
termination or appointment of a Successor Servicer pursuant to this Article X,
the Trustee shall give prompt written notice thereof to Investor
Certificateholders at their respective addresses appearing in the Certificate
Register.
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Section 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 50% of the
Aggregate Investor Amount may, on behalf of all Holders of Certificates, waive
any default by the Servicer or JCPR in the performance of its obligations
hereunder and its consequences, except a default in the failure to make any
required deposits or payments in accordance with Sections 4.6 and 4.7 provided,
however, that no such waiver shall affect any rights of, or obligations to, any
Letter of Credit Bank hereunder. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of a Servicer Default and
after the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Servicer Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement or any Supplement, as the case may be, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of such man's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, or any Supplement, shall examine them to determine
whether they conform to the requirements of this Agreement or any Supplement.
The Trustee shall give prompt written notice to the Certificateholders of any
material lack of conformity of any such instrument to the applicable
requirements of this Agreement or any Supplement discovered by the Trustee which
would entitle a specified percentage of the Certificateholders to take any
action pursuant to this Agreement or any Supplement.
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(c) Subject to Section 11.1(a), no provision of this Agreement or any
Supplement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct;
provided, however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing Undivided Interests aggregating not less than 51% of the
Aggregate Investor Amount relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement or any Supplement; and
(iii) the Trustee shall not be charged with knowledge of, or
required to take notice of, any failure by the Servicer to comply with the
obligations of the Servicer hereunder or of the occurrence of a Servicer
Default, and the Trustee may conclusively assume that no Servicer Default
has occurred, unless a Responsible Officer of the Trustee obtains actual
knowledge of such failure or occurrence or the Trustee receives written
notice of such failure or occurrence from the Servicer, any Letter of
Credit Bank or any Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 10% of the Aggregate Investor Amount.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder, or in exercise of any of its rights or powers, if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it; and none of the
provisions contained in this Agreement or any Supplement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement or any
Supplement except during such time, if any, as the Trustee shall be
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the Successor Servicer, and be vested with the rights, duties, powers and
privileges of the Servicer, in accordance with the terms of this Agreement or
any Supplement.
(e) Except for actions expressly authorized by this Agreement or any
Supplement, the Trustee shall take no action reasonably likely to impair the
interests of the Trust in any Receivable now existing or hereafter acquired by
JCPR from JCPenney pursuant to the Receivables Purchase Agreement or to impair
the value of any Receivable now existing or hereafter created.
(f) Except as provided in Section 2.6, the Trustee shall have no
power to vary the corpus of the Trust including, without limitation, the power
to (i) accept any substitute obligation for a Receivable initially assigned to
the Trust under Section 2.1 or 2.6 hereof, (ii) add any other investment,
obligation or security to the Trust or (iii) withdraw from the Trust any
Receivables, except for a withdrawal permitted under subsections 2.4(d), 2.4(e),
4.4(c), 4.8, 9.2 or 12.1.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day required to be performed by the Paying Agent or the Transfer Agent
and Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated promptly upon written notice of such failure to use its best efforts
to perform such obligation, duty or agreement in the manner so required.
(h) If JCPR or JCPenney has agreed to transfer any of its credit card
receivables (other than the Receivables) to another Person, upon the written
request of JCPR or JCPenney, as the case may be, the Trustee will enter into
such intercreditor agreements with the transferee of such receivables as are
customary and necessary separately to identify the rights of the Trust and such
other Person in JCPR's credit card receivables; provided, that the Trust shall
not be required to enter into any intercreditor agreement which could adversely
affect the interests of the Certificateholders and, upon the request of the
Trustee, JCPR or JCPenney, as the case may be, will deliver an Opinion of
Counsel on any matters relating to such intercreditor agreement, reasonably
requested by the Trustee.
Section 11.2 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section ll.l:
(a) the Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accord with, any resolution, Officer's Certificate,
certificate of
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auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented to it pursuant
to this Agreement or any Supplement by the proper party or parties;
(b) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or any Supplement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement or any Supplement, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of any Servicer Default (which has not
been cured), to exercise such of the rights and powers vested in it by this
Agreement or any Supplement, and to use the same degree of care and skill in
their exercise as a prudent man would exercise or use under the circumstances in
the conduct of such man's own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement or
any Supplement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing so to do by Holders of Investor
Certificates evidencing Undivided Interests aggregating no less than 51% of
Aggregate Investor Amount;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder; and
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(g) except as may be required by subsection 11.1(a) hereof, the
Trustee shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by JCPR with
its representations and warranties or for any other purpose.
Section 11.3 Trustee Not Liable for Recitals In Certificates. The Trustee
assumes no responsibility for the correctness of the recitals contained herein
and in the Certificates (other than the certificate of authentication on the
Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee
shall not be accountable for the use or application by JCPR of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to JCPR in respect of the Receivables or deposited
in or withdrawn from the Collection Account, the Principal Account or the
Finance Charge Account by the Servicer.
Section 11.4 Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Investor Certificates
with the same rights as it would have if it were not the Trustee.
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and, subject to Section 8.4, the Servicer will
pay or reimburse the Trustee (without reimbursement from any Investor Account or
otherwise) upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement or any Supplement (including the reasonable fees
and expenses of its agents and counsel) except any such expense, disbursement or
advance as may arise from its negligence or bad faith and except as provided in
the following sentence. If the Trustee is appointed Successor Servicer pursuant
to Section 10.2, the provisions of this Section 11.5 shall not apply to
expenses, disbursements and advances made or incurred by the Trustee in its
capacity as Successor Servicer.
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The obligations of JCPR under this Section 11.5 and Section 8.4 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation organized and doing business under the laws
of the United States of America or any state thereof authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $10,000,000 and subject to supervision or examination by Federal or state
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section 11.6, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 11.6, the Trustee shall resign
immediately in the manner and with the effect specified in Section 11.7.
Section 11.7 Resignation or Removal of Trustees. (a) The Trustee may at
any time resign and be discharged from the trust hereby created by giving
written notice thereof to JCPR and Servicer. Upon receiving such notice of
resignation, JCPR shall promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to resign
after written request therefor by JCPR, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
JCPR may, but shall not be required to, remove the Trustee and promptly appoint
a successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section
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11.8 hereof and any liability of the Trustee arising hereunder shall survive
such appointment of a successor trustee.
Section 11.8 Successor Trustee. (a) Any successor trustee appointed as
provided in Section 11.7 hereof shall execute, acknowledge and deliver to JCPR
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents and statements held by it hereunder; and JCPR and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided in this
Section 11.8 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 11.8 hereof, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown in
the Certificate Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under the provisions of Section 11.6
hereof, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee. (a) Notwith-
standing any other provisions of this Agreement or any Supplement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust may at the time be located, the Trustee shall have the
power and may execute and deliver all instruments to appoint one or more Persons
to act as a co-trustee or co-
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trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the trust, or any part thereof,
and, subject to the other provisions of this Section 11.10, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee under Section 11.6 and no notice
to Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extant that under any laws of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
an successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
any Supplement and the conditions of this Article XI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein,
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subject to all the provisions of this Agreement or any Supplement, specifically
including every provision of this Agreement or any Supplement relating to the
conduct of, affecting the liability of, or affording protection to, the Trustee.
Every such instrument shall be filed with the Trustee and a copy thereof given
to the Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement or any Supplement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 11.11 Tax Returns. In the event the Trust shall be required to
file tax returns, the Trustee, as soon as practicable after it is made aware of
such requirement, shall prepare or cause to be prepared and is authorized
hereunder to sign any tax returns required to be filed by the Trust and, to the
extent possible, shall file such returns at least five days before such returns
are due to be filed. The Servicer shall prepare or shall cause to be prepared
all tax information required by law to be distributed to Certificateholders and
shall deliver such information to the Trustee at least five days prior to the
date it is required by law to be distributed to Certificateholders. The
Servicer, upon request, will furnish the Trustee with all such information known
to the Servicer as may be reasonably required in connection with the preparation
of all tax returns of the Trust. In no event shall the Trustee or the Servicer
be liable for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation Federal, state or local income or excise taxes or
any other tax imposed on or measured by income (or any interest or penalty with
respect thereto or arising from a failure to comply therewith). Nothing in this
Section 11.11 shall be construed as inconsistent with the characterization of
the Investor Certificates as indebtedness of JCPR for purposes of federal, state
and local income or franchise taxes and any other tax imposed or measured by
income, as expressed in Section 3.7 hereof.
Section 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any
Supplement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee. Any recovery of judgment
shall, after provision for the payment of the
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reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Certificateholders in
respect of which such judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default shall occur
and be continuing, the Trustee, in its discretion may, subject to the provisions
of Section 10.1, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement or any Supplement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or any
Supplement or in aid of the execution of any power granted in this Agreement or
any Supplement or for the enforcement of any other legal, equitable or other
remedy as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Certificateholders.
Section 11.14 Rights of Certificateholders to Direct Trustee. Holders of
Investor Certificates evidencing Undivided Interests aggregating not less than
51% of the Aggregate Investor Amount shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, provided,
however, that, subject to Section 11.1, the Trustee shall have the right to
decline to follow any such direction if the Trustee being advised by counsel
determines that the action so directed may not lawfully be taken, or if the
Trustee in good faith shall, by a Responsible Officer or Responsible Officers of
the Trustee, determine that the proceedings so directed would be illegal or
involve it in personal liability or be unduly prejudicial to the rights of
Certificateholders not parties to such direction; and provided further that
nothing in this Agreement or any Supplement shall impair the right of the
Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction.
Section 11.15 Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(i) The Trustee is a banking corporation organized, existing
and in good standing under the laws of New York;
(ii) The Trustee has full power, authority and right to
execute, deliver and perform this Agreement and any Supplement, and has
taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement or any Supplement; and
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(iii) This Agreement or any Supplement has been duly executed
and delivered by the Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will maintain
at its expense in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where notices and demands to or upon the Trustee
in respect of the Certificates and this Agreement may be served. The Trustee
initially appoints the Corporate Trust Office as its office for such purposes in
New York. The Trustee will give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
Section 11.17 Requests for Agreement. A copy of this Agreement may be
obtained by any Certificateholder by a request in writing to the Trustee
addressed to the Corporate Trust office and will be provided at the expense of
JCPR.
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust. (a) The respective obligations and
responsibilities of JCPR, the Servicer and the Trustee created hereby (other
than the obligation of the Trustee to make payments to Certificateholders as
hereafter set forth) shall terminate, except with respect to the duties
described in subsections 2.4(c) and 12.3(b), upon the earlier of (i) the day, if
any, designated by JCPR after the Distribution Date following the date on which
funds shall have been deposited in the Distribution Account sufficient to pay
the Aggregate Investor Amount plus Certificate Interest accrued through the last
day of the month preceding such Distribution Date in full ("Final Trust
Termination Date"), (ii) subject to subsection 12.1(b) below, the Scheduled
Trust Termination Date and (iii) the expiration of 21 years less one day from
the death of the last survivor of the descendants living on the date of this
Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States of
America to the Court of St. James's.
(b) If on the Transfer Date in the month immediately preceding the
month in which the Scheduled Trust Termination Date occurs (after giving effect
to all transfers, withdrawals, deposits and drawings to occur on such date and
the payment of principal on any Series of Certificates to be made on the related
Payment Date pursuant to Section 4.7) the Investor Amount of any Series would be
greater than zero, the
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Servicer shall sell within 30 days of such Transfer Date all of the Receivables.
The proceeds of such sale shall be treated as Collections on the Receivables and
shall be allocated and deposited in accordance with Section 4.3; provided,
however, that the Trustee shall determine conclusively the amount of such
proceeds which are allocable to Finance Charge Receivables and the amount of
such proceeds which are allocable to Principal Receivables. During such 30 day
period, the Servicer shall continue to collect Collections on the Receivables
and allocate and deposit such payments in accordance with the provisions of
Section 4.3.
Section 12.2 Repurchase and Final Maturity Date of Investor Certificates
with Respect to Any Series.
(a) (i) If for any Series the Adjusted Investor Amount for such
Series is equal to or less than the Optional Repurchase Percentage of the
Initial Investor Amount for such Series, JCPR may, at its option, purchase such
Series of Investor Certificates, in whole but not in part, by depositing into
the Distribution Account for the account of such Series, on the Collection
Deposit Day next preceding any Transfer Date thereafter an amount equal to the
Repurchase Deposit Amount with respect to such Series as of such Transfer Date;
provided, however, that if the long-term unsecured debt obligations of JCPenney
are not rated at least Baa-3 by ▇▇▇▇▇'▇ at the time of such purchase, such
purchase shall not occur unless JCPR shall deliver an Opinion of Counsel
reasonably acceptable to the Trustee that the transfer of funds, if any, to JCPR
by JCPenney in respect of any such purchase of any Series of Investor
Certificates would not constitute a fraudulent conveyance by JCPenney under
applicable law.
(ii) If for any Series the Adjusted Investor Amount for such
Series at the end of any Monthly Period is equal to or less than the
Mandatory Repurchase Amount for such Series as of the end of such Monthly
Period, JCPR shall be obligated to purchase such Series of Investor
Certificates by depositing into the Distribution Account for the account of
such Series, on the Collection Deposit Day next preceding the Transfer Date
preceding the Distribution Date immediately following the end of such
Monthly Period, an amount equal to the Repurchase Deposit Amount with
respect to such Series as of such Transfer Date. If JCPR fails to make the
deposit required under this subsection with respect to such Series for any
reason, then, unless the Supplement with respect to such Series shall
otherwise provide, the Trustee shall, on the Drawing Date following the
Collection Deposit Day on which such payment was due, make a drawing (which
drawing, in the case of the Letter of Credit,
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shall be made simultaneously with any drawing thereunder on such Drawing
Date pursuant to Section 4.5), first, under the Repurchase Letter of
Credit, if any, and then, to the extent necessary, under the Letter of
Credit, if any, relating to such Series in accordance with and to the
extent permitted thereunder and the Supplement relating to such Series, in
an amount equal to such Repurchase Deposit Amount (minus any portion
thereof deposited by or on behalf of JCPR), and the proceeds of such
drawing shall be deposited into the Distribution Account for the account of
such Series.
(iii) On the Distribution Date following the Transfer Date on
which the full Repurchase Deposit Amount then applicable to a Series is
deposited pursuant to this subsection 12.2(a), JCPR shall be deemed,
automatically and without requirement for any act on the part of JCPR or
any other Person, to have acquired all outstanding Certificates of such
Series and to have retired such Series.
(b) The entire Investor Amount of each Series shall be due and
payable no later than the Final Maturity Date with respect to such Series.
Unless otherwise provided in a Supplement, if on the Determination Date in the
month immediately preceding the month in which the Final Maturity Date with
respect to any Series occurs (after giving effect to all transfers, withdrawals,
deposits and drawings to occur on the next Transfer Date and the payment of
principal on such Series of Certificates to be made on the related Distribution
Date pursuant to Section 4.7), the Adjusted Investor Amount of such Series would
be greater than zero, the Servicer shall (subject to prior deposit of the full
Repurchase Deposit Amount, if any, with respect to such Series pursuant to
subsection 12.2 (a)) sell, dispose of, or otherwise liquidate, in a commercially
reasonable manner and on commercially reasonable terms (which shall include the
solicitation of competitive bids from Persons who are not Affiliates of JCPR),
within 30 days of such Determination Date, an amount of Receivables equal to (i)
100% plus the lesser of (x) the JCPR Percentage or (y) the Minimum JCPR
Percentage, multiplied by (ii the Adjusted Investor Amount of such Series
determined as of the date of such sale, disposition or liquidation; provided,
however, that (i) no procedure used by the Servicer to select the Receivables to
be sold, disposed of or otherwise liquidated shall be adverse to the interests
of the Investor Certificateholders of any other Series, and (ii) the Servicer
shall give JCPR at least 10 days advance written notice of such sale,
disposition or other liquidation. JCPR shall have the option, exercisable at any
time after the Servicer has obtained an offer from any Person that is not an
Affiliate of JCPR and prior to the consummation of such sale, disposition or
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liquidation by giving notice of the exercise thereof to the Servicer, to
purchase such Receivables for cash (payable in immediately payable funds on the
Final Maturity Date) for the lesser of (i) 100% of the amount of such
Receivables, or (ii) the highest price offered therefor pursuant to such
proposed sale, disposition or other liquidation. The proceeds received upon the
sale, disposition or other liquidation of such Receivables in an amount up to
(i) the Adjusted Investor Amount for such Series on the Final Maturity Date,
plus (ii) unpaid interest thereon at the applicable Certificate Rate, as of the
end of the Monthly Period preceding the Final Maturity Date, less (iii) amounts
on deposit on such date in respect of such Series in the Investor Accounts,
shall be deposited into the Distribution Account for the benefit of such Series
on the relevant Final Maturity Date, and shall be distributed to the Holders of
such Series in final payment thereof pursuant to the terms of Section 12.3.
Proceeds received in excess of the amount to be deposited as aforesaid shall be
treated as Collections on the Receivables and shall be allocated and deposited
in accordance with the provisions of Section 4.3; provided that the Servicer
shall determine conclusively the amount of such proceeds which are allocable to
Finance Charge Receivables and the amount of such proceeds which are allocable
to Principal Receivables.
(c) The amount deposited pursuant to subsections 12.2 (a) and 12.2
(b) shall be paid to the Investor Certificateholders in the manner provided in
Section 12.3.
Section 12.3 Final Distributions. (a) Written notice of any termination,
specifying the Distribution Date upon which the Investor Certificateholders of
any Series may surrender their Certificates for payment of the final
distribution and cancellation, shall be given (subject to at least two days'
prior notice from the Servicer to the Trustee) by the Trustee to Investor
Certificateholders of any Series mailed not later than the fifth day of the
month of such final distribution specifying (a) the Distribution Date (which
shall be the Distribution Date in the month in which the deposit is made
pursuant to subsection 2.4(e), 12.1, 12.2(a) or 12.2(b)) upon which final
payment of the Investor Certificates of such Series will be made upon
presentation and surrender of Investor Certificates at the office or offices
therein designated, (b) the amount of any such final payment and (c) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Investor
Certificates at the office or offices therein specified. The Servicer's notice
to the Trustee in accordance with the preceding sentence shall be accompanied by
an Officer's Certificate setting forth the information specified in Section 3.5
covering the period during the then current calendar year through the date of
such
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notice. The Trustee shall give such notice to the Transfer Agent and Registrar
and the Paying Agent at the time such notice is given to Investor
Certificateholders.
(b) All funds on deposit in the Distribution Account in respect of
any Series, in the case of a final payment pursuant to Section 12.2, or all
Series, in the case of a termination of the Trust pursuant to Section 12.1 (and
notwithstanding such termination), shall continue to be held in trust for the
benefit of the Certificateholders of such Series and the Paying Agent or the
Trustee shall pay such funds to the appropriate Certificateholders upon
surrender of their Certificates. In the event that all of the Investor
Certificateholders shall not surrender their Certificates for cancellation
within six months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the remaining Investor
Certificateholders of such Series to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Investor Certificates of such Series
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Investor Certificateholders of such Series concerning surrender
of their Certificates, and the cost thereof shall be paid out of the funds in
the Distribution Account held for the benefit of such Investor
Certificateholders.
Section 12.4 JCPR's Termination Rights. Upon the termination of the Trust
pursuant to Section 12.1 and the surrender of the Exchangeable Certificate, the
Trustee shall return to JCPR (without recourse, representation or warranty) all
right, title and interest of the Trust in, to and under the Receivables, whether
then existing or thereafter created, and all monies due or to become due with
respect thereto (including all accrued interest theretofore posted as Finance
Charge Receivables), all proceeds thereof and Insurance Proceeds relating
thereto except for amounts held by the Trustee pursuant to subsection 12.3(b).
The Trustee shall execute and deliver such instruments of transfer, in each case
without recourse as shall be reasonably requested by JCPR to vest in JCPR all
right, title and interest which the Trust had in the Receivables.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment. (a) This Agreement and any Supplement may be
amended from time to time by the Servicer, JCPR and the Trustee, without the
consent of any of the Certificateholders, to cure any ambiguity, to correct or
supplement any
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provisions herein which may be inconsistent with any other provisions herein, or
to add any other provisions with respect to matters or questions arising under
this Agreement or any Supplement which shall not be inconsistent with the
provisions of this Agreement or any Supplement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel adversely affect in any
material respect the interests of the Certificateholders; provided, further,
however, that anything herein or in any Supplement to the contrary
notwithstanding, any Supplement may contain Principal Terms as provided in
Section 6.12. The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's rights, duties or immunities under
this Agreement and any Supplement or otherwise. Any Supplement and any Transfer
Agreement or Retransfer Agreement regarding the addition or removal of
Receivables from the Trust as provided in Sections 2.6 and 2.7, respectively,
executed in accordance with the provisions hereof shall not be considered
amendments to this Agreement.
(b) This Agreement and any Supplement may also be amended from time
to time by the Servicer, JCPR and the Trustee with the consent of the Holders of
Investor Certificates evidencing Undivided Interests aggregating not less than
66-2/3% of the Aggregate Investor Amount of all Series adversely affected, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or any Supplement or modifying in any
manner the rights of the Investor Certificateholders; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, distributions which are required to be made on any Investor Certificate
without the consent of such Investor Certificateholder, (ii) unless expressly
stated in the Supplement under which a Series is created, change the definition
of or the manner of calculating the Investor Amount, the Investor Percentage or
the Investor Default Amount with respect to any Series without the consent of
each Investor Certificateholder affected thereby, or (iii) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of
each Investor Certificateholder; provided, further, however, that anything
herein or in any Supplement to the contrary notwithstanding, any Supplement may
contain Principal Terms as provided in Section 6.12 without the consent of any
Holders of Investor Certificates.
(c) Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of such amendment to
each Investor Certificateholder and to each Rating Agency and any Letter of
Credit Bank.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.1 to approve the particular form of any
proposed
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amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Section 13.2 Protection of Right, Title and Interest to Trust. (a) The
Servicer shall cause this Agreement, any Supplement, all amendments hereto and
thereto and/or all financing statements and continuation statements and any
other necessary documents covering the Certificateholders and the Trustee's
right, title and interest to the Trust to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Trustee hereunder to all property
comprising the Trust. The Servicer shall deliver to the Trustee file-stamped
copies of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording, registration or
filing. JCPR shall cooperate fully with the Servicer in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 13.2(a).
(b) Within 30 days after JCPenney or JCPR makes any change in its
name, identity or corporate structure which would make any financing statement
or continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of the UCC as in effect in the
state where such financing statement or continuation statement was filed,
JCPenney or JCPR shall give the Trustee notice of any such change and shall file
such financing statements or amendments as may be necessary to continue the
perfection of the Trust's security interest in the Receivables and the proceeds
thereof.
(c) Each of JCPR and the Servicer will give the Trustee prompt
written notice of any relocation of any office from which it services
Receivables or keeps records concerning the Receivables or of its principal
executive office and whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. Each of JCPR and the Servicer will at all
times maintain each office from which it services Receivables and its principal
executive office within the United States of America.
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(d) The Servicer will deliver to the Trustee: (i) upon the execution
and delivery of each amendment of Articles I, II, III or IV hereto other than
amendments pursuant to subsection 13.1(a) an Opinion of Counsel substantially in
the form of Exhibit P; and (ii) on or before April 15 of each year, beginning
with April 15, 1989 an Opinion of Counsel, dated as of a date during the
preceding 90-day period, substantially in the form of Exhibit L.
Section 13.3 Limitation on Rights of Certificateholders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall such death or incapacity entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except with
respect to the Investor Certificateholders as provided in Section 13.1 hereof)
or in any manner otherwise control the operation and management of the Trust, or
the obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given to the Trustee, and unless the
Holders of Certificates evidencing Undivided Interests aggregating not less than
51% of the Aggregate Investor Amount shall have made, written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Certificateholder shall
have the right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Certificateholders of any other of the Certificates, or to
obtain or seek to obtain priority over or preference to any other such
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Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 13.3, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 13.4 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 13.5 Notices. All demands, notices and communications hereunder
shall be effective upon receipt and shall be in writing and shall be personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of JCPR, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
President, (b) in the case of JCPenney, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer, (c) in the case of the Trustee, to the
Corporate Trust Office and (d) in the case of the initial Letter of Credit Bank,
to Credit Suisse, New York Branch, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Specialty Finance Department; or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Section 13.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be hold invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders thereof.
Section 13.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.2, this Agreement, including
any Supplement, may not be assigned by the Servicer without the prior consent of
Holders of Investor Certificates evidencing Undivided Interests aggregating not
less than 66 2/3% of the Aggregate Investor Amount.
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Section 13.8 Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the Undivided Interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and that Certificates upon
authentication thereof by the Trustee pursuant to Sections 2.7 and 6.2 are and
shall be deemed fully paid.
Section 13.9 Further Assurances. JCPR and the Servicer agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Trustee more fully to effect
the purposes of this Agreement, including, without limitation, the execution of
any financing statements or continuation statements relating to the Receivables
for filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privilege provided by law.
Section 13.11 Counterparts. This Agreement and any Supplement may be
executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement and any
Supplement will inure to the benefit of and be binding upon the parties hereto,
the Certificateholders and their respective successors and permitted assigns.
Except as otherwise provided in this Article XIII and Section 8.4, no other
person will have any right or obligation hereunder.
Section 13.13 Actions by Certificateholders. (a) Wherever in this
Agreement or any Supplement, a provision is made that an action may be taken or
a notice, demand or instruction given by Investor Certificateholders, such
action, notice or instruction
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may be taken or given by any Investor Certificateholder, unless such provision
requires a specific percentage of Investor Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind such Certificateholder and
every subsequent holder of such Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by the Trustee, JCPR or the Servicer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
Section 13.14 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the Supplement set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Supplement. This Agreement and the Supplement may not be modified, amended,
waived or supplemented, except as provided herein.
Section 13.15 JCPenney as Servicer for JCPR. In the event that any
Receivables are ever retransferred to JCPR pursuant to any of the terms or
provisions of this Agreement, including, without limitation, pursuant to
subsection 2.4(d), subsection 2.4 (e), Section 4.4 or Section 12.2 hereof, and
before JCPR transfers, sells or assigns such Receivables to JCPenney or any
other Person in accordance with the terms and provisions of the Receivables
Purchase Agreement, or any other contract or arrangement, JCPenney shall act as
Servicer for such retransferred Receivables in accordance with the Receivables
Purchase Agreement.
Section 13.16 Payments to JCPR. All payments hereunder by the Servicer or
the Trustee to JCPR (including payments to it as Holder of the Exchangeable
Certificate) shall be paid to JCPR or to such other Person as JCPR shall direct
by written notice to the Servicer and the Trustee.
Section 13.17 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
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IN WITNESS WHEREOF, JCPR, the Servicer and the Trustee have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
JCP RECEIVABLES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
▇. ▇. PENNEY COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
THE FUJI BANK AND TRUST COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------------
Title: Vice President
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