Document:

mm05-2114_8ke422.htm

 

EXHIBIT 4.2

 

 

EXECUTION VERSION

 

	
 

STERLING JEWELERS RECEIVABLES MASTER NOTE

TRUST

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST,

as Issuer

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Indenture Trustee

and

STERLING JEWELERS INC.,

as Servicer

SERIES 2014-A INDENTURE SUPPLEMENT

Dated as of May 15, 2014

 

 

  

  

  

 

Table of Contents

 

	  	  	
Page

	  	  	  
	
ARTICLE I

	  	  
	  	  	  	  
	  	
CREATION OF THE SERIES 2014-A NOTES

	
1

	 	 	 
	  	
Section 1.01.

	
Designation.

	
1

	 	 	 
	
ARTICLE II

	  	  
	  	  	  	  
	  	
DEFINITIONS

	
2

	 	 	 
	  	
Section 2.01.

	
Definitions.

	
2

	 	 	 	 
	
ARTICLE III

	  	  
	  	  	  	  
	  	
SERVICING FEE

	
12

	 	 	 
	  	
Section 3.01.

	
Servicing Compensation.

	
12

	 	 	 	 
	
ARTICLE IV

	  	  
	  	  	  	  
	  	
RIGHTS OF SERIES 2014-A NOTEHOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS

	
13

	 	 	 
	  	
Section 4.01.

	
Collections and Allocations.

	
13

	  	
Section 4.02.

	
Determination of Class A Monthly Interest.

	
15

	  	
Section 4.03.

	
Determination of Monthly Principal.  .

	
15

	  	
Section 4.04.

	
Application of Available Finance Charge Collections and Available Principal Collections.

	
16

	  	
Section 4.05.

	
Investor Charge-Offs.

	
18

	  	
Section 4.06.

	
Reallocated Principal Collections.

	
18

	  	
Section 4.07.

	
Excess Finance Charge Collections.

	
18

	  	
Section 4.08.

	
Shared Principal Collections.

	
19

	  	
Section 4.09.

	
Suspension of the Revolving Period; Limited Amortization Period and Optional Amortization.

	
19

	  	
Section 4.10.

	
Investment Instructions.

	
20

	  	
Section 4.11.

	
Note Principal Balance Increases; Reduction of Facility Limit.

	
20

	 	 	 	 
	
ARTICLE V

	  	  
	  	  	  	  
	  	
DELIVERY OF SERIES 2014-A NOTES; DISTRIBUTIONS; REPORTS TO SERIES 2014-A NOTEHOLDERS

	
22

	 	 	 
	  	
Section 5.01.

	
Delivery and Payment for the Series 2014-A Notes.

	
22

	  	
Section 5.02.

	
Distributions.

	
22

	  	
Section 5.03.

	
Reports and Statements to Series 2014-A Noteholders.

	
22

	 	 	 	 
	
ARTICLE VI

	  	  
	  	  	  	  
	  	
SERIES 2014-A PAY OUT EVENTS; ADDITIONAL SERVICER DEFAULTS

	
24

	 	 	 
	  	
Section 6.01.

	
Series 2014-A. Pay Out Events.

	
24

  

i

  

Table of Contents

(continued)

	  	  	  	
Page

	  	  	  	  
	  	
Section 6.02.

	
Additional Servicer Defaults.

	
25

	 	 	 	 
	
ARTICLE VII

	  	  
	  	  	  	  
	  	
REDEMPTION OF SERIES 2014-A NOTES; FINAL DISTRIBUTIONS; SERIES TERMINATION

	
27

	 	 	 
	  	
Section 7.01.

	
Optional Redemption of Series 2014-A Notes; Final Distributions.

	
27

	  	
Section 7.02.

	
Series Termination.

	
28

	 	 	 	 
	
ARTICLE VIII

	  	  
	  	  	  	  
	  	
MISCELLANEOUS PROVISIONS

	
29

	 	 	 
	  	
Section 8.01.

	
Ratification of Indenture.

	
29

	  	
Section 8.02.

	
Private Placement of Series 2014-A Notes; Form of Delivery of Series 2014-A Notes.

	
29

	  	
Section 8.03.

	
Tax and Other Matters.

	
29

	  	
Section 8.04.

	
Counterparts..

	
32

	  	
Section 8.05.

	
GOVERNING LAW.

	
32

	  	
Section 8.06.

	
Additional Notice.

	
33

	  	
Section 8.07.

	
WAIVERS OF JURY TRIAL..

	
33

	  	
Section 8.08.

	
No Proceeding.

	
33

	  	
Section 8.09.

	
Limitation of Liability..

	
33

	  	
Section 8.10.

	
Rights of the Indenture Trustee.

	
33

	  	
Section 8.11.

	
USA Patriot Act.

	
34

 

  

ii

  

 

EXHIBITS

	
EXHIBIT A-1

	
FORM OF CLASS A NOTE

	
EXHIBIT A-2

	
FORM OF CLASS B NOTE

	
EXHIBIT B

	
FORM OF MONTHLY STATEMENT

	
EXHIBIT C

	
FORM OF MONTHLY SERVICER’S CERTIFICATE

	
EXHIBIT D

	
FORM OF NOTICE OF LIMITED AMORTIZATION

	
EXHIBIT E

	
FORM OF NOTICE OF OPTIONAL AMORTIZATION

	
EXHIBIT F

	
FORM OF CLASS B NOTE PRINCIPAL BALANCE INCREASE REQUEST

	
EXHIBIT G

	
FORM OF INVESTMENT LETTER

  

iii

  

SERIES 2014-A INDENTURE SUPPLEMENT, dated as of May 15, 2014 (this “Indenture Supplement”), among STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST, a statutory trust organized and existing under the laws of the State of Delaware (herein, the “Issuer” or the “Trust”), STERLING JEWELERS INC., a Delaware corporation, as Servicer (the “Servicer”), DEUTSCHE BANK TRUST COMPANY AMERICAS, a banking corporation organized and existing under the laws of the State of New York, not in its individual capacity, but solely as indenture trustee (herein, together with its successors in the trusts thereunder as provided in the Master Indenture referred to below, the “Indenture Trustee”) under  the Master Indenture, dated as of November 2, 2001 (the “Indenture”) among the Issuer, the Servicer and the Indenture Trustee (the Indenture, together with this Indenture Supplement, the “Agreement”).

 

Pursuant to Section 2.12 of the Indenture, the Transferor may direct the Issuer to issue one or more Series of Notes.  The Principal Terms of this Series are set forth in this Indenture Supplement to the Indenture.

 

ARTICLE I

 

Creation of the Series 2014-A Notes

 

Section 1.01.     Designation.

 

(a)           There is hereby created and designated a Series of Notes to be issued pursuant to the Indenture and this Indenture Supplement to be known as “Sterling Jewelers Receivables Master Note Trust, Series 2014-A Notes” or the “Series 2014-A Notes.”  The Series 2014-A Notes shall be issued in two Classes, the first of which shall be known as the “Class A Series 2014-A Asset Backed Variable Funding Notes” and the second of which shall be known as the “Class B Series 2014-A Asset Backed Variable Funding Notes.”  The Series 2014-A Notes shall be due and payable on the Series 2014-A Final Maturity Date.

 

(b)           Series 2014-A shall be included in Group One and shall be a Principal Sharing Series with respect to Group One only.  Series 2014-A shall be an Excess Allocation Series with respect to Group One only. Series 2014-A shall not be subordinated to any other Series.

 

[END OF ARTICLE I]

 

  

  

  

 

ARTICLE II

 

Definitions

 

Section 2.01.     Definitions.

 

(a)           Whenever used in this Indenture Supplement, the following words and phrases shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and the masculine as well as the feminine and neuter genders of such terms.

 

“Account Addition Test” for the purposes of the Transfer and Servicing Agreement, shall have the meaning specified in the side letter among the Transferor, the Servicer and the Issuer dated as of the date hereof.

 

“Administrative Agent” shall mean the “Agent” as such term is defined in the Note Purchase Agreement.

 

“Amortization Date” shall mean the earliest to occur of (i) the date after May 14, 2015 designated by the Trust as the Amortization Date at any time upon seven (7) Business Days’ written notice to the Administrative Agent, the Transferor, the Indenture Trustee and the Servicer, (ii) the Pay Out Commencement Date and (iii) the Scheduled Expiration Date.

 

“Applicable Law” shall have the meaning specified in Section 8.11.

 

“Available Finance Charge Collections” shall mean, with respect to any Monthly Period, an amount equal to the sum of (a) the Finance Charge Collections allocated to Series 2014-A pursuant to subsection 4.01(c)(i) for such Monthly Period, (b) the Excess Finance Charge Collections allocated to Series 2014-A for such Monthly Period, and (c) investment earnings on funds in the Special Funding Account (net of investment expenses and losses) allocable to Series 2014-A for the period from and including the immediately preceding Distribution Date to but excluding the related Distribution Date.

 

“Available Principal Collections” shall mean, with respect to any Monthly Period, an amount equal to (a) the Investor Principal Collections for such Monthly Period, minus (b) the amount of Reallocated Principal Collections with respect to such Monthly Period which pursuant to Section 4.06 are required to be applied on the related Distribution Date, plus (c) any Shared Principal Collections with respect to other Principal Sharing Series in Group One (including any amounts on deposit in the Special Funding Account that are allocated to Series 2014-A pursuant to the Indenture for application as Shared Principal Collections), plus (d) the aggregate amount to be treated as Available Principal Collections pursuant to subsections 4.04(a)(iii), (iv) and (v) for the related Distribution Date, minus (e) any Principal Collections that have been used to effect an Optional Amortization during such Monthly Period.

 

“Base Invested Amount” shall mean, with respect to any Monthly Period, (a) the Initial Invested Amount, plus (b) the aggregate amount of any Note Principal Balance Increases occurring on or prior to the first day of such Monthly Period minus (c) the aggregate decreases in the Note Principal Balance for any Limited Amortization Period and/or Optional Amortization preceding such Monthly Period.

 

  

2

  

 

“Base Rate” shall mean, with respect to any Monthly Period, the annualized percentage equivalent of a fraction, the numerator of which is equal to the sum of the Class A Monthly Interest and the Monthly Servicing Fee, each with respect to the related Distribution Date, and the denominator of which is the Note Principal Balance as of the first day of such Monthly Period.

 

“Business Day” shall have the meaning specified in the Note Purchase Agreement.

 

“Class A Facility Limit” shall mean the “Facility Limit” as that term is defined in the Note Purchase Agreement.

 

“Class A Monthly Interest” shall have the meaning specified in subsection 4.02(a).

 

“Class A Note Initial Principal Balance” shall mean $0.00.

 

“Class A Note Interest Rate” shall mean the “Class A Note Rate” as that term is defined in the Note Purchase Agreement.

 

“Class A Note Principal Balance” shall mean, on any date of determination, an amount equal to (a) the Class A Note Initial Principal Balance, plus (b) the aggregate amount of Class A Note Principal Balance Increases made on or prior to such date, minus (c) the aggregate amount of principal payments made to the Class A Noteholders on or prior to such date.

 

“Class A Note Principal Balance Increase” shall have the meaning specified in subsection 4.11(a).

 

“Class A Noteholder” shall mean the Person and any successors or assigns permitted hereunder in whose name a Class A Note is registered in the Note Register.  The initial Class A Noteholder is J.P. Morgan Chase Bank, N.A., as Administrative Agent, on behalf of the Purchasers.

 

“Class A Notes” shall mean any one of the Class A Series 2014-A Asset Backed Variable Funding Notes executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A-1.

 

“Class A Required Amount” shall mean, with respect to any Distribution Date, an amount equal to the excess of the amounts described in subsections 4.04(a)(i) and 4.04(a)(ii) over the Available Finance Charge Collections applied to pay such amount pursuant to subsection 4.04(a).

 

“Class B Note Initial Principal Balance” shall mean $0.00.

 

  

3

  

 

“Class B Note Principal Balance” shall mean, on any date of determination, an amount equal to (a) the Class B Note Initial Principal Balance, plus (b) the aggregate amount of Class B Note Principal Balance Increases made on or prior to such date, minus (c) the aggregate amount of principal payments made to the Class B Noteholders prior to such date.

 

“Class B Note Principal Balance Increase” shall have the meaning specified in subsection 4.11(b).

 

“Class B Noteholder” shall mean the Person and any successors or assigns permitted hereunder in whose name a Class B Note is registered in the Note Register.

 

“Class B Notes” shall mean any one of the Class B Series 2014-A Asset Backed Variable Funding Notes executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A-2.

 

“Closing Date” shall mean May 15, 2014.

 

“Consignment Reserve Amount” shall mean, on any date of determination, an amount equal to the inventory value (as determined by the Servicer as of the last Business Day of the prior calendar week) of all consigned merchandise of all Consignment Vendors which merchandise is on consignment with the Seller.

 

“Consignment Vendor” shall mean, on any date of determination, a vendor who has on file an effective UCC-1 financing statement naming the Seller as debtor (or consignee) and describing collateral consisting of consigned merchandise, which financing statement, as amended, does not (i) exclude or disclaim a security interest in proceeds of such consigned merchandise or (ii) relate to a consignment agreement or other security agreement that expressly excludes or disclaims a security interest in proceeds of such consigned merchandise.

 

“Controlled Amortization Amount” shall mean, for any Distribution Date with respect to the Controlled Amortization Period, one-tenth of the Note Principal Balance as of the end of the Revolving Period (rounded upward to the nearest dollar).

 

“Controlled Amortization Period” shall mean, unless a Pay Out Event shall have occurred prior thereto, the period commencing at the close of business on the Termination Date (as such term is defined in the Note Purchase Agreement excluding clause (b) thereof), and ending on the first to occur of (a) the commencement of the Early Amortization Period and (b) the Series 2014-A Termination Date.

 

“Controlled Distribution Amount” shall mean, for any Distribution Date with respect to the Controlled Amortization Period, an amount equal to the sum of the Controlled Amortization Amount for such Distribution Date and any Deficit Controlled Amortization Amount for the immediately preceding Distribution Date.

 

“Credit Agreement” shall mean, the Credit Agreement dated as of May 24, 2011, among Signet Group Limited, Signet Group Treasury Services, Inc., Signet Jewelers Limited, the additional borrower party thereto, the lenders party thereto, J.P. Morgan Chase Bank, N.A., Barclays Capital, Fifth Third Bank, PNC Bank, National Association, RBS Citizens, N.A., and Standard Chartered Bank, as the same may be amended and restated, amended, supplemented or otherwise modified from time to time.

 

  

4

  

 

“Deficit Controlled Amortization Amount” shall mean (a) on the first Distribution Date of the Controlled Amortization Period, the excess, if any, of the Controlled Amortization Amount for such Distribution Date over the aggregate amount distributed to the Class A Noteholders and Class B Noteholders as principal on such Distribution Date and (b) on each subsequent Distribution Date with respect to the Controlled Amortization Period, the excess, if any, of the Controlled Distribution Amount for such Distribution Date over the aggregate amount distributed to Class A Noteholders and Class B Noteholders on such Distribution Date.

 

“Distribution Date” shall mean, initially, July 21, 2014, and thereafter, the 20th calendar day of each calendar month; provided, that if such date is not a Business Day, the next succeeding Business Day.

 

“Early Amortization Period” shall mean the period commencing on the Business Day immediately preceding the day on which a Pay Out Event is deemed to have occurred, and ending on the Series 2014-A Termination Date.

 

“Event of Default” shall mean an “Event of Default” specified in Section 5.02 of the Indenture or an “Event of Default” specified in Section 5.01 of the Note Purchase Agreement.

 

“Finance Charge Collections” shall have the meaning specified in Section 4.01(c)(i).

 

“Finance Charge Shortfall” shall have the meaning specified in Section 4.07.

 

“Fixed Investor Percentage” shall mean, with respect to any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction, (a) the numerator of which is the Invested Amount as of the close of business on the last day of the Revolving Period or the last day prior to the suspension thereof, as the case may be, and (b) the denominator of which is the greater of (i) the sum of (A) the total amount of Principal Receivables in the Trust as of the close of business on the last day of the immediately preceding Monthly Period (or with respect to the first Monthly Period, the total amount of Principal Receivables in the Trust as of the Closing Date) and (B) the principal amount on deposit in the Special Funding Account as of the close of business on such day (or with respect to the first Monthly Period, the Closing Date) and (ii) the sum of the numerators used to calculate the investor percentages for allocations with respect to Principal Receivables or Finance Charge Receivables, as applicable, for all Series outstanding as of the date as to which such determination is being made provided, however, that with respect to any Monthly Period in which a Removal Date occurs, the amount in clause (b)(i)(A) above shall be (1) the aggregate amount of Principal Receivables in the Trust as of the close of business on the last day of the prior Monthly Period, for the period from and including the first day of such Monthly Period to but excluding the related Removal Date, and (2) the aggregate amount of Principal Receivables in the Trust as of the close of business on the related Removal Date, after adjusting for the aggregate amount of Principal Receivables removed from the Trust on the related Removal Date, for the period from and including the related Removal Date to and including the last day of such Monthly Period.

 

  

5

  

 

“Floating Investor Percentage” shall mean, with respect to any day during a Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction, (a) the numerator of which is the Invested Amount as of the close of business on the previous day and (b) the denominator of which is the greater of (i) the sum of (A) the total amount of Principal Receivables in the Trust as of the close of business on such last day (or with respect to the first Monthly Period, the total amount of Principal Receivables in the Trust on the Closing Date) and (B) the principal amount on deposit in the Special Funding Account as of the close of business on such last day (or with respect to the first Monthly Period, as of the Closing Date) and (ii) the sum of the numerators used to calculate the investor percentages for allocations with respect to Finance Charge Receivables, Defaulted Amounts or Principal Receivables, as applicable, for all Series outstanding as of the date as to which such determination is being made; provided, however, that with respect to any Monthly Period in which a Removal Date occurs, the amount in clause (b)(i)(A) above shall be (1) the aggregate amount of Principal Receivables in the Trust as of the close of business on the last day of the prior Monthly Period, for the period from and including the first day of such Monthly Period to but excluding the related Removal Date and (2) the aggregate amount of Principal Receivables in the Trust as of the close of business on the related Removal Date, after adjusting for the aggregate amount of Principal Receivables removed from the Trust on the related Removal Date for the period from and including the related Removal Date to and including the last day of such Monthly Period.

 

“Group One” shall mean Series 2014-A and each other Series hereafter specified in the related Indenture Supplement to be included in Group One.

 

“Indebtedness” shall have the meaning given to it in the Credit Agreement.

 

“Initial Invested Amount” shall mean $0.00.

 

“Interest Period” shall mean, with respect to any Distribution Date, the period from and including the first day of the calendar month immediately preceding such Distribution Date (or, in the case of the first Distribution Date, from and including the Closing Date) to and including the last day of the calendar month immediately preceding such Distribution Date.

 

“Invested Amount” shall mean, as of any date of determination, an amount equal to the Initial Invested Amount, plus the aggregate amount of Note Principal Balance Increases made on or prior to such date, minus the amount of principal previously paid to the Series 2014-A Noteholders, minus the excess, if any, of the aggregate amount of Investor Charge-Offs and Reallocated Principal Collections over the reimbursements of such amounts pursuant to subsection 4.04(a)(v) prior to such date.

 

“Investment Letter” shall have the meaning specified in Section 8.03(c).

 

“Investor Charge-Offs” shall have the meaning specified in Section 4.05.

 

  

6

  

 

“Investor Default Amount” shall mean, with respect to any Distribution Date, an amount equal to the product of (a) the Defaulted Amount for the related Monthly Period and (b) the Floating Investor Percentage as of the first day of the related Monthly Period.

 

“Investor Finance Charge Collections” shall mean, with respect to any Monthly Period, an amount equal to the Investor Percentage on the first day of such Monthly Period of Collections of Finance Charge Receivables (including Recoveries treated as Collections of Finance Charge Receivables) deposited in the Collection Account for such Monthly Period.

 

“Investor Percentage” shall mean (a) for any day during a Monthly Period, with respect to Defaulted Amounts at all times and Finance Charge Receivables and Principal Receivables during the Revolving Period, the Floating Investor Percentage and (b) for any day during a Monthly Period, with respect to Finance Charge Receivables and Principal Receivables during the Controlled Amortization Period or the Early Amortization Period or any Limited Amortization Period, the Fixed Investor Percentage.

 

“Investor Principal Collections” shall mean, with respect to any Monthly Period, the aggregate amount retained in the Collection Account pursuant to subsection 4.01(c)(ii) for such Monthly Period.

 

“Limited Amortization” shall have the meaning specified in subsection 4.09(a).

 

“Limited Amortization Amount” shall have the meaning specified in subsection 4.09(a).

 

“Limited Amortization Period” shall mean, with respect to any Limited Amortization, the period beginning on the first day of the first Monthly Period for which any effective notice of Limited Amortization was delivered pursuant to subsection 4.09(a) and ending on the earlier of (i) the date on which Principal Collections equal to the Limited Amortization Amount have been deposited into the Collection Account and (ii) the commencement of the Controlled Amortization Period or the Early Amortization Period.

 

“Loan Party” shall have the meaning given to it in the Credit Agreement.

 

“Material Indebtedness” shall have the meaning given to it in the Credit Agreement.

 

“Material Subsidiary” shall have the meaning given to it in the Credit Agreement.

 

“Minimum Class B Note Payment Amount” shall mean, on any date, an amount equal to the lesser of (i) the amount by which the Class B Note Principal Balance exceeds the Required Class B Note Principal Balance and (ii) the amount by which the Consignment Reserve Amount on the date that a payment of principal was made with respect to the Class B Notes prior to such date exceeds the Consignment Reserve Amount on such date.

 

“Monthly Delinquent Receivables Ratio” shall mean with respect to the last day of any prior Monthly Period, the percentage equivalent of a fraction, the numerator of which is the aggregate amount of all Principal Receivables which are more than 90 days past due per the contractual method and the denominator of which is the aggregate amount of Principal Receivables as of the last day of the immediately preceding Monthly Period.

 

  

7

  

 

“Monthly Period” shall mean, with respect to any Distribution Date, the period from and including the first day of the calendar month immediately preceding such Distribution Date (or, in the case of the first Distribution Date, from and including the Closing Date) to and including the last day of the calendar month immediately preceding such Distribution Date.

 

“Monthly Principal” shall mean the monthly principal distributable in respect of the Notes as calculated in accordance with Section 4.03.

 

“Monthly Principal Reallocation Amount” shall mean, with respect to any Monthly Period, an amount equal to the lower of (i) the Class A Required Amount and (ii) the greater of (a)(x) the product of (I) 32.5% and (II) the Base Invested Amount for such Monthly Period minus (y) the amount of unreimbursed Investor Charge-Offs (after giving effect to Investor Charge-Offs for the related Monthly Period) and unreimbursed Reallocated Principal Collections (as of the previous Distribution Date) and (b) zero.

 

“Monthly Servicing Fee” shall have the meaning specified in Section 3.01.

 

“Monthly Statement” shall have the meaning specified in subsection 5.03(a).

 

“Note Assignment” shall have the meaning specified in subsection 8.03(e).

 

“Note Principal Balance” shall mean, on any date of determination, an amount equal to the sum of the Class A Note Principal Balance and the Class B Note Principal Balance.

 

“Note Principal Balance Increase” shall mean a Class A Note Principal Balance Increase and a Class B Note Principal Balance Increase.

 

“Note Purchase Agreement” shall mean the note purchase agreement, dated as of May 15, 2014, among the Trust, the Transferor, the Servicer, each conduit purchaser party thereto from time to time, each committed purchaser party thereto from time to time, and the Administrative Agent, as amended, modified and supplemented from time to time.

 

“Optional Amortization” shall have the meaning specified in subsection 4.09(b).

 

“Optional Amortization Amount” shall have the meaning specified in subsection 4.09(b).

 

“Optional Amortization Date” shall have the meaning specified in subsection 4.09(b).

 

“Participant” shall have the meaning specified in subsection 8.03(f).

 

“Pay Out Commencement Date” shall mean the date on which a Trust Pay Out Event occurs pursuant to Section 5.01 of the Indenture or a Series 2014-A Pay Out Event occurs pursuant to Section 6.01.

 

  

8

  

 

“Pay Out Event” shall mean a Trust Pay Out Event or a Series 2014-A Pay Out Event.

 

“Percentage Allocation” shall have the meaning specified in subsection 4.01(c)(ii)(y).

 

“Performance Guarantor” means Signet Jewelers Ltd.

 

“Permitted Note Participant” shall mean (i) the institution which is the Administrative Agent, (ii) each bank or financial institution specified as a Permitted Note Participant in a letter, dated as of the date hereof, and available to Series 2014-A Noteholders at the Corporate Trust Office of the Indenture Trustee from the Transferor, as such letter may be modified from time to time by the Transferor; provided that such modifications do not result in fewer than twenty-five (25) banks or financial institutions being specified in such letter and (iii) any other Person to which the Transferor may consent, which consent shall be withheld only on the basis that, following such Person’s becoming a Class B Noteholder or the holder of a participation interest in the rights of a Class B Noteholder, the number of Private Holders would exceed eighty (80) (assuming that each bank or financial institution specified as a Permitted Note Participant in the letter described in clause (ii) hereof is a Private Holder) or otherwise cause the Trust to be in jeopardy of being taxable as a publicly traded partnership pursuant to Section 7704 of the Code).

 

“Portfolio Yield” shall mean, with respect to any Monthly Period on the first day of which a Class A Note Principal Balance is outstanding, the annualized percentage equivalent of a fraction, (a) the numerator of which is equal to the sum of (i) Investor Finance Charge Collections with respect to such Monthly Period, plus (ii) the Series 2014-A Investor Percentage of investment earnings on funds in the Special Funding Account (net of investment expenses and losses) for the period from and including the immediately preceding Distribution Date to but excluding such Distribution Date, in each case, deposited into the Collection Account on the Distribution Date relating to such Monthly Period, such sum to be calculated on a cash basis after subtracting the Investor Default Amount for such Monthly Period and the Series 2014-A Investor Percentage of any Adjustment Payments which the Transferor is required but fails to make for such Monthly Period, and (b) the denominator of which is the Note Principal Balance as of the first day of such Monthly Period; provided, however, that Excess Finance Charge Collections that are allocated to Series 2014-A with respect to such Monthly Period may be added to the numerator if the Transferor shall have provided ten (10) Business Days prior written notice of such action to the Administrative Agent and the Administrative Agent shall have consented in writing to such action.

 

  

9

  

 

“Private Holder” shall mean each holder of a right to receive interest or principal in respect of any direct or indirect interest in the Trust, including any financial instrument or contract the value of which is determined in whole or in part by reference to the Trust (including the assets of the Trust, income of the Trust or distributions made by the Trust), but excluding any interest in the Trust represented by any Series or Class of Notes or any other interest as to which the Transferor has provided to the Indenture Trustee an Opinion of Counsel to the effect that such Series, Class or other interest will be treated as debt or otherwise not as an equity interest in either the Trust or the Receivables for federal income tax purposes, in each case, provided such interest is not convertible or exchangeable into an interest in the Trust or the Trust’s income or equivalent value.  Notwithstanding the immediately preceding sentence, “Private Holder” shall also include any other Person that the Transferor determines is, may be or may become, a “partner” within the meaning of Section 1.7704-1(h)(1)(ii) (including by reason of Section 1.7704-1(h)(3)) of the United States Treasury Regulations.  “Private Holders” shall include the Holders of the Transferor Certificates or Trust Certificate or any interest in either, the Servicer and the Class B Noteholders (but not the Class A Noteholders).  Any Person holding more than one interest in the Trust each of which separately would cause such Person to be a Private Holder shall be treated as a single Private Holder.  Each holder of an interest in a Private Holder which is a partnership, a corporation or a grantor trust under the Code shall be treated as a Private Holder unless excepted with the consent of the Transferor (which consent shall be based on an Opinion of Counsel generally to the effect that following the related transfer, the number of Private Holders would not exceed eighty (80)).

 

“Purchaser” shall have the meaning specified in the Note Purchase Agreement.

 

“Reallocated Principal Collections” shall, with respect to any Distribution Date, have the meaning specified in Section 4.06.

 

“Reassignment Amount” shall mean, with respect to any Distribution Date, after giving effect to any deposits and distributions otherwise to be made on such Distribution Date, the sum of (i) the outstanding principal balance of the Series 2014-A Notes on such Distribution Date and (ii) the Class A Monthly Interest for such Distribution Date plus any Class A Monthly Interest previously due but not distributed to the Class A Noteholders on a prior Distribution Date.

 

“Required Class B Note Principal Balance” shall mean on any date of determination, the sum of 32.5% of the Invested Amount on such date after taking into account any adjustments to be made on such date and (ii) the Consignment Reserve Amount on such date.

 

“Required Transferor Percentage” shall mean 10% of the principal balance of Eligible Receivables in the Trust. The Required Transferor Percentage shall increase to 15% in the event the Performance Guarantor’s public debt rating falls below “BB+” from Standard and Poor’s or “Ba2” from Moody’s

 

“Revolving Period” shall mean the period beginning on the Closing Date and ending on the earlier of the close of business on the day immediately preceding (i) the day the Controlled Amortization Period commences and (ii) the Early Amortization Period commences; provided, however, that the Revolving Period will be temporarily suspended for the duration of any Limited Amortization Period.

 

“Scheduled Expiration Date” shall have the meaning specified in the Note Purchase Agreement.

 

“Series 2014-A” shall mean the Series of Notes the terms of which are specified in this Indenture Supplement.

 

  

10

  

 

“Series 2014-A Final Maturity Date” shall mean the last day of the forty-eighth calendar month commencing after the Amortization Date.

 

“Series 2014-A Noteholder” shall mean a Class A Noteholder and/or a Class B Noteholder, as the context may require.

 

“Series 2014-A Notes” shall mean the Class A Notes and the Class B Notes.

 

“Series 2014-A Pay Out Event” shall have the meaning specified in Section 6.01.

 

“Series 2014-A Investor Percentage” shall mean, on any date of determination, the percentage equivalent of a fraction, the numerator of which is the Invested Amount and the denominator of which is the sum of the Invested Amounts relating to all other Series then outstanding.

 

“Series 2014-A Principal Shortfall” shall have the meaning specified in subsection 4.08(a).

 

“Series 2014-A Termination Date” shall mean the earliest to occur of (i) the day after the Distribution Date on which the Series 2014-A Notes are paid in full, (ii) the Distribution Date on which the proceeds of Receivables sold pursuant to Section 7.02 are distributed to the Series 2014-A Noteholders pursuant to Section 5.02 and (iii) the termination of the Trust pursuant to the Trust Agreement.

 

“Servicing Fee Rate” shall mean 2.00% per annum.

 

“Weighted Average Invested Amount” shall mean, for any period, the sum of the Invested Amounts for each day in such period divided by the number of days in such period.

 

(b)           Each capitalized term defined herein shall relate to the Series 2014-A Notes and no other Series of Notes issued by the Trust, unless the context otherwise requires.  All capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Indenture, the Transfer and Servicing Agreement or the Trust Agreement.  In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the Transfer and Servicing Agreement or the Trust Agreement, the terms and provisions of this Indenture Supplement shall govern.

 

(c)           The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Indenture Supplement shall refer to this Indenture Supplement as a whole and not to any particular provision of this Indenture Supplement; references to any Article, subsection, Section or Exhibit are references to Articles, subsections, Sections and Exhibits in or to this Indenture Supplement unless otherwise specified; and the term “including” means “including without limitation.”

 

[END OF ARTICLE II]

 

  

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ARTICLE III

 

Servicing Fee

 

Section 3.01.     Servicing Compensation.  The share of the Servicing Fee allocable to the Series 2014-A Noteholders with respect to any Distribution Date (the “Monthly Servicing Fee”) shall be equal to one-twelfth of the product of (a) the Servicing Fee Rate and (b) (i) the Weighted Average Invested Amount for the Monthly Period preceding such Distribution Date, minus (ii) the product of the amount, if any, on deposit in the Special Funding Account as of the last day of the Monthly Period preceding such Distribution Date and the Floating Investor Percentage as of the last day of such Monthly Period; provided, however, that with respect to the first Distribution Date, the Monthly Servicing Fee shall be equal to the product of (a) the Servicing Fee Rate and (b) (i) the Weighted Average Invested Amount for the first Monthly Period, minus (ii) the product of the amount, if any, on deposit in the Special Funding Account as of the last day of the Monthly Period preceding such Distribution Date and the Floating Investor Percentage as of the last day of such Monthly Period and (c) a fraction, the numerator of which is equal to the number of days beginning on and including the date of the first Note Principal Balance Increase to but not including the first Distribution Date and the denominator of which is equal to 360.  The remainder of the Servicing Fee shall be paid by the Holders of the Transferor Certificates or the noteholders of other Series (as provided in the related Indenture Supplements) and in no event shall the Trust, the Indenture Trustee or the Series 2014-A Noteholders be liable for the share of the Servicing Fee to be paid by the Holders of the Transferor Certificates or the noteholders of any other Series.  To the extent that the Monthly Servicing Fee is not paid in full pursuant to the preceding provisions of this Section 3.01 and Section 4.04, it shall be paid by the Holders of the Transferor Certificates.  In no event shall the Indenture Trustee be responsible for the Servicing Fee.

 

[END OF ARTICLE III]

 

  

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ARTICLE IV

 

Rights of Series 2014-A Noteholders

and Allocation and Application of Collections

 

Section 4.01.     Collections and Allocations.

 

(a)           Allocations.  Collections of Finance Charge Receivables and Principal Receivables and Defaulted Receivables allocated pursuant to Article VIII of the Indenture shall be allocated and distributed as set forth in this Article.

 

(b)           Payments to the Transferor.  On each Deposit Date, the Servicer shall withdraw from the Collection Account and pay to the Holders of the Transferor Certificates the following amounts:

 

(i)            an amount equal to the Transferor Percentage for the related Monthly Period of Collections of Finance Charge Receivables deposited in the Collection Account on such Deposit Date; and

 

(ii)           an amount equal to the Transferor Percentage for the related Monthly Period of Collections of Principal Receivables deposited in the Collection Account on such Deposit Date, if the Transferor Interest (determined after giving effect to any Principal Receivables transferred to the Trust on such Deposit Date) exceeds zero.

 

The withdrawals to be made from the Collection Account pursuant to this subsection 4.01(b) shall not apply to deposits into the Collection Account that do not represent Collections, including payment of (i) the purchase price for the Receivables pursuant to Sections 2.06 or 7.01 of the Transfer and Servicing Agreement, (ii) the purchase price for the Notes pursuant to Section 11.04 of the Indenture and (iii) the redemption price for the Series 2014-A Notes pursuant to Section 7.01.

 

(c)           Allocations to the Series 2014-A Noteholders.  The Servicer shall, prior to the close of business on any Deposit Date, allocate to the Series 2014-A Noteholders the following amounts as set forth below:

 

(i)             Allocations of Finance Charge Collections.  The Servicer shall allocate to the Series 2014-A Noteholders and retain in the Collection Account for application as provided herein an amount equal to the product of (A) the Investor Percentage and (B) the aggregate amount of Collections of Finance Charge Receivables deposited in the Collection Account on such Deposit Date (such amount, the “Finance Charge Collections”).

 

(ii)           Allocations of Principal Collections.  The Servicer shall allocate to the Series 2014-A Noteholders the following amounts as set forth below:

 

  

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(x)           Allocations During the Revolving Period.  During the Revolving Period an amount equal to the product of (I) the Investor Percentage and (II) the aggregate amount of Collections of Principal Receivables deposited in the Collection Account on such Deposit Date, shall be allocated to the Series 2014-A Noteholders sequentially (i) first, if any other Principal Sharing Series in Group One is outstanding and in its amortization period or accumulation period, retained in the Collection Account for application, to the extent necessary, as Shared Principal Collections to other Series in Group One on the related Distribution Date, and (ii) second, at the request of the Class B Noteholders and only if the Transferor Interest on such Deposit Date is greater than the Required Transferor Interest (after giving effect to all Principal Receivables transferred to the Trust on such day), paid to the Class B Noteholders as principal up to the Minimum Class B Note Payment Amount and (iii) third, paid to the Holders of the Transferor Certificates only if the Transferor Interest on such Deposit Date is greater than the Required Transferor Interest (after giving effect to all Principal Receivables transferred to the Trust on such day) and otherwise shall be deposited in the Special Funding Account.

 

(y)           Allocations During any Limited Amortization Period.  During any Limited Amortization Period an amount equal to the product of (I) the Investor Percentage and (II) the aggregate amount of Collections of Principal Receivables deposited in the Collection Account on such Deposit Date (the product for any such date is hereinafter referred to as a “Percentage Allocation”) shall be allocated to the Series 2014-A Noteholders and retained in the Collection Account until applied as provided herein; provided, however, that if the sum of such Percentage Allocation and all preceding Percentage Allocations with respect to the same Monthly Period exceeds the Limited Amortization Amount, then such excess shall not be treated as a Percentage Allocation and shall be (i) first, if any other Principal Sharing Series in Group One is outstanding and in its amortization period or accumulation period, retained in the Collection Account for application, to the extent necessary, as Shared Principal Collections to other Series in Group One on the related Distribution Date, (ii) second, at the request of the Class B Noteholders and only if the Transferor Interest on such Deposit Date is greater than the Required Transferor Interest (after giving effect to all Principal Receivables transferred to the Trust on such day), paid to the Class B Noteholders as principal up to the Minimum Class B Note Payment Amount and (iii) third, paid to the Holders of the Transferor Certificates only if the Transferor Interest on such Deposit Date is greater than the Required Transferor Interest (after giving effect to all Principal Receivables transferred to the Trust on such day) and otherwise shall be deposited in the Special Funding Account.

 

  

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(z)           Allocations During the Controlled Amortization Period or the Early Amortization Period.  During the Controlled Amortization Period or the Early Amortization Period, an amount equal to the product of (I) the Investor Percentage and (II) the aggregate amount of Collections of Principal Receivables deposited in the Collection Account on such Deposit Date, shall be allocated to the Series 2014-A Noteholders and retained in the Collection Account until applied as provided herein; provided, however, that after the date on which the amount of such Collections equal to (x) the Controlled Distribution Amount, during the Controlled Amortization Period, or (y) the Invested Amount, during the Early Amortization Period, has been deposited into the Collection Account and allocated to the Series 2014-A Noteholders, any excess over such amount shall (i) first, if any other Principal Sharing Series in Group One is outstanding and in its amortization period or accumulation period, retained in the Collection Account for application, to the extent necessary, as Shared Principal Collections to other Series in Group One on the related Distribution Date, (ii) second, at the request of the Class B Noteholders and only if the Transferor Interest on such Deposit Date is greater than the Required Transferor Interest (after giving effect to all Principal Receivables transferred to the Trust on such day), paid to the Class B Noteholders as principal up to the Minimum Class B Note Payment Amount and (iii) third, paid to the Holders of the Transferor Certificates only if the Transferor Interest on such date is greater than the Required Transferor Interest (after giving effect to all Principal Receivables transferred to the Trust on such day) and otherwise shall be deposited in the Special Funding Account.

 

(d)           Notwithstanding anything to the contrary in this Section 4.01, (i) if on any date the aggregate amount of Principal Receivables is less than the Required Minimum Principal Balance, the Investor Percentage of all Collections of Principal Receivables on such date shall, unless such Collections are to be retained in the Collection Account, be deposited in the Special Funding Account and (ii) Collections of Principal Receivables that are otherwise payable to the Holders of the Transferor Certificate may, at the option of such Holders, remain in the Collection Account for possible application to a Limited Amortization or Optional Amortization.  Such Holders shall give prompt notice to the Administrative Agent of the retention of such Collections in the Collection Account.

 

Section 4.02.     Determination of Class A Monthly Interest.

 

(a)           The amount of monthly interest (“Class A Monthly Interest”) payable from the Collection Account with respect to the Class A Notes on any Distribution Date shall be an amount determined as provided in the Note Purchase Agreement.

 

(b)           The Class B Notes shall not accrue interest.

 

Section 4.03.     Determination of Monthly Principal.  The amount of monthly principal payable from the Collection Account with respect to the Series 2014-A Notes on each Distribution Date (the “Monthly Principal”), beginning with the Distribution Date in the month following the month in which the Controlled Amortization Period or, if earlier, a Limited Amortization Period or the Early Amortization Period, begins, shall be equal to the least of (i) the Available Principal Collections on deposit in the Collection Account with respect to such Distribution Date, (ii) for each Distribution Date with respect to the Controlled Amortization Period, the Controlled Distribution Amount for such Distribution Date, (iii) for each Distribution Date with respect to a Limited Amortization Period, the aggregate Limited Amortization Amount remaining outstanding on such Distribution Date and (iv) the Invested Amount (after taking into account any adjustments to be made on such Distribution Date pursuant to Sections 4.05 and 4.06).

 

  

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Section 4.04.     Application of Available Finance Charge Collections and Available Principal Collections.  The Servicer shall apply, or shall cause the Indenture Trustee to apply by written instruction to the Indenture Trustee, on each Distribution Date, Available Finance Charge Collections and Available Principal Collections on deposit in the Collection Account with respect to such Distribution Date to make the following distributions:

 

(a)           an amount equal to the Available Finance Charge Collections with respect to such Distribution Date will be distributed or deposited in the following priority:

 

(i)             first, an amount equal to Class A Monthly Interest for such Distribution Date to the Class A Noteholders;

 

(ii)           second, an amount equal to the Monthly Servicing Fee for such Distribution Date, plus the amount of any Monthly Servicing Fee previously due but not distributed to the Servicer on a prior Distribution Date, shall be distributed to the Servicer (unless such amount has been netted against deposits to the Collection Account in accordance with Section 8.04 of the Indenture);

 

(iii)           third, an amount equal to the Investor Default Amount, if any, for such Distribution Date shall be treated as a portion of Available Principal Collections for such Distribution Date;

 

(iv)           fourth, an amount equal to the Series 2014-A Investor Percentage of Adjustment Payments which the Transferor is required but fails to make pursuant to Section 3.09 of the Transfer and Servicing Agreement shall be treated as Available Principal Collections for such Distribution Date;

 

(v)            fifth, an amount equal to the sum of the aggregate amount of Investor Charge-Offs and the amount of Reallocated Principal Collections which have not been previously reimbursed pursuant to this subparagraph (v) shall be treated as a portion of Available Principal Collections for such Distribution Date;

 

(vi)          sixth, any other amounts that the Trust or the Transferor may from time to time be liable for hereunder or in the Note Purchase Agreement with respect to such Distribution Date and that are not otherwise provided for in subsections 4.04(a)(i) through (v) above will be paid to the Class A Noteholders;

 

(vii)         seventh, if an Event of Default and acceleration of the Series 2014-A Notes has occurred, an amount up to the outstanding principal balance of the Series 2014-A Notes will be treated as Available Principal Collections for such Distribution Date; and

 

  

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(viii)        eighth, the balance, if any, will constitute a portion of Excess Finance Charge Collections for such Distribution Date and will be available for allocation to other Series in Group One or to the Holders of the Transferor Certificates as described in Section 8.08 of the Indenture and Section 4.01;

 

(b)           (i) if such Distribution Date is with respect to the Revolving Period (and is not an Optional Amortization Date), an amount equal to the Available Principal Collections deposited in the Collection Account for the related Monthly Period shall be treated as Shared Principal Collections and applied in accordance with Section 8.05 of the Indenture; and

 

(ii)            if such Distribution Date is an Optional Amortization Date with respect to the Revolving Period, an amount equal to the Optional Amortization Amount designated by the Issuer pursuant to subsection 4.09(b) as being payable to the Class A Noteholders on such Optional Amortization Date shall be distributed to the Class A Noteholders;

 

(c)            if such Distribution Date is with respect to a Limited Amortization Period, an amount equal to the Available Principal Collections deposited in the Collection Account for the related Monthly Period shall be distributed or deposited in the following order of priority:

 

(i)             first, an amount up to the portion of the applicable Limited Amortization Amount designated by the Issuer pursuant to subsection 4.09(a) as being payable to the Class A Noteholders which has not been previously distributed with respect to such Limited Amortization Period shall be distributed to the Class A Noteholders;

 

(ii)           second, an amount up to the portion of the applicable Limited Amortization Amount designated by the Issuer pursuant to subsection 4.09(a) as being payable to the Class B Noteholders which has not been previously distributed with respect to such Limited Amortization Period shall be distributed to the Class B Noteholders; and

 

(iii)           third, the balance of such Available Principal Collections shall be treated as Shared Principal Collections and applied in accordance with Section 8.05 of the Indenture.

 

(d)           On each Distribution Date if such Distribution Date is with respect to a Controlled Amortization Period or an Early Amortization Period, an amount equal to the Available Principal Collections deposited in the Collection Account for the related Monthly Period shall be distributed or deposited in the following order of priority:

 

(i)            first, an amount, to the extent available as allocated pursuant to subsection 4.01(c)(ii)(z), up to the Class A Note Principal Balance shall be paid to the Class A Noteholders;

 

(ii)           second, for each Distribution Date beginning on the Distribution Date on which the Class A Note Principal Balance has been paid in full, an amount, to the extent available, up to the Class B Note Principal Balance shall be paid to the Class B Noteholders;

 

  

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(iii)           third, the balance of such Available Principal Collections shall be treated as Shared Principal Collections and applied in accordance with Section 8.05 of the Indenture.

 

Section 4.05.     Investor Charge-Offs.  On each Determination Date, the Servicer shall calculate the Investor Default Amount, if any, and the Series 2014-A Investor Percentage of unpaid Adjustment Payments, if any, for such Distribution Date.  If, on any Distribution Date, the Investor Default Amount and the Series 2014-A Investor Percentage of unpaid Adjustment Payments, if any, for such Distribution Date exceeds the amount of Available Finance Charge Collections allocated with respect thereto pursuant to subsection 4.04(a)(iii) and (iv) with respect to such Distribution Date, the Invested Amount (after giving effect to any reductions for any Reallocated Principal Collections on such Distribution Date) shall be reduced by the amount of such excess, but not by more than the lesser of (x) the sum of the Investor Default Amount and the Series 2014-A Investor Percentage of unpaid Adjustment Payments and (y) the Invested Amount (after giving effect to any reductions for any Reallocated Principal Collections on such Distribution Date) for such Distribution Date (such reduction, an “Investor Charge-Off’).

 

Section 4.06.     Reallocated Principal Collections.  On each Distribution Date, the Servicer shall apply, or shall cause the Indenture Trustee to apply, Investor Principal Collections with respect to such Distribution Date to fund any deficiency under subsections 4.04(a)(i) and (ii), in that order of priority in an amount not to exceed the Monthly Principal Reallocation Amount for the related Monthly Period (the amount of Investor Principal Collections so applied, “Reallocated Principal Collections”).  On each Distribution Date, the Invested Amount shall be reduced by the amount of Reallocated Principal Collections for such Distribution Date.

 

Section 4.07.     Excess Finance Charge Collections.  Series 2014-A shall be an Excess Allocation Series with respect to Group One only.  Subject to Section 8.08 of the Indenture, Excess Finance Charge Collections with respect to the Excess Allocation Series in Group One for any Distribution Date will be allocated to Series 2014-A in an amount equal to the product of (x) the aggregate amount of Excess Finance Charge Collections with respect to all the Excess Allocation Series in Group One for such Distribution Date and (y) a fraction, the numerator of which is the Finance Charge Shortfall for Series 2014-A for such Distribution Date and the denominator of which is the aggregate amount of Finance Charge Shortfalls for all the Excess Allocation Series in Group One for such Distribution Date.  The “Finance Charge Shortfall” for Series 2014-A for any Distribution Date will be equal to the excess, if any, of (a) the full amount required to be paid, without duplication, pursuant to subsections 4.04(a)(i) through (vii) on such Distribution Date over (b) the Finance Charge Collections allocated to Series 2014-A pursuant to subsection 4.01(c)(i) for the related Monthly Period.

 

  

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Section 4.08.     Shared Principal Collections.  Subject to Section 8.05 of the Indenture, Shared Principal Collections with respect to the Series in Group One for any Distribution Date will be allocated to Series 2014-A in an amount equal to the product of (x) the aggregate amount of Shared Principal Collections with respect to all Principal Sharing Series in Group One for such Distribution Date and (y) a fraction, the numerator of which is the Series 2014-A Principal Shortfall for such Distribution Date and the denominator of which is the aggregate amount of Principal Shortfalls for all the Series which are Principal Sharing Series in Group One for such Distribution Date.  The “Series 2014-A Principal Shortfall” will be equal to (a) for any Distribution Date with respect to the Revolving Period, zero, (b) for any Distribution Date with respect to the Controlled Amortization Period, the excess, if any, of the Controlled Distribution Amount with respect to such Distribution Date over the amount of Available Principal Collections for such Distribution Date (excluding any portion thereof attributable to Shared Principal Collections), (c) for any Distribution Date with respect to any Limited Amortization Period, the excess, if any, of the outstanding Limited Amortization Amount for such Distribution Date over the amount of Available Principal Collections for such Distribution Date (excluding any portion thereof attributable to Shared Principal Collections), and (d) for any Distribution Date with respect to the Early Amortization Period, the excess, if any, of the Invested Amount over the amount of Available Principal Collections for such Distribution Date (excluding any portion thereof attributable to Shared Principal Collections).

 

Section 4.09.     Suspension of the Revolving Period; Limited Amortization Period and Optional Amortization.

 

(a)            Limited Amortization.  Subject to the terms and conditions of the Transfer and Servicing Agreement, the Indenture, this Indenture Supplement, the Class A Notes and the Class B Notes, the Issuer may elect at any time during the period beginning on the Closing Date and ending on the earlier to occur of (i) the commencement of the Early Amortization Period and (ii) the Controlled Amortization Period unless a Pay Out Event shall have occurred prior thereto, to temporarily suspend the Revolving Period and cause a Limited Amortization Period to commence for one or more Monthly Periods (a “Limited Amortization”) by giving to each of the Indenture Trustee, the Servicer and the Administrative Agent a written notice of Limited Amortization substantially in the form of Exhibit D at least two (2) Business Days prior to the first day of the Monthly Period in which such Limited Amortization Period is scheduled to commence, which notice shall specify an amount (a “Limited Amortization Amount”) for such Limited Amortization Period; provided, however, that any Limited Amortization Amount shall be in an amount of $1,000,000 or any higher multiple of $100,000; provided, further, that the Issuer may not cause a Limited Amortization Period to commence unless, in the reasonable belief of the Issuer and the Transferor, such Limited Amortization Period would not result in the occurrence of a Pay Out Event.  Notwithstanding anything herein to the contrary, the Issuer may elect to cause or cancel a Limited Amortization or to increase or decrease the Limited Amortization Amount by giving written notice of each such Limited Amortization or cancellation thereof, and each such increase or decrease to each of the Indenture Trustee, the Servicer and the Administrative Agent no later than two (2) Business Days following each Monthly Period in such Limited Amortization Period.

 

  

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(b)           Optional Amortization.  On any Business Day during the Revolving Period, the Issuer may cause the Servicer to provide written notice to the Transferor, the Indenture Trustee, the Administrative Agent and the Class A Noteholders (an “Optional Amortization Notice”) in the form of Exhibit E at least three (3) Business Days prior to the day such optional amortization is to occur (an “Optional Amortization Date”) stating its intention to cause a full or partial payment of principal of the Series 2014-A Notes in order to reduce the Invested Amount of such Series 2014-A Notes (an “Optional Amortization”) on such Optional Amortization Date, which notice shall specify the amount (an “Optional Amortization Amount”) for such Optional Amortization Date; provided, however, that any Optional Amortization Amount shall be in an amount of $1,000,000 or any higher multiple of $100,000; provided, further, that the Issuer may not cause any Optional Amortization to occur unless, in the reasonable belief of the Issuer and the Transferor, such Optional Amortization would not result in the occurrence of a Pay Out Event.  An Optional Amortization Notice shall state an Optional Amortization Date and an Optional Amortization Amount.  Such Optional Amortization Amount shall be paid from (i) any Available Principal Collections on deposit in the Collection Account, (ii) from funds on deposit in the Special Funding Account (but only to the extent withdrawals from the Special Funding Account will not cause the Transferor Interest to be less than the Required Transferor Interest after giving effect to such withdrawal and to such Optional Amortization), (iii) from the proceeds of the issuance of one or more new Series of Notes issued substantially contemporaneously with such Optional Amortization, (iv) from other funds paid to the Issuer by the Transferor for the express purpose of paying such Optional Amortization Amount and which are not otherwise allocable pursuant to the Transaction Documents, or (v) from any combination of items (i) through (iv) above.  On an Optional Amortization Date the Servicer shall pay the Optional Amortization Amount to the Administrative Agent for the benefit of the Class A Noteholders without penalty, premium or breakage.  After such payment has been made, the Invested Amount shall be reduced by such Optional Amortization Amount.

 

Section 4.10.     Investment Instructions.  Any investment instructions required to be given to the Indenture Trustee pursuant to the terms hereof must be given to the Indenture Trustee no later than 11:00 a.m., New York City time, on the date such investment is to be made. In the event the Indenture Trustee receives such investment instruction later than such time, the Indenture Trustee may, but shall have no obligation to, make such investment.  In the event the Indenture Trustee is unable to make an investment required in an investment instruction received by the Indenture Trustee after 11:00 a.m., New York City time, on such day, such investment shall be made by the Indenture Trustee on the next succeeding Business Day.  In no event shall the Indenture Trustee be liable for any investment not made pursuant to investment instructions received after 11:00 a.m., New York City time, on the day such investment is requested to be made.

 

Section 4.11.     Note Principal Balance Increases; Reduction of Facility Limit.

 

(a)           The Class A Noteholders agree, by acceptance of the Class A Notes, that the Issuer may from time to time in accordance with Section 2.02 of the Note Purchase Agreement, prior to the commencement of the Controlled Amortization Period or the Early Amortization Period, request that the Purchasers fund an increase in the outstanding principal balance of the Class A Notes in the specified amounts (each such amount, a “Class A Note Principal Balance Increase”).

 

  

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(b)           The Class B Noteholders agree, by acceptance of the Class B Notes, that the Issuer may from time to time during the Revolving Period or, if the Consignor Reserve Amount is greater than $0 at such time, during the Controlled Amortization Period or the Early Amortization Period, request upon five (5) Business Day prior written notice to each of the Indenture Trustee, the Servicer and the Class B Noteholders substantially in the form of Exhibit F, that the Class B Noteholders fund increases in the outstanding principal balance of the Class B Notes in the specified amounts (each such amount, a “Class B Note Principal Balance Increase”).  The Class B Noteholders shall fund a Class B Note Principal Balance Increase by payment, in same day funds, to the Issuer of the amount of such Class B Note Principal Balance Increase in accordance with the payment instructions specified in the notice delivered with respect to such Class B Note Principal Balance Increase; provided, however, that so long as each Class B Noteholder is also a Transferor, each Class B Note Principal Balance Increase shall be funded through a reduction of the Transferor Interest in the amount of such Class B Note Principal Balance Increase so long as after giving effect to such Class B Note Principal Balance Increase, the Transferor Interest shall not be less than the Required Transferor Interest.

 

(c)           The Issuer may reduce the Class A Facility Limit as provided in Section 2.03(a) of the Note Purchase Agreement.

 

[END OF ARTICLE IV]

 

  

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ARTICLE V

 

Delivery of Series 2014-A Notes;

Distributions; Reports to Series 2014-A Noteholders

 

Section 5.01.     Delivery and Payment for the Series 2014-A Notes.

 

The Issuer shall execute and issue, and the Indenture Trustee shall authenticate, the Series 2014-A Notes in accordance with Section 2.03 of the Indenture.  The Indenture Trustee shall deliver the Series 2014-A Notes to or upon the order of the Issuer when so authenticated.

 

Section 5.02.     Distributions.

 

(a)            On each Distribution Date, the Paying Agent shall distribute to each Class A Noteholder of record on the related Record Date (other than as provided in Section 11.02 of the Indenture) such Class A Noteholder’s pro rata share of the amounts held by the Paying Agent that are allocated and available on such Distribution Date to pay interest on the Class A Notes pursuant to this Indenture Supplement.

 

(b)            On each Distribution Date, the Paying Agent shall distribute to each Class A Noteholder of record on the related Record Date such Class A Noteholder’s pro rata share of the amounts held by the Paying Agent that are allocated and available on such Distribution Date to pay principal of the Class A Notes pursuant to this Indenture Supplement.

 

(c)            On each Distribution Date, the Paying Agent shall distribute to each Class B Noteholder of record on the related Record Date such Class B Noteholder’s pro rata share of the amounts held by the Paying Agent that are allocated and available on such Distribution Date to pay principal of the Class B Notes pursuant to this Indenture Supplement.

 

(d)            The distributions to be made pursuant to this Section 5.02 are subject to the provisions of Sections 2.06, 6.01 and 7.01 of the Transfer and Servicing Agreement, Section 11.02 of the Indenture and Section 7.01.

 

(e)            Except as provided in Section 11.02 of the Indenture with respect to a final distribution, distributions to Series 2014-A Noteholders hereunder shall be made by wire transfer of immediately available funds to the account of the Administrative Agent that has been designated by the Administrative Agent (which account shall be designated not later than five (5) Business Days prior to the applicable Distribution Date) without presentation or surrender of any Series 2014-A Note or the making of any notation thereon.

 

Section 5.03.     Reports and Statements to Series 2014-A Noteholders.

 

(a)            Not later than the second Business Day preceding each Distribution Date, the Servicer shall deliver to the Owner Trustee, the Indenture Trustee, the Paying Agent and the Administrative Agent (i) a statement substantially in the form of Exhibit B, or such other form as agreed between the Servicer and the Administrative Agent from time to time, prepared by the Servicer (the “Monthly Statement”) and (ii) a certificate of an Authorized Officer substantially in the form of Exhibit C; provided that the Servicer may amend the form of Exhibit C, from time to time, with the consent of the Indenture Trustee and the Administrative Agent.

 

  

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(b)            On each Distribution Date, the Paying Agent, on behalf of the Indenture Trustee, shall forward to each Series 2014-A Noteholder each Monthly Statement it receives from the Servicer.

 

(c)            A copy of each statement or certificate provided pursuant to paragraph (a) may be obtained by any Series 2014-A Noteholder by a request in writing to the Servicer.

 

(d)            (i)  On or before January 31, April 30, July 31 and October 31 of each calendar year, beginning on October 31, 2014, the Paying Agent, on behalf of the Indenture Trustee, shall furnish or cause to be furnished to each Person who at any time during the preceding calendar quarter was a Series 2014-A Noteholder, a statement prepared by the Servicer containing the information which is required to be contained in the statement to Series 2014-A Noteholders, as set forth in paragraph (a) above, aggregated for such calendar quarter or the applicable portion thereof during which such Person was a Series 2014-A Noteholder, together with other information as is required to be provided by an issuer of indebtedness under the Code.  Such obligation of the Paying Agent shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Paying Agent pursuant to any requirements of the Code as from time to time in effect.

 

(ii)            On or before January 31 of each calendar year, beginning on January 31, 2015, the Paying Agent, on behalf of the Indenture Trustee, shall furnish or cause to be furnished to each Person who at any time during the preceding calendar year was a Series 2014-A Noteholder, a statement prepared by the Servicer containing the information which is required to be contained in the statement to Series 2014-A Noteholders, as set forth in paragraph (a) above, aggregated for such calendar year or the applicable portion thereof during which such Person was a Series 2014-A Noteholder, together with other information as is required to be provided by an issuer of indebtedness under the Code.  Such obligation of the Paying Agent shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Paying Agent pursuant to any requirements of the Code as from time to time in effect.

 

[END OF ARTICLE V]

 

  

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ARTICLE VI

 

Series 2014-A Pay Out Events; Additional Servicer Defaults

 

Section 6.01.     Series 2014-A. Pay Out Events.  If any one of the following events (each, a “Series 2014-A Pay Out Event”) shall occur with respect to the Series 2014-A Notes:

 

(a)            failure on the part of the Transferor or the Issuer (i) to make any payment or deposit required to be made by the Transferor by the terms of the Transfer and Servicing Agreement, the Indenture or this Indenture Supplement on or before the date occurring two (2) Business Days after the date such payment or deposit is required to be made therein or herein or (ii) failure by the Transferor duly to observe or perform any other covenants or agreements of the Transferor set forth in the Transfer and Servicing Agreement, or failure by the Issuer to observe or perform any other covenants or agreements of the Issuer set forth in the Indenture or this Indenture Supplement, which failure has a material adverse effect on the Series 2014-A Noteholders and continues unremedied for a period of thirty (30) days after the earlier to occur of (x) the date on which the Transferor obtains actual knowledge of such failure and (y) the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Transferor and the Issuer by the Indenture Trustee, or to the Transferor, the Issuer and the Indenture Trustee by any Holder of the Series 2014-A Notes;

 

(b)           any representation or warranty made by the Transferor in the Transfer and Servicing Agreement or by the Issuer in the Indenture or this Indenture Supplement, or any information contained in a computer file or microfiche list required to be delivered by the Transferor pursuant to Section 2.01 or subsection 2.09(e) of the Transfer and Servicing Agreement, shall prove to have been incorrect in any material respect when made or when delivered and continues to be incorrect in any material respect for a period of thirty (30) days after the earlier to occur of (x) the date on which the Transferor obtains actual knowledge of such failure and (y) the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Transferor and the Issuer by the Indenture Trustee, or to the Transferor, the Issuer and the Indenture Trustee by any Holder of the Series 2014-A Notes and as a result of which the interests of the Series 2014-A Noteholders are materially and adversely affected for such period; provided, however, that a Series 2014-A Pay Out Event pursuant to this subsection 6.01(b) shall not be deemed to have occurred hereunder if the Transferor has accepted reassignment of the Receivables relating to such potential Series 2014-A Pay Out Event, if applicable, during such period in accordance with the provisions of the Transfer and Servicing Agreement;

 

(c)            failure on the part of the Issuer or the Transferor to pay any indebtedness of at least $100,000 when due, which failure to pay continues beyond the applicable grace period or the Issuer or the Transferor shall otherwise default under any agreement or instrument and such default shall continue beyond the applicable grace period;

 

(d)           the entry of any final judgment or decree against the Issuer or the Transferor for which insurance or uncontested indemnification is not available, the collection of which has not been stayed;

 

  

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(e)            (i)  the Transferor Interest for any two (2) consecutive Business Days is less than the Required Transferor Interest for such two (2) consecutive Business Days or (ii) the aggregate amount of Principal Receivables for any two (2) consecutive Business Days is less than the Required Minimum Principal Balance for such two (2) consecutive Business Days;

 

(f)            any Servicer Default shall occur;

 

(g)            the average of the Portfolio Yield for any three (3) consecutive Monthly Periods is less than the average for such three Monthly Periods of the sum of (y) the Base Rate for each such Monthly Period and (z) 1.5%;

 

(h)            the Class B Note Principal Balance for any five (5) consecutive Business Days is less than the Required Class B Note Principal Balance for such five (5) consecutive Business Days;

 

(i)             the average Monthly Payment Rates for any three (3) consecutive Monthly Periods is less than 8.0%;

 

(j)             the average Monthly Delinquent Receivables Ratio for any three (3) consecutive Monthly Periods is more than 12.0%; or

 

(k)            any Event of Default shall occur;

 

then, in the case of any event described in subparagraph (a), (b), or (f) after the applicable grace period, if any, set forth in such subparagraphs, either the Indenture Trustee or the Holders of Series 2014-A Notes evidencing more than 50% of the aggregate unpaid principal amount of Series 2014-A Notes may declare that a Series 2014-A Pay Out Event has occurred by delivering written notice to the Transferor and the Servicer (and to the Indenture Trustee if given by the Series 2014-A Noteholders), which Series 2014-A Pay Out Event shall occur on the date of such written notice, and, in the case of any event described in subparagraph (c), (d), (e), (g), (h), (i), (j) or (k), a Series 2014-A Pay Out Event shall occur without any notice or other action on the part of the Indenture Trustee or the Series 2014-A Noteholders immediately upon the occurrence of such event.

 

Section 6.02.     Additional Servicer Defaults.  In addition to the events identified as Servicer Defaults in Section 7.01 of the Transfer and Servicing Agreement, the following events will be “Servicer Defaults” with respect to the Series 2014-A Notes:

 

(a)           one or more judgments for the payment of money in an aggregate amount in excess of $50,000,000 shall be rendered against the Servicer or against the Servicer, Signet Group Limited, any Material Subsidiary and any other Loan Party in aggregate and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Servicer, Signet Group Limited, any Material Subsidiary or any other Loan Party to enforce any such judgment;

 

  

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(b)           the Servicer shall fail to make any payment (whether of principal or interest) in respect of any Material Indebtedness, when and as the same shall become due and payable, and such failure shall continue after any applicable grace period; provided, however, that such default shall not constitute an Servicer Default unless the aggregate outstanding principal amount of such item of Indebtedness and all other items of Indebtedness of the Servicer and the other Loan Parties as to which such defaults exist and have continued without being duly cured, waived or consented to beyond the respective grace periods, if any, therein specified exceeds $50,000,000; or

 

(c)           an Insolvency Event shall occur in respect of the Performance Guarantor.

 

[END OF ARTICLE VI]

 

  

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ARTICLE VII

 

Redemption of Series 2014-A Notes; Final Distributions; Series Termination

 

Section 7.01.     Optional Redemption of Series 2014-A Notes; Final Distributions.

 

(a)            On any day occurring on or after the date on which the Class A Note Principal Balance is reduced to 10% or less of the largest Class A Note Principal Balance at any time after the Closing Date, the Servicer shall have the option to redeem, or cause to be redeemed, the Series 2014-A Notes at a purchase price equal to (i) if such day is a Distribution Date, the Reassignment Amount for such Distribution Date or (ii) if such day is not a Distribution Date, the Reassignment Amount for the Distribution Date following such day.

 

(b)            The Servicer shall give the Indenture Trustee at least thirty (30) calendar days prior written notice of the date on which the Servicer intends to exercise, or cause to be exercised, such optional redemption.  Not later than 12:00 noon, New York City time, on such day the Servicer shall deposit into the Collection Account in immediately available funds the excess of the Reassignment Amount over the amount, if any, on deposit in the Principal Funding Account.  Such optional redemption shall be subject to payment in full of the Reassignment Amount.  Following such deposit into the Collection Account in accordance with the foregoing, the Invested Amount for Series 2014-A shall be reduced to zero and the Series 2014-A Noteholders shall have no further security interest in the Receivables.  The Reassignment Amount shall be distributed as set forth in subsection 7.01(d).

 

(c)            (i)  The amount to be paid by the Transferor with respect to Series 2014-A in connection with a reassignment of Receivables to the Transferor pursuant to Section 2.06 of the Transfer and Servicing Agreement shall equal the Reassignment Amount for the first Distribution Date following the Monthly Period in which the reassignment obligation arises under the Transfer and Servicing Agreement.

 

(ii)            The amount to be paid by the Transferor with respect to Series 2014-A in connection with a repurchase of the Notes pursuant to Section 7.01 of the Transfer and Servicing Agreement shall equal the Reassignment Amount for the Distribution Date of such repurchase.

 

(d)            With respect to the Reassignment Amount deposited into the Collection Account pursuant to this Section 7.01, the Indenture Trustee shall, in accordance with the written direction of the Servicer, not later than 12:00 noon, New York City time, on the related Distribution Date, make deposits or distributions of the following amounts (in the priority set forth below and, in each case, after giving effect to any deposits and distributions otherwise to be made on such date) in immediately available funds: (i) (x) the Class A Note Principal Balance on such Distribution Date will be distributed to the Paying Agent for payment to the Class A Noteholders and (y) an amount equal to the sum of (A) Class A Monthly Interest for such Distribution Date and (B) any Class A Monthly Interest previously due but not distributed to the Class A Noteholders on a prior Distribution Date will be distributed to the Paying Agent for payment to the Class A Noteholders; and (ii) the Class B Note Principal Balance on such Distribution Date will be distributed to the Paying Agent for payment to the Class B Noteholders.

 

  

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(e)            Notwithstanding anything to the contrary in this Indenture Supplement, the Indenture or the Transfer and Servicing Agreement, all amounts distributed to the Paying Agent pursuant to subsection 7.01(d) for payment to the Series 2014-A Noteholders shall be deemed distributed in full to the Series 2014-A Noteholders on the date on which such funds are distributed to the Paying Agent pursuant to this Section 7.01 and shall be deemed to be a final distribution pursuant to Section 11.02 of the Indenture.

 

Section 7.02.     Series Termination.

 

(a)            If, on the forty-sixth Distribution Date following the Amortization Date, the Invested Amount (after giving effect to all changes therein on such date) is greater than zero, the Servicer, on behalf of the Indenture Trustee, shall, within the forty-day period which begins on such Distribution Date, solicit bids for the sale of Principal Receivables (or interests therein) in an amount at least equal to the Invested Amount and the related Finance Charge Receivables at the close of business on the last day of the Monthly Period preceding the Series 2014-A Final Maturity Date (after giving effect to all distributions required to be made on the Series 2014-A Final Maturity Date, except pursuant to this Section 7.02).  Such bids shall require that such sale (subject to subsection 7.02(b)) occur on the Series 2014-A Final Maturity Date.  The Transferor shall be entitled to participate in, and to receive from the Servicer a copy of each other bid submitted in connection with, such bidding process.

 

(b)           The Servicer, on behalf of the Indenture Trustee, shall sell such Receivables (or interests therein) on the Series 2014-A Final Maturity Date to the bidder who made the highest cash purchase offer.  The proceeds of any such sale shall be treated as Collections on the Receivables allocated to the Series 2014-A Noteholders pursuant to the Transfer and Servicing Agreement, the Indenture and this Indenture Supplement; provided, however, 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.  During the period from the forty-sixth Distribution Date following the Amortization Date to the Series 2014-A Final Maturity Date, the Servicer shall continue to collect payments on the Receivables and allocate and deposit such Collections in accordance with the provisions of the Transfer and Servicing Agreement, the Indenture and this Indenture Supplement.

 

[END OF ARTICLE VII]

 

  

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ARTICLE VIII

 

Miscellaneous Provisions

 

Section 8.01.     Ratification of Indenture.  As supplemented by this Indenture Supplement, the Indenture is in all respects ratified and confirmed and the Indenture as so supplemented by this Indenture Supplement shall be read, taken and construed as one and the same instrument.

 

Section 8.02.     Private Placement of Series 2014-A Notes; Form of Delivery of Series 2014-A Notes.

 

(a)           The Series 2014-A Notes have not been registered under the Securities Act or any state securities law.  No transfer of any Series 2014-A Note shall be made except to a Series 2014-A Noteholder or in accordance with the terms of the Note Purchase Agreement and this Section 8.02 and only to (i) Sterling Jewelers Receivables Corp. or any Affiliate thereof, (ii) a person who the Series 2014-A Noteholder reasonably believes is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) in compliance with Rule 144A, or (iii) an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that, prior to such transfer, shall have executed and delivered to the Indenture Trustee a letter in the form of Exhibit G.  The Series 2014-A Notes shall bear a legend to the effect set forth in Exhibit A.  None of the Transferor, the Transfer Agent and Registrar, the Owner Trustee or the Indenture Trustee is obligated to register the Series 2014-A Notes under the Securities Act or any other securities or “Blue Sky” laws or to take any other action not otherwise required under this Indenture Supplement, the Indenture or the Transfer and Servicing Agreement to permit the transfer of Series 2014-A Notes without the registration of such Notes.

 

(b)           The Series 2014-A Notes shall be Definitive Notes and shall be delivered as Registered Notes as provided in Section 2.01 of the Indenture.

 

Section 8.03.     Tax and Other Matters.

 

(a)            Notwithstanding anything to the contrary herein, each of the Paying Agent, Servicer or Indenture Trustee shall be entitled to withhold any amount that it reasonably determines in its sole discretion is required to be withheld pursuant to Section 1446 of the Code with respect to the Class B Notes and such amount shall be deemed to have been paid for all purposes of the Indenture or the Transfer and Servicing Agreement.

 

(b)            This Indenture Supplement may be amended by the Transferor without the consent of the Servicer or the Indenture Trustee if the Transferor provides the Indenture Trustee with (i) an Opinion of Counsel to the effect that such amendment or modification would reduce the risk the Trust would be treated as a publicly traded partnership pursuant to Code Section 7704, (ii) a certificate that such amendment or modification would not materially and adversely affect any Class A Noteholder and (iii) evidence that the Administrative Agent has consented to such amendment; provided that no such amendment shall be deemed effective without the consent of the Indenture Trustee, if the Indenture Trustee’s rights, duties and obligations hereunder are thereby modified.

 

  

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(c)            Each Purchaser agrees with the Transferor that: (a) such Purchaser will deliver to the Transferor on or before the Closing Date or the effective date of any participation or Note Assignment a letter in the form of Exhibit G (an “Investment Letter”), executed by such assignee Purchaser, in the case of a Note Assignment (as defined below), or by the Participant (as defined below), in the case of a participation, with respect to the purchase by such Purchaser or Participant of a portion of an interest relating to the Class A Notes and (b) all of the statements made by such Purchaser in its Investment Letter shall be true and correct as of the date made.

 

(d)            Each Class B Noteholder, by its holding of an interest in the Class B Notes, hereby severally represents, warrants and covenants, and each Class B Noteholder that acquires an interest in the Class B Notes by Note Assignment shall be deemed to have severally represented, warranted and covenanted upon such Note Assignment that: (i) such Class B Noteholder has not acquired and shall not sell, trade or transfer any interest in the Class B Notes, nor cause any interest in the Class B Notes to be marketed, on or through either (A) an “established securities market” within the meaning of Section 7704(b)(1) of the Code (including an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise) or (B) a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704(b)(2) of the Code (including a market wherein interests in the Class B Notes are regularly quoted by any person making a market in such interests and a market wherein any person regularly makes available bid or offer quotes with respect to interests in the Class B Notes and stands ready to effect buy or sell transactions at the quoted prices for itself or on behalf of others), and (ii) unless the Transferor consents otherwise (which consent shall be based on an Opinion of Counsel generally to the effect that following the related transfer the number of Private Holders would not exceed eighty (80)), such Class B Noteholder (A) is properly classified as, and shall remain classified as, a “corporation” as described in Section 7701(a)(3) of the Code (including, without limitation, a corporation described in Section 1381 of the Code, subject to clause (g) of this Section 8.03) and (B) is not, and shall not become, an “S corporation” as described in Section 1361 of the Code.  Each Class B Noteholder represents, warrants and covenants that it shall (A) cause each of its Participants otherwise permitted hereunder to make representations, warranties and covenants similar to the foregoing for the benefit of the Transferor, the Indenture Trustee and the Trust at the time such Participant becomes a Participant and (B) forward a copy of such representations, warranties and covenants to the Indenture Trustee.  In the event of any breach of the representation, warranty and covenant of a Class B Noteholder or its Participant that such Class B Noteholder or Participant shall remain classified as a corporation other than an S corporation, such Class B Noteholder shall notify the Transferor promptly upon such Class B Noteholder’s becoming aware of such breach, and thereupon the Class B Noteholder hereby agrees to use reasonable efforts to procure a replacement investor which is a Permitted Note Participant or is otherwise reasonably acceptable to the Transferor not so affected to replace such affected Class B Noteholder.  In any such event, the Transferor shall also have the right to procure a replacement investor.  Each affected Class B Noteholder hereby agrees to take all actions necessary to permit a replacement investor to succeed to its rights and obligations hereunder.  Each Class B Noteholder which has a Participant which has breached its representation, warranty and covenant that it shall remain classified as a corporation other than an S corporation hereby agrees (without limiting the right of the Transferor to procure a replacement investor for such Class B Noteholder as provided above in this paragraph) to notify the Transferor of such breach promptly upon such Class B Noteholder’s becoming aware thereof and to use reasonable efforts to procure a replacement Participant, as applicable, not so affected which is a Permitted Note Participant or is otherwise acceptable to the Transferor to replace any such Participant.

 

  

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(e)            Subject to Section 8.02, each Class A Noteholder (and each Person on behalf of which any Class A Noteholder may be holding a Class A Note) may at any time sell, assign or otherwise transfer, to the extent of such Class A Noteholder’s interest in the Class A Notes (each, a “Note Assignment”) as provided in Section 8.01 of the Note Purchase Agreement.

 

(f)             Subject to Section 8.02, any Class A Noteholder may at any time grant a participation in all or part of its interest in Class A Notes to any Person (each such Person, a “Participant”); provided, however, that such participation shall be void, unless such Participant complies with the applicable provisions of this Section 8.03 and such Class A Noteholder delivers to the Indenture Trustee, prior to the effectiveness of its participation, a copy of an agreement under which such Participant has made the representations, warranties and covenants required to be made pursuant to this Section 8.03.  Each Class A Noteholder hereby acknowledges and agrees that any such participation will not alter or affect in any way whatsoever such Class A Noteholder’s direct obligations hereunder and that the Transferor shall have no obligation to have any communication or relationship whatsoever with any Participant of such Class A Noteholder in order to enforce the obligations of such Class A Noteholder hereunder.  Each Class A Noteholder shall promptly notify the Indenture Trustee (who shall promptly notify the Transferor) in writing of the identity and interest of each Participant upon any such disposition. In granting any participation, such Class A Noteholder will provide to the Servicer and Indenture Trustee, the forms described in (i), (ii) and (iii) of subsection 8.03(i) as though the Participant were a Class A Noteholder, and such Class A Noteholder similarly will provide subsequent forms as described in subsection 8.03(i) with respect to such Participant as though it were a Class A Noteholder.

 

(g)            To the fullest extent permitted by applicable law, the Class B Notes (or any interest therein) may not be sold, transferred, assigned, participated, pledged or otherwise disposed of to any Person; provided, however, that any Class B Note (or any interest therein) may be sold, transferred, assigned, participated, pledged or otherwise disposed of if the transferor thereof has provided the Owner Trustee and the Indenture Trustee with a Tax Opinion relating to such sale, transfer, assignment, participation, pledge or other disposition.

 

(h)            It is the intention of the parties hereto that the Class A Notes be characterized as debt for federal income tax purposes and the provisions of this Indenture Supplement, the Indenture and the Transfer and Servicing Agreement shall be interpreted accordingly.  The Transferor and, by acceptance of its Class A Notes, each holder agrees to treat its interest in the Trust for all tax reporting consistent with such intention of the parties.

 

  

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(i)             Each of the Class A Noteholders agrees that prior to the date on which the first interest payment hereunder is due thereto, it will provide to the Servicer and the Indenture Trustee (i) if such Class A Noteholder is created or organized under the laws of a jurisdiction outside the United States, two duly completed copies of the United States Internal Revenue Service Form W-8ECI, Form W-8BEN, as applicable, or in either case successor applicable or required forms, and if claiming benefits of the portfolio interest exemption, a certificate to the effect that the Class A Noteholder is not a “bank” or  a “10 percent shareholder” of the Transferor, in each case as described in Section 881(c)(3) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, (ii) a duly completed copy of United States Internal Revenue Service Form W-9 or successor applicable or required forms, and (iii) such other forms and information as may be required to confirm the availability of any applicable exemption from United States federal, state or local withholding taxes.  Each Class A Noteholder agrees to provide to the Servicer and Indenture Trustee, like additional subsequent duly completed forms (subject to like consent) satisfactory to the Servicer and Indenture Trustee on or before the date that any such form expires or becomes obsolete, or upon the occurrence of any event requiring an amendment, resubmission or change in the most recent form previously delivered by it, and to provide such extensions or renewals as may be reasonably requested by the Servicer or Indenture Trustee.

Section 8.04.     Counterparts.  This Indenture 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 shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page of this Indenture Supplement in Portable Document Format (PDF) or by facsimile transmission shall be as effective as delivery of a manually executed original counterpart of this Indenture Supplement.

 

Section 8.05.     Covenants of the Indenture Trustee.

 

(a)           The Indenture 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 marked as Schedule 1 to the Amended and Restated Transfer and Servicing Agreement and delivered to the Indenture Trustee, from time to time, except (i) to a Successor Servicer or as required by a Requirement of Law applicable to the Indenture Trustee, (ii) in connection with the performance of the Indenture Trustee’s or the Trust’s duties hereunder, or (iii) to bona fide creditors or potential creditors of the Trust, the Owner Trustee, any Account Owner, a Seller, SJRC or any Transferor for the limited purpose of enabling any such creditor to identify applicable Receivables or Accounts subject to this Agreement or the Receivables Purchase Agreements.  The Indenture Trustee agrees to take such measures as shall be reasonably requested by any Transferor to protect and maintain the security and confidentiality of such information and, in connection therewith, shall allow each Transferor or its duly authorized representatives to inspect the Indenture Trustee’s security and confidentiality arrangements as they specifically relate to the administration of the Trust from time to time during normal business hours upon prior written notice.  The Indenture Trustee shall provide the applicable Transferor with notice five (5) Business Days prior to disclosure of any information of the type described in this subsection 8.05(a).

 

(b)           The Indenture Trustee hereby agrees not to use any information it obtains pursuant to this Agreement, including any of the account numbers or other information contained in the computer files, microfiche lists or printed lists marked as Schedule 1 to the Amended and Restated Transfer and Servicing Agreement or otherwise delivered by the Transferor to the Indenture Trustee pursuant to Sections 2.01, 2.09 or 2.10 of the Amended and Restated Transfer and Servicing Agreement, to compete or assist any person in competing with any Account Owner or any Transferor in its credit card business.

 

  

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Section 8.06.     GOVERNING LAW.  THIS INDENTURE SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 8.07.     Additional Notice.  The Transferor shall notify the Administrative Agent promptly after becoming aware of any Lien on any Receivable other than the conveyances under the Transfer and Servicing Agreement and the Indenture and of any merger, consolidation, assumption or transfer referred to in Section 4.02 of the Transfer and Service Agreement.

 

Section 8.08.     WAIVERS OF JURY TRIAL.  EACH OF THE TRANSFEROR, THE SERVICER AND THE INDENTURE TRUSTEE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THE TRANSFER AND SERVICING AGREEMENT, THE INDENTURE AND THIS INDENTURE SUPPLEMENT AND FOR ANY COUNTERCLAIM THEREIN OR HEREIN.

 

Section 8.09.     No Proceeding.  The Indenture Trustee, the Transferor and the Servicer each hereby agrees that it will not at any time prior to the date which is one year and one day after the later of (i) the termination of the Note Purchase Agreement with respect to the Purchasers or (ii) payment in full of all outstanding Commercial Paper Notes (as defined in the Note Purchase Agreement) of the related Purchaser, institute against any Purchaser in connection with the Transfer and Servicing Agreement, the Indenture, this Indenture Supplement or the Series 2014-A Notes any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceeding under any federal or state bankruptcy or similar law.

 

Section 8.10.     Limitation of Liability.  It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by Wilmington Trust Company ("WTC"), not individually or personally but solely as Owner Trustee of the Trust, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by WTC but is made and intended for the purpose of binding only the Trust, (c) nothing herein contained shall be construed as creating any liability on WTC, individually or personally, to perform any covenant either expressed or implied contained herein of the Owner Trustee or the Trust, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTC has made no investigation as to the accuracy or completeness of any representations and warranties made by the Trust in this Agreement and (e) under no circumstances shall WTC be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Agreement or any other related documents.

 

  

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Section 8.11.     Rights of the Indenture Trustee.  The Indenture Trustee shall be entitled to the same rights, protections, immunities and indemnities set forth in the Master Indenture as if specifically set forth herein.

 

Section 8.12.     USA Patriot Act.  The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act, Deutsche Bank Trust Company Americas, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with Deutsche Bank Trust Company Americas.  The parties to this Agreement agree that they will provide Deutsche Bank Trust Company Americas with such information as it may request in order for Deutsche Bank Trust Company Americas to satisfy the requirements of the USA Patriot Act.

 

Section 8.13.     Collections and Allocations.  For the purposes of Section 8.04(a)(ii) of the Indenture, during the Revolving Period the Performance Guarantor having a public debt rating greater than or equal to “BB+” from Standard & Poor’s or “Ba2” from Moody’s shall satisfy the Rating Agency Condition.

 

Section 8.14.     Rating Agency Condition.  For the purposes of the definition of Rating Agency Condition in the Indenture and Series 2014-A, “Rating Agency Condition” shall mean the written consent of the Administrative Agent.  Whenever a Transaction Document requires the consent of or notice to a Rating Agency, the Administrative Agent shall be deemed to be the Rating Agency with  respect to the Class A Notes.

 

Section 8.15.     Series Account.  Each of the Collection Account and the Special Funding Account shall constitute a Series Account for Series 2014-A.

 

Section 8.16.     Account Addition Test.  For the purposes of the Transfer and Servicing Agreement the Account Addition Test shall have the meaning given to it in the side letter among the Transferor, the Servicer and the Issuer dated as of the date hereof.

 

[END OF ARTICLE VIII]

 

[SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement to be duly executed and delivered by their respective duly authorized officers on the day and year first above written.

 

	  	
STERLING JEWELERS RECEIVABLES MASTER

	  	
NOTE TRUST,

	  	
as Issuer

	  	  	  	  
	  	
By:

	
Wilmington Trust Company,

	  	  	
not in its individual capacity,

	  	  	
but solely as Owner Trustee

	  	  
	  	
By:

	
/s/ Jeanne M. Oller

	  	  	
Name:

	
Jeanne M. Oller

	  	  	
Title:

	
Vice President

	  	  	  	  
	  	
DEUTSCHE BANK NATIONAL TRUST COMPANY for

	  	
DEUTSCHE BANK TRUST COMPANY AMERICAS,

	  	
as Indenture Trustee

	  	  	  	  
	  	
By:

	
/s/ Michele H. Y. Voon

	  	  	
Name:

	
Michele H.Y. Voon

	  	  	
Title:

	
Vice President

	  	  
	  	
By:

	
/s/ Mark DiGiacomo

	  	  	
Name:

	
Mark DiGiacomo

	  	  	
Title:

	
Vice President

	  	  	  	  
	  	
STERLING JEWELERS INC.,

	  	
as Servicer

	  	  	  	  
	  	
By:

	
/s/ Simon Cashman

	  	  	
Name:

	
Simon Cashman

	  	  	
Title:

	
SVP

 

[Indenture Supplement]

 

  

 

  

 

Acknowledged and Accepted:

 

	
STERLING JEWELERS RECEIVABLES CORP.,

	  
	
as Transferor

	  
	  	  	  	  
	
By:

	
/s/ Simon Cashman

	  
	  	
Name:

	
Simon Cashman

	  
	  	
Title:

	
VP

	  

 

[Indenture Supplement]

 

  

 

  

 

EXHIBIT A-1

 

FORM OF CLASS A NOTE

 

THIS CLASS A NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (A “QUALIFIED INSTITUTIONAL BUYER”) WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) TO AN ENTITY QUALIFYING AS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF PARAGRAPH (1), (2), (3) OR (7) OF RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACT OR AN ENTITY OWNED ENTIRELY BY OTHER ENTITIES THAT FALL WITHIN SUCH PARAGRAPHS, IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES, IN EACH CASE IN COMPLIANCE WITH THE CERTIFICATION AND OTHER REQUIREMENTS SPECIFIED IN THE SERIES 2014-A INDENTURE SUPPLEMENT REFERRED TO HEREIN.  NONE OF THE TRANSFEROR, THE TRANSFER AGENT, TRANSFER AGENT REGISTRAR OR THE INDENTURE TRUSTEE IS OBLIGATED TO REGISTER THE CLASS A NOTES UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES OR “BLUE SKY” LAW.

 

EACH PURCHASER REPRESENTS AND WARRANTS, FOR THE BENEFIT OF STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST AND STERLING JEWELERS RECEIVABLES CORP., THAT (1) IT IS NOT A RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR ANY PROVISION OF ANY OTHER FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION WHICH IS SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (COLLECTIVELY, “SIMILAR LAWS”) (EACH, A “PLAN”), OR ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING OR HOLDING THE CLASS A NOTES OR INTEREST THEREIN ON BEHALF OF, AS FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF, ANY PLAN OR (II) IS PURCHASING OR HOLDING THE CLASS A NOTES WITH THE ASSETS OF A PLAN AND ITS PURCHASE AND HOLDING OF SUCH CLASS A NOTES WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT VIOLATE ANY APPLICABLE PROVISION OF ANY APPLICABLE SIMILAR LAWS.

 

ANY TRANSFER OF A DIRECT OR INDIRECT INTEREST IN THIS CLASS A NOTE IS SUBJECT TO THE PROVISIONS OF THE INDENTURE AND SUBJECT TO CERTAIN LIMITATIONS THEREIN SET FORTH, INCLUDING SECTIONS 8.02 AND 8.03 OF THE INDENTURE SUPPLEMENT.

 

  

A-1-1

  

 

THE OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS A NOTE WILL BE REDUCED FROM TIME TO TIME BY DISTRIBUTIONS ON THIS CLASS A NOTE ALLOCABLE TO PRINCIPAL.  IN ADDITION, THE PRINCIPAL BALANCE OF THIS CLASS A NOTE MAY BE INCREASED AT THE REQUEST OF THE TRANSFEROR SUBJECT TO CERTAIN TERMS AND CONDITIONS SET FORTH IN THE INDENTURE SUPPLEMENT REFERRED TO HEREIN.  ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CLASS A NOTES, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS A NOTE MAY BE DIFFERENT FROM THE INITIAL OUTSTANDING PRINCIPAL BALANCE SHOWN BELOW.  ANYONE ACQUIRING THIS CLASS A NOTE MAY ASCERTAIN THE CURRENT OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS A NOTE BY INQUIRY OF THE INDENTURE TRUSTEE.  ON THE DATE OF THE INITIAL ISSUANCE OF THE CLASS A NOTES, THE INDENTURE TRUSTEE IS DEUTSCHE BANK TRUST COMPANY AMERICAS.

 

  

A-1-2

  

INITIAL OUTSTANDING PRINCIPAL BALANCE

 

	
REGISTERED

	
$____1

 

No. ____

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST

 

SERIES 2014-A

 

CLASS A ASSET BACKED VARIABLE FUNDING NOTE

 

Sterling Jewelers Receivables Master Note Trust (herein referred to as the “Issuer” or the “Trust”), a Delaware statutory trust governed by a Trust Agreement dated as of October 18, 2001, for value received, hereby promises to pay to J.P. Morgan Chase Bank N.A., on behalf of _____, or registered assigns, subject to the following provisions, the principal sum of ________________ DOLLARS ($__________ ), or such greater or lesser amount as determined in accordance with the Indenture, on the Series 2014-A Final Maturity Date, except as otherwise provided below or in the Indenture Supplement.  The Issuer will pay interest on the unpaid principal amount of this Note at the Class A Note Interest Rate on each Distribution Date until the principal amount of this Note is paid in full.  Interest on this Note will accrue for each Distribution Date from and including the first day of the calendar month immediately preceding such Distribution Date to and including the last day of the calendar month immediately preceding such Distribution Date, or, for the initial Distribution Date, from and including the Closing Date to but excluding the last day of the calendar month preceding such Distribution Date. Interest will be computed on the basis of a 360-day year and the actual number of days elapsed. Principal of this Note shall be paid in the manner specified on the reverse hereof.

 

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

 

Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee, by manual signature, this Note shall not be entitled to any benefit under the Master Indenture or the Indenture Supplement referred to on the reverse hereof, or be valid for any purpose.

 

1 Denominations of $100,000 and integral multiples of $1,000 in excess thereof.

 

  

A-1-3

  

IN WITNESS WHEREOF, the Issuer has caused this Class A Note to be duly executed.

 

	  	
STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST,

	  	
as Issuer

	 	 
	  	
By:

	
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee under the Trust Agreement

	 	 	 
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

 

Dated: _________ ____, 2014

 

  

A-1-4

  

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Class A Notes described in the within-mentioned Master Indenture.

 

	  	
DEUTSCHE BANK TRUST COMPANY AMERICAS,

	  	
as Indenture Trustee,

	 	 	 
	  	
By:

	  	  
	  	  	
Authorized Signatory

	  
	 	 	 	 
	  	
By:

	  	  
	  	  	
Authorized Signatory

	  

 

  

A-1-5

  

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST

 

SERIES 2014-A

 

CLASS A ASSET BACKED VARIABLE FUNDING NOTE

 

Summary of Terms and Conditions

 

This Class A Note is one of a duly authorized issue of Notes of the Issuer, designated as Sterling Jewelers Receivables Master Note Trust, Series 2014-A (the “Series 2014-A Notes”), issued under a Master Indenture, dated as of November 2, 2001 (the “Master Indenture”), among the Issuer, Sterling Jewelers Inc., as Servicer (the “Servicer”) and Deutsche Bank Trust Company Americas, as indenture trustee (the “Indenture Trustee”), as supplemented by the Series 2014-A Indenture Supplement, dated as of May 15, 2014 (the “Indenture Supplement”), among the Issuer, the Servicer and the Indenture Trustee and representing the right to receive certain payments from the Issuer.  The term “Indenture,” unless the context otherwise requires, refers to the Master Indenture as supplemented by the Indenture Supplement.  The Series 2014-A Notes are subject to all of the terms of the Indenture.  All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.  In the event of any conflict or inconsistency between the Indenture and this Note, the Indenture shall control.

 

The Class B Notes will also be issued under the Indenture.

 

The Noteholder, by its acceptance of this Note, agrees that it will look solely to the property of the Issuer allocated to the payment of this Note for payment hereunder and that the Indenture Trustee is not liable to the Noteholders for any amount payable under the Note or the Indenture or, except as expressly provided in the Indenture, subject to any liability under the Indenture.

 

This Note does not purport to summarize the Indenture and reference is made to the Indenture for the interests, rights and limitations of rights, benefits, obligations and duties evidenced thereby, and the rights, duties and immunities of the Indenture Trustee.

 

The Class A Note Initial Principal Balance is $0.00.  The Class A Note Principal Balance on any date will be an amount equal to (a) the Class A Note Initial Principal Balance, plus (b) the aggregate amount of Class A Note Principal Balance Increases made on or prior to such date, minus (c) the aggregate amount of principal payments made to the Class A Noteholders on or prior to such date.

 

The “Scheduled Series 2014-A Termination Date” is the tenth (10th) Distribution Date with respect to the Controlled Amortization Period, but principal with respect to the Class A Notes may be paid earlier or later under certain circumstances described in the Indenture.  If for one or more months during the Controlled Amortization Period there are not sufficient funds to pay the Controlled Distribution Amount, then to the extent that excess funds are not available on subsequent Distribution Dates with respect to the Controlled Amortization Period to make up for such shortfalls, the final payment of principal of the Notes will occur later than the Scheduled Series 2014-A Termination Date.  Payments of principal of the Notes shall be payable in accordance with the provisions of the Indenture.

 

  

A-1-6

  

 

Subject to the terms and conditions of the Indenture, the Transferor may, from time to time, direct the Owner Trustee, on behalf of the Issuer, to issue one or more new Series of Notes.

 

On each Distribution Date, the Paying Agent shall distribute to the Administrative Agent on behalf of each Class A Noteholder of record on the related Record Date (except for the final distribution in respect of this Class A Note) such Class A Noteholder’s pro rata share of the amounts held by the Paying Agent that are allocated and available on such Distribution Date to pay interest and principal on the Class A Notes pursuant to the Indenture Supplement.  Except as provided in the Indenture with respect to a final distribution, distributions to Series 2014-A Noteholders shall be made by (i) wire transfer to the Administrative Agent on behalf of each Series 2014-A Noteholder at the account specified by the Administrative Agent to the Indenture Trustee and the Servicer and (ii) without presentation or surrender of any Series 2014-A Note or the making of any notation thereon.  Final payment of this Class A Note will be made only upon presentation and surrender of this Class A Note at the office or agency specified in the notice of final distribution delivered by the Indenture Trustee to the Series 2014-A Noteholders in accordance with the Indenture.

 

On any day occurring on or after the date on which the outstanding principal balance of the Class A Notes is reduced to 10% or less of the largest outstanding principal balance of the Class A Notes at any time after the Closing Date, the Issuer shall have the option to redeem the Series 2014-A Notes, at a purchase price equal to (i) if such day is a Distribution Date, the Reassignment Amount for such Distribution Date or (ii) if such day is not a Distribution Date, the Reassignment Amount for the Distribution Date following such day.

 

This Class A Note does not represent an obligation of, or an interest in or the assets of, the Transferor, the Servicer or any Affiliate thereof.

 

Each Noteholder, by accepting a Note, hereby covenants and agrees that it will not at any time institute against the Issuer or the Transferor, or join in instituting against the Issuer or the Transferor, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law.

 

Except as otherwise provided in the Indenture Supplement, the Class A Notes are issuable only in minimum denominations of $1,000 and integral multiples of $1,000.  The transfer of this Class A Note shall be registered in the Note Register upon surrender of this Class A Note for registration of transfer at any office or agency maintained by the Transfer Agent and Registrar accompanied by a written instrument of transfer, in a form satisfactory to the Indenture Trustee or the Transfer Agent and Registrar, duly executed by the Class A Noteholder or such Class A Noteholder’s attorney, and duly authorized in writing with such signature guaranteed, and thereupon one or more new Class A Notes in any authorized denominations of like aggregate principal amount will be issued to the designated transferee or transferees.

 

  

A-1-7

  

 

As provided in the Indenture and subject to certain limitations therein set forth, Class A Notes are exchangeable for new Class A Notes in any authorized denominations and of like aggregate principal amount, upon surrender of such Notes to be exchanged at the office or agency of the Transfer Agent and Registrar.  No service charge may be imposed for any such exchange but the Issuer or Transfer Agent and Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

The Issuer, the Transferor, the Indenture Trustee and any agent of the Issuer, Transferor or the Indenture Trustee shall treat the person in whose name this Class A Note is registered as the owner hereof for all purposes, and neither the Issuer, the Transferor, the Indenture Trustee nor any agent of the Issuer, Transferor or the Indenture Trustee shall be affected by notice to the contrary.

 

THIS CLASS A NOTE 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.

 

It is expressly understood and agreed by the parties hereto that (a) this Note is executed and delivered by Wilmington Trust Company ("WTC"), not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by WTC but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on WTC, individually or personally, to perform any covenant either expressed or implied contained herein of the Owner Trustee or the Issuer, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTC has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Note and (e) under no circumstances shall WTC be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Note or any other related documents.

 

  

A-1-8

  

 

ASSIGNMENT

 

Social Security or other identifying number of assignee __________________________

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _________________________________ (name and address of assignee)

 

the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints , ___________________, attorney, to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises.

 

	
Dated: 

	 	 	  	
2

	 	 	 	 	 
	  	 	 	
Signature Guaranteed:

	  
	 	 	 	 	 
	  	 	 	  	  

 

2 NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

 

  

A-1-9

  

 

EXHIBIT A-2

 

FORM OF CLASS B ASSET BACKED VARIABLE FUNDING NOTE

 

THIS CLASS B NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (A “QUALIFIED INSTITUTIONAL BUYER”) WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) TO AN ENTITY QUALIFYING AS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF PARAGRAPH (1), (2), (3) OR (7) OF RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACT OR AN ENTITY OWNED ENTIRELY BY OTHER ENTITIES THAT FALL WITHIN SUCH PARAGRAPHS, IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES, IN EACH CASE IN COMPLIANCE WITH THE CERTIFICATION AND OTHER REQUIREMENTS SPECIFIED IN THE SERIES 2014-A INDENTURE SUPPLEMENT REFERRED TO HEREIN.  NONE OF THE TRANSFEROR, THE TRANSFER AGENT, TRANSFER AGENT AND REGISTRAR OR THE INDENTURE TRUSTEE IS OBLIGATED TO REGISTER THE CLASS B NOTES UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES OR “BLUE SKY” LAW.

 

EACH PURCHASER REPRESENTS AND WARRANTS, FOR THE BENEFIT OF STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST AND STERLING JEWELERS RECEIVABLES CORP., THAT (1) IT IS NOT A RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR ANY PROVISION OF ANY OTHER FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION WHICH IS SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (COLLECTIVELY, “SIMILAR LAWS”) (EACH, A “PLAN”), OR ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING OR HOLDING THE CLASS B NOTES OR INTEREST THEREIN ON BEHALF OF, AS FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF, ANY PLAN OR (II) IS PURCHASING OR HOLDING THE CLASS B NOTES WITH THE ASSETS OF A PLAN AND ITS PURCHASE AND HOLDING OF SUCH CLASS B NOTES WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT VIOLATE ANY APPLICABLE PROVISION OF ANY APPLICABLE SIMILAR LAWS.

 

ANY TRANSFER OF A DIRECT OR INDIRECT INTEREST IN THIS CLASS B NOTE IS SUBJECT TO THE PROVISIONS OF THE INDENTURE AND SUBJECT TO CERTAIN LIMITATIONS THEREIN SET FORTH, INCLUDING SECTIONS 8.02 AND 8.03 OF THE INDENTURE SUPPLEMENT.

 

  

A-2-1

  

THE OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS B NOTE WILL BE REDUCED FROM TIME TO TIME BY DISTRIBUTIONS ON THIS CLASS B NOTE ALLOCABLE TO PRINCIPAL.  IN ADDITION, THE PRINCIPAL BALANCE OF THIS CLASS B NOTE MAY BE INCREASED AT THE REQUEST OF THE TRANSFEROR SUBJECT TO CERTAIN TERMS AND CONDITIONS SET FORTH IN THE INDENTURE SUPPLEMENT REFERRED TO HEREIN.  ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CLASS B NOTES, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS B NOTE MAY BE DIFFERENT FROM THE INITIAL OUTSTANDING PRINCIPAL BALANCE SHOWN BELOW.  ANYONE ACQUIRING THIS CLASS B NOTE MAY ASCERTAIN THE CURRENT OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS B NOTE BY INQUIRY OF THE INDENTURE TRUSTEE.  ON THE DATE OF THE INITIAL ISSUANCE OF THE CLASS B NOTES, THE INDENTURE TRUSTEE IS DEUTSCHE BANK TRUST COMPANY AMERICAS.

 

  

A-2-2

  

INITIAL OUTSTANDING PRINCIPAL BALANCE

 

	
REGISTERED

	
$ ___3

 

No. _____

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST

 

SERIES 2014-A

 

CLASS B ASSET BACKED VARIABLE FUNDING NOTE

 

Sterling Jewelers Receivables Master Note Trust (herein referred to as the “Issuer” or the “Trust”), a Delaware statutory trust governed by a Trust Agreement dated as of October 18, 2001, for value received, hereby promises to pay to Sterling Jewelers Receivables Corp., or registered assigns, subject to the following provisions, the principal sum of ________ DOLLARS ($ _________), or such greater or lesser amount as determined in accordance with the Indenture, on the Series 2014-A Final Maturity Date, except as otherwise provided below or in the Indenture Supplement.  This Note shall not accrue interest.  Principal of this Note shall be paid in the manner specified on the reverse hereof.

 

The principal of this Note is payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

 

Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee, by manual signature, this Note shall not be entitled to any benefit under the Master Indenture or the Indenture Supplement referred to on the reverse hereof, or be valid for any purpose.

 

THIS CLASS B NOTE IS SUBORDINATED TO THE EXTENT NECESSARY TO FUND PAYMENTS ON THE CLASS A NOTES AS SPECIFIED IN THE INDENTURE SUPPLEMENT.

 

3 Denominations of $100,000 and integral multiples of $1,000 in excess thereof.

 

  

A-2-3

  

IN WITNESS WHEREOF, the Issuer has caused this Class B Note to be duly executed.

 

	  	
STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST,

	  	
as Issuer

	 	 
	  	
By:

	
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee under the Trust Agreement

	 	 	 
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

 

Dated: ______, 2014

 

  

A-2-4

  

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Class B Notes described in the within-mentioned Master Indenture.

 

	  	
DEUTSCHE BANK TRUST COMPANY AMERICAS,

	  	
as Indenture Trustee,

	 	 
	  	
By:

	  	  
	  	  	
Authorized Signatory

	  
	 	 	 	 
	  	
By:

	  	  
	  	  	
Authorized Signatory

	  

 

  

A-2-5

  

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST

 

SERIES 2014-A

 

CLASS B ASSET BACKED VARIABLE FUNDING NOTE

 

Summary of Terms and Conditions

 

This Class B Note is one of a duly authorized issue of Notes of the Issuer, designated as Sterling Jewelers Receivables Master Note Trust, Series 2014-A (the “Series 2014-A Notes”), issued under a Master Indenture dated as of November 2, 2001 (the “Master Indenture”), among the Issuer, Sterling Jewelers Inc., as Servicer (the “Servicer”) and Deutsche Bank Trust Company Americas, as indenture trustee (the “Indenture Trustee”), as supplemented by the Series 2014-A Indenture Supplement dated as of May 15, 2014 (the “Indenture Supplement”), among the Issuer, the Servicer and the Indenture Trustee and representing the right to receive certain payments from the Issuer.  The term “Indenture,” unless the context otherwise requires, refers to the Master Indenture as supplemented by the Indenture Supplement.  The Series 2014-A Notes are subject to all of the terms of the Indenture.  All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in or pursuant to the Indenture.  In the event of any conflict or inconsistency between the Indenture and this Note, the Indenture shall control.

 

The Class A Notes will also be issued under the Indenture.

 

The Noteholder, by its acceptance of this Note, agrees that it will look solely to the property of the Issuer allocated to the payment of this Note for payment hereunder and that the Indenture Trustee is not liable to the Noteholders for any amount payable under the Note or the Indenture or, except as expressly provided in the Indenture, subject to any liability under the Indenture.

 

This Note does not purport to summarize the Indenture and reference is made to the Indenture for the interests, rights and limitations of rights, benefits, obligations and duties evidenced thereby, and the rights, duties and immunities of the Indenture Trustee.

 

The Class B Initial Note Principal Balance is $0.00.  The Class B Note Principal Balance on any date will be an amount equal to (a) the Class B Initial Note Principal Balance, plus (b) the aggregate amount of Class B Note Principal Balance Increases made on or prior to such date, minus (c) the aggregate amount of principal payments made to the Class B Noteholders on or prior to such date.

 

The Scheduled Series 2014-A Termination Date is the tenth (10th) Distribution Date with respect to the Controlled Amortization Period, but principal with respect to the Class B Notes may be paid earlier or later under certain circumstances described in the Indenture.  If for one or more months during the Controlled Amortization Period there are not sufficient funds to pay the Controlled Distribution Amount, then to the extent that excess funds are not available on subsequent Distribution Dates with respect to the Controlled Amortization Period to make up for such shortfalls, the final payment of principal of the Notes will occur later than the Scheduled Series 2014-A Termination Date.  Payments of principal of the Notes shall be payable in accordance with the provisions of the Indenture.

 

  

A-2-6

  

 

Subject to the terms and conditions of the Indenture, the Transferor may, from time to time, direct the Owner Trustee, on behalf of the Issuer, to issue one or more new Series of Notes.

 

On each Deposit Date, at the request of the Class B Noteholders, the Servicer shall cause the Paying Agent to make a principal payment to the extent provided in Section 4.01(c) of the Indenture Supplement.

 

On each Distribution Date, the Paying Agent shall distribute to each Class B Noteholder of record on the related Record Date (except for the final distribution in respect of this Class B Note) such Class B Noteholder’s pro rata share of the amounts held by the Paying Agent that are allocated and available on such Distribution Date to pay principal on the Class B Notes pursuant to the Indenture Supplement.  Except as provided in the Indenture with respect to a final distribution, distributions to Series 2014-A Noteholders shall be made by (i) wire transfer to each Series 2014-A Noteholder at the account specified by the Deal Agent to the Indenture Trustee and the Servicer and (ii) without presentation or surrender of any Series 2014-A Note or the making of any notation thereon.  Final payment of this Class B Note will be made only upon presentation and surrender of this Class B Note at the office or agency specified in the notice of final distribution delivered by the Indenture Trustee to the Series 2014-A Noteholders in accordance with the Indenture.

 

On any day occurring on or after the date on which the outstanding principal balance of the Class A Notes is reduced to 10% or less of the largest outstanding principal balance of the Class A Notes at any time after the Closing Date, the Issuer shall have the option to redeem the Series 2014-A Notes, at a purchase price equal to (i) if such day is a Distribution Date, the Reassignment Amount for such Distribution Date or (ii) if such day is not a Distribution Date, the Reassignment Amount for the Distribution Date following such day.

 

This Class B Note does not represent an obligation of, or an interest in, the Transferor, the Servicer or any Affiliate thereof.

 

Each Noteholder, by accepting a Note, hereby covenants and agrees that it will not at any time institute against the Issuer or the Transferor, or join in instituting against the Issuer or the Transferor, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law.

 

Except as otherwise provided in the Indenture Supplement, the Class B Notes are issuable only in minimum denominations of $1,000 and integral multiples of $1,000.  The transfer of this Class B Note shall be registered in the Note Register upon surrender of this Class B Note for registration of transfer at any office or agency maintained by the Transfer Agent and Registrar accompanied by a written instrument of transfer, in a form satisfactory to the Indenture Trustee or the Transfer Agent and Registrar, duly executed by the Class B Noteholder or such Class B Noteholder’s attorney, and duly authorized in writing with such signature guaranteed, and thereupon one or more new Class B Notes in any authorized denominations of like aggregate principal amount will be issued to the designated transferee or transferees.

 

  

A-2-7

  

As provided in the Indenture and subject to certain limitations therein set forth, Class B Notes are exchangeable for new Class B Notes in any authorized denominations and of like aggregate principal amount, upon surrender of such Notes to be exchanged at the office or agency of the Transfer Agent and Registrar.  No service charge may be imposed for any such exchange but the Issuer or Transfer Agent and Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

The Issuer, the Transferor, the Indenture Trustee and any agent of the Issuer, the Transferor or the Indenture Trustee shall treat the person in whose name this Class B Note is registered as the owner hereof for all purposes, and neither the Issuer, the Transferor, the Indenture Trustee nor any agent of the Issuer, the Transferor or the Indenture Trustee shall be affected by notice to the contrary.

 

THIS CLASS B NOTE 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.

 

It is expressly understood and agreed by the parties hereto that (a) this Note is executed and delivered by Wilmington Trust Company ("WTC"), not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by WTC but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on WTC, individually or personally, to perform any covenant either expressed or implied contained herein of the Owner Trustee or the Issuer, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTC has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Note and (e) under no circumstances shall WTC be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Note or any other related documents.

 

  

A-2-8

  

ASSIGNMENT

 

Social Security or other identifying number of assignee _______________

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________________________________________________ (name and address of assignee)

 

the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints __________________, attorney, to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises.

 

	
Dated:

	  	
__________________4

	 	 	 
	  	  	
Signature Guaranteed:

	
 

	  	  

 

4 NOTE: The signature to this Assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

 

  

A-2-9

  

 

EXHIBIT B

 

FORM OF MONTHLY STATEMENT

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST

SERIES 2014-A

 

Pursuant to the Master Indenture, dated as of November 2, 2001 (as amended and supplemented, the “Master Indenture”), as supplemented by the Series 2014-A Indenture Supplement, dated as of May 15, 2014 (the “Indenture Supplement “), each among Sterling Jewelers Receivables Master Note Trust (the “Trust”), Deutsche Bank Trust Company Americas, as indenture trustee, and Sterling Jewelers Inc., as servicer (the “Servicer”), under the Transfer and Servicing Agreement, dated as of November 2, 2001 (the “Transfer and Servicing Agreement”) among Sterling Jewelers Receivables Corp., as Transferor, the Servicer and the Trust, is required to prepare certain information each month regarding current distributions to the Series 2014-A Noteholders and the performance of the Trust during the previous month.  The information which is required to be prepared with respect to the Distribution Date of _______, and with respect to the performance of the Trust during the Monthly Period ended ________ is set forth on the attached schedule.  Capitalized terms used in this Monthly Statement have their respective meanings set forth in the Master Indenture and the Indenture Supplement.

 

	  	
STERLING JEWELERS INC.,

	  
	  	
as Servicer

	  
	 	 	 
	  	
By:

	  	  
	  	  	
Name:   [Simon Cashman] [Robert D Trabucco]

	  
	  	  	
Title:

	  

 

  

B-1

  

 

ATTACHMENT TO MONTHLY STATEMENT

 

	
A)

	
Information regarding distributions in respect of the Class A Notes

	  
	  	
(1) The total amount of the distribution in respect of Class A Notes

	
$_________

	  	
(2) The amount of the distribution set forth in paragraph 1 above in respect of interest on the Class A Notes

	
$_________

	  	
(3) The amount of the distribution set forth in paragraph 1 above in respect of principal of the Class A Notes

	
$_________

	
B)

	
Information regarding distributions in respect of the Class B Notes

	  
	  	
(1) The total amount of the distribution in respect of Class B Notes

	
$_________

	  	
(2) Payout Events Test (Indenture Supplement Section 6.01)

	
Pass / Fail

	  	
Required Transferor Interest met (Section 6.01(e)(i))

	
Pass / Fail

	  	
Required Minimum Principal Balance met (Section 6.01(e)(ii))

	
Pass / Fail

	  	
Portfolio Yield requirements met (Section 6.01(g)(i)

	
Pass / Fail

	  	
Required Class B Note Principal Balance met (Section 6.01 (h))

	
Pass / Fail

	  	
Monthly Payment Rate requirements met (Section 6.01(i)(i))

	
Pass / Fail

	  	
Monthly Delinquent Receivables Ratio (Section 6.01(i)(j))

	
Pass / Fail

	  	
No Payout Event has occurred with respect to any other Series (Section 6.01(k))

	
Pass / Fail

	 	 	 
	
RECEIVABLES --

	  
	 	 
	
Total Collections of Finance Charge Receivables

	
$_________

	
Total Collections of Principal Receivables

	
$_________

	
Total Receivables as of the last day of the preceding Monthly Period

	
$_________

	  	
Number of Additional Accounts designated during the preceding Monthly Period

	
$_________

	  	
Number of Additional Accounts constituting Excluded Accounts

	
$_________

	  	
Total amount of Principal Receivables in Additional Accounts designated during the preceding Monthly Period

	
$_________

 

  

B-2

  

 

	
DELINQUENCIES AND LOSSES --

	  
	 	 
	
Aggregate amount of Adjusted Invested Amounts that were delinquent as of the last day of the preceding Monthly Period

	  
	  	
31-60 Days Delinquent

	
$_________

	  	
61-90 Days Delinquent

	
$_________

	  	
90-120 Days Delinquent

	
$_________

	  	
121 or More Days Delinquent

	
$_________

	  	
Total 31+ Days Delinquent

	
$_________

	  	
Defaulted Receivables during preceding Monthly Period

	
$_________

	 	 	 
	
NOTE PRINCIPAL BALANCES --

	  
	 	 
	  	
Class A Note Principal Balance

	
$_________

	  	
Class B Note Principal Balance

	  
	
Initial Invested Amount

	  
	 	 
	
SERIES 2014-A INFORMATION

	  
	 	 
	  	
Floating Investor Percentage

	
_________%

	  	
Fixed Investor Percentage

	
_________%

	  	
Series 2014-A percentage

	
_________%

	  	
Special Funding Amount as of the last day of the preceding Monthly Period

	
$_________

	  	
Available Finance Charge Collections

	
$_________

	  	
Monthly Servicing Fees

	
$_________

	  	
Available Principal Collections

	
$_________

	  	
Excess Finance Charge Collections

	
$_________

	  	
Shared Principal Collections

	
$_________

	  	
Consignment Reserve Amount

	
$_________

	 	 	 
	
Total Investor Default Amount for such Monthly Period

	
$_________

	
Transferor Interest as of the end of the day on the last day for the proceeding Monthly Period

	
$_________

	
Transferor Percentage as of the end of the day on the last day of the proceeding Monthly Period

	
_________%

 

  

B-3

  

 

	
APPLICATION OF COLLECTIONS --

	  
	 	 
	
Class A Monthly Interest

	
$_________

	
Monthly Servicing Fee

	
$_________

	
Investor Default Amount

	
$_________

	
Series 2014-A unpaid Adjustment Payments

	
$_________

	
Investor Charge Offs and Reallocated Principal Collections not previously reimbursed

	
$_________

	
If an Event of Default has occurred and is continuing, amounts to be treated as Available Principal Collections

	
$_________

	
Other amounts owing by the Trust

	
$_________

	
Amounts to be treated as Excess Finance Charge Collections

	
$_________

	 	 
	
PORTFOLIO YIELD, BASE RATE AND PAYMENT RATE --

	  
	 	 
	  	
Base Rate for preceding Monthly Period

	
_________%

	  	
Base Rate (second preceding Monthly Period)

	
_________%

	  	
Base Rate (third preceding Monthly Period)

	
_________%

	  	
Portfolio Yield for preceding Monthly Period

	
_________%

	  	
Portfolio Yield (second preceding Monthly Period)

	
_________%

	  	
Portfolio Yield (third preceding Monthly Period)

	
_________%

	  	
Base Rate for preceding Monthly Period + 1.5% %

	
_________%

	  	
Base Rate (second preceding Monthly Period) + 1.5%

	
_________%

	  	
Base Rate (third preceding Monthly Period) + 1.5% %

	
_________%

	  	
(Portfolio Yield (preceding Monthly Period)) — (Base Rate for preceding Monthly Period + 1.5%)

	
_________%

	  	
(Portfolio Yield (second preceding Monthly Period)) — (Base Rate (second preceding Monthly Period) + 1.5%)

	
_________%

	  	
(Portfolio Yield (third preceding Monthly Period)) — (Base Rate (third preceding Monthly Period) + 1.5%)

	
_________%

	  	
Portfolio Yield — Base Rate (preceding monthly period)

	
_________%

	  	
Payment Rate (preceding Monthly Period)

	
_________%

	  	
Payment Rate (second preceding Monthly Period)

	
_________%

	  	
Payment Rate (third preceding Monthly Period)

	
_________%

	  	
Average Payment Rate for three month period

	
_________%

 

  

B-4

  

 

	
PRINCIPAL COLLECTIONS --

	  
	 	 
	  	
Series 2014-A Principal Shortfall

	
_________%

	  	
Shared Principal Collections allocable from other Principal Sharing Series

	
_________%

	 	 	 
	
INVESTOR CHARGE-OFFS AND REDUCTIONS

	  
	 	 
	
Total Investor Charge-Offs

	
$_________

	
Reductions in Invested Amount (other than by Principal Payments)

	
$_________

	
Previous reductions in Invested Amount reimbursed

	
$_________

  

B-5

  

 

EXHIBIT C

 

FORM OF MONTHLY SERVICER’S CERTIFICATE

 

STERLING JEWELERS INC.

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST

 

SERIES 2014-A

 

The undersigned, a duly authorized representative of Sterling Jewelers Inc. (“SJI”), as Servicer pursuant to the Transfer and Servicing Agreement, dated as of November 2, 2001 (as amended and supplemented, the “Transfer and Servicing Agreement”), among SJI, Sterling Jewelers Receivables Corp. (the “Company”), as Transferor and Sterling Jewelers Receivables Master Note Trust, as Issuer (the “Trust”), does hereby certify as follows:

 

1.        Capitalized terms used in this Certificate have their respective meanings set forth in the Transfer and Servicing Agreement or the Master Indenture, each dated as of November 2, 2001 (the “Master Indenture”), among the Trust, SJI and Deutsche Bank Trust Company Americas, as indenture trustee (the “Indenture Trustee”), as supplemented by the Series 2014-A Indenture Supplement, dated as of May 15, 2014, among the Trust, SJI and the Indenture Trustee (as amended and supplemented, the “Indenture Supplement” and together with the Master Indenture, the “Indenture “), as applicable.

 

2.        SJI is, as of the date hereof, the Servicer under the Transfer and Servicing Agreement.

 

3.        The undersigned is an Authorized Officer of the Servicer.

 

4.        This Certificate relates to the Distribution Date occurring on _______ ___, 20__.

 

5.        As of the date hereof, to the best knowledge of the undersigned, the Servicer has performed in all material respects all its obligations under the Transfer and Servicing Agreement and the Indenture through the Monthly Period preceding such Distribution Date [or, if there has been a default in the performance of any such obligation, set forth in detail the (i) nature of such default, (ii) the action taken by the Servicer, if any, to remedy such default and (iii) the current status of each such default]; if applicable, insert “None.”

 

6.        As of the date hereof, to the best knowledge of the undersigned, no Pay Out Event occurred on or prior to such Distribution Date.

 

  

C-1

  

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Certificate this ____ day of ___ __, 20__.

 

	  	
STERLING JEWELERS INC.,

	  
	  	
Servicer

	  
	 	 	 
	  	
By:

	  	  
	  	  	
Name:   [Simon Cashman] [Robert D Trabucco]

	  
	  	  	
Title:

	  

 

  

C-2

  

EXHIBIT D

 

FORM OF NOTICE OF LIMITED AMORTIZATION

 

[Date]

 

Deutsche Bank Trust Company Americas,

[Address]

 

Sterling Jewelers Inc.

[Address]

 

J.P. Morgan Chase Bank N.A.

[Address]

 

	
  

	
Re:

	
Sterling Jewelers Receivables Master Note Trust, Series 2014-A Notes

 

Ladies and Gentlemen:

 

Pursuant to subsection 4.09(a) of the Series 2014-A Indenture Supplement, dated as of May 15, 2014, to the Master Indenture, dated as of November 2, 2001, each among Sterling Jewelers Receivables Master Note Trust, a Delaware statutory trust, as Issuer, Sterling Jewelers Inc., a Delaware corporation, as Servicer and Deutsche Bank Trust Company Americas, a New York banking corporation, as Indenture Trustee (terms defined therein being used herein as therein defined), this notice represents the Issuer’s request to reduce the Class A Note Principal Balance and the Class B Note Principal Balance, beginning on the Distribution Date falling in the __________, 20__ Monthly Period, by an aggregate amount equal to $ ________________.5

 

It is expressly understood and agreed by the parties hereto that (a) Notice is executed and delivered by Wilmington Trust Company ("WTC"), not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by WTC but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on WTC, individually or personally, to perform any covenant either expressed or implied contained herein of the Owner Trustee or the Issuer, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTC has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Notice and (e) under no circumstances shall WTC be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Notice or any other related documents.

 

5 Each such decrease shall be in a minimum amount of $1,000,000 plus integral multiples of $100,000 in excess thereof.

 

  

D-1

  

 

	  	
Very truly yours,

	 	 
	  	
STERLING JEWELERS RECEIVABLES

	  	
MASTER NOTE TRUST,

	  	
Issuer

	 	 
	  	
By:

	
Wilmington Trust Company,

	  	  	
not in its individual capacity

	  	  	
but solely as Owner Trustee

	 	 	 
	  	
By:

	  
	  	
Name:

	  	
Title:

 

  

D-2

  

 

EXHIBIT E

 

FORM OF NOTICE OF OPTIONAL AMORTIZATION

 

Deutsche Bank Trust Company Americas

[Address]

 

J.P. Morgan Chase Bank N.A.

[Address]

 

Pursuant to subsection 4.09(b) of the Series 2014-A Indenture Supplement, dated as of May 15, 2014, to the Master Indenture, dated as of November 2, 2001, each among Sterling Jewelers Receivables Master Note Trust, a Delaware statutory trust, as Issuer, Sterling Jewelers Inc., a Delaware corporation, as Servicer and Deutsche Bank Trust Company Americas, a New York banking corporation, as Indenture Trustee (terms defined therein being used herein as therein defined), the Servicer hereby provides notice of an optional amortization in the amount and on the date set forth below:

 

Optional Amortization Date: _________________

 

Optional Amortization Amount:     $ _______________

 

Class A Investor Amount on Optional Amortization Date:    $ ______________

 

IN WITNESS WHEREOF, I have duly executed and delivered this Optional Amortization Notice on this ____ day of _______, 20___.

 

	  	
STERLING JEWELERS INC.,

	  
	  	
as Servicer

	  
	 	 	 
	  	
By:

	  	  
	  	  	
Name:

	  
	  	  	
Title:

	  

 

  

E-1

  

 

EXHIBIT F

 

[Date]

 

Deutsche Bank Trust Company Americas

[Address]

 

Sterling Jewelers Inc.

[Address]

 

Sterling Jewelers Receivables Corp.

[Address]

 

	
Re: 

	
Sterling Jewelers Receivables Master Note Trust, Series 2014-A Notes

 

Ladies and Gentlemen:

 

Pursuant to subsection 4.11(b) of the Series 2014-A Indenture Supplement dated as of May 15, 2014, to the Master Indenture dated as of November 2, 2001, each among Sterling Jewelers Receivables Master Note Trust, a Delaware statutory trust, Sterling Jewelers Inc., a Delaware corporation, as servicer and Deutsche Bank Trust Company Americas, a New York banking corporation, as Indenture Trustee (terms defined therein being used herein as therein defined), the Issuer hereby irrevocably requests a Note Principal Balance Increase as follows:

 

	
  

	
1.

	
The requested aggregate amount of such Class B Note Principal Balance Increase is $_________.

 

	
  

	
2.

	
Such Class B Note Principal Balance Increase is requested to be made on _________, the Increase Date.

 

	
  

	
3.

	
Proceeds of such Class B Note Principal Balance Increase shall be remitted on the applicable Increase Date in immediately available funds to [specify payment instructions].

 

It is expressly understood and agreed by the parties hereto that (a) this request is executed and delivered by Wilmington Trust Company ("WTC"), not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by WTC but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on WTC, individually or personally, to perform any covenant either expressed or implied contained herein of the Owner Trustee or the Issuer, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTC has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this request and (e) under no circumstances shall WTC be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this request or any other related documents.

 

  

F-1

  

 

	  	
Very truly yours,

	  
	 	 	 
	  	
STERLING JEWELERS RECEIVABLES

	  
	  	
MASTER NOTE TRUST, as Issuer

	  
	 	 	 
	  	
By:

	
Wilmington Trust Company,

	  
	  	  	
not in its individual capacity

	  
	  	  	
but solely as Owner Trustee

	  
	 	 	 	 
	  	
By:

	  	  
	  	  	
Name:

	  
	  	  	
Title:

	  

 

  

F-2

  

EXHIBIT G

 

FORM OF INVESTMENT LETTER

 

May 15, 2014

 

Sterling Jewelers Receivables Corp.

375 Ghent Road

Akron, Ohio 44333

Attn.: ____________________

 

	
  

	
Re:

	
Sterling Jewelers Receivables Master Note Trust;

	
 

	
Purchase of Series 2014-A Class A Notes

 

Ladies and Gentlemen:

 

This letter (the “Investment Letter”) is delivered by the undersigned (the “Purchaser”) pursuant to Section 8.03(c) of the Series 2014-A Supplement (the “Indenture Supplement”), dated as of May 15, 2014 among Sterling Jewelers Receivables Master Note Trust, as Issuer (the “Issuer”), Sterling Jewelers Inc., as Servicer (the “Servicer”) and Deutsche Bank Trust Company Americas, as Indenture Trustee (the “Indenture Trustee”) to the Master Indenture (as amended, the “Indenture”), dated as of November 2, 2001 among the Issuer, the Servicer and the Indenture Trustee and pursuant to that certain Note Purchase Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Note Purchase Agreement”) dated as of May 15, 2014, among Sterling Jewelers Receivables Corp. (the “Transferor”), the Issuer, the Servicer, each conduit purchaser party thereto from time to time, each committed purchaser party thereto from time to time, and J.P. Morgan Chase Bank N.A., as Administrative Agent.  Capitalized terms used herein without definition shall have the meanings set forth in the Note Purchase Agreement or the Indenture Supplement.  The Purchaser represents to and agrees with the Transferor as follows:

 

(a)            It is authorized to enter into the Note Purchase Agreement and to perform its obligations thereunder and to consummate the transactions contemplated thereby.

 

(b)           It has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Class A Notes and is able to bear the economic risk of such investment.

 

(c)            It is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) as promulgated by the Securities and Exchange Commission (the “Commission”).  The Purchaser understands that the offering and sale of the Class A Notes has not been and will not be registered under the Securities Act or any applicable state securities laws or securities laws of any other jurisdiction and is being offered only in a transaction not involving any public offering within the meaning of the Securities Act and may not be resold or otherwise transferred unless so registered or qualified or unless an exemption from registration or qualification is available, and that the offering and sale of the Class A Notes has not been reviewed by, passed on or submitted to any federal or state agency or commission, securities exchange or other regulatory body.

 

  

G-1

  

 

(d)           It will not resell or otherwise transfer the Class A Notes except in accordance with the Note Purchase Agreement and the Indenture Supplement and (i) to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or (ii) to a person who the Purchaser reasonably believes is a “qualified institutional buyer” (within the meaning thereof in Rule 144A under the Securities Act) in compliance with Rule 144A.  In connection therewith, the Purchaser hereby agrees that it will not resell or otherwise transfer the Class A Notes or any interest therein unless the purchaser thereof provides to the addressee hereof a letter from such Purchaser substantially in the form hereof.

 

(e)            It understands that each of the Class A Notes will bear a legend to substantially the following effect:

 

THIS CLASS A NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (A “QUALIFIED INSTITUTIONAL BUYER”) WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) TO AN ENTITY QUALIFYING AS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF PARAGRAPH (1), (2), (3) OR (7) OF RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACT OR AN ENTITY OWNED ENTIRELY BY OTHER ENTITIES THAT FALL WITHIN SUCH PARAGRAPHS, IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES.

 

EACH PURCHASER REPRESENTS AND WARRANTS, FOR THE BENEFIT OF STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST AND STERLING JEWELERS RECEIVABLES CORP., THAT (1) IT IS NOT A RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR ANY PROVISION OF ANY OTHER FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION WHICH IS SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (COLLECTIVELY, “SIMILAR LAWS”) (EACH, A “PLAN”), OR ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING OR HOLDING THE CLASS A NOTES OR INTEREST THEREIN ON BEHALF OF, AS FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF, ANY PLAN OR (II) IS PURCHASING OR HOLDING THE CLASS A NOTES WITH THE ASSETS OF A PLAN AND ITS PURCHASE AND HOLDING OF SUCH CLASS A NOTES WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT VIOLATE ANY APPLICABLE PROVISION OF ANY APPLICABLE SIMILAR LAWS.

 

  

G-2

  

 

ANY TRANSFER OF A DIRECT OR INDIRECT INTEREST IN THIS CLASS A NOTE IS SUBJECT TO THE PROVISIONS OF THE INDENTURE AND SUBJECT TO CERTAIN LIMITATIONS THEREIN SET FORTH, INCLUDING SECTIONS 8.02 AND 8.03 OF THE INDENTURE SUPPLEMENT.

 

THE OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS A NOTE WILL BE REDUCED FROM TIME TO TIME BY DISTRIBUTIONS ON THIS CLASS A NOTE ALLOCABLE TO PRINCIPAL.  IN ADDITION, THE PRINCIPAL BALANCE OF THIS CLASS A NOTE MAY BE INCREASED AT THE REQUEST OF THE TRANSFEROR SUBJECT TO CERTAIN TERMS AND CONDITIONS SET FORTH IN THE INDENTURE SUPPLEMENT REFERRED TO HEREIN.  ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CLASS A NOTES, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS A NOTE MAY BE DIFFERENT FROM THE INITIAL OUTSTANDING PRINCIPAL BALANCE SHOWN BELOW.  ANYONE ACQUIRING THIS CLASS A NOTE MAY ASCERTAIN THE CURRENT OUTSTANDING PRINCIPAL BALANCE OF THIS CLASS A NOTE BY INQUIRY OF THE INDENTURE TRUSTEE.  ON THE DATE OF THE INITIAL ISSUANCE OF THE CLASS A NOTES, THE INDENTURE TRUSTEE IS BANKERS TRUST COMPANY.

 

(f)             It represents and warrants that (i) it is not a retirement plan or other employee benefit plan or other retirement arrangement subject to Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or any provision of any other federal, state, local or non-U.S. law or regulation which is similar to the prohibited transaction provisions of Section 406 of ERISA or Section 4975 of the Code (collectively, “Similar Laws”) (each, a “Plan”), or any person who is directly or indirectly purchasing or holding the Class A Notes or interest therein on behalf of, as fiduciary of, as trustee of, or with assets of, any Plan or (ii) is purchasing or holding the Class A Notes with the assets of a Plan and its purchase and holding of such Class A Notes will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code and will not violate any applicable provision of any applicable Similar Laws.

 

  

G-3

  

 

(g)           This Investment Letter has been duly executed and delivered and constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors’ rights generally and general principles of equity.

 

  

G-4

  

 

	  	
Very truly yours,

	  
	 	 	 
	  	
[__________________]

	  
	 	 	 
	  	
By:

	  	  
	  	
Name:

	  	  
	  	
Title:

	  	  

 

 

G-5mm05-2114_8ke43.htm

 

EXHIBIT 4.3

 

EXECUTION VERSION

 

STERLING JEWELERS RECEIVABLES

MASTER NOTE TRUST

  

 

AMENDED AND RESTATED TRANSFER AND SERVICING AGREEMENT

 

among

 

STERLING JEWELERS RECEIVABLES CORP.,

 

as Transferor

 

and

 

STERLING JEWELERS INC.,

 

as Servicer

 

and

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST,

 

as Issuer

 

Dated as of May 15, 2014

  

  

  

 

TABLE OF CONTENTS

 

	  	 	
Page

	  	  	  
	
ARTICLE I

	
DEFINITIONS

	
1

	
Section 1.01.

	
Definitions

	
1

	
Section 1.02.

	
Other Definitional Provisions

	
14

	
ARTICLE II

	
CONVEYANCE OF RECEIVABLES

	
15

	
Section 2.01.

	
Conveyance of Receivables

	
15

	
Section 2.02.

	
Acceptance by Trust

	
17

	
Section 2.03.

	
Representations and Warranties of Each Transferor Relating to  Such Transferor

	
17

	
Section 2.04.

	
Representations and Warranties of each Transferor Relating to the Agreement and Any Participation Interest Supplement and the Receivables

	  
	  	  	
19

	
Section 2.05.

	
Reassignment of Ineligible Receivables

	
21

	
Section 2.06.

	
Reassignment of Trust Portfolio

	
22

	
Section 2.07.

	
Covenants of each Transferor

	
23

	
Section 2.08.

	
Covenants of each Transferor with Respect to the Applicable Receivables Purchase Agreement

	
26

	
Section 2.09.

	
Addition of Accounts

	
27

	
Section 2.10.

	
Removal of Accounts and Participation Interests

	
29

	
Section 2.11.

	
Account Allocations

	
31

	
Section 2.12.

	
Discount Option

	
32

	
ARTICLE III

	
ADMINISTRATION AND SERVICING OF RECEIVABLES

	
33

	
Section 3.01.

	
Acceptance of Appointment and Other Matters Relating to the Servicer

	
33

	
Section 3.02.

	
Servicing Compensation

	
34

	
Section 3.03.

	
Representations, Warranties and Covenants of the Servicer

	
34

	
Section 3.04.

	
Reports and Records for the Owner Trustee and the Indenture Trustee

	
37

	
Section 3.05.

	
Annual Certificate of the Servicer

	
38

	
Section 3.06.

	
Annual Servicing Report of Independent Public Accountants; Copies of Reports Available

	
38

	
Section 3.07.

	
Tax Treatment

	
39

	
Section 3.08.

	
Notices to the Servicer

	
39

	
Section 3.09.

	
Adjustments

	
39

 

  

i

  

 

TABLE OF CONTENTS

(continued)

 

	  	 	
Page

	  	  	  
	
ARTICLE IV

	
OTHER MATTERS RELATING TO EACH TRANSFEROR

	
41

	
Section 4.01.

	
Liability of each Transferor

	
41

	
Section 4.02.

	
Merger or Consolidation of, or Assumption of the Obligations of a Transferor

	
41

	
Section 4.03.

	
Limitations on Liability of Each Transferor

	
42

	
ARTICLE V

	
OTHER MATTERS RELATING TO THE SERVICER

	
43

	
Section 5.01.

	
Liability of the Servicer

	
43

	
Section 5.02.

	
Merger or Consolidation of, or Assumption of the Obligations of, the Servicer

	
43

	
Section 5.03.

	
Limitation on Liability of the Servicer and Others

	
43

	
Section 5.04.

	
Servicer Indemnification of the Trust, the Owner Trustee and the Indenture Trustee

	
44

	
Section 5.05.

	
Resignation of the Servicer

	
44

	
Section 5.06.

	
Access to Certain Documentation and Information Regarding the Receivables

	
45

	
Section 5.07.

	
Delegation of Duties

	
45

	
Section 5.08.

	
Examination of Records

	
45

	
Section 5.09.

	
Designation of a Co-Servicer

	 
	
ARTICLE VI

	
INSOLVENCY EVENTS

	
46

	
Section 6.01.

	
Rights upon the Occurrence of an Insolvency Event

	
46

	
ARTICLE VII

	
SERVICER DEFAULTS

	
47

	
Section 7.01.

	
Servicer Defaults

	
47

	
Section 7.02.

	
Indenture Trustee To Act; Appointment of Successor

	
49

	
Section 7.03.

	
Notification to Noteholders

	
51

	
ARTICLE VIII

	
TERMINATION

	
52

	
Section 8.01.

	
Termination of Agreement

	
52

	
ARTICLE IX

	
MISCELLANEOUS PROVISIONS

	
53

	
Section 9.01.

	
Amendment; Waiver of Past Defaults

	
53

	
Section 9.02.

	
Protection of Right, Title and Interest to Trust

	
55

	
Section 9.03.

	
GOVERNING LAW

	
56

	
Section 9.04.

	
Notices; Payments

	
56

	
Section 9.05.

	
Severability of Provisions

	
56

	
Section 9.06.

	
Further Assurances

	
56

	
Section 9.07.

	
No Waiver: Cumulative Remedies

	
57

  

ii

  

TABLE OF CONTENTS

(continued)

 

	  	 	
Page

	  	  	  
	
Section 9.08.

	
Counterparts

	
57

	
Section 9.09.

	
Third-Party Beneficiaries

	
57

	
Section 9.10.

	
Actions by Noteholders

	
57

	
Section 9.11.

	
Rule 144A Information

	
57

	
Section 9.12.

	
Merger and Integration

	
57

	
Section 9.13.

	
Headings

	
58

	
Section 9.14.

	
Limitation of Liability

	
58

	
Section 9.15.

	
Rights of the Indenture Trustee

	
58

 

  

iii

  

 

EXHIBITS

 

	
EXHIBIT A

	
Reserved

	
A-1

	
EXHIBIT B

	
Form of Reassignment of Receivables in Removed Accounts

	
B-1

	
EXHIBIT C

	
Form of Annual Servicer’s Certificate

	
C-1

	
EXHIBIT D-1

	
Form of Opinion of Counsel with Respect to Amendments

	
D-1-1

	
EXHIBIT D-2

	
Form of Opinion of Counsel with Respect to Accounts

	
D-2-1

	
EXHIBIT D-3

	
Provisions to be Included in Annual Opinion of Counsel

	
D-3-1

	  	  	  
	
SCHEDULE 1

	
List of Accounts

	
14

  

iv

  

AMENDED AND RESTATED TRANSFER AND SERVICING AGREEMENT, dated as of May 15, 2014 among STERLING JEWELERS RECEIVABLES CORP., a Delaware corporation, as Transferor, STERLING JEWELERS INC., as Servicer, and STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST, a Delaware business trust, as Issuer.

 

WITNESSETH

 

WHEREAS, the Issuer, the Transferor and the Servicer have heretofore entered into that certain Transfer and Servicing Agreement, dated as of November 2, 2001 (the “Original Transfer and Servicing Agreement”);

 

WHEREAS, Section 9.01 of the Original Transfer and Servicing Agreement provides for amendments to be made thereto in writing with (i) the delivery by the Transferor of an Officer’s Certificate to the Indenture Trustee and the Owner Trustee, dated the date of such action, stating that the Transferor reasonably believes that such action will not have an Adverse Effect and (ii) the satisfaction of the Rating Agency Condition with respect to such amendment;

 

WHEREAS, no Notes are outstanding at the time of entry into this Agreement; and

 

WHEREAS, the Transferor, the Servicer and the Issuer propose to amend and restate the Original Transfer and Servicing Agreement as set forth herein and all conditions precedent for such amendment and restatement have been satisfied.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, each party agrees as follows for the benefit of the other parties, the Noteholders and any Series Enhancer (as defined below) to the extent provided herein, in the Indenture and in any Indenture Supplement:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.  Definitions.  Whenever used in this Agreement, the following words and phrases shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

 

“Account” shall mean (a) each consumer revolving credit card account of Account Owner in existence on the Cut-Off Date that was an Eligible Account on the Cut-Off Date, (b) each consumer revolving credit card account established by an Obligor with an Account Owner from and after the Cut-Off Date that, as of the date of its origination, is an Eligible Account and that is covered by the Receivables Purchase Agreement, (c) each Related Account and (d) each Transferred Account, but shall exclude any Account all the Receivables in which are either reassigned or assigned to the Transferor or its designee or the Servicer in accordance with the terms of this Agreement.  The definition of Account shall include each Transferred Account.  The term “Account” shall be deemed to refer to an Additional Account only from and after the Addition Date with respect thereto, and the term “Account” shall be deemed to refer to any Removed Account only prior to the Removal Date with respect thereto.

  

  

  

 

“Account Addition Test” shall have the meaning set forth (if any) in any Indenture Supplement.

 

“Account Owner” shall mean the Seller.

 

“Addition Date” shall mean (i) with respect to Additional Accounts, the date from and after which such Additional Accounts are to be included as Accounts pursuant to subsection 2.09(a)(i) and (ii) with respect to Participation Interests, the date from and after which such Participation Interests are to be included as assets of the Trust pursuant to subsection 2.09(a)(ii).

 

“Additional Account” shall mean each Eligible Account designated pursuant to subsection 2.09(a) to be included as an Account and identified in the computer file or microfiche list delivered to the Indenture Trustee by the Transferor pursuant to Section 2.01 and subsection 2.09(a).

 

“Additional Cut-Off Date” shall mean the date specified as such in the notice delivered with respect thereto pursuant to subsection 2.09(b).

 

“Additional Transferors” shall have the meaning specified in subsection 2.09(d).

 

“Adjustment Payment” shall have the meaning specified in Section 3.09.

 

“Adverse Effect” shall mean, with respect to any action, that such action will (a) result in the occurrence of a Pay Out Event or an Event of Default or (b) materially and adversely affect the amount or timing of distributions to be made to the Noteholders of any Series or Class pursuant to this Agreement, the Indenture or the related Indenture Supplement.

 

“Affiliate” shall mean, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person.  For the purposes of this definition, “control” shall mean the power to direct the management and policies of a 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 Addition” shall mean the designation of additional Eligible Accounts to be included as.  Accounts or of Participation Interests to be included as Trust Assets pursuant to subsection 2.09(a).

 

“Agreement” shall mean this Transfer and Servicing Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Appointment Date” shall have the meaning specified in Section 6.01.

 

“Assignment” shall have the meaning specified in subsection 2.09(e).

  

2

  

“Authorized Newspaper” shall mean any newspaper or newspapers of general circulation in the Borough of Manhattan, the City of New York, printed in the English language (and, with respect to any Series or Class, if and so long as the Notes of such Series are Bearer Notes, in such place as may be specified in the applicable Indenture Supplement) and customarily published on each business day at such place, whether or not published on Saturdays, Sundays or holidays.

 

“Bearer Notes” shall have the meaning specified in the Indenture.

 

“Business Day” shall mean any day other than (a) a Saturday or Sunday or (b) any other day on which national banking associations or state banking institutions in New York, New York, Ohio, Delaware or any other state in which the principal executive offices of Sterling, the Owner Trustee, the Indenture Trustee or other Account Owner, as the case may be, are located, are authorized or obligated by law, executive order or governmental decree to be closed or (c) for purposes of any particular Series, any other day specified in the related Indenture Supplement.

 

“Class” shall have the meaning specified in the Indenture.

 

“Closing Date” shall mean, with respect to any Series, the closing date specified in the related Indenture Supplement.

 

“Collections” shall mean all payments (including Insurance Proceeds) by or on behalf of Obligors received in respect of the Receivables, in the form of cash, checks, wire transfers, electronic transfers, ATM transfers or any other form of payment in accordance with a Credit Card Agreement in effect from time to time and all other amounts specified by this Agreement, the Indenture or any Indenture Supplement as constituting Collections.  As specified in any Participation Interest Supplement or Indenture Supplement, Collections shall include amounts received with respect to Participation Interests.  All Recoveries with respect to Receivables previously charged off as uncollectible will be treated as Collections of Finance Charge Receivables.

 

“Contractual Method” shall mean the method of aging receivables in a consumer revolving credit card account with respect to which less than the full agreed upon minimum monthly payment for any month has been received by the Credit Card Originator pursuant to the terms of the related Credit Card Agreement, which method shall treat the entire unpaid principal balance of any such receivable as being outstanding.

 

“Corporate Trust Office” shall have the meaning (a) when used in respect of the Owner Trustee, specified in the Trust Agreement and (b) when used in respect of the Indenture Trustee, specified in the Indenture.

 

“Co-Servicer” shall have the meaning specified in Section 5.09.

 

“Coupon” shall have the meaning specified in the Indenture.

 

“Credit Card Agreement” shall mean, with respect to a revolving credit card account, the agreements between an Account Owner and the Obligor governing the terms and conditions of such account, as such agreements may be amended, modified or otherwise changed from time to time and as distributed (including any amendments and revisions thereto) to holders of such account.

  

3

  

 

“Credit Card Guidelines” shall mean the respective policies and procedures of the Account Owner, as such policies and procedures may be amended from time to time, (a) relating to the operation of its credit card business, which generally are applicable to its portfolio of revolving credit card accounts or, if the Account Owner has only a portion of its portfolio subject to the Receivables Purchase Agreement, applicable to such portion of its portfolio, and in each case which are consistent with prudent practice, including the policies and procedures for determining the creditworthiness of credit card customers and the extension of credit to credit card customers, and (b) relating to the maintenance of credit card accounts and collection of credit card receivables.

 

“Credit Card Originator” shall mean Sterling Jewelers Inc.

 

“Cut-Off Date” shall mean May 21, 2014.

 

“Date of Processing” shall mean, with respect to any transaction or receipt of Collections, the date on which such transaction is first recorded on the Servicer’s computer file of revolving credit card accounts (without regard to the effective date of such recordation).

 

“Defaulted Amount” shall mean, with respect to any Monthly Period, an amount (which shall not be less than zero) equal to (a) the amount of Principal Receivables which became Defaulted Receivables in such Monthly Period, minus (b) the amount of any Defaulted Receivables of which the Transferor or the Servicer became obligated to accept reassignment or assignment in accordance with the terms of this Agreement during such Monthly Period; provided, however, that, if an Insolvency Event occurs with respect to the Transferor, the amount of such Defaulted Receivables which are subject to reassignment to the Transferor in accordance with the terms of this Agreement shall not be added to the sum so subtracted and, if any of the events described in subsection 7.01(d) occur with respect to the Servicer, the amount of such Defaulted Receivables which are subject to reassignment or assignment to the Servicer in accordance with the terms of this Agreement shall not be added to the sum so subtracted.

 

“Defaulted Receivables” shall mean, with respect to any Monthly Period, all Principal Receivables in any Account which are written off as uncollectible in such Monthly Period in accordance with the Credit Card Guidelines and the Servicer’s customary and usual servicing procedures for servicing consumer revolving credit card receivables comparable to the Receivables.  A Receivable in any Account shall become a Defaulted Receivable on the day on which such Receivable is recorded as written off on the Servicer’s computer master file of consumer revolving credit card accounts, but in any event, shall be deemed a Defaulted Receivable no later than the last day of the seventh consecutive billing cycle in which such Receivable is delinquent (i.e., 211 days or more past due) as determined under the Contractual Method.

 

“Discount Option Date” shall have the meaning specified in Section 2.12

 

“Discount Option Receivables” shall have the meaning specified in Section 2.12.  The aggregate amount of Discount Option Receivables on any Date of Processing shall equal the product of (a) the amount of Principal Receivables as of such Date of Processing and (b) the Discount Percentage, if any, in effect on such Date of Processing.

  

4

  

 

“Discount Option Receivables Collections” means on any Date of Processing, the product of (i) a fraction the numerator of which is the aggregate amount of Discount Option Receivables and the denominator of which is the sum of the aggregate amount of Principal Receivables and the aggregate amount of Discount Option Receivables, in each case at the end of the prior Date of Processing and (ii) Collections of Principal Receivables on such Date of Processing prior to any reduction for Finance Charge Receivables which are Discount Option Receivables received on such Date of Processing.

 

“Discount Percentage” shall have the meaning specified in Section 2.12.

 

“Distribution Date” shall mean, with respect to any Series, the date specified in the applicable Indenture Supplement.

 

“Document Delivery Date” shall have the meaning specified in subsection 2.09(a)(i)(A).

 

“Dollars,” “$” or “U.S. $” shall mean United States dollars.

 

“Early Accumulation Period” shall have the meaning, with respect to any Series, if any, specified in the related Indenture Supplement.

 

“Eligible  Account” shall mean a consumer revolving credit card account owned by the Seller in the case of the Initial Accounts on the Cut-Off Date, or the Seller or other Account Owner, in the case of Additional Accounts after the Cut-Off Date which, as of the Cut-Off Date with respect to an Initial Account or as of the Addition Date with respect to an Additional Account meets the following requirements:

 

(a)          is a revolving credit card account in existence and maintained by the Account Owner;

 

(b)          is established pursuant to a Credit Card Agreement, only one original of which exists, which original is in the possession of the Seller;

 

(c)          is payable in Dollars;

 

(d)          has a cardholder who has provided, as his or her most recent billing address, an address located in the United States or its territories or possessions or a military address;

 

(e)          except as provided below, has a cardholder who has not been identified by the Servicer in its computer files as being currently involved in a voluntary or involuntary bankruptcy proceeding;

 

(f)           has not been identified as an account with respect to which the related card has been lost or stolen;

 

  

5

  

(g)          has not been sold or pledged to any other party;

 

(h)          does not have receivables which have been sold or pledged by the Account Owner to any other party other than SJRC pursuant to the Receivables Purchase Agreement or the Indenture Trustee pursuant to the Indenture or a Consignment Vendor;

 

(i)           with respect to the Initial Accounts, is an account in existence and  maintained by the Account Owner as of the Cut-Off Date or maintained by the Account Owner as of the Addition Date with respect to Additional Accounts;

 

(j)           except as provided below, does not have any Receivables that are Defaulted Receivables;

 

(k)          does not have any Receivables that have been identified by the Servicer or the relevant Obligor as having been incurred as a result of fraudulent use of any related credit card; and

 

(l)           except as provided below, does not have any Receivables that are more than 211 days past due from the date of the initial billing statement.

 

Eligible Accounts may include Accounts, the Receivables of which have been charged off, or with respect to which the Servicer believes the related Obligor is bankrupt, in each case as of the Cut-Off Date, with respect to the Initial Accounts, and as of the related Addition Date, with respect to Additional Accounts; provided that (a) the balance of all Receivables included in such Accounts is reflected on the books and records of such Transferor (and is treated for purposes of this Agreement) as “zero” and (b) charging privileges with respect to all such Accounts have been canceled in accordance with the relevant Credit Card Guidelines.

 

“Eligible Receivable” shall mean each Receivable:

 

(a)          which has arisen in an Eligible Account;

 

(b)          which was created in compliance in all material respects with all Requirements of Law applicable to the institution which owned such Receivable at the time of its creation and pursuant to a Credit Card Agreement which complies in all material respects with all Requirements of Law applicable to the Account Owner;

 

(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 in connection with the creation of such Receivable or the execution, delivery and performance by the Account Owner 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;

 

(d)          as to which at the time of the transfer of such Receivable to the Trust, the Transferor or the Trust will have good and marketable title thereto and which itself is, and the underlying receivables are, free and clear of all Liens (other than any Lien for municipal or other local taxes if such taxes are not then due and payable or if the Transferor is then contesting the validity thereof in good faith by appropriate proceedings and has set aside on its books adequate reserves with respect thereto);

 

  

6

  

 

(e)          which has been the subject of either a valid transfer and assignment from the Transferor to the Trust of all the Transferor’s right, title and interest therein (including any proceeds thereof), or the grant of a first priority perfected security interest therein (and in the proceeds thereof), effective until the termination of the Trust;

 

(f)           which at all times will be 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 bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);

 

(g)          which, at the time of transfer to the Trust, has not been waived or modified except as permitted in accordance with the Credit Card Guidelines and which waiver or modification is reflected in the Servicer’s computer file of revolving credit card accounts;

 

(h)          which, at the time of transfer to the Trust, is not subject to any right of rescission, setoff, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the Obligor, other than defenses arising out of applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights in general;

 

(i)           as to which, at the time of transfer to the Trust, the Account Owner, as the case may be, has satisfied all of its obligations required to be satisfied by such time;

 

(j)           as to which, at the time of transfer to the Trust, none of the Transferor, Sterling or the Account Owner has taken any action which would impair, or omitted to take any action the omission of which would impair, the rights of the Trust or the Noteholders therein; and

 

(k)          which constitutes an “account,” a “payment intangible” or “tangible chattel paper” under and as defined in Article 9 of the UCC as then in effect in the State of New York, the State of Delaware and any other state where the filing of a financing statement is required to perfect the Trust’s interest in the Receivables and the proceeds thereof.

 

“Eligible Servicer” shall mean the Indenture Trustee or, if the Indenture Trustee is not acting as Servicer, an entity which, at the time of its appointment as Servicer, (a) is servicing a portfolio of revolving credit card accounts, (b) is legally qualified and has the capacity to service the Accounts, (c) except for the purposes of Section 5.02, in the sole determination of the Indenture Trustee, which determination shall be conclusive and binding, has demonstrated the ability to service professionally and competently a portfolio of similar accounts in accordance with high standards of skill and care, (d) is qualified to use the software that is then being used to service the Accounts or obtains the right to use or has its own software which is adequate to perform its duties under this Agreement and (e) has a net worth of at least $50,000,000 as of the end of its most recent fiscal quarter.

 

  

7

  

“Event of Default” shall have the meaning specified in the Indenture.

 

“Excluded Account” shall mean any Account designated by the Transferor to be excluded from the calculation of the Account Addition Test.

 

“Finance Charge Receivables” shall mean all amounts billed to the Obligors on any Account in respect of (i) Periodic Rate Finance Charges, (ii) Late Fees, (iii) Returned Payment Check Fees, (iv) the amount of any insurance premiums billed to the Obligor; provided, however, that after the occurrence of an Insolvency Event relating to Sterling Jewelers Inc., such amount shall be net of amounts payable by the Account Owner to insurance providers or reinsurers, (v) Discount Option Receivables, and (vi) all other fees and charges with respect to the Accounts designated by the Transferor to be included as Finance Charge Receivables.  All Collections in relation to Recoveries with respect to a Monthly Period will be treated as Collections of Finance Charge Receivables with respect to such Monthly Period.  A Finance Charge Receivable shall be deemed to have been created at the end of the day on the Date of Processing of such Receivable.

 

“Fitch” shall mean Fitch, Inc. or its successors.

 

“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.

 

“Indenture” shall mean the Master Indenture, dated as of November 2, 2001, among the Issuer, the Servicer and the Indenture Trustee, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Indenture Collateral” shall have the meaning specified in Section 2.01.

 

“Indenture Supplement” shall have the meaning specified in the Indenture.

 

“Indenture Trustee” shall mean Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), in its capacity as trustee under the Indenture, its successors in interest and any successor indenture trustee under the Indenture.

 

“Independent Director”  shall have the meaning specified in subsection 2.07(h)(vii).

 

“Ineligible Receivables” shall have the meaning specified in subsection 2.05(a).

 

“Initial Account” shall mean each consumer revolving credit card account established pursuant to a Credit Card Agreement between the Seller and any Person, which account is identified in the computer file or microfiche list delivered to the Indenture Trustee by the Transferor pursuant to Section 2.01 on the Initial Funding Date.

 

“Initial Funding Date” shall mean May 27, 2014 or such other date as the Servicer and Transferor shall agree in writing.

 

  

8

  

“Initial Issuance Date” shall mean November 2, 2001, the date the Transferor’s Certificate is delivered by the Trust to the Transferor pursuant to the Trust Agreement.

 

“Insolvency Event” shall have the meaning specified in Section 6.01.

 

“Insurance Proceeds” shall mean any amounts received pursuant to the payment of benefits under any credit life insurance policies, credit disability or unemployment insurance policies covering any Obligor with respect to Receivables under such Obligor’s Account.

 

“Invested Amount” shall mean, with respect to any Series and for any date, an amount equal to the invested amount or adjusted invested amount, as applicable, specified in the related Indenture Supplement.

 

“Issuer” shall mean the Trust.

 

“Late Fees” shall have the meaning specified in the Credit Card Agreement applicable to each Account for late fees or similar terms.

 

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, equity interest, encumbrance, lien (statutory or other), preference, participation interest, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing; provided, however, that any assignment permitted by subsection 3.06(b) of the Trust Agreement or Section 4.02 of, and the lien created by, this Agreement shall not be deemed to constitute a Lien.

 

“Monthly Payment Rate” shall mean with respect to the last day of any prior Monthly Period, the percentage equivalent of a fraction, the numerator of which is the aggregate amount of Collections of Principal Receivables with respect to such Monthly Period and the denominator of which is the aggregate amount of Principal Receivables as of the last day of the immediately preceding Monthly Period.

 

“Monthly Period” shall have the meaning specified in the Indenture.

 

“Monthly Servicing Fee” shall have the meaning specified in Section 3.02.

 

“Note Interest Rate” shall have the meaning specified in the Indenture.

 

“Note Owner” shall have the meaning specified in the Indenture.

 

“Note Register” shall have the meaning specified in the Indenture.

 

“Noteholder” or “Holder” shall have the meaning specified in the Indenture.

 

“Notices” shall have the meaning specified in subsection 9.04(a).

 

  

9

  

“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, but excluding any merchant.

 

“Officer’s Certificate” shall have the meaning specified in the Indenture.

 

“Opinion of Counsel” shall have the meaning specified in the Indenture.

 

“Owner Trustee” shall mean Wilmington Trust Company, not in its individual capacity, but solely as owner trustee under the Trust Agreement, its successors in interest and any successor owner trustee under the Trust Agreement.

 

“Participation Interest Supplement” shall mean a supplement to this Agreement entered into pursuant to subsection 2.09(a)(ii) in connection with the conveyance of Participation Interests to the Trust.

 

“Participation Interests” shall have the meaning specified in subsection 2.09(a)(ii).

 

“Pay Out Event” shall have the meaning specified in the Indenture.

 

“Paying Agent” shall have the meaning specified in the Indenture.

 

“Periodic Rate Finance Charges” shall have the meaning specified in the Credit Card Agreement applicable to each Account for finance charges (due to periodic rate) or any similar term.

 

“Person” shall mean any legal person, including any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, governmental entity or other entity of any nature.

 

“Portfolio Yield” shall have the meaning specified in the Indenture Supplement.

 

“Principal Funding Account” shall have the meaning, with respect to any Series, specified in the related Indenture Supplement.

 

“Principal Funding Account Balance” shall have the meaning, with respect to any Series, specified in the related Indenture Supplement.

 

“Principal Receivables” shall mean all Receivables other than Finance Charge Receivables, Defaulted Receivables and Receivables arising in Excluded Accounts; provided, however, that after the Discount Option Date, Principal Receivables on any Date of Processing thereafter means Principal Receivables as otherwise determined pursuant to this definition minus the amount of any Discount Option Receivables.  Principal Receivables shall also include the principal portion of Participation Interests as shall be determined pursuant to, and only if so provided in, the applicable Participation Interest Supplement or Indenture Supplement for any Series.  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 the Transferor is unable to transfer as provided in Section 2.11 shall not be included in calculating the amount of Principal Receivables.

  

10

  

 

“Rating Agency” shall have the meaning specified in the Indenture.

 

“Rating Agency Condition” shall have the meaning specified in the Indenture.

 

“Reassignment” shall have the meaning specified in Section 2.10.

 

“Receivables” shall mean all amounts shown on the Servicer’s records as amounts payable by Obligors on any Account from time to time, including amounts payable for Principal Receivables and Finance Charge Receivables.  Receivables which become Defaulted Receivables will cease to be included as Receivables as of the day on which they become Defaulted Receivables.  Unless the context otherwise requires (whether or not there is a specific reference to the underlying receivable), any reference in this Agreement, the Indenture or any Indenture Supplement to a Receivable (including any Principal Receivable, Finance Charge Receivable or Defaulted Receivable) and any Collections thereon or other amounts recoverable with respect thereto (including any Insurance Proceeds or Recoveries with respect thereto) shall refer to only the fractional undivided interest in the amounts paid or payable by Obligors on the Accounts that are transferred by Seller to SJRC pursuant to the Receivables Purchase Agreement.

 

“Receivables Purchase Agreement” shall mean, the Third Amended and Restated Receivables Purchase Agreement, dated as of May 15, 2014, between the Seller and the Transferor.

 

 “Recoveries” shall mean all amounts received (net of out-of-pocket costs of collection) including Insurance Proceeds, which is reasonably estimated by the Servicer to be attributable to Defaulted Receivables, including the net proceeds of any sale of such Defaulted Receivables by the Transferor.

 

“Registered Notes” shall have the meaning specified in the Indenture.

 

“Related Account” shall mean an Account with respect to which a new credit account number has been issued by the Account Owner or Servicer or the applicable Transferor under circumstances resulting from a lost or stolen credit card and not requiring standard application and credit evaluation procedures under the Credit Card Guidelines.

 

“Removal Date” shall have the meaning specified in Section 2.10.

 

“Removed Accounts” shall have the meaning specified in Section 2.10.

 

“Removed Participation Interests” shall have the meaning specified in Section 2.10.

 

  

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“Required Minimum Principal Balance” shall mean, unless otherwise provided in an Indenture Supplement relating to any Series, as of any date of determination, an amount equal to the sum of the numerators used in the calculation of the Investor Percentages with respect to Principal Receivables for all outstanding Series on such date; provided that with respect to any Series in its Early Accumulation Period or such other period as designated in the related Indenture Supplement with an Invested Amount as of such date of determination equal to the Principal Funding Account Balance relating to such Series taking into account any deposit to be made to the Principal Funding Account on the Distribution Date following such date of determination, the numerator used in the calculation of the Investor Percentage with respect to Principal Receivables relating to such Series shall, solely for the purpose of the definition of Required Minimum Principal Balance, be deemed to equal zero.

 

“Required Transferor Interest” shall have the meaning specified in the Indenture.

 

“Requirements of Law” shall mean any law, treaty, rule or regulation, or determination of an arbitrator or Governmental Authority, whether Federal, state or local (including usury laws, the Federal Truth in Lending Act and Regulation B and Regulation Z of the Board of Governors of the Federal Reserve System), and, when used with respect to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person.

 

“Returned Payment Check Fee” shall have the meaning specified in the Credit Card Agreement applicable to each Account for returned payment check fees or similar items.

 

“Seller” shall mean Sterling.

 

“Series” shall have the meaning specified in the Indenture.

 

“Series Account” shall have the meaning specified in the Indenture.

 

“Series Enhancement” shall have the meaning specified in the Indenture.

 

“Series Enhancer” shall have the meaning specified in the Indenture.

 

“Service Transfer” shall have the meaning specified in Section 7.01.

 

“Servicer” shall mean Sterling, in its capacity as Servicer under this Agreement, and, after any Service Transfer, the Successor Servicer.

 

“Servicer Default” shall have the meaning specified in Section 7.01.

 

“Servicing Fee” shall have the meaning specified in Section 3.02.

 

“Servicing Fee Rate” shall mean, with respect to any Series, the servicing fee rate specified in the related Indenture Supplement.

 

“SJRC” shall mean Sterling Jewelers Receivables Corp., a Delaware corporation, and its successors and permitted assigns, in its capacity as Transferor under this Agreement and the Trust Agreement.

  

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“Special Funding Account” shall have the meaning specified in the Indenture.

 

“Special Funding Amount” shall have the meaning specified in the Indenture.

 

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, or its successor.

 

“Sterling” shall mean Sterling Jewelers Inc., a Delaware corporation, and its successors and permitted assigns, in its capacity as Servicer under this Agreement, or as a Seller under the Receivables Purchase Agreement, as the context requires.

 

“Successor Servicer” shall have the meaning specified in subsection 7.02(a).

 

“Supplemental Certificate” shall have the meaning specified in the Trust Agreement.

 

“Tax Opinion” shall have the meaning specified in the Indenture.

 

“Termination Notice” shall have the meaning specified in subsection 7.01(e).

 

“Transfer Agent and Registrar” shall have the meaning specified in the Indenture.

 

“Transfer Restriction Event” shall have the meaning specified in Section 2.11.

 

“Transferor” shall mean (a) SJRC, a wholly owned special purpose subsidiary of Sterling and incorporated in the State of Delaware, or its successor under this Agreement, and (b) any Additional Transferor or Transferors.  References to “each Transferor” shall refer to each entity mentioned in the preceding sentence and references to “the Transferor” shall refer to all of such entities.

 

“Transferor Certificates” shall have the meaning specified in the Trust Agreement.

 

“Transferor Interest” shall have the meaning specified in the Indenture.

 

“Transferred Account” shall mean each account into which an Account shall be transferred; provided that (i) such transfer was made in accordance with the Credit Card Guidelines and (ii) such account can be traced or identified as an account into which an Account has been transferred.

 

“Trust” shall mean the Sterling Jewelers Receivables Master Note Trust, a Delaware business trust.

 

“Trust Agreement” shall mean the Trust Agreement relating to the Trust, dated as of October 18, 2001, between SJRC and the Owner Trustee, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Trust Assets” shall have the meaning specified in Section 2.01.

 

  

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“UCC” shall mean the Uniform Commercial Code, as amended from time to time, as in effect in any specified jurisdiction.

 

Section 1.02.   Other Definitional Provisions.

 

(a)          With respect to any Series, all terms used herein and not otherwise defined herein shall have meanings ascribed to them in the Trust Agreement, the Indenture or the related Indenture Supplement, as applicable.

 

(b)          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.

 

(c)          As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP.  To the extent that the definitions of accounting tents in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.

 

(d)          The agreements, representations and warranties of SJRC and Sterling in this Agreement in each of their respective capacities as Transferor and Servicer shall be deemed to be the agreements, representations and warranties of SJRC and Sterling solely in each such capacity for so long as SJRC and Sterling act in each such capacity under this Agreement.

 

(e)          Any reference to each Rating Agency shall only apply to any specific rating agency if such rating agency is then rating any outstanding Series.

 

(f)           Unless otherwise specified, references to any amount as on deposit or outstanding on any particular date shall mean such amount at the close of business on such day.

 

(g)          The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; references to any subsection, Section, Schedule or Exhibit are references to subsections, Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” means “including without limitation.”

 

[END OF ARTICLE I]

  

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ARTICLE II

 

CONVEYANCE OF RECEIVABLES

 

Section 2.01.  Conveyance of Receivables.  By execution of this Agreement, SJRC and, in the case of Additional Accounts, SJRC or, if applicable, any Additional Transferor does hereby as of the Initial Funding Date transfer, assign, set over and otherwise convey to the Trust, without recourse except as provided herein, all its right, title and interest in, to and under the Receivables existing at the close of business on the Cut-Off Date, in the case of Receivables arising in the Initial Accounts, and on each Addition Date, in the case of Receivables arising in the Additional Accounts, and in each case thereafter created from time to time until the termination of the Trust, any Participation Interests and any property conveyed to the Trust pursuant to any Participation Interest Supplement, all Recoveries allocable to the Trust as provided herein, all monies due or to become due and all amounts received or receivable with respect thereto and all proceeds (including “proceeds” as defined in the UCC) thereof.  The Transferor does hereby further transfer, assign, set over and otherwise convey to the Trust all of its right, title and interest in and under the Receivables Purchase Agreement.  The property described in the two preceding sentences, together with all monies and other property credited to the Collection Account, the Series Accounts and the Special Funding Account (including any sub-accounts of such account), the rights of the Trust under this Agreement and the Trust Agreement, the property conveyed to the Trust under any Participation Interest Supplement and the right to receive Recoveries attributed to cardholder charges for merchandise and services in the Accounts shall constitute the assets of the Trust (the “Trust Assets”).  The foregoing does not constitute and is not intended to result in the creation or assumption by the Trust, the Owner Trustee (as such or in its individual capacity), the Indenture Trustee or any Noteholder of any obligation of the Account Owner or the Transferor, any Additional Transferor, the Servicer or any other Person in connection with the Accounts or the Receivables or under any agreement or instrument relating thereto, including any obligation to Obligors, merchant banks, merchants clearance systems or insurers.  The Obligors shall not be notified in connection with the creation of the Trust of the transfer, assignment, set-over and conveyance of the Receivables to the Trust.

 

Each Transferor agrees to record and file, at its own expense, financing statements (and continuation statements when applicable) with respect to the Receivables and other Trust Assets conveyed by such Transferor now existing and hereafter created meeting the requirements of applicable state law in such manner and in such jurisdictions as are necessary to perfect, and maintain the perfection of, the transfer and assignment of its interest in such Receivables to the Trust, and to deliver a file stamped copy of each such financing statement or other evidence of such filing to the Owner Trustee as soon as practicable after the Initial Funding Date, in the case of Receivables arising in the Initial Accounts, and (if any additional filing is so necessary) as soon as practicable after the applicable Addition Date, in the case of Receivables arising in Additional Accounts.  The Owner Trustee shall be under no obligation whatsoever to file such financing or continuation statements or to make any other filing under the UCC in connection with such transfer and assignment.

 

  

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Each Transferor further agrees, at its own expense, on or prior to (x) the Initial Funding Date, in the case of the Initial Accounts, (y) the applicable Addition Date, in the case of Additional Accounts with respect to such Transferor, if any, and (z) the applicable Removal Date, in the case of Removed Accounts with respect to such Transferor, (a) to indicate in the appropriate computer files that Receivables created (or reassigned, in the case of Removed Accounts) in connection with the Accounts have been conveyed to the Trust pursuant to this Agreement (or conveyed to each such Transferor or its designee in accordance with Section 2.10, in the case of Removed Accounts) and (b) to deliver to the Indenture Trustee a computer file or microfiche list containing a true and complete list of all such Accounts specifying for each such Account, as of April 30, 2014, in the case of the Initial Accounts, the applicable Addition Date in the case of Additional Accounts, and the applicable Removal Date in the case of Removed Accounts, its account number and the aggregate amount outstanding in such Account and the aggregate amount of Principal Receivables outstanding in such Account.  Each such file or list, as supplemented, from time to time, to reflect Additional Accounts and Removed Accounts, shall be marked as Schedule 1 to this Agreement and is hereby incorporated into and made a part of this Agreement.  Each Transferor further agrees not to alter the code referenced in this paragraph with respect to any Account during the term of this Agreement unless and until such Account becomes a Removed Account.

 

If the arrangements with respect to the Receivables hereunder shall constitute a loan and not a purchase and sale of such Receivables, it is the intention of the parties hereto that this Agreement shall constitute a security agreement under applicable law, and that each Transferor shall be deemed to have granted to the Trust a first priority perfected security interest in all of such Transferor’s right, title and interest, whether owned on the Initial Funding Date or thereafter acquired, in, to and under the Receivables and the other Trust Assets conveyed by such Transferor, and all money, accounts, general intangibles, chattel paper, instruments, documents, goods, investment property, deposit accounts, certificates of deposit, letters of credit, and advices of credit consisting of, arising from or related to the Trust Assets, and all proceeds thereof, to secure its obligations hereunder; and in such circumstances only, each of the Transferor and the Trust represents and warrants as to itself that each remittance of Collections by the Transferor to the Trust under this Agreement will have been: (i) in payment of a debt incurred by the Transferor in the ordinary course of business or financial affairs of the Transferor and the Trust; and (ii) made in the ordinary course of business or financial affairs of the Transferor and the Trust.

 

To the extent that any Transferor retains any interest in the Trust Assets, such Transferor hereby grants to the Indenture Trustee for the benefit of the Noteholders a security interest in all of such Transferor’s right, title and interest, whether now owned or hereafter acquired, in, to and under the Receivables, and the other Trust Assets, and all money, accounts, general intangibles, chattel paper, instruments, documents, goods, investment property, deposit accounts, certificates of deposit, letters of credit, advices of credit, and letter-of-credit rights consisting of, arising from or related to the Trust Assets, and all proceeds thereof (collectively, the “Indenture Collateral”), to secure the performance of all of its obligations hereunder, under the Indenture and under the Transaction Documents.  With respect to the Indenture Collateral, the Indenture Trustee shall have all of the rights that it has under the Indenture and the Transaction Documents.  The Indenture Trustee shall have all of the rights of a secured creditor under the UCC.

 

  

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Section 2.02.   Acceptance by Trust.

 

(a)          The Trust hereby acknowledges its acceptance of all right, title and interest to the property, now existing and hereafter created, conveyed to the Trust pursuant to Section 2.01.  The Indenture Trustee acknowledges that, prior to or on the Initial Funding Date, the Transferor will deliver to the Indenture Trustee the computer file or microfiche list relating to the Initial Accounts described in the third paragraph of Section 2.01.  The Indenture Trustee shall maintain a copy of Schedule 1, as delivered from time to time, at its Corporate Trust Office.

 

(b)          The Indenture Trustee, by its signature hereto, hereby agrees not to disclose to any Person any of the account numbers or other information contained in the computer files or microfiche lists marked as Schedule 1 and delivered to the Indenture Trustee, from time to time, except (i) to a Successor Servicer or as required by a Requirement of Law applicable to the Indenture Trustee, (ii) in connection with the performance of the Indenture Trustee’s or the Trust’s duties hereunder, or (iii) to bona fide creditors or potential creditors of the Trust, the Owner Trustee, the Seller, SJRC or any Transferor for the limited purpose of enabling any such creditor to identify applicable Receivables or Accounts subject to this Agreement or the Receivables Purchase Agreements.  The Indenture Trustee agrees to take such measures as shall be reasonably requested by any Transferor to protect and maintain the security and confidentiality of such information and, in connection therewith, shall allow each Transferor or its duly authorized representatives to inspect the Indenture Trustee’s security and confidentiality arrangements as they specifically relate to the administration of the Trust from time to time during normal business hours upon prior written notice.  The Indenture Trustee shall provide the applicable Transferor with notice five (5) Business Days prior to disclosure of any information of the type described in this subsection 2.02(b).

 

(c)          The Indenture Trustee, by its signature hereto, hereby agrees not to use any information it obtains pursuant to this Agreement, including any of the account numbers or other information contained in the computer files, microfiche lists or printed lists marked as Schedule 1 or otherwise delivered by the Transferor to the Indenture Trustee pursuant to Sections 2.01, 2.09 or 2.10, to compete or assist any person in competing with the Account Owner or any Transferor in its credit card business.

 

Section 2.03.  Representations and Warranties of Each Transferor Relating to  Such Transferor.  Each Transferor hereby severally represents and warrants to the Trust (and agrees that the Owner Trustee and the Indenture Trustee may conclusively rely on each such representation and warranty in accepting the Receivables in trust and in authenticating the Notes, respectively) as of each Closing Date (but only if it was a Transferor on such date) that:

 

(a)          Organization and Good Standing.  Such Transferor is a corporation or limited liability company validly existing under the laws of the jurisdiction of its organization or incorporation and has, in all material respects, full power and authority to own its properties and conduct its business as presently owned or conducted, and to execute, deliver and perform its obligations under this Agreement, the applicable Receivables Purchase Agreement and each applicable Participation Interest Supplement.

  

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(b)          Due Qualification.  Such Transferor is duly qualified to do business and is in good standing as a foreign corporation and has obtained all necessary licenses and approvals, in each jurisdiction in which failure to so qualify or to obtain such licenses and approvals would (i) render any Credit Card Agreement relating to any Receivable conveyed to the Trust by such Transferor unenforceable by such Transferor, the Servicer or the Trust or (ii) have a material adverse effect on the Noteholders.

 

(c)          Due Authorization.  The execution and delivery of this Agreement and each applicable Participation Interest Supplement by such Transferor and the order to the Owner Trustee to have the Notes authenticated and delivered and the consummation by such Transferor of the transactions provided for in this Agreement and each applicable Participation Interest Supplement have been duly authorized by such Transferor by all necessary corporate or limited liability company action on the part of such Transferor.

 

(d)          No Conflict.  The execution and delivery by such Transferor of this Agreement and each applicable Participation Interest Supplement, and the performance of the transactions contemplated by this Agreement and each applicable Participation Interest Supplement and the fulfillment of the terms hereof and thereof applicable to such Transferor, will not conflict with or violate any Requirements of Law applicable to such Transferor or conflict with, result in any breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any indenture, contract, agreement, mortgage, deed of trust or other instrument to which such Transferor is a party or by which it or its properties are bound.

 

(e)          No Proceedings.  There are no proceedings or investigations, pending or, to the best knowledge of such Transferor, threatened against such Transferor before any Governmental Authority (i) asserting the invalidity of this Agreement or each applicable Participation Interest Supplement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or each applicable Participation Interest Supplement, (iii) seeking any determination or ruling that, in the reasonable judgment of such Transferor, would materially and adversely affect the performance by such Transferor of its obligations under this Agreement or each applicable Participation Interest Supplement, (iv) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of this Agreement or each applicable Participation Interest Supplement or (v) seeking to affect adversely the income or franchise tax attributes of the Trust under the United States Federal or any State income or franchise tax systems.

 

(f)           All Consents.  All authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given by such Transferor in connection with the execution and delivery by such Transferor of this Agreement and each applicable Participation Interest Supplement and the performance of the transactions contemplated by this Agreement and each applicable Participation Interest Supplement by such Transferor have been duly obtained, effected or given and are in full force and effect.

  

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Section 2.04.  Representations and Warranties of each Transferor Relating to the Agreement and Any Participation Interest Supplement and the Receivables.

 

(a)          Representations and Warranties.  Each Transferor hereby severally represents and warrants to the Trust and the Indenture Trustee as of the Initial Issuance Date, each Closing Date and, with respect to Additional Accounts, as of the related Addition Date (but only if in either case, it was a Transferor on such date and only with respect to Accounts it has designated on such date and Receivables arising therein) that:

 

(i)           this Agreement and the applicable Participation Interest Supplement each constitutes a legal, valid and binding obligation of such Transferor enforceable against such Transferor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ lights generally from time to time in effect or general principles of equity;

 

(ii)          as of the Cut-Off Date with respect to the Initial Accounts (and the Receivables arising therein), and as of the related Document Delivery Date with respect to Additional Accounts (and the Receivables arising therein), the portion of Schedule 1 to this Agreement under such Transferor’s name, as supplemented to such date, is an accurate and complete listing in all material respects of all the Accounts the Receivables in which were transferred by such Transferor as of the Cut-Off Date or such Addition Date, as the case may be, and the information contained therein with respect to the identity of such Accounts and the Receivables existing thereunder is true and correct in all material respects as of the Cut-Off Date or such Document Delivery Date, as the case may be;

 

(iii)         on the date each Receivable is conveyed to the Trust by such Transferor, such Receivable has been conveyed to the Trust free and clear of any Lien, claim or encumbrance of any Person;

 

(iv)         all authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given by such Transferor in connection with the conveyance by such Transferor of Receivables to the Trust have been duly obtained, effected or given and are in full force and effect;

 

(v)          either this Agreement or, in the case of Additional Accounts, the related Assignment constitutes a valid sale, transfer and assignment to the Trust of all right, title and interest of such Transferor in the Receivables conveyed to the Trust by such Transferor and the proceeds thereof and Recoveries identified as relating to the Receivables conveyed to the Trust by such Transferor which have become Defaulted Receivables or, if this Agreement or, in the case of Additional Accounts, the related Assignment does not constitute a sale of such property, it constitutes a grant of a perfected “security interest” (as defined in the UCC) in such property to the Trust, and which security interest is prior to all other Liens (other than any Lien for municipal or other local taxes if such taxes are not then due and payable or if such Transferor is then contesting the validity thereof in good faith by appropriate proceedings and has set aside on its books adequate reserves with respect thereto), which, in the case of existing Receivables and the proceeds thereof and said Recoveries, is enforceable upon execution and delivery of this Agreement, or, with respect to then existing Receivables in Additional Accounts, as of the applicable Addition Date, and which will be enforceable with respect to such Receivables hereafter and thereafter created and the proceeds thereof upon such creation.  Upon the filing of the financing statements and, in the case of Receivables hereafter created and the proceeds thereof, upon the creation thereof, the Trust shall have a first priority perfected security or ownership interest in such property and proceeds prior to all other Liens, which is enforceable against creditors of and purchasers from such Transferor;

 

  

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(vi)         such Transferor has not authorized the filing of and is not aware of any financing statements against such Transferor that include a description of collateral covering the Receivables other than any financing statement (i) relating to the security interest granted to the Issuer hereunder or (ii) that has been terminated.

 

(vii)       on the Cut-Off Date, each Initial Account specified in Schedule 1 with respect to such Transferor is an Eligible Account and, on the applicable Addition Date, each related Additional Account with respect to such Transferor is an Eligible Account;

 

(viii)      on the Cut-Off Date, each Receivable then existing and conveyed to the Trust by such Transferor is an Eligible Receivable and, on the applicable Addition Date, each Receivable contained in the related Additional Accounts and conveyed to the Trust by such Transferor is an Eligible Receivable;

 

(ix)         as of the date of the creation of any new Receivable transferred to the Trust by such Transferor, such Receivable is an Eligible Receivable;

 

(x)          other than the procedures specified herein, no selection procedures believed by such Transferor to be materially adverse to the interests of the Noteholders have been used in selecting such Accounts;

 

(xi)         this Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables described in Section 2.01 in favor of the Trust, which security interest is prior to all other Liens (other than any Lien for municipal or other local taxes if such taxes are not then due and payable or if such Transferor is then contesting the validity thereof in good faith by appropriate proceedings and has set aside on its books adequate reserves with respect thereto), and is enforceable as such against creditors of and purchasers from such Transferor;

 

(xii)        such Receivables constitute “accounts,” “payment intangibles” or “tangible chattel paper” within the meaning of the applicable UCC;

 

(xiii)       such Transferor owns and has good and marketable title to such Receivables free and clear of any Lien, claim or encumbrance (other than any Lien for municipal or other local taxes if such taxes are not then due and payable or if such Transferor is then contesting the validity thereof in good faith by appropriate proceedings and has set aside on its books adequate reserves with respect thereto) of any Person;

 

(xiv)       such Transferor has caused or will have caused, within ten days of this Agreement or the applicable Assignment, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in such Receivables granted to the Issuer hereunder;

  

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(xv)        other than the security interest granted to the Trust pursuant to this Agreement, such Transferor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of such Receivables.  Such Transferor has not authorized the filing of and is not aware of any financing statements against such Transferor that include a description of collateral covering such Receivables other than any financing statement (i) relating to the security interest granted to the Trust hereunder, or (ii) that has been terminated;

 

(xvi)       only one original Credit Card Agreement exists with respect to each Account, and each such original is in the possession of the related Seller; and

 

(xvii)      no Credit Card Agreement has any marks or notations indicating that it has been pledged, assigned, or otherwise conveyed to any Person other than the Indenture Trustee.

 

(b)          Notice of Breach.  The representations and warranties set forth in Section 2.03, this Section 2.04 and subsection 2.09(c) shall survive the transfers and assignments of the Receivables to the Trust, the pledge of the Receivables to the Indenture Trustee pursuant to the Indenture, and the issuance of the Notes.  Upon discovery by any Transferor, the Servicer or the Owner Trustee of a breach of any of the representations and warranties set forth in Section 2.03, this Section 2.04 or subsection 2.09(c), the party discovering such breach shall give written notice to the other parties and to the Indenture Trustee within three (3) Business Days following such discovery; provided that the failure to give notice within three (3) Business Days does not preclude subsequent notice.

 

(c)          The representations and warranties in Section 2.04(a)(xi)-(xvii) shall survive termination of this Agreement and, if Standard & Poor’s is then a Rating Agency, shall not be waived without the written consent of Standard and Poor’s.

 

Section 2.05.   Reassignment of Ineligible Receivables.

 

(a)          Reassignment of Receivables.  In the event (i) any representation or warranty contained in subsection 2.04(a)(ii), (iv), (vi), (vii), (viii),(ix), (x), (xvi) or (xvii) is not true and correct in any material respect as of the date specified therein with respect to any Receivable or the related Account and such breach has a material adverse effect on any Receivable (which determination shall be made without regard to whether funds are then available pursuant to any Series Enhancement) unless cured within sixty (60) days (or such longer period, not in excess of 120 days, as may be agreed to by the Indenture Trustee and the Servicer in writing) after the earlier to occur of the discovery thereof by the Transferor which conveyed such Receivables to the Trust or receipt by such Transferor of written notice thereof given by the Owner Trustee, the Indenture Trustee or the Servicer, (ii) any representation or warranty contained in subsection 2.04(a)(iii) is not true and correct in any material respect as of the date specified therein with respect to any Receivable and such breach has a material adverse effect on any Receivable (which determination shall be made without regard to whether funds are then available pursuant to any Series Enhancement) or (iii) it is so provided in subsection 2.07(a) with respect to any Receivables conveyed to the Trust by such Transferor, then such Transferor shall accept reassignment of all Receivables in the related Account (“Ineligible Receivables”) on the terms and conditions set forth in paragraph (b) below.

  

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(b)           Price of Reassignment.  The Servicer shall deduct the portion of such Ineligible Receivables required to be reassigned to each Transferor which are Principal Receivables from the aggregate amount of the Principal Receivables used to calculate the Transferor Interest and (unless otherwise specified) any other amount required herein or in the Indenture or any Indenture Supplement to be calculated by reference to the amount of Principal Receivables.  In the event that, following the exclusion of such Principal Receivables from the calculation of the Transferor Interest, the Transferor Interest would be less than the Required Transferor Interest, not later than 1:00 p.m., New York City time, on the first Distribution Date following the Monthly Period in which such reassignment obligation arises, the applicable Transferor shall make a deposit into the Special Funding Account in immediately available funds in an amount equal to the amount by which the Transferor Interest would be below the Required Transferor Interest (up to the amount of such Principal Receivables).

 

Upon reassignment of any Ineligible Receivable, the Trust shall automatically and without further action be deemed to transfer, assign, set over and otherwise convey to the applicable Transferor or its designee, without recourse, representation or warranty, all the right, title and interest of the Trust in and to such Ineligible Receivable, all Recoveries related thereto, all monies and amounts due or to become due and all proceeds thereof and such reassigned Ineligible Receivable shall be treated by the Trust as collected in full as of the date on which it was transferred.  The obligation of each Transferor to accept reassignment of any Ineligible Receivables conveyed to the Trust by such Transferor, and to make the deposits, if any, required to be made to the Special Funding Account as provided in this Section, shall constitute the sole remedy respecting the event giving rise to such obligation available to the Trust, the Noteholders (or the Indenture Trustee on behalf of the Noteholders) or any Series Enhancer.  Notwithstanding any other provision of this subsection 2.05(b), a reassignment of an Ineligible Receivable in excess of the amount that would cause the Transferor Interest to be less than the Required Transferor Interest shall not occur if the applicable Transferor fails to make any deposit required by this subsection 2.05(b) with respect to such Ineligible Receivable.  The Trust shall execute such documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested and provided by the applicable Transferor to effect the conveyance of such Ineligible Receivables pursuant to this subsection 2.05(b), but only upon receipt of an Officer’s Certificate from such Transferor that states that all conditions set forth in this Section 2.05 have been satisfied.

 

Section 2.06.  Reassignment of Trust Portfolio.  In the event any representation or warranty of a Transferor set forth in subsection 2.03(a), (c), (d), (e) or (f) or subsection 2.04(a)(i) or (v) is not true and correct in any material respect and such breach has a material adverse effect on the Receivables or Participation Interests conveyed to the Trust by such Transferor or the availability of the proceeds thereof to the Trust (which determination shall be made without regard to whether funds are then available pursuant to any Series Enhancement), then the Indenture Trustee, upon the written direction of the Holders of Notes evidencing more than 50% of the aggregate unpaid principal amount of all Notes, by notice then given to such Transferor, may direct such Transferor to accept a reassignment of the Receivables and any Participation Interests conveyed to the Trust by such Transferor if such breach and any material adverse effect caused by such breach is not cured within sixty (60) days of such notice (or within such longer period, not in excess of 120 days, as may be specified in such notice), and upon those conditions such Transferor shall be obligated to accept such reassignment on the terms set forth below; provided, however, that such Receivables and Participation Interests will not be reassigned to such Transferor if, on any day prior to the end of such 60-day or longer period (i) the relevant representation and warranty shall be true and correct in all material respects as if made on such day and (ii) such Transferor shall have delivered to the Owner Trustee a certificate of an authorized officer describing the nature of such breach and the manner in which the relevant representation and warranty has become true and correct.

 

  

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The applicable Transferor shall deposit in the Collection Account in immediately available funds not later than 1:00 p.m., New York City time, on the first Distribution Date following the Monthly Period in which such reassignment obligation arises, in payment for such reassignment, an amount equal to the sum of the amounts specified therefor with respect to each outstanding Series in the related Indenture Supplement.  Notwithstanding anything to the contrary in this Agreement, such amounts shall be distributed to the Noteholders on such Distribution Date in accordance with the terms of each Indenture Supplement.  If the Owner Trustee, the Indenture Trustee or the Noteholders give notice directing the applicable Transferor to accept a reassignment of the Receivables and Participation Interests as provided above, the obligation of such Transferor to accept such reassignment pursuant to this Section 2.06 and to make the deposit required to be made to the Collection Account as provided in this paragraph shall constitute the sole remedy respecting an event of the type specified in the first sentence of this Section 2.06 available to the Noteholders (or the Indenture Trustee on behalf of the Noteholders) or any Series Enhancer.  Upon reassignment of the Receivables and the Participation Interests on such Distribution Date, the Trust shall automatically and without further action be deemed to transfer, assign, set-over and otherwise convey to the applicable Transferor, without recourse, representation or warranty, all the right, title and interest of the Trust in and to the Receivables and the Participation Interests, all Recoveries allocable to the Trust, and all monies and amounts due or to become due with respect thereto and all proceeds thereof.  The Trust shall execute such documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by the applicable Transferor to effect the conveyance of such property pursuant to this subsection.

 

Section 2.07.   Covenants of each Transferor.  Each Transferor hereby severally covenants that:

 

(a)          Receivables Not To Be Evidenced by Promissory Notes.  Except in connection with its enforcement or collection of an Account, such Transferor will take no action to cause any Receivable conveyed by it to the Trust to be evidenced by any instrument (as defined in the UCC) and if any such Receivable (or any underlying receivable) is so evidenced it shall be deemed to be an Ineligible Receivable in accordance with subsection 2.05(a) and shall be reassigned to such Transferor in accordance with subsection 2.05(b).

 

(b)          Security Interests.  Except for the conveyances hereunder, such Transferor 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 (or any underlying receivable) or Participation Interest conveyed by it to the Trust, whether now existing or hereafter created, or any interest therein, and such Transferor shall defend the right, title and interest of the Trust and the Indenture Trustee in, to and under the Receivables and any Participation Interest, whether now existing or hereafter created, against all claims of third parties claiming through or under such Transferor.

 

  

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(c)          Transferor Interest.  Except for (i) the conveyances hereunder, in connection with any transaction permitted by subsection 4.02(a)(i) and as provided in subsection 2.09(d) of this Agreement or Section 2.12 of the Indenture or (ii) conveyances with respect to which the Rating Agency Condition shall have been satisfied and a Tax Opinion shall have been delivered, such Transferor agrees not to transfer, sell, assign, exchange or otherwise convey or pledge, hypothecate or otherwise grant a security interest in the Transferor Interest, the Transferor Certificate or any Supplemental Certificate and any such attempted transfer, assignment, exchange, conveyance, pledge, hypothecation, grant or sale shall be void; provided, however, that nothing in this subsection 2.07(c) shall prevent the owner of an interest in the Transferor Interest from granting to an Affiliate a participation interest or other beneficial interest in the rights to receive cash flows related to the Transferor Interest, if (i) such interest does not grant such Affiliate any rights hereunder or delegate to such Affiliate any obligations or duties hereunder, (ii) the transferor of such interest obtains the prior written consent of such Transferor and (iii) after giving effect to such transfer, the interest in the Transferor’s Interest owned directly by such Transferor represents an undivided ownership interest in two percent (2.0%) or more of the Trust Assets.

 

(d)          Delivery of Collections or Recoveries.  In the event that such Transferor receives Collections or Recoveries, such Transferor agrees to pay the Servicer all such Collections and Recoveries as soon as practicable after receipt thereof.

 

(e)          Notice of Liens.  Such Transferor shall notify the Trust, the Indenture Trustee and each Series Enhancer in writing promptly after becoming aware of any Lien on any Receivable (or on the underlying receivable) or Participation Interest conveyed by it to the Trust other than the conveyances hereunder and under the applicable Receivables Purchase Agreement and the Indenture.

 

(f)           Amendment of the Certificate of Incorporation.  Such Transferor will not amend in any material respect its certificate of incorporation without providing the Rating Agency with notice no later than the fifth Business Day prior to such amendment (unless the right to such notice is waived by the Rating Agency) and satisfying the Rating Agency Condition.

 

(g)          Other Indebtedness.  Such Transferor shall not incur any additional debt, unless (i) such debt is contemplated by the Transaction Documents or (ii) the Rating Agency is provided with notice no later than the fifth Business Day prior to the incurrence of such additional debt (unless the right to such notice is waived by the Rating Agency) and the Rating Agency Condition is satisfied with respect to the incurrence of such debt.

 

(h)          Separate Corporate Existence.  Such Transferor shall:

  

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(i)           Maintain in full effect its existence, rights and franchises as a corporation or limited liability company under the laws of the state of its incorporation and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to proper administration hereof and permit and effectuate the transactions contemplated hereby.

 

(ii)          Except as provided herein, maintain its own deposit, securities and other account or accounts, separate from those of any Affiliate of such Transferor, with financial institutions.  The funds of such Transferor will not be diverted to any other Person or for other than the corporate use of such Transferor, and, except as may be expressly permitted by this Agreement or the applicable Receivables Purchase Agreement, the funds of such Transferor shall not be commingled with those of any other person or entity.

 

(iii)         Ensure that, to the extent that it shares the same officers or other employees as any of its stockholders or Affiliates, the salaries of and the expenses related to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with all such common officers and employees.

 

(iv)        Ensure that, to the extent that it jointly contracts with any of its stockholders or Affiliates to do business with vendors or service providers or to share overhead expenses, the costs incurred in so doing shall be allocated fairly among such entities, and each such entity shall bear its fair share of such costs.  To the extent that such Transferor contracts or does business with vendors or service providers where the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing shall be fairly allocated to or among such entities for whose benefit the goods and services are provided, and each such entity shall bear its fair share of such costs.  All material transactions between such Transferor and any of its Affiliates shall be only on an arm’s-length basis and shall receive the approval of such Transferor’s Board of Directors including at least one Independent Director (defined below).

 

(v)          Maintain a principal executive and administrative office through which its business is conducted and a telephone number separate from those of its stockholders and Affiliates.  To the extent that such Transferor and any of its stockholders or Affiliates have offices in contiguous space, there shall be fair and appropriate allocation of overhead costs (including rent) among them, and each such entity shall bear its fair share of such expenses.

 

(vi)         Conduct its affairs strictly in accordance with its certificate of incorporation and observe all necessary, appropriate and customary corporate formalities, including, but not limited to, holding all regular and special stockholders’ and directors’ meetings appropriate to authorize all corporate action, keeping separate and accurate minutes of such meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, intercompany transaction accounts.  Regular stockholders’ and directors’ meetings shall be held at least annually.

 

  

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(vii)        Ensure that its board of directors shall at all times include at least one Independent Director (for purposes hereof, “Independent Director” shall mean any member of the board of directors of such Transferor that is not and has not at any time been (x) an officer, agent, advisor, consultant, attorney, accountant, employee or shareholder of any Affiliate which is not a special purpose entity of such Transferor, (y) a director of any Affiliate of such Transferor other than an independent director of any Affiliate which is a special purpose entity or (z) a member of the immediate family of any of the foregoing).

 

(viii)       Ensure that decisions with respect to its business and daily operations shall be independently made by such Transferor (although the officer making any particular decision may also be an officer or director of an Affiliate of such Transferor) and shall not be dictated by an Affiliate of such Transferor.

 

(ix)         Act solely in its own corporate name and through its own authorized officers and agents, and no Affiliate of such Transferor shall be appointed to act as agent of such Transferor.  Such Transferor shall at all times use its own stationery and business forms and describe itself as a separate legal entity.

 

(x)          Ensure that no Affiliate of such Transferor shall advance funds to such Transferor, and no Affiliate of such Transferor will otherwise guaranty debts of, such Transferor.

 

(xi)         Other than organizational expenses and as expressly provided herein, pay all expenses, indebtedness and other obligations incurred by it using its own funds.

 

(xii)        Not enter into any guaranty, or otherwise become liable, with respect to or hold its assets or creditworthiness out as being available for the payment of any obligation of any Affiliate of such Transferor nor shall such Transferor make any loans to any Person.

 

(xiii)       Ensure that any financial reports required of such Transferor shall comply with generally accepted accounting principles and shall be issued separately from, but may be consolidated with, any reports prepared for any of its Affiliates so long as such consolidated reports contain footnotes describing the effect of the transactions between the Transferor and such Affiliate and also state that the assets of the Transferor are not available to pay creditors of the Affiliate.

 

(xiv)       Ensure that at all times it is adequately capitalized to engage in the transactions contemplated in its Certificate of Incorporation.

 

Section 2.08.  Covenants of each Transferor with Respect to the Applicable Receivables Purchase Agreement.  Each Transferor, in its capacity as purchaser of Receivables from the Seller pursuant to the Receivables Purchase Agreement, hereby covenants that such Transferor will at all times enforce the covenants and agreements of the Seller in the Receivables Purchase Agreement including covenants substantially to the effect set forth below:

 

  

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(a)          Periodic Rate Finance Charges.  (i) Except (x) as otherwise required by any Requirements of Law or (y) as is deemed by the Seller to be necessary in order for it to maintain its credit card business or a program operated by such credit card business on a competitive basis based on a good faith assessment by it of the nature of the competition with respect to the credit card business or such program, it shall not at any time take any action which would have the effect of reducing the Portfolio Yield to a level that could be reasonably expected to cause any Series to experience any Pay Out Event or Event of Default based on the insufficiency of the Portfolio Yield or any similar test and (ii) it shall not take any action unless such action is also applied to all comparable segments of consumer revolving credit card accounts owned by the Credit Card Originator which have characteristics the same as, or substantially similar to, such Accounts.

 

(b)          Credit Card Agreements and Guidelines.  Subject to compliance with all Requirements of Law and paragraph (a) above, the Seller may change the terms and provisions of the applicable Credit Card Agreements or the applicable Credit Card Guidelines in any respect (including the calculation of the amount or the timing of charge-offs and the Periodic Rate Finance Charges to be assessed thereon) if such change would not materially and adversely affect the rights of the Trust or the Noteholders.  Notwithstanding the above, unless required by Requirements of Law or as permitted by paragraph (a) above, the Seller will not take such action unless (i) at the time of such action, the Seller reasonably believes that such action will not cause a Pay Out Event or Event of Default to occur, and (ii) such action is made applicable to the comparable segment of the revolving credit card accounts owned by the Seller which have characteristics the same as, or substantially similar to, the Accounts that are the subject of such change, except as otherwise restricted by an endorsement, sponsorship, or other agreement between the Seller and an unrelated third party or by the terms of the Credit Card Agreements.

 

Section 2.09.   Addition of Accounts.

 

(a)

 

(i)           The Transferor shall on each Business Day designate as Accounts hereunder all newly created consumer revolving credit card accounts of the Seller that have been transferred to the Transferor that are Eligible Accounts (the “Additional Accounts”).  The Transferor agrees that it shall meet the following requirement in connection with the designation of such Additional Accounts:

 

	
  

	
(A)

	
On the Determination Date immediately following the Monthly Period during which an Addition Date shall have occurred (the “Document Delivery Date”), the Transferor shall have delivered to the Indenture Trustee a computer file, magnetic tape or microfiche list containing a true and complete list of all Accounts, including Additional Accounts, identified by account number and the aggregate amount of the Principal Receivables and aggregate amount of Finance Charge Receivables in such Accounts and Additional Accounts as of the close of the preceding Monthly Period, which computer file, magnetic tape or microfiche lists shall be as of the date of such delivery incorporated into and made a part of this Agreement as Schedule 1; and

 

	
  

	
(B)

	
On or before the Document Delivery Date, the Servicer shall determine whether the Account Addition Test is satisfied and shall designate the Excluded Accounts, if any, necessary to cause the Account Addition Test to be satisfied.  Each Excluded Account (and all Receivables thereunder) shall automatically and without further action be re-conveyed by the Issuer to the Transferor upon such designation (and such re-conveyance shall be effective as of the Addition Date for such Account.

 

  

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(ii)          In addition to causing the designation of Additional Accounts pursuant to  clause (i) above, the Transferor may (but shall not be required), subject to the conditions specified in paragraph (b) below, convey to the Trust participations (including 100% participations) representing undivided interests in a pool of assets primarily consisting of revolving credit card receivables and any interests in any of the foregoing, including securities representing or backed by such receivables and collections, together with all earnings, revenue, dividends, distributions, income, issues and profits thereon (“Participation Interests”).  Receivables shall not be treated as a Participation Interest for purposes of this Agreement.  The addition of Participation Interests in the Trust pursuant to this paragraph (a) shall be effected by a Participation Interest Supplement, dated the applicable Addition Date and entered into pursuant to subsection 9.01(a).

 

(iii)         Any Participation Interests designated to be included as Trust Assets  pursuant to clause (ii) above may only be so included if the applicable conditions specified in paragraph (b) below have been satisfied.

 

(b)          Conditions to Additions of Participation Interests.  On the Addition Date with respect to any Participation Interests, the Trust shall acquire such Participation Interests existing as of the close of business on the applicable Additional Cut-Off Date, subject to the satisfaction of the following conditions:

 

(i)           on or before the eighth Business Day immediately preceding the Addition Date, the applicable Transferor shall have given the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency written notice (unless such notice requirement is otherwise waived) that the Participation Interests will be included and specifying the applicable Additional Cut-Off Date and Addition Date;

 

(ii)          such Transferor shall have delivered to the Owner Trustee and Indenture Trustee copies of UCC-1 financing statements covering such Participation Interests, if necessary to perfect the Trust’s interest in the Receivables arising therein;

 

(iii)         to the extent required by Section 8.04 of the Indenture, such Transferor shall have deposited in the Collection Account all Collections with respect to such Participation Interests since the Addition Date;

 

(iv)        as of each of the Additional Cut-Off Date and the Addition Date, no Insolvency Event with respect to the Seller, SJRC or other Transferor shall have occurred nor shall the transfer to the Trust of the Participation Interests have been made in contemplation of the occurrence thereof;

 

(v)          the Rating Agency Condition shall have been satisfied;

 

  

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(vi)         such Transferor shall have delivered to the Owner Trustee and the Indenture Trustee an Officer’s Certificate, dated the Addition Date, confirming, to the extent applicable, the items set forth in clauses (ii) through (v) above and clause (vii) below;

 

(vii)        the acquisition by the Trust of the Participation Interests will not result in an Adverse Effect and such Transferor shall have delivered to the Owner Trustee and the Indenture Trustee an Officer’s Certificate, dated the Addition Date, stating that such Transferor reasonably believes that the acquisition by the Trust of the Participation Interests will not have an Adverse Effect; and

 

(viii)       such Transferor shall have delivered to the Owner Trustee, the Indenture Trustee and each Rating Agency an Opinion of Counsel, dated the Addition Date, in accordance with subsection 9.02(d)(ii) or (iv), as applicable.

 

(c)          Representations and Warranties.  Each Transferor conveying Participation Interests hereby represents and warrants to the Trust as of the related Addition Date as to the matters set forth in clauses (iv) and (vii) of subsection 2.09(b) above.

 

(d)          Additional Transferors.  The Transferor may designate Affiliates of the Transferor to be included as Transferors (“Additional Transferors”) under this Agreement in an amendment hereto pursuant to subsection 9.01(a) and, in connection with such designation, the Transferor shall surrender the Transferor Certificate to the Owner Trustee in exchange for a newly issued Transferor Certificate modified to reflect such Additional Transferor’s interest in the Transferor Interest; provided, however, that prior to any such designation and exchange the conditions set forth in clauses (iii) and (v) of subsection 3.06(b) of the Trust Agreement shall have been satisfied with respect thereto.

 

Section 2.10.   Removal of Accounts and Participation Interests.  (a) On any day of any Monthly Period each Transferor shall have the right to require the reassignment to it or its designee of all the Trust’s right, title and interest in, to and under the Receivables then existing and thereafter created, all Recoveries related thereto after the Removal Date, all monies due or to become due and all amounts received or receivable with respect thereto, and all proceeds thereof in or with respect to the Accounts (the “Removed Accounts”) or Participation Interests conveyed to the Trust by such Transferor (the “Removed Participation Interests”) (unless otherwise set forth in the applicable Participation Interest Supplement or Indenture Supplement) and designated for removal by the Transferor, upon satisfaction of the conditions in clauses (i) through (vi) below:

 

(i)           on or before the eighth Business Day immediately preceding the Removal Date, such Transferor shall have given written notice to the Owner Trustee, the Indenture Trustee, the Servicer, the Rating Agency and each Series Enhancer (unless such notice requirement is otherwise waived) of such removal and specifying the date for removal of the Removed Accounts and removed Participation Interests (the “Removal Date”);

 

(ii)           on or prior to the date that is five (5) Business Days on or before the Removal Date, such Transferor shall amend Schedule 1 by delivering to the Indenture Trustee a computer file or microfiche list containing a true and complete list of the Removed Accounts specifying for each such Account, as of the date notice of the Removal Date is given, its account number, the aggregate amount outstanding in such Account and the aggregate amount of Principal Receivables outstanding in such Account;

  

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(iii)         such Transferor shall have represented and warranted as of the Removal Date that the list of Removed Accounts delivered pursuant to paragraph (ii) above, as of the Removal Date, is true and complete in all material respects;

 

(iv)         the Rating Agency Condition shall have been satisfied with respect to the removal of the Removed Accounts and removed Participation Interests;

 

(v)          such Transferor shall have delivered to the Owner Trustee and the Indenture Trustee an Officer’s Certificate, dated the Removal Date, to the effect that such Transferor reasonably believes that (A) such removal will not have a material adverse effect on the Noteholders, (B) such removal will not result in the occurrence of a Pay Out Event or Event of Default, and (C) no selection procedures believed by such Transferor to be materially adverse to the interests of the Noteholders have been used in selecting the Removed Accounts; and

 

(vi)         any other conditions specified in the related Indenture Supplement.

 

(b)          Upon satisfaction of the above conditions, the Trust shall execute and deliver to such Transferor a written reassignment in substantially the form of Exhibit B (the “Reassignment”) and shall, without further action, be deemed to transfer, assign, set over and otherwise convey to such Transferor or its designee, effective as of the Removal Date, without recourse, representation or warranty, all the right, title and interest of the Trust in and to the Receivables arising in the Removed Accounts and Removed Participation Interests, all Recoveries related thereto, all monies due and to become due and all amounts received or receivable with respect thereto after the Removal Date and all proceeds thereof and any Insurance Proceeds relating thereto.  The Owner Trustee and the Indenture Trustee may conclusively rely on the Officer’s Certificate delivered pursuant to this Section 2.10 and shall have no duty to make inquiries with regard to the matters set forth therein and shall incur no personal liability in so relying.

 

In addition to the foregoing, on the date when any Receivable in an Account becomes a Defaulted Receivable, the Trust shall automatically and without further action or consideration be deemed to transfer, set over and otherwise convey to the Transferor with respect to such Account, without recourse, representation or warranty, all right, title and interest of the Trust in and to the Defaulted Receivables in such Account, all monies and amounts due or to become due with respect thereto and all proceeds thereof; provided that Recoveries of such Account shall be applied as provided herein.

 

In addition to the foregoing, each Transferor may designate Removed Accounts as provided in and subject to the terms and conditions contained in this Section 2.10 if the Removed Accounts are designated in response to a third-party action or decision not to act and not the unilateral action of any Transferor.

 

  

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(c)          With respect to Removed Accounts described in subsection 2.11(a), in addition to the foregoing requirements (i) there shall be no more than one Removal Date per Transferor in any Monthly Period, (ii) for each Removal Date, the Accounts to be designated as Removed Accounts shall be selected at random by the applicable Transferor and (iii) the Removed Accounts shall not, as of the Removal Notice Date, contain Principal Receivables which in the aggregate exceed an amount equal to the positive difference, if any, between the Transferor Interest and the Required Transferor Interest.

 

Section 2.11.   Account Allocations.  In the event that any Transferor is unable for any reason to transfer Receivables to the Trust in accordance with the provisions of this Agreement, including by reason of the application of the provisions of Section 6.01 or any order of any Governmental Authority (a “Transfer Restriction Event”), then, (a) such Transferor and the Servicer agree (except as prohibited by any such order) to allocate and pay to the Trust, after the date of such inability, all Collections, including Collections of Receivables transferred to the Trust prior to the occurrence of such event, and all amounts which would have constituted Collections but for such Transferor’s inability to transfer Receivables (up to an aggregate amount equal to the amount of Receivables transferred to the Trust by such Transferor in the Trust on such date), (b) such Transferor and the Servicer agree that such amounts will be applied as Collections in accordance with Article VIII of the Indenture and the terms of each Indenture Supplement and (c) for so long as the allocation and application of all Collections and all amounts that would have constituted Collections are made in accordance with clauses (a) and (b) above, Principal Receivables and all amounts which would have constituted Principal Receivables but for such Transferor’s inability to transfer Receivables to the Trust which are charged off as uncollectible in accordance with this Agreement shall continue to be allocated in accordance with Article VIII of the Indenture and the terms of each Indenture Supplement.  For the purpose of the immediately preceding sentence, such Transferor and the Servicer shall treat the first received Collections with respect to the Accounts as allocable to the Trust until the Trust shall have been allocated and paid Collections in an amount equal to the aggregate amount of Principal Receivables in the Trust as of the date of the occurrence of such event.  If such Transferor and the Servicer are unable pursuant to any Requirements of Law to allocate Collections as described above, such Transferor and the Servicer agree that, after the occurrence of such event, payments on each Account with respect to the principal balance of such Account shall be allocated first to the oldest principal balance of such Account and shall have such payments applied as Collections in accordance with Article VIII of the Indenture and the terms of each Indenture Supplement.  The parties hereto agree that Finance Charge Receivables, whenever created, accrued in respect of Principal Receivables which have been conveyed to the Trust shall continue to be a part of the Trust notwithstanding any cessation of the transfer of additional Principal Receivables to the Trust and Collections with respect thereto shall continue to be allocated and paid in accordance with Article VIII of the Indenture and the terms of each Indenture Supplement.

 

  

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Section 2.12.   Discount Option.

 

(a)          The Transferor shall have the option to designate at any time and from time to time a percentage or percentages, which may be a fixed percentage or a variable percentage based on a formula (the “Discount Percentage”), of all or any specified portion of Principal Receivables existing on or after the Discount Option Date to be treated as Finance Charge Receivables (“Discount Option Receivables”).  As of the Initial Issuance Date, the Transferor hereby exercises such option and designates a Discount Percentage of 5.0% to be effective as of the Initial Issuance Date and to be applied to all Principal Receivables.  Subject to the conditions specified below, the Transferor may, without notice to or the consent of any Noteholder, from time to time, increase, reduce or eliminate the Discount Percentage for all or any specified portion of Principal Receivables and if the Discount Percentage has been withdrawn to again designate a Discount Percentage on or after a specified date (each, a “Discount Option Date”) at any time and from time to time.  The Transferor shall provide thirty (30) days prior written notice of any such change in the Discount Percentage and the related Discount Option Date to the Servicer, the Owner Trustee, the Indenture Trustee and any Rating Agency and such change in the Discount Percentage shall become effective on such Discount Option Date (i) unless such designation in the reasonable belief of the Transferor would cause a Pay Out Event or Event of Default with respect to any Series to occur, or an event which, with notice or lapse of time or both, would constitute a Pay Out Event or Event of Default with respect to any Series and (ii) only if the Rating Agency Condition shall have been satisfied with respect to such designation.

 

(b)          On each Date of Processing, Collections of Discount Option Receivables, if any, shall be treated as Collections of Finance Charge Receivables.

 

[END OF ARTICLE

  

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ARTICLE III

 

ADMINISTRATION AND SERVICING

OF RECEIVABLES

 

Section 3.01.   Acceptance of Appointment and Other Matters Relating to the Servicer.

 

(a)          Sterling agrees to act as the Servicer under this Agreement and the Noteholders by their acceptance of Notes consent to Sterling acting as Servicer.

 

(b)          As agent for each Transferor and the Trust, the Servicer shall service and administer the Receivables (including the underlying receivables) and any Participation Interests, shall collect and deposit into the Collection Account amounts received under the Receivables (including the underlying receivables) and any Participation Interests and shall charge off as uncollectible Receivables, all in accordance with to customary and usual servicing procedures for servicing credit card receivables comparable to the Receivables and in accordance with the Credit Card Guidelines.  As agent for each Transferor and the Trust, the Servicer 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; provided, however, that subject to the rights of the Owner Trustee, the Indenture Trustee and the Noteholders hereunder, SJRC shall have the absolute right to direct the Servicer with respect to any power conferred on the Servicer hereunder in accordance with any such direction.  Without limiting the generality of the foregoing and subject to Section 7.01, the Servicer or its designee is hereby authorized and empowered, unless such power is revoked by the Indenture Trustee on account of the occurrence of a Servicer Default pursuant to Section 7.01, (i) to instruct the Owner Trustee or the Indenture Trustee in writing to make withdrawals and payments from the Collection Account, the Special Funding Account and any Series Account, as set forth in this Agreement, the Indenture or any Indenture Supplement, (ii) to take any action required or permitted under any Series Enhancement, as set forth in this Agreement, the Indenture or any Indenture Supplement, (iii) to execute and deliver, on behalf of the Trust, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Receivables and, after the delinquency of any Receivable and to the extent permitted under and in compliance with applicable Requirements of Law, to commence collection proceedings with respect to such Receivable and in its discretion, to sell Defaulted Receivables, and (iv) to make any filings, reports, notices, applications and 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 or other laws. or regulations.  The Owner Trustee and the Indenture Trustee upon written request therefor shall furnish the Servicer with any documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder.

 

(c)          The Servicer shall not, and no Successor Servicer shall, 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 or such Successor Servicer, as the case may be, in connection with servicing other credit card receivables.

  

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(d)          The Servicer shall comply with and perform its servicing obligations with respect to the Accounts and Receivables in accordance with the Credit Card Agreements relating to the Accounts and the Credit Card Guidelines, except insofar as any failure to so comply or perform would not materially and adversely affect the Trust or the Noteholders.

 

(e)          The Servicer shall pay out of its own funds, without reimbursement, all expenses incurred in connection with the Trust and the servicing activities hereunder including expenses related to enforcement of the Receivables, fees and disbursements of the Owner Trustee (as such and in its individual capacity), the Administrator and the Indenture Trustee in accordance with Section 6.07 of the Indenture (including the reasonable fees and expenses of its outside counsel) and independent accountants and all other fees and expenses, including the costs of filing UCC continuation statements, the costs and expenses relating to obtaining and maintaining the listing of any Notes on any stock exchange and any stamp, documentary, excise, property (whether on real, personal or intangible property) or any similar tax levied on the Trust or the Trust’s assets that are not expressly stated in this Agreement to be payable by the Trust or the Transferor (other than federal, state, local and foreign income and franchise taxes, if any, or any interest or penalties with respect thereto, assessed on the Trust).

 

Section 3.02.   Servicing Compensation.  As full compensation for its servicing activities hereunder and as reimbursement for any expense incurred by it in connection therewith, the Servicer shall be entitled to receive a servicing fee (the “Servicing Fee”) with respect to each Monthly Period, payable monthly on the related Distribution Date, in an amount equal to one-twelfth of the product of (a) the weighted average of the Servicing Fee Rates with respect to each outstanding Series (based upon the Servicing Fee Rate for each Series and the Invested Amount (or such other amount as specified in the related Indenture Supplement) of such Series, in each case as of the last day of the prior Monthly Period) and (b) the amount of Principal Receivables on the last day of the prior Monthly Period prior to the termination of the Trust pursuant to Section 8.01 of the Trust Agreement.  The share of the Servicing Fee allocable to a Series of Notes with respect to any Monthly Period (the “Monthly Servicing Fee”) shall be determined in accordance with the relevant Indenture Supplement.  The portion of the Servicing Fee with respect to any Monthly Period not paid pursuant to the preceding sentence shall be paid by the Holders of the Transferor Certificates on the related Distribution Date and in no event shall the Trust, the Owner Trustee (as such or in its individual capacity), the Indenture Trustee, the Noteholders of any Series or any Series Enhancer be liable for the share of the Servicing Fee with respect to any Monthly Period to be paid by the Holders of the Transferor Certificates.

 

Section 3.03.  Representations, Warranties and Covenants of the Servicer.  Sterling, as initial Servicer, hereby makes, and any Successor Servicer by its appointment hereunder shall make, with respect to itself, on each Closing Date (and on the date of any such appointment), the following representations, warranties and covenants on which the Trust and the Indenture Trustee shall be deemed to have relied in accepting the Receivables in trust and in entering into the Indenture:

 

(a)          Organization and Good Standing.  The Servicer is a Delaware corporation duly organized and validly existing in good standing under the laws of the State of Delaware and has, in all material respects, full power and authority to own its properties and conduct its credit card servicing business as presently owned or conducted, and to execute, deliver and perform its obligations under this Agreement.

 

  

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(b)          Due Qualification.  The Servicer is duly qualified to do business and is in good standing as a foreign corporation or other foreign entity (or is exempt from such requirements) and has obtained all necessary licenses and approvals in each jurisdiction in which the servicing of the Receivables (including the underlying receivables) and any Participation Interests as required by this Agreement requires such qualification except where the failure to so qualify or obtain licenses or approvals would not have a material adverse effect on its ability to perform its obligations as Servicer under this Agreement.

 

(c)          Due Authorization.  The execution, delivery, and performance of this Agreement and the other agreements and instruments executed or to be executed by the Servicer as contemplated hereby, have been duly authorized by the Servicer by all necessary action on the part of the Servicer.

 

(d)          Binding Obligation.  This Agreement constitutes a legal, valid and binding obligation of the Servicer, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally from time to time in effect or by general principles of equity.

 

(e)          No Conflict.  The execution and delivery of this Agreement by the Servicer, and the performance of the transactions contemplated by this Agreement and the fulfillment of the terms hereof and thereof applicable to the Servicer, will not conflict with, violate or result in any breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any indenture, contract, agreement, mortgage, deed of trust or other instrument to which the Servicer is a party or by which it or its properties are bound.

 

(f)           No Violation.  The execution and delivery of this Agreement by the Servicer, the performance of the transactions contemplated by this Agreement and the fulfillment of the terms hereof and thereof applicable to the Servicer will not conflict with or violate any Requirements of Law applicable to the Servicer.

 

(g)          No Proceedings.  There are no proceedings or investigations pending or, to the best knowledge of the Servicer, threatened against the Servicer before any Governmental Authority seeking to prevent the consummation of any of the transactions contemplated by this Agreement or 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.

 

(h)          Compliance with Requirements of Law.  The Servicer shall duly satisfy all obligations on its part to be fulfilled under or in connection with each Receivable (and the underlying receivable) and the related Account, if any, will maintain in effect all qualifications required under Requirements of Law in order to service properly each Receivable and the related Account, if any, and will comply in all material respects with all other Requirements of Law in connection with servicing each Receivable and the related Account the failure to comply with which would have an Adverse Effect.

  

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(i)           No Rescission or Cancellation.  The Servicer shall not permit any rescission or cancellation of any Receivable (or the underlying receivable) except in accordance with the Credit Card Guidelines or as ordered by a court of competent jurisdiction or other Governmental Authority.

 

(j)           Protection of Rights.  The Servicer shall take no action which, nor omit to take any action the omission of which, would impair the rights of the Trust, the Indenture Trustee or the Noteholders in any Receivable (or the underlying receivable) or the related Account, if any, nor shall it reschedule, revise or defer payments due on any Receivable, except in accordance with the Credit Card Guidelines.

 

(k)          Receivables Not To Be Evidenced by Promissory Notes.  Except in connection with its enforcement or collection of an Account, the Servicer will take no action to cause any Receivable to be evidenced by any instrument (as defined in the UCC) and if any Receivable is so evidenced it shall be reassigned or assigned to the Servicer as provided in this Section.

 

(l)           All Consents.  All authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given by the Servicer in connection with the execution and delivery of this Agreement by the Servicer and the performance of the transactions contemplated by this Agreement by the Servicer, have been duly obtained, effected or given and are in full force and effect.

 

In the event (x) any of the representations, warranties or covenants of the Servicer contained in subsection 3.03(h), (i) or (j) with respect to any Receivable or the related Account is breached, and such breach has a material adverse effect on such Receivable (which determination shall be made without regard to whether funds are then available to any Noteholders pursuant to any Series Enhancement) and is not cured within sixty (60) days (or such longer period, not in excess of 150 days, as may be agreed to by the Indenture Trustee and the Transferor in writing) of the earlier to occur of the discovery of such event by the Servicer, or receipt by the Servicer of notice of such event given by the Indenture Trustee or the Transferor, or (y) as provided in subsection 3.03(k) with respect to any Receivable, all Receivables in the Account or Accounts to which such event relates shall be assigned and transferred to the Servicer on the terms and conditions set forth below.

 

The Servicer shall effect such assignment by making a deposit into the Collection Account in immediately available funds on the Distribution Date following the Monthly Period in which such assignment obligation arises in an amount equal to the amount of such Receivables.

 

  

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Upon each such reassignment or assignment to the Servicer, the Trust shall automatically and without further action be deemed to sell, transfer, assign, set over and otherwise convey to the Servicer, without recourse, representation or warranty, all right, title and interest of the Trust in and to such Receivables, all Recoveries related thereto, all monies due or to become due and all amounts received or receivable with respect thereto and all proceeds thereof.  The Trust shall execute such documents and instruments of transfer or assignment and take such other actions as shall be reasonably requested by the Servicer to effect the conveyance of any such Receivables pursuant to this Section but only upon receipt of an Officer’s Certificate of the Servicer that states that all conditions set forth in this section have been satisfied.  The obligation of the Servicer to accept reassignment or assignment of such Receivables, and to make the deposits, if any, required to be made to the Collection Account as provided in the preceding paragraph, shall constitute the sole remedy respecting the event giving rise to such obligation available to Noteholders (or the Indenture Trustee on behalf of Noteholders) or any Series Enhancer, except as provided in Section 5.04.

 

Section 3.04.   Reports and Records for the Owner Trustee and the Indenture Trustee.

 

(a)          Daily Records.  On each Business Day, the Servicer shall make or cause to be made available at the office of the Servicer for inspection by the Owner Trustee, the Indenture Trustee and the Co-Servicer upon reasonable request a record that shall:

 

(i)           set forth (x) the aggregate amount of Collections processed by the Servicer on the second preceding Business Day, (y) the amount on deposit in the Special Funding Account on the preceding Business Day and (z) a calculation of the Transferor Interest and the Required Transferor Interest on the second preceding Business Day based on the estimates described below and a determination of whether the Transferor Interest on the second preceding Business Day was greater than the Required Transferor Interest on such second preceding Business Day and such other information as may be specified in any applicable Indenture Supplement; and

 

(ii)          allocate for such second preceding Business Day in the manner specified below, (x) the aggregate amount of Collections processed by the Servicer with respect to Principal Receivables and (y) the aggregate amount of Collections processed by the Servicer with respect to Finance Charge Receivables.

 

The estimate of the aggregate amount of Collections processed by the Servicer with respect to Principal Receivables required by paragraph (ii) above shall equal the product of (a) the aggregate amount of the Collections and (b) a fraction, the numerator of which shall be the aggregate amount of Collections of Principal Receivables during the preceding Monthly Period and the denominator of which shall be the aggregate amount of Collections during such Monthly Period.  The estimate of the aggregate amount of Collections processed by the Servicer with respect to Finance Charge Receivables required by paragraph (ii) above shall equal the product of (a) the aggregate amount of Collections and (b) a fraction, the numerator of which shall be the aggregate amount of Collections of Finance Charge Receivables during the preceding Monthly Period and the denominator of which shall be the aggregate amount of Collections during such Monthly Period.  On the Determination Date following each Monthly Period during which the foregoing methods of estimation shall have been used by the Servicer, the Servicer shall make an appropriate “true-up” adjustment of the aggregate amounts allocated as Collections of Principal Receivables and Finance Charge Receivables in the Collection Account for such Monthly Period pursuant to paragraph (ii) above to the actual amount of Collections of Principal Receivables included in the Trust Assets and the actual amount of Collections of Finance Charge Receivables included in the Trust Assets, in each case, to reflect the difference between (x) the amounts that should have been recorded as Collections in respect of Principal Receivables and Finance Charge Receivables if actual Collections of Principal Receivables and Finance Charge Receivables had been known and (y) the amount allocated thereto pursuant to the preceding sentence.

 

  

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(b)          Monthly Servicer’s Certificate.  Not later than the second Business Day preceding each Distribution Date, the Servicer shall, with respect to each outstanding Series, deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency a certificate of an Authorized Officer in substantially the form set forth in the related Indenture Supplement.

 

Section 3.05.  Annual Certificate of the Servicer.  The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency on or before April 30 of each calendar year, beginning with April 30, 2015, an Officer’s Certificate substantially in the form of Exhibit C.

 

Section 3.06.   Annual Servicing Report of Independent Public Accountants; Copies of Reports Available.

 

(a)          On or before April 30, of each calendar year, beginning with April 30, 2015, the Servicer shall cause a firm of nationally recognized independent public accountants (who may also render other services to the Servicer or the Transferor or any Account Owner) to furnish a report (addressed to the Indenture Trustee) to the Indenture Trustee, the Servicer and each Rating Agency to the effect that they have applied certain procedures agreed upon with the Servicer and examined certain documents and records relating to the servicing of the Receivables under this Agreement, the Indenture and each Indenture Supplement for the prior calendar year and that, on the basis of such agreed-upon procedures, nothing has come to the attention of such accountants that caused them to believe that the servicing (including the allocation of Collections set forth in Article VIII of the Indenture and in each Indenture Supplement) has not been conducted in compliance with the terms and conditions set forth in Article III and Section 5.08 of this Agreement, Article VIII of the Indenture and the applicable provisions of each Indenture Supplement, except for such exceptions as they believe to be immaterial and such other exceptions as shall be set forth in such statement.  Such report shall set forth the agreed-upon procedures performed.

 

(b)          On or before April 30 of each calendar year, beginning with April 30, 2015, the Servicer shall cause a firm of nationally recognized independent public accountants (who may also render other services to the Servicer or Transferor) to furnish a report to the Indenture Trustee, the Servicer and each Rating Agency to the effect that they have applied certain procedures agreed upon with the Servicer to compare the mathematical calculations of certain amounts set forth in the Servicer’s certificates delivered pursuant to subsection 3.04(b) during the period covered by such report with the Servicer’s computer reports that were the source of such amounts and that on the basis of such agreed-upon procedures and 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.  Such report shall set forth the agreed-upon procedures performed.

  

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(c)           A copy of each certificate and report provided pursuant to subsection 3.04(b), or Section 3.05 or 3.06, may be obtained by any Noteholder or Note Owner by a request in writing to the Indenture Trustee addressed to the Corporate Trust Office.

 

Section 3.07.   Tax Treatment.  Unless otherwise specified in the Indenture or an Indenture Supplement with respect to a particular Series, the Transferor has entered into this Agreement, and the Notes will be issued, with the intention that, for federal, state and local income and franchise tax purposes, (i) the Notes of each Series which are characterized as indebtedness at the time of their issuance will qualify as indebtedness secured by the Receivables and (ii) the Trust shall not be treated as an association or publicly traded partnership taxable as a corporation.  The Transferor, by entering into this Agreement, and each Noteholder, by the acceptance of any such Note (and each Note Owner, by its acceptance of an interest in the applicable Note), agree to treat such Notes for federal, state and local income and franchise tax purposes as indebtedness of the Transferor.  Each Holder of such Note agrees that it will cause any Note Owner acquiring an interest in a Note through it to comply with this Agreement as to treatment as indebtedness under applicable tax law, as described in this Section 3.07.  The parties hereto agree that they shall not cause or permit the making, as applicable, of any election under Treasury Regulation Section 301.7701-3 whereby the Trust or any portion thereof would be treated as a corporation for federal income tax purposes and, except as required by Section 6.13 of the Indenture, shall not file tax returns or obtain any federal employer identification number for the Trust but shall treat the Trust as a disregarded entity for federal income tax purposes.  The provisions of this Agreement shall be construed in furtherance of the foregoing intended tax treatment.

 

Section 3.08.   Notices to the Servicer.  In the event that Sterling is no longer acting as Servicer, any Successor Servicer shall deliver or make available to Sterling each certificate and report required to be provided thereafter pursuant to subsection 3.04(b) and Sections 3.05 and 3.06.

 

Section 3.09.   Adjustments.

 

(a)          If the Servicer adjusts downward the amount of any Receivable because of a rebate, refund, unauthorized charge or billing error to a cardholder, or because such Receivable was created in respect of merchandise which was refused or returned by a cardholder, then, in any such case, the amount of Principal Receivables used to calculate the Transferor Interest, and (unless otherwise specified) any other amount required herein or in the Indenture or any Indenture Supplement to be calculated by reference to the amount of Principal Receivables, will be reduced by the amount of the adjustment.  Similarly, the amount of Principal Receivables used to calculate the Transferor Interest and (unless otherwise specified) any other amount required herein or in any Indenture Supplement to be calculated by reference to the amount of Principal Receivables will be reduced by the principal amount of any Receivable which was discovered as having been created through a fraudulent or counterfeit charge or with respect to which the covenant contained in subsection 2.07(b) was breached or which arises in an Excluded Account first designated as such on the related Determination Date.  Any adjustment required pursuant to either of the two preceding sentences shall be made on or prior to the end of the Monthly Period in which such adjustment obligation arises or, with respect to Excluded Accounts, the Determination Date following such Monthly Period.  In the event that, following the exclusion of such Principal Receivables from the calculation of the Transferor Interest, the Transferor Interest would be less than the Required Transferor Interest, not later than 1:00 p.m., New York City time, on the Distribution Date following the Monthly Period (or, in the case of Excluded Account, the related Determination Date) in which such adjustment obligation arises, the Transferor shall make a deposit into the Special Funding Account in immediately available funds in an amount equal to the amount by which the Transferor Interest would be less than the Required Transferor Interest, due to adjustments with respect to Receivables conveyed by such Transferor (up to the amount of such Principal Receivables).  Any amount deposited into the Special Funding Account in connection with the adjustment of a Receivable (an “Adjustment Payment”) shall be applied in accordance with the terms of Section 8.03 of the Indenture and, if applicable, the Indenture Supplement relating to any Series of Notes.

 

  

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(b)          If (i) the Servicer makes a deposit into the Collection Account in respect of a Collection of a Receivable and such Collection was received by the Servicer in the form of a check which is not honored for any reason or (ii) the Servicer makes a mistake with respect to the amount of any Collection and deposits an amount that is less than or more than the actual amount of such Collection or (iii) the Servicer deposits into the Collection Account fund representing collections of any Excluded Account, then the Servicer shall appropriately adjust the amount subsequently deposited into the Collection Account to reflect such dishonored check or mistake.  Any Receivable in respect of which a dishonored check is received shall be deemed not to have been paid.  Notwithstanding the first two sentences of this paragraph, adjustments made pursuant to this Section 3.09 shall not require any change in any report previously delivered pursuant to subsection 3.04(a).

 

[END OF ARTICLE III]

 

  

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ARTICLE IV

 

OTHER MATTERS RELATING TO EACH TRANSFEROR

 

Section 4.01.  Liability of each Transferor.  Each Transferor shall be severally, and not jointly, liable for all obligations, covenants, representations and warranties of such Transferor arising under or related to this Agreement.  Except as provided in the preceding sentence, each Transferor shall be liable only to the extent of the obligations specifically undertaken by it in its capacity as a Transferor.

 

Section 4.02.   Merger or Consolidation of, or Assumption of the Obligations of a Transferor.

 

(a)          No Transferor shall dissolve, liquidate, consolidate with or merge into any other corporation or convey, transfer or sell its properties and assets substantially as an entirety to any Person unless:

 

(i)           (x) the corporation formed by such consolidation or into which such Transferor is merged or the Person which acquires by conveyance, transfer or sale the properties and assets of the Transferor substantially as an entirety shall be, if such Transferor is not the surviving entity, organized and existing under the laws of the United States of America or any state or the District of Columbia, and shall be a savings association, a national banking association, a bank or other entity which is not eligible to be a debtor in a case under Title 11 of the United States Code or is a special purpose corporation whose powers and activities are limited to substantially the same degree as provided in the certificate of incorporation of SJRC and, if such Transferor is not the surviving entity, shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Owner Trustee and the Indenture Trustee, in form reasonably satisfactory to the Owner Trustee and the Indenture Trustee, the performance of every covenant and obligation of such Transferor hereunder; and (y) such Transferor or the surviving entity, as the case may be, has delivered to the Owner Trustee and the Indenture Trustee (with a copy to each Rating Agency) an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance, transfer or sale and such supplemental agreement comply with this Section, that such supplemental agreement is a valid and binding obligation of such surviving entity enforceable against such surviving entity in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally from time to time in effect or general principles of equity, and that all conditions precedent herein provided for relating to such transaction have been complied with; and

 

(ii)          the Rating Agency Condition shall have been satisfied with respect to such consolidation, merger, conveyance or transfer.

 

  

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(b)          Except as permitted by subsection 2.07(c), the obligations, rights or any part thereof of each Transferor hereunder shall not be assignable nor shall any Person succeed to such obligations or rights of any Transferor hereunder except (i) for conveyances, mergers, consolidations, assumptions, sales or transfers in accordance with the provisions of the foregoing paragraph and (ii) for conveyances, mergers, consolidations, assumptions, sales or transfers to other entities (1) which such Transferor and the Servicer determine will not result in an Adverse Effect, (2) which meet the requirements of clause (ii) of the preceding paragraph and (3) for which such purchaser, transferee, pledgee or entity shall expressly assume, in an agreement supplemental hereto, executed and delivered to the Owner Trustee and the Indenture Trustee in writing in form satisfactory to the Owner Trustee and the Indenture Trustee, the performance of every covenant and obligation of such Transferor thereby conveyed.

 

Section 4.03.  Limitations on Liability of Each Transferor.  Subject to Section 4.01, no Transferor nor any of the directors, officers, employees, incorporators or agents of any Transferor acting in such capacities shall be under any liability to the Trust, the Owner Trustee, the Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for any action taken, or for refraining from the taking of any action, in good faith in such capacities pursuant to this Agreement, it being expressly understood that such liability is expressly waived and released as a condition of, and consideration for, the execution of this Agreement, the Indenture and any Indenture Supplement and the issuance of the Notes; provided, however, that this provision shall not protect any Transferor 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 reckless disregard of obligations and duties hereunder.  Each Transferor and any director, officer, employee or agent of such Transferor may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person (other than such Transferor) respecting any matters arising hereunder.

 

[END OF ARTICLE IV]

  

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ARTICLE V

 

OTHER MATTERS RELATING TO THE SERVICER

 

Section 5.01.  Liability of the Servicer.  The Servicer shall be liable under this Article V only to the extent of the obligations specifically undertaken by the Servicer in its capacity as Servicer.

 

Section 5.02.  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, transfer or sell its properties and assets substantially as an entirety to any Person, unless:

 

(a)          (i)  the corporation formed by such consolidation or into which the Servicer is merged or the Person which acquires by conveyance, transfer or sale the properties and assets of the Servicer substantially as an entirety shall be, if the Servicer is not the surviving entity, a Person or a national banking association 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, such entity shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Owner Trustee and the Indenture Trustee, in form satisfactory to the Owner Trustee and the Indenture Trustee, the performance of every covenant and obligation of the Servicer hereunder;

 

(ii)          the Servicer has delivered to the Owner Trustee and the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance, transfer or sale comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with;

 

(iii)         the Servicer shall have given the Rating Agencies notice of such consolidation, merger or transfer or assets; and

 

(b)          the Person 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 an Eligible Servicer.

 

Section 5.03.  Limitation on Liability of the Servicer and Others.  Except as provided in Section 5.04, neither the Servicer nor any of the directors, officers, employees or agents of the Servicer in its capacity as Servicer shall be under any liability to the Trust, the Owner Trustee, the Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for any action taken, or for refraining from the taking of any action, in good faith in its capacity as Servicer pursuant to this Agreement; provided, however, that this provision shall not protect the Servicer or any such Person against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder.  The Servicer and any director, officer, 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 (other than the Servicer) 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 as Servicer in accordance with this Agreement and which in its reasonable judgment may involve it in any expense or liability.  The Servicer may, in its sole discretion, undertake any such legal action which it may deem necessary or desirable for the benefit of the Noteholders with respect to this Agreement and the rights and duties of the parties hereto and the interests of the Noteholders hereunder.

 

  

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Section 5.04.  Servicer Indemnification of the Trust, the Owner Trustee and the Indenture Trustee.  The Servicer shall indemnify and hold harmless each of the Trust, the Owner Trustee (as such and in its individual capacity), the Indenture Trustee and any trustees predecessor thereto (including the Indenture Trustee in its capacity as Transfer Agent and Registrar or as Paying Agent) and their respective directors, officers, employees and agents from and against any and all loss, liability, claim, expense, damage or injury suffered or sustained by reason of (a) any acts or omissions of the Servicer with respect to the Trust pursuant to this Agreement or (b) the administration by the Owner Trustee and the Indenture Trustee of the Trust (in the case of clause (a) or (b), other than such as may arise from the fraud, negligence or willful misconduct of the Owner Trustee or the Indenture Trustee, as applicable), including any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any action, proceeding or claim provided, however, that the Servicer shall not indemnify the Trust or the Noteholders 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 (except as provided in Section 5.03); and provided further, that the Servicer shall not indemnify the Trust or the Noteholders for any liabilities, costs or expenses of the Trust or the Noteholders arising under any tax law, including without limitation, any Federal, state, local or foreign 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 or the Noteholders in connection herewith to any taxing authority.  Indemnification pursuant to this Section 5.04 shall not be payable from the Trust Assets.  The Servicer’s obligations under this Section 5.04 shall survive the termination of this Agreement or the Trust or the earlier removal or resignation of the Owner Trustee or the Indenture Trustee, as applicable.

 

Section 5.05.   Resignation of the Servicer.  The Servicer shall not resign from the obligations and duties hereby imposed on it except (a) upon determination that (i) the performance of its duties hereunder is no longer permissible under applicable law and (ii) there is no reasonable action which the Servicer could take to make the performance of its duties hereunder permissible under applicable law or (b) upon the assumption, by an agreement supplemental hereto, executed and delivered to the Owner Trustee and the Indenture Trustee, in form satisfactory to the Owner Trustee and the Indenture Trustee, of the obligations and duties of the Servicer hereunder by any of its Affiliates that is a direct or indirect wholly owned subsidiary of Sterling or by any entity the appointment of which shall have satisfied the Rating Agency Condition and, in either case, qualifies as an Eligible Servicer.  Any determination permitting the resignation of the Servicer shall be evidenced as to clause (a) above by an Opinion of Counsel to such effect delivered to the Owner Trustee and the Indenture Trustee.  No resignation shall become effective until the Indenture Trustee or a Successor Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with Section 7.02 hereof.  If within 120 days of the date of the determination that the Servicer may no longer act as Servicer under clause (a) above the Indenture Trustee is unable to appoint a Successor Servicer, the Indenture Trustee shall serve as Successor Servicer; provided that if the Indenture Trustee is the Successor Servicer, (i) any failure of the Indenture Trustee to perform such responsibilities or duties that are caused by the Servicer’s failure to provide information or monies required hereunder shall not be considered a default by the Indenture Trustee and (ii) the Indenture Trustee shall have no liability for actions or inactions of the predecessor Servicer.  As compensation therefor, the Indenture Trustee shall be entitled to receive any and all compensation which the Servicer would have been entitled to if the Servicer had continued to act hereunder and all reasonable costs and expenses incurred by such successor in connection with the assuming the duties and obligations of the Servicer.  In no event shall the Indenture Trustee be liable for the Servicing Fee or for the costs and expenses incurred in connection with its assumption of the duties and obligations of the Servicer.  Notwithstanding the foregoing, the Indenture Trustee shall, if it is legally unable so to act, petition a court of competent jurisdiction to appoint any established institution qualifying as an Eligible Servicer as the Successor Servicer hereunder.  The Trust shall give prompt notice to each Rating Agency and each Series Enhancer upon the appointment of a Successor Servicer.  Notwithstanding anything in this Agreement to the contrary, Sterling may assign part or all of its obligations and duties as Servicer under this Agreement to an Affiliate of Sterling so long as Sterling shall remain liable for the performance of such obligations and duties under this Agreement.

  

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Section 5.06.  Access to Certain Documentation and Information Regarding the Receivables.  The Servicer shall provide to the Owner Trustee or the Indenture Trustee, as applicable, access to the documentation regarding the Accounts and the Receivables in such cases where the Owner Trustee or the Indenture Trustee, as applicable, is required in connection with the enforcement of the rights of Noteholders or by applicable statutes or regulations to review such documentation, such access being afforded without charge but only (a) upon reasonable request, (b) during normal business hours, (c) subject to the Servicer’s normal security and confidentiality procedures and (d) at reasonably accessible offices in the continental United States designated by the Servicer.  Nothing in this Section shall derogate from the obligation of the Transferor, the Owner Trustee, the Indenture Trustee and 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 as a result of such obligation shall not constitute a breach of this Section.

 

Section 5.07.  Delegation of Duties.  In the ordinary course of business, the Servicer may at any time delegate its duties hereunder with respect to the Accounts and the Receivables to any Person that agrees to conduct such duties in accordance with the Credit Card Guidelines and this Agreement.  Notwithstanding anything herein to the contrary, such delegation shall not relieve the Servicer of its liability and responsibility with respect to such duties, and shall not constitute a resignation within the meaning of Section 5.05.  The Servicer shall give prompt notice of such delegation of duties to the Indenture Trustee and each Rating Agency.

 

Section 5.08.  Examination of Records.  Each Transferor and the Servicer shall indicate generally in their computer files or other records that the Receivables arising in the Accounts have been conveyed to the Trust, pursuant to this Agreement.  Each Transferor and the Servicer shall, prior to the sale or transfer to a third party of any receivable held in its custody, examine its computer records and other records to determine that such receivable is not, and does not include, a Receivable. 

 

 [END OF ARTICLE V]

  

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ARTICLE VI

 

INSOLVENCY EVENTS

 

Section 6.01.   Rights upon the Occurrence of an Insolvency Event.  If any Transferor shall consent or fail to object to the appointment of a bankruptcy trustee or conservator, receiver or liquidator in any bankruptcy proceeding or other insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to any Transferor or relating to all or substantially all of such Transferor’s property, or the commencement of an action seeking a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a bankruptcy trustee or conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up, insolvency, bankruptcy, reorganization, conservatorship, receivership or liquidation of such entity’s affairs, or notwithstanding an objection by such Transferor any such action shall have remained undischarged or unstayed for a period of sixty (60) days or upon entry of any order or decree providing for such relief; or such Transferor shall admit in writing its inability to pay its debts generally as they become due, file, or consent or fail to object (or object without dismissal of any such filing within sixty (60) days of such filing) to the filing of, a petition to take advantage of any applicable bankruptcy, insolvency or reorganization, receivership or conservatorship statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations (any such act or occurrence with respect to any Person being an “Insolvency Event”), such Transferor shall on the day any such Insolvency Event occurs (the “Appointment Date”), immediately cease to transfer Principal Receivables to the Trust and shall promptly give written notice thereof to the Indenture Trustee, the Owner Trustee and each Rating Agency.  Notwithstanding any cessation of the transfer to the Trust of additional Principal Receivables, Principal Receivables transferred to the Trust prior to the occurrence of such Insolvency Event, Collections in respect of such Principal Receivables and Finance Charge Receivables (whenever created) accrued in respect of such Principal Receivables shall continue to be a part of the Trust Assets and shall be allocated and distributed to Noteholders in accordance with the terms of the Indenture and each Indenture Supplement.

 

[END OF ARTICLE VII

 

  

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ARTICLE VII

 

SERVICER DEFAULTS

 

Section 7.01.   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 to give notice to the Indenture Trustee to make such payment, transfer or deposit on or before the date occurring five (5) Business Days after the date such payment, transfer or deposit or such instruction or notice is required to be made or given, as the case may be, under the terms of this Agreement, the Indenture or any Indenture Supplement;

 

(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 which has an Adverse Effect and which continues unremedied for a period of sixty (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 Owner Trustee or the Indenture Trustee, or to the Servicer, the Owner Trustee and the Indenture Trustee by Holders of Notes evidencing not less than 10% of the aggregate unpaid principal amount of all Notes (or, with respect to any such failure that does not relate to all Series, 10% of the aggregate unpaid principal amount of all Series to which such failure relates); or the Servicer shall assign or delegate its duties under this Agreement, except as permitted by Sections 5.02 and 5.07;

 

(c)          any representation, warranty or certification made by the Servicer in this Agreement or in any certificate delivered pursuant to this Agreement shall prove to have been incorrect when made, which has an Adverse Effect on the rights of the Noteholders of any Series (which determination shall be made without regard to whether funds are then available pursuant to any Series Enhancement) and which Adverse Effect continues for a period of sixty (60) days after the date on which written notice thereof, requiring the same to be remedied, shall have been given to the Servicer by the Owner Trustee or the Indenture Trustee, or to the Servicer, the Owner Trustee and the Indenture Trustee by the Holders of Notes evidencing not less than 10% of the aggregate unpaid principal amount of all Notes (or, with respect to any such representation, warranty or certification that does not relate to all Series, 10% of the aggregate unpaid principal amount of all Series to which such representation, warranty or certification relates);

 

(d)          the Servicer shall consent to the appointment of a bankruptcy trustee or conservator or receiver or liquidator in any bankruptcy proceeding or other insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Servicer or of or relating to all or substantially all its property, or a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a bankruptcy trustee or a conservator or receiver or liquidator in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or the winding-up or liquidation of its affairs, shall have been entered against the Servicer and such decree or order shall have remained in force undischarged or unstayed for a period of sixty (60) days; or the Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable bankruptcy, insolvency or reorganization statute, make any assignment for the benefit of its creditors or voluntarily suspend payment of its obligations; or

 

  

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(e)          any other Servicer Default described in the related Indenture Supplement;

 

then, in the event of any Servicer Default, so long as the Servicer Default shall not have been remedied, either the Indenture Trustee or the Holders of Notes evidencing more than 50% of the aggregate unpaid principal amount of all Notes, by notice then given to the Servicer and the Owner Trustee (and to the Indenture Trustee if given by the Noteholders) (a “Termination Notice”), may terminate all but not less than all the rights and obligations of the Servicer as Servicer under this Agreement; provided, however, if within sixty (60) days of receipt of a Termination Notice the Indenture Trustee does not receive any bids from Eligible Servicers in accordance with subsection 7.02(c) to act as a Successor Servicer and receives an Officer’s Certificate of the Servicer to the effect that the Servicer cannot in good faith cure the Servicer Default which gave rise to the Termination Notice, the Indenture Trustee shall grant a purchase option and right of first refusal to the Transferor which would permit the Transferor at its option to redeem or acquire the Notes on the Distribution Date in the next calendar month; provided further, however, the foregoing purchase option or right of first refusal shall not apply in the case of a Servicer Default set forth in subsection 7.01(d).

 

The price to redeem or acquire the Notes shall be equal to the sum of the amounts specified therefor with respect to each outstanding Series in the related Indenture Supplement.  The Transferor shall notify the Indenture Trustee in writing prior to the Record Date for the Distribution Date of the acquisition if it is exercising such purchase option and right of first refusal.  If the Transferor exercises such purchase option or right of first refusal, the Transferor shall deposit the price into the Collection Account not later than 1:00 p.m., New York City time, on such Distribution Date in immediately available funds.  The price shall be allocated and distributed to Noteholders in accordance with the terms of the Indenture and each Indenture Supplement.

 

After receipt by the Servicer of a Termination Notice, and on the date that a Successor Servicer is appointed by the Indenture Trustee pursuant to Section 7.02, all authority and power of the Servicer under this Agreement shall pass to and be vested in the Successor Servicer (a “Service Transfer”); and, without limitation, the Indenture Trustee is hereby authorized and empowered (upon the failure of the Servicer to cooperate) to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all documents and other instruments upon the failure of the Servicer to execute or deliver such documents or instruments, and to do and accomplish all other acts or things necessary or appropriate to effect the purposes of such Service Transfer.  The Servicer agrees to cooperate with the Indenture Trustee and such Successor Servicer in effecting the termination of the responsibilities and rights of the Servicer to conduct servicing hereunder, including the transfer to such Successor Servicer of all authority of the Servicer to service the Receivables provided for under this Agreement, including all authority over all Collections which shall on the date of transfer be held by the Servicer for deposit, or which have been deposited by the Servicer, in the Collection Account, or which shall thereafter be received with respect to the Receivables, and in assisting the Successor Servicer.  The Servicer shall within twenty (20) Business Days 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 shall require the Servicer to disclose to the Successor Servicer information of any kind which the Servicer deems to be confidential, the Successor Servicer shall be required to enter into such customary licensing and confidentiality agreements as the Servicer shall deem reasonably necessary to protect its interests.

  

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Notwithstanding the foregoing, a delay in or failure of performance referred to in paragraph (a) above for a period of ten (10) Business Days after the applicable grace period or under paragraph (b) or (c) above for a period of sixty (60) Business Days after the applicable grace period, shall not constitute a Servicer Default if such delay or failure could not be prevented by the exercise of reasonable diligence by the Servicer and such delay or failure was caused by an act of God or the public enemy, acts of declared or undeclared war, public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes.  The preceding sentence shall not relieve the Servicer from using all commercially reasonable efforts to perform its obligations in a timely manner in accordance with the terms of this Agreement and the Servicer shall provide the Indenture Trustee, Owner Trustee, each Transferor and any Series Enhancer with an Officer’s Certificate giving prompt notice of such failure or delay by it, together with a description of its efforts so to perform its obligations.

 

Section 7.02.   Indenture Trustee To Act; Appointment of Successor.

 

(a)          On and after the receipt by the Servicer of a Termination Notice pursuant to Section 7.01, 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 Indenture Trustee or until a date mutually agreed upon by the Servicer and the Indenture Trustee.  The Indenture Trustee shall as promptly as possible after the giving of a Termination Notice appoint an Eligible Servicer as a successor servicer (the “Successor Servicer”), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Indenture Trustee.  In the event that a Successor Servicer has not been appointed or has not accepted its appointment at the time when the Servicer ceases to act as Servicer, the Indenture Trustee without further action shall automatically be appointed the Successor Servicer.  The Indenture Trustee may delegate any of its servicing obligations to an Affiliate or agent in accordance with subsection 3.01(b) and Section 5.07.  Notwithstanding the foregoing, the Indenture Trustee shall, if it is legally unable so to act, petition at the expense of the Servicer a court of competent jurisdiction to appoint any established institution qualifying as an Eligible Servicer as the Successor Servicer hereunder.  The Indenture Trustee shall give prompt notice to each Rating Agency and each Series Enhancer upon the appointment of a Successor Servicer.

 

(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.

  

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(c)          In connection with any Termination Notice, the Indenture Trustee will review any bids which it obtains from Eligible Servicers and shall be permitted to appoint any Eligible Servicer submitting such a bid as a Successor Servicer for servicing compensation not in excess of the aggregate Servicing Fees for all Series plus the sum of the amounts with respect to each Series and with respect to each Distribution Date equal to any Collections of Finance Charge Receivables allocable to Noteholders of such Series which are payable to the Holders of the Transferor Certificates after payment of all amounts owing to the Noteholders of such Series with respect to such Distribution Date or required to be deposited in the applicable Series Accounts with respect to such Distribution Date and any amounts required to be paid to any Series Enhancer for such Series with respect to such Distribution Date pursuant to the terms of any Enhancement Agreement; provided, however, that the Holders of the Transferor Certificates shall be responsible for payment of the Transferor’s portion of such aggregate Servicing Fees and all other such amounts in excess of such aggregate Servicing Fees.  Each Holder of the Transferor’s Certificates agrees that, (i) if Sterling (or any Successor Servicer) is terminated as Servicer hereunder, the portion of the Collections in respect of Finance Charge Receivables that the Transferor is entitled to receive pursuant to this Agreement, the Indenture or any Indenture Supplement shall be reduced by an amount sufficient to pay the Transferor’s share of the compensation of the Successor Servicer and (ii) if a Servicer Default has occurred and is continuing, the remaining Collections that the Transferor is entitled to receive pursuant thereto shall be reduced, if necessary, by an amount sufficient to pay any amounts due and unpaid to the Indenture Trustee pursuant to Section 6.07 of the Indenture.

 

(d)          All authority and power granted to the Servicer under this Agreement shall automatically cease and terminate upon termination of the Trust pursuant to Section 8.01 of the Trust Agreement, and shall pass to and be vested in the Transferor and, without limitation, the Transferor is hereby authorized and empowered to execute and deliver, on behalf of the 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 Servicer agrees to cooperate with the Transferor in effecting the termination of the responsibilities and rights of the Servicer to conduct servicing of the Receivables.  The Servicer shall transfer its electronic records relating to the Receivables to the Transferor or its designee in such electronic form as it may reasonably request and shall transfer all other records, correspondence and documents to it in the manner and at such times as it shall reasonably request.  To the extent that compliance with this Section shall require the Servicer to disclose to the Transferor information of any kind which the Servicer deems to be confidential, the Transferor shall be required to enter into such customary licensing and confidentiality agreements as the Servicer shall deem necessary to protect its interests.

 

  

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Section 7.03.  Notification to Noteholders.  Within five (5) Business Days after the Servicer becomes aware of any continuing Servicer Default, the Servicer shall give written notice thereof to the Owner Trustee, the Indenture Trustee, each Rating Agency and each Series Enhancer and the Indenture Trustee shall give notice to the Noteholders.  Upon any termination or appointment of a Successor Servicer pursuant to this Article, the Indenture Trustee shall give prompt notice thereof to the Noteholders.

 

[END OF ARTICLE VII]

  

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ARTICLE VIII

 

TERMINATION

 

Section 8.01.   Termination of Agreement.  This Agreement and the respective obligations and responsibilities of the Trust, the Transferor and the Servicer under this Agreement shall terminate, except with respect to the duties described in Section 5.04, on the Trust Termination Date.

 

[END OF ARTICLE VIII]

  

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ARTICLE IX

 

MISCELLANEOUS PROVISIONS

 

Section 9.01.   Amendment; Waiver of Past Defaults.

 

(a)          This Agreement may be amended by the parties hereto from time to time prior to, or in connection with, the issuance of the first Series of Notes hereunder without the requirement of any consents or the satisfaction of any conditions set forth below.  This Agreement may be amended from time to time by the Servicer, the Transferor and the Trust, by a written instrument signed by each of them, without the consent of the Indenture Trustee or any of the Noteholders; provided that (i) the Transferor shall have delivered to the Indenture Trustee and the Owner Trustee an Officer’s Certificate, dated the date of any such Amendment, stating that the Transferor reasonably believes that such amendment will not have an Adverse Effect and (ii) the Rating Agency Condition shall have been satisfied with respect to any such amendment.  Additionally, notwithstanding the preceding sentence, this Agreement will be amended by the Servicer and the Trust at the direction of the Transferor without the consent of the Indenture Trustee or any of the Noteholders or Series Enhancers to add, modify or eliminate such provisions as may be necessary or advisable in order to enable all or a portion of the Trust (i) to qualify as, and to permit an election to be made to cause the Trust to be treated as, a “financial asset securitization investment trust” as described in the provisions of Section 860L of the Code, and (ii) to avoid the imposition of state or local income or franchise taxes imposed on the Trust’s property or its income; provided, however, that (i) the Transferor delivers to the Indenture Trustee and the Owner Trustee an Officer’s Certificate to the effect that the proposed amendments meet the requirements set forth in this subsection, (ii) each Rating Agency will have notified the Transferor, the Servicer, the Indenture Trustee and the Owner Trustee in writing that the amendment will not result in a reduction or withdrawal of the rating of any outstanding Series or Class as to which it is a Rating Agency and (iii) such amendment does not affect the rights, duties, benefits, protections, privileges or immunities of the Indenture Trustee or the Owner Trustee (as such or in its individual capacity) hereunder.

 

(b)          This Agreement may be amended from time to time to add a new Seller and a new Receivables Purchase Agreement and to delete a Seller or a Receivables Purchase Agreement without the consent of Noteholders or any other Persons if (x) the new Seller is an Affiliate of Sterling and (y) the new Seller acquires from Sterling Jewelers Inc. the Receivables that would have been otherwise directly transferred to the Transferor pursuant to the Receivables Purchase Agreement and sells them to the Transferor pursuant to such new Receivables Purchase Agreement; provided, however, that the Transferor delivers (i) an Officer’s Certificate to the Indenture Trustee and the Owner Trustee stating that there is no Adverse Effect; (ii) a Tax Opinion; (iii) an Opinion of Counsel relating to security interest matters relating to the Receivables; and (iv) prior written notice to the Rating Agencies then rating any outstanding Series or Class of Notes.

 

  

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(c)          This Agreement may also be amended from time to time by the Servicer, the Transferor and the Trust, with the consent of the Holders of Notes evidencing not less than 50% of the aggregate unpaid principal amount of the Notes of all affected Series for which the Transferor has not delivered an Officer’s Certificate stating that there is no Adverse Effect, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders; provided, however, that no such amendment shall (i) reduce in any manner the amount of or delay the timing of any distributions (changes in Pay Out Events or Events of Default that decrease the likelihood of the occurrence thereof shall not be considered delays in the timing of distributions for purposes of this clause) to be made to Noteholders or deposits of amounts to be so distributed or the amount available under any Series Enhancement without the consent of each affected Noteholder, (ii) change the definition of or the manner of calculating the interest payable to any Noteholder without the consent of each affected Noteholder, (iii) reduce the aforesaid percentage required to consent to any such amendment without the consent of each Noteholder or (iv) adversely affect the rating of any Series or Class by each Rating Agency without the consent of the Holders of Notes of such Series or Class evidencing not less than 50% of the aggregate unpaid principal amount of the Notes of such Series or Class.

 

(d)          Promptly after the execution of any such amendment or consent (other than an amendment pursuant to paragraph (a)), the Trust shall furnish written notification of the substance of such amendment to the Indenture Trustee and each Noteholder, and the Servicer shall furnish notification of the substance of such amendment to each Rating Agency and each Series Enhancer.

 

(e)          It shall not be necessary for the consent of Noteholders under this Section 9.01 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Noteholders shall be subject to such reasonable requirements as the Indenture Trustee may prescribe.

 

(f)           Notwithstanding anything in this Section 9.01 to the contrary, no amendment may be made to this Agreement or any Participation Interest Supplement which would adversely affect in any material respect the interests of any Series Enhancer or the Indenture Trustee without the prior written consent of such Series Enhancer or the Indenture Trustee, respectively.

 

(g)          Any Indenture Supplement executed in accordance with the provisions of Article X of the Indenture shall not be considered an amendment of this Agreement for the purposes of this Section 9.01.

 

(h)          The Holders of Notes evidencing more than 66-2/3% of the aggregate unpaid principal amount of the Notes of each Series or, with respect to any Series with two (2) or more Classes, of each Class (or, with respect to any default that does not relate to all Series, 66-2/3% of the aggregate unpaid principal amount of the Notes of each Series to which such default relates or, with respect to any such Series with two or more Classes, of each Class) may, on behalf of all Noteholders, waive any default by the Transferor or the Servicer in the performance of their obligations hereunder and its consequences, except the failure to make any distributions required to be made to Noteholders or to make any required deposits of any amounts to be so distributed.  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.

  

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(i)           The Owner Trustee or the Indenture Trustee, may, but shall not be obligated to, enter into any such amendment which affects the Owner Trustee’s or Indenture Trustee’s, as applicable, rights, duties, benefits, protections, privileges or immunities under this Agreement or otherwise.  In connection with the execution of any amendment hereunder, the Owner Trustee and the Indenture Trustee shall be entitled to receive the Opinion of Counsel described in subsection 9.02(d).

 

Section 9.02.   Protection of Right, Title and Interest to Trust.

 

(a)          The Transferor shall cause this Agreement, all amendments and supplements hereto and all financing statements and continuation statements and any other necessary documents covering the Indenture Trustee’s and the Trust’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 Indenture Trustee, Noteholders and the Trust hereunder to all property comprising the Trust.  The Transferor shall deliver to the Owner Trustee and Indenture Trustee file-stamped copies of, or filing receipts for, any document recorded, registered or filed as provided above, as soon as available following such recording, registration or filing.  The Transferor 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 paragraph.

 

(b)          Within thirty (30) days after any Transferor 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) seriously misleading within the meaning of Section 9-402(7) (or any comparable provision) of the UCC, such Transferor shall give the Owner Trustee and the Indenture Trustee written 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 or ownership interest in the Receivables and the proceeds thereof.

 

(c)          Each Transferor shall give the Owner Trustee and the Indenture Trustee prompt notice of any relocation of its chief executive office or any change in the jurisdiction under whose laws it is organized and whether, as a result of such relocation or change, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and shall file such financing statements or amendments as may be necessary to perfect or to continue the perfection of the Trust’s security interest in the Receivables and the proceeds thereof.  Each Transferor shall at all times maintain its chief executive offices within the United States and shall at all times be organized under the laws of a jurisdiction located within the United States.

 

(d)          The Transferor shall deliver to the Owner Trustee and the Indenture Trustee (i) upon the execution and delivery of each amendment of this Agreement, an Opinion of Counsel to the effect specified in Exhibit D-1; (ii) quarterly, with respect to Additional Accounts, and on each Addition Date on which any Participation Interests are to be included in the Trust pursuant to subsection 2.09(a), an Opinion of Counsel covering the same substantive legal issues addressed by Exhibits D-1 and D-2 but conformed to the extent appropriate to relate to Additional Accounts and Participation Interests; and (iii) on or before April 30 of each year, beginning with April 30, 2015, an Opinion of Counsel substantially in the form of Exhibit D-3.

  

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Section 9.03.  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 OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 9.04.   Notices; Payments.

 

(a)          All demands, notices, instructions, directions and communications (collectively, “Notices”) under this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered at, mailed by registered mail, return receipt requested, or sent by facsimile transmission (i) in the case of the Transferor, to SJRC, at 375 Ghent Road, Akron, Ohio 44333, Attention: Corporate Treasury Department (facsimile no. (330) 668-5191), (ii) in the case of the Servicer, to Sterling Jewelers Inc., at 375 Ghent Road, Akron, Ohio 44333, Attention: Corporate Treasury Department (facsimile no. (330) 668-5191), (iii) in the case of the Trust or the Owner Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration (facsimile no. (302) 651-1576), (iv) in the case of the Rating Agency for a particular Series, the address, if any, specified in the Indenture Supplement relating to such Series, and (v) to any other Person as specified in the Indenture or any Indenture Supplement; or, as to each party, at such other address or facsimile number as shall be designated by such party in a written notice to each other party.

 

(b)          Any Notice required or permitted to be given to a Holder of Registered Notes shall be given by first-class mail, postage prepaid, by hand or by overnight courier, at the address of such Holder as shown in the Note Register.  No Notice shall be required to be mailed to a Holder of Bearer Notes or Coupons but shall be given as provided below.  Any Notice so mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder receives such Notice.  In addition, in the case of any Series or Class with respect to which any Bearer Notes are outstanding, any Notice required or permitted to be given to Noteholders of such Series or Class shall be published in an Authorized Newspaper within the time period prescribed in this Agreement.

 

Section 9.05.   Severability of Provisions.  If any one or more of the covenants, agreements, provisions or terms of this Agreement shall for any reason whatsoever be held invalid, then such provisions shall be deemed severable from the remaining provisions of this Agreement and shall in no way affect the validity or enforceability of the remaining provisions or of the Notes or the rights of the Noteholders.

 

Section 9.06.  Further Assurances.  The Transferor 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 Owner Trustee and the Indenture Trustee more fully to effect the purposes of this Agreement, including the execution of any financing statements or continuation statements relating to the Receivables for filing under the provisions of the UCC of any applicable jurisdiction.

  

56

  

 

Section 9.07.  No Waiver: Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of the Trust, the Owner Trustee, the Indenture Trustee or the Noteholders, any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges provided under this Agreement are cumulative and not exhaustive of any rights, remedies, powers and privileges provided by law.

 

Section 9.08.  Counterparts.  This Agreement may be executed in two or more counterparts (and by different parties on separate counterparts), each of which shall be an original, but all of which together shall constitute one and the same instrument.

 

Section 9.09.   Third-Party Beneficiaries.  This Agreement will inure to the benefit of and be binding upon the parties hereto, the Indenture Trustee, the Noteholders, any holder of a Supplemental Certificate, any Series Enhancer and their respective successors and permitted assigns.  Except as otherwise expressly provided in this Agreement, no other Person will have any right or obligation hereunder.

 

Section 9.10.   Actions by Noteholders.

 

(a)          Wherever in this Agreement a provision is made that an action may be taken or a Notice given by Noteholders, such action or Notice may be taken or given by any Noteholder, unless such provision requires a specific percentage of Noteholders.

 

(b)          Any Notice, request, authorization, direction, consent, waiver or other act by the Holder of a Note shall bind such Holder and every subsequent Holder of such Note and of any Note 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 Owner Trustee, the Transferor or the Servicer in reliance thereon, whether or not notation of such action is made upon such Note.

 

Section 9.11.   Rule 144A Information.  For so long as any of the Notes of any Series or Class are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, each of the Transferor, the Owner Trustee, the Issuer, the Indenture Trustee, the Servicer and any Series Enhancer agree to cooperate with each other to provide to any Noteholders of such Series or Class and to any prospective purchaser of Notes designated by such Noteholder, upon the request of such Noteholder or prospective purchaser, any information required to be provided to such holder or prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4) under the Securities Act.

 

Section 9.12.   Merger and Integration.  Except as specifically stated otherwise herein, this Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement. This Agreement may not be modified, amended, waived or supplemented except as provided herein.

  

57

  

 

Section 9.13.   Headings.  The headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.

 

Section 9.14.  Limitation of Liability.  It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by Wilmington Trust Company ("WTC"), not individually or personally but solely as Owner Trustee of the Trust, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by WTC but is made and intended for the purpose of binding only the Trust, (c) nothing herein contained shall be construed as creating any liability on WTC, individually or personally, to perform any covenant either expressed or implied contained herein of the Trust, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WTC has made no investigation as to the accuracy or completeness of any representations and warranties made the Trust in this Agreement and (e) under no circumstances shall WTC be personally liable for the payment of any indebtedness or expenses of the Owner Trustee or the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Agreement or any other related documents.

 

Section 9.15.  Rights of the Indenture Trustee.  The Indenture Trustee shall be entitled to the same rights, protections, immunities and indemnities set forth in the Indenture as if specifically set forth herein.

 

[END OF ARTICLE IX)

 

  

58

  

IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust have caused this Transfer and Servicing Agreement to be duly executed by their respective officers as of the day and year first above written.

 

	STERLING JEWELERS RECEIVABLES CORP., as Transferor
	 
	By:	
/s/ Simon Cashman

	  
	Name: 	
Simon Cashman

	  
	Title:	
VP

	  

	STERLING JEWELERS INC., as Servicer
	 
	By:	
/s/ Simon Cashman

	  
	Name:	
Simon Cashman

	  
	Title: 	
SVP

	  

	
STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST,

	 
	
By:

	
Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee on behalf of the Trust,

	 	 
	
By:

	
/s/ Jeanne M. Oller

	  
	Name:	
Jeanne M. Oller

	  
	Title:	
Vice President

	  

[SIGNATURE PAGE TO TRANSFER AND SERVICING AGREEMENT]

  

  

  

 

Acknowledged and Accepted:

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

not in its individual capacity but

solely as Indenture Trustee

 

	
By:

	
/s/ Michele H.Y. Voon

	  	  
	  	
Name:  Michele H.Y. Voon

	  	  
	  	
Title:  Vice President

	  	  
	 	 	 	 
	 	 	 	 
	
By:

	
/s/ Mark DiGiacomo

	  	  
	  	
Name:  Mark DiGiacomo

	  	  
	  	
Title:  Vice President

	  	  

 

[SIGNATURE PAGE TO TRANSFER AND SERVICING AGREEMENT]

 

  

  

  

EXHIBIT A

 

Reserved

  

A-1

  

 

EXHIBIT B

 

FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS

(As required by Section 2.10 of

the Transfer and Servicing Agreement)

 

REASSIGNMENT No. _______ OF RECEIVABLES dated as of _______,1 by and among SJRC, a Delaware corporation, as Transferor (the “Transferor”), STERLING JEWELERS INC., an Ohio corporation, as Servicer (the “Servicer”) and STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST, (the “Trust”), pursuant to the Transfer and Servicing Agreement referred to below.

 

WITNESSETH:

 

WHEREAS the Transferor, the Servicer and the Trust are parties to the Transfer and Servicing Agreement, dated as of November 2, 2001 (as amended and supplemented, the “Agreement”);

 

WHEREAS pursuant to the Agreement, the Transferor wishes to remove from the Trust all Receivables owned by the Trust in certain designated Accounts (the “Removed Accounts”) and to cause the Trust to reconvey the Receivables of such Removed Accounts, whether now existing or hereafter created, from the Trust to the Transferor; and

 

WHEREAS the Trust is willing to accept such designation and to reconvey the Receivables in the Removed Accounts subject to the terms and conditions hereof;

 

NOW, THEREFORE, the Transferor and the Trust hereby agree as follows:

 

1.           Defined Terms.  All terms defined in the Agreement and used herein shall have such defined meanings when used herein, unless otherwise defined herein.

 

“Removal Date” shall mean, with respect to the Removed Accounts designated hereby,

 

“Removal Notice Date” shall mean, with respect to the Removed Accounts ____________, _____

 

2.           Designation of Removed Accounts.  On or before the Removal Date, the  Transferor will deliver to the Indenture Trustee a computer file or microfiche list containing a true and complete schedule identifying all Accounts the Receivables of which are being removed from the Trust, specifying for each such Account, as of the Removal Notice Date, its account number, the aggregate amount outstanding in such Account and the aggregate amount of Principal Receivables in such Account, which computer file or microfiche list shall supplement Schedule 1 to the Agreement.

 

1 To be dated as of the Removal Date.

  

B-1

  

3.           Conveyance of Receivables.  a)  The Trust does hereby transfer, assign, set over and otherwise convey to the Transferor, without recourse, on and after the Removal Date, all right, title and interest of the Trust in, to and under the Receivables existing at the close of business on the Removal Notice Date and thereafter created from time to time in the Removed Accounts designated hereby, all Recoveries related thereto, all monies due or to become due and all amounts received or receivable with respect thereto and all proceeds thereof.

 

(b)           In connection with such transfer, the Trust agrees to execute and deliver to the Transferor on or prior to the date this Reassignment is delivered, applicable termination statements prepared by the Transferor with respect to the Receivables existing at the close of business on the Removal Date and thereafter created from time to time in the Removed Accounts reassigned hereby and the proceeds thereof evidencing the release by the Trust of its interest in the Receivables in the Removed Accounts, and meeting the requirements of applicable state law, in such manner and such jurisdictions as are necessary to terminate such interest.

 

4.           Representations and Warranties of the Transferor.  The Transferor hereby represents and warrants to the Trust as of the Removal Date:

 

(a)          Legal Valid and Binding Obligation.  This Reassignment constitutes a legal, valid and binding obligation of the Transferor enforceable against the Transferor, in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity); and

 

(b)          Pay Out Event; Event of Default.  The Transferor reasonably believes that (A) the removal of the Receivables existing in the Removed Accounts will not, based on the facts known to the Transferor, then or thereafter cause a Pay Out Event or Event of Default to occur with respect to any Series and (B) no selection procedure was utilized by the Transferor which would result in a selection of Removed Accounts that would be materially adverse to the interests of the Noteholders of any Series as of the Removal Date.

 

(c)          List of Removed Accounts.  The list of Removed Accounts delivered pursuant to subsection 2.09(c) of the Agreement, as of the Removal Date, is true and complete in all material respects.

 

5.           Ratification of Agreement.  As supplemented by this Reassignment, the Agreement is in all respects ratified and confirmed and the Agreement as so supplemented by this Reassignment shall be read, taken and construed as one and the same instrument.

 

6.           Counterparts.  This Reassignment 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 shall constitute one and the same instrument.

 

7.           GOVERNING LAW.  THIS REASSIGNMENT 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.

  

B-2

  

 

8.           Limitation of Liability.  Notwithstanding any other provision herein or elsewhere, this Reassignment has been executed and delivered by Wilmington Trust Company, not in its individual capacity, but solely in its capacity as Owner Trustee of the Trust, in no event shall Wilmington Trust Company in its individual capacity have any liability in respect of the representations, warranties, or obligations of the Trust hereunder or under any other document, as to all of which recourse shall be had solely to the assets of the Trust, and for all purposes of this Reassignment and each other document, the Owner Trustee (as such or in its individual capacity) shall be subject to, and entitled to the benefits of, the terms and provisions of the Trust Agreement.

  

B-3

  

IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust have caused this Reassignment to be duly executed by their respective officers as of the day and year first above written.

 

 

	STERLING JEWELERS RECEIVABLES CORP., as Transferor
	 
	By:	 	  
	 	Name: 	  
	 	Title:	  

	
STERLING JEWELERS INC., 

	 	
as Servicer

	 
	 	 	 
	By:	 	  
	 	Name:	  
	 	Title: 	  

	
STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST,

	 
	
By:

	
Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee on behalf of the Trust,

	 	 
	
By:

	 	  
	 	Name:	  
	 	Title:	  

  

B-4

  

EXHIBIT C

 

FORM OF ANNUAL SERVICER’S CERTIFICATE

 

(To be delivered on or before April 30 of

each calendar year beginning with April 30, 2015,

pursuant to Section 3.05 of the Transfer and

Servicing Agreement referred to below)

 

STERLING JEWELERS RECEIVABLES MASTER NOTE TRUST

 

The undersigned, a duly authorized representative of Sterling Jewelers Inc., as Servicer (“Sterling”), pursuant to the Transfer and Servicing Agreement, dated as of November 2, 2001 (as amended and supplemented, the “Agreement”), among SJRC, as transferor, Sterling, and Sterling Jewelers Receivables Master Note Trust, does hereby certify that:

 

1.           Sterling is, as of the date hereof, the Servicer under the Agreement.  Capitalized terms used in this Certificate have their respective meanings as set forth in the Agreement.

 

2.           The undersigned is an Authorized Officer who is duly authorized pursuant to the Agreement to execute and deliver this Certificate to the Trust.

 

3.           A review of the activities of the Servicer during the year ended December 31, ____, and of its performance under the Agreement was conducted under my supervision.

 

4.           Based on such review, the Servicer has, to the best of my knowledge, performed in all material respects its obligations under the Agreement throughout such year and no default in the performance of such obligations has occurred or is continuing except as set forth in paragraph 5 below.

 

5.           The following is a description of each default in the performance of the Servicer’s obligations under the provisions of the Agreement known to me to have been made by the Servicer during the year ended December 31, _____ which sets forth in detail (i) the nature of each such default, (ii) the action taken by the Servicer, if any, to remedy each such default and (iii) the current status of each such default: [If applicable, insert “None.”]

 

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this ____ day of ______________, 20__.

 

	
STERLING JEWELERS INC.,

	  	
as Servicer

	  
	 	 	 
	
By:

	 	  
	  	
Name:

	  
	  	
Title:

	  

  

C-1

  

EXHIBIT D-1

 

FORM OF OPINION OF COUNSEL

WITH RESPECT TO AMENDMENTS

 

Provisions to be included in

Opinion of Counsel to be delivered pursuant

to subsection 9.02(d)(i)

 

The opinions set forth below may be subject to all the qualifications, assumptions, limitations and exceptions taken or made in the Opinions Of Counsel delivered on any applicable Closing Date.

 

(i)           The amendment to the Transfer and Servicing Agreement, attached hereto as Schedule 1 (the “Amendment”), has been duly authorized, executed and delivered by the Transferor and constitutes the legal, valid and binding agreement of the Transferor, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws from time to time in effect affecting creditors’ rights generally. The enforceability of the Transferor’s obligations is also subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)

 

(ii)          The Amendment has been entered into in accordance with the terms and provisions of Section 9.01 of the Transfer and Servicing Agreement.

  

D-1-1

  

 

EXHIBIT D-2

 

FORM OF OPINION OF COUNSEL

WITH RESPECT TO ACCOUNTS

 

Provisions to be included in

Opinion of Counsel to be

delivered pursuant to

subsection 9.02(d)(ii) or (iii)

 

The opinions set forth below may be subject to all the qualifications, assumptions, limitations and exceptions taken or made in the Opinions of Counsel delivered on any applicable Closing Date.

 

	
  

	
1.

	
To the extent that Article 9 of the New York UCC applies to the transfer of Receivables in certain identified Additional Accounts from a Seller to SJRC pursuant to a Supplemental Conveyance or a Receivables Purchase Agreement, respectively, such Supplemental Conveyance or such Receivables Purchase Agreement creates in favor of SJRC a security interest in the rights of the Seller in such Receivables.

 

	
  

	
2.

	
To the extent that the transfer of Receivables in certain identified Additional Accounts by SJRC to the Issuer pursuant to the Transfer and Servicing Agreement does not constitute an absolute assignment by SJRC to the Issuer of such Receivables, the Transfer and Servicing Agreement creates in favor of the Issuer a security interest in the rights of SJRC in such Receivables.

 

	
  

	
3.

	
The security interests described in paragraphs 1 and 2 above are perfected.

  

D-2-1

  

EXHIBIT D-3

 

PROVISIONS TO BE INCLUDED IN

ANNUAL OPINION OF COUNSEL

 

The opinions set forth below may be subject to all the qualifications, assumptions, limitations and exceptions taken or made in the Opinions of Counsel delivered on any applicable Closing Date with respect to similar matters. Unless otherwise indicated, all capitalized terms used herein shall have the meanings ascribed to them in the Transfer and Servicing Agreement.

 

1.           No filing or other action, other than such filing or other action described in  such opinion, is necessary from the date of such opinion through April 30 of the following year to continue the perfected status of the security interest of the Trust in the Receivables described in the financing statements referenced in such opinion.

 

2.           No filing or other action, other than such filing or other action described in such opinion, is necessary from the date of such opinion through April 30 of the following year to continue the perfected status of the security interest of the relevant Transferor in the Receivables described in the financing statements referenced in such opinion.

 

3.           No filing or other action, other than such filing or other action described in such opinion, is necessary from the date of such opinion through April 30 of the following year to continue the perfected status of the security interest of SJRC in the Receivables described in the financing statements referenced in such opinion.

  

D-3-1

  

SCHEDULE I

 

List of Accounts

 

[Original list delivered to Indenture Trustee]

 

 

S-1

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