Document:

<PAGE>

                                                                     Exhibit 4.1

     Series 2001-1 Supplement dated as of March 1, 2001, to the Master Pooling
and Servicing Agreement dated as of August 21, 1997, among Saks Credit
Corporation, as Transferor, Saks Incorporated, as Servicer, and Wells Fargo Bank
Minnesota, National Association, as Trustee
<PAGE>

--------------------------------------------------------------------------------

                            SAKS CREDIT CORPORATION,
                                 as Transferor

                                      and

                               SAKS INCORPORATED,
                                  as Servicer

                                      and

               WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                   as Trustee

                      on behalf of the Certificateholders
                         ______________________________

                            SERIES 2001-1 SUPPLEMENT
                           Dated as of March 1, 2001

                                       to

                     MASTER POOLING AND SERVICING AGREEMENT

                          Dated as of August 21, 1997

                         ______________________________

                                  $261,500,000

                         SAKS CREDIT CARD MASTER TRUST

                                 Series 2001-1

--------------------------------------------------------------------------------

<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS
                                                                                           Page
                                                                                           ----
                             PRELIMINARY STATEMENTS

<S>            <C>                                                                        <C>
SECTION 1.     Designation................................................................  1
SECTION 2.     Definitions................................................................  2
SECTION 3.     Minimum Transferor Interest Percentage..................................... 16
SECTION 4.     Reassignment and Transfer Terms............................................ 16
SECTION 5.     Delivery and Payment for the Certificates.................................. 16
SECTION 6.     Form of Delivery of the Series 2001-1 Certificates......................... 17
SECTION 7.     Servicing Compensation..................................................... 17
SECTION 8.     Increase in the Senior Class Investor Amount............................... 17
SECTION 9.     Procedure for Pre-Funding Increases in the Senior
                 Class Investor Amount.................................................... 18
SECTION 10.    Article IV of the Agreement................................................ 19

                                      ARTICLE IV
             RIGHTS OF SERIES 2001-1 CERTIFICATEHOLDERS ANDALLOCATION AND
                             APPLICATION OF COLLECTIONS

Section 4.2    Establishment of Series Accounts...........................................20
Section 4.2.1  Collections and Allocations................................................21
Section 4.3    Determination of Monthly Principal.........................................22
Section 4.4    Application of Collections of Finance Charge Receivables...................23
Section 4.5    Application of Collections of Principal Receivables........................28
Section 4.6    Defaulted Amounts; Senior Class Investor Charge Offs.......................30
Section 4.7    Shared Principal Collections...............................................32
Section 4.8    Shared Excess Finance Charge Collections...................................33
Section 4.9    Applications of Spread Account Funds; Release of Funds
                 From Spread Account......................................................33
SECTION 9.     Article V of the Agreement.................................................34
</TABLE>
                                           i
<PAGE>

                                        ARTICLE V
                    DISTRIBUTIONS AND REPORTS TOCERTIFICATEHOLDERS
<TABLE>
<CAPTION>

<S>          <C>                                                                        <C>
Section 5.1    Distributions..............................................................34
Section 5.2    Reports and Notices to Series 2001-1 Certificateholders....................35
SECTION 10.    Pay Out Events.............................................................36
SECTION 11.    Consent to Issuance of Additional Series...................................38
SECTION 12.    [Reserved].................................................................38
SECTION 13.    Increase or Reduction of Discount Percentage...............................39
SECTION 14.    Access to Information......................................................39
SECTION 15.    Series 2001-1 Investor Exchange............................................39
SECTION 16.    Certificate Defeasance.....................................................40
SECTION 17.    Transfers of Series 2001-1 Certificates; Legends...........................40
SECTION 18.    Ratification of Master Pooling and Servicing Agreement.....................45
SECTION 19.    Counterparts...............................................................45
SECTION 20.    Governing Law..............................................................45
SECTION 21.    Subordination of Certain Termination Payments..............................46
SECTION 22.    Opinions of Counsel........................................................46
SECTION 23.    No Third-Party Beneficiaries...............................................46

</TABLE>
Exhibit A-1         Form of Senior Class Certificate
Exhibit A-2         Form of Subordinate Class Certificate
Exhibit B           Form of Monthly Payment Instructions
Exhibit C           Form of Monthly Certificateholder's Statement
Exhibit D           Transfer Certification

                                                ii
<PAGE>

     SERIES 2001-1 SUPPLEMENT, dated as of March 1, 2001 (this "Series
                                                                ------
Supplement"), by and among SAKS CREDIT CORPORATION, a Delaware corporation, as
----------
Transferor (the "Transferor"), SAKS INCORPORATED, a Tennessee corporation, as
                 ----------
Servicer (the "Servicer"), and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
               --------
(f/k/a Norwest Bank Minnesota National Association, a national banking
association, as trustee (together with its successors in trust thereunder as
provided in the Agreement referred to below, the "Trustee") under the Master
                                                  -------
Pooling and Servicing Agreement, dated as of August 21, 1997 (the "Master
                                                                   ------
Pooling and Servicing Agreement" and, as supplemented by this Series Supplement,
-------------------------------
the "Agreement").
     ---------

                             PRELIMINARY STATEMENTS

          Section 6.9 of the Master Pooling and Servicing Agreement provides,
among other things, that the Transferor and the Trustee may at any time and from
time to time enter into one or more Supplements to the Master Pooling and
Servicing Agreement for the purpose of authorizing the issuance by the Trust to
the Transferor, for execution and redelivery to the Trustee for authentication,
of one or more Series of Certificates.  The Transferor and the Servicer each
hereby enter into this Series Supplement with the Trustee as required by Section
6.9(c) of the Master Pooling and Servicing Agreement to provide for the
issuance, authentication and delivery of the Investor Certificates of Series
2001-1.

          Pursuant to this Series Supplement, the Transferor and the Trustee
shall create a new Series of Investor Certificates and shall specify the
Principal Terms thereof.  The Series 2001-1 Certificates shall not be
subordinated to any other Series.

          In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Master Pooling and Servicing Agreement, the terms and provisions of this Series
Supplement shall govern.

          SECTION 1.  Designation.  The Certificates issued hereunder shall be
                      -----------
designated generally as the Series 2001-1 Certificates.  The Series 2001-1
Certificates shall be one of the Series of Investor Certificates in Group One
and shall be a Principal Sharing Series.  The Investor Certificates of Series
2001-1 (collectively, the "Series 2001-1 Certificates") shall be issued
                           --------------------------
initially in three classes, which shall be designated generally as the
Class A-1 Variable Funding Certificates, Series 2001-1,
<PAGE>

the Class A-2 Variable Funding Certificates, Series 2001-1, and the Subordinate
Class Certificates, Series 2001-1.

          SECTION 2.  Definitions.  All capitalized terms not otherwise defined
                      -----------
herein are defined in the Master Pooling and Servicing Agreement.  All Article,
Section or subsection references herein shall mean Articles, Sections or
subsections of the Master Pooling and Servicing Agreement, except as otherwise
provided herein.  Unless otherwise stated herein, as the context otherwise
requires or if such term is otherwise defined in the Master Pooling and
Servicing Agreement, each capitalized term used or defined herein shall relate
only to the Series 2001-1 Certificates and no other Series of Certificates
issued by the Trust.

          The following words and phrases shall have the following meanings with
respect to the Series 2001-1 Certificates and the definitions of such terms are
applicable to the singular as well as the plural form of such terms and to the
masculine as well as the feminine and neuter genders of such terms:

          "Accrued Interest Component" shall mean, for any Monthly Period for
           --------------------------
any Senior Class, the Interest Component of all Related Commercial Paper
outstanding with respect to such Senior Class at any time during such Monthly
Period which has accrued from the first day through the last day of such Monthly
Period, whether or not such Related Commercial Paper matures during such Monthly
Period.  For purposes of the immediately preceding sentence, the portion of the
Interest Component of Related Commercial Paper accrued in a Monthly Period
which Related Commercial Paper has a stated maturity date that succeeds the last
day of such Monthly Period shall be computed based on the actual number of days
that such Related Commercial Paper was outstanding during such Monthly Period.

          "Additional Investor Amount" shall have the meaning specified in the
           --------------------------
Certificate Purchase Agreement.

          "Additional Senior Class Investor Amounts" shall have the meaning
           ----------------------------------------
specified in Section 8 of this Series Supplement.

          "Agent" shall mean Bank of America, N.A., in its capacity as agent for
           -----
the Senior Class Conduits and the Bank Investors pursuant to the Certificate
Purchase Agreement, and any successor thereto appointed pursuant to the
Certificate Purchase Agreement.

                                       2
<PAGE>

          "Aggregate Initial Investor Amount" shall mean the sum of the
           ---------------------------------
Class A-1 Initial Investor Amount, the Class A-2 Initial Investor Amount and the
Subordinate Class Initial Investor Amount.

          "Aggregate Investor Amount" shall mean, on any date of determination,
           -------------------------
the sum of the Investor Amounts on such date.

          "Amortization Period" shall mean the period commencing at the close of
           -------------------
business on the Termination Date and ending on the date on which the Aggregate
Investor Amount and any other amounts outstanding to the Investor
Certificateholders under the Transaction Documents have been paid in full.

          "Assignee" shall have the meaning specified in Section 17 of this
           --------
Series Supplement.

          "Bank Investors" shall have the meaning specified in the Certificate
           --------------
Purchase Agreement.

          "Base Rate" shall mean, with respect to any Monthly Period, the sum of
           ---------
(a) the annualized percentage equivalent of a fraction, the numerator of which
is equal to the aggregate Carrying Costs for all Senior Classes for such Monthly
Period and the denominator of which is the daily average Aggregate Investor
Amount with respect to  the preceding Monthly Period and (b) 2.00% per annum.

          "Business Day" shall have the meaning specified in the Master Pooling
           ------------
and Servicing Agreement; provided, however, that the cities specified in the
                         --------  -------
definition of "Business Day" in the Master Pooling and Servicing Agreement shall
               ------------
also include Charlotte, North Carolina and Chicago, Illinois.

          "Carrying Costs" shall mean, for each Senior Class, with respect to
           --------------
any Monthly Period, the sum (without duplication) of (i) the sum of the dollar
amount of the obligations of the Senior Class Conduit which is a member of such
Senior Class for such Monthly Period determined on an accrual basis in
accordance with generally accepted accounting principles consistently applied
(a) to pay interest accrued during such Monthly Period with respect to the
related Senior Class Certificates and other amounts outstanding under the
related Program Support Agreement at any time during such Monthly Period,
whether or not such interest is payable during such Monthly Period, (b) to pay
the Accrued Interest Component of Related Commercial Paper for such Senior Class
with respect to such Monthly Period, and

                                       3
<PAGE>

(c) to pay the portion of any servicing compensation payable to a Successor
Servicer pursuant to Section 4.2 allocable to such Senior Class, and (ii) the
sum of (a) amounts payable in respect of such Senior Class by the Transferor
pursuant to Section 7.3 of the Master Pooling and Servicing Agreement and
Article IV of the Certificate Purchase Agreement, (b) to pay interest accrued as
specified in Section 2.6 of the Certificate Purchase Agreement during the
related Monthly Period to each related Program Support Provider and each related
Bank Investor which has acquired an interest in such Senior Class Certificates
and (c) to pay all fees payable pursuant to the Fee Letter for such Senior Class
accrued from the first day of such Monthly Period through the last day of such
Monthly Period to the extent not paid by the Transferor in accordance with the
provisions of the Certificate Purchase Agreement and such Fee Letter.

          "Certificate Purchase Agreement" shall mean the certificate purchase
           ------------------------------
agreement dated as of March 1, 2001 among the Transferor, the Servicer, EFC, any
other conduit purchaser named therein or subsequently added thereto, the Bank
Investor parties thereto, the Agent and the Senior Class Agents.

          "Certificate Rate" shall mean for each Senior Class, with respect to
           ----------------
the Monthly Period related to any Distribution Date, a per annum interest rate
which if multiplied by the average daily Senior Class Investor Amount for such
Monthly Period, would produce, on the basis of the actual number of days in such
Monthly Period and a 360-day year, an amount equal to the Carrying Costs for
such Senior Class.

          "Certificateholder" shall mean each holder of a Series 2001-1
           -----------------
Certificate.

          "Certificates" shall mean any one of the Senior Class Certificates or
           ------------
the Subordinate Class Certificates.

          "Class" shall mean each of the Senior Classes and the Subordinate
           -----
Class.

          "Class A-1 Initial Investor Amount" shall mean the initial principal
           ---------------------------------
amount of the Class A-1 Variable Funding Certificates, which is $0.

          "Class A-2 Initial Investor Amount" shall mean the initial principal
           ---------------------------------
amount of the Class A-2 Variable Funding Certificates, which is $0.

                                       4
<PAGE>

          "Closing Date" shall mean March 1, 2001.
           ------------

          "Commercial Paper" shall have the meaning specified in the
           ----------------
Certificate Purchase Agreement.

          "Defeasance Account" shall have the meaning specified in Section 16(b)
           ------------------
of this Series Supplement.

          "EFC" shall mean Enterprise Funding Corporation, a Delaware
           ---
corporation, together with its successors.

          "Enhancement" shall mean, with respect to the Senior Class
           -----------
Certificates, the subordination of the Subordinate Class Certificates.

          "Enhancement Investor Amount" shall mean the Subordinate Class
           ---------------------------
Investor Amount.

          "Enhancement Provider" shall mean each of the holders of the
           --------------------
Subordinate Class Certificates.

          "Face Amount" shall mean (i) with respect to Commercial Paper issued
           -----------
on a discount basis, the face amount stated therein, and (ii) with respect to
Commercial Paper which is interest-bearing, the principal amount of and interest
accrued and to accrue on such Commercial Paper to its stated maturity.

          "Finance Charge Shortfall" shall have the meaning specified in Section
           ------------------------
4.8.

          "Fixed/Floating Allocation Percentage" shall mean for each Class, with
           ------------------------------------
respect to any Monthly Period (with respect to Collections of Principal
Receivables for any Monthly Period during the Amortization Period), the
percentage equivalent of a fraction the numerator of which is equal to the
Investor Amount of such Class as of the end of the last day of the Revolving
Period and the denominator of which is equal to the greater of (i) (x) the
Aggregate Principal Receivables as of the last day of such Monthly Period plus
                                                                          ----
(y) the amount on deposit in the Excess Funding Account as of the last day of
such Monthly Period, and (ii) the sum of the numerators used to calculate the
applicable investor percentages with respect to Collections of Principal
Receivables for any Monthly Period during the Amortization Period for each class
of each Series outstanding as of the date on which such deter-

                                       5
<PAGE>

mination is being made; provided, however, that the Fixed/Floating Allocation
                        --------  -------
Percentage with respect to Collections of Principal Receivables allocated to
Series 2001-1 shall equal zero until the Series 1998-2 Pay-Out Date. The
Fixed/Floating Allocation Percentage with respect to Collections of Principal
Receivables allocated to Series 2001-1 will be recalculated as of the end of the
day on the Series 1998-2 Pay-Out Date and such Fixed/Floating Allocation
Percentage shall remain in effect for the remainder of the Monthly Period in
which such Series 1998-2 Pay-Out Date occurs. With respect to the Series 1998-2
Certificates, the Investor Percentage (as defined in the Series 1998-2
Supplement) with respect to Principal Receivables shall be set at zero as of the
end of the day on the Series 1998-2 Pay Out Date and thereafter remain zero.

          "Floating Allocation Percentage" shall mean for each Class, with
           ------------------------------
respect to any Monthly Period (with respect to Collections of Principal
Receivables for any Monthly Period during the Revolving Period (except as
otherwise provided herein), with respect to Collections of Finance Charge
Receivables, except as provided below with respect to Series 1998-2 Rapid
Amortization Period and with respect to the Default Amount and Adjustment
Payment Obligations at any time), the percentage equivalent of a fraction the
numerator of which is equal to the Aggregate Investor Amount of such Class as of
last Business day of the preceding Monthly Period provided, that with respect to
                                                  --------
the Monthly Period beginning on the Closing Date and ending March 31, 2001, the
numerator shall be equal to the daily average Aggregate Investor Amount for such
Class during such period, and the denominator shall in each case be equal to the
greater of (i) (x) the sum of the Aggregate Principal Receivables as of the last
day of the preceding Monthly Period plus (y) the amount on deposit in the Excess
                                    ----
Funding Account as of the last day of the preceding Monthly Period, and (ii) the
sum of the numerators used to calculate the applicable investor percentages with
respect to Collections of Principal Receivables and Collections of Finance
Charge Receivables, as applicable, for any Monthly Period during the Revolving
Period and with respect to the Default Amount and Adjustment Payment
Obligations, as applicable, for each class of each Series outstanding as of the
date on which such determination is being made; provided, however, that the
                                                --------  -------
Floating Allocation Percentage with respect to Collections of Principal
Receivables allocated to Series 2001-1 shall equal zero until the Series 1998-2
Pay Out Date.  The Floating Allocation Percentage with respect to Collections of
Principal Receivables allocated to Series 2001-1 will be recalculated as of the
end of the day on the Series 1998-2 Pay Out Date and such Floating Allocation
Percentages shall remain in effect for the remainder of the applicable Monthly
Period in which the Series 1998-2 Pay-Out Date occurs.  From the start of the
Rapid Amortization Period with respect to Series 1998-

                                       6
<PAGE>

2, the Floating Allocation Percentage with respect to Collections of Finance
Charge Receivables shall equal zero until the Series 1998-2 Pay Out Date has
occurred.

          "Group One" shall mean Series 2001-1 and each other Series specified
           ---------
in the related Series Supplement to be included in Group One.

          "Indebtedness" shall have the meaning specified in the Certificate
           ------------
Purchase Agreement.

          "Initial Investor Amount" shall mean the Class A-1 Initial Investor
           -----------------------
Amount, the Class A-2 Initial Investor Amount, and the Subordinated Class
Initial Investor Amount.

          "Initial Pre-Funded Amount" shall mean with respect to the Senior
           -------------------------
Class Certificates the aggregate amount of $22,000,000.

          "Interest Component" shall mean, with respect to Commercial Paper
           ------------------
issued by a Senior Class Conduit, the per annum rate equivalent to the "weighted
average cost" (as defined below) related to the issuance of Commercial Paper by
such Senior Class Conduit that is allocated, in whole or in part, to maintain
such Senior Class Conduit's investment in the Senior Class Certificates;
provided, however, that if any component of such rate is a discount rate in
--------  -------
calculating the Interest Component, the rate used to calculate such component
of such rate shall be a rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum. As used in this definition, the
"weighted average cost" shall consist of (x) the actual interest rate paid to
purchasers of the Commercial Paper issued by the related Senior Class Conduit,
(y) the costs associated with the issuance of such Commercial Paper as set forth
in the Fee Letter, and (z) interest on other borrowing or funding sources by the
related Senior Class Conduit (other than under any Program Support Agreement),
including to fund small or odd dollar amounts that are not easily accommodated
in the commercial paper market.

          "Investor Amount" shall mean, with respect to each Senior Class, the
           ---------------
Senior Class Investor Amount of such Senior Class and, with respect to the
Subordinate Class, the Subordinate Class Investor Amount.

          "Investor Charge Offs" shall mean, with respect to any date of
           --------------------
determination, the sum of the Senior Class Investor Charge Offs and the
Subordinate Class Investor Charge Offs for such date of determination.

                                       7
<PAGE>

          "Investor Default Amount" shall mean for each Class, with respect to
           -----------------------
any Distribution Date, an amount equal to the product of (a) the Default Amount
for the immediately preceding Monthly Period and (b) the Investor Percentage for
such Class with respect to such preceding Monthly Period.

          "Investor Finance Charge Collections" shall mean for each Class, with
           -----------------------------------
respect to any Monthly Period, the product of (a) the Investor Percentage for
such Class with respect to such Monthly Period and (b) the Collections of
Finance Charge Receivables for such Monthly Period.

          "Investor Letter" means that Investor Letter delivered to the
           ---------------
Transferor by the Agent in connection with the purchase of Senior Certificates.

          "Investor Monthly Servicing Fee" shall have the meaning specified in
           ------------------------------
Section 7 of this Series Supplement.

          "Investor Percentage" shall mean for each Class, with respect to any
           -------------------
Monthly Period, (a) when used with respect to Collections of Principal
Receivables during the Revolving Period, the Floating Allocation Percentage, (b)
when used with respect to Collections of Principal Receivables during the
Amortization Period, the Fixed/Floating Allocation Percentage and (c) when used
with respect to Collections of Finance Charge Receivables or the Default Amount
or Adjustment Payment Obligations at any time, the Floating Allocation
Percentage.

          "Investor Servicer Advance" shall mean for each Senior Class the
           -------------------------
aggregate amount of all Servicer Advances made with respect to such Senior Class
pursuant to Section 4.4(b).

          "Minimum Enhancement Amount" shall mean, as of any date of
           --------------------------
determination the sum of (i) 6% of the Aggregate Investor Amount as of such
date and (ii) the Required Spread Account Balance.

          "Minimum Transferor Interest Percentage" shall have the meaning
           --------------------------------------
specified in Section 3 of this Series Supplement.

          "Monthly Period" shall have the meaning specified in the Master
           --------------
Pooling and Servicing Agreement; provided, however, that, with respect to the
                                 --------  -------
first Distribution Date, the Monthly Period shall be the period from and
including the Closing Date through and including March 31, 2001.

                                       8
<PAGE>

          "Pay Out Event" shall mean a Pay Out Event as specified in Section 9.1
           -------------
of the Master Pooling and Servicing Agreement or Section 10 of this Series
Supplement.

          "Portfolio Adjusted Yield" shall mean, with respect to any Monthly
           ------------------------
Period, the Portfolio Yield with respect to such Monthly Period minus the Base
                                                                -----
Rate with respect to such Monthly Period.

          "Portfolio Yield" shall mean, with respect to any Monthly Period, the
           ---------------
annualized percentage equivalent of a fraction, the numerator of which is equal
to (a) the amount of Collections of Finance Charge Receivables that are
allocated to Series 2001-1 with respect to such Monthly Period, minus (b) the
                                                                -----
aggregate Investor Default Amount for all Classes of this Series for such
Monthly Period and the denominator of which is the daily average Aggregate
Investor Amount for such Monthly Period.  For the purposes of this definition
only, the Servicer shall have the option to replace the amount described in
clause (a) above, with a pro forma amount calculated as if Collections of
Finance Charge Receivables are allocated among all Series using either daily
average investor amounts during the Monthly Period or actual daily investor
amounts in the numerator, and daily average Aggregate Principal Receivables and
daily average Excess Funding Account Balances during the Monthly Period or
actual daily amounts during the Monthly Period in the denominator for the
allocation formula; provided however that all Series which use a fixed numerator
                    -------- -------
in the allocation formula upon the occurrence of a Pay Out Event must continue
to do so for the pro forma calculation.  This "Portfolio Yield" definition may
be altered at any time upon the written or electronic consent of both the
Servicer and the Agent, and shall not be considered an "Amendment" for purposes
of Section 13 of the Master Pooling and Servicing Agreement or the Certificate
Purchase Agreement.

          "Potential Pay Out Event" shall have the meaning specified in the
           -----------------------
Certificate Purchase Agreement.

          "Pre-Funded Amount" shall mean, as of any date, (a) the Initial Pre-
           -----------------
Funded Amount, plus (b) the amount of any deposits in the Pre-Funding Account
               ----
prior to such date pursuant to the Certificate Purchase Agreement, minus (c) the
                                                                   -----
amount of any withdrawals from the Pre-Funding Account to fund Additional
Investor Amounts prior to such date.

                                       9
<PAGE>

          "Pre-Funding Account" shall have the meaning specified in Section
           -------------------
4.2(b).

          "Principal Shortfall" shall have the meaning specified in Section 4.7.
           -------------------

          "Pro Forma Spread Percentage" shall mean, with respect to the March
           ---------------------------
2001 Monthly Period, the sum of (i) the Spread Percentage for Series 2001-1 for
the March 2001 Monthly Period and (ii) the Portfolio Adjusted Yield ("as defined
in the Series 1997-1 Series Supplement") for  Series 1997-1 for the February
2001 Monthly Period, divided by two.

          "Pro Rata Share" shall mean, for each Senior Class, on any date of
           --------------
determination, the amount (expressed as a percentage) obtained by dividing the
Senior Class Investor Amount for such Class by the sum of the Senior Class
Investor Amounts for all Classes as of the close of business on the immediately
preceding Business Day; provided, however, that in the case of any Additional
                        --------  -------
Investor Amount where all Senior Class Agents shall agree in writing to any
other "Pro Rata Share", the "Pro Rata Share" for each Senior Class for such
       --------------        --------------
Additional Investor Amount shall be as so agreed provided that the total of such
"Pro Rata Shares" equals 100%; provided further, that "Pro Rata Share" when used
 ---------------               -------- -------        --------------
with respect to a Monthly Period shall mean for each Senior Class the weighted
average Pro Rata Share for each day during such Monthly Period for such Senior
Class.

          "Program Support Agreement" shall have the meaning specified in the
           -------------------------
Certificate Purchase Agreement.

          "Program Support Provider" shall have the meaning specified in the
           ------------------------
Certificate Purchase Agreement.

          "Reallocated Subordinate Class Principal Collections" shall have the
           ---------------------------------------------------
meaning specified in Section 4.4(c).

          "Related Commercial Paper" shall have the meaning specified in the
           ------------------------
Certificate Purchase Agreement.

          "Required Investor Certificateholders" shall mean, with respect to any
           ------------------------------------
date of determination, the holders of not less than 66 2/3% of the aggregate
Senior Class Investor Amounts for the Senior Classes on such date.

                                       10
<PAGE>

          "Required Spread Account Amount" shall mean, (i) with respect to the
           ------------------------------
Closing Date, zero and (ii) with respect to any Determination Date, from and
after the April 2001 Determination Date, the product of the Invested Amount on
such Determination Date and a percentage determined based on the Two Month
Rolling Spread Percentage with respect to such Determination Date as follows:
(A) if the Two Month Rolling Spread Percentage with respect to such
Determination Date is greater than or equal to 5.50%, 0%, (B) if the Two Month
Rolling Spread Percentage with respect to such Determination Date is less than
5.50% but greater than or equal to 5.00%, 1.50%, (C) if the Two Month Rolling
Spread Percentage with respect to such Determination Date is less than 5.00% but
greater than or equal to 4.50%, 2.50%, (D) if the Two Month Rolling Spread
Percentage with respect to such Determination Date is less than 4.50% but
greater than or equal to 4.00%, 3.50%, (E) if the Two Month Rolling Spread
Percentage with respect to such Determination Date is less than 4.00% but
greater than or equal to 3.00%, 5.00%, and (F) if the Two Month Rolling Spread
Percentage with respect to such Determination Date is less than 3.00%, 6.00%.

          "Revolving Period" shall mean the period from and including the
           ----------------
Closing Date to but excluding the first day of the Amortization Period.

          "Senior Certificateholders" shall mean each holder of a Senior Class
           -------------------------
Certificate.

          "Senior Class" shall have the meaning specified in the Certificate
           ------------
Purchase Agreement.

          "Senior Class Agent" shall have the meaning specified in the
           ------------------
Certificate Purchase Agreement.

          "Senior Class Certificate Principal Balance" shall mean for a Senior
           ------------------------------------------
Class, when used with respect to any date of determination, an amount equal to
(a) the Initial Investor Amount for such Senior Class, minus (b) the aggregate
                                                       -----
amount of principal payments made to the Senior Class Certificateholders of such
Senior Class prior to such day, plus (c) the aggregate initial principal amount
                                ----
of any Additional Investor Amounts purchased by the Senior Class Conduits or the
Bank Investors of such Senior Class pursuant to Section 2.2 of the Certificate
Purchase Agreement, plus (d) after an assignment to the related Bank Investors
                    ----
pursuant to Section 5.7 of the Certificate Purchase Agreement, any amount paid
by the related Bank Investors pursuant to Section 5.7(d) of the Certificate
Purchase Agreement.

                                       11
<PAGE>

          "Senior Class Certificates" shall mean any one of the variable funding
           -------------------------
certificates executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-1 hereto.
                                      -----------

          "Senior Class Conduit" shall have the meaning specified in the
           --------------------
Certificate Purchase Agreement.

          "Senior Class Facility Limit" shall have the meaning specified in the
           ---------------------------
Certificate Purchase Agreement.

          "Senior Class Investor Amount" shall mean for each Senior Class, on
           ----------------------------
any date of determination, an amount equal to (a) the Initial Investor Amount of
such Senior Class, plus (b) the aggregate amount of any increases in the
                   ----
Investor Amount of such Senior Class pursuant to Section 8 of this Series
Supplement, minus (c) the aggregate amount of principal payments made to the
            -----
Senior Certificateholders of such Senior Class prior to such date (other than
principal payments made from amounts on deposit in the applicable Pre-Funding
Account on the first Distribution Date following the end of the Revolving
Period), minus (d) the aggregate amount of Senior Class Investor Charge Offs
         -----
allocated to such Senior Class for all prior Distribution Dates, plus (e) the
                                                                 ----
aggregate amount of Senior Class Investor Charge Offs allocated to such Senior
Class reimbursed pursuant to Section 4.4(a) prior to such date, plus (f) after
                                                                ----
an assignment to the related Bank Investors pursuant to Section 5.7 of the
Certificate Purchase Agreement, any amount paid by the related Bank Investors
pursuant to Section 5.7(d) of the Certificate Purchase Agreement; provided,
                                                                  --------
however, that no Senior Class Investor Amount may be reduced below zero.
-------

          "Senior Class Investor Charge Off" shall have the meaning specified in
           --------------------------------
Section 4.6(a).

          "Senior Class Monthly Principal" shall have the meaning specified in
           ------------------------------
Section 4.3(a).

          "Senior Class Servicing Fee" shall have the meaning specified in
           --------------------------
Section 7 of this Series Supplement.

          "Series 1997-1" shall mean, the series, the terms of which are
           -------------
established by the First Amended and Restated Series 1997-1 Series Supplement,
dated as of December 1, 1998, as amended, to the Master Pooling and Servicing
Agreement.

                                       12
<PAGE>

          "Series 1998-2 Pay Out Date" shall mean the date on which the Class A
           --------------------------
Adjusted Investor Amount, the Class B Adjusted Investor Amount, the Collateral
Indebtedness Amount (each as defined in the Series 1998-2 Series Supplement),
and all other amounts owed to the holders of the Series 1998-2 Certificates
(other than the Series 1998-2 Class D Certificates) has been paid in full.

          "Series Accounts" shall mean the Spread Account and the Pre-Funding
           ---------------
Accounts.

          "Series Allocation Percentage" shall mean, with respect to any Monthly
           ----------------------------
Period, (i) when used with respect to Collections of Principal Receivables
during the Revolving Period, with respect to Collections of Finance Charge
Receivables, the Default Amount and Adjustment Payment Obligations at any time,
the sum of the Floating Allocation Percentages for such Monthly Period for each
Senior Class and the Subordinate Class, and (ii) when used with respect to
Collections of Principal Receivables during the Amortization Period the sum of
the Fixed/Floating Allocation Percentages for such Monthly Period for each
Senior Class and the Subordinate Class.

          "Series 2001-1" shall mean the Series the terms of which are specified
           -------------
in this Series Supplement.

          "Series 2001-1 Certificate" shall have the meaning specified in
           -------------------------
Section 1 of this Series Supplement.

          "Series 2001-1 Certificateholder" shall mean a holder of a Series
           -------------------------------
2001-1 Certificate.

          "Servicer" shall have the meaning specified in the preamble to this
           --------
Series Supplement.

          "Servicer Advance" shall have the meaning specified in Section 4.4(b).
           ----------------

          "Servicing Fee Percentage" shall mean 2.00%.
           ------------------------

                                       13
<PAGE>

          "Shared Principal Collections" shall mean, with respect to Series
           ----------------------------
2001-1, amounts to be treated as such pursuant to Sections 4.1(h), 4.5(a),
4.5(b) and 4.6(a) (which amounts shall be available for other Series pursuant to
Section 4.1(h)).

          "Spread Account" shall have the meaning set forth in Section 4.2(a).
           --------------

          "Spread Account Funding Shortfall" shall mean for each Class, with
           --------------------------------
respect to any Determination Date, an amount equal to the excess, if any, of the
amount to be deposited in the Spread Account with respect to such Class on the
following Distribution Date pursuant to Section 4.4(a)(i)(G) and Section
4.5(b)(iii), over the amount actually deposited in the Spread Account with
respect to such Class on such Distribution Date pursuant to Section 4.4(G).

          "Spread Percentage" shall mean, with respect to any Monthly Period,
           -----------------
the Portfolio Yield for such Monthly Period minus the Base Rate for such Monthly
Period.

          "Stated Series Termination Date" shall mean the fifty-second
           ------------------------------
Distribution Date occurring after the Termination Date.

          "Subordinate Class" shall mean the Subordinate Class Certificates.
           -----------------

          "Subordinate Class Certificates" shall mean any one of the
           ------------------------------
certificates executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-2 hereto.
                                       -----------

          "Subordinate Class Initial Investor Amount" shall mean the aggregate
           -----------------------------------------
initial principal amount of the Subordinate Class Certificates, which is $0.

          "Subordinate Class Investor Amount" shall mean, on any date of
           ---------------------------------
determination, an amount equal to (a) the Subordinate Class Initial Investor
Amount, plus (b) the aggregate amount of any increases in the Subordinate Class
        ----
Investor Amount pursuant to Section 4.10 and Section 8 of this Series
Supplement, minus (c) the aggregate amount of principal payments made to the
            -----
holders of the Subordinate Class Certificates prior to such date, minus (d) the
                                                                  -----
aggregate amount of Subordinate Class Investor Charge Offs for all prior
Distribution Dates, minus (e) the amount of Reallocated Subordinate Class
                    -----
Principal Collections allocated on all prior Distribution Dates pursuant to
Section 4.4(c), minus (f) an amount equal to the amount by which the Subordinate
                -----
Class Investor Amount has been reduced on all prior Distribu-

                                       14
<PAGE>

tion Dates pursuant to Section 4.6(a), plus (g) the aggregate amount by which
                                       ----
reductions in the Subordinate Class Investor Amount pursuant to clauses (d), (e)
and (f) above have been reimbursed pursuant to Section 4.4(a)(ii)(C) prior to
such date; provided, however, that the Subordinate Class Investor Amount may not
           --------  -------
be reduced below zero.

          "Subordinate Class Investor Charge Off" shall have the meaning
           -------------------------------------
specified in Section 4.6(b).

          "Subordinate Class Investor Default Amount" shall mean, with respect
           -----------------------------------------
to any Distribution Date, an amount equal to the product of (i) the Default
Amount for the immediately preceding Monthly Period and (ii) the Floating
Allocation Percentage for the Subordinate Class for such preceding Monthly
Period.

          "Subordinate Class Monthly Principal" shall have the meaning specified
           -----------------------------------
in Section 4.3(b).

          "Subordinate Class Principal Commencement Date" shall mean the
           ---------------------------------------------
Distribution Date on which the Senior Class Investor Amounts have been paid in
full.

          "Subordinate Class Servicing Fee" shall have the meaning specified in
           -------------------------------
Section 7 of this Series Supplement.

          "Targeted Holder" shall mean each holder of a right to receive
           ---------------
interest or principal with respect to the Series 2001-1 Certificates (or other
interests in the Trust), other than certificates (or other such interests) with
respect to which an opinion is rendered that such certificates (or other such
interests) will be treated as debt for federal income tax purposes, and any
holder of a right to receive any amount in respect of the Transferor Interest;
provided, however, that any Person holding more than one interest each of which
--------  -------
would cause such Person to be a Targeted Holder shall be treated as a single
Targeted Holder.

          "Termination Date" shall have the meaning specified in the Certificate
           ----------------
Purchase Agreement.

          "Transfer" shall have the meaning specified in Section 17 of this
           --------
Series Supplement.

                                       15
<PAGE>

          "Transfer Date" shall mean the Business Day preceding each
           -------------
Distribution Date.

          "Transferor" shall have the meaning specified in the preamble to this
           ----------
Series Supplement.

          "Trustee"  shall have the meaning specified in the preamble to this
           -------
Series Supplement.

          "Two Month Rolling Spread Percentage" shall mean, with respect to any
           -----------------------------------
Determination Date, the sum of the Spread Percentages with respect to the two
preceding Monthly Periods divided by two (or the Pro Forma Spread Percentage
with respect to the March 2001 Monthly Period).

          SECTION 3.  Minimum Transferor Interest Percentage.  The Minimum
                      --------------------------------------
Transferor Interest Percentage applicable to the Series 2001-1 Certificates
shall be 0%.

          SECTION 4.  Reassignment and Transfer Terms.  The Series 2001-1
                      -------------------------------
Certificates may be reassigned and transferred to the Transferor on any
Distribution Date during the Amortization Period on or after which the sum of
the Class A-1 Investor Amount, the Class A-2 Investor Amount and the Subordinate
Class Investor Amount held by parties other than the Transferor or any of its
Affiliates is less than or equal to 10% of the sum of the highest amount of the
Class A-1 Investor Amount, the Class A-2 Investor Amount and the Subordinate
Class Investor Amount held by parties other than the Transferor or any of its
Affiliates since the Closing Date.  The repurchase price for the Series 2001-1
Certificates will be equal to (a) the Aggregate Investor Amount less the
Subordinate Class Investor Amount held by the Transferor, plus (b) accrued and
unpaid interest on the Series 2001-1 Certificates together with all other
amounts due and unpaid pursuant to the Certificate Purchase Agreement, less (c)
the amount held in the Collection Account allocable to Series 2001-1 to be
applied other than any excess payable to the Transferor as holder of the
Exchangeable Transferor Certificate.  The provisions of this Section are
subject to the provisions of Section 12.2 of the Master Pooling and Servicing
Agreement.

          SECTION 5.  Delivery and Payment for the Certificates.  The Trustee
                      -----------------------------------------
shall deliver the Series 2001-1 Certificates upon the written direction of the
Transferor when authenticated in accordance with Section 6.2.

                                       16
<PAGE>

          SECTION 6.  Form of Delivery of the Series 2001-1 Certificates. Each
                      --------------------------------------------------
of the Series 2001-1 Certificates shall be delivered as registered, definitive,
physical certificates.  Each of the Senior Class Certificates shall be issued in
minimum denominations of $500,000 and in integral multiples of $1,000 in excess
thereof.  The Subordinate Class Certificates shall be issued in minimum
denominations of $1,000 and in integral multiples of $1,000 in excess thereof.

          SECTION 7.  Servicing Compensation.  The share of the Monthly
                      ----------------------
Servicing Fee allocable to the Series 2001-1 Certificateholders with respect to
any Distribution Date (the "Investor Monthly Servicing Fee") shall be equal to
                            ------------------------------
one-twelfth of the product of (a) the Servicing Fee Percentage and (b) the
average daily Aggregate Investor Amount for the related Monthly Period.  The
share of the Investor Monthly Servicing Fee allocable to the Senior Classes with
respect to any Distribution Date (the "Senior Class Servicing Fee") shall be
                                       --------------------------
equal to the product of (a) the sum of the Floating Allocation Percentages for
the Senior Classes divided by the sum of the Floating Allocation Percentages for
all Classes, in each case with respect to the related Monthly Period, and (b)
the Investor Monthly Servicing Fee with respect to such Distribution Date.  The
share of the Investor Monthly Servicing Fee allocable to the Subordinate Class
with respect to any Distribution Date (the "Subordinate Class Servicing Fee")
                                            -------------------------------
shall be equal to the product of (a) the Floating Allocation Percentage for the
Subordinate Class divided by the sum of the Floating Allocation Percentages for
all Classes, in each case with respect to the related Monthly Period, and (b)
the Investor Monthly Servicing Fee with respect to such Distribution Date.  The
Senior Class Servicing Fee, that portion of the Senior Class Servicing Fee
payable in respect of any particular Senior Class and the Subordinate Class
Servicing Fee shall be payable solely to the extent amounts are available for
distribution in respect thereof pursuant to this Series Supplement.  The
remainder of the Monthly Servicing Fee shall be paid by the Transferor or from
amounts allocable to other Series (as provided in the Master Pooling and
Servicing Agreement and the Supplements relating to such other Series) and in no
event shall the Trust, the Trustee or the Series 2001-1 Certificateholders be
liable for the share of the Monthly Servicing Fee to be paid by the Transferor
or from amounts allocable to any other Series.

          SECTION 8.  Increase in the Senior Class Investor Amount.
                      --------------------------------------------

          (a) Each Senior Class Certificateholder agrees, by acceptance of its
Series 2001-1 Certificate, that the Transferor may, from time to time prior to
the Termination Date upon satisfaction of the conditions set forth in Section
2.2 of the Certificate Purchase Agreement, require that each Senior Class
Conduit acquire, as

                                       17
<PAGE>

of any Business Day, additional undivided interests in the Trust in specified
amounts (any such amount, an "Additional Senior Class Investor Amount") (each
                              ---------------------------------------
such date, a "Purchase Date").
              -------------

          (b) If the Senior Class Certificateholders acquire an additional
undivided interest in the Trust, then in consideration of such Senior Class
Certificateholders' payments of Additional Senior Class Investor Amounts (which
payments shall be made through a withdrawal of amounts on deposit in the
applicable Pre-Funding Account in accordance with Section 9 of this Series
Supplement or a direct payment by the applicable Senior Class Certificateholder
in accordance with the Certificate Purchase Agreement), the Servicer and the
Trustee shall appropriately note such Additional Senior Class Investor Amounts.

          (c) Any additional Senior Class Investor Amount purchased by any
Senior Class Certificateholder shall be evidenced by the related Senior Class
Certificate issued on the Closing Date.  The Senior Class Agent shall, and is
hereby authorized to, record on the grid attached to any Senior Class
Certificate (or, at the Senior Class Agent's option, in its internal books and
records) the date and amount of any Additional Senior Class Investor Amount
purchased, and each repayment thereof, which recordations shall be deemed
correct absent manifest error; provided, however, that failure to make any such
                               --------  -------
recordation on such grid or internal records or any error in such grid or
internal records shall not adversely affect a Senior Class Certificateholder's
rights with respect to any Senior Class Investor Amount and its right to receive
interest payments in respect of any Senior Class Investor Amount held by such
Senior Class Certificateholder.

          (d) The Senior Class Certificates will be issued in the initial face
amount of up to $250,410,000.  The Servicer shall notify the Trustee in writing
of any increase in the face amount of the Senior Class Certificates and shall
instruct the Trustee in writing to record any such increase on the Certificate
Register.

           SECTION 9.  Procedure for Pre-Funding Increases in the Senior Class
                       -------------------------------------------------------
Investor Amount.
---------------

          (a) Administration of the Pre-Funding Account.  The Senior Class
              -----------------------------------------
Certificateholders shall, subject to the terms and conditions of the Certificate
Purchase Agreement, deposit the Initial Pre-Funded Amount for such Class into
the Pre-Funding Account on the Closing Date.  All interest (including reinvested

                                       18
<PAGE>

interest) and other investment earnings on the Pre-Funded Amount shall not be
considered part of such Pre-Funded Amount for purposes of this Series
Supplement.

          (b) Investment of Funds in the Pre-Funding Account.  Funds on deposit
              ----------------------------------------------
in the Pre-Funding Account shall at all times be invested in Eligible
Investments. Any such investment shall mature and such funds shall be available
for withdrawal on or prior to the following Business Day. Subject to the
restrictions set forth above, the Servicer shall instruct the Trustee or the
Qualified Institution maintaining the Pre-Funding Account in writing with
respect to the investment of funds on deposit in the Pre-Funding Account. For
purposes of determining the availability of funds or the balances in the Pre-
Funding Account for any reason under this Agreement, all interest and other
investment earnings (net of losses and investment expenses) on such funds shall
be deemed not to be available or on deposit until actually credited to the Pre-
Funding Account.

          (c) Principal Payments from the Pre-Funding Account.  On each day that
              -----------------------------------------------
Additional Senior Class Investor Amounts are to be purchased with respect to any
Class pursuant to Section 8 of this Series Supplement through a withdrawal of
amounts from the Pre-Funding Account, if all the conditions precedent to such
purchase under the Certificate Purchase Agreement have been satisfied, the
Servicer shall instruct the Trustee in writing to withdraw from the Pre-Funding
Account and pay to the Transferor an amount equal to the lesser of the aggregate
Additional Senior Class Investor Amounts being purchased with respect to such
Class on such date and the amount on deposit in the Pre-Funding Account.  In the
event that the applicable Pre-Funded Amount exceeds zero at the end of the
Revolving Period, the Servicer shall apply or shall cause the Trustee to apply
such Pre-Funded Amount to the payment by the Paying Agent, on the next
succeeding Distribution Date, of principal on the applicable Senior Class
Certificates.

          SECTION 10.  Article IV of the Agreement.  Any provisions of Article
                       ---------------------------
IV of the Master Pooling and Servicing Agreement which distribute Collections
to the Transferor on the basis of the Transferor Percentage shall continue to
apply irrespective of the issuance of the Series 2001-1 Certificates.  Section
4.1 shall read in its entirety as provided in the Master Pooling and Servicing
Agreement. Article IV of the Agreement (except for Section 4.1 thereof) as it
relates to Series 2001-1 shall read in its entirety as follows:

                                       19
<PAGE>

                                  ARTICLE IV

                 RIGHTS OF SERIES 2001-1 CERTIFICATEHOLDERS AND
                   ALLOCATION AND APPLICATION OF COLLECTIONS

          Section 4.2  Establishment of Series Accounts.
                       --------------------------------

          (a)  The Trustee, for the benefit of the Series 2001-1
Certificateholders, shall establish and maintain or cause to be established and
maintained in the name of the Trustee, on behalf of the Trust, with an Qualified
Institution designated by the Servicer, a segregated trust account within the
corporate trust department of such Qualified Institution (the "Spread Account"),
                                                               --------------
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Series 2001-1 Certificateholders.  The
Servicer hereby designates the Trustee as the Qualified Institution with whom
the Spread Account will initially be maintained.

          (b)  The Trustee, for the benefit of each Senior Class
Certificateholder, shall establish and maintain or cause to be established and
maintained in the name of the Trustee, on behalf of the Trust, within the
corporate trust department of an Qualified Institution designated by the
Servicer, a segregated trust account with respect to each Class of the Senior
Class Certificates (each, a "Pre-Funding Account"), which will bear a
                             -------------------
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the applicable Senior Class Certificateholder.  The
Servicer hereby designates the Trustee as the Qualified Institution with whom
the Pre-Funding Accounts will initially be maintained.

          (c)  The Trustee, for the benefit of the applicable Series 2001-1
Certificateholders, shall possess all right, title and interest in all funds on
deposit from time to time in the Series Accounts and in all proceeds thereof.
The Trustee at all times shall maintain accurate records reflecting each
transaction in the Series Accounts.  Pursuant to the authority granted to it
pursuant to the Agreement, the Servicer shall have the power, revocable by the
Trustee, to withdraw funds, and to instruct the Trustee to withdraw funds from
the Series Accounts for the purpose of carrying out its duties hereunder.  Funds
on deposit in the Spread Account shall at all times be invested in Eligible
Investments.  Any such investment shall mature and such funds shall be available
for withdrawal on or prior to the Distribution Date following the Monthly Period
in which such funds were processed for collection. Subject to the restrictions
set forth above, the Servicer shall instruct the Trustee or

                                       20
<PAGE>

the Qualified Institution maintaining the Spread Account in writing with respect
to the investment of funds on deposit in the Spread Account. For purposes of
determining the availability of funds or the balances in the Series Accounts
for any reason under this Agreement, all interest and other investment earnings
(net of losses and investment expenses) on such funds shall be deemed not to be
available or on deposit until actually credited to such Series Accounts.
Eligible Investments shall not be disposed of prior to their maturity.

          (d)  On each Distribution Date, the Trustee, acting at the written
direction of the Servicer, shall transfer to the Collection Account all interest
and other investment earnings (net of losses and investment expenses) credited
to the Series Accounts during the preceding Monthly Period.  The amounts so
transferred shall be treated as Collections of Finance Charge Receivables
allocable to the Series 2001-1 Certificates.

          Section 4.2.1  Collections and Allocations.
                         ---------------------------

          (a)  Collections of Finance Charge Receivables with respect to a
Monthly Period shall be allocated to Series 2001-1 and deposited into the
Collection Account in an amount equal to the product of such Collections of
Finance Charge Receivables and the Series Allocation Percentage for such Monthly
Period. Collections of Principal Receivables with respect to a Monthly Period
shall be allocated to Series 2001-1 and deposited into the Collection Account in
an amount equal to the product of such Collections of Principal Receivables and
the Series Allocation Percentage for such Monthly Period. The Servicer shall
apply, or shall instruct the Trustee to apply, all Collections and other funds
on deposit in the Collection Account that are allocated to the Series 2001-1
Certificates as described in this Article IV.

          (b)  Provided that daily deposits of Collections are required pursuant
to subsection 4.1(f) of the Master Pooling and Servicing Agreement, during the
Revolving Period, so long as the sum of the Subordinate Class Investor Amount
and the amount on deposit in the Spread Account is not less than the Minimum
Enhancement Amount, Collections of Principal Receivables allocable to Series
2001-1 with respect to each Monthly Period need not be deposited into the
Collection Account on a daily basis during such Monthly Period; provided,
                                                                --------
however, that in the event that the Minimum Transferor Amount exceeds the
Transferor Amount on any date, such Collections of Principal Receivables shall
be deposited into the Excess Funding Account until the Transferor Amount equals
the Minimum Transferor

                                       21
<PAGE>

Amount; and provided, further, that on any date on which the sum of the
            --------  -------
Aggregate Principal Receivables and the Excess Funding Amount is less than the
Aggregate Investor Amount, such Collections of Principal Receivables shall be
deposited into the Collection Account on a daily basis. During the Amortization
Period, Collections of Principal Receivables allocable to Series 2001-1 with
respect to each Monthly Period shall be deposited into the Collection Account on
a daily basis.

          (c)  All allocations of Collections, Default Amounts and Adjustment
Payment Obligations to the Senior Classes shall be made to such classes pari
                                                                        ----
passu.
-----

          Section 4.3  Determination of Monthly Principal.
                       ----------------------------------

          (a)  The amount of principal allocable to each Senior Class on each
Distribution Date (the "Senior Class Monthly Principal"), shall be equal to the
                        ------------------------------
lesser of (i) during the Amortization Period the Fixed/Floating Allocation
Percentage for such Senior Class or during the Revolving Period the Floating
Allocation % for such Senior Class of Collections of Principal Receivables with
respect to the preced ing Monthly Period, plus the Pro Rata Share for such
                                          ----
Senior Class of the amount of any Shared Principal Collections with respect to
other Series that are allocated to Series 2001-1 in accordance with the Master
Pooling and Servicing Agreement, plus, any amounts required by Section 4.4(a)(i)
                                 ----
or Section 4.9(e) to be applied in accor dance with Section 4.5 governing
Principal Collections plus, prior to the Subordinate Class Principal
                      ----
Commencement Date, the Pro Rata Share for such Senior Class of the amount which
would be, but for the failure of the Subordinate Class Principal Commencement
Date to occur, treated hereunder as the Subordinate Class Monthly Principal for
such Distribution Date, minus the amount of Reallocated Subordinate Class
                        -----
Principal Collections allocated to such Senior Class on such Distribution Date
pursuant to Section 4.4(c) and (ii) the Senior Class Investor Amount for such
Senior Class with respect to such Distribution Date.

          (b)  The amount of principal allocable to the Subordinate Class on
each Distribution Date (the "Subordinate Class Monthly Principal"), beginning
                             -----------------------------------
with the Subordinate Class Principal Commencement Date, shall be equal to the
lesser of (i) the Floating Allocation Percentage for the Subordinate Class of
Collections of Principal Receivables with respect to the preceding Monthly
Period, plus, any amounts required by Section 4.4(a)(ii) to be applied in
        ----
accordance with Section 4.5 governing Principal Collections plus the Shared
                                                            ----
Principal Collections with respect to other Series that are allocated to Series
2001-1 in accordance with the

                                       22
<PAGE>

Agreement and remaining after application pursuant to Section 4.3(a) and
(ii) the Subordinate Class Investor Amount with respect to such Distribution
Date.

          Section 4.4  Application of Collections of Finance Charge Receivables.
                       --------------------------------------------------------

          (a)  In accordance with Section 4.2(a) of the Agreement, the Servicer
shall apply or shall instruct the Trustee to apply on each Distribution Date the
Collections of Finance Charge Receivables and any other amounts that are to be
treated as Collections of Finance Charge Receivables pursuant to the Master
Pooling and Servicing Agreement in each case allocable to Series 2001-1 plus the
                                                                        ----
amount of any Shared Excess Finance Charge Collections allocable to Series
2001-1 to make the distributions specified in this Section 4.4.

               (i)  For each Senior Class, the sum of (x) the Pro Rata Share for
     such Senior Class for the related Monthly Period of Collections of Finance
     Charge Receivables allocable to Series 2001-1 plus (y) the Pro Rata Share
                                                   ----
     for such Senior Class for the related Monthly Period of the amount of any
     Shared Excess Finance Charge Collections allocable to Series 2001-1 will be
     applied to make the following distributions to the Senior
     Certificateholders of such Senior Class in the following priority:

                    (A)  an amount equal to unpaid Investor Servicer Advances
          for such Senior Class for the related Monthly Period, if any, shall be
          paid to the Servicer to repay such Investor Servicer Advances;

                    (B)  an amount equal to the Carrying Costs for such Senior
          Class for the related Monthly Period (less the amount of any such
          Carrying Costs that has been paid by an Investor Servicer Advance),
          plus the amount of any Carrying Costs previously due but not paid on
          ----
          a prior Distribution Date plus interest on any such overdue amount at
          the Base Rate for the prior Monthly Period plus 2.0%, shall be
          distributed to each Senior Class Agent for payment to the
          Certificateholders of such Class;

                                       23
<PAGE>

                    (C)  if neither Saks Incor porated nor an Affiliate of Saks
          Incorporated is the Servicer, an amount equal to the Pro Rata Shares
          for such Senior Class for the related Monthly Period of the Senior
          Class Servicing Fee with respect to such Distribution Date, plus an
                                                                       ----
          amount equal to the Pro Rata Share for such Senior Class for the
          related Monthly Period of any Senior Class Servicing Fee previously
          due but not distributed to the Servicer on a prior Distribution Date,
          shall be distributed to, or retained by, the Servicer;

                    (D)  an amount equal to the Investor Default Amount
          allocated to the Senior Classes with respect to such Distribution
          Date, if any, shall be applied with respect to each Class in
          accordance with the provisions of Section 4.5 governing Collections of
          Principal Receivables;

                    (E)  an amount equal to the Floating Allocation Percentage
          for such Senior Class for the related Monthly Period of Adjustment
          Payment Obligations for the related Monthly Period which the
          Transferor fails to make in accordance with the Agreement shall be
          applied with respect to such Class in accordance with the provisions
          of Section 4.5 governing Collections of Principal Receivables,
          provided that any such application shall not relieve the Transferor of
          --------
          its obligations in respect of such Adjustment Payment Obligations;

                    (F)  an amount equal to the aggregate Senior Class Investor
          Charge Offs allocable to such Senior Class not previously reimbursed
          shall be applied with respect to such Class in accordance with the
          provisions of Section 4.5 governing Collections of Principal
          Receivables;

                                       24
<PAGE>

                    (G)  an amount equal to the excess, if any, of the Pro Rata
          Share for each Senior Class Certificateholder of the Required Spread
          Account Amount with respect to such Determination Date over the Pro
          Rata Share for such Senior Class Certificateholder of the amount on
          deposit in the Spread Account before giving effect to such deposit
          (assuming that an amount equal to all unfunded Spread Account Funding
          Shortfalls for all Classes with respect to previous Determination
          Dates have been deposited in the Spread Account on such Determination
          Date) shall be deposited in the Spread Account.

                    (H)  if Saks Incorporated or an Affiliate of Saks
          Incorporated is the Servicer, an amount equal to the Pro Rata Share
          for such Senior Class for the related Monthly Period of the Senior
          Class Servicing Fee for such Distribution Date, plus an amount equal
                                                          ----
          to the Pro Rata Share for such Senior Class for the related Monthly
          Period of any Senior Class Servicing Fee previously due but not
          distributed to the Servicer on a prior Distribution Date, shall be
          distributed to, or retained by, the Servicer;

                    (I)  to the extent Inves tor Finance Charge Collections for
          any other Senior Class are insufficient to provide for the payment in
          respect of such other Senior Class(es) of the amounts described in
          clauses (A) through (F) above, the bal ance, if any, remaining after
          application pursuant to clauses (A) through (F) above shall be applied
          to cover any such insufficiency(ies) (pro rata among such other Senior
                                                --- ----
          Classes, if applicable, based on the amount of their respective Senior
          Class Investor Amounts); and

                    (J)  the balance, if any, remaining after application
          pursuant to clauses (A) through (I) above shall be distributed as
          described in clause (a)(ii) of this Section 4.4.

                                       25
<PAGE>

               (ii)  For the Subordinate Class, the sum of the amounts described
     in Section 4.4(a)(i)(J) with respect to all Senior Classes will be applied
     to make the following distributions to the holder of the Subordinate Class
     Certificate in the following priority:

                    (A)  if neither Saks Incorporated nor an Affiliate of Saks
          Incorporated is the Servicer, an amount equal to the Subordinate Class
          Servicing Fee with respect to such Distribution Date, plus an amount
                                                                ----
          equal to any Subordinate Class Servicing Fee previously due but not
          distributed to the Servicer on a prior Distribution Date, shall be
          distributed to, or retained by, the Servicer;

                    (B)  an amount equal to the Investor Default Amount for the
          Subordinate Class with respect to such Distribution Date, if any,
          shall be applied in accordance with the provisions of Section 4.5
          governing Collections of Principal Receivables;

                    (C)  an amount equal to the Floating Allocation Percentage
          for the Subordinate Class for the related Monthly Period of Adjustment
          Payment Obligations for the related Monthly Period which the
          Transferor fails to make in accordance with the Agreement shall be
          applied in accordance with the provisions of Section 4.5 governing
          Collections of Principal Receivables, provided that any such
                                                --------
          application shall not relieve the Transferor of its obligations in
          respect of such Adjustment Payment Obligations;

                    (D)  an amount equal to the aggregate amount by which the
          Subordinate Class Investor Amount has been reduced pursuant to clauses
          (d), (e) and (f) of the definition thereof (but not in excess of the
          aggregate amount of such reductions which have not been previously
          reimbursed) shall be applied in accordance with the provisions of
          Section

                                       26
<PAGE>

          4.5 governing Collections of Principal Receivables; and

                    (E)  the balance, if any, remaining after application
          pursuant to clauses (A) through (D) above shall be distributed as
          described in clause (d) of this Section 4.4.

          (b)  In the event that, on any date, a Senior Class Conduit does not
have sufficient funds to pay any Carrying Costs for such Senior Class Conduit
due and payable on such date, such Senior Class Conduit shall provide to the
Servicer a notice setting forth the amount of such Carrying Costs and the date
on which such Carrying Costs are due, and the Servicer shall make an advance
from its own funds to the related Senior Class Agent for the account of the
Certificateholders of such Senior Class in an amount equal to such deficiency or
deficiencies, but only to the extent the Servicer reasonably expects to be
reimbursed therefor (each, a "Servicer Advance").  The amounts set forth in such
                              ----------------
notice shall be conclusive and binding for all purposes absent manifest error.

          In the event that Carrying Costs for a Senior Class are due and
payable to a Bank Investor on any date other than a Distribution Date, the
Senior Class Agent shall provide to the Servicer a notice setting forth the
amount of such Carrying Costs and the date on which such Carrying Costs are due,
and the Servicer shall make an advance from its own funds to the Senior Class
Agent for the benefit of the Bank Investors of such Senior Class in an amount
equal to such deficiency or deficiencies, but only to the extent the Servicer
reasonably expects to be reimbursed therefor (each also, a "Servicer Advance").
                                                            ----------------

          Amounts required to be remitted to a Senior Class Agent pursuant to
this Section 4.4(b) shall be remitted in immediately available funds to the
account of such Senior Class Agent designated in the Certificate Purchase
Agreement no later than 12:00 noon, New York City time, on the date due;
provided, however, that in lieu of such direct payment by the Servicer, to the
--------  -------
extent of available funds, the Servicer may instruct the Trustee in writing to
remit such amounts from the Investor Finance Charge Collections on deposit in
the Collection Account, any such payment to be netted from amounts to be paid
with respect to the related Senior Class pursuant to Section 4.4(a)(i)(B).  The
Servicer shall record in its books and records such withdrawal and the
application of funds and net such amounts so applied from the

                                       27
<PAGE>

amounts to be paid with respect to such Senior Class under Section 4.4(a)(i)(B)
on the succeeding Distribution Date.

          (c)  If the Investor Finance Charge Collections with respect to any
Monthly Period are insufficient to pay the sum of the amounts to be distributed
with respect to a Senior Class on the related Distribution Date pursuant to
clauses (A) through (F) of Section 4.4(a)(i), the Servicer shall first, withdraw
                                                                 -----
from the Spread Account on such Distribution Date, an amount equal to the lesser
of (i) the amount available to be withdrawn from the Spread Account with respect
to such Class (based on the amount previously withdrawn from or deposited in the
Spread Account with respect to such Class) and (ii) such deficiency for such
Senior Class, and apply such amount withdrawn to such deficiency and pay such
amount to the related Senior Class Agent for the account of the
Certificateholders of such Class, and second, to the extent a deficiency
                                      ------
continues to remain, the Servicer shall pay on such Distribution Date to the
related Senior Class Agent for the account of the Certificateholders of such
Senior Class, out of the Pro Rata Share for such Senior Class for the related
Monthly Period of the Collections of Principal Receivables allocated to the
Subordinate Class for such Monthly Period, an amount equal to such remaining
deficiency (all such amounts, "Reallocated Subordinate Class Principal
                               ---------------------------------------
Collections").  Such amounts shall be applied with respect to such Senior Class
-----------
in the order of priority set forth in Section 4.4(a)(i) (without giving effect
to the distributions in clauses (H) and (I) thereof).

          (d)  On each Distribution Date with respect to the Revolving Period,
the amount determined pursuant to Section 4.4(a)(ii)(E) shall be treated as
"Shared Excess Finance Charge Collections" to be applied in accordance with
Section 4.1(i) of the Agreement; and thereafter the balance shall be distributed
to the Transferor.  On each Distribution Date with respect to the Amortization
Period, the amount determined pursuant to Section 4.4(a)(ii)(E) shall be
distributed to each Senior Class Agent in accordance with the Pro Rata Share for
the related Senior Class for the account of the Certificateholders of such
Senior Class in reduction of the Senior Class Investor Amount for such Senior
Class until paid in full; and thereafter the balance shall be distributed to the
Transferor.

          Section 4.5  Application of Collections of Principal Receivables.
                       ---------------------------------------------------

          (a)  On each Distribution Date with respect to the Revolving Period,
an amount equal to the Collections of Principal Receivables allocable to Series
2001-1 for the related Monthly Period (after giving effect to any reallocation

                                       28
<PAGE>

thereof pursuant to Section 4.4(c) and any distribution described in Section
4.5(d)) shall, at the Transferor's option, either (i) be distributed in whole or
in part to the Senior Class Agent in accordance with the Pro Rata Share for the
related Senior Class for the account of the Certificateholders of such Senior
Class in reduction of the Senior Class Investor Amount for such Senior Class
(provided that the amounts so distributed on any Distribution Date shall not
---------
exceed the Floating Allocation Percentage for the related Monthly Period of the
Collections of Principal Receivables allocated to Series 2001-1 and received
during the related Monthly Period) or (ii) to the extent not distributed
pursuant to clause (i) of this Section 4.5(a), be treated as "Shared Principal
Collections" to be applied to other Series in Group One in accordance with
Section 4.1(h) of the Agreement.  Notwithstanding the foregoing, at any time (x)
to the extent that the Transferor Amount is less than the Minimum Transferor
Amount or (y) after the occurrence of a Potential Pay Out Event, Collections of
Principal Receivables allocable to Series 2001-1 (after giving effect to any
reallocation thereof pursuant to Section 4.4(c) and any distribution described
in Section 4.5(d)) shall be applied, in the case of clause (x) above, to the
extent of such deficiency, in the case of clause (y) above, in whole, as
described in clause (i) of this Section 4.5(a).

          (b) On each Distribution Date following the commencement of the
Amortization Period, an amount equal to the Collections of Principal Receivables
allocable to Series 2001-1 for the related Monthly Period (after giving effect
to any reallocation thereof pursuant to Section 4.4(c) and any distribution
described in Section 4.5(d)) plus the amount of any Shared Principal Collections
                             ----
allocable to Series 2001-1 plus that portion of the amount on deposit in the
                           ----
Excess Funding Account allocable to Series 2001-1 plus the amount described in
                                                  ----
Section 4.9(e), if applicable, shall be applied in the following priority:

               (i)  an amount equal to the Senior Class Monthly Principal for
     each Senior Class for such Distribution Date shall be distributed to the
     related Senior Class Agent for payment to the related Senior
     Certificateholders pro rata until the Senior Class Investor Amount of such
     Senior Class has been paid in full;

               (ii)  an amount equal to the Subordinate Class Monthly Principal
     for such Distribution Date shall be distributed to the Paying Agent for
     payment to the holders of the Subordinate Class Certificates pro rata until
                                                                  --- ----
     the Subordinate Class Investor Amount has been paid in full; and

                                       29
<PAGE>

               (iii)  the balance, if any, shall be treated as "Shared Principal
     Collections" to be applied to other Series in Group One in accordance with
     Section 4.1(h) of the Agreement.

          (c)  [Reserved]

          (d)  The Transferor may direct the Servicer to (i) deposit to the
Collection Account and (ii) release from the Collection Account, Collections of
Principal Receivables allocable to Series 2001-1 and on deposit therein and
direct that such amounts be distributed to each Senior Class Agent in accordance
with the Pro Rata Share for the related Senior Class for the account of the
Certificateholders of such Senior Class in reduction of the Senior Class
Investor Amount for such Senior Class.  Any such release and distribution may
occur only in order (i) to reduce the sum of the Senior Class Investor Amount
and the Interest Component of all outstanding Related Commercial Paper for a
Senior Class to an amount which is less than the Senior Class Facility Limit or
(ii) to reduce the Senior Class Certificate Principal Balances for all Senior
Classes to an amount which is less than the product of (x) the aggregate
Floating Allocation Percentage with respect to Default Amounts for all Senior
Classes (as of the end of the most recent Monthly Period) and (y) the sum of the
Excess Funding Amount and the Aggregate Principal Receivables; provided that
                                                               --------
amounts must be distributed to each Senior Class in accordance with the Pro Rata
Share as described above, notwithstanding that the reduction described in clause
(ii) may not be required for each Senior Class.

          Section 4.6  Defaulted Amounts; Senior Class Investor Charge Offs.
                       ----------------------------------------------------

          (d)  If, on any Distribution Date, (i) the sum of the amounts required
to be paid with respect to each Senior Class pursuant to Sections 4.4(a)(i)(A)
through (E) of the Agreement on such Distribution Date exceeds (ii) the sum of
(w) the amount available therefor pursuant to Section 4.4(a)(i) for such
Distribution Date, (x) the amount available to be withdrawn from the Spread
Account in respect of such Senior Class and actually paid to the related Senior
Class Agent pursuant to clause first of Section 4.4(c), (y) the amount of Shared
                               -----
Principal Collections available pursuant to Section 4.7(d) and (z) the Pro Rata
Share for such Senior Class for the related Monthly Period of the Collections of
Principal Receivables allocated to the Subordinate Class for the related
Monthly Period, then the Subordinate Class Investor Amount shall be reduced by
the amount of such excess, but not by more than the excess of (A) the sum of the
Investor Default Amount for the Senior Class and the Floating Allocation
Percentage for such Class for the related

                                       30
<PAGE>

Monthly Period of Adjustment Payment Obligations for such Monthly Period which
the Transferor failed to make in accordance with the Agreement over (B) the
amount available therefor pursuant to Section 4.4(a)(i) for such Distribution
Date plus the amount paid to the related Senior Class Agent from amounts on
     ----
deposit in the Spread Account pursuant to clause first of Section 4.4(c) plus
                                                 -----                   ----
the amount of Shared Principal Collections available pursuant to Section 4.7(d),
plus the Pro Rata Share for such Senior Class for the related Monthly Period of
----
the Collections of Principal Receivables allocated to the Subordinate Class for
the related Monthly Period, in each case used to fund the Investor Default
Amount for such Senior Class and the Floating Allocation Percentage for the
related Monthly Period of Adjustment Payment Obligations which the Transferor
failed to make in accordance with the Agreement. In the event that such
reduction would cause the Subordinate Class Investor Amount to be a negative
number, the Subordinate Class Investor Amount shall be reduced to zero, and the
Senior Class Investor Amount for such Senior Class shall be reduced by the
amount by which the Subordinate Class Investor Amount would have been reduced
below zero (with respect to such Senior Class, a "Senior Class Investor Charge
                                                  ----------------------------
Off"); provided, however, that the Senior Class Investor Amount for such Senior
---    --------  -------
Class shall not be reduced below zero. Senior Class Investor Charge Offs for
such Class shall thereafter be reimbursed and the Senior Class Investor Amount
for such Senior Class increased (but not by an amount in excess of the aggregate
unreimbursed Senior Class Investor Charge Offs for such Class) on any
Distribution Date by the amounts allocated and available for that purpose
pursuant to Section 4.4(a)(i)(F). Nothing herein shall affect the Transferor's
obligations to make Adjustment Payment Obligations in accordance with the
Agreement whether before or after any Investor Charge Offs are made with respect
to such Adjustment Payment Obligations.

          (b)  If, on any Distribution Date, the sum of the amounts to be paid
pursuant to Sections 4.4(a)(ii)(A) through (C) of the Agreement exceeds the
amounts available therefor under Section 4.4(a)(ii), then the Subordinate Class
Investor Amount (after giving effect to any reduction thereof pursuant to
Sections 4.4(c) and 4.6(a) of the Agreement) shall be reduced by the amount of
such excess, but not by more than the excess of (A) the sum of the Subordinate
Class Investor Default Amount and the Floating Allocation Percentage with
respect to the Subordinate Class for the related Monthly Period of Adjustment
Payment Obligations which the Transferor failed to make in accordance with the
Agreement over (B) the amounts available therefor under Section 4.4(a)(ii) used
to fund the Subordinate Class Investor Default Amount and the Floating
Allocation Percentage with respect to the Subordinate Class for the related
Monthly Period of Adjustment Payment

                                       31
<PAGE>

Obligations which the Transferor failed to make in accordance with the Agreement
(each, a "Subordinate Class Investor Charge Off"); provided, however, that the
          -------------------------------------    --------  -------
Subordinate Class Investor Amount shall not be reduced below zero. Any such
reduction of the Subordinate Class Investor Amount shall be given effect after
any reduction of the Subordinate Class Investor Amount pursuant to Sections
4.4(c) and 4.6(a) of the Agreement. Subordinate Class Investor Charge Offs shall
thereafter be reimbursed and the Subordinate Class Investor Amount increased
(but not by an amount in excess of the aggregate unreimbursed Subordinate Class
Investor Charge Offs) on any Distribution Date by the amounts allocated and
available for that purpose pursuant to Section 4.4(a)(ii)(D) of the Agreement.

          Section 4.7  Shared Principal Collections.  Subject to Section 4.1(h)
                       ----------------------------
of the Agreement, Shared Principal Collections for any Distribution Date will be
allocated to Series 2001-1 in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Series in
Group One for such Distribution Date and (y) a fraction, the numerator of which
is the Principal Shortfall for Series 2001-1 for such Distribution Date and the
denominator of which is the aggregate amount of Principal Shortfalls for all
Series in Group One.  The "Principal Shortfall" for Series 2001-1 will be equal
                           -------------------
to the sum, during each respective period shown below, of (a) for any
Distribution Date with respect to the Revolving Period, zero or such other
greater amount not exceeding the Aggregate Investor Amount as may be designated
by the Transferor, at its option, (b) for any Distribution Date with respect to
the Amortization Period, the excess, if any, of the Aggregate Investor Amount
over the sum of the Fixed/Floating Allocation Percentages for all Classes for
the related Monthly Period of Collections of Principal Receivables for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), (c) for any Distribution Date, the excess of the amount
of the Required Spread Account Amount over the amount on deposit in the Spread
Account and (d) for any Distribution Date with respect to which the Investor
Percentage with respect to collections of Principal Receivables is zero, the
amount by which the amount described in Section 4.6(a)(i) exceeds the sum of the
amounts described in clauses (w) and (x) of Section 4.6(a)(ii); provided,
                                                                --------
however, that the amount described in clauses (c) and (d) may only be included
-------
in the Principal Shortfall amount for such Distribution Date to the extent such
amount can be funded from Shared Principal Collections otherwise payable to the
Transferor.

                                       32
<PAGE>

          Section 4.8  Shared Excess Finance Charge Collections.  Shared Excess
                       ----------------------------------------
Finance Charge Collections for any Distribution Date will be allocated to Series
2001-1 in an amount equal to the product of (x) the aggregate amount of Shared
Excess Finance Charge Collections with respect to all Series in Group One for
such Distribution Date and (y) a fraction, the numerator of which is the Finance
Charge Shortfall for Series 2001-1 for such Distribution Date and the
denominator of which is the aggregate amount of Finance Charge Shortfalls for
all Series in Group One.  The "Finance Charge Shortfall" for Series 2001-1 for
                               ------------------------
any Distribution Date will be equal to the excess, if any, of (a) the full
amount described in clauses (i) and (ii) of Section 4.4(a) on such Distribution
Date for all Classes  over (b) the sum of the Collections of Finance Charge
Receivables for such Distribution Date allocable to Series 2001-1 and any other
amounts that are to be treated as Collections of Finance Charge Receivables
allocable to Series 2001-1 in accordance with the Agreement with respect to the
related Monthly Period.

          Section 4.9  Applications of Spread Account Funds; Release of Funds
                       ------------------------------------------------------
From Spread Account.
-------------------

          (a)  On the Closing Date, the Transferor shall deposit in the Spread
Account the Required Spread Account Amount which at such Closing Date shall
equal $0.

          (b)  On each Distribution Date during the Revolving Period on which
the amount on deposit in the Spread Account exceeds the Required Spread Account
Amount, the Servicer shall, or shall direct the Trustee in writing to, transfer
such excess from the Spread Account to the Transferor on such Distribution Date.
On the date during the Amortization Period on which the sum of the Senior Class
Investor Amounts for all Senior Classes has been reduced to zero and all amounts
payable hereunder and under the Certificate Purchase Agreement with respect to
all Senior Classes shall have been paid in full, the Servicer shall, or shall
direct the Trustee in writing to, transfer all amounts on deposit in the Spread
Account to the Transferor.

          (c)  On the Series Termination Date, the Servicer shall, or shall
direct the Trustee in writing to, transfer all amounts on deposit in the Spread
Account to the Collection Account and apply such amounts in accordance with
Section 4.4(a) as Collections of Finance Charge Receivables allocable to Series
2001-1.

                                       33
<PAGE>

          (d)  In the event the Trustee shall sell the Receivables pursuant to
Section 9.2, the Servicer shall, or shall direct the Trustee in writing to,
transfer all amounts on deposit in the Spread Account to the Collection Account
and apply such amounts in accordance with Section 4.4(a) as Collections of
Finance Charge Receivables allocable to Series 2001-1.

          (e)  Upon the occurrence of a Pay Out Event, the Servicer shall, or
shall direct the Trustee in writing to, withdraw all amounts on deposit in the
Spread Account and apply such amounts as Senior Class Monthly Principal in
accordance with Section 4.5(b).

                              [END OF ARTICLE IV]

          SECTION 9.  Article V of the Agreement.  Article V of the Agreement
                      --------------------------
shall read in its entirety as follows and shall be applicable to the Series
2001-1 Certificates:

                                   ARTICLE V

                          DISTRIBUTIONS AND REPORTS TO
                               CERTIFICATEHOLDERS

          Section 5.1  Distributions.  On each Distribution Date, the Servicer
                       -------------
shall deliver to the Trustee and the Paying Agent a certificate in substantially
the form of Exhibit B hereto prepared by the Servicer.
            ----------

          (a)  On each Distribution Date, the Paying Agent shall distribute to
each Senior Class Agent (other than as provided in Section 12.2 of the Agreement
respecting a final distribution) for the account of the Certificateholders of
the related Senior Class the amounts that are distributable on such Distribution
Date in respect of Carrying Costs for such Senior Class pursuant to this Series
Supplement.

          (b)  On each Distribution Date with respect to the Amortization
Period and on each Distribution Date during the Revolving Period on which
principal is to be distributed pursuant to subsection 4.5(a)(i), the Paying
Agent shall distribute to each Senior Class Agent (other than as provided in
Section 12.2 of the Agreement respecting a final distribution) for the account
of the Certificateholders of

                                       34
<PAGE>

the related Senior Class the amounts that are distributable on such Distribution
Date in respect of principal pursuant to this Series Supplement.

          (c)  On each Distribution Date, the Paying Agent shall distribute to
each holder of record of a Subordinate Class Certificate as of the preceding
Record Date (other than as provided in Section 12.2 of the Agreement respecting
a final distribution) such holder's pro rata share of the amounts that are
                                    --- ----
available on such Distribution Date to be distributed on the Subordinate Class
Certificates pursuant to this Series Supplement.

          (d)  On each Distribution Date with respect to the Amortization
Period on or after the Subordinate Class Principal Commencement Date, the Paying
Agent shall distribute to each holder of record of a Subordinate Class
Certificate as of the preceding Record Date (other than as provided in Section
12.2 of the Agreement respecting a final distribution) such holder's pro rata
                                                                     --- ----
share of the amounts that are available on such Distribution Date to pay
principal of the Subordinate Class Certificates pursuant to this Series
Supplement.

          (e)  Except as provided in Section 12.2 of the Agreement with respect
to a final distribution, distributions to any Senior Class Agent or any Series
2001-1 Certificateholder hereunder shall be made by wire transfer of immediately
available funds to such Senior Class Agent or such Certificateholder's account
so long as the Paying Agent was notified of such account at least five Business
Days prior to such Distribution Date, without presentation or surrender of any
such Series 2001-1 Certificate or the making of any notation thereon.

          Section 5.2  Reports and Notices to Series 2001-1 Certificateholders.
                       -------------------------------------------------------
On each Distribution Date, the Paying Agent, on behalf of the Trustee, shall
forward to each Series 2001-1 Certificateholder a statement substantially in the
form of Exhibit C prepared by the Servicer setting forth certain information
        ---------
relating to the Trust and the Series 2001-1 Certificates.  On or before January
31 of each calendar year, beginning with calendar year 2001, the Paying Agent,
on behalf of the Trustee, shall furnish or cause to be furnished to each Person
who at any time during the preceding calendar year was a Certificateholder of
Series 2001-1, a statement prepared by the Servicer containing the information
which is required to be contained in the monthly statement to the
Certificateholders in the form of Exhibit C referred to in the immediately
                                  ---------
preceding sentence, aggregated for such calendar year or the applicable portion
thereof during which such Person was a Certificateholder of such Series,
together with other information as is required to be provided by an issuer of

                                       35
<PAGE>

indebtedness under the Internal Revenue Code and such other customary
information as is necessary to enable the Certificateholders of such Series to
prepare their tax returns.  Such obligation of the Servicer 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
Internal Revenue Code as from time to time in effect.

                               [END OF ARTICLE V]

          SECTION 10.  Pay Out Events.  If any one of the events specified in
                       --------------
Section 9.1 of the Master Pooling and Servicing Agreement or any one of the
following events shall occur with respect to the Series 2001-1 Certificates:

          (a)  the Transferor or the Servicer shall fail to make any payment or
deposit on the date required under the Receivables Purchase Agreement, the
Agreement or the Certificate Purchase Agreement, as applicable;

          (b)  any representation, warranty, certification or statement made by
the Transferor in the Receivables Purchase Agreement, the Agreement, the
Certificate Purchase Agreement or any other Transaction Document to which it is
a party or in any other document delivered pursuant hereto or thereto shall
prove to have been incorrect in any material respect when made or deemed made;

          (c)  the Transferor or the Servicer shall default in the performance
of any payment or undertaking (other than those covered by clause (a) above) (i)
to be performed or observed under Sections 3.3(a)(vi), 3.3(a)(vii), 3.3(b),
3.3(c), 3.3(h), 3.3(k), 3.3(q), 3.3(t), 3.3(u), 3.3(v), 3.3(w), 3.4(c) or 3.4(d)
of the Certificate Purchase Agreement or Sections 2.5(e) or 2.5(g) (other than
any requirements that the Transferor have more than one independent director in
clause (ii) of such Section 2.5 (g)) of the Master Pooling and Servicing
Agreement or (ii) to be performed or observed under any other provision of the
Agreement or the Certificate Purchase Agreement and such default in the case of
this clause (ii) shall continue for ten (10) days;

          (d)  failure or the default by the Transferor or any Eligible
Originator in the performance of any material term, provision or condition
contained in any agreement to which any such Person is a party and under which
any Indebtedness greater than $10,000,000 was created or is governed, if such
event is an "event of default" or "default" under any such agreement; or any
Indebtedness of the

                                       36
<PAGE>

Transferor or any Eligible Originator greater than $10,000,000 shall be declared
to be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the scheduled date of maturity thereof;

          (e)  the Trustee on behalf of the Investor Certificateholders shall
fail for any reason to have a valid and perfected first priority security or
ownership interest in the Receivables and other Trust Property of the type
covered by Article 9 of the UCC;

          (f)  a Servicer Default shall have occurred;

          (g)  any Receivables Purchase Agreement shall have terminated,
without the consent of the Agent and each Senior Class Agent;

          (h) the Transferor, the Servicer or any Eligible Originator shall
enter into any transaction or merger whereby it is not the surviving entity;
provided that any Eligible Originator may merge into any other Eligible
--------
Originator and, with the consent of the Agent and each Senior Class Agent, the
Transferor may merge or liquidate into the Bank;

          (i)  the Transferor shall fail to (x) designate, or be unable to
designate, Additional Accounts the Receivables of which will be Eligible
Receivables, as required by Section 2.6(a) of the Agreement or (y) reduce the
Investor Amount pursuant to Section 2.6(a) of the Agreement within the time it
is required to designate Additional Accounts or reduce the Investor Amount
pursuant to Section 2.6(a) of the Agreement;

          (j)  the Two Month Rolling Spread Percentage is equal to or less
than 2.00%;

          (k)  the Subordinate Class Investor Amount is less than 6% of the
Aggregate Investor Amount and the Transferor fails to cure such insufficiency
within ten Business Days; or

          (l)  as of the end of the most recent Monthly Period, the product of
(i) the aggregate Floating Allocation Percentage with respect to Default Amounts
for all Senior Classes and (ii) the sum of the Excess Funding Amount and the
Aggregate Principal Receivables, is less than the sum of the Senior Class
Certificate Principal Balances for all Senior Classes.  For purposes of this
subsection

                                       37
<PAGE>

10(l), the Servicer shall have the option to calculate the Floating Allocation
Percentage on a daily basis method, using the current day Aggregate Investor
Amount in the numerator and the current day Aggregate Principal Receivables and
Excess Funding Account balance in the denominator.

          (m) a "Pay-Out Event" or equivalent event shall have occurred and be
continuing with respect to Series 1998-2; or

          (n) the Senior Class Investor Amount is not reduced to $0 by September
15, 2001; then, in the case of any event described in subparagraphs (e), (k),
(l), (m) and (n) above, a Pay Out Event with respect to only the Series 2001-1
Certificates will be deemed to have occurred without any notice or other action
on the part of the Trustee or the Certificateholders, immediately upon the
occurrence of such event, and, in the case of any other event described above in
this Section 10, after the applicable grace periods, if any, specified for such
events, the Trustee or the Required Investor Certificateholders by notice in
writing to the Transferor and the Servicer (and to the Trustee if given by
Certificateholders), may declare that a Pay Out Event with respect to the Series
2001-1 Certificates only has occurred as of the date of such notice; provided,
                                                                     --------
however, that 100% of the Senior Class Agents may waive any such Pay Out Event
-------
with respect to the Series 2001-1 Certificates. Upon any such waiver, such Pay
Out Event shall be deemed not to have occurred for every purpose of the
Agreement. No such waiver shall extend to any subsequent or other event or
impair any right consequent thereon.

          SECTION 11.  Consent to Issuance of Additional Series and Additional
                       -------------------------------------------------------
Eligible Originators.  The Transferor shall obtain the prior written consent of
--------------------
the Agent and each Senior Class Agent prior to the issuance of any Series other
than this Series 2001-1 and prior to the designation of any Eligible Originator
other than G.R. Herberger's, Inc., McRae's, Inc., Parisian, Inc. and Carson
Pirie Scott & Co., National Bank of the Great Lakes, Saks & Company, Saks or any
of their respective affiliates, which consents may not be unreasonably withheld
or delayed; provided however, that the addition of 2001 Additional Accounts, the
            -------- -------
removal of 2001 Removed Accounts, the issuance of Series 2001-2 and the issuance
or inclusion of an additional Senior Class, Senior Class Agent or Bank Investor
shall not require the approval of the Agent and the Senior Class Agent.

          SECTION 12. Notice to Rating Agencies of Amendments.  The Transferor
                      ---------------------------------------
shall provide notice to the Rating Agencies for any amendment to the definition
of "Fixed/Floating Allocation Percentage", "Floating Allocation Percent-

                                       38
<PAGE>

age" or any other amendment to this Series Supplement which may be reasonably
expected to adversely effect the subordination of Series 2001-1 to Series 1998-2
or other Series rated by such Rating Agencies.

          SECTION 13. Increase or Reduction of Discount Percentage.  The
                      --------------------------------------------
Transferor shall provide to the Agent and each Senior Class Agent 30 days' prior
written notice of any increase, reduction or elimination of the Discount
Percentage which would cause the Discount Percentage to be less than 1% or more
than 3% and shall obtain the prior written consent of the Agent and each Senior
Class Agent to any such increase, reduction or elimination, which consents may
not be unreasonably withheld or delayed.

          SECTION 14.  Access to Information.  Notwithstanding the provisions
                       ---------------------
of Section 2.2(b) of the Agreement, the Trustee may disclose to the Agent, each
Senior Class Agent and each Senior Class Certificateholder the information
contained in the computer files and microfiche lists delivered by the Transferor
to the Trustee under the Agreement.

          SECTION 15.  Series 2001-1 Investor Exchange.  Pursuant to subsection
                       -------------------------------
6.9(b) of the Agreement, the Certificateholders may tender their Certificates,
and the holder of the Exchangeable Transferor Certificate may tender the
Exchangeable Transferor Certificate, in exchange for (i) one or more newly
issued classes of Investor Certificates and (ii) a reissued Exchangeable
Transferor Certificate in accordance with the terms and conditions contained in
a notice of exchange delivered to the Certificateholders.  Such notice of
exchange will specify, among other things:  (a) the amount of Certificates that
may be tendered, (b) the certificate rate (or the method for allocating interest
payments or other cash flows to the new Series), if any, with respect to the new
Series, (c) the term of the new Series, (d) the method of computing the investor
percentage, (e) the manner of Enhancement, if any, with respect to the new
Series and (f) the time and the manner at which the tender and cancellation of
the Series 2001-1 Certificates and the issuance of the new Certificates will be
effectuated.  Upon satisfaction of the conditions contained in subsections
6.9(b) and 6.9(c) of the Master Pooling and Servicing Agreement, and the receipt
by the Trustee of the exchange notice and the related Supplement, the Trustee
shall cancel the existing Exchangeable Transferor Certificate and the Series
2001-1 Certificates which have been tendered pursuant to this Section 12(a), and
shall issue such new Series of Investor Certificates and a new Exchangeable
Transferor Certificate, each dated the Exchange Date.

                                       39
<PAGE>

           SECTION 16.  Certificate Defeasance.
                        ----------------------

          (a)  The Trustee, at the request of the Transferor and for the benefit
of the Series 2001-1 Certificateholders, shall establish and maintain or shall
cause to be established and maintained in the name of the Trustee, on behalf of
the Series 2001-1 Certificateholders, with a Qualified Institution a certain
segregated trust account (the "Defeasance Account").  At the option of the
                               ------------------
Transferor, all amounts received by the Trustee from the issuance of new
Certificates or an increase in the invested amount of another Series (or any
class within any such other Series) on the settlement date for such issuance
shall be deposited in the Defeasance Account.

          (b)  Amounts on deposit in the Defeasance Account shall be applied as
Collections allocable to the Series 2001-1 Certificates in payment of all
accrued and unpaid interest on the Senior Class Certificates and all other
amounts outstanding to the Senior Class Certificateholders under the Transaction
Documents, in accordance with Section 4.4 of the Agreement, then to the payment
in full of the Senior Class Certificate Principal Balance and then, to the
extent funds are available, to the payment in full of the Subordinate Class
Investor Amount.  Any Business Day upon which payments are received in the
Defeasance Account shall be deemed to be a Distribution Date.  Any funds
remaining in the Defeasance Account after all amounts payable to the
Certificateholders pursuant to Section 4.4 of the Agreement have been paid in
full shall be paid to the Transferor.

           SECTION 17.  Transfers of Series 2001-1 Certificates; Legends.
                        ------------------------------------------------

          (a)  No Senior Class Certificate or any interest therein may be sold
(including in the initial offering), conveyed, assigned, hypothecated, pledged,
participated, or otherwise transferred (each, a "Transfer") except in accordance
                                                 --------
with this Section 17 and the Investor Letter.  No Subordinate Class Certificate
or any interest therein may be Transferred, except as permitted by this Series
Supplement or the Certificate Purchase Agreement.  Any Transfer of a Senior
Class Certificate otherwise permitted by this Section 17 will be permitted only
if it consists of a pro rata percentage interest in all payments made with
                    --------
respect to such holder's Senior Class Certificates.  No Senior Class Certificate
or any interest therein may be Transferred to any Person (each, an "Assignee"),
                                                                    --------
unless the Assignee shall have executed and delivered the certification referred
to in subsection 17(f) below and each of the Transferor and the Servicer shall
have granted its prior consent thereto; provided, that the consent of the
                                        --------
Transferor and the Servicer shall not be required in

                                       40
<PAGE>

connection with any transfer to the Bank Investors pursuant to the Certificate
Purchase Agreement or to any Program Support Provider. The consent of the
Transferor and the Servicer shall be granted unless the Transferor reasonably
determines that such Transfer would create a risk that the Trust would be
classified for federal or any applicable state tax purposes as an association or
publicly traded partnership taxable as a corporation. Notwithstanding anything
to the contrary contained herein or in the Master Pooling and Servicing
Agreement, any attempted Transfer that would cause the number of Targeted
Holders to exceed ninety-nine shall be void.

          (b)  Notwithstanding subsection 6.3(d)(i) of the Agreement, transfers
of less than $500,000 in principal amount of a Senior Class Certificate may be
made, provided that no transfer of a Senior Class Certificate (or a portion
      --------
thereof) shall be of less than $200,000 in principal amount and provided further
                                                                -------- -------
that any transfer to any Bank Investor pursuant to the Certificate Purchase
Agreement or to any Program Support Provider may be made in any principal
amount.

          (c)  Each (x) Senior Class Agent shall certify to the Transferor, the
Servicer, and the Trustee that the initial purchaser of a Senior Class
Certificate (of the Senior Class with respect to which such Person is the Senior
Class Agent) or any interest therein and any Assignee thereof which is either a
related Bank Investor or a Program Support Provider is, and (y) each other
Assignee shall certify as to itself to the Transferor, the Servicer, and the
Trustee that it is, either (i)(A) a citizen or resident of the United States,
(B) a corporation or other entity organized in or under the laws of the United
States or any political subdivision thereof which, if such entity is a tax-
exempt entity, recognizes that payments with respect to the Senior Class
Certificates may constitute unrelated business taxable income or (C) a person
not described in (A) or (B) whose ownership of the Senior Class Certificates is
effectively connected with the conduct of a trade or business within the United
States (within the meaning of the Code) and whose ownership of any interest in a
Senior Class Certificate will not result in any withholding obligation with
respect to any payments with respect to the Senior Class Certificates by any
person and who will furnish to the Senior Class Agent, the Certificateholder
making the Transfer, the Servicer and the Trustee, a properly executed United
States Internal Revenue Service Form 4224 (and to agree to provide a new Form
4224 upon the expiration or obsolescence of any previously delivered form and
comparable statements in accordance with applicable United States laws) or (ii)
an estate or trust the income of which is includable in gross income for United
States federal income tax purposes.

                                       41
<PAGE>

          (d)  Each (i) Senior Class Agent shall certify to the Transferor, the
Servicer, and the Trustee that the initial purchaser of a Senior Class
Certificate (of the Senior Class with respect to which such Person is the Senior
Class Agent) or any interest therein and any Assignee thereof which is either a
related Bank Investor or a Program Support Provider has, and (ii) each other
Assignee shall certify as to itself to the Transferor, the Servicer, and the
Trustee, that it has, neither acquired nor will it sell, trade or transfer any
interest in a Senior Class Certificate or cause an interest in a Senior Class
Certificate to be readily tradable on a secondary market (or the substantial
equivalent thereof) within the meaning of Section 7704(b)(2) of the Code and any
treasury regulation thereunder or to be marketed on or through an "established
securities market" within the meaning of Section 7704(b)(1) of the Code and any
treasury regulation thereunder, including, without limitation, an over-the-
counter-market or an interdealer quotation system that regularly disseminates
firm buy or sell quotations.  In addition, each initial purchaser of a Senior
Class Certificate or any interest therein and any Assignee shall certify, prior
to any delivery or Transfer to it of a Senior Class Certificate that it is not
and will not become, for so long as it holds an interest in a Senior Class
Certificate, a partnership, Subchapter S corporation or grantor trust for United
States federal income tax purposes.  If an initial purchaser of an interest in a
Senior Class Certificate or an Assignee cannot make the certification described
in the preceding sentence, the Transferor may, in its sole discretion, prohibit
a Transfer to such entity; provided, however, that if the Transferor agrees to
                           --------  -------
permit such a Transfer, the Transferor, the Servicer or the Trustee may require
additional certifications in order to prevent the Trust from being treated as a
publicly traded partnership.

          (e)  Each Senior Class Certificate will bear a legend or legends
substantially in the following form:

               EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SAKS
CREDIT CORPORATION AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF
TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW
WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE,

                                       42
<PAGE>

(IV) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" (AS DESCRIBED IN 29
C.F.R. 2510.3-101) BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY OR (V) A
PERSON INVESTING "PLAN ASSETS" (AS DESCRIBED IN 29 C.F.R. 2510.3-101) OF ANY
SUCH PLAN (INCLUDING FOR PURPOSES OF CLAUSES (IV) AND (V), INSURANCE COMPANY
GENERAL ACCOUNTS (WITHIN THE MEANING OF SECTION 401(C) OF ERISA), BUT EXCLUDING,
ANY ENTITY REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).

               THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR
TRANSFERRED, NOR MAY AN INTEREST IN THIS CERTIFICATE BE MADE READILY TRADABLE ON
A SECONDARY MARKET (OR THE SUBSTANTIAL EQUIVALENT THEREOF) WITHIN THE MEANING
OF SECTION 7704(b)(2) OF THE CODE AND ANY TREASURY REGULATION THEREUNDER OR
MARKETED, ON OR THROUGH AN "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF
SECTION 7704(b)(1) OF THE CODE AND ANY TREASURY REGULATION THEREUNDER,
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET OR AN INTERDEALER
QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS.

               THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) TO
THE TRANSFEROR, (2) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) AND IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (UPON DELIVERY
OF THE DOCUMENTATION REQUIRED BY THE MASTER POOLING AND SERVICING AGREEMENT
AND, IF THE TRUSTEE SO REQUIRES, AN OPINION OF COUNSEL SATISFACTORY TO THE
TRUSTEE) OR (3) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A ("QIB") PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING
FOR THE ACCOUNT OF A QIB, WHOM

                                       43
<PAGE>

THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A. EACH CERTIFICATE OWNER BY
ACCEPTING A BENEFICIAL INTEREST IN THIS CERTIFICATE IS DEEMED TO REPRESENT THAT
IT IS EITHER A QIB PURCHASING FOR ITS OWN ACCOUNT, A QIB PURCHASING FOR THE
ACCOUNT OF ANOTHER QIB OR AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT). THIS CERTIFICATE WILL
NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION OF
EVIDENCE SATISFACTORY TO THE TRANSFER AGENT AND REGISTRAR THAT THE RESTRICTIONS
ON TRANSFER SET FORTH IN THE SERIES 2001-1 SUPPLEMENT HAVE BEEN COMPLIED WITH.
THIS CERTIFICATE MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
TO ANY PERSON OTHER THAN A BANK INVESTOR OR A PROGRAM SUPPORT PROVIDER WITHOUT
THE PRIOR WRITTEN CONSENT OF EACH OF THE TRANSFEROR AND THE SERVICER AND UNLESS
AND UNTIL THE TRUSTEE SHALL HAVE RECEIVED THE CERTIFICATIONS REQUIRED BY THE
SERIES 2001-1 SUPPLEMENT.

               Each Subordinate Class Certificate will bear a legend or legends
substantially in the following form:

               THIS CERTIFICATE MAY NOT BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED.

               EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SAKS
CREDIT CORPORATION AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF
TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW
WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE "PLAN ASSETS" (AS DESCRIBED IN 29 C.F.R. 2510.3-101) BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING "PLAN ASSETS" (AS

                                       44
<PAGE>

DESCRIBED IN 29 C.F.R. 2510.3-101) OF ANY SUCH PLAN (INCLUDING FOR PURPOSES OF
CLAUSES (IV) AND (V), INSURANCE COMPANY GENERAL ACCOUNTS (WITHIN THE MEANING OF
SECTION 401(C) OF ERISA), BUT EXCLUDING, ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).

          (f)  Upon surrender for registration of transfer of a Senior Class
Certificate at the office of the Transfer Agent and Registrar, accompanied by a
certification by the Senior Class Certificateholder substantially in the form
attached as Exhibit D hereto, executed by the registered owner, in person or by
            ---------
such Senior Class Certificateholder's attorney thereunto duly authorized in
writing, and receipt by the Trustee of the written consent of each of the
Transferor and the Servicer to such transfer, such Senior Class Certificate
shall be transferred upon the Certificate Register, and the Transferor shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferees one or more new registered Senior Class Certificates of
any authorized denominations and of a like aggregate principal amount and tenor.
Such transfers of Senior Class Certificates shall be subject to the restrictions
set forth in this Section 17, to such other restrictions as shall be set forth
in the text of the Senior Class Certificates.  Successive registrations and
registrations of transfers as aforesaid may be made from time to time as
desired, and each such registration shall be noted on the Certificate Register.

          SECTION 18.  Ratification of Master Pooling and Servicing Agreement.
                       ------------------------------------------------------
As supplemented by this Series Supplement, the Master Pooling and Servicing
Agreement is in all respects ratified and confirmed and the Master Pooling and
Servicing Agreement as so supplemented by this Series Supplement shall be read,
taken, and construed as one and the same instrument.

          SECTION 19.  Counterparts.  This Series Supplement may be executed in
                       ------------
any number of counterparts (and by different parties on different counterparts),
each of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.

          SECTION 20.  Governing Law.  THIS SERIES SUPPLEMENT SHALL BE CONSTRUED
                       -------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                       45
<PAGE>

          SECTION 21.  Subordination of Certain Termination Payments.
                       ---------------------------------------------
Notwithstanding anything contained in Section 12.2(c) of the Agreement, upon the
sale of Receivables or interests therein as provided in Section 12.2(c) of the
Agreement, the proceeds of any such sale payable in respect of the Series
2001-1 Certificates shall be payable first to the holders of the Senior Class
Certificates on a pro rata basis until all obligations payable in respect of the
                  --- ----
Senior Class Certificates are paid in full and then to the holders of the
Subordinate Class Certificates on a pro rata basis until the Subordinate Class
                                    --- ----
Certificates are paid in full.

          SECTION 22.  Opinions of Counsel.  Any Opinion of Counsel required to
                       -------------------
be delivered pursuant to the Agreement shall be acceptable to the Agent, in its
sole discretion.

          SECTION 23.  No Third-Party Beneficiaries.  As provided in Section
                       ----------------------------
13.12 of the Agreement, the Agreement will inure to the benefit of the Series
2001-1 Certificateholders and their respective successors and permitted assigns.
Except as otherwise provided herein, no other person will have any right or
obligation hereunder, whether as third party beneficiary or otherwise.

                                       46
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Series
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.

                         SAKS CREDIT CORPORATION,
                           as Transferor

                         By:/s/ Scott A. Honnold
                            ----------------------------
                         Name:  Scott A. Honnold
                         Title: Vice President

                         SAKS INCORPORATED,
                           as Servicer

                         By:/s/ Scott A. Honnold
                            ----------------------------
                         Name:  Scott A. Honnold
                         Title: Vice President

                         WELLS FARGO BANK MINNESOTA,
                         NATIONAL ASSOCIATION,
                           as Trustee

                         By:/s/ Sue Dignan
                            ----------------------------
                         Name: Sue Dignan
                         Title: Corporate Trust Officer<PAGE>

                                                                     Exhibit 4.2

     Certificate Purchase Agreement dated as of March 1, 2001, by and among Saks
 Credit Corporation, as Transferor, Saks Incorporated, as Servicer, Enterprise
 Funding Corporation, as Purchaser, and Bank of America, N.A., as Agent, Senior
 Class Agent, and individually as a Bank Investor
<PAGE>

================================================================================

                         CERTIFICATE PURCHASE AGREEMENT

                                (Series 2001-1)

                                  by and among

                            SAKS CREDIT CORPORATION,

                               SAKS INCORPORATED
                      (formerly named "Proffitt's, Inc."),

                        ENTERPRISE FUNDING CORPORATION,

                                      and

                             BANK OF AMERICA, N.A.

                           Dated as of March 1, 2001

================================================================================
<PAGE>

                               TABLE OF CONTENTS

                                   ARTICLE I
                                  DEFINITIONS

SECTION 1.1.   Definitions................................................  2
SECTION 1.2.   Other Terms................................................ 12
SECTION 1.3.   Computation of Time Periods................................ 12

                                  ARTICLE II
                        PURCHASE OF SENIOR CERTIFICATES

SECTION 2.1.   Purchase................................................... 13
SECTION 2.2.   Increase of Senior Class Investor Amount................... 13
SECTION 2.3.   Fees....................................................... 17
SECTION 2.4.   Sharing of Payments, Etc................................... 17
SECTION 2.5.   Right of Setoff............................................ 18
SECTION 2.6.   Interest Rate; Eurodollar Rate Protection; Illegality...... 18
SECTION 2.7.   Notice of Reinvestment Termination Date.................... 22

                                  ARTICLE III
                   REPRESENTATIONS, WARRANTIES AND COVENANTS

SECTION 3.1.   Representations and Warranties of the Transferor........... 22
SECTION 3.2.   Representations and Warranties of the Servicer............. 27
SECTION 3.3.   Covenants of the Transferor................................ 29
SECTION 3.4.   Covenants of the Servicer.................................. 39
SECTION 3.5.   Tax Treatment.............................................. 40
SECTION 3.6.   Conditions Precedent to Initial Transfer................... 41
SECTION 3.7.   [RESERVED]................................................. 42
SECTION 3.8.   Periodic Notices and Reports............................... 42

                                  ARTICLE IV
                  INDEMNIFICATION; EXPENSES; RELATED MATTERS

SECTION 4.1.   Indemnities by the Transferor.............................. 43
SECTION 4.2.   Indemnity for Taxes, Reserves and Expenses................. 46
SECTION 4.3.   Taxes...................................................... 48
SECTION 4.4.   Other Costs, Expenses and Related Matters.................. 49
SECTION 4.5.   Indemnification by Servicer................................ 50

<PAGE>

                                   ARTICLE V
                THE AGENT; BANK COMMITMENT; SENIOR CLASS AGENTS

SECTION 5.1.   Authorization and Action of Agent.......................... 51
SECTION 5.2.   Agent's Reliance, Etc...................................... 53
SECTION 5.3.   Credit Decision............................................ 53
SECTION 5.4.   Indemnification of the Agent............................... 54
SECTION 5.5.   Successor Agent............................................ 54
SECTION 5.6.   Payments by the Agent...................................... 55
SECTION 5.7.   Bank Commitment; Assignment to Bank Investors.............. 55
SECTION 5.8.   Authorization and Action of Senior Class Agent............. 60
SECTION 5.9.   Senior Class Agents' Reliance, Etc......................... 62
SECTION 5.10.  Credit Decision............................................ 62
SECTION 5.11.  Indemnification of the Senior Class Agent.................. 62
SECTION 5.12.  Successor Senior Class Agent............................... 63
SECTION 5.13.  Payments by the Senior Class Agents........................ 64

                                  ARTICLE VI
                                 MISCELLANEOUS

SECTION 6.1.   Term of Agreement.......................................... 65
SECTION 6.2.   Waivers; Amendments........................................ 65
SECTION 6.3.   Notices, Etc............................................... 65
SECTION 6.4.   Governing Law; Submission to Jurisdiction; Integration..... 66
SECTION 6.5.   Severability............................................... 67
SECTION 6.6.   Counterparts............................................... 67
SECTION 6.7.   Successors and Assigns..................................... 67
SECTION 6.8.   Confidentiality............................................ 69
SECTION 6.9.   No Bankruptcy Petition Against the Senior Class Conduits... 70
SECTION 6.10.  No Recourse................................................ 70
SECTION 6.11.  Setoff..................................................... 71
SECTION 6.12.  Further Assurances......................................... 71

<PAGE>

                                    EXHIBITS
                                    --------

EXHIBIT A   Form of Additional Investment Certificate

EXHIBIT B   Form of Assignment and Assumption Agreement

EXHIBIT C   Form of Secretary's Certificate

EXHIBIT D   [Reserved]

EXHIBIT E   [Reserved]

EXHIBIT F   Defined Terms in Financial Covenants

EXHIBIT G   Proceedings
<PAGE>

          CERTIFICATE PURCHASE AGREEMENT (this "Agreement"), dated as of March
                                                ---------
1, 2001, by and among SAKS CREDIT CORPORATION, a Delaware corporation (together
with its successors and permitted assigns, the "Transferor"), SAKS INCORPORATED
                                                ----------
(formerly named "Proffitt's, Inc."), a Tennessee corporation, as servicer (in
such capacity, the "Servicer"), ENTERPRISE FUNDING CORPORATION, a Delaware
                    --------
corporation (together with its successors and permitted assigns, "EFC" and a
                                                                  ---
"Purchaser"), and BANK OF AMERICA, N.A., a national banking association ("Bank
----------                                                                ----
of America"), as agent for the Senior Class Conduits and the Bank Investors (in
----------
such capacity, the "Agent"), as a Senior Class Agent and individually as a Bank
                    -----
Investor.

                              W I T N E S S E T H:
                              --------------------

          WHEREAS, the Transferor may desire to convey, transfer and assign,
from time to time, to each of the Senior Class Conduits, one or more
certificates issued by the Saks Credit Card Master Trust pursuant to a master
pooling and servicing agreement (as amended, restated or supplemented from time
to time, the "Master Pooling and Servicing Agreement") dated as of August 21,
              --------------------------------------
1997 among the Transferor, the Servicer and Wells Fargo Bank Minnesota, National
Association, a national banking association (formerly known as "Norwest Bank
Minnesota, National Association"), as trustee (the "Trustee") as supplemented
                                                     -------
by a Series 2001-1 Supplement dated as of the date hereof (as amended, restated
or supplemented from time to time, the "Series Supplement") among the
                                        -----------------
Transferor, the Servicer and the Trustee;

          WHEREAS, the Senior Class Conduits may desire to, and the Bank
Investors, if requested, shall, accept such conveyance, transfer and assignment
of such certificates on the terms and conditions set forth herein; and

          WHEREAS, the Servicer has joined in this Agreement to make certain
representations, warranties, covenants and agreements for the benefit of the
Agent, the Senior Class Agents, the Senior Class Conduits and the Bank
Investors.

          NOW THEREFORE, the parties hereto hereby agree as follows:

                                       1
<PAGE>

                                   ARTICLE I

                                  DEFINITIONS

          SECTION 1.1. Definitions.  All capitalized terms used herein shall
                       -----------
have the meanings herein specified or as specified in the Master Pooling and
Servicing Agreement or the Series Supplement, and shall include in the singular
number the plural and in the plural number the singular:

          "Act" shall mean the Securities Act of 1933, as amended.
           ---

          "Additional Investor Amount" shall have the meaning set forth in
           --------------------------
Section 2.2(a) hereof.

          "Additional Investment Certificate" shall mean a certificate of the
           ---------------------------------
Transferor substantially in the form of Exhibit A hereto.
                                        ---------

          "Adjusted LIBOR Rate" means, with respect to any period during which
           -------------------
the return to any Bank Investor or a related Program Support Provider is to be
calculated by reference to the London interbank offered rate, a rate which is
1.25% in excess of a rate per annum equal to the sum (rounded upwards, if
necessary, to the next higher 1/100 of 1%) of (A) the rate obtained by dividing
(i) the applicable LIBOR Rate by (ii) a percentage equal to 100% minus the
reserve percentage, if any, used for determining the maximum reserve requirement
as specified in Regulation D (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that is applicable to the
Agent during such period in respect of eurocurrency or eurodollar funding,
lending or liabilities (or, if more than one percentage shall be so applicable,
the daily average of such percentage for those days in such period during which
any such percentage shall be applicable) plus (B) the then daily net annual
assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) as
estimated by the Agent for determining the current annual assessment, if any,
payable by the Agent to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.

          "Affected Assets" shall mean, collectively, the Senior Class
           ---------------
Certificates and the Trust Property.

          "Agent" shall mean Bank of America, in its capacity as agent for the
           -----
Senior Class Conduits and the Bank Investors, and any successor agent appointed
pursuant to Article V hereof.

                                       2
<PAGE>

          "Agreement" shall mean this Certificate Purchase Agreement, as it may
           ---------
from time to time be amended, supplemented or otherwise modified in accordance
with the terms hereof.

          "Amortizing Investor Classes" shall mean Class A, Class B and the
           ---------------------------
Collateral Indebtedness Interest of Series 1998-2 issued by the Trust pursuant
to the Series 1998-2 Supplement to the Master Pooling and Servicing Agreement
dated as of May 21, 1998 by and among the Transferor, the Servicer and the
Trustee.

          "Assignment" shall mean, with respect to each Senior Class, an
           ----------
assignment pursuant to an Assignment and Assumption Agreement by which a Senior
Class Conduit or a Bank Investor may assign its interests in the Senior Class
Certificates, the Senior Class Certificate Principal Balance and the Trust
Property pursuant to Section 5.7 hereof.

          "Assignment Amount" shall mean, with respect to each Bank Investor at
           -----------------
any time, an amount equal to the lesser of (a) such Bank Investor's Commitment
and (b) the sum of, without duplication, (i) the Bank's Pro Rata Share for such
Bank Investor of the Senior Class Investor Amount for the related Senior Class
held by the related Senior Class Conduit at such time, (ii) an amount equal to
the Bank Pro Rata Share for such Bank Investor of all Carrying Costs accrued
through the date of Assignment, and (iii) to the extent not paid by the
Transferor as provided in subsection 5.7(d) hereof, an amount equal to the Bank
Pro Rata Share for such Bank Investor of all Carrying Costs to accrue with
respect to each Senior Class through the maturity of all outstanding Related
Commercial Paper.

          "Assignment and Assumption Agreement" shall mean an Assignment and
           -----------------------------------
Assumption Agreement substantially in the form of Exhibit B hereto.
                                                  ---------

          "Bank Base Rate" means, a rate per annum equal to the greater of (i)
           --------------
the prime rate of interest announced publicly by the Agent from time to time,
changing when and as said prime rate changes (such rate not necessarily being
the lowest or best rate charged by the Agent) and (ii the sum of (a) 2.00% and
(b) the rate equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions received
by the Agent from three Federal funds brokers of recognized standing selected by
it.

                                       3
<PAGE>

          "Bank Investors" shall mean, (i) with respect to the Senior Class of
           --------------
which EFC is a member, Bank of America and its successors and assigns, and (ii)
with respect to any other Class, the financial institutions specified as such in
any supplement hereto and their respective successors and permitted assigns.

          "Bank of America" shall mean Bank of America, National Association,
           ---------------
together with its successors and permitted assigns.

          "Bank Pro Rata Share" shall mean, for each Bank Investor, the
           -------------------
percentage equivalent of a fraction, the numerator of which is the Commitment of
such Bank Investor and the denominator of which is the sum of the Commitments of
all Bank Investors in the Senior Class of which such Bank Investor is a member.

          "Benefit Plan" shall mean any employee benefit plan as defined in
           ------------
Section 3(3) of ERISA which the Transferor or any Eligible Originator maintains.

          "Business Taxes" shall mean any Federal, state or local income taxes
           --------------
or taxes measured by income, property taxes, excise taxes, franchise taxes or
other similar taxes.

          "Capitalization" shall have the meaning set forth in Exhibit F
           --------------                                      ---------
attached hereto.

          "Closing Date" shall mean March 1, 2001.
           ------------

          "Collateral Agent" shall mean (i) with respect to EFC, any Person
           ----------------
acting as collateral agent for certain secured parties under the EFC commercial
paper program and (ii) with respect to any other Senior Class Conduit, the
collateral agent specified in any supplement hereto for such Senior Class
Conduit, if any.

          "Commercial Paper" shall mean the promissory notes of a Senior Class
           ----------------
Conduit issued by such Senior Class Conduit in the commercial paper market.

          "Commitment" shall mean, for each Bank Investor, the commitment of
           ----------
such Bank Investor to make acquisitions from the Transferor or the related
Senior Class Conduit in accordance herewith in an amount not to exceed (i) for
Bank of America, the dollar amount set forth opposite such Bank Investor's
signature on the signature pages hereto under the heading "Commitment", minus
                                                           ----------   -----
the dollar amount of any Commitment or portion thereof assigned pursuant an
Assignment and Assumption Agreement in accordance with Section 5.7 hereof prior
to the time of determina-

                                       4
<PAGE>

tion, plus the dollar amount of any increase to such Bank Investor's Commitment
      ----
consented to by such Bank Investor prior to the time of determination, (ii) in
the case of a Bank Investor for any other Senior Class, the amount set forth in
any supplement hereto for the related Senior Class, minus the dollar amount of
                                                    -----
any Commitment or portion thereof assigned pursuant an Assignment and Assumption
Agreement in accordance with Section 5.7 hereof prior to the time of
determination, plus the dollar amount of any increase to such Bank Investor's
               ----
Commitment consented to by such Bank Investor prior to the time of
determination, and (iii) in the case of any permitted assignee of a Bank
Investor pursuant to Section 5.7 hereof, the amount set forth in the Assignment
and Assumption Agreement pursuant to which such assignee acquired its interest
in the Senior Class Certificates, the Senior Class Investor Amount and the Trust
Property, minus the dollar amount of any Commitment or portion thereof assigned
          -----
pursuant an Assignment and Assumption Agreement in accordance with Section 5.7
hereof prior to the time of determination, plus the dollar amount of any
                                           ----
increase to such Bank Investor's Commitment consented to by such Bank Investor
prior to the time of determination.

          "Commitment Termination Date" shall mean September 15, 2001, or such
           ---------------------------
later date to which the Commitment Termination Date may be extended by the
Transferor, the Senior Class Agents and the Bank Investors not later than 30
days prior to the then current Commitment Termination Date.

          "Conduit Assignee" shall mean (i) with respect to EFC, any commercial
           ----------------
paper conduit administered by Bank of America and (ii) with respect to any other
Senior Class Conduit, any commercial paper conduit administered by the entity
specified in any supplement hereto for the related Senior Class, in each case
designated from time to time by the related Senior Class Agent to accept an
assignment from such Purchaser of all or a portion of the Senior Class
Certificates, Senior Class Investor Amount and Trust Property, and in each case
that has the same or higher rating by each of Moody's and Standard & Poor's as
EFC or such other Senior Class Conduit, as applicable.

          "Conduit Termination Events" shall mean (i) a Program Support Provider
           --------------------------
shall have notified the related Senior Class Conduit that an Event of Default
has occurred under a related Program Support Agreement; or (ii) the Commercial
Paper of any Senior Class Conduit shall not be rated at least "A-1" by Standard
& Poor's and at least "P-1" by Moody's.

          "Defined Benefit Plan" shall mean a "defined benefit plan" as defined
           --------------------
in Section 3(35) of ERISA which is or was at any time during the current year or
the

                                       5
<PAGE>

immediately preceding five years contributed to by the Transferor, any Eligible
Originator or any ERISA Affiliate of the Transferor or any Eligible Originator
on behalf of its employees.

          "Early Collection Fee" means, for any funding period (such funding
           --------------------
period to be determined without regard to the last sentence in Section 2.6(a)
hereof) during which the portion of the Senior Class Certificate Principal
Balance that was allocated to such funding period is reduced for any reason
whatsoever, the excess, if any, of (i) the additional Carrying Costs that would
have accrued during such funding period if such reductions had not occurred,
minus (ii) the income, if any, received by the recipient of such reductions from
investing the proceeds of such reductions.

          "EFC" shall mean Enterprise Funding Corporation, a Delaware
           ---
corporation, together with its successors and permitted assigns.

          "Eligible Receivables" shall mean, as of the end of the most recent
           --------------------
Monthly Period (solely for the purposes of any Program Support Agreement related
to EFC), the product of (x) the aggregate Floating Allocation Percentage with
respect to Default Amounts for all Senior Classes and (y) the sum of the Excess
Funding Amount and the Aggregate Principal Receivables and (z) the Bank Pro Rata
Share as it applies to Bank of America.  For purposes of this definition, the
Servicer shall have the option to calculate the Floating Allocation Percentage
on a daily basis method, using the current day Aggregate Investor Amount in the
numerator and the current day Aggregate Principal Receivables and Excess Funding
Account balance in the denominator.

          "ERISA" shall mean the Employee Retirement Income Security Act of
           -----
1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.

          "ERISA Affiliate" shall mean, with respect to any Person, (i) any
           ---------------
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code) as such
Person; (ii) a trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Internal Revenue Code) with
such Person; or (iii) for purposes of Code Section 412, a member of the same
affiliated service group (within the meaning of Section 414(m) of the Internal
Revenue Code) as such Person, any corporation described in clause (i) above or
any trade or business described in clause (ii) above.

                                       6
<PAGE>

          "Excluded Taxes" shall have the meaning set forth in Section 4.3
           --------------
hereof.

          "Fee Letters" shall mean, collectively, the letter agreement or
           -----------
agreements, dated the date hereof, (i) among the Transferor and the Senior Class
Conduits and (ii) among the Transferor, the Agent and the Senior Class Agents on
behalf of the Bank Investors, in each case, with respect to the fees to be paid
by the Transferor hereunder, as amended, modified or supplemented from time to
time.

          "Four-Quarter Period" shall have the meaning set forth in Exhibit F
           -------------------                                      ---------
attached hereto.

          "GAAP" shall mean generally accepted accounting principles set forth
           ----
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such accounting profession, which are in effect as of the date of
this Agreement.

          "Guaranty" shall mean, with respect to any Person any agreement by
           --------
which such Person assumes, guarantees, endorses, contingently agrees to purchase
or provide funds for the payment of, or otherwise becomes liable upon, the
obligation of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assures
any other creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement or take-or-pay contract and
shall include, without limitation, the contingent liability of such Person in
connection with any application for a letter of credit.

          "Indemnified Amounts" shall have the meaning set forth in Section 4.1
           -------------------
hereof.

          "Indemnified Parties" shall have the meaning set forth in Section 4.1
           -------------------
hereof.

          "Law" shall mean any applicable law (including common law),
           ---
constitution, statute, treaty, regulation, rule, ordinance, order, injunction,
writ, decree or award of any Official Body.

          "LIBOR Rate" means, with respect to any funding period, the rate per
           ----------
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on

                                       7
<PAGE>

Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two
London Business Days prior to the first day of such funding period for a term of
one month or three months, as determined in accordance with Section 2.6 hereof.
If for any reason such rate is not available, the term "LIBOR Rate" shall mean,
for any funding period, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in dollars at approximately 11:00 a.m.
(London time) two London Business Days prior to the first day of such funding
period for a term of one month or three months, as applicable; provided,
                                                               --------
however, if more than one rate is specified on the Reuters Screen LIBO Page, the
-------
applicable rate shall be the arithmetic mean of all such rates.  If for any
reason neither of such rates is available, the term "LIBOR Rate" shall mean, for
any funding period, the rate at which deposits in U.S. dollars are offered to
the Agent in the London interbank market at approximately 11:00 a.m. (London
time) two London Business Days prior to the first day of such funding period for
a term of one month or three months, as applicable.

          "London Business Day" shall mean, with respect to the determination of
           -------------------
the LIBOR Rate, any Business Day other than a Business Day on which banking
institutions in London, England trading in dollar deposits in the London
interbank market are authorized or obligated by Law or executive order to be
closed.

          "Majority Investors" shall mean at any time, with respect to a Senior
           ------------------
Class, Persons consisting of the Bank Investors for such Senior Class and
assignees thereof which hold commitments in respect of the Senior Class Facility
Limit aggregating in excess of 51% of the applicable Senior Class Facility Limit
as of such date.

          "Master Pooling and Servicing Agreement" shall have the meaning
           --------------------------------------
specified in the recitals hereto.

          "Material Adverse Effect" shall mean any event or condition which
           -----------------------
would have a material adverse effect on (i) the collectibility of the
Receivables considered in the aggregate, (ii) the condition (financial or
otherwise), businesses or the property of the Transferor or Saks and its
subsidiaries taken as a whole, (iii) the ability of the Transferor, Saks or any
Eligible Originator to perform its respective obligations under the Transaction
Documents to which it is a party or (iv) the interests of the Agent, any Senior
Class Agent, any Senior Class Conduit or any Bank Investor under the Transaction
Documents.

                                       8
<PAGE>

          "McRae's" shall mean McRae's, Inc., a Mississippi corporation, and its
           -------
permitted successors and assigns.

          "Multiemployer Plan" shall mean a "multiemployer plan" as defined in
           ------------------
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding five years contributed to by the Transferor, any
Eligible Originator or any ERISA Affiliate of the Transferor or any Eligible
Originator on behalf of its employees.

          "Net Investment" shall (solely for the purposes of this Agreement and
           --------------
any Program Support Agreement with respect to EFC), mean the Senior Class
Certificate Principal Balance for the Senior Class of which EFC is a member.

          "Official Body" shall mean any government or political subdivision or
           -------------
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

          "Other Transferor" shall mean any Person other than the Transferor
           ----------------
that has entered into a receivables purchase agreement, transfer and
administration agreement or other similar agreement with a Senior Class Conduit.

          "Parisian, Inc." shall mean Parisian, Inc., an Alabama corporation,
           --------------
and its permitted successors and assigns.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
           ----
other entity succeeding to the functions currently performed by the Pension
Benefit Guaranty Corporation.

          "Potential Pay Out Event" shall mean an event which, but for the lapse
           -----------------------
of time or the giving of notice, or both, would constitute a Pay Out Event.

          "Pre Funding Account Deposit" shall have the meaning set forth in
           ---------------------------
Section 2.2(b)(i) hereof.

          "Program Support Agreement" shall mean an agreement between a Senior
           -------------------------
Class Conduit and a Program Support Provider evidencing the obligation of such
Program Support Provider to provide liquidity support, credit enhancement or
asset purchase facilities for or in respect of any assets or liabilities of any
Senior

                                       9
<PAGE>

Class Conduit in connection with the issuance by such Senior Class Conduit of
Commercial Paper.

          "Program Support Provider" shall mean the Person or Persons who will
           ------------------------
provide liquidity or program support to a Senior Class Conduit in connection
with the issuance by such Senior Class Conduit of Commercial Paper.

          "Purchasers" shall have the meaning specified in the preamble to this
           ----------
Agreement.

          "Recipient" shall have the meaning set forth in Section 2.4 hereof.
           ---------

          "Records" shall mean all Account Agreements and other documents,
           -------
books, records and other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
property and rights) maintained with respect to Receivables and the related
Obligors.

          "Reinvestment Termination Date" shall mean the Business Day on which
           -----------------------------
the Agent or a Senior Class Agent delivers to the Transferor (and, in the case
of notice from a Senior Class Agent, to the Agent) written notice that a Senior
Class Conduit has elected not to maintain its interest in the related Senior
Class Investor Amount.  Any such notice shall be effective on the Business Day
given if such notice is given by 11:00 a.m. (New York time) on such Business Day
and shall be effective on the immediately succeeding Business Day if such notice
is given after 11:00 a.m. (New York time) on such Business Day.

          "Related Commercial Paper" shall mean with respect to EFC, Commercial
           ------------------------
Paper issued by EFC, all or a portion of the proceeds of which were used to
finance the acquisition of an interest in the Senior Class Certificates, and
(ii) with respect to any other Senior Class Conduit, the Commercial Paper
specified as "Related Commercial Paper" in any supplement hereto.

          "Reportable Event" shall mean any of the events set forth in Section
           ----------------
4043(b) of ERISA, other than those events for which notice to the PBGC is waived
under applicable PBGC regulations.

          "Saks" shall mean Saks Incorporated, a Tennessee corporation (formerly
           ----
named "Proffitt's, Inc."), together with its successors and permitted assigns.

                                       10
<PAGE>

          "Section 4.2 Costs" shall have the meaning set forth in Section 4.2
           -----------------
hereof.

          "Senior Class" shall mean each group of Senior Certificateholders
           ------------
consisting of a multi-seller commercial paper conduit, the related Bank
Investors and their respective assigns and participants.

          "Senior Class Agent" shall mean, (i) with respect to the Senior Class
           ------------------
of which EFC is a member, Bank of America, and (ii) with respect to any other
Senior Class, the financial institution or other Person identified in any
supplement hereto for such Senior Class.

          "Senior Class Conduit" shall mean, with respect to any Senior Class,
           --------------------
the Certificateholder in such Senior Class which is a multi-seller commercial
paper conduit (and if more than one Certificateholder in such Senior Class is a
multi-seller commercial paper conduit, "Senior Class Conduit" shall mean such
Certificateholders collectively).

          "Senior Class Facility Limit" shall mean, (i) with respect to the
           ---------------------------
Senior Class of which EFC is a member, $250,410,000, and (ii) with respect to
any other Class, the amount indicated in any supplement hereto for such Senior
Class; provided that in each case such amount may not at any time exceed the
       --------
aggregate Commitments for the related Bank Investors.

          "Series Supplement" shall have the meaning specified in the recitals
           -----------------
hereto.

          "Subordinated Note" shall have the meaning specified in the
           -----------------
Receivables Purchase Agreements.

          "Taxes" shall have the meaning set forth in Section 4.3 hereof.
           -----

          "Telerate Page 3750" shall mean the British Bankers Association Libor
           ------------------
Rates (determined at 11:00 a.m. London time) that are published by Bridge
Information Systems, Inc.'s service (or any successor service).

          "Termination Date" shall mean the earliest of (i) the Business Day
           ----------------
designated by the Transferor to the Agent and each Senior Class Agent as the
termination date at any time following 30 days' written notice to the Agent and
each Senior Class Agent, (ii) the date on which a Pay Out Event is declared or

                                       11
<PAGE>

automatically occurs pursuant to the Master Pooling and Servicing Agreement or
the Series Supplement, (iii) two Business Days prior to the Commitment
Termination Date, (iv) the Reinvestment Termination Date (unless, on such
                                                          ------
Business Day, the related Bank Investors accept an assignment of the Senior
Class Investor Amount with respect to the related Senior Class) and (v) the date
on which a Program Support Agreement shall have terminated.

          "Termination Event" shall, solely for the purposes of any Program
           -----------------
Support Agreement related to EFC, be deemed to have occurred if the Net
Investment is greater than the amount of Eligible Receivables (as defined
herein).

          "Transaction Costs" shall have the meaning set forth in Section 4.4
           -----------------
hereof.

          "Transaction Documents" shall mean, collectively, this Agreement, each
           ---------------------
Receivables Purchase Agreement, the Master Pooling and Servicing Agreement, the
Series Supplement and the related Fee Letter, the Certificates and all of the
other instruments, documents and other agreements executed and delivered by the
Transferor or any Eligible Originator in connection with any of the foregoing in
connection with Series 2001-1, in each case, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

          "Transferor" shall mean Saks Credit Corporation, a Delaware
           ----------
corporation, together with its successors and permitted assigns.

          SECTION 1.2. Other Terms.  All accounting terms not specifically
                       -----------
defined herein shall be construed in accordance with GAAP.  The symbol "$" shall
mean the lawful currency of the United States of America.  All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.

          SECTION 1.3. Computation of Time Periods.  Unless otherwise stated in
                       ---------------------------
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including", the words
"to" and "until" each means "to but excluding", and the word "within" means
"from and excluding a specified date and to and including a later specified
date".  The definitions of all terms defined herein shall include the singular
as well as the plural form of such terms and the masculine of such terms as well
as the feminine and neuter genders of such terms.

                                       12
<PAGE>

                                  ARTICLE II

                        PURCHASE OF SENIOR CERTIFICATES

          SECTION 2.1. Purchase. Upon the terms and subject to the conditions
                       --------
set forth herein, (x) the Transferor may, at its option, convey, transfer and
assign to the Purchasers or the Bank Investors, as applicable, and (y) the
Purchasers may, at their respective option, or the Bank Investors shall, if the
related Purchaser determines not to so accept and if so requested, accept such
conveyance, transfer and assignment from the Transferor of, without recourse
except as provided herein and in the other Transaction Documents, on the Closing
Date, Senior Class Certificates in the aggregate face amount of $250,410,000.
The Senior Class Certificates shall accrue interest as described in the Master
Pooling and Servicing Agreement, as supplemented by the Series Supplement, from
and including the Closing Date.  The Senior Class Certificates purchased by EFC
shall be delivered to and be registered in the name of "Bank of America, N.A.,
as agent for the members of the Senior Class of which Enterprise Funding
Corporation and Bank of America, N.A. are members" and shall be in the face
amount of up to $250,410,000.

          SECTION 2.2. Increase of Senior Class Investor Amount.
                       ----------------------------------------

          (a)  Upon the terms and subject to the conditions set forth herein and
provided that neither the Commitment Termination Date nor the Termination Date
(excluding, in the case of the Bank Investors, a "Termination Date" occurring as
a result of clause (iv) or (v) of the definition of "Termination Date") shall
have occurred, (x) the Transferor may, at its option, on any Business Day during
the Revolving Period, after delivery to the Agent (which the Agent shall forward
to each Senior Class Agent) of an Additional Investment Certificate (to be
received by the Agent and each Senior Class Agent not later than 1:00 P.M., New
York City time, on the second Business Day prior to the Business Day on which
the proposed increase in the Senior Class Investor Amount is to occur), convey,
transfer and assign to the Senior Class Conduits or the Bank Investors, as
applicable, and (y) the Senior Class Conduits may, at their respective option,
or the Bank Investors shall, if the related Senior Class Conduit has assigned
its interest in the Senior Class Certificate Principal Balance in whole to the
related Bank Investors and if so requested under subsection 2.2(b), accept such
conveyance, transfer and assignment from the Transferor of, without recourse
except as provided herein and in the other Transaction Documents, an additional
undivided interest in the Trust in the amount specified in such Additional
Investment Certificate (each, an "Additional Investor Amount"); provided that:
                                  --------------------------    --------

                                       13
<PAGE>

          (i) such Additional Investor Amount shall not cause the Senior Class
Certificate Balance for any Class plus the Interest Component of all Related
                                  ----
Commercial Paper issued by the related Senior Class Conduit and then
outstanding, if any, to exceed the Senior Class Facility Limit for such Class;

          (ii) the sum of the Senior Class Investor Amounts for all Classes
shall not exceed the lesser of (x) an amount equal to, without duplication, the
sum of: (I) all Collections of Principal Receivables on deposit in the Series
1998-2 Principal Account, (II) all Collections of Principal Receivables on
deposit in the Collection Account with respect to the Amortizing Investor
Classes awaiting transfer to the Series 1998-2 Principal Account on the next
succeeding Distribution Date or awaiting distribution to the Certificateholders
of the Amortizing Investor Classes on the next succeeding Distribution Date, and
(III) all Collections of Principal Receivables previously paid to the
Certificateholders of the Amortizing Investor Classes, and (y) $245,500,000 or
such other amount as shall have been agreed to in writing by the Transferor, the
Class Agents, the Purchasers and the Bank Investors;

          (iii)  after giving effect to such Additional Investor Amount, the
Transferor Amount as of the Business Day immediately preceding the date of the
Additional Investment Certificate and as reported in such Additional Investment
Certificate, shall not be less than the Minimum Transferor Amount;

          (iv) after giving effect to such Additional Investor Amount, the
Subordinate Class Investor Amount, as of the Business Day immediately preceding
the date of the Additional Investment Certificate and as reported in such
Additional Investment Certificate, shall not be less than the Minimum
Enhancement Amount;

          (v)   the amounts on deposit in the Spread Account shall not be less
than the Required Spread Account Amount;

          (vi)  no Potential Pay Out Event or Pay Out Event shall have occurred
and be continuing;

          (vii) The Two Month Rolling Spread Percentage (as defined in the
Series Supplement) as most recently calculated shall be equal or greater than
3%; and

          (viii)  all of the representations and warranties of the Transferor
and the Servicer made herein shall be true and correct as of such date (except
to the extent any such representation or warranty expressly relates to an
earlier date).

                                       14
<PAGE>

The Senior Class Conduits or the Bank Investors, as the case may be, shall
acquire such additional interest in consideration of the Senior Class Conduits'
or the Bank Investors', as the case may be, payment to the Transferor in
immediately available funds in an amount equal to the Additional Investor Amount
for the related Senior Class, and the Senior Class Investor Amount for each
Senior Class shall be increased to be equal to the Senior Class Investor Amount
immediately prior to such acquisition plus the Additional Investor Amount for
                                      ----
such Senior Class so acquired. Each Additional Investor Amount shall be an
amount that results in the acquisition by each Senior Class, subject to the
limitations on allocation in this Section, of an Additional Investor Amount of
not less than $500,000 and integral multiples of $100,000 in excess thereof.
Each acquisition of an Additional Investor Amount hereunder by a Senior Class
shall be made ratably in accordance with the respective Senior Class Facility
Limits, up to the amount of the Senior Class Facility Limit for such Senior
Class; provided that if one or more (but not all) Senior Class Facility Limits
       --------
have been reached, but availability exists under one or more other Senior Class
Facility Limits related to one or more Senior Class, acquisitions of Additional
Investor Amounts hereunder by such Senior Class(es) shall be made ratably among
them in accordance with their respective Senior Class Facility Limits.  Bank
Investors of a Senior Class (in the aggregate) shall be made ratably in
accordance with the respective Commitments of such Bank Investors up to the
Commitment of such Bank Investor.

          (b)  (i)  The Transferor may request that the Purchasers or Bank
Investors, as applicable, deposit additional amounts in the related Pre-Funding
Account (any such amount, a "Pre-Funding Account Deposit") as of the first
                             ---------------------------
Business Day of any calendar week.  The making of any such Pre-Funding Account
Deposit shall be subject to all of the terms and conditions of this Agreement,
except that the sum of the Pre-Funding Account Deposits made on any Business Day
shall not exceed $75,000,000 and the aggregate amount on deposit in the Pre-
Funding Accounts may not exceed $75,000,000 at any time.

               (ii) The Transferor shall deliver to the applicable Class Agent,
     by no later than 2:00 P.M. (New York time) on the second Business Day
     preceding the Business day on which any Pre-Funding Account Deposit is
     requested to be made, an Additional Investment Certificate with respect to
     any Pre-Funding Account Deposit to be requested specifying (i) the
     aggregate amount of the requested Pre-Funding Account Deposit, (ii) the
     date such Pre-Funding Account Deposit is requested to be made, and (iii)
     compliance with the limit on the size of the Pre-Funding Account Deposit
     and the limit on the amount on deposit in the Pre-Funding Accounts set
     forth herein.  On the

                                       15
<PAGE>

     Business Day immediately after each deposit date, each applicable Class
     Agent shall report to the Transferor and the Servicer the amount of the
     Pre-Funding Account Deposit, if any, made by the related Purchasers or Bank
     Investors.

               (iii)  Each Pre-Funding Account Deposit shall be disbursed to the
     Transferor in accordance with Section 9(c) of the Series Supplement,
     subject to compliance with the conditions precedent set forth in this
     Agreement.

          (c)  The Transferor may, at its option, request that a Purchaser or
Bank Investor, as applicable, acquire an Additional Investor Amount through a
direct payment by such Purchaser or Bank Investor, as applicable, rather than
through a withdrawal from the related Pre-Funding Account.  The Transferor shall
deliver to the applicable Class Agent, by no later than 12:00 noon (New York
time), on the second Business Day prior to the Business Day on which the
proposed increase in the Senior Class Investor Amount is to occur, an Additional
Investment Certificate outlining such request; provided that the sum of the
                                               --------
amounts remitted pursuant to this Section 2.2(c) on any Business Day and any
Pre-Funding Account Deposits made pursuant to Section 2.2(b) on such Business
Day, in each case with respect to a Class, shall be issued in minimum
denominations of $500,000 and in integral multiples of $100,000 in excess
thereof.

          (d)  If a Senior Class Conduit elects not to acquire any such
Additional Investor Amount, the Transferor (i) may withdraw its request that the
Senior Class Conduits acquire such Additional Investor Amount or (ii) may
request the related Bank Investors to accept an assignment of the Additional
Investor Amount for the related Senior Class Conduit, in which case, the Senior
Class Certificate Principal Balance for such Senior Class Conduit, prior to such
request to acquire such Additional Investor Amount, shall be assigned to the
related Bank Investors.  The Transferor may not request and no Bank Investor
shall acquire an Additional Investor Amount on or after the occurrence and
during the continuation of a Potential Pay Out Event or a Pay Out Event or after
the Commitment Termination Date.

          (e)  In the event the Transferor requests the Senior Class Conduits or
any or all Bank Investors to make any such acquisition of additional interests
in the Trust, the Transferor shall indemnify each Senior Class Conduit and each
such Bank Investor against any loss or expense incurred by any Senior Class
Conduit or any such Bank Investor, either directly or indirectly (including, in
the case

                                       16
<PAGE>

of the Senior Class Conduits, through a Program Support Agreement), as a result
of any failure by the Transferor to complete any such acquisition of an
Additional Investor Amount (other than as a result of an election by such Senior
Class Conduit not to acquire such Additional Investor Amount) including, without
limitation, any loss or reasonable out-of-pocket expenses incurred by the Senior
Class Conduits or any such Bank Investor, either directly or indirectly
(including, in the case of the Senior Class Conduits, pursuant to a Program
Support Agreement), by reason of the liquidation or reemployment of funds
acquired by the Senior Class Conduits (or any Program Support Provider) or any
such Bank Investor (including, without limitation, funds obtained by issuing
commercial paper or promissory notes or obtaining deposits as loans from third
parties) for the Senior Class Conduits to fund such acquisition of an Additional
Investor Amount.

          (f)  Each acquisition of an Additional Investor Amount shall be
subject to the further condition precedent that, prior to the date of such
acquisition, the Transferor shall have delivered to the Agent (and the Agent
shall forward to each Senior Class Agent) on the date that the Additional
Investment Certificate is delivered under subsection 2.2(a), a certification in
form and substance satisfactory to the Agent and each Senior Class Agent, dated
the date that such certificate is delivered, that the conditions specified in
clauses (i) through (viii) of subsection 2.2(a) have been satisfied (it being
understood that such certification may be included on the face of the Additional
Investment Certificate).

          SECTION 2.3. Fees.  The Transferor shall pay such fees as are set
                       ----
forth in the Fee Letters at the times and in the amounts set forth therein.

          SECTION 2.4. Sharing of Payments, Etc. If any Senior Class Conduit or
                       -------------------------
any Bank Investor (for purposes of this Section only, a "Recipient") shall
                                                         ---------
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of setoff, or otherwise) on account of Senior Class Certificates owned by
it (other than pursuant to Section 2.2(c) or Section 2.3 or Article IV hereof)
in excess of its ratable share of payments on account of Senior Class
Certificates obtained by the Senior Class Conduits and/or the Bank Investors
entitled thereto, such Recipient shall forthwith purchase from the Senior Class
Conduits and/or the Bank Investors entitled to a share of such amount
participations in the Senior Class Certificates owned by such Persons as shall
be necessary to cause such Recipient to share the excess payment ratably with
each such other Person entitled thereto; provided, however, that if all or any
                                         --------  -------
portion of such excess payment is thereafter recovered from such Recipient, such
purchase from each such other Person shall be rescinded and each such other
Person shall repay to the Recipient the purchase price paid by such

                                       17
<PAGE>

Recipient for such participation to the extent of such recovery, together with
an amount equal to such other Person's ratable share (according to the
proportion of (a) the amount of such other Person's required payment to (b) the
total amount so recovered from the Recipient) of any interest or other amount
paid or payable by the Recipient in respect of the total amount so recovered.

          SECTION 2.5. Right of Setoff.  Without in any way limiting the
                       ---------------
provisions of Section 2.4, each of the Senior Class Conduits and the Bank
Investors is hereby authorized (in addition to any other rights it may have) at
any time after the Termination Date or during the continuance of a Potential Pay
Out Event to setoff, appropriate and apply (without presentment, demand, protest
or other notice which are hereby expressly waived) any deposits and any other
indebtedness held or owing by a Senior Class Conduit or a Bank Investor to, or
for the account of, the Transferor against all amounts owing by the Transferor
to such Senior Class Conduit or Bank Investor under this Agreement (even if
contingent or unmatured), provided that no Senior Class Conduit and no Bank
Investor shall setoff against any property of the Transferor which shall have
been pledged to the Trust or in which the Trust shall have been granted an
interest.

          SECTION 2.6. Interest Rate; Eurodollar Rate Protection; Illegality.
                       -----------------------------------------------------

          (a)  Prior to the Termination Date.  At all times hereafter, but prior
               -----------------------------
to the Termination Date, and not with respect to any portion of the Senior Class
Certificate Principal Balance held by any Bank Investor, the Transferor may,
subject to the applicable Senior Class Agent's approval (which approval shall be
transmitted through the Agent) and the limitations described below, request
(which request shall be made through the Agent) that the Senior Class
Certificate Principal Balance held by a Senior Class Conduit be allocated among
one or more funding periods, so that the aggregate amounts so allocated with
respect to such Senior Class Conduit at all times shall equal the Senior Class
Certificate Principal Balance held by such Senior Class Conduit. The Transferor
shall give each Senior Class Agent irrevocable notice (which notice shall be
given through the Agent) by telephone of the new requested funding period(s) at
least two (2) Business Days prior to the expiration of any then existing funding
period; provided, however, that the applicable Senior Class Conduit or the
        --------  -------
related Senior Class Agent may select, in its sole discretion, any such new
funding period if (i) the Transferor fails to provide such notice on a timely
basis or (ii) such Senior Class Conduit or the related Senior Class Agent
determines, in its sole discretion, that the funding period requested by the
Transferor is unavailable or for any reason commercially undesirable.  Each
Senior Class Conduit confirms that it is its intention to fund all or
substantially all of the Senior Class Certificate Principal

                                       18
<PAGE>

Balance held by such Senior Class Conduit by issuing Related Commercial Paper;
provided that such Senior Class Conduit or the related Senior Class Agent may
--------
determine, from time to time, in its sole discretion, that funding such Senior
Class Certificate Principal Balance by means of Related Commercial Paper is not
possible or is not desirable for any reason. In the case of any funding period
outstanding upon the Termination Date, such funding period shall end on such
date. In the case of the Senior Class of which EFC is a member, if any Program
Support Provider acquires from EFC an interest in the Senior Class Certificate
Principal Balance held by EFC, then Bank of America may exercise the right of
selection granted to EFC or its related Senior Class Agent hereby. If any
Program Support Provider acquires from a Purchaser an interest in the Senior
Class Certificate Principal Balance held by such Purchaser, then the initial
funding period applicable to any such interest shall be a period of not greater
than 14 days and shall accrue Carrying Costs on the basis of the Bank Base Rate.
Thereafter, with respect to such portion of the Senior Class Certificate
Principal Balance and with respect to any other portion of the Senior Class
Certificate Principal Balance held by the Program Support Providers (or any of
them), provided that the Termination Date shall not have occurred, Carrying
Costs shall accrue on the basis of either the Bank Base Rate or the Adjusted
LIBOR Rate (with a funding period of either one month or three months), as
determined by Bank of America.

          Any portion of the Senior Class Certificate Principal Balance
transferred to the Bank Investors (or any of them) pursuant to this Agreement
prior to the Termination Date, shall initially bear interest at the Bank Base
Rate (with a funding period of either one month or three months) for a period of
not greater than 14 days.  Thereafter, with respect to such portion of the
Senior Class Certificate Principal Balance and with respect to any other portion
of the Senior Class Certificate Principal Balance held by the Bank Investors (or
any of them), provided that the Termination Date shall not have occurred, the
interest rate applicable thereto shall be, at the Transferor's option, either
the Bank Base Rate or the Adjusted LIBOR Rate for such period as may be
specified by the Transferor.  The Transferor shall give the Agent irrevocable
notice by telephone (and the Agent shall immediately forward such notice to the
applicable Senior Class Agent) of each requested funding period (which funding
period in the case of the Adjusted LIBOR Rate shall be a period of either one or
three months) at least two (2) Business Days prior to the expiration of any then
existing funding period; provided, however, that such Senior Class Agent may
                         --------  -------
select, in its sole discretion, the term of any such subsequent funding period
and the rate applicable thereto if (i) the Transferor fails to provide such
notice on a timely basis or (ii) such Senior Class Agent determines, in its sole
discretion, that the requested funding period is unavailable or for any reason
commercially undesirable.

                                       19
<PAGE>

Each Senior Class Agent confirms that it is its intention to fund all or
substantially all of the Senior Class Certificate Principal Balance funded by
the related Bank Investors at the Adjusted LIBOR Rate; provided that such Senior
                                                       --------
Class Agent may determine, from time to time, in its sole discretion, that
funding the related Senior Class Certificate Principal Balance by such means is
not possible or is not desirable for any reason. In the case of any funding
period outstanding upon the occurrence of the Termination Date, such funding
period shall end on the date of such occurrence.

          (b)  After the Termination Date.  At all times on and after the
               --------------------------
Termination Date, the Senior Class Certificate Principal Balance (or applicable
portion thereof) shall bear interest at the Bank Base Rate plus 2.0%; provided,
                                                           ----       --------
however, that in the event the Termination Date has occurred because a Conduit
-------
Termination Event has occurred, the Senior Certificate Principal Balance (or
applicable portion thereof) shall bear interest at the Adjusted LIBOR Rate.

          (c)  Eurodollar Rate Protection.  If a Senior Class Agent is unable to
               --------------------------
obtain on a timely basis the information necessary to determine the LIBOR Rate
for any proposed funding period, then

               (i)  the Agent (acting at the direction of such Senior Class
     Agent) shall forthwith notify the Bank Investors and the Transferor that
     the Adjusted LIBOR Rate cannot be determined for such funding period, and

               (ii) while such circumstances exist, none of the Senior Class
     Agents, the Bank Investors or the Agent shall allocate the Senior Class
     Certificate Principal Balance purchased during such period or reallocate
     the Senior Class Certificate Principal Balance allocated to any then
     existing funding period ending during such period, to a funding period
     which accrues Carrying Costs on the basis of the Adjusted LIBOR Rate.

          If, with respect to any outstanding funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate, the Senior Class
Conduits or any of the Bank Investors owning any interest in Senior Class
Certificates notifies the Senior Class Agent that it or any Program Support
Provider is unable to obtain matching deposits in the London interbank market to
fund its purchase or maintenance of such interest in the Senior Class
Certificates or that the Adjusted LIBOR Rate applicable to the Senior Class
Certificate Principal Balance will not adequately reflect the cost to the Person
of funding or maintaining its respective interest in the Senior Class
Certificates for such funding period then the Agent (acting at the direction of
such Senior Class Agent) shall forthwith so notify

                                       20
<PAGE>

the Transferor, whereupon neither any Senior Class Conduit nor the Bank
Investors, as applicable, shall, while such circumstances exist, allocate any
Senior Class Certificate Principal Balance acquired during such period or
reallocate the Senior Class Certificate Principal Balance allocated to any
funding period ending during such period, to a funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate.

          (d)  Illegality.  Notwithstanding any other provision of this
               ----------
Agreement, if a Senior Class Conduit or any of the Bank Investors, as
applicable, shall notify the Senior Class Agent that such Person has determined
(or has been notified by any Program Support Provider) that the introduction of
or any change in or in the interpretation of any law or regulation makes it
unlawful (either for a Senior Class Conduit, such Bank Investor, or such Program
Support Provider, as applicable), or any central bank or other governmental
authority asserts that it is unlawful, for the Senior Class Conduit, such Bank
Investor or such Program Support Provider, as applicable, to fund the purchases
or maintenance of the Senior Class Certificate Principal Balance at the Adjusted
LIBOR Rate, then (x) as of the effective date of such notice from such Person to
the Senior Class Agent, the obligation or ability of such Senior Class Conduit
or such Bank Investor, as applicable, to fund its purchase or maintenance of the
Senior Class Certificate Principal Balance at the Adjusted LIBOR Rate shall be
suspended until such Person notifies the Senior Class Agent that the
circumstances causing such suspension no longer exist and (y) such Senior Class
Certificate Principal Balance allocated to each funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate in which such Person owns
an interest shall either (1) if such Person may lawfully continue to maintain
such interest in the Senior Class Certificate Principal Balance at the Adjusted
LIBOR Rate until the last day of the applicable funding period, be reallocated
on the last day of such funding period to another funding period in respect of
which the Senior Class Certificate Principal Balance accrues Carrying Costs on a
basis other than the Adjusted LIBOR Rate or (2) if such Person shall determine
that it may not lawfully continue to maintain such interest in the Senior Class
Certificate Principal Balance at the Adjusted LIBOR Rate until the end of the
applicable funding period, such Person's share of the Senior Class Certificate
Principal Balance allocated to such funding period shall be deemed to accrue
Carrying Costs on the basis of the Bank Base Rate from the effective date of
such notice until the end of such funding period.

          (e)  Compensation.  The Transferor shall compensate each Senior Class
               ------------
Conduit and each Bank Investor, upon its written request (which request shall
set forth in reasonable detail the basis for requesting such amounts and shall
be

                                       21
<PAGE>

delivered to the Transferor through the Agent), for all reasonable losses, out-
of-pocket expenses and liabilities (including, without limitation, any interest
paid by such Senior Class Conduit or Bank Investor to lenders of funds borrowed
by it to make or carry any Senior Class Certificate Principal Balance and any
loss sustained by such Senior Class Conduit or Bank Investor in connection with
the re-employment of such funds), which such Senior Class Conduit or Bank
Investor actually sustains if any payment in respect of any portion of the
Senior Class Certificate Principal Balance funded by such Senior Class Investor
or Bank Investor at a fixed rate occurs on a date which is not a day agreed upon
by the Transferor and such Senior Class Conduit or Bank Investor.

          SECTION 2.7. Notice of Reinvestment Termination Date.  A Senior Class
                       ---------------------------------------
Conduit that elects not to maintain its interest in the related Senior Class
Investor Amount shall use commercially reasonable efforts to give the related
Senior Class Agent and the Agent two (2) Business Days prior written notice of
such election; provided that the Senior Class Conduit shall give the related
               --------
Senior Class Agent and the Agent notice immediately after such election is made
by such Senior Class Conduit.  The Agent shall use commercially reasonable
efforts to give the Transferor by facsimile immediate written notice of such
election.  Notwithstanding anything to the contrary in this Section 2.7, the
giving of such notice shall not be a condition to the effectiveness of any such
election and the failure to give any such notice shall not prevent any transfer
in connection with such election; provided, that the foregoing shall not relieve
                                  --------
such Senior Class Conduit and the Agent of their notice obligations and the
Transferor shall retain all rights and remedies with respect to the failure to
give any such notice.

                                  ARTICLE III

                   REPRESENTATIONS, WARRANTIES AND COVENANTS

          SECTION 3.1. Representations and Warranties of the Transferor.  As of
                       ------------------------------------------------
the date hereof and as of each day that an acquisition of an Additional Investor
Amount is made hereunder, the Transferor represents and warrants to the Agent,
each Senior Class Agent, each Senior Class Conduit and each Bank Investor, that
all representations and warranties described in this Section 3.1 are true and
correct as of such day as though made on and as of such day:

          (a)  Corporate Existence and Power.  The Transferor is a corporation
               -----------------------------
duly organized and validly existing in good standing under the laws of its

                                       22
<PAGE>

jurisdiction of incorporation, and has all corporate power, authority and legal
right and all material governmental licenses, authorizations, consents and
approvals required to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted in each
jurisdiction in which it presently owns properties and presently conducts its
business, except where the absence of any such licenses, authorizations,
consents or approvals would not have a Material Adverse Effect, and to execute,
deliver and perform its obligations under this Agreement, the Master Pooling and
Servicing Agreement, the Series Supplement and all other Transaction Documents
to which the Transferor is a party, and to execute and deliver to the Senior
Class Agents the Senior Class Certificates pursuant to the Series Supplement.

          (b)  Due Qualification.  The Transferor is duly qualified to do
               -----------------
business and is in good standing (or is exempt from such requirement) in each
jurisdiction in which the nature of its business requires it to be so qualified,
and has obtained all necessary licenses and approvals in each jurisdiction in
which the failure to be so qualified or to obtain such licenses and approvals
would have a Material Adverse Effect.

          (c)  Corporate and Governmental Authorization; Contravention.  The
               -------------------------------------------------------
execution and delivery by the Transferor of this Agreement, each Receivables
Purchase Agreement, the Master Pooling and Servicing Agreement, the Series
Supplement, the Fee Letters, the Certificates and the other Transaction
Documents to which the Transferor is a party, the performance by the Transferor
of the transactions contemplated hereby and thereby and the fulfillment by the
Transferor of the terms hereof and thereof, are within the Transferor's
corporate powers, have been duly authorized by all necessary corporate action,
require no action, approval or consent by or in respect of, or filing with, any
Official Body or official thereof that has not been taken or obtained, and do
not conflict with, violate or result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any Requirement of Law applicable to the Transferor, or the
Articles of Incorporation or Bylaws of the Transferor or any agreement,
judgment, injunction, order, writ, decree or other instrument binding upon the
Transferor, or result in the creation or imposition of any Lien on the assets of
the Transferor or any of its Subsidiaries.

          (d)  Binding Effect.  Each of this Agreement, the Master Pooling and
               --------------
Servicing Agreement, the Series Supplement, the Fee Letters, the Certificates
and the other Transaction Documents to which the Transferor is a party
constitutes the legal, valid and binding obligation of the Transferor,
enforceable

                                       23
<PAGE>

against the Transferor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
moratorium or other similar laws now or hereafter in effect affecting the rights
of creditors generally and to general equitable principles whether or not
considered at law or in equity, and to limitations upon indemnification and
contribution contained in applicable securities laws and regulations.

          (e)  Accuracy of Information.  All information heretofore furnished by
               -----------------------
the Transferor to the Agent, any Senior Class Agent, any Senior Class Conduit or
any Bank Investor for purposes of or in connection with this Agreement, the
Master Pooling and Servicing Agreement, the Series Supplement or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by the Transferor to any such party will be, true and accurate in every material
respect, on the date such information is stated or certified.

          (f)  Tax Status.  The Transferor has filed all tax returns (federal,
               ----------
state and local) required to be filed and has paid or made adequate provision
consistent with GAAP for the payment of all its taxes, assessments and other
governmental charges.

          (g)  No Proceedings.  Except as set forth in Exhibit G hereto, there
               --------------                          ---------
are no actions, suits, proceedings or investigations pending or, to the best
knowledge of the Transferor, threatened against or affecting the Transferor or
any Affiliate of the Transferor or their respective properties, in or before any
court, regulatory body, administrative agency, arbitrator or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement, the
Master Pooling and Servicing Agreement, the Series Supplement, the Certificates
or the other Transaction Documents, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Master Pooling and Servicing Agreement, the Series Supplement,
the Certificates or the other Transaction Documents, or (iii) seeking any
determination or ruling that, individually or in the aggregate, would have a
Material Adverse Effect.

          (h)  Use of Proceeds.  The Transferor is not engaged in the business
               ---------------
of extending credit for the purposes of purchasing or carrying margin stock, and
no proceeds of any acquisition of an interest in the Senior Class Certificates,
directly or indirectly, will be used for a purpose that violates, or would be
inconsistent with, Regulations T, U and X promulgated by the Federal reserve
Board from time to time.

                                       24
<PAGE>

          (i)  Aggregate Principal Balance.  On each day, the product of (i) the
               ---------------------------
daily aggregate Floating Allocation Percentage with respect to Default Amounts
for all Senior Classes and (ii) the sum of the Excess Funding Amount and the
Aggregate Principal Receivables, is not less than the sum of the Senior Class
Certificate Principal Balances for all Senior Classes.

          (j)  Transferor Amount; Subordinate Class Investor Amount. After
               ----------------------------------------------------
giving effect to the issuance of the Senior Class Certificates on the Closing
Date, (i) the Transferor Amount is not less than the Minimum Transferor Amount
and (ii) the Subordinate Class Investor Amount is not less than the Minimum
Enhancement Amount.

          (k)  Credit Card Guidelines.  Since July 15, 1999, there have been no
               ----------------------
material changes in the Credit Card Guidelines other than as permitted under the
Master Pooling and Servicing Agreement.  Since such date, no material adverse
change has occurred in the overall rate of collection of the Receivables.

          (l)  No Pay Out Event.  No event has occurred and is continuing and no
               ----------------
condition exists which constitutes a Pay Out Event or a Potential Pay Out Event.

          (m)  Not an Investment Company.  The Transferor is not, and is not
               -------------------------
controlled by, an "investment company" within the meaning of the 1940 Act, or is
exempt from all provisions of such Act.

          (n)  ERISA.  No liability exists under Title IV of ERISA or under
               -----
Section 412 of the Internal Revenue Code arising out of a Defined Benefit Plan
or a Multiemployer Plan of the Transferor or any ERISA Affiliate.

          (o)  Bulk Sales.  No transaction contemplated by this Agreement, any
               ----------
Receivables Purchase Agreement or the Master Pooling and Servicing Agreement
requires compliance with any bulk sales act or similar law.

          (p)  Transfers Under Receivables Purchase Agreement.  Each Receivable
               ----------------------------------------------
which has been transferred to the Transferor by an Eligible Originator has been
purchased by the Transferor from such Eligible Originator pursuant to, and in
accordance with, the terms of a Receivables Purchase Agreement.

          (q)  Reasonable Equivalent Value.  The Transferor has given reasonably
               ---------------------------
equivalent value to each Eligible Originator in consideration for the

                                       25
<PAGE>

transfer to the Transferor of the applicable Receivables and Collections and
Related Security, if any, from such Eligible Originator, and each such transfer
shall not have been made for or on account of an antecedent debt owed by such
Eligible Originator to the Transferor. The Transferor has received reasonably
equivalent value in consideration for the transfer to the Trust of the
Receivables and Collections and Related Security, if any, and will have received
reasonably equivalent value in consideration for the sale of the Senior
Certificates (and any sale of additional interests in the Trust in connection
with any Additional Investor Amount) to the Senior Class Conduits and the Bank
Investors.

          (r)  Representations and Warranties.  Each representation and warranty
               ------------------------------
of the Transferor set forth in Article IV of each Receivables Purchase Agreement
and in Article II of the Master Pooling and Servicing Agreement is true and
correct in all material respects and the Transferor hereby remakes all such
representations and warranties for the benefit of the Agent, each Senior Class
Agent, each Senior Class Conduit and each Bank Investor.

          (s)  Validity of Certificates.  The Certificates have been or will be
               ------------------------
issued pursuant to the terms of the Master Pooling and Servicing Agreement and
the Series Supplement and, as or when executed by the Transferor and
authenticated by the Trustee in accordance with the Master Pooling and Servicing
Agreement and the Series Supplement and delivered pursuant to this Agreement,
have been or will be validly issued and outstanding and entitled to the benefits
of the Master Pooling and Servicing Agreement and the Series Supplement.  The
Certificates are or will be in all material respects in the form contemplated by
the Master Pooling and Servicing Agreement and the Series Supplement.  At the
time of transfer to the Purchasers hereunder, the Transferor had or shall have
good and marketable title to the Certificates free and clear of any Lien.

          (t)  No General Solicitation.  None of the Transferor or any of its
               -----------------------
affiliates (as defined in Rule 501(b) under the Act) or any Person (other than
the Purchasers and their respective affiliates, as to whom the Transferor makes
no representation) acting on its behalf has engaged, in connection with the
offering of the Senior Class Certificates, in any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the Act.

          (u)  No Registration under the Act; Trust Indenture Act.  It is not
               --------------------------------------------------
necessary in connection with the offer, sale and delivery of the Certificates to
the Purchasers to register the Certificates under the Act.  The Master Pooling
and

                                       26
<PAGE>

Servicing Agreement is not required to be qualified under the Trust Indenture
Act of 1939.

          The representations and warranties set forth in this Section shall
survive the sale of the Senior Class Certificates to the Senior Class Conduits
or the Bank Investors and the acquisition by the Senior Class Conduits or the
Bank Investors of any additional interests in the Trust in connection with any
Additional Investor Amounts.  Upon discovery by the Transferor, the Agent, any
Senior Class Agent, any Senior Class Conduit or any Bank Investor of a breach of
any of the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice thereof to each other party, provided
that the failure by any such party to give any such notice shall not impair any
of such parties' rights hereunder.

          SECTION 3.2  Representations and Warranties of the Servicer.  As of
                       ----------------------------------------------
the date hereof and as of each day that an acquisition of an Additional Investor
Amount is made hereunder, the Servicer hereby makes and shall be deemed to have
made the following representations and warranties:

          (a)  Organization and Good Standing.  The Servicer is a corporation
               ------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all corporate power, authority and
legal right and all material governmental licenses, authorizations, consents and
approvals required to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted in each
jurisdiction in which it presently owns properties and presently conducts its
business, except where the absence of any such licenses, authorizations,
consents or approvals would not have a Material Adverse Effect, and to execute,
deliver and perform its obligations under this Agreement, the Master Pooling and
Servicing Agreement and all other Transaction Documents to which it is a party
and to service the Receivables as required under federal and state law.

          (b)   Due Qualification.  The Servicer is duly qualified to do
                -----------------
business and is in good standing (or is exempt from such requirements) in each
jurisdiction in which the nature of its business requires it to be so qualified
and has obtained all necessary licenses and approvals in each jurisdiction in
which the failure to be so qualified or to obtain such licenses and approvals
would have a Material Adverse Effect or a material adverse effect on the
Servicer's ability to perform its obligation under the Master Pooling and
Servicing Agreement or to service the Receivables as required under federal and
state law.

                                       27
<PAGE>

          (c)  Corporate and Governmental Authorization; Contravention.  The
               -------------------------------------------------------
execution and delivery and performance by the Servicer of this Agreement and the
other Transaction Documents to which the Servicer is a party, the performance by
the Servicer of the transactions contemplated hereby and thereby and the
fulfillment by the Servicer of the terms hereof and thereof are within the
Servicer's corporate powers, have been duly authorized by all necessary
corporate action, require no action, consent or approval by or in respect of, or
filing with, any Official Body or official thereof that has not been taken or
obtained, and do not conflict with, violate or result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any Requirement of Law applicable to the
Servicer, or the Articles of Incorporation or Bylaws of the Servicer or any
agreement, judgment, injunction, order, writ, decree or other instrument binding
upon the Servicer and will not result in the creation or imposition of any Lien
on assets of the Servicer or any of its Subsidiaries.

          (d)  Binding Effect.  Each of this Agreement and the other Transaction
               --------------
Documents to which the Servicer is a party constitutes the legal, valid and
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
affecting the enforcement of creditors' rights in general and to general
equitable principles, whether or not considered at law or in equity, and to
limitations upon indemnification and contribution contained in applicable
securities laws and regulations.

          (e)  Accuracy of Information.  All information heretofore furnished by
               -----------------------
the Servicer to the Transferor, the Agent, any Senior Class Agent, any Senior
Class Conduit or any Bank Investor for purposes of or in connection with this
Agreement, the Master Pooling and Servicing Agreement, the Series Supplement or
any transaction contemplated hereby or thereby is, and all such information
hereafter furnished by the Servicer to any such party will be, true and accurate
in every material respect, on the date such information is stated or certified.

          (f)  Tax Status.  The Servicer has filed all tax returns (federal,
               ----------
state and local) required to be filed and has paid or made adequate provision
consistent with GAAP for the payment of all taxes, assessments and other
governmental charges.

          (g)  No Proceedings.  Except as set forth in Exhibit G hereto, there
               --------------                          ---------
are no proceedings or investigations pending or, to the best knowledge of the

                                       28
<PAGE>

Servicer, threatened against the Servicer or any Affiliate of the Servicer
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement or
the other Transaction Documents, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement and the other Transaction Documents or (iii) seeking any determination
or ruling that, individually or in the aggregate, would have a Material Adverse
Effect.

          (h)  Credit Card Guidelines.  Since July 15, 1999, there have been no
               ----------------------
material changes in the Credit Card Guidelines other than as permitted hereunder
and under the Master Pooling and Servicing Agreement.  Since such date, no
material adverse change has occurred in the overall rate of collection of the
Receivables.

          (i)  Collections and Servicing.  Since July 15, 1999, there has been
               -------------------------
no material adverse change in the ability of the Servicer to service and collect
the Receivables and no material adverse change has occurred in the overall rate
of collections of Receivables.

          (j)  Not an Investment Company.  The Servicer is not an "investment
               -------------------------
company" within the meaning of the 1940 Act, or is exempt from all provisions of
such Act.

          (k)  ERISA.  The Servicer is in compliance in all material respects
               -----
with ERISA.

          The representations and warranties set forth in this Section shall
survive the sale of the Senior Class Certificates to the Senior Class Conduits
or the Bank Investors and the acquisition by the Senior Class Conduits or the
Bank Investors of any additional interests in the Trust in connection with any
Additional Investor Amounts.  Upon discovery by the Servicer, the Transferor,
the Agent, any Senior Class Agent, any Senior Class Conduit or any Bank Investor
of a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice thereof to each other
party, provided that the failure by any such party to give any such notice shall
not impair any of such parties' rights hereunder.

          SECTION 3.3  Covenants of the Transferor.  At all times from the date
                       ---------------------------
hereof to the later to occur of (i) the Termination Date or (ii) the date on
which all amounts due to the Senior Certificateholders under this Agreement and
the other

                                       29
<PAGE>

Transaction Documents shall have been paid in full, unless the Agent and each
Senior Class Agent shall otherwise consent in writing:

          (a)  Financial Reporting.  The Transferor will, and will cause each
               -------------------
Eligible Originator and each of such Eligible Originator's Subsidiaries to,
maintain, for itself and each of its respective Subsidiaries, a system of
accounting established and administered in accordance with GAAP, and will
furnish to the Agent (and the Agent shall furnish to each Senior Class Agent):

               (i)  Annual Reports.  Within one hundred (100) days after the
                    --------------
     close of the Transferor's and Saks' fiscal years, (beginning with the
     fiscal year ending in 2001) audited financial statements, prepared in
     accordance with GAAP on a consolidated basis for Saks and its Subsidiaries,
     in each case, including balance sheets as of the end of such period,
     related statements of operations, shareholder's equity and cash flows,
     accompanied by an unqualified audit report certified by
     PricewaterhouseCoopers, LLP, or other independent certified public
     accountants, acceptable to the Agent, prepared in accordance with GAAP.
 .
               (ii) Quarterly Reporting.  Within fifty (50) days after the close
                    -------------------
     of the first three quarterly periods of each of the Transferor's and Saks'
     fiscal years, for (x) the Transferor and (y) for Saks and its Subsidiaries,
     in each case, consolidated unaudited balance sheets and consolidated
     related statements of operations and cash flows as at the end of such
     period for such period and for the period from the beginning of such fiscal
     year to the end of such quarter, and showing the computation of each of the
     financial ratios and restrictions set forth in Section 3.4(d) hereof all
     certified by its chief financial officer, chairman, president, treasurer or
     any executive or senior vice president.

               (iii) Compliance Certificate.  Together with the financial
                     ----------------------
     statements required hereunder, a compliance certificate signed by the chief
     financial officer, chairman, president, treasurer or any executive or
     senior vice president of the Transferor or Saks, as applicable, stating
     that (x) the attached financial statements have been prepared in accordance
     with GAAP and accurately reflect the financial condition of the Transferor
     or Saks as applicable (in the case of quarterly statements, subject to
     normal adjustments) and (y) to the best of such Person's knowledge, no Pay
     Out Event or Potential Pay Out Event exists, or if any Pay Out Event or
     Potential Pay Out Event exists, stating the nature and status thereof.

                                       30
<PAGE>

               (vi)  Shareholders Statements and Reports.  Promptly upon the
                     -----------------------------------
     furnishing thereof generally to the shareholders of Saks, copies of all
     financial statements, reports and proxy statements so furnished to the
     extent not included in the filings provided pursuant to paragraph (v)
     below.

               (v)   S.E.C. Filings.  Promptly upon (x) the filing thereof,
                     --------------
     copies of all annual, quarterly, monthly or other regular reports and
     reports on Form 8-K and (y) the effectiveness thereof, copies of all
     registration statements, in each case which Saks or any subsidiary files
     with the Securities and Exchange Commission (excluding any filings on Form
     S-8).

               (vi)  Notice of Pay Out Events or Potential Pay Out Events. As
                     ----------------------------------------------------
     soon as possible and in any event within two (2) days after the occurrence
     of each Pay Out Event or each Potential Pay Out Event, a statement of the
     chief financial officer or chief accounting officer of the Transferor
     setting forth details of such Pay Out Event or Potential Pay Out Event and
     the action which the Transferor proposes to take with respect thereto.

               (vii) Change in Credit Card Guidelines and Debt Ratings. Within
                     -------------------------------------------------
     thirty (30) days after the date of any material change in or amendment to
     the Credit Card Guidelines is made, a copy of the Credit Card Guidelines
     then in effect indicating such change or amendment.  Within fifteen (15)
     days after any change in Saks' public or private debt ratings by any rating
     agency that has been requested by Saks to provide any such rating, if any,
     a written certification of Saks' public and private debt ratings after
     giving effect to any such change.

               (viii) Credit Card Guidelines.  Within ten (10) Business Days of
                      ----------------------
     the request of the Agent or any Senior Class Agent (which request by any
     Senior Class Agent shall be made through the Agent), a complete copy of the
     Credit Card Guidelines then in effect.

               (ix)  ERISA.  Promptly after the filing or receiving thereof,
                     -----
     copies of all reports and notices with respect to any Reportable Event
     which the Transferor, any Eligible Originator or any ERISA Affiliate of the
     Transferor or any Eligible Originator files under ERISA with the Internal
     Revenue Service, the PBGC or the U.S. Department of Labor or which the
     Transferor, any Eligible Originator or any ERISA Affiliates of the
     Transferor or any Eligible Originator receives from the Internal Revenue
     Service, the PBGC or the U.S. Department of Labor.

                                       31
<PAGE>

               (x)  Other Information.  Such other information (including non-
                    -----------------
     financial information) as the Agent or any Senior Class Agent may from time
     to time reasonably request (which request by any Senior Class Agent shall
     be made through the Agent) with respect to any Eligible Originator, the
     Transferor or any Subsidiary of any of the foregoing.

          (b)  Conduct of Business.  The Transferor will carry on and conduct
               -------------------
its business in substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted and do all things necessary to
remain duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted. The Transferor may merge or consolidate with any Subsidiary of Saks
that is a special purpose entity designed to be a bankruptcy-remote financing
vehicle (i) where the successor entity, if not the Transferor, adopts the
obligations of the Transferor hereunder, (ii) no Pay Out Event, Potential Pay
Out Event or Servicer Default shall have occurred and be continuing whether as a
result thereof or otherwise, and (iii) upon delivery of an opinion of counsel of
the Transferor that the assets and liabilities of such entity would not be
consolidated with the assets and liabilities of Saks.

          (c)  Compliance with Laws.  The Transferor will comply with all laws,
               --------------------
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it or its respective properties may be subject.

          (d)  Furnishing of Information and Inspection of Records.  The
               ---------------------------------------------------
Transferor will, and will exercise its rights under Section 5.1(c) of each
Receivable Purchase Agreement to obtain information from each Eligible
Originator in order to, furnish to the Agent (which the Agent shall furnish to
each Senior Class Agent) from time to time such information with respect to the
Receivables as the Agent or such Senior Class Agent may reasonably request
(which request by any Senior Class Agent shall be made through the Agent),
including, without limitation, listings identifying the Obligor and the
Outstanding Principal Balance for each Receivable. The Transferor will permit,
and will exercise its rights under Section 5.1(c) of each Receivable Purchase
Agreement in order to permit, at any time and from time to time during regular
business hours and upon reasonable prior notice (which notice by any Senior
Class Agent shall be given through the Agent), the Agent and each Senior Class
Agent, or their respective agents or representatives, (i) to examine and make
copies of and take abstracts from all Records (at the expense of the Transferor)
and (ii) to visit the offices and properties of the Transferor or such Eligible
Originator, as applicable, for the purpose of examining such Records, and to
discuss matters

                                       32
<PAGE>

relating to Receivables or the Transferor's or such Eligible Originator's
performance hereunder and under the other Transaction Documents to which such
Person is a party with any of the officers, directors, employees or independent
public accountants of the Transferor or such Eligible Originator, as applicable,
having knowledge of such matters.

          (e)  Keeping of Records and Books of Account.  The Transferor will,
               ---------------------------------------
and will cause each Eligible Originator to, maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables in the event of the
destruction of the originals thereof), and keep and maintain, all documents,
books, records and other information reasonably necessary or customary for the
collection of all Receivables (including, without limitation, records adequate
to permit the daily identification of each new Receivable and all Collections of
and adjustments to each existing Receivable).  The Transferor will give the
Agent (and the Agent shall give each Senior Class Agent) notice of any material
change in the administrative and operating procedures of the Transferor or any
Eligible Originator.

          (f)  Sale Treatment.  The Transferor will not (i) account for
               --------------
(including for accounting and tax purposes), or otherwise treat, the
transactions contemplated by each Receivables Purchase Agreement in any manner
other than as a sale of the Receivables by such Eligible Originator to the
Transferor, or (ii) account for (other than for tax purposes) or otherwise treat
the transactions contemplated hereby in any manner other than as a sale of an
undivided percentage ownership interest in the Receivables by the Transferor to
the Senior Class Conduits or the Bank Investors, as applicable.  In addition,
the Transferor shall, and shall cause each Eligible Originator to, disclose (in
a footnote or otherwise) in all of its respective financial statements
(including any such financial statements consolidated with any other Persons'
financial statements) the existence and nature of the transaction contemplated
by the Master Pooling and Servicing Agreement and by each Receivables Purchase
Agreement and the interest of the Transferor (in the case of an Eligible
Originator's financial statements), the Senior Class Conduits and the Bank
Investors in the Affected Assets.

          (g)  Corporate Documents.  The Transferor shall not amend, alter,
               -------------------
change or repeal any Articles of its Articles of Incorporation without the prior
written consent of the Agent and each Senior Class Agent.

          (h)  No Sales, Liens, Etc.  Except as otherwise permitted by the
               --------------------
Master Pooling and Servicing Agreement, the Series Supplement, this Agreement

                                       33
<PAGE>

or any other Transaction Document, the Transferor will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Lien upon (or the filing of any financing statement with respect to),
any of the Trust Property.

          (i)  No Extension or Amendment of Receivables; Discount Percentage.
               -------------------------------------------------------------
Except as otherwise permitted by the Transaction Documents, the Transferor will
not, and will not change or waive Section 5.1(f) of any Receivable Purchase
Agreement to permit any Eligible Originator to, extend, amend or otherwise
modify the terms of any Receivable, or amend, modify or waive any term or
condition of any Account related thereto.   The Transferor further covenants
that, except as otherwise required by any Requirement of Law, it shall not, and
shall not cause or otherwise permit the Servicer at any time to, reduce the
periodic finance charges assessed on any Receivable or other fees on any Account
if, as a result of such reduction, the reasonable expectation of the Portfolio
Adjusted Yield as of such date would be less than 2.00%.

          (j)  Changes to Account Agreements.  The Transferor shall not change
               -----------------------------
the terms and provisions of the Account Agreements or the Credit Card Guidelines
in any respect (including, without limitation, the calculation of the amount,
and the timing, of uncollectible Receivables) except to the extent permitted by
the Master Pooling and Servicing Agreement.

          (k)  No Change in Business or Credit Card Guidelines.  The Transferor
               -----------------------------------------------
will not make any change in the character of its business or in the Credit Card
Guidelines, which change would, in either case, impair the collectibility of any
substantial portion of the Receivables or otherwise result in a Material Adverse
Effect.

          (l)  Amendment of Receivables Purchase Agreement, Master Pooling and
               ---------------------------------------------------------------
Servicing Agreement and Series Supplement.  The Transferor will not amend,
-----------------------------------------
waive, modify or supplement any Receivables Purchase Agreement, the Master
Pooling and Servicing Agreement, the Series Supplement or any other Transaction
Document to which it is a party without the prior written consent of the Agent
and each Senior Class Agent to the substance and form of any such amendment,
modification, waiver or supplement and, in addition, will not permit any
Eligible Originator to take (or acquiesce in the taking of any such action) any
action (including any omission to act) under any Transaction Document to which
it is a party that would have a material adverse effect on the Agent, any Senior
Class

                                       34
<PAGE>

Conduit or any Bank Investor or which is inconsistent with the terms of the
Master Pooling and Servicing Agreement, the Series Supplement or this Agreement.

          (m)  Other Debt.  Except as permitted by this Agreement, the Master
               ----------
Pooling and Servicing Agreement or the Receivables Purchase Agreement, the
Transferor will not create, incur, assume or suffer to exist any indebtedness
whether current or funded, or any other liability other than (i) indebtedness of
the Transferor representing fees, expenses and indemnities arising hereunder,
under any Series Supplement, any Enhancement or under a Receivables Purchase
Agreement for the purchase price of the Receivables under such Receivables
Purchase Agreement, and (ii) other indebtedness incurred in the ordinary course
of its business, the amount thereof which is past due not to exceed $10,500 at
any time outstanding.

          (n)  ERISA Matters.  The Transferor will not (i) engage in any
               -------------
prohibited transaction (as defined in Section 4975 of the Code and Section 406
of ERISA) for which an exemption is not available or has not previously been
obtained from the U.S. Department of Labor; (ii) permit to exist any accumulated
funding deficiency (as defined in Section 302(a) of ERISA and Section 412(a) of
the Code) or funding deficiency with respect to any Defined Benefit Plan other
than a Multiemployer Plan that could reasonably result in the PBGC or IRS filing
a lien; (iii) fail to make any payments to any Multiemployer Plan that the
Transferor, such Eligible Originator or any ERISA Affiliate of the Transferor or
such Eligible Originator is required to make under the agreement relating to
such Multiemployer Plan or any law pertaining thereto; (iv) terminate any
Defined Benefit Plan so as to result in any liability; or (v) permit to exist
any occurrence of any Reportable Event which represents a material risk of a
liability to the Transferor, such Eligible Originator, or any ERISA Affiliate of
the Transferor or such Eligible Originator under ERISA or the Code.

          (o)  Receivables Purchase Agreement.  The Transferor, in its capacity
               ------------------------------
as purchaser of the Receivables from the Eligible Originators pursuant to the
related Receivables Purchase Agreement, will at all times enforce the covenants
and agreements of each Eligible Originator in each Receivables Purchase
Agreement. With respect to any Receivable sold by an Eligible Originator to the
Transferor, the Transferor shall, and shall cause such Eligible Originator to,
effect such sale under, and pursuant to the terms of, a Receivables Purchase
Agreement, including, without limitation, the payment by the Transferor, either
in cash, by increase in the amount of the Subordinated Note, a contribution of
capital or any combination thereof, to such

                                       35
<PAGE>

Eligible Originator in an aggregate amount equal to the purchase price for such
Receivable as required by the terms of such Receivables Purchase Agreement.

          (p)  Master Pooling and Servicing Agreement.  The Transferor will
               --------------------------------------
comply with the covenants set forth in Section 2.5 of the Master Pooling and
Servicing Agreement.

          (q)  Notice of Breach; Liens.  The Transferor shall advise the Agent
               -----------------------
(and the Agent shall forward such advisement to each Senior Class Agent)
promptly, in reasonable detail, (i) after becoming aware of any Lien on any
Receivable or other Trust Property other than the conveyances under the Master
Pooling and Servicing Agreement or under a Receivables Purchase Agreements or
Liens permitted under Section 2.5(b) of the Master Pooling and Servicing
Agreement or under Section 5.2(a) of each Receivable Purchase Agreement, (ii) of
any breach by the Transferor or the Servicer of any of their respective
representations, warranties and covenants contained herein or in the Master
Pooling and Servicing Agreement and (iii) of the occurrence of any other event
which would have a material adverse effect on the Trustee's interest in the
Receivables or the collectibility thereof.

          (r)  Notice of Additions.  On or before the fifth Business Day prior
               -------------------
to the Additional Account Closing Date with respect to any Additional Accounts
designated pursuant to subsections 2.6(a) or (b) of the Master Pooling and
Servicing Agreement (other than the Additional Accounts and related Receivables
(the "2001 Additional Accounts") to be designated from Saks Transitional Credit
      ------------------------
Corporation on or about the date of this Agreement and the date of the Series
Supplement as to which no notice is required hereunder), the Transferor shall
give the Agent (and the Agent shall forward to each Senior Class Agent) written
notice that the Receivables in such Additional Accounts will be included,
specifying the approximate aggregate amount of Receivables in such Additional
Accounts.  Subject to the foregoing exception, the Transferor shall give the
Agent (and the Agent shall forward to each Senior Class Agent) five (5) Business
Days prior written notice of (i) any designation of Accounts to be included as
Accounts pursuant to subsection 2.5(d) of the Master Pooling and Servicing
Agreement and (ii) any discontinuance or suspension of any such designation,
provided that the Agent and the Senior Class Agent acknowledges notice of, and
consents to, the removal of Accounts and related Receivables (the "2001 Removed
                                                                   ------------
Accounts") from the Trust in connection with the sale of certain stores pursuant
--------
to that certain Asset Purchase and Sale Agreement, dated on or about January 28,
2001. between Saks Incorporated  and the The May Department Stores Company (the
"Store Sales Agreement").  The Transferor shall not include as Automatic
 ---------------------
Additional Accounts any Accounts of a type not included

                                       36
<PAGE>

as Accounts on the Initial Closing Date or included on any Additional Account
Closing Date pursuant to which Additional Accounts are designated pursuant to
subsection 2.6(b) of the Master Pooling and Servicing Agreement or consented to
in writing by the Agent and each Senior Class Agent.

          (s)  Protection of Interest in Trust Property.  The Transferor shall
               ----------------------------------------
execute and file such continuation statements and any other documents reasonably
requested by the Trustee, the Agent, any Senior Class Agent, any Senior Class
Conduit or any Bank Investor (in the case of any Senior Class Agent, any Senior
Class Conduit or any Bank Investor, such request to be made through the Agent)
or which may be required by law to fully preserve and protect the interest of
the Trustee in and to the Receivables and the other Trust Property.

          (t)  Transfer of Transferor Interest and Subordinate Class
               -----------------------------------------------------
Certificates.  The Transferor shall not assign, transfer or otherwise convey to
------------
any Person any interest in the Transferor Interest or the Subordinate Class
Certificates held by it without (i) the prior written consent of the Agent and
each Senior Class Agent and (ii) delivering to the Trustee prior thereto an
Opinion of Counsel to the effect that (x) the conveyed interest in the
Transferor's Interest or the Subordinate Class Certificates will be treated as
either debt or an interest in a partnership for federal income tax purposes and
that the conveyance of such interest will not cause the Trust to be
characterized for federal income tax purposes as an association or a publicly
traded partnership taxable as a corporation or otherwise have any material
adverse impact on the federal or applicable state income taxation of any
outstanding Certificates or any Certificate Owner and (y) such transfer will not
cause a taxable event for federal income tax purposes to any Investor
Certificateholder.

          (u)  No Assignment.  The Transferor shall not assign any of its rights
               -------------
or delegate any of its duties hereunder or under the Master Pooling and
Servicing Agreement or the Series Supplement or under any of the other
Transaction Documents to which it is a party without the prior written consent
of the Agent and each Senior Class Agent.

          (v)  No Designation.  The Transferor shall not designate an Eligible
               --------------
Originator other than G.R. Herberger's, Inc., McRae's, Inc., Parisian, Inc.,
Carson Pirie Scott & Co., National Bank of the Great Lakes, Saks & Company or
Saks, or any of their Affiliates without, the prior written consent of the Agent
and each Senior Class Agent.

                                       37
<PAGE>

          (w)  Consent of Agent and Senior Class Agent.   The Transferor shall
               ---------------------------------------
obtain the written consent of the Agent and each Senior Class Agent prior to
taking any action under the Master Pooling and Servicing Agreement that would
require (i) the satisfaction of the Rating Agency Condition under the Master
Pooling and Servicing Agreement (whether or not any Series is then currently
rated by any rating agency) or (ii) the consent of the Trustee, provided that
the addition of the 2001 Additional Accounts, the removal of the 2001 Removed
Accounts, the issuance of Series 2001-2 shall not require the approval of the
Agent or any Senior Class Agent hereunder.

          (x)  Notice of Delegation of Servicer's Duties.  The Transferor
               -----------------------------------------
promptly shall notify the Agent (and the Agent shall forward such notice to each
Senior Class Agent) of any delegation by the Servicer of any of the Servicer's
duties under the Master Pooling and Servicing Agreement or the Series
Supplement, provided that the designation of Parisian, Inc. or any other
Affiliate of the Transferor as Subservicer shall be permitted without notice.

          (y)  Notice of Resignation or Removal of the Trustee.  The Transferor
               -----------------------------------------------
promptly shall notify the Agent (and the Agent shall forward such notice to each
Senior Class Agent) of any resignation or removal of the Trustee under the
Master Pooling and Servicing Agreement.

          (z)  Reduction of Investor Amounts.  If, on any day, (x) the Senior
               -----------------------------
Class Certificate Principal Balance for any Senior Class plus the Interest
                                                         ----
Component of all Related Commercial Paper issued by the related Senior Class
Conduit and then outstanding, if any, exceeds the Senior Class Facility Limit
for such Class or (y) the product of (i) the aggregate Floating Allocation
Percentage with respect to Default Amounts for all Senior Classes (as of the end
of the most recent Monthly Period) and (ii) the sum of the Excess Funding Amount
and the Aggregate Principal Receivables, is less than the sum of the Senior
Class Certificate Principal Balances for all Senior Classes, the Transferor
shall distribute on such day to such Senior Class Conduit, in accordance with
subsection 4.5(d) of the Series Supplement an amount sufficient to (I) reduce
the sum of the Senior Class Investor Amount and the Interest Component of all
outstanding Related Commercial Paper for such Senior Class to an amount which is
less than the Senior Class Facility Limit for such Senior Class or (II) reduce
the sum of the Senior Class Certificate Principal Balances for all Senior
Classes plus the Subordinate Class Investor Amount to an amount which is less
        ----
than the Series Allocation Percentage with respect to Principal Receivables (as
of the end of the most recent Monthly Period) of the Aggregate Outstanding
Principal Balance, as applicable.

                                       38
<PAGE>

          SECTION 3.4  Covenants of the Servicer.  At all times from the date
                       -------------------------
hereof to the later to occur of (i) the Termination Date or (ii) the date on
which all amounts due to the Senior Certificateholders under this Agreement and
the other Transaction Documents shall have been paid in full, unless the Agent
and each Senior Class Agent shall otherwise consent in writing:

          (a)  Records.  The Senior Class Certificateholders and their agents
               -------
and representatives shall at all times upon reasonable prior notice have full
access during normal business hours to all Records of the Servicer, and the
Agent, each Senior Class Agent and the Senior Class Certificateholders and their
agents and representatives may examine the same, take extracts therefrom and
make photocopies thereof, and the Servicer agrees to render to such Persons, at
the Servicer's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.

          (b)  No Extension or Amendment of Receivables.  Except as otherwise
               ----------------------------------------
expressly permitted by the Transaction Documents, the Servicer will not extend,
amend or otherwise modify the terms of any Receivable, or amend, modify or waive
any term or condition of any Account related thereto.  The Servicer further
covenants that, except as otherwise required by any Requirement of Law, it shall
not reduce the periodic finance charges assessed on any Receivable or other fees
on any Account if, as a result of such reduction, the reasonable expectation of
the Portfolio Adjusted Yield as of such date would be less than 2.00%.

          (c)  Conduct of Business.  The Servicer will, and will cause each of
               -------------------
its Subsidiaries to which it delegates any servicing functions under the Master
Pooling and Servicing Agreement to, carry on and conduct its business in
substantially the same fields of enterprise as it is presently conducted and do
all things necessary to remain duly incorporated, validly existing and in good
standing in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where the failure to be so qualified will not have a Material
Adverse Effect.  All Eligible Originators shall at all times be direct or
indirect wholly-owned (except for director's qualifying shares and/or shares of
preferred stock) subsidiaries of Saks.

          (d)  Financial Covenants.  The Servicer shall:
               -------------------

                                       39
<PAGE>

               (i)  not permit Consolidated Net Worth at any time to be less
     than (A) the amount equal to ninety percent (90%) of the Servicer's
     Consolidated Net Worth as of November 1, 1998 after completion of the Saks
     Acquisition plus (B) an amount equal to one hundred percent (100%) of the
     Net Proceeds of each sale of capital stock or other equity interest
     (including those instruments and securities exchangeable, convertible or
     exercisable into capital stock or other equity interests at such time as
     such instruments are recognizable in Consolidated Net Worth in accordance
     with GAAP) in the Servicer or any Subsidiary after November 1, 1998 plus
                                                                         ----
     (C) an amount equal to the sum of fifty percent (50%) of Consolidated Net
     Income of the Servicer and its Subsidiaries (without deduction for any
     negative Consolidated Net Income) for each full fiscal quarter ending after
     November 1, 1998; and

               (ii)  not permit, at the end of any Four-Quarter Period of the
     Servicer, the Consolidated Fixed Charge Ratio for such Four-Quarter Period
     to be equal to or less than 1.50 to 1.00; and

               (iii)  not permit, at the end of any Four-Quarter Period of the
     Servicer, the ratio of Consolidated Funded Total Indebtedness to
     Consolidated EBITDA for such Four-Quarter Period to be greater than 3.50 to
     1.00;

Capitalized terms used in this Section 3.4(d) and not otherwise defined in
Section 1.1 hereof are used as defined in Exhibit F attached hereto.  The
definitions contained in this subsection and in Exhibit F shall not otherwise be
                                                ---------
used or applied for any other purpose or used to define or construe any other
provisions hereof or of any other Transaction Documents.

          (e)  No Assignment.  The Servicer shall not assign any of its rights
               -------------
or delegate any of its duties hereunder or under the Master Pooling and
Servicing Agreement or the Series Supplement or under any of the other
Transaction Documents to which it is a party without the prior written consent
of the Agent and each Senior Class Agent, provided that any designation of
McRae's, Inc., Carson Pirie Scott & Co., Parisian Inc. or any other Affiliate of
the Transferor shall be permitted without notice.

          SECTION 3.5  Tax Treatment.  The Transferor, the Senior Class Conduits
                       -------------
and the Bank Investors have entered into this Agreement, and the Transferor has
entered into the Series Supplement, with the intention that the Senior Class
Certificates will qualify under applicable tax law as indebtedness, and the

                                       40
<PAGE>

Transferor and each Senior Class Conduit and Bank Investor by its acceptance of
the Senior Class Certificates agree to and shall treat the Senior Class
Certificates for purposes of federal and state income or franchise taxes and any
other tax imposed on or measured by income, as indebtedness unless otherwise
required by the Internal Revenue Service.

          SECTION 3.6  Conditions Precedent to Initial Transfer.  On or prior to
                       ----------------------------------------
the Closing Date, the Transferor and the Servicer shall deliver to the Agent
(with sufficient copies for each Senior Class Agent and their respective
counsel) the following documents, instruments and fees, all of which shall be in
a form and substance acceptable to the Agent and each Senior Class Agent:

          (a)  A copy of the resolutions of the Board of Directors (or Executive
Committee) of each of the Transferor and the Servicer, certified by an Executive
Vice President, Senior Vice President, Treasurer, Secretary or  Assistant
Secretary, approving the execution, delivery and performance by the Transferor
and the Servicer, respectively, of the Series Supplement, this Agreement, the
Certificates and the other Transaction Documents to which the Transferor or the
Servicer is a party.

          (b)  The Certificate of Incorporation of the Transferor and the
Servicer, certified by the Secretary of State or other similar official of its
jurisdiction of incorporation dated a recent date and further certified by an
officer of each respective corporation.

          (c)  A Good Standing Certificate for the Transferor and the Servicer
and issued by the Secretary of State or other similar official of its
jurisdiction of incorporation and certificates of qualification as a foreign
corporation issued by the Secretaries of State or other similar officials of
each jurisdiction where such qualification is material to the transactions
contemplated by the Transaction Documents to which such Person is a party, in
each case dated a date reasonably prior to the Closing Date.

          (d)  A certificate of an Executive Vice President, Senior Vice
President, Treasurer, Secretary or  Assistant Secretary of the Transferor and
the Servicer substantially in the form of Exhibit C hereto.
                                          ---------

          (e)  Favorable opinions of Alston & Bird LLP, counsel to the
Transferor, the Servicer and each Eligible Originator in substantially the form
of such opinions previously delivered in respect of other Series of Certificates
issued by the

                                       41
<PAGE>

Trust with respect to certain corporate and enforceability, UCC, federal and
state income tax, FIRREA and substantive non-consolidation matters.

          (f)  Favorable opinions of counsel to the Trustee, as to the due
authorization, execution and delivery by the Trustee of the Series Supplement
and each other Transaction Document executed by the Trustee.

          (g)  An executed copy of the Master Pooling and Servicing Agreement,
the Series Supplement, this Agreement, the Fee Letters, and executed or a
certified copy of each of the other Transaction Documents to be executed by the
Transferor or the Servicer.

          (h)  The Class A Variable Funding Certificates in the face amount of
$250,410,000 and the Subordinate Class Certificates in the face amount of
$16,000,000, in each case duly executed by the Transferor and duly authenticated
by the Trustee and issued, in the case of the Class A Variable Funding
Certificates, to the parties specified in Section 2.1 hereof and, in the case of
the Subordinate Class Certificates, to the Transferor.

          (i)  Payment of (i) any fees to be paid on or prior to the Closing
Date pursuant to the Fee Letter and (ii) all up-front fees to be paid to the
Senior Class Conduits.

          (j)  Such other documents, instruments, certificates and opinions as
the Agent, any Senior Class Agent or any Bank Investor shall reasonably request.

          SECTION 3.7   [RESERVED]

          SECTION 3.8  Periodic Notices and Reports.  Notices, Certificates and
                       ----------------------------   -------------------------
Reports Delivered to the Trustee and the Rating Agencies.  In addition to those
--------------------------------------------------------
notices, certificates and reports required to be delivered to the Agent pursuant
to Section 3.3 hereof, the Transferor shall furnish to the Agent (and the Agent
shall forward to each Senior Class Agent) a copy of each notice, certificate or
report delivered to the Trustee or a Rating Agency pursuant to the Master
Pooling and Servicing Agreement or the Series Supplement concurrently with the
delivery of any such notice, certificate or report to the Trustee or a Rating
Agency, as the case may be.

                                       42
<PAGE>

                                  ARTICLE IV

                   INDEMNIFICATION; EXPENSES; RELATED MATTERS

          SECTION 4.1  Indemnities by the Transferor.  Without limiting any
                       -----------------------------
other rights which the Agent, the Senior Class Agents, the Senior Class Conduits
or the Bank Investors may have hereunder or under applicable law, the Transferor
hereby agrees to indemnify the Senior Class Conduits, the Bank Investors, the
Agent, the Senior Class Agent, the Collateral Agents, each Program Support
Provider and any successors and permitted assigns and any of their respective
officers, directors and employees (collectively, the "Indemnified Parties") from
                                                      -------------------
and against any and all damages, losses, claims, liabilities, costs and
expenses, including, without limitation, reasonable attorneys' fees (which such
attorneys may be employees of a Program Support Provider, the Agent, a Senior
Class Agent or a Collateral Agent, as applicable) and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
                                             -------------------
against or reasonably incurred by any Indemnified Party in any action or
proceeding between the Transferor or the Servicer and any of the Indemnified
Parties or between any of the Indemnified Parties and any third party or
otherwise arising out of or as a result of this Agreement, the other Transaction
Documents, the ownership or maintenance, either directly or indirectly, by the
Agent, any Senior Class Agent, any Senior Class Conduit or any Bank Investor of
the Senior Class Certificates or any of the other transactions contemplated
hereby or thereby, excluding, however, (i) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (ii) recourse (except as otherwise specifically provided in
this Agreement or the Master Pooling and Servicing Agreement) for amounts due
under the Receivables which are uncollectible and (iii) Indemnified Amounts
specifically excluded from coverage under Section 4.2.  Without limiting the
generality of the foregoing, the Transferor shall indemnify each Indemnified
Party for Indemnified Amounts relating to or resulting from:

               (i)  any representation or warranty made by the Transferor, any
     Eligible Originator or the Servicer or any officer of the Transferor, any
     Eligible Originator or the Servicer under or in connection with this
     Agreement, any Receivables Purchase Agreement, any of the other Transaction
     Documents or any other information or report delivered by the Transferor or
     the Servicer pursuant hereto or thereto, which shall have been false or
     incorrect in any material respect when made or deemed made;

                                       43
<PAGE>

               (ii)  the failure by the Transferor, any Eligible Originator or
     the Servicer to comply with any applicable law, rule or regulation with
     respect to any Receivable or the related Account, or the nonconformity of
     any Receivable or the related Account with any such applicable law, rule or
     regulation;

               (iii)  the failure to vest and maintain vested in the Trustee, on
     behalf of the Trust, an undivided first priority, perfected percentage
     ownership or security interest in the Trust Property free and clear of any
     Lien (except as expressly permitted by the Transaction Documents);

               (iv)  the failure to file, or any delay in filing, financing
     statements, continuation statements, or other similar instruments or
     documents under the UCC of any applicable jurisdiction or other applicable
     laws with respect to any of the Trust Property;

               (v)  any dispute, claim, offset or defense (other than discharge
     in bankruptcy) of the Obligor to the payment of any Receivable (including,
     without limitation, a defense based on such Receivable or the related
     Account not being the legal, valid and binding obligation of such Obligor
     enforceable against it in accordance with its terms), or any other claim
     resulting from the sale of merchandise or services related to such
     Receivable or the furnishing or failure to furnish such merchandise or
     services;

               (vi)  any failure of the Servicer to perform its duties or
     obligations in accordance with the provisions of the Master Pooling and
     Servicing Agreement and the Series Supplement; or

               (vii)  any products liability claim or personal injury or
     property damage suit or other similar or related claim or action of
     whatever sort arising out of or in connection with merchandise or services
     which are the subject of any Receivable;

               (viii)  the transfer of an ownership interest in any Receivable
     other than an Eligible Receivable as defined in the Master Pooling and
     Servicing Agreement;

               (ix)  the failure by the Transferor, any Eligible Originator or
     the Servicer to comply with any term, provision or covenant contained in
     this

                                       44
<PAGE>

     Agreement or any of the other Transaction Documents to which it is a
     party or to perform any of its respective duties under the Accounts;

               (x)    the failure of any Eligible Originator to pay when due any
     taxes, including without limitation, sales, excise or personal property
     taxes payable in connection with any of the Receivables;

               (xi)   any repayment by any Indemnified Party of any amount
     previously distributed in reduction of the Senior Class Investor Amount
     which such Indemnified Party believes in good faith is required to be made;

               (xii)  the commingling by the Transferor, any Eligible Originator
     or the Servicer of Collections of Receivables at any time with other funds;

               (xiii) any investigation, litigation or proceeding related to
     this Agreement, any of the other Transaction Documents, the use of proceeds
     of the acquisition of interests in the Senior Class Certificates by the
     Transferor, the ownership of the Senior Class Certificates or any Trust
     Property;

               (xiv)  any inability to obtain any judgment in or utilize the
     court or other adjudication system of, any state in which an Obligor may be
     doing business as a result of the failure of the Transferor or any Eligible
     Originator to qualify to do business or file any notice of business
     activity report or any similar report;

               (xv)   any failure of the Transferor to give reasonably
     equivalent value to an Eligible Originator in consideration of the purchase
     by the Transferor from such Eligible Originator of any Receivable, or any
     attempt by any Person to void, rescind or set-aside any such transfer under
     statutory provisions or common law or equitable action, including, without
     limitation, any provision of the Bankruptcy Code; or

               (xvi)  any action taken by the Transferor, any Eligible
     Originator or the Servicer in the enforcement or collection of any
     Receivable;

provided, however, that if the Senior Class Conduits enter into
--------  -------
agreements for the purchase of certificates representing interests in amounts
due under receivables or of interests in receivables from one or more Other
Transferors, the Senior Class Conduits shall allocate such Indemnified Amounts
which are in connection with a

                                       45
<PAGE>

Program Support Agreement or the program support furnished by a Program Support
Provider among the Transferor and each Other Transferor; and provided, further,
                                                             --------  -------
that if such Indemnified Amounts are attributable to the Transferor or the
Servicer and not attributable to any Other Transferor, the Transferor shall be
solely liable for such Indemnified Amounts or if such Indemnified Amounts are
attributable to Other Transferors and not attributable to the Transferor or the
Servicer, such Other Transferors shall be solely liable for such Indemnified
Amounts.

          SECTION 4.2  Indemnity for Taxes, Reserves and Expenses.  (a)  If
                       ------------------------------------------
after the date hereof, the adoption of any Law or bank regulatory guideline or
any amendment or change in the interpretation of any existing or future Law or
bank regulatory guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any directive of
any Official Body (in the case of any bank regulatory guideline, whether or not
having the force of law):

               (i)  shall subject any Indemnified Party to any tax, duty or
     other charge (other than Excluded Taxes) with respect to this Agreement,
     the other Transaction Documents, the ownership, maintenance or financing of
     the Senior Class Certificates, the Receivables or payments of amounts due
     hereunder, or shall change the basis of taxation of payments to any
     Indemnified Party of amounts payable in respect of this Agreement, the
     other Transaction Documents, the ownership, maintenance or financing of the
     Senior Class Certificates, the Receivables or payments of amounts due
     hereunder or its obligation to advance funds hereunder, under a Program
     Support Agreement or otherwise in respect of this Agreement, the other
     Transaction Documents, the ownership, maintenance or financing of the
     Senior Class Certificates or the Receivables (except for changes in the
     rate of general corporate, franchise, net income or other income tax
     imposed on such Indemnified Party by the jurisdiction in which such
     Indemnified Party's principal executive office is located);

               (ii) shall impose, modify or deem applicable any reserve, special
     deposit or similar requirement (including, without limitation, any such
     requirement imposed by the Board of Governors of the Federal Reserve System
     other than any such requirement used in determining the Adjusted LIBOR
     Rate) against assets of, deposits with or for the account of, or credit
     extended by, any Indemnified Party or shall impose on any Indemnified Party
     or on the London interbank market any other condition affecting this
     Agreement, the other Transaction Documents, the ownership, maintenance or

                                       46
<PAGE>

     financing of the Senior Class Certificates, the Receivables or payments of
     amounts due hereunder or its obligation to advance funds hereunder, under a
     Program Support Agreement or otherwise in respect of this Agreement, the
     other Transaction Documents, the ownership, maintenance or financing of the
     Senior Class Certificates or the Receivables; or

               (iii) imposes upon any Indemnified Party any other expense
     (including, without limitation, reasonable attorneys' fees and expenses,
     and expenses of litigation or preparation therefor in contesting any of the
     foregoing) with respect to this Agreement, the other Transaction Documents,
     the ownership, maintenance or financing of the Senior Class Certificates,
     the Receivables or payments of amounts due hereunder or its obligation to
     advance funds hereunder, under a Program Support Agreement or otherwise in
     respect of this Agreement, the other Transaction Documents, the ownership,
     maintenance or financing of the Senior Class Certificates or the
     Receivables,

and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Senior Class
Certificates, the Receivables, the obligations hereunder, the funding of any
purchases hereunder, a Program Support Agreement, by an amount deemed by such
Indemnified Party to be material, then, within ten (10) days after demand by
such Indemnified Party through the Agent, the Transferor shall pay to the Agent,
for the benefit of such Indemnified Party, such additional amount or amounts as
will compensate such Indemnified Party for such increased cost or reduction.

          (b)  If any Indemnified Party shall have determined that after the
date hereof, the adoption of any applicable Law or bank regulatory guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation thereof by any Official Body, or any directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of law) of any such Official Body, has or would have the effect of
reducing the rate of return on capital of such Indemnified Party (or its parent)
as a consequence of such Indemnified Party's obligations hereunder or with
respect hereto to a level below that which such Indemnified Party (or its
parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Indemnified Party to be material, then from time to time,
within ten (10) days after demand by such Indemnified Party through the Agent,
the Transferor shall pay to the Agent, for the benefit of such Indemnified

                                       47
<PAGE>

Party, such additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction.

          (c)  Each Senior Class Agent will notify the Agent and the Agent will
promptly notify the Transferor of any event of which it has knowledge, occurring
after the date hereof, which will entitle an Indemnified Party to compensation
pursuant to this Section.  A notice by the Agent or the applicable Indemnified
Party claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error.  In determining such amount, the Agent or any applicable
Indemnified Party may use any reasonable averaging and attributing methods.

          (d)  Anything in this Section 4.2 to the contrary notwithstanding, if
a Senior Class Conduit enters into agreements for the acquisition of
certificates representing interests in other receivables from one or more Other
Transferors, such Senior Class Conduit shall allocate the liability for any
amounts under this Section which are in connection with a Program Support
Agreement or the program support provided by a Program Support Provider
("Section 4.2 Costs") to the Transferor and each Other Transferor; provided,
-------------------                                                --------
however, that if such Section 4.2 Costs are attributable to the Transferor, an
-------
Eligible Originator or the Servicer and not attributable to any Other
Transferor, the Transferor shall be solely liable for such Section 4.2 Costs or
if such Section 4.2 Costs are attributable to Other Transferors and not
attributable to the Transferor, an Eligible Originator or the Servicer, such
Other Transferors shall be solely liable for such Section 4.2 Costs.

          SECTION 4.3  Taxes.  All payments made hereunder by the Transferor or
                       -----
the Servicer (each, a "payor") to any Senior Class Conduit, any Bank Investor or
                       -----
the Agent (each, a "recipient") shall be made free and clear of and without
                    ---------
deduction for any present or future income, excise, stamp or franchise taxes and
any other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority on any recipient (or any assignee of
such parties) (such non-excluded items being called "Taxes"), but excluding
                                                     -----
franchise taxes imposed on net income (or any interest or penalties with respect
thereto) and taxes imposed on or measured by the recipient's net income required
to be paid by any recipient in connection herewith to any taxing authority
("Excluded Taxes").  In the event that any withholding or deduction from any
----------------
payment made by the payor hereunder is required in respect of any Taxes, then
such payor shall:

               (a)  pay directly to the relevant authority the full amount
required to be so withheld or deducted;

                                       48
<PAGE>

               (b)  promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and

               (c)  pay to the recipient such additional amount or amounts as is
necessary to ensure that the net amount actually received by the recipient will
equal the full amount such recipient would have received had no such withholding
or deduction been required.

Moreover, if any Taxes are directly asserted against any recipient with respect
to any payment received by such recipient hereunder, the recipient shall
promptly notify the Transferor and the Servicer, and the recipient may pay such
Taxes and the payor will promptly pay such additional amounts (including any
penalties, interest or expenses) as shall be necessary in order that the net
amount received by the recipient after the payment of such Taxes (including any
Taxes on such additional amount) shall equal the amount such recipient would
have received had such Taxes not been asserted.

               If the payor fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the recipient the required receipts or
other required documentary evidence, the payor shall indemnify the recipient for
any incremental Taxes, interest, or penalties that may become payable by any
recipient as a result of any such failure.

          SECTION 4.4  Other Costs, Expenses and Related Matters.
                       -----------------------------------------

               (a)  The Transferor agrees, upon receipt of a written invoice in
reasonable detail, to pay or cause to be paid, and to save the Senior Class
Conduits, the Bank Investors, the Senior Class Agents and the Agent harmless
against liability for the payment of, all reasonable out-of-pocket expenses
(including, without limitation, attorneys', accountants' and other third
parties' fees and expenses, any filing fees and expenses incurred by officers or
employees of the Senior Class Conduits, the Bank Investors, the Agent and/or the
Senior Class Agents) or intangible, documentary or recording taxes incurred by
or on behalf of any Senior Class Conduit, any Bank Investor, the Agent and any
Senior Class Agent (i) in connection with the negotiation, execution, delivery
and preparation of this Agreement, the other Transaction Documents and any
documents or instruments delivered pursuant hereto and thereto and the
transactions contemplated hereby or thereby, and (ii) from time to time (a)
relating to any amendments, waivers or consents under this Agreement and the
other Transaction Documents, (b) arising in connection with any Senior Class
Conduit's, any Bank Investor's, the Agent's or any Senior Class Agent's
enforcement or preservation of rights, or (c) arising in

                                       49
<PAGE>

connection with any audit, dispute, disagreement, litigation or preparation for
litigation involving this Agreement or any of the other Transaction Documents
(all of such amounts, collectively, "Transaction Costs").
                                     -----------------

               (b)  The Transferor shall pay to each Senior Class Agent, for the
account of the related Senior Class Conduit and Bank Investors, as applicable,
on demand any Early Collection Fee due on account of the receipt by a Senior
Class Conduit or Bank Investor of any amounts applied in reduction of the Senior
Class Investor Amount on any day other than the last day of any applicable
funding period.

          SECTION 4.5  Indemnification by Servicer.  The Servicer shall
                       ---------------------------
indemnify and hold harmless each Indemnified Party from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of willful
misfeasance, bad faith, or negligence in the performance of the duties of the
Servicer or by reason of reckless disregard of obligations and duties of the
Servicer hereunder or under the Master Pooling and Servicing Agreement or by
reason of any acts, omissions or alleged acts or omissions of the Servicer
pursuant to this Agreement or the Master Pooling and Servicing Agreement;
provided, however, that the Servicer shall not indemnify any such Indemnified
--------  -------
Party for any such loss, liability, expense, damage or injury suffered or
sustained by reason of any action taken or omitted at the written request of
such Indemnified Party; and provided, further, that the Servicer shall not
                            --------  -------
indemnify any such Indemnified Party for any such loss, liability, expense,
damage or injury incurred with respect to any action taken by such Indemnified
Party constituting fraud, gross negligence, breach of fiduciary duty or willful
misconduct, with respect to the uncollectibility of the Receivables or with
respect to any federal, state or local income or franchise taxes (or any
interest or penalties with respect thereto) required to be paid by any such
Indemnified Party in connection herewith to any taxing authority.  The Servicer
shall not be liable for acts or omissions of any Successor Servicer.  The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.

                                       50
<PAGE>

                                   ARTICLE V

                THE AGENT; BANK COMMITMENT; SENIOR CLASS AGENTS

               SECTION 5.1.  Authorization and Action of Agent.
                             ---------------------------------

               (a)  Each Senior Class Conduit and each Bank Investor hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Transaction Documents
as are delegated to the Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. In furtherance, and without
limiting the generality of the foregoing, each Senior Class Conduit and each
Bank Investor hereby appoints the Agent as its agent to execute and deliver all
further instruments and documents, and take all further action that the Agent
may deem necessary or appropriate or that a Senior Class Conduit or a Bank
Investor may reasonably request in order to perfect, protect or more fully
evidence the interests transferred or to be transferred from time to time by the
Transferor hereunder, or to enable any of them to exercise or enforce any of
their respective rights hereunder. The Senior Class Agents jointly may direct
the Agent to take any such incidental action hereunder. With respect to other
actions which are incidental to the actions specifically delegated to the Agent
hereunder, the Agent shall not be required to take any such incidental action
hereunder, but shall be required to act or to refrain from acting (and shall be
fully protected in acting or refraining from acting) upon the joint direction of
the Senior Class Agents; provided, however, that the Agent shall not be required
                         --------  -------
to take any action hereunder if the taking of such action, in the reasonable
determination of the Agent, shall be in violation of any applicable law, rule or
regulation or contrary to any provision of this Agreement or shall expose the
Agent to liability hereunder or otherwise.  Upon the occurrence and during the
continuance of any Pay Out Event or Potential Pay Out Event, the Agent shall
take no action hereunder (other than ministerial actions or such actions as are
specifically provided for herein) without the prior consent of the Required
Investor Certificateholders.  The Agent shall not, without the prior written
consent of each Senior Class Agent and Bank Investor, agree to (i) amend, modify
or waive any provision of this Agreement in any way which would (A) reduce or
impair Collections or the payment of fees payable hereunder to the Senior Class
Conduits or the Bank Investors or delay the scheduled dates for payment of such
amounts, (B) increase the Servicing Fee Percentage, (C) modify any provisions of
this Agreement, the Master Pooling and Servicing Agreement or the Series
Supplement relating to the timing of payments required to be made by the
Transferor or the Servicer or the application of the proceeds of such payments,
(D) the appointment of any Person (other than the Trustee) as successor

                                       51
<PAGE>

Servicer, (E) release any property from the lien provided by this Agreement
(other than as expressly contemplated herein), or (F) modify Section 3.4(d)
hereof or the definition of "Minimum Enhancement Amount" in the Series
Supplement or the definitions of "Defaulted Account" or "Eligible Receivable" in
the Master Pooling and Servicing Agreement, or (ii) amend, modify or waive any
provision of any Transaction Document relating to a Pay Out Event or Potential
Pay Out Event or waive any Pay Out Event or Potential Pay Out Event.  The Agent
shall not agree to any amendment of or waiver under this Agreement which
increases the dollar amount of a Bank Investor's Commitment without the prior
written consent of such Bank Investor.  In addition, the Agent shall not agree
to any amendment of or waiver under this Agreement not specifically described in
the two preceding sentences without the consent of the Required Investor
Certificateholders.  In the event the Agent requests a Senior Class Agent's, a
Senior Class Conduit's or a Bank Investor's consent pursuant to the foregoing
provisions and the Agent does not receive a response (either positive or
negative) from such Senior Class Agent, Senior Class Conduit or Bank Investor
within 10 Business Days of such Person's receipt of such request in writing,
then such Senior Class Agent, Senior Class Conduit or Bank Investor (and its
percentage interest hereunder, if applicable) shall be disregarded in
determining whether the Agent shall have obtained sufficient consent hereunder.

          (b)  The Agent shall use commercially reasonable efforts to (i)
forward any communication (whether written or otherwise) received by it from the
Transferor to each applicable Senior Class Agent, and (ii) forward, at the
direction of any Senior Class Agent, any Senior Class Conduit or any Bank
Investor or as otherwise provided by this Agreement, any communication received
by it from any Senior Class Agent, any Senior Class Conduit or any Bank
Investor, to the Transferor or the Servicer, as applicable.  Any communication
between the Transferor or the Servicer and any Senior Class Agent, any Senior
Class Conduit or any Bank Investor made pursuant to this Agreement or any other
Transaction Document (other than such Person's Fee Letters) shall be made, to
the extent possible, through the Agent. The Agent may, where appropriate,
deliver copies (including facsimile or electronic copies) of any communication
it is required to deliver pursuant to this Agreement or any other Transaction
Document.

          (c)  The Agent shall exercise such rights and powers vested in it by
this Agreement and the other Transaction Documents, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.

                                       52
<PAGE>

          SECTION 5.2.  Agent's Reliance, Etc.  Neither the Agent nor any of its
                        ----------------------
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them as Agent under or in connection with this
Agreement or any of the other Transaction Documents, except for its or their own
gross negligence or willful misconduct.  Without limiting the foregoing, the
Agent: (i) may consult with legal counsel (including counsel for the Transferor
or the Servicer), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Senior Class Conduit or
Bank Investor and shall not be responsible to any Senior Class Conduit or Bank
Investor for any statements, warranties or representations made in or in
connection with this Agreement; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Transaction Documents on the
part of the Transferor or the Servicer or to inspect the property (including the
books and records) of the Transferor or the Servicer; (iv) shall not be
responsible to any Senior Class Conduit or any Bank Investor for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any of the other Transaction Documents or any other
instrument or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this Agreement or any of the other
Transaction Documents by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by telex or
facsimile) believed by it to be genuine and signed or sent by the proper party
or parties.

          SECTION 5.3.  Credit Decision.  Each Senior Class Conduit and Bank
                        ---------------
Investor acknowledges that it has, independently and without reliance upon the
Agent, any of the Agent's Affiliates, any other Bank Investor or any other
Senior Class Conduit and based upon such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and the other Transaction Documents to which it is a party and, if it
so determines, to accept the transfer of all or any portion of the Senior Class
Certificates.  Each Senior Class Conduit and Bank Investor also acknowledges
that it will, independently and without reliance upon the Agent, any of the
Agent's Affiliates, any other Bank Investor or any other Senior Class Conduit
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own decisions in taking or not taking action under
this Agreement and the other Transaction Documents to which it is a party.

                                       53
<PAGE>

          SECTION 5.4.  Indemnification of the Agent.  Each Bank Investor agrees
                        ----------------------------
to indemnify the Agent (to the extent not reimbursed by the Transferor), ratably
(and not jointly) in accordance with their respective Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent (in its capacity as such) in any way relating to or arising out of this
Agreement and the other Transaction Documents or any action taken or omitted by
the Agent hereunder or thereunder, provided that a Bank Investor shall not be
                                   --------
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.  Without limitation of
the foregoing, the Bank Investors agree to reimburse the Agent, ratably (and not
jointly) in accordance with their respective Commitments, promptly upon demand
for any out-of-pocket expenses (including counsel fees) incurred by the Agent
(in its capacity as such) in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Transaction
Documents, to the extent that such expenses are incurred in the interests of or
otherwise in respect of the Senior Class Conduits or the Bank Investors
hereunder and/or thereunder and to the extent that the Agent is not reimbursed
for such expenses by the Transferor.

          SECTION 5.5  Successor Agent.  The Agent may resign at any time,
                       ---------------
effective upon the appointment and acceptance of a successor Agent as provided
below, by giving written notice thereof to each Senior Class Agent, each Senior
Class Conduit, each Bank Investor, the Transferor and the Servicer, and may be
removed at any time (i) with cause by holders of more than 50% of the aggregate
Senior Class Investor Amounts or (ii) without cause at the direction of the
Servicer provided that the Bank Investor affiliated with the successor Agent
provides a Commitment equal to at least the Commitment of the former Agent as
adjusted after the appointment of the successor Agent.  Upon any removal of the
Agent without cause pursuant to clause (ii) of the preceding sentence, the
Servicer shall appoint a successor Agent. Upon any such resignation or a removal
for cause, the continuing and new Bank Investors representing not less than 50%
of the new aggregate Commitment amount shall appoint a successor Agent
affiliated with the continuing or new Bank Investor, with the Servicer's
consent, which shall not be unreasonably withheld.  Each Senior Class Conduit
and each Bank Investor agrees that it shall not unreasonably withhold or delay
its approval of the appointment of a successor Agent. If no such successor Agent
shall have been so appointed, and shall have accepted such appointment, within
30 days after the retiring Agent's giving of notice of resignation or the
holders

                                       54
<PAGE>

of more than 50% of the aggregate Senior Class Investor Amounts removal of the
retiring Agent then the retiring Agent may, on behalf of the Senior Class
Conduits and the Bank Investors, appoint a successor Agent which successor Agent
shall be either (i) a commercial bank organized under the laws of the United
States or of any state thereof and have a combined capital and surplus of at
least $500,000,000 or (ii) an Affiliate of such a bank. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article V shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. The successor
agent shall promptly notify the Transferor and the Servicer of its appointment
hereunder.

          SECTION 5.6.  Payments by the Agent.  Unless specifically allocated to
                        ---------------------
a Bank Investor or a Senior Class Conduit pursuant to the terms of this
Agreement, all amounts received by the Agent, if any, on behalf of the Senior
Class Conduits or the Bank Investors shall be paid by the Agent to the
applicable Senior Class Agent (at the account specified on the signature pages
hereto or as may be specified in writing to the Agent) in accordance with their
respective related pro rata interests in the Senior Class Investor Amount on the
Business Day received by the Agent, unless such amounts are received after 12:00
noon on such Business Day, in which case the Agent shall use commercially
reasonable efforts to pay such amounts to the Senior Class Conduits or Bank
Investors on such Business Day, but, in any event, shall pay such amounts to the
Senior Class Conduits or Bank Investors in accordance with their respective
related pro rata interests in the Senior Class Investor Amount not later than
the following Business Day.

          SECTION 5.7.  Bank Commitment; Assignment to Bank Investors.
                        ---------------------------------------------

               (a)  Bank Commitment.  At any time prior to the Commitment
                    ---------------
Termination Date and prior to the Termination Date (excluding a "Termination
Date" occurring as a result of clause (iv) or (v) of the definition of
"Termination Date"), in the event that any Senior Class Conduit does not acquire
an Additional Investor Amount as requested under Section 2.2(a), then at any
time, the Transferor shall have the right to require such Senior Class Conduit
to assign its interests in the Senior Class Certificate Principal Balance in
whole to the related Bank Investors pursuant to this Section 5.7. In addition,
at any time prior to the Commitment Termination Date (i) upon the occurrence of
a Pay Out Event, a Senior Class Agent may request that

                                       55
<PAGE>

the related Senior Class Conduit assign its interest in the Senior Class
Certificate Principal Balance in whole to the related Bank Investors pursuant to
this Section 5.7, and (ii) if a Senior Class Conduit gives notice to the
Transferor of a Reinvestment Termination Date and requests that its interest in
the Senior Class Certificate Principal Balance be assigned to the related Bank
Investors, such interest shall be assigned in whole to the related Bank
Investors pursuant to this Section 5.7, and, in each case, the Transferor hereby
agrees to pay the amounts described in Section 5.7(d) below. Upon any such
election or notice by a Senior Class Agent or a Senior Class Conduit, the
applicable Senior Class Agent shall give a notice of Assignment to the related
Bank Investors and such Bank Investors shall thereupon be deemed to have
accepted such Assignment and shall assume all the applicable Senior Class
Conduit's obligations hereunder. In connection with any Assignment from a Senior
Class Conduit to the related Bank Investors pursuant to this Section, each Bank
Investor shall, by the close of business on the date specified in such notice of
Assignment, pay to such Senior Class Conduit (in immediately available funds) an
amount equal to its Assignment Amount (it being understood that notwithstanding
the foregoing assignment of Senior Class Certificate Principal Balance, the
related Bank Investors, as assignees, continue to be obligated to fund
Additional Investor Amounts under Section 2.2 in accordance with the terms
thereof and shall not have the right to elect the commencement of the
amortization of such Senior Class Certificate Principal Balance pursuant to the
definition of "Reinvestment Termination Date" notwithstanding that the Purchaser
had such right). Consent of the Transferor shall in no event be required in
order for any Senior Class Conduit to assign any interest in the Senior Class
Certificate Principal Balance to the related Bank Investors. Upon any Assignment
by a Senior Class Conduit to the related Bank Investors contemplated hereunder,
such Senior Class Conduit shall cease to acquire any Additional Investor Amounts
hereunder.

               (b)  Assignment.  No Bank Investor may assign all or a portion
                    ----------
of its interests in the Senior Class Certificates, the Senior Class Certificate
Principal Balance, the Trust Property or its rights and obligations hereunder to
any Person unless approved in writing by the Agent, the related Senior Class
Agent and the Transferor (in each case such approval not to be unreasonably
withheld or delayed) and made in accordance with the Master Pooling and
Servicing Agreement and the Series Supplement.  In the case of an Assignment by
a Bank Investor to another Person, the assignor shall deliver to the assignee(s)
an Assignment and Assumption Agreement in substantially the form of Exhibit B
                                                                    ---------
hereto, duly executed, assigning to the assignee a pro rata interest in the
Senior Class Certificates, the Senior Class Certificate Principal Balance, the
Trust Property and the assignor's rights and obligations hereunder and the
assignor shall promptly execute and deliver all

                                       56
<PAGE>

instruments and documents required by the Master Pooling and Servicing Agreement
and the Series Supplement and all further instruments and documents, and take
all further action, that the assignee may reasonably request, in order to
protect, or more fully evidence the assignee's right, title and interest in and
to such interest and to enable the Agent, on behalf of such assignee, to
exercise or enforce any rights hereunder and under the other Transaction
Documents to which such assignor is or, immediately prior to such Assignment,
was a party. Upon any such Assignment, (i) the assignee shall have all of the
rights and obligations of the assignor hereunder and under the other Transaction
Documents to which such assignor is or, immediately prior to such Assignment,
was a party with respect to such interest for all purposes of this Agreement and
under the other Transaction Documents to which such assignor is or, immediately
prior to such Assignment, was a party, and (ii) the assignor shall relinquish
its rights with respect to such interest for all purposes of this Agreement and
under the other Transaction Documents to which such assignor is or, immediately
prior to such Assignment, was a party. No such Assignment shall be effective
unless a fully executed copy of the related Assignment and Assumption Agreement
shall be delivered to the Agent and the Transferor. All reasonable out-of-pocket
costs and reasonable legal expenses of the Agent and the initial Bank Investors
hereto incurred in connection with any Assignment from the initial Bank
Investors to other Bank Investors hereunder shall be borne by the Transferor. No
Bank Investor shall assign any portion of its Commitment hereunder without also
simultaneously assigning an equal portion of its interest in the applicable
Program Support Agreement.

          (c)  Effects of Assignment.  By executing and delivering an Assignment
               ---------------------
and Assumption Agreement,  the assignor and assignee thereunder confirm to and
agree with each other and the other parties hereto as follows:  (i) other than
as provided in such Assignment and Assumption Agreement, the assignor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, the other Transaction Documents or any other instrument or document
furnished pursuant hereto or thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, the other
Transaction Documents or any such other instrument or document; (ii) the
assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Transferor or the Servicer or the
performance or observance by the Transferor or the Servicer of any of their
respective obligations under this Agreement, the other Transaction Documents or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, the Master Pooling and
Servicing Agreement, the Series

                                       57
<PAGE>

Supplement and such other instruments, documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Assumption Agreement and to purchase such interest; (iv)
such assignee will, independently and without reliance upon the Agent, or any of
its Affiliates, or the assignor and based on such agreements, documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Transaction Documents; (v) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement, the other Transaction Documents and any other instrument or
document furnished pursuant hereto or thereto as are delegated to the Agent by
the terms hereof or thereof, together with such powers as are reasonably
incidental thereto and to enforce its respective rights and interests in and
under this Agreement, the other Transaction Documents and the Trust Property;
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Transaction Documents are required to be performed by it as the assignee of the
assignor; and (vii) such assignee agrees that it will not institute against any
Senior Class Conduit any proceeding of the type referred to in Section 6.9 prior
to the date which is one year and one day after the payment in full of all
Commercial Paper issued by any Senior Class Conduit.

               (d)  Transferor's Obligation to Pay Certain Amounts; Additional
                    ----------------------------------------------------------
Assignment Amount.  The Transferor shall pay to the Agent for the benefit of the
-----------------
related Senior Class Agent, and the Agent shall pay to such related Senior Class
Agent, for the account of the related Senior Class Conduit, in connection with
any Assignment by a Senior Class Conduit to the related Bank Investors pursuant
to this Section 5.7, an amount equal to all Carrying Costs to accrue through the
maturity of all outstanding Related Commercial Paper.  To the extent that such
Carrying Costs relate to interest or discount on Commercial Paper issued to fund
the related Senior Class Certificate Principal Balance, if the Transferor fails
to make payment of such amounts at or prior to the time of Assignment by a
Senior Class Conduit to the related Bank Investors, such amount shall be paid by
such Bank Investors (in accordance with their respective Bank Pro Rata Shares)
to the Senior Class Conduit as additional consideration for the interests
assigned to the Bank Investors and the amount of the "Senior Class Certificate
Principal Balance" of the Senior Class Certificates held by the Bank Investors
and the "Senior Class Investor Amount" of the related Senior Class shall be
increased by an amount equal to the additional amount so paid by the Bank
Investors.

                                       58
<PAGE>

          (e)  Payments.  After any Assignment by the Senior Class Conduit to
               --------
the related Bank Investors pursuant to this Agreement, all payments to be made
hereunder by the Transferor or the Servicer for the benefit of the related
Senior Class Agent, for the benefit of the related Senior Class Conduit, shall
be made to the Agent's account as such account shall have been notified to the
Transferor and the Servicer, and the Agent shall forward such payment to the
related Senior Class Agent's account as such account shall have been notified to
the Agent for the benefit of the related Bank Investors.  In the event that the
sum of the Assignment Amount paid by the Bank Investors and the amounts paid to
the related Senior Class Conduit pursuant to 5.7(d) in connection with such
assignment is less than the sum of the related Senior Class Investor Amount plus
the Interest Component of all outstanding Related Commercial Paper, then to the
extent payments made hereunder in respect of the Senior Class Investor Amount
exceed such Assignment Amount plus all other amounts accruing to the applicable
Bank Investors after the date of such Assignment, such excess shall be remitted
by the Agent to the related Senior Class Agent for the benefit of such Senior
Class Conduit.

          (f)  Downgrade of Bank Investor.  If at any time prior to any
               --------------------------
Assignment by a Senior Class Conduit to the related Bank Investors as
contemplated pursuant to this Section, the short term debt rating of any Bank
Investor shall be "A-2" or "P-2" from Standard & Poor's or Moody's,
respectively, with negative credit implications, such Bank Investor, upon
request of the related Senior Class Agent, shall, at its own expense, within 30
days of such request, assign its rights and obligations hereunder to another
financial institution (which institution's short term debt shall be rated at
least "A-2" and "P-2" from Standard & Poor's or Moody's, respectively, and which
shall not be so rated with negative credit implications).  If the short term
debt rating of a Bank Investor shall be "A-3" or "P-3", or lower, from Standard
& Poor's or Moody's, respectively (or such rating shall have been withdrawn by
Standard & Poor's or Moody's), such Bank Investor, upon request of the related
Senior Class Agent, shall, within five (5) Business Days of such request, at its
own expense, assign its rights and obligations hereunder to another financial
institution (which institution's short term debt shall be rated at least "A-2"
and "P-2" from Standard & Poor's and Moody's, respectively, and which shall not
be so rated with negative credit implications).  In either such case, if any
such Bank Investor shall not have assigned its rights and obligations under this
Agreement within the applicable time period described above, the related Senior
Class Conduit or the Transferor shall have the right to require such Bank
Investor to accept the Assignment of the Bank Pro Rata Share for such Bank
Investor of the related Senior Class Investor Amount; such Assignment shall
occur in accordance with the applicable provisions of this Section.  Such Bank
Investor shall be obligated to pay to

                                       59
<PAGE>

the related Senior Class Conduit, in connection with such Assignment, in
addition to the Bank Pro Rata Share of the related Senior Class Investor Amount,
an amount equal to the interest component of the outstanding Commercial Paper
issued to fund the portion of the related Senior Class Investor Amount being
assigned to such Bank Investor, as reasonably determined by the Agent.
Notwithstanding anything contained herein to the contrary, upon any such
Assignment to a downgraded Bank Investor as contemplated pursuant to the
immediately preceding sentence, the aggregate available amount of the related
Senior Class Facility Limit, solely as it relates to the acquisition of any
Additional Investor Amount by the related Senior Class Conduit, shall be reduced
by the amount of the unused Commitment of such downgraded Bank Investor; it
being understood and agreed, that nothing in this sentence or the two preceding
sentences shall affect or diminish in any way any such downgraded Bank
Investor's Commitment to the Transferor or such downgraded Bank Investor's other
obligations and liabilities hereunder and under the other Transaction Documents.
The related Senior Class Agent shall give the Agent and the Transferor prompt
written notice of any Assignment to a Bank Investor pursuant to this Section
5.7.

          SECTION 5.8  Authorization and Action of Senior Class Agent.
                       ----------------------------------------------

               (a)  Each of the Senior Class Conduits and related Bank Investors
of each Class hereby appoints and authorizes the Senior Class Agent with respect
to such Class to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Senior Class Agent by the
terms hereof, together with such powers as are reasonably incidental thereto. In
furtherance, and without limiting the generality, of the foregoing, each of the
Senior Class Conduits and related Bank Investors hereby appoint the related
Senior Class Agent as their agent to execute and deliver all further instruments
and documents, and take all further action that the related Senior Class Agent
may deem necessary or appropriate or that the related Senior Class Conduit or
Bank Investors may reasonably request in order to perfect, protect or more fully
evidence the interests transferred or to be transferred from time to time by the
Transferor hereunder, or to enable any of them to exercise or enforce any of
their respective rights hereunder or under the Senior Class Certificates, and
such other instruments or notices, as may be necessary or appropriate for the
purposes stated hereinabove. With respect to actions which are incidental to the
actions specifically delegated to the Agent hereunder, the Majority Investors
may direct the related Senior Class Agent to direct the Agent to take any such
incidental action hereunder and the approval of the Majority Investors is
required to direct and/or approve the related Senior Class Agent's decision to
remove the Agent pursuant to Section 5.5. The Majority Investors may direct the

                                       60
<PAGE>

related Senior Class Agent to direct the Agent not to take or to cease taking
any action which is incidental to the actions specifically delegated to the
Agent hereunder. With respect to other actions which are incidental to the
actions specifically delegated to a Senior Class Agent hereunder, a Senior Class
Agent shall not be required to take any such incidental action hereunder, but
shall be required to act or to refrain from acting (and shall be fully protected
in acting or refraining from acting) upon the direction of the related Majority
Investors; provided, however, that no Senior Class Agent shall be required to
           --------  -------
take any action hereunder if the taking of such action, in the reasonable
determination of such Senior Class Agent, shall be in violation of any
applicable law, rule or regulation or contrary to any provision of this
Agreement or shall expose such Senior Class Agent to liability hereunder or
otherwise.  Upon the occurrence and during the continuance of any Pay Out Event
or Potential Pay Out Event, the Senior Class Agent shall take no action
hereunder (other than ministerial actions or such actions as are specifically
provided for herein) without the prior consent of each related Investor.  Unless
otherwise provided herein, the Senior Class Agent shall not authorize the
release by the Agent of any property conveyed to the Agent by the Transferor
hereunder without the prior consent of the Majority Investors.  The Senior Class
Agent shall not, without the prior written consent of each of the related Senior
Class Conduits (if any interest is held by a Senior Class Conduit at such time)
and Bank Investors, agree to (i) amend, modify or waive any provision of this
Agreement in any way which would (A) reduce or impair Collections or the payment
of Carrying Costs or fees payable under the related Fee Letters or delay the
scheduled dates for payment of such amounts, (B) increase the applicable Class
Monthly Servicing Fee, (C) modify any provisions of this Agreement relating to
the timing of payments required to be made by the Transferor or the application
of the proceeds of such payments, or (D) the appointment of any Person (other
than the Agent) as Successor Servicer.  In addition, each Senior Class Agent
agrees that it shall not agree to any amendment of or waiver under this
Agreement not specifically contemplated by the preceding sentence without the
consent of the related Majority Investors.  In the event the Senior Class Agent
requests a Person's consent pursuant to the foregoing provisions and the Senior
Class Agent does not receive a consent (either positive or negative) from such
Person within 10 Business Days of such Person's receipt of such request, then
such Person (and its percentage interest hereunder) shall be disregarded in
determining whether the Senior Class Agent shall have obtained sufficient
consent hereunder.

          (b)  The Senior Class Agent shall exercise such rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.

                                       61
<PAGE>

          SECTION 5.9  Senior Class Agents' Reliance, Etc.  Neither any Senior
                       -----------------------------------
Class Agent nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as
Senior Class Agent under or in connection with this Agreement, except for its or
their own gross negligence or willful misconduct.  Without limiting the
foregoing, the Senior Class Agent:  (i) may consult with legal counsel
(including counsel for the Transferor), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation to any Senior
Class Conduit or Bank Investor and shall not be responsible to any Senior Class
Conduit or Bank Investor for any statements, warranties or representations made
in or in connection with this Agreement; (iii) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of the Transferor or to
inspect the property (including the books and records) of the Transferor; (iv)
shall not be responsible to any Investor for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the Senior Class Certificates or any other instrument or document furnished
pursuant hereto; and (v) shall incur no liability under or in respect of this
Agreement by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by telex) believed by
it to be genuine and signed or sent by the proper party or parties.

          SECTION 5.10  Credit Decision.  Each Senior Class Conduit and Bank
                        ---------------
Investor acknowledges that it has, independently and without reliance upon the
Senior Class Agent or any of the Senior Class Agent's Affiliates, and based upon
such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement and, if it so determines,
to accept the transfer of an interest in a Certificate hereunder.  Each Investor
also acknowledges that it will, independently and without reliance upon the
Senior Class Agent or any of the Senior Class Agent's Affiliates and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own decisions in taking or not taking action under this
Agreement.

          SECTION 5.11.  Indemnification of the Senior Class Agent.  Each Bank
                         -----------------------------------------
Investor agrees to indemnify the related Senior Class Agent (to the extent not
reimbursed by the Transferor), ratably (and not jointly) according to their
respective Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the

                                       62
<PAGE>

Senior Class Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by the Senior Class Agent under this Agreement,
provided that a Bank Investor shall not be liable for any portion of such
                     --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the related Senior Class Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank Investor agrees to reimburse the related Senior Class Agent, ratably
(and not jointly) according to their respective Commitments, promptly upon
demand for any out-of-pocket expenses (including counsel fees) incurred by such
Senior Class Agent in connection with the modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that such expenses are incurred in the interests of or otherwise in
respect of the Series 2001-1 Certificates and to the extent that the Senior
Class Agent is not reimbursed for such expenses by the Transferor.

          SECTION 5.12  Successor Senior Class Agent.  A Senior Class Agent may
                        ----------------------------
resign at any time by giving written notice thereof to the Agent, each other
Senior Class Agent, each member of the Class, the Transferor and the Servicer
and may be removed at any time with cause by the related Senior Class Conduit or
Bank Investor.  Upon any such resignation or removal, the members of the related
Class acting jointly shall appoint a successor Senior Class Agent.  Each Senior
Class Conduit and Bank Investor agrees that it shall not unreasonably withhold
or delay its approval of the appointment of a successor Senior Class Agent.  If
no such successor Senior Class Agent shall have been so appointed, and shall
have accepted such appointment, within 30 days after the retiring Senior Class
Agent's giving of notice of resignation or the removal of the retiring Senior
Class Agent, then the retiring Senior Class Agent may, on behalf of the related
Senior Class Conduits and Bank Investors, appoint a successor Senior Class Agent
which successor agent shall be either (i) a commercial bank organized under the
laws of the United States or of any state thereof and have a combined capital
and surplus of at least $500,000,000 or (ii) an Affiliate of such a bank.  Upon
the acceptance of any appointment as Senior Class Agent hereunder by a successor
Senior Class Agent, such successor Senior Class Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Senior Class Agent, and the retiring Senior Class Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Senior Class Agent's resignation or removal hereunder as Senior Class
Agent, the provisions of this Article V shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Senior Class Agent under
this

                                       63
<PAGE>

Agreement. Each successor Senior Class Agent shall promptly notify the
Transferor and the Servicer of its appointment hereunder.

          SECTION 5.13.  Payments by the Senior Class Agents.  Unless
                         -----------------------------------
specifically allocated to a Senior Class Conduit or a Bank Investor pursuant to
the terms of this Agreement, all amounts received by the Senior Class Agent on
behalf of the Senior Class Conduit or the Bank Investors shall be paid by the
Senior Class Agent to the Senior Class Conduit or the Bank Investors, as
applicable (at the accounts specified to the Senior Class Agent) in accordance
with their respective related pro rata interests in the Senior Class Investor
Amount on the Business Day received by the Senior Class Agent, unless such
amounts are received after 12:00 noon on such Business Day, in which case the
Senior Class Agent shall use commercially reasonable efforts to pay such amounts
on such Business Day, but, in any event, shall pay such amounts in accordance
with their respective related pro rata interests in the Senior Class Investor
Amount not later than the following Business Day.

                                       64
<PAGE>

                                  ARTICLE VI

                                 MISCELLANEOUS

          SECTION 6.1.  Term of Agreement.  This Agreement shall terminate on
                        -----------------
the date following the Termination Date upon which all amounts due to the Series
2001-1 Certificateholders under this Agreement and the other Transaction
Documents have been paid in full; provided, however, that (i) the rights and
                                  --------  -------
remedies of the Agent, the Senior Class Agents, the Senior Class Conduits and
the Bank Investors with respect to any representation and warranty made or
deemed to be made by the Transferor or the Servicer pursuant to this Agreement,
(ii) the indemnification and payment provisions of Article IV, and (iii) the
agreement set forth in Section 6.9 hereof, shall be continuing and shall survive
any termination of this Agreement.

          SECTION 6.2.  Waivers; Amendments.  No failure or delay on the part of
                        -------------------
the Agent, any Senior Class Agent, any Senior Class Conduit or any Bank Investor
in exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy.  The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law.  Any
provision of this Agreement may be amended in writing signed by the Transferor,
the Servicer, the Agent, each Senior Class Agent, each Senior Class Conduit
(prior to an assignment in whole by such Senior Class Conduit of its interest in
the related Senior Class Certificate Principal Balance), and each Bank Investor
and any right or remedy herein provided to the Agent, any Senior Class Agent,
any Senior Class Conduit or any Bank Investor may be waived in writing signed by
the Agent and each Senior Class Agent; provided, however, that (i) any
                                       --------  -------
supplement to this Agreement to add an additional Senior Class Conduit as a
party hereto must be signed only by the Transferor, the Servicer, such
additional Senior Class Conduit and the Bank Investors related to such Senior
Class Conduit, and (ii) any amendment to the representations, warranties and
covenants of the Servicer in this Agreement in connection with the appointment
of a Successor Servicer shall not require the consent of the Transferor or the
Servicer.

          SECTION 6.3.  Notices, Etc.  Except where telephonic instructions or
                        -------------
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be sent by first-class prepaid United
States mail,

                                       65
<PAGE>

overnight delivery service for which a receipt or other tracking service is
available or facsimile transmission with a confirmation of the receipt thereof
and shall be deemed to be given for purposes of this Agreement five (5) days
after the same shall have been deposited in the mail or with such an overnight
delivery service or, where applicable, on the day that the receipt of such
facsimile transmission is confirmed in accordance with the provisions of this
Section 6.3. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section, notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses or facsimile numbers
indicated on the signature pages hereto, and, in the case of telephonic
instructions or notices, by calling the telephone number or numbers indicated
for such party on the signature pages hereto or, in the case of a Bank Investor
which becomes a party hereto pursuant to an Assignment and Assumption Agreement,
on the signature page to the Assignment and Assumption Agreement pursuant to
which it becomes a party hereto.

          SECTION 6.4.  Governing Law; Submission to Jurisdiction; Integration.
                        ------------------------------------------------------

               (a)  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE TRANSFEROR AND THE
SERVICER EACH HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. The Transferor and the Servicer each hereby irrevocably
waives, to the fullest extent it may effectively do so, any objection which it
may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. Nothing in this Section shall
affect the right of the Senior Class Conduits to bring any action or proceeding
against the Transferor, the Servicer or their respective property in the courts
of other jurisdictions.

               (b)  EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING

                                       66
<PAGE>

TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.

               (c)  This Agreement contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire Agreement among the parties hereto
with respect to the subject matter hereof superseding all prior oral or written
understandings.

               (d)  The Transferor hereby appoints Brian Martin, Saks
Incorporated, 12 East 49/th/ Street, New York, New York 10017, as the authorized
agent upon whom process may be served in any action arising out of or based upon
this Agreement, the other Transaction Documents to which such Person is a party
or the transactions contemplated hereby or thereby that may be instituted in the
United States District Court for the Southern District of New York and of any
New York State court sitting in The City of New York by the Agent, any Senior
Class Agent, any Senior Class Conduit, any Bank Investor or any assignee of any
of them.

          SECTION 6.5.  Severability.  Any provisions of this Agreement which
                        ------------
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

          SECTION 6.6.  Counterparts.  This Agreement may be executed in any
                        ------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.

          SECTION 6.7.  Successors and Assigns.
                        ----------------------

               (a)  This Agreement shall be binding on the parties hereto and
their respective successors and permitted assigns; provided, however, that the
                                                   --------  -------
Transferor may not assign any of its rights or delegate any of its duties
hereunder without the prior written consent of the Agent and each Senior Class
Agent.

               (b)  Without limiting the foregoing, a Purchaser may, from time
to time, with prior or concurrent notice to the Transferor and the Servicer, in
one transaction or a series of transactions, assign all or a portion of the
Senior Class

                                       67
<PAGE>

Certificates and its rights and obligations under this Agreement and any other
Transaction Documents to which it is a party to a Conduit Assignee. Upon and to
the extent of such assignment by a Purchaser to a Conduit Assignee, (i) such
Conduit Assignee shall be the owner of the assigned portion of the Senior Class
Certificates, (ii) the related administrative or managing agent for such Conduit
Assignee will act as the Senior Class Agent for such Conduit Assignee, with all
corresponding rights and powers, express or implied, granted to the Senior Class
Agent hereunder or under the other Transaction Documents, (iii) such Conduit
Assignee and its Program Support Providers and other related parties shall have
the benefit of all the rights and protections provided to the Purchaser and its
Program Support Providers, respectively, herein and in the other Transaction
Documents (including, without limitation, any limitation on recourse against
such Conduit Assignee or related parties, any agreement not to file or join in
the filing of a petition to commence an insolvency proceeding against such
Conduit Assignee, and the right to assign to another Conduit Assignee as
provided in this paragraph), (iv) such Conduit Assignee shall assume all (or the
assigned or assumed portion) of the Purchaser's obligations, if any, hereunder
or any other Transaction Document, and the Purchaser shall be released from such
obligations, in each case to the extent of such assignment, and the obligations
of the Purchaser and such Conduit Assignee shall be several and not joint, (v)
all distributions in respect of the Senior Class Certificates shall be made to
the applicable agent or administrative agent, as applicable, on behalf of such
Purchaser and such Conduit Assignee on a pro rata basis according to their
respective interests, (vi) the definition of the "Interest Component" with
respect to the portion of the Senior Class Investor Amount funded with
commercial paper issued by the Purchaser from time to time shall be determined
in the manner set forth in the definition of "Interest Component" applicable to
such Purchaser on the basis of the interest rate or discount applicable to
commercial paper issued by such Conduit Assignee (rather than such Purchaser),
(vii) the defined terms and other terms and provisions of this Agreement and the
other Transaction Documents shall be interpreted in accordance with the
foregoing, and (viii) if requested by the Agent or the agent or administrative
agent with respect to the Conduit Assignee, the parties will execute and deliver
such further agreements and documents and take such other actions as the Agent
or such agent or administrative agent may reasonably request to evidence and
give effect to the foregoing. No Assignment by a Purchaser to a Conduit Assignee
of all or any portion of the Class A Certificates shall in any way diminish the
related Bank Investors' obligation under Section 5.7(i) to fund any Additional
Investor Amount not funded by the related Purchaser or such Conduit Assignee or
(ii) to acquire from the related Purchaser or such Conduit Assignee all or any
portion of the Senior Class Certificates.

                                       68
<PAGE>

          (c)  The Transferor hereby agrees and consents to the assignment by
each Senior Class Conduit from time to time of all or any part of its rights
under, interest in and title to this Agreement and the Senior Class Certificates
to any Program Support Provider for such Senior Class Conduit; provided,
                                                               --------
however, that any such assignment shall be made in accordance with the
-------
provisions of the Master Pooling and Servicing Agreement and the Series
Supplement and any applicable provisions of this Agreement.  In addition, the
Transferor hereby consents to and acknowledges the assignment by (i) EFC of all
of its rights under, interest in and title to this Agreement and the Senior
Class Certificates to the Collateral Agent and (ii) each other Senior Class
Conduit of all of its rights under, interest in and title to this Agreement and
the Senior Class Certificates to any Program Support Provider for such Senior
Class Conduit.

          SECTION 6.8.  Confidentiality.
                        ---------------

               (a)  The Transferor and the Servicer agree to maintain the
confidentiality of this Agreement, the Senior Class Certificates, the Fee
Letters, and all other related documents and drafts thereof in communications
with third parties (other than its employees, accountants, auditors, regulators,
shareholders or counsel); provided, however, that this Agreement may be
                          --------  -------
disclosed to third parties to the extent such disclosure is (i) directly related
to its efforts solicit additional or substitute Bank Investors or Agents,
provided that such potential Bank Investors or Agents agree to maintain such
information confidential in accordance with this Section 6.8 and provided that
the Fee Letter not be disclosed without the written consent of Bank of America ,
(ii) required in order to comply with any applicable law, order, regulation or
ruling, or (iii) required in response to any summons or subpoena or in
connection with any litigation; and provided, further, however, that the
                                    --------  -------  -------
Transferor and the Servicer shall have no obligation of confidentiality in
respect of any information which may be generally available to the public or
becomes available to the public through no fault of theirs.  Such documents
shall include, but not be limited to, research studies, proprietary technology,
trade secrets, know-how, market studies and forecasts, competitive analyses,
pricing policies, the substance of agreements with customers and others,
marketing arrangements, customer lists and other documents embodying such
confidential information.

               (b)  The Agent, each Senior Class Agent, each Senior Class
Conduit and each Bank Investor agree to maintain the confidentiality for all
purposes, including Section 100(b) of Regulation FD issued by the Securities and
Exchange Commission, of any information obtained by it in respect of the
Receivables (including credit losses and delinquency levels) and any other
proprietary or confidential information with respect to Obligors, the Accounts,
the

                                       69
<PAGE>

Transferor or any Eligible Originator in communications with third parties
(other than its employees, accountants, auditors, regulators, shareholders or
counsel) and shall not use or permit others to use such information to purchase
or sell any securities of Saks or its affiliates (other than purchases of Senior
Class Certificates); provided, however, that such information may be disclosed
                     --------  -------
to third parties to the extent such disclosure is (i) required in order to
comply with any applicable Law, or (ii) required in response to any summons or
subpoena or in connection with any litigation or (iii) to any Program Support
Provider, Collateral Agent or Bank Investor or any prospective Bank Investor or
Program Support Provider or to any rating agency providing a rating for the
Related Commercial Paper, provided that the Agent, the applicable Senior Class
Agent, the applicable Senior Class Conduit and the applicable Bank Investor
inform such person that such information is sensitive, proprietary and
confidential and shall be held confidential for all purposes including Section
100(b) of Regulation FD issued by the Securities and Exchange Commission and
shall not be used to purchase or sell any securities of Saks or any Affiliate
thereof (other than purchases of the Senior Class Certificates hereby).
Notwithstanding the foregoing, (i) each Senior Class Conduit shall be permitted
to disclose Receivable performance information and details concerning the
structure of the facility contemplated hereby and by the Series Supplement, in
summary form and in a manner not identifying the Transferor, to prospective
investors in Related Commercial Paper, and (ii) the Agent, each Senior Class
Agent and each Senior Class Conduit shall have no obligation of confidentiality
in respect of any information which may be generally available to the public or
becomes available to the public through no fault of theirs.

          SECTION 6.9.  No Bankruptcy Petition Against the Senior Class
                        -----------------------------------------------
Conduits. Each of the Transferor, the Servicer, the Agent, the Senior Class
--------
Agents and the Bank Investors hereby covenants and agrees that, prior to the
date which is one year and one day after the payment in full of all outstanding
Commercial Paper or other indebtedness of the Senior Class Conduits, it will not
institute against, or join any other Person in instituting against any Senior
Class Conduit any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.

          SECTION 6.10.  No Recourse.  (a)  The obligations of each Senior Class
                         -----------
Conduit under this Agreement are solely the corporate obligations of such Senior
Class Conduit.  Notwithstanding anything to the contrary contained in this
Agreement, the obligations of the Senior Class Conduits under this Agreement and
all other Transaction Documents are solely the corporate obligations of the
respective Senior Class Conduits and shall be payable solely to the extent of
funds received by any of them, as appropriate, from the Transferor or the Trust
in accordance herewith

                                       70
<PAGE>

or the Series Supplement or from any party to any Transaction Document in
accordance with the terms thereof in excess of funds necessary to pay matured
and maturing Commercial Paper.

               (b)  The obligations of the Transferor arising under this
Agreement shall be payable solely from amounts available therefore in accordance
with the Series Supplement and amounts otherwise released by the Trust to the
Transferor as holder of the Transferor Interest or any other interest in the
Trust.

          SECTION 6.11.  Setoff.  The Transferor and the Servicer hereby
                         ------
irrevocably and unconditionally waive all right of setoff that it may have under
contract (including this Agreement), applicable law or otherwise with respect to
any funds or monies of the Senior Class Conduits at any time held by or in the
possession of the Transferor.

          SECTION 6.12.  Further Assurances.
                         ------------------

               (a)  The Transferor and the Servicer each agrees to do such
further acts and things and to execute and deliver to the Agent, each Senior
Class Agent, each Senior Class Conduit, each Bank Investor or each Collateral
Agent such additional assignments, agreements, powers and instruments as are
reasonably required by such party to carry into effect the purposes of this
Agreement or to better assure and confirm unto such party its rights, powers and
remedies hereunder.

               (b)  The Agent, each Senior Class Agent and each Senior Class
Conduit each agrees to do such further acts and things and to execute and
deliver to the Transferor such additional instruments as are reasonably required
by such party to carry into effect the purposes of this Agreement or to better
assure and confirm unto such party its rights, powers and remedies hereunder.

                                       71
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Certificate Purchase Agreement as of the date first written above.

                        SAKS CREDIT CORPORATION,
                         as Transferor

                        By:/s/ Scott A. Honnold
                           -----------------------
                           Name:  Scott A. Honnold
                           Title: Vice President

                        Address for notices:

                        Saks Credit Corporation
                        140 Industrial Drive
                        Elmhurst, Illinois 60126
                        Attn: Douglas E. Coltharp, President
                        Telephone:  (___) ___-____
                        Telecopy:   (___) ___-____

                        SAKS INCORPORATED,
                          as Servicer

                        By:/s/ Scott A. Honnold
                           -----------------------
                           Name:  Scott A. Honnold
                           Title: Vice President and Treasurer

                        Address for notices:

                        Saks Incorporated
                        750 Lakeshore Parkway
                        Birmingham, Alabama  35211
                        Attn:  Scott A. Honnold
                        Vice President and Treasurer
                        Telephone: (205) 940-4708
                        Telecopy: (205) 940-4709
<PAGE>

                        ENTERPRISE FUNDING CORPORATION,
                         as a Purchaser and a Senior Class
                         Conduit

                        By: /s/ Kevin Burns
                           ----------------------------
                           Name:  Kevin Burns
                           Title: Vice President

                        Address for notices:

                        Enterprise Funding Corporation
                        c/o Global Securitization Services, LLC
                        25 West 43/rd/ Street, Suite 1715
                        New York, New York  10036
                        Attention: Kevin Burns, Vice President
                        Telephone: (212) 302-8331
                        Facsimile: (212) 302-8767

                        (with a copy to the Agent and the related Senior Class
                        Agent)

        Commitment:             Bank of America, N.A., as Agent,
        ----------               as a Senior Class Agent and as a
        $250,410,000             Bank Investor

                                 By: /s/ Diane Sonnenstein
                                    ------------------------------
                                    Name:  Diane Sonnenstein
                                    Title: Vice President

                                 Address for notices:

                                 Bank of America, N.A.
                                 Bank of America Corporate Center
                                 100 North Tryon Street, 10th Floor
                                 Charlotte, North Carolina  28255
                                 Attention:  Michelle M. Heath -
                                             Global Asset Backed Securitization
                                             Group
<PAGE>

                                 Telephone: (704) 386-7922
                                 Telecopy: (704) 388-9169

                                 Account for payments:

                                 Bank of America, N.A.
                                 ABA No.: 053000196
                                 For Credit To: Bank of America, Charlotte
                                 Account No.: 109-360-165-0000
                                 Attention: Camille Zerbinos

<PAGE>

                                                                       EXHIBIT F

                  DEFINED TERMS UNDER THE FINANCIAL COVENANTS

     "Acquisition" means the acquisition, including without limitation by means
      -----------
of merger or consolidation, by the Servicer or any Subsidiary of (i) a
controlling equity interest in another Person (including the purchase of an
option, warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder thereof),
whether by purchase of such equity interest or upon exercise of an option or
warrant for, or conversion of securities into, such equity interest, (ii) assets
of another Person which constitute all or substantially all of the assets of
such Person or (iii) a Business Unit.

     "Audited Restated Financial Statements" means, collectively, the audited
      -------------------------------------
restated combined income statement of the Servicer and its Subsidiaries (giving
effect to the Saks Acquisition) for the Fiscal Year ended January 31, 1998 and
the audited restated combined balance sheet of the Servicer and its Subsidiaries
(giving effect to the Saks Acquisition) as at January 31, 1998.

     "Authorized Representative" means any of the Chairman, Vice Chairmen,
      -------------------------
President or Executive Vice Presidents of the Servicer and, with respect to
financial matters, the Treasurer or Chief Financial Officer of the Servicer.

     "Business Unit" means (i) one or more retail stores, warehouses or
      -------------
distribution centers, including the related land, buildings and trade fixtures
of a Person or a division of a Person, which may, but is not required to,
include inventory, receivables, furniture, fixtures and equipment, and
intangible and other assets related to such retail stores, warehouses or
distribution centers or (ii) all or substantially all of a line or lines of
business conducted by a Person or a division of a Person.

     "Capital Leases" means all leases which have been or should be capitalized
      --------------
in accordance with Generally Accepted Accounting Principles as in effect from
time to time including Statement No. 13 of the Financial Accounting Standards
Board and any successor thereof.

     "Closing Date" means the date on which the conditions set forth in Section
      ------------
5.01 of the Credit Agreement have been satisfied.
<PAGE>

     "Combined Three Month Statements" has the meaning assigned thereto in
      -------------------------------
Section 6.01(f) of the Credit Agreement.

     "Consistent Basis" in reference to the application of Generally Accepted
      ----------------
Accounting Principles means the accounting principles observed in the period
referred to are comparable in all material respects to those applied in the
preparation of the Audited Restated Financial Statements, which accounting
principles shall be the same in all material respects as those accounting
principles applied in the preparation of the Combined Three Month Statements.

     "Consolidated EBITDA" means, with respect to the Servicer and its
      -------------------
Subsidiaries for any period of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income, plus (ii) Consolidated Interest
                                          ----
Expense, plus (iii) taxes on income, plus (iv) amortization, plus (v)
         ----                        ----                    ----
depreciation, all determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis; provided
                                                                        --------
however, that (x) extraordinary and unusual charges incurred by the Servicer
-------
directly as a result of (A) the Acquisition by the Servicer of Saks effective
September 17, 1998 (including in any event repayment or retirement of
Indebtedness of the Saks REMIC Subsidiaries), the Acquisition by the Servicer of
Carson Pirie Scott & Co. effective January 31, 1998, the Acquisition by the
Servicer of Parisian, Inc. effective October 11, 1996, the Acquisition by the
Servicer of Younkers, Inc. effective February 3, 1996, the Acquisition by the
Servicer of G.R. Herberger's, Inc. effective February 1, 1997, the retirement of
the Parisian Senior Subordinated Notes, and the retirement of the Senior Notes
and (B) any Permitted Acquisition after the Closing Date in an amount up to and
including 10% of the Cost of Acquisition for such Permitted Acquisition, and (y)
any non-recurring, non-cash loss, shall all be excluded from the computation of
Consolidated Net Income; provided further, however, that effective as of the
                         -------- -------
effective date of any Acquisition, Consolidated EBITDA shall be computed giving
pro forma effect to such Acquisition for each Four-Quarter Period then and
thereafter occurring until such Acquisition has been effective for a complete
Four-Quarter Period.

     "Consolidated Financing Charges" means those charges owed and allocated to
      ------------------------------
third parties with respect to accounts receivable securitizations transacted in
the ordinary course of business.

     "Consolidated Fixed Charge Ratio" means, with respect to the Servicer and
      -------------------------------
its Subsidiaries for the Four-Quarter Period ending on the date of computation
thereof, the ratio of (i) Consolidated EBITDA plus Consolidated Financing
             -----                            ----
Charges plus, to the extent deducted in arriving at Consolidated EBITDA, lease,
        ----
rental and all
<PAGE>

other payments made in respect of or in connection with operating leases, to
(ii) Consolidated Fixed Charges during such Four-Quarter Period.

     "Consolidated Fixed Charges" means, with respect to the Servicer and its
      --------------------------
Subsidiaries, for the periods indicated, the sum of, without duplication, (i)
                                             ---
Consolidated Interest Expense, plus (ii) to the extent deducted in arriving at
                               ----
Consolidated EBITDA, lease, rental and all other payments made in respect of or
in connection with operating leases, plus (iii) Consolidated Financing Charges,
                                     ----
all determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis; provided, however, that
                                                     --------
effective as of the effective date of any Acquisition, such calculations shall
be computed giving pro forma effect to such Acquisition for each Four-Quarter
Period then and thereafter occurring until such Acquisition has been effective
for a complete Four-Quarter Period.

     "Consolidated Funded Total Indebtedness" means, at any time as of which the
      --------------------------------------
amount thereof is to be determined, all Indebtedness for Money Borrowed of the
Servicer and its Subsidiaries (including, but not limited to, all current
maturities and borrowings under short term loans) plus the face amount of all
                                                  ----
issued and outstanding standby letters of credit and all obligations (to the
extent not duplicative) arising under such letters of credit, all determined on
a consolidated basis in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis.

     "Consolidated Interest Expense" means, with respect to any period of
      -----------------------------
computation thereof, the gross interest expense of the Servicer and its
Subsidiaries, including without limitation (i) the amortization of debt
discounts, (ii) the amortization of all fees (including, without limitation,
fees payable in respect of a Swap Agreement) payable in connection with the
incurrence of Indebtedness to the extent included in interest expense and (iii)
the portion of any payments made in connection with Capital Leases allocable to
interest expense, all determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis.

     "Consolidated Net Income" means, for any period of computation thereof, the
      -----------------------
net income of the Servicer and its Subsidiaries as determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;  but excluding as income: (i) net gains on the sale,
conversion or other disposition of capital assets and net gains on the
acquisition, retirement, sale or other disposition of capital stock and other
securities of Servicer or its Subsidiaries,
<PAGE>

(ii) any write-up of any asset, and (iii) any other net gain or credit of an
extraordinary nature, all determined in accordance with GAAP applied on a
Consistent Basis.

     "Consolidated Net Worth" means at any time as of which the amount thereof
      ----------------------
is to be determined, the shareholders' equity of the Servicer and its
Subsidiaries determined on a  consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis (excluding
intercompany items among the Servicer and its Subsidiaries and any upward
adjustment after the Closing Date due to revaluation of assets).

     "Contingent Obligation" of any Person means (i) all contingent liabilities
      ---------------------
required (or which, upon the creation or incurring thereof, would be required)
to be included in the consolidated financial statements (including footnotes) of
such Person in accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis, including Statement No. 5 of the Financial Accounting
Standards Board, (ii) all reimbursement obligations of such Person with respect
to any letter of credit and (iii) without duplication, all obligations of such
Person guaranteeing or in effect guaranteeing any Indebtedness of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including obligations of such Person however incurred:

     (a)  to purchase such Indebtedness or any property or assets constituting
security therefor;

     (b)  to advance or supply funds in any manner (x) for the purchase or
payment of such Indebtedness or (y) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement condition of the
primary obligor;

     (c)  to grant or convey any lien, security interest, pledge, charge or
other encumbrance on any property or assets of such Person to secure payment of
such Indebtedness;

     (d)  to lease property or to purchase securities or other property or
services primarily for the purpose of assuring the owner or holder of such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness; or

     (e)  otherwise to assure the owner of the Indebtedness of the primary
obligor against loss in respect thereof.
<PAGE>

     With respect to Contingent Obligations, such liabilities shall be computed
at the amount which, in light of all the facts and circumstances existing at the
time, represent the present value of the amount which can reasonably be expected
to become an actual or matured liability.

     "Cost of Acquisition" means, as at the date of closing any Acquisition, the
      -------------------
sum of the following:  (i) the value of the capital stock, or warrants or
---
options to acquire capital stock, of the Servicer or any Subsidiary to be
transferred in connection therewith, (ii) any cash or other property (excluding
property described in clause (i)) or the unpaid principal amount of any debt
instrument given as consideration in such Acquisition, and (iii) any
Indebtedness or liabilities assumed by the Servicer or its Subsidiaries in
connection with such Acquisition.  For purposes of determining the Cost of
Acquisition for any transaction, (A) the capital stock of the Servicer shall be
valued (I) at its market value as reported on the New York Stock Exchange or any
national securities exchange with respect to shares that are freely tradeable,
and (II) with respect to shares that are not freely tradeable, as determined by
the Board of Directors of the Servicer (which determination shall be
conclusive), (B) the capital stock of any Subsidiary shall be valued as
determined by the Board of Directors of such Subsidiary (which determination
shall be conclusive), and (C) with respect to any Acquisition accomplished
pursuant to the exercise of options or warrants or the conversion of securities,
the Cost of Acquisition shall include both the cost of acquiring such option,
warrant or convertible security as well as the cost of exercise or conversion.

     "Credit Agreement" shall mean the Second Amended and Restated Credit
      ----------------
Agreement dated as of August 26, 1999 among the Servicer, each Lender party
thereto, Bank of America, N.A., as Administrative Agent, Morgan Guaranty Trust
Company of New York and The Chase Manhattan Bank, as Co-Syndication Agents, and
Citibank, N.A., as documentation agent.

     "Dollars" and the symbol "$" means dollars constituting legal tender for
      -------                  -
the payment of public and private debts in the United States of America.

     "Fiscal Year" means the 52-week or 53-week period of the Servicer ending on
      -----------
the Saturday of each calendar year closest (whether before or after) to January
31 and "Fiscal Year" followed by a numerical year means the Fiscal Year which
has a Fiscal Year Beginning occurring during such numerical calendar year.

     "Fiscal Year Beginning" means the first day of a Fiscal Year.
      ---------------------
<PAGE>

     "Four-Quarter Period" means a period of four full consecutive fiscal
      -------------------
quarterly periods, taken together as one accounting period, and in the event any
such fiscal quarterly period occurs prior to the effective date of any
Acquisition, or is the period in which such effective date occurs (each a "Pre-
                                                                           ---
Acquisition Period"), all financial statements, data, computations and
------------------
determinations for such Four-Quarter Period shall be made on a pro forma basis
for each Pre-Acquisition Period giving effect to such Acquisition for all prior
periods.

     "GAAP" means or "Generally Accepted Accounting Principles" means those
      ----            ----------------------------------------
principles of accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants or which
have other substantial authoritative support and are applicable in the
circumstances as of the date of a report, as such principles are from time to
time supplemented and amended, subject to compliance at all times with Section
1.02 of the Credit Agreement.

     "Indebtedness" means with respect to any Person, without duplication, all
      ------------
Indebtedness for Money Borrowed, all indebtedness of such Person for the
acquisition of property, all indebtedness secured by any Lien on the property of
such Person whether or not such indebtedness is assumed, all liability of such
Person by way of endorsements (other than for collection or deposit in the
ordinary course of business), all Contingent Obligations, all Rate Hedging
Obligations, that portion of obligations with respect to Capital Leases which in
accordance with Generally Accepted Accounting Principles is classified as a
liability on a balance sheet and all Synthetic Lease Indebtedness; but excluding
all accounts payable in the ordinary course of business and only so long as
payment therefor is due within one year; provided, that in no event shall the
                                         --------
term Indebtedness include surplus and retained earnings, minority interest in
Subsidiaries, lease obligations (other than pursuant to Capital Leases or in
connection with any tax retention operating lease or any form of synthetic lease
as provided above), reserves for deferred income taxes and investment credits,
other deferred credits and reserves, and deferred compensation obligations.

     "Indebtedness for Money Borrowed" means for any Person all indebtedness in
      -------------------------------
respect of money borrowed, including without limitation all Capital Leases and
the deferred purchase price of any property or asset, evidenced by a promissory
note, bond or similar written obligation for the payment of money (including,
but not limited to, conditional sales or similar title retention agreements).

     "Lien" means any interest in property securing any obligation owed to, or a
      ----
claim by, a Person other than the owner of the property, whether such interest
is
<PAGE>

based on the common law, statute or contract, and including but not limited
to the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes.  For the purposes of these financial covenant
definitions, the Servicer and its Subsidiaries shall be deemed to be the owners
of any property which either of them have acquired or hold subject to a
conditional sale agreement, financing lease, or other arrangement pursuant to
which title to the property has been retained by or vested in some other Person
for security purposes.

     "Net Proceeds" from a disposition of assets (other than assets sold in the
      ------------
ordinary course of business and accounts receivable sold in connection with an
accounts receivable securitization transacted in the ordinary course of business
by a Securitization Subsidiary) or issuance of equity means cash payments
received therefrom as and when received, net of  (i) all reasonable legal,
accounting, banking, underwriting, title and recording expenses, commissions,
discounts and other fees and expenses incurred in connection therewith, (ii) all
taxes required to be paid or accrued as a consequence of such disposition or
issuance and (iii) all amounts necessary to repay Indebtedness for Money
Borrowed the repayment of which is secured by such disposed assets.

     "Parisian Indenture" means that certain Amended and Restated Indenture
      ------------------
dated as of October 11, 1996 among the Servicer, Parisian, Inc. and AmSouth Bank
of Alabama (formerly known as AmSouth Bank, N.A.), as trustee, as amended from
time to time thereafter.

     "Parisian Senior Subordinated Notes" means the 9.875% Senior Subordinated
      ----------------------------------
Notes Due 2003 of Parisian, Inc. in the original aggregate principal amount of
$125,000,000 issued pursuant to the Parisian Indenture.

     "Permitted Acquisition" means an Acquisition beyond the normal course of
      ---------------------
business effected with the consent and approval of the board of directors or
other applicable governing body of the Person being acquired, and with the duly
obtained approval of such shareholders or other holders of equity interest as
such Person may be required to obtain, so long as (i) immediately prior to and
immediately after the consummation of such Acquisition, no Default or Event of
Default has occurred and is continuing, (ii) substantially all of the sales and
operating profits generated by such Person (or assets) so acquired or invested
are derived from (A) the same or related line or lines of business as conducted
by the Servicer and its Subsidiaries on the Closing Date or (B) a line or lines
of business not inconsistent with, the business substantially as conducted by
the Servicer and its Subsidiaries on the Closing Date; provided, that the Cost
                                                       --------
of Acquisition of all such Acquisitions permitted pursuant to
<PAGE>

this clause (ii)(B) shall not in the aggregate exceed $100,000,000 during any
Four-Quarter Period and (iii) if the Cost of Acquisition therefor equals or
exceeds $250,000,000, pro forma historical financial statements as of the end of
the most recently completed Four-Quarter Period giving effect to such
Acquisition are delivered to the Agent not less than five (5) Business Days
prior to the consummation of such Acquisition, together with a certificate of an
Authorized Representative demonstrating compliance with the financial covenants
set forth in Article VIII of the Credit Agreement after giving effect to such
Acquisition.

     "Person" means an individual, partnership, limited partnership,
      ------
corporation, limited liability company, limited liability partnership, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof.

     "Rate Hedging Obligations" means any and all obligations of the Servicer or
      ------------------------
any Subsidiary, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or cross-
currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; and (ii) any and all cancellations, buybacks,
reversals, terminations or assignments of any of the foregoing.

     "Saks" means Saks Holdings, Inc., a Delaware corporation.
      ----

     "Saks Acquisition" has the meaning assigned thereto in Section 5.01(a)(xiv)
      ----------------
of the Credit Agreement.

     "Saks REMIC Subsidiary" means any of Calwin Realty II, Inc., Win Realty
      ---------------------
Holdings II, Inc., Florida Win Trust, Or. Win, Inc., York Win Realty, Inc.,
Fifth Win, Inc., Ohio Win, Inc., Tex Win II, Inc., Vir. Win, Inc., Cal SFA,
Inc., Penn SFA, Inc., Tex SFA, Inc., Fifth Avenue Capital Trust and Fifteenth
Win, Inc.

     "Securitization Subsidiary" means SAKS Credit Corporation, SAKS
      -------------------------
Transitional Credit Corporation, National Bank of the Great Lakes, SFA Finance
Company II and any other present or future Subsidiary (including any credit card
bank) of the Servicer and organized for the purpose of and is only engaged in
(i)
<PAGE>

originating, purchasing, acquiring, financing, servicing or collecting accounts
receivable obligations of customers of the Servicer or its Subsidiaries, (ii)
issuing or servicing credit cards, engaging in other credit card operations or
financing accounts receivable obligations of customers of the Servicer and its
Subsidiaries, (iii) the sale or financing of such accounts receivable and
interests therein and (iv) other activities incident thereto.

     "Senior Indenture" means that certain Indenture dated as of May 21, 1997
      ----------------
among the Servicer and The First National Bank of Chicago, as trustee, as
amended from time to time thereafter.

     "Senior Notes" means the 8.125% Senior Notes due 2004 of the Servicer in
      ------------
the aggregate principal amount of $125,000,000 issued pursuant to the Senior
Indenture.

     "Servicer" shall mean, for the purpose of these financial covenant
      --------
definitions, Saks Incorporated, having a principal place of business in
Birmingham, Alabama.

     "Subsidiary" means any corporation or other entity in which more than 50%
      ----------
of its outstanding voting stock or more than 50% of all equity interests is
owned directly or indirectly by the Servicer and/or by one or more of the
Servicer's Subsidiaries at or after the Closing Date, and specifically includes
Saks and each of its subsidiaries as of the Closing Date.

     "Swap Agreement" means one or more agreements between the Servicer and
      --------------
another Person, on terms mutually acceptable to the Servicer and such Person,
which agreements create Rate Hedging Obligations.

     "Synthetic Lease Indebtedness" means, with respect to a Person that is a
      ----------------------------
lessee under  a synthetic lease, an amount equal to (i) the aggregate purchase
price of any property that the lessor under such synthetic lease acquired,
through one or a series of  related transactions,  and thereafter leased to such
Person pursuant to such synthetic lease less (ii) the aggregate amount of all
                                        ----
payments of fixed rent or other rent payments which reduce such Person's
obligation under such synthetic lease and which are not the financial equivalent
of interest.  Synthetic Lease Indebtedness of a Person shall also include,
without duplication, the amount of Synthetic Lease Indebtedness of others to the
extent guarantied by such Person.

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