<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1999
REGISTRATION NO. 333-71757
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CHARMING SHOPPES MASTER TRUST
(Issuer)
CHARMING SHOPPES RECEIVABLES CORP.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 9999 51-0383871
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
3411 SILVERSIDE ROAD
WILMINGTON, DELAWARE 19810
(302) 479-5510
(Address, including zip code, and telephone number, including area code, of
principal executive offices of Registrant)
COLIN STERN
C/O CHARMING SHOPPES INC.
450 WINKS LANE
BENSALEM, PENNSYLVANIA 19020
(215) 638-6898
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
MARY C. FONTAINE PAUL WEIFFENBACH
MAYER, BROWN & PLATT ORRICK, HERRINGTON & SUTCLIFFE LLP
190 SOUTH LASALLE STREET 3050 K STREET, N.W.
CHICAGO, ILLINOIS 60603 WASHINGTON, D.C. 20007
Approximate date of commencement of proposed sale to the public: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
Class A Certificates $1,000,000 100% $1,000,000 $278
Class B Certificates $1,000,000 100% $1,000,000 $278
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS SUBJECT TO COMPLETION, DATED [ ], 1999
_______________________
CHARMING SHOPPES MASTER TRUST
Issuer
CHARMING SHOPPES RECEIVABLES CORP.
Seller
SPIRIT OF AMERICA, INC.
Servicer
SERIES 1999-1
$[_________] Floating Rate Class A Asset Backed Certificates
$[_________] Floating Rate Class B Asset Backed Certificates
<TABLE>
<CAPTION>
Class A Certificates Class B Certificates
<S> <C> <C>
Principal amount $ $
Price to public per certificate % %
Underwriting discount per certificate % %
Proceeds to seller per certificate % %
Certificate rate per certificate One-Month LIBOR One-Month LIBOR
plus [___]% annually* plus [___]% annually**
Interest paid Monthly Monthly
First interest payment date [______________] [______________]
Scheduled first principal payment date [______________] [______________]
Expected final principal payment date [______________] [______________]
Series termination date [______________] [______________]
</TABLE>
* After the Class A expected final payment date, one-month LIBOR may not exceed
[ ]%.
** After the Class B expected final payment date, one-month LIBOR may not
exceed [ ]%.
The total price to public is $______, the total amount of the underwriting
discount is $_____ and the total amount of proceeds plus accrued interest and
before deduction of expenses is
$-----.
Subordination of the Class B certificates provides credit enhancement for
the Class A certificates.
A certificate is not a deposit and neither the certificates nor the
underlying accounts or receivables are insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency. The certificates
offered in this prospectus will represent interests in the trust only and will
not represent interests in or obligations of Charming Shoppes Receivables Corp.,
Spirit of America National Bank or any of their affiliates.
PLEASE CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 8 IN THE
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE CLASS A CERTIFICATES OR THE CLASS B
CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
Class A Underwriters
BEAR, STEARNS & CO. INC. [OTHERS]
Class B Underwriter
BEAR, STEARNS & CO. INC.
______________, 1999
<PAGE> 3
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
We include cross-references in this prospectus to captions in these
materials where you can find further related discussions. The following table of
contents provide the pages on which these captions are located.
TABLE OF CONTENTS
PAGE
----
Summary of Trust Terms................................................... 1
The Trust............................................................. 1
The Trustee........................................................... 1
The Originator........................................................ 1
The Seller............................................................ 1
The Servicer.......................................................... 1
The Receivables....................................................... 1
Summary of Series 1999-1 Terms........................................... 2
Structural Summary....................................................... 3
The Series 1999-1 Certificates........................................ 3
Other Interests in the Trust.......................................... 3
Credit Enhancement for Series 1999-1.................................. 4
Schedule of Principal Payments and
Factors That Could Affect the Schedule.............................. 5
Federal Tax Status of the Offered
Certificates and the Trust.......................................... 6
Ohio Tax Status of the Offered
Certificates and the Trust.......................................... 7
Erisa Considerations for Investors.................................... 7
Risk Factors............................................................. 8
It may not be possible to find an investor
to purchase your certificates....................................... 8
Allocations of charged-off receivables
could reduce your payments.......................................... 8
Class B bears additional risk because it is
subordinated to Class A............................................. 8
Insolvency of Spirit of America National
Bank could result in accelerated, delayed
or reduced payments................................................. 9
Insolvency of the seller, the servicer or
Charming Shoppes could result in
accelerated, delayed or reduced
payments ........................................................... 11
Some liens could be given priority over
your securities which could cause
delayed or reduced payments......................................... 12
Changes to consumer protection laws may
impede collection efforts........................................... 13
Limited remedies for breaches of
representations could reduce or delay
payments............................................................ 13
Potential early repayment, delayed
payment or reduced payment due to
reduced collections................................................. 14
High concentrations in a geographic area
could affect the collection rate on the
receivables ........................................................ 18
Issuance of additional series by the trust
may affect the timing of payments................................... 18
Issuance of a paired series could affect
your payments....................................................... 19
Individual certificateholders will have
limited control of trust actions.................................... 19
Recharacterization of principal payments
would reduce principal receivables and
may require addition of new receivables ............................ 19
The certificates are not guaranteed and
will only be paid from trust assets................................. 20
Exposure to cap providers could lead to an
early amortization event............................................ 20
i
<PAGE> 4
PAGE
----
The Year 2000 problem could disrupt the
generation and servicing of the
receivables................................................... 20
Trust.............................................................. 22
Maturity Considerations............................................ 22
Spirit of America's Credit Card Activities......................... 24
Overview........................................................ 24
New Account Underwriting........................................ 24
Description of Subservicer...................................... 26
Billing and Payments............................................ 26
Delinquencies and
Collections--Collection Efforts............................... 27
Credit Return Policy............................................ 27
Delinquency and Loss Experience................................. 28
Revenue Experience.............................................. 29
Payment Rates................................................... 30
The Receivables.................................................... 31
Use of Proceeds.................................................... 36
Description of Charming Shoppes Entities........................... 36
Overview........................................................ 36
Legal Proceedings............................................... 36
Year 2000 Disclosure............................................ 37
Description of the Certificates.................................... 41
Overview........................................................ 41
Interest Payments............................................... 43
Interest Rate Cap Agreements.................................... 45
Principal Payments.............................................. 46
Allocation Percentages.......................................... 48
Servicing Fees.................................................. 51
Application of Collections...................................... 52
Reallocations and Payments of Principal......................... 55
Series Shared Excess Finance Charge
Collections................................................... 58
Series Shared Principal Collections............................. 59
Investor Charge-Offs............................................ 61
Paired Series................................................... 62
Early Amortization Events....................................... 63
The Pooling Agreement.............................................. 67
Transfer and Assignment of Receivables.......................... 67
Issuance of Other Series........................................ 68
Book-Entry Registration......................................... 69
Definitive Certificates......................................... 73
Required Removal of Receivables from
the Trust..................................................... 74
Eligible Accounts; Eligible Receivables....................... 77
Addition of Accounts............................................ 78
Removal of Accounts............................................. 79
Collection Account.............................................. 80
Deposits in Collection Account.................................. 80
Excess Funding Account.......................................... 81
Loss Amount; Dilution Amounts................................. 82
Discount Option................................................. 83
Defeasance...................................................... 84
Optional Repurchase; Final Payment of
Principal; Termination........................................ 84
Servicing Compensation and Payment of
Expenses...................................................... 85
Resignation of Servicer; Scope of
Indemnities................................................... 86
Servicer Default................................................ 87
Reports to Series 1999-1
Certificateholders............................................ 89
Agreed Upon Procedures.......................................... 89
Amendments...................................................... 90
List of Investor Certificateholders............................. 91
The Trustee..................................................... 91
ii
<PAGE> 5
PAGE
----
Description of the Purchase Agreement................................. 92
Overview........................................................... 92
Purchase Price for Receivables..................................... 92
Required Reassignment of Receivables to
the Originator................................................... 93
Material Covenants................................................. 93
Addition and Removal of Accounts................................... 94
Description of the Security Agreement................................. 95
Legal Aspects of the Receivables...................................... 95
Nature of Interests in the Receivables............................. 95
Consumer Protection Laws........................................... 96
Claims and Defenses of Cardholders
Against the Trust................................................ 97
Insolvency Laws Affecting Transfers................................ 98
Other Issues Under Insolvency Laws................................. 101
U.S. Federal Income Tax Consequences.................................. 101
Overview........................................................... 101
Characterization of the Certificates and the
Trust............................................................ 102
Taxation of Interest Income of
Certificateholders............................................... 102
Sale of a Certificate.............................................. 103
Possible Classification as a Partnership or
as an Association Taxable as a Corporation....................... 104
FASIT Legislation.................................................. 104
Foreign Investors.................................................. 105
Backup Withholding................................................. 107
Ohio State Tax Consequences........................................... 107
ERISA Considerations.................................................. 109
Underwriting.......................................................... 109
Legal Matters......................................................... 111
Certificate Ratings................................................... 112
Reports to Certificateholders......................................... 112
Where You Can Find More Information................................... 112
Index of Terms for Prospectus......................................... 114
Annex I
Other Series Outstanding.............................................. 116
Annex II
Global Clearance, Settlement and Tax
Documentation Procedures............................................. 117
Initial Settlement................................................. 117
Secondary Market Trading........................................... 118
U.S. Federal Income Tax Documentation
Requirements..................................................... 120
iii
<PAGE> 6
SUMMARY OF TRUST TERMS
THE TRUST
Charming Shoppes Master Trust was formed in December of 1992. The purpose of the
trust is to acquire credit card receivables of the originator. The trust may
finance the receivables by issuing securities representing ownership interests
in its assets and by borrowing on a secured basis. The trust may not engage in
any unrelated activities.
THE TRUSTEE
First Union National Bank.
THE ORIGINATOR
Spirit of America National Bank is a national banking association whose
principal place of business is 1103 Allen Drive, Milford, Ohio 45150 and whose
telephone number is 513-576-5300. The originator is an indirect subsidiary of
Charming Shoppes Inc., a company that operates a chain of Fashion Bug(R) and
Fashion Bug Plus(R) stores that sell moderately and popularly priced women's
specialty apparel.
THE SELLER
Charming Shoppes Receivables Corp. is an indirect subsidiary of Charming Shoppes
Inc. whose principal place of business is 3411 Silverside Road, Wilmington,
Delaware 19810 and whose telephone number is 302-479-5510.
THE SERVICER
Spirit of America, Inc. is an indirect subsidiary of Charming Shoppes Inc. whose
principal place of business is 1103 Allen Drive, Milford, Ohio 45150 and whose
telephone number is 513- 576-5300. It has delegated some of its duties to
Alliance Data Systems, Inc.
THE RECEIVABLES
The receivables arise in a portfolio of credit card accounts originated by
Spirit of America National Bank. Currently, the receivables are originated under
private label credit cards used primarily at Fashion Bug stores. Other types of
receivables may be added to the trust. Receivables include charges for
merchandise or services, credit insurance premiums, finance charges, late
payment fees, returned check charges and other fees. For a additional
information, see "Spirit of America's Credit Card Activities" and "The
Receivables."
<PAGE> 7
SUMMARY OF SERIES 1999-1 TERMS
<TABLE>
<CAPTION>
Series Structure: initial investor interest % of total
<S> <C> <C>
Class A $ %
Class B $ %
Class C $ %
Class D $ %
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
The Offered Certificates: Class A Class B
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Anticipated ratings: Aaa or its equivalent from two P2 or its equivalent from at
nationally recognized rating least one nationally recognized
agencies rating agency
- --------------------------------------------------------------------------------------------------------------
Credit Enhancement: subordination of the Class B, subordination of the Class C
Class C and Class D and Class D certificates;
certificates; interest rate cap interest rate cap payments if the
payments if the Class A interest Class B interest rate exceeds
rate exceeds _____% ____%
- --------------------------------------------------------------------------------------------------------------
Monthly Servicing Fee: 2% of class investor interest 2% of class investor interest
- --------------------------------------------------------------------------------------------------------------
Interest Rate: one-month libor, plus ___%; one-month libor, plus ___%;
except that after the expected except that
after the expected final payment date for
this final payment date for this class,
one-month libor may not class, one-month
libor may not exceed __% for any interest
exceed __% for any interest period period
- --------------------------------------------------------------------------------------------------------------
Interest Accrual Method: actual/360 actual/360
- --------------------------------------------------------------------------------------------------------------
Interest Payment Dates: the fifteenth of each month the fifteenth of each month
- --------------------------------------------------------------------------------------------------------------
First Interest Payment: ___________ __, 1999 __________ __, 1999
- --------------------------------------------------------------------------------------------------------------
Scheduled Monthly $____________ N/A
Principal Payment:
- --------------------------------------------------------------------------------------------------------------
First Scheduled Principal __________ __, 200_ __ _______ __, 200_
Payment
- --------------------------------------------------------------------------------------------------------------
Expected Final Payment: __________ __, 200_ __________ __, 200_
- --------------------------------------------------------------------------------------------------------------
Series Termination Date: __________ __, 200_ __________ __, 200_
- --------------------------------------------------------------------------------------------------------------
Clearance/Settlement DTC/Euroclear/Cedel DTC/Euroclear/Cedel
- --------------------------------------------------------------------------------------------------------------
Minimum Denomination $1,000 $1,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 8
STRUCTURAL SUMMARY
This summary briefly describes major structural components of Series 1999-1. To
fully understand the terms of Series 1999-1, you need to read all of this
prospectus.
THE SERIES 1999-1 CERTIFICATES
Your certificates represent the right to a portion of collections on the trust's
assets. The servicer will also allocate to your certificates a portion of losses
on the receivables and dilution on the receivables. Dilution means the amount of
reductions, other than those for losses or payments, to the principal balances
of receivables made by the servicer as described in "The Pooling Agreement--Loss
Amount; Dilution Amounts," and "Description of the Certificates--Investor
Charge-Offs."
The servicer will apply collections allocated to your series each month to make
interest or principal payments to you, to pay a portion of the servicer's
monthly fee and to cover losses and dilution allocated to your series. If any
amounts remain from your allocations after covering the required monthly
applications, the servicer will share the excess with other outstanding series
to cover their shortfalls or return the excess to the seller. You are not
entitled to receive more than the principal and interest owed to you by the
trust.
Required allocations and payments are more fully described in "Description of
the Certificates--Allocation Percentages;" "--Application of Collections;" and
"The Pooling Agreement--Servicing Compensation and Payment of Expenses." The
receivables and other trust assets supporting your certificates are more fully
described under "The Receivables" and "The Pooling Agreement--Eligible
Accounts; Eligible Receivables."
The seller may repurchase your certificates once the outstanding amount of your
series is reduced to 10% or less of the initial outstanding amount.
OTHER INTERESTS IN THE TRUST
The trust has issued [five] other series and may issue additional series in the
future. Of those [five], only [three] remain outstanding. The trust paid the
other two series in full on their scheduled payment dates. Like your series,
each other series will be allocated a portion of collections and will be
required to absorb
3
<PAGE> 9
a portion of losses and dilution amounts each month. You can review a summary of
each outstanding series under the caption "Annex 1: Other Series Outstanding" at
the end of this prospectus.
The seller holds the remaining claim to the trust assets, the size of which
fluctuates with the total amount of receivables in the trust and the total
amount of outstanding series. This interest does not provide credit enhancement
for your series or any other series.
CREDIT ENHANCEMENT FOR SERIES 1999-1
Subordination of Classes
Credit enhancement is provided for the Class A certificates by the subordination
of the Class B certificates, the Class C certificates and the Class D
certificates.
Credit enhancement is provided for the Class B certificates by the subordination
of the Class C certificates and the Class D certificates.
Subordination serves as credit enhancement in two ways. First, the more
subordinated classes will not receive payment of interest or principal until
required payments have been made to the more senior classes, except that Class B
may receive interest even if required Class A payments have not been made.
Second, collections allocated to the more subordinated classes will be required
to cover losses and dilution amounts allocated to your series and make up
shortfalls in cash flows each month. If allocations to the subordinated classes
are insufficient to cover those amounts, the principal balance of the more
subordinated classes will be reduced by any shortfall, beginning with reductions
to the most subordinated class then outstanding.
If Class C and Class D are reduced to zero, Class B would then be exposed to
reduction to cover losses, dilutions and cash shortfalls. If Class B is reduced
to zero, Class A would be exposed to reduction. The size of each class is set
forth in "Summary of Series 1999-1 Terms" above.
For a detailed description of the subordination terms and of events that may
lead to a reduction of the investor interest of any class, see "Description of
the Certificates--Application of Collections;" "--Reallocations and Payments of
Principal;" and "--Investor Charge-Offs."
4
<PAGE> 10
Interest Rate Caps
As additional enhancement for Class A and Class B, the trust will enter into
interest rate cap agreements for your certificates. Under these agreements, the
trust will receive payments from [name of counterparty] or a permitted
replacement generally equal to the difference between the amount of interest you
accrue on your certificates, if it exceeds the specified rate, over the interest
that would have accrued on your certificates at the specified rate.
The specified rate for the Class A certificates is [____]%. The specified rate
for the Class B certificates is [____]%.
The interest rate cap agreement for each class will terminate on its expected
final payment date. After that date, if that class has not been paid in full,
interest will continue to accrue on that class, but the LIBOR rate on which the
interest calculation is based will not exceed the specified rate in any future
month.
These agreements are more fully described in "Description of the
Certificates--Interest Rate Cap Agreements."
SCHEDULE OF PRINCIPAL PAYMENTS AND FACTORS THAT COULD AFFECT
THE SCHEDULE
The trust expects to pay the entire principal amount of the Class A certificates
on _________ __, 200_ by making eight monthly principal payments of $ beginning
in [month/year].
The trust expects to pay the entire principal amount of the Class B certificates
in one payment on __________ __, 200_. Because the trust will not pay principal
on Class B until Class A has been paid in full, this payment could be delayed.
If Class A is not repaid in full on its expected final payment date, the trust
will continue to make monthly payments of principal to only to Class A until it
has been fully repaid. If Class B is not paid in full on its expected final
payment date and Class A has been repaid in full, the Trust will continue to
make monthly payments of principal only to Class B until it has been fully
repaid. The amount of these monthly payments will equal all collections on the
trust assets available to make principal payments to your series as described in
"Description of the Certificates--Application of Collections."
5
<PAGE> 11
Your series will begin to amortize, and you may receive payments of principal
earlier than scheduled, if an "early amortization event" occurs. The early
amortization events for your series are described in "Description of the
Certificates--Early Amortization Events."
If your series begins to amortize because an early amortization event has
occurred, Class A will receive monthly payments of principal until fully repaid
and then Class B will receive monthly payments of principal until fully repaid.
Payments on your certificates may be delayed or reduced if collections on the
trust assets are less than expected. If any principal or interest on the Series
1999-1 certificates is outstanding on __________ __, 200_, the trustee will sell
receivables in an amount up to 110% of the then outstanding principal on your
series. The proceeds of this sale will be allocated solely to your series and
will be applied in the same way as collections. After you have been paid your
share of the proceeds, you will not be entitled to any further payments from the
trust even if you have not been paid in full.
For a detailed description of the allocation mechanics and schedule of payments,
see "Maturity Considerations;" "Description of the Certificates--Allocation
Percentages;" and "--Reallocation and Payments of Principal." The mechanics for
applications of allocated collections are discussed in "Description of the
Certificates--Applications of Collections."
FEDERAL TAX STATUS OF THE OFFERED CERTIFICATES AND THE TRUST
Mayer, Brown & Platt, counsel to the seller, is of the opinion that, under
existing law:
- the Class A and Class B certificates will be characterized as
debt for federal income tax purposes; and
- the trust will not be treated as an association or publicly traded
partnership taxable as a corporation.
The seller has agreed, and by your purchase of certificates, you agree, to treat
your certificates as debt for federal, state and local income tax purposes and
franchise tax purposes. See "U.S. Federal Income Tax Consequences" for
additional information concerning the application of federal income tax law.
6
<PAGE> 12
OHIO TAX STATUS OF THE OFFERED CERTIFICATES AND THE TRUST
Squire, Sanders & Dempsey L.L.P., special Ohio tax counsel, is of the opinion
that, under existing Ohio law:
- if the Class A and Class B certificates are treated as indebtedness for
federal income tax purposes, they will be treated as indebtedness for Ohio
income tax purposes. As a result, investors not otherwise required to pay
Ohio tax would not be required to pay Ohio tax solely as a result of their
ownership of these certificates; and
- the trust will not be subject to the Ohio personal income tax, the Ohio
corporate franchise tax or the Ohio tax on dealers in intangibles.
See "Ohio State Tax Consequences" for additional information concerning the
application of Ohio income tax law.
ERISA CONSIDERATIONS FOR INVESTORS
Generally, you may not acquire Class A certificates or Class B certificates if
you are purchasing with the assets of a retirement plan, individual retirement
plan or other employee benefit plan.
See "ERISA Considerations."
7
<PAGE> 13
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the asset-backed certificates described herein.
IT MAY NOT BE POSSIBLE TO FIND AN INVESTOR TO PURCHASE YOUR
CERTIFICATES
The underwriters may assist in resales of Class A and Class B certificates, but
they are not required to do so. A secondary market for your certificates may not
develop. If a secondary market does develop, it might not continue or it might
not be sufficiently liquid to allow you to resell any of your certificates.
ALLOCATIONS OF CHARGED-OFF RECEIVABLES COULD REDUCE YOUR
PAYMENTS
The servicer anticipates that it will charge-off as uncollectible some portion
of the receivables. Each class of Series 1999-1 will be allocated a portion of
those charged-off receivables. If the amount of charged-off receivables
allocated to the Class A or Class B certificates exceeds the amount of other
funds available for reimbursement of those charge-offs, the holders of the Class
A and B certificates may not receive the full amount of principal and interest
due to them. This could occur if the Class C and Class D certificates are
reduced to zero. See "Description of the Certificates--Reallocations and
Payments of Principal" and "The Pooling Agreement--Loss Amount; Dilution
Amounts."
CLASS B BEARS ADDITIONAL RISK BECAUSE IT IS SUBORDINATED TO
CLASS A
Because Class B is subordinated to Class A, principal payments to Class B will
not begin until Class A is repaid. Additionally, if collections of finance
charge receivables allocated to Series 1999-1 are insufficient to cover amounts
due to Class A, the investor interest for Class B might be reduced. This would
reduce the amount of the collections of finance charge receivables available to
Class B in future periods and could cause a delay or reduction in principal and
interest payments on Class B. If receivables have to be sold, the net proceeds
of that sale available to pay principal would be paid first to Class A, and only
remaining net proceeds would be paid to Class B. See "Description of the
Certificates--Allocation Percentages" and "--Application of Collections."
8
<PAGE> 14
INSOLVENCY OF SPIRIT OF AMERICA NATIONAL BANK COULD RESULT IN
ACCELERATED, DELAYED OR REDUCED PAYMENTS
Under the Federal Deposit Insurance Act, as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, the FDIC, as receiver
for an insolvent bank, has the power to invalidate contracts entered into by the
bank before insolvency.
The FDIC has issued a policy statement describing some circumstances when it
will not exercise this power.
In this policy statement, the FDIC states that it will respect a grant of a
security interest by a bank if--
- the security agreement grants a valid security interest in the
bank's assets;
- the security interest (a) is validly perfected before the bank's
insolvency and (b) was not taken in contemplation of the bank's
insolvency or with the intent to hinder, delay or defraud the bank or
its creditors;
- the security interest was not granted for the benefit of an
affiliate of the bank; and
- the security agreement is continuously an official record of the bank
and represents a bona fide and arm's length transaction undertaken for
adequate consideration in the ordinary course of business.
The policy statement does not cover transfers of assets to the bank's affiliate,
such as Spirit of America National Bank's sale of receivables to Charming
Shoppes Receivables Corp., but it does cover grants of security interests to
non-affiliates. To fit within the policy statement, the originator has entered
into a security agreement with the trustee, for the benefit of investors in, and
creditors of, the trust that are not affiliates of the originator. The security
agreement covers any interest the originator would have in the trust's assets if
the transfer of those assets to Charming Shoppes Receivables Corp. were
invalidated.
The policy statement is not binding on the FDIC, and it could take a contrary
position at a later date.
9
<PAGE> 15
Additionally, if the FDIC were appointed as the originator's conservator or
receiver, under the Federal Deposit Insurance Act, the FDIC could--
- require the trustee for the trust to go through an administrative
claims procedure to establish its right to payments collected on the
receivables in the trust;
- request a stay of proceedings with respect to the originator;
or
- repudiate the agreements under which the originator transferred
receivables and limit the trust's resulting claim to "actual direct
compensatory damages" measured as of the date of receivership.
See "Legal Aspects of the Receivables." If the FDIC were to take any of those
actions, your payments of outstanding principal and interest could be delayed
and possibly reduced.
If a conservator or receiver were appointed for Spirit of America National Bank,
then an "early amortization event" would occur for all outstanding series. Under
the terms of the relevant agreements, new principal receivables would not be
transferred to the trust and the trustee would sell the receivables unless
holders of more than 50% of the investor interest of each class of outstanding
certificates, all credit enhancement providers and each representative of
outstanding receivables purchase series gave the trustee other instructions. The
trust would then terminate earlier than planned and you could have a loss if the
sale of the receivables produced insufficient net proceeds to pay you in full.
See "Description of the Certificates - Early Amortization Events."
The conservator or receiver may have the power--
- regardless of the terms of the relevant agreements, (a) to prevent the
beginning of an early amortization period, (b) to prevent the early
sale of the receivables and termination of the trust or (c) to require
new principal receivables to continue being transferred to the trust;
or
- regardless of the instructions of the certificateholders, (a) to
require the early sale of the trust's receivables, (b) to require
termination of the trust and retirement of the trust's certificates,
including Series 1999-1, or (c) to prohibit the continued transfer of
principal receivables to the trusts.
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INSOLVENCY OF THE SELLER, THE SERVICER OR CHARMING SHOPPES COULD
RESULT IN ACCELERATED, DELAYED OR REDUCED PAYMENTS
Charming Shoppes Receivables Corp., as seller, has documented the transfers by
it to the trust as sales. However, if the seller were to become a debtor in a
bankruptcy case, a bankruptcy trustee or creditor of the seller may take the
position that the transfer of the receivables to the trust should be
recharacterized as a pledge of the receivables. If so, the trustee for the trust
would be required to go through bankruptcy court proceedings to establish its
rights to collections on the receivables in the trust, and, if the transfer were
held to be a pledge, to establish the amount of claims secured by the pledge.
These proceedings could result in a delay and possibly a reduction in the
payment of principal and interest to you.
If Charming Shoppes Receivables Corp., the servicer or Charming Shoppes Inc.
were to become the subject of bankruptcy proceedings, an "early amortization
event" would occur for all outstanding series. Under the terms of the relevant
agreements, new principal receivables would not be transferred to the trust and
the trustee would sell the receivables unless holders of more than 50% of the
investor interest of each class of outstanding certificates, all credit
enhancement providers and each representative of outstanding receivables
purchase series gave the trustee other instructions. The trust would then
terminate earlier than planned and you could have a loss if the sale of the
receivables produced insufficient net proceeds to pay you in full. See
"Description of the Certificates - Early Amortization Events."
The bankruptcy court may have the power--
- regardless of the terms of the relevant agreements, (a) to prevent the
beginning of an early amortization period, (b) to prevent the early
sale of the receivables and termination of the trust or (c) to require
new principal receivables to continue being transferred to the trust;
or
- regardless of the instructions of the certificateholders, (a) to
require the early sale of the trust's receivables, (b) to require
termination of the trust and retirement of the trust's certificates,
including Series 1999-1, or (c) to prohibit the continued transfer of
principal receivables to the trust.
There is a time delay between the servicer's receipt of collections and its
deposit of those collections in an account of the trust. If the servicer becomes
the subject of bankruptcy proceedings, the
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trustee's claim to collections in the servicer's possession at the time of the
bankruptcy filing may not be perfected. In this event, funds available to pay
principal and interest on your certificates may be reduced.
Additionally, if the servicer defaults on its obligations under the pooling and
servicing agreement solely because it becomes insolvent, the bankruptcy court
might have the power to prevent either the trustee or the holders of securities
issued by the trust from appointing a new servicer. See "Legal Aspects of the
Receivables." In this event, the ability of the servicer to service the
receivables could be impaired by its bankruptcy and its actions would be subject
to court supervision, which could cause delays in payments being made on your
certificates.
SOME LIENS COULD BE GIVEN PRIORITY OVER YOUR SECURITIES WHICH
COULD CAUSE DELAYED OR REDUCED PAYMENTS
Each of Spirit of America National Bank and Charming Shoppes Receivables Corp.
account for the transfer of the receivables to the trust as a sale. However, a
court could conclude that either transferor still owns the receivables and that
the trust holds only a security interest. Each transferor will take steps to
give the trustee a senior lien on the receivables in the event a court concludes
that it still owns the receivables.
However, if the originator became insolvent and the FDIC were appointed
conservator or receiver of the originator, the FDIC's administrative expenses
might be paid from the receivables before the trust received any payments on the
receivables. If Charming Shoppes Receivables Corp. became insolvent and a
receiver or conservator were appointed for it, the fees and expenses of the
receiver or conservator might be paid from the receivables before the trust
received any payments on the receivables.
Additionally, if a court concludes that the transfer to the trust is only a
grant of a security interest in the receivables, some liens on either
transferor's property arising before new receivables come into existence may get
paid before the trust's interest in those receivables. Those liens include a tax
or government lien or other liens permitted under the law without the consent of
the transferor. See "Legal Aspects of the Receivables."
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CHANGES TO CONSUMER PROTECTION LAWS MAY IMPEDE COLLECTION EFFORTS
Federal and state consumer protection laws regulate the creation and enforcement
of consumer loans, including credit card accounts and receivables. Changes or
additions to those regulations could make it more difficult for the servicer of
the receivables to collect payments on the receivables or reduce the finance
charges and other fees that the originator can charge on credit card account
balances, resulting in reduced collections.
Receivables that do not comply with consumer protection laws may not be valid or
enforceable in accordance with their terms against the obligors on those
receivables.
If a cardholder sought protection under federal or state bankruptcy or debtor
relief laws, a court could reduce or discharge completely the cardholder's
obligations to repay amounts due on its account and, as a result, the related
receivables would be written off as uncollectible.
LIMITED REMEDIES FOR BREACHES OF REPRESENTATIONS COULD REDUCE OR DELAY PAYMENTS
Each of Spirit of America National Bank and Charming Shoppes Receivables Corp.,
as transferor of the receivables, makes representations and warranties relating
to the validity and enforceability of the receivables arising under the accounts
in the trust portfolio, and as to the perfection and priority of the trustee's
interest in the receivables. However, the trustee will not make any examination
of the receivables or the related records for the purpose of determining the
presence or absence of defects, compliance with representations and warranties,
or for any other purpose.
If a representation or warranty relating to the receivables is violated, the
related obligors may have defenses to payment or other offset rights, or other
creditors of the originator or the seller may claim rights to the trust assets.
The only remedy if any representation or warranty is violated, and the violation
continues beyond the period of time the transferors have to correct the
violation, is that each transferor must accept reassignment of the receivables
affected by the violation. See "The Pooling Agreement --Required Removal of
Receivables from the Trust."
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POTENTIAL EARLY REPAYMENT, DELAYED PAYMENT OR REDUCED PAYMENT DUE TO REDUCED
COLLECTIONS
If the three month average trust portfolio yield is less than the three month
average base rate for the same three consecutive months, an "early amortization
event" will occur with respect to Series 1999-1 and the trust will begin an
early amortization of Series 1999-1. In that event, holders of Series 1999-1
certificates will receive principal payments earlier than scheduled. Moreover,
if principal collections on receivables allocated to other series are available
for application during an early amortization of Series 1999-1 certificates, the
period during which that early amortization occurs may be substantially
shortened. Because of the potential for early repayment if collections on the
receivables fall below the minimum amount, any circumstances that tend to reduce
collections may increase the risk of early repayment of Series 1999-1.
If your certificates are paid sooner than expected, you may not be able to
reinvest the amount paid to you at an interest rate comparable to the rate you
would have earned on your certificates. In addition to lost opportunity costs,
you may incur negative arbitrage costs or breakage costs if you fund your
investment in the certificates by incurring fixed rate obligations and/or
obligations that cannot be repaid at any time without penalty.
Any reduction in collections may also cause the period during which collections
are applied to the payment of Class A to be longer than otherwise would have
been the case, or could cause a reduction in the amount of principal and
interest paid to you.
The following factors could result in circumstances that tend to reduce
collections:
The originator may change the terms and conditions of the accounts
Spirit of America National Bank will transfer to Charming Shoppes Receivables
Corp., and Charming Shoppes Receivables Corp. will transfer to the trust,
receivables arising under specified credit card accounts, but the originator
will continue to own those accounts. As the owner of the accounts, the
originator retains the right to change the terms and conditions of those
accounts, including finance charges and other fees it charges and the required
minimum monthly payment. The originator may change the terms of the accounts to
maintain its competitive position in the
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credit card industry. Changes in the terms of the accounts may reduce the amount
of receivables arising under the accounts, reduce the amount of collections on
those receivables, or prompt obligors on the accounts to pay sooner or later
than would otherwise have been expected.
The originator has agreed that it will not reduce the periodic interest rate it
charges on the receivables or other fees on any account if doing so would have a
material adverse effect on the collectibility of the receivables, unless the
originator is required by law to do so. The originator has no other restrictions
on its ability to change the terms of the accounts.
The originator may add accounts to the trust portfolio
In addition to the accounts already designated for the trust, Spirit of America
National Bank is expected to designate additional accounts for the trust
portfolio and to transfer the receivables in those accounts to the trust. Any
new accounts and receivables may have different terms and conditions than the
accounts and receivables already in the trust portfolio -- such as higher or
lower fees or interest rates, or longer or shorter principal payment terms. The
new accounts also could have higher loss or delinquency experience. Any or all
of these factors could affect the average yield on the trust assets.
Currently, the receivables primarily represent the right to be paid for
merchandise and services purchased at Fashion Bug(R) and Fashion Bug Plus(R)
stores and charged on a private label credit card. However, cardholders may use
the card to pay for direct mail purchases of goods and services offered by other
vendors selected by the originator, and to pay for other services, such as
credit insurance, offered by the originator. The originator plans to promote
increased use of the private label credit card for these purposes. In addition,
the originator is considering offering other types of credit cards, such as Visa
or MasterCard or a secured credit card. With rating agency approval, accounts
arising from new types of credit card programs may be added to the trust. The
terms of the new programs, the target customer base for these programs, and/or
the payment patterns for the related customers could vary from the accounts
currently in the trust.
Credit card accounts purchased by the originator may be included as additional
accounts. Credit card accounts purchased by the originator will have been
originated using a third party's underwriting criteria. The third party's
underwriting criteria may
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be less stringent than those of Spirit of America National Bank. The new
accounts and receivables may produce higher or lower collections or charge-offs
over time than the accounts and receivables already in the trust and could tend
to reduce the amount of collections allocated to Series 1999-1.
Also, if Charming Shoppes Receivables Corp.'s percentage interest in the
accounts of the trust is reduced to zero and receivables in the trust are less
than the amount required to support outstanding securities, Charming Shoppes
Receivables Corp. and the originator will be required to designate additional
accounts for the trust portfolio and transfer the receivables in those accounts
to the trust. If the originator is required to add accounts to the trust, it may
not have additional accounts available for this purpose. If new accounts are not
added when required, an "early amortization event" will occur and you could
receive payment of principal sooner than expected. See "The Pooling Agreement
- --Addition of Accounts."
Additionally, when the seller is obligated to designate additional accounts for
the trust, it may elect to instead make a cash deposit to the excess funding
account. If contributions are made to the excess funding account, then the trust
may receive significantly less finance charge receivables than it would if the
seller had designated additional accounts. Amounts on deposit in the excess
funding account may accrue interest at a lower rate than finance charge
receivables do.
Certificate and receivables interest rate reset terms may differ
Finance charges on accounts in the trust accrue at a fixed rate or at a variable
rate above a designated prime rate or other designated index. The certificate
rate of your certificate is based on LIBOR. Changes in LIBOR might not be
reflected in the prime rate or the designated index, resulting in a higher or
lower spread, or difference, between the amount of collections of finance charge
receivables on the accounts on one hand, and the amount of interest payable on
Series 1999-1 and other amounts required to be funded out of collections of
finance charge receivables, on the other hand.
Finance charges on some of the accounts in the trust accrue at a fixed rate. If
LIBOR increases, the amount of interest on your certificate and other amounts
required to be funded out of collections of finance charge receivables will
increase, while the amount of collections of finance charge receivables on the
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accounts will remain the same unless and until the rates on the accounts are
reset.
Payment pattern of receivables could reduce collections
The receivables transferred to the trust may be paid at any time. We cannot
assure the creation of additional receivables in the trust's accounts or that
any particular pattern of cardholder payments will occur. A significant decline
in the amount of new receivables generated by the accounts in the trust could
result in reduced amounts of trust collections.
Monthly payment rates by accountholders depend on a variety of factors,
including seasonal purchasing and individual payment habits, the availability of
other sources of credit and general economic conditions. Increased convenience
use, where accountholders pay their balances in full on or before the due date
and thus avoid all finance charges, would decrease the yield on the accounts, as
well as a decrease in protection to you against defaults under the accounts.
Operation of Fashion Bug stores may affect payments
The majority of the currently outstanding Spirit of America credit cards can be
used primarily to purchase merchandise or services from the Fashion Bug(R) and
Fashion Bug Plus(R) stores owned by affiliates of Charming Shoppes Inc. The
business of marketing and selling women's specialty apparel and related services
is highly competitive. Many considerations enter into the competition for the
consumer's patronage, including price, quality, style, service, product mix,
convenience and credit availability and terms. Additionally, store closings in a
concentrated area could decrease the amount of receivables generated or increase
losses in that area. There can therefore be no assurance that the Fashion Bug
stores will continue to generate receivables at the same rate as in prior years.
Competition in the credit card industry could affect payment
Fashion Bug Stores accept American Express cards and MasterCard, Visa and
Discover credit cards. There can be no assurance that the originator will
continue to maintain its historic percentage share of Fashion Bug Stores credit
card sales against competition from these other credit cards.
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HIGH CONCENTRATIONS IN A GEOGRAPHIC AREA COULD AFFECT THE COLLECTION RATE ON THE
RECEIVABLES
If the trust contains a high concentration of receivables relating to
cardholders located within a single state or region of the United States, events
in that state or region may adversely affect the collection rate of receivables
in the trust. For example, an increase in unemployment in one state or region
might result in higher default rates on the trust's receivables. A change in a
state's consumer protection laws could reduce the interest rate or fees payable
on accounts maintained with residents of that state. This prospectus contains a
geographic breakdown of the number of accounts and the amount of receivables
relating to cardholders in applicable state. See "The Receivables --Geographic
Distribution of Accounts."
As of March 31, 1999, approximately 16.2% and 10.8% of the outstanding balance
of receivables were located in Pennsylvania and Ohio, respectively. No other
state currently accounts for more than 10% of the receivables. These
concentration levels may change in the future.
We are not aware of any existing adverse economic conditions or relevant laws
particularly affecting either of these regions that are material to
certificateholders, but cannot assure you (1) whether materially adverse
economic conditions will develop in the future or (2) whether laws will change
in the future in a way that would materially affect the collection rate of
receivables.
ISSUANCE OF ADDITIONAL SERIES BY THE TRUST MAY AFFECT THE TIMING OF PAYMENTS
The trust, as a master trust, may issue series of certificates or purchased
interests from time to time. The trust has issued, and may issue, additional
series with terms that are different from your series. For example, the new
series may accrue interest at a higher rate, require higher levels of
overcollateralization or have more restrictive early amortization events than
Series 1999-1. If so, the new series may be entitled to a proportionately higher
share of collections than your series, or may be paid sooner than your series in
circumstances where the quality of the trust portfolio is deteriorating. In any
event, the issuance of a new series increases the aggregate amount of
obligations to be paid by the trust. It is a condition to the issuance of each
new series that each rating agency that has rated an outstanding series confirm
that the issuance of the new series will not result in a reduction or
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withdrawal of its rating of any class of any outstanding series. However, a
ratings confirmation does not guaranty that the timing or amount of payments on
your series will remain the same. See "The Pooling Agreement--Issuance of Other
Series."
ISSUANCE OF A PAIRED SERIES COULD AFFECT YOUR PAYMENTS
A Series 1999-1 begins to amortize, a new "paired" series of certificates could
be issued by the trust. A reduction in the invested amount of Series 1999-1
would result in an increase in the invested amount of the paired series. If an
early amortization event occurs on the "paired" series, the percentage of
principal collections allocated to the Series 1999-1 certificates may be
lowered, and/or the amortization period for Series 1999-1 may be lengthened, so
as to provide for the early amortization of the paired series. See "Description
of the Certificates--Paired Series."
INDIVIDUAL CERTIFICATEHOLDERS WILL HAVE LIMITED CONTROL OF TRUST ACTIONS
Certificateholders of any series, or any class within a series, may need the
consent or approval of a specified percentage of the investor interest of other
series, a class of another series, or a credit enhancement provider to take or
direct certain actions, including to (a) require the appointment of a successor
servicer after Spirit of America, Inc., as servicer, defaults on its obligations
under the pooling and servicing agreement, (b) amend the pooling and servicing
agreement in some cases, and (c) direct a repurchase of all outstanding series
after certain violations of representations and warranties by the transferors.
The interests of the certificateholders of other series or a credit enhancer may
not coincide with yours, making it more difficult for you to achieve the desired
results from any vote.
RECHARACTERIZATION OF PRINCIPAL PAYMENTS WOULD REDUCE PRINCIPAL RECEIVABLES AND
MAY REQUIRE ADDITION OF NEW RECEIVABLES
The seller may designate a percentage of the receivables that would otherwise be
treated as principal receivables to be treated as finance charge receivables.
This designation should decrease the likelihood of an early amortization event
occurring because of a reduction of the average portfolio yield for a given
period. However, this designation will also reduce the aggregate amount of
principal receivables, which may increase the likelihood that the seller will be
required to add receivables to the trust. If the seller were unable to add
receivables and could not make a sufficient
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cash deposit into the excess funding account, Series 1999-1 could go into early
amortization.
THE CERTIFICATES ARE NOT GUARANTEED AND WILL ONLY BE PAID FROM TRUST ASSETS
The certificates will represent interests in the trust only, and will not
represent an obligation of the originator, the seller, the servicer, the trustee
or any of their affiliates. The certificates are not deposits and neither the
certificates nor the underlying accounts or receivables are insured or
guaranteed by the FDIC or any other government agency.
EXPOSURE TO CAP PROVIDERS COULD LEAD TO AN EARLY AMORTIZATION EVENT
The trust will enter into interest rate cap agreements to provide additional
enhancement for your series. These agreements will require the counterparties to
make payments to the trust if the rate of interest on the Class A or Class B
certificates exceeds a specified rate. There can be no assurance that the
servicer will be able to enter into replacement interest rate cap agreements or
make other arrangements to protect you if the counterparty is downgraded.
Failure to replace a downgraded counterparty will result in early amortization
of Series 1999-1, and could result in a shortfall in funds available to pay
interest on your certificates.
Interest rate cap agreements are not regulated by the Securities and Exchange
Commission or the Commodity Futures Trading Commission. As a result, a
counterparty's risk management and operating procedures are not subject to
review by these agencies, and may not be subject to any regulatory restrictions.
Adverse market movements could increase the trust's exposure to counterparty
risk over a period of time, and could weaken the counterparty's ability to pay
its hedging obligations generally.
THE YEAR 2000 PROBLEM COULD DISRUPT THE GENERATION AND SERVICING OF THE
RECEIVABLES
Date-sensitive computer functions, including those necessary to the servicing of
receivables, are susceptible to the "Year 2000 problem." This problem arises
from the risk that computer applications will not be able to recognize and
properly perform functions involving dates before and after January 1, 2000.
Charming Shoppes has been modifying and/or replacing its computer systems,
including those of the servicer, the originator
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and the seller, to address the Year 2000 problem, and expects to be able to
perform these date-sensitive functions without interruption. Charming Shoppes
has also been communicating with its important suppliers of merchandise and
services to ensure that they are addressing the Year 2000 problem. However, the
unique nature of the Year 2000 problem, and the extent to which one company's
systems failure could directly or indirectly affect other companies, create the
possibility of unexpected disruptions in the servicing of receivables, the
distribution of payments from the trust or, to the extent sales at Fashion Bug
or Fashion Bug Plus stores are disrupted, the origination of new receivables.
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You can find a listing of the pages where capitalized terms used in this
prospectus are defined under the caption "Index of Terms for Prospectus"
beginning on page 114 in this document.
TRUST
The Charming Shoppes Master Trust was formed under the laws of the
State of New York. It is operated under the Second Amended and Restated Pooling
and Servicing Agreement, dated November 25, 1997 which has been and may be
amended from time to time -- and is referred to in this prospectus supplement as
the pooling agreement. The pooling agreement is among Charming Shoppes
Receivables Corp., as seller, Spirit of America, Inc., as servicer, and First
Union National Bank, as trustee.
The trust, as a master trust, may issue certificate series and sell
receivables purchase series from time to time. The trust has not and will not
engage in any business activity other than:
- acquiring and holding trust assets
- issuing and making payments on certificate series
- issuing and making payments on the Exchangeable Seller Certificate
- selling receivables purchase series o engaging in related activities.
MATURITY CONSIDERATIONS
Series 1999-1 will always be in one of three payment periods--the
Revolving Period, the Controlled Amortization Period or the Early Amortization
Period.
Monthly interest payments will be made on the certificates during each
of the payment periods. Principal payments, however, will only be made during
the Controlled Amortization Period and the Early Amortization Period. In any
case, the trust will not pay principal on the Class B certificates until the
Class A Investor Interest has been paid in full. The trust will not pay
principal on the Class C or Class D certificates until the Class B Investor
Interest has been paid in full. For a detailed description of when interest and
principal are payable on the certificates, see "Description of the
Certificates--Interest Payments" and "--Reallocations and Payments of
Principal."
As described in this prospectus under "Risk Factors," the ability of
the trust to make payments of interest or principal when scheduled depends upon
several factors:
- the payment rates on the receivables
- the amount of outstanding receivables, delinquencies, charge-offs
and new borrowings on the accounts
- the potential issuance by the trust of additional certificate
series and sale of additional receivables purchase series
- the availability of shared principal collections.
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Monthly payment rates on the receivables may vary for several reasons
including:
- accountholders having different payment rates
- accountholders failing to make required minimum payments
- accountholders paying only minimum payments
- accountholders paying off entire outstanding balances
- accountholders making seasonal purchases or altering their
payment habits based on the season
- Charming Shoppes changing its merchandise return policies or
other programs in which accountholders participate.
Additionally, the amount of outstanding receivables and the
delinquencies, charge-offs and new borrowings on the accounts may vary from
month to month due to a variety of factors:
- seasonal variations
- the availability of other sources of credit
- legal factors
- general economic conditions
- spending and borrowing habits of individual accountholders.
Although we have provided historical data concerning the payment rates
on the receivables, because of these factors, we cannot provide you with any
assurance that the levels and timing of payments on receivables in the trust
portfolio from time to time will be similar to the historic experience described
in the "Accountholder Monthly Payment Rates for the Trust Portfolio" table in
"Spirit of America's Credit Card Activities--Payment Rates."
The trust is a master trust and it has previously issued certificate
series and sold receivables purchase series. The trust may issue additional
certificate series and sell additional receivables purchase series in the
future. The terms, the outstanding principal amount of, and interest rate for
additional series may vary from time to time.
The early amortization events for other series may vary from the Early
Amortization Events for Series 1999-1. Early amortization events for other
series may include early amortization events which are unrelated to the status
of the seller, the servicer or the receivables, for example, events related to
the continued availability and rating of any enhancement providers for that
series. If an early amortization event does occur for any other series prior to
the payment in full of Series 1999-1, the final payment of principal to holders
of the Class A certificates and the Class B certificates may be delayed.
As described under "Risk Factors" in this prospectus, a certificate
series issued in the future could be "paired" with Series 1999-1. If an early
amortization event occurs for the paired series, the numerator of the Fixed
Allocation Percentage for Series 1999-1 may be lowered, resulting in fewer
principal collections being allocated to Series 1999-1. In that event, payments
to you could be reduced or delayed. These topics are fully described in
"Description of the Certificates--Allocation Percentages" and "--Paired Series."
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Additionally, if an Early Amortization Event occurs for Series 1999-1,
the average life and maturity of the Series 1999-1 certificates could be
significantly reduced.
For all of these reasons, we cannot provide assurances relating to:
- the level or timing of collections of receivables which have been
transferred to the trust,
- the rate at which Series 1999-1 certificateholders will receive
payments of principal on their certificates during the Early
Amortization Period,
- the rate at which the scheduled payments will be made during the
Controlled Amortization Period,
- whether any class will be paid on its expected final payment
date, or
- whether the rate of payments on the receivables will be similar
to the historic experience described in "Accountholder Monthly
Payment Rates for the Trust Portfolio" table under "Spirit of
America's Credit Card Activities--Payment Rates."
SPIRIT OF AMERICA'S CREDIT CARD ACTIVITIES
OVERVIEW
The seller currently transfers to the trust only receivables that are
owed by customers under Fashion Bug revolving private label credit card
accounts. The credit cards are called "private label" because the originator
establishes credit card accounts to permit qualified customers to purchase
merchandise and services from retail stores affiliated with Charming Shoppes
operating under the names of Fashion Bug(R) and Fashion Bug Plus(R). We refer to
these stores as Fashion Bug stores in this prospectus. The total amount of
receivables in the trust on March 31, 1999 was $261.3 million. Spirit of
America, Inc., an affiliate of the originator, is currently responsible for all
aspects of the credit card program, which include the granting of credit, the
issuance of credit cards, collections, account processing and customer service,
and acts as servicer of the trust portfolio.
NEW ACCOUNT UNDERWRITING
The originator generates new accounts primarily through credit card
applications available in Fashion Bug stores. Store personnel offer credit card
applications and information about the credit card program to customers. A
credit card application may be processed either by (1) the store personnel
telephoning the originator at its operations center located in Milford, Ohio, or
(2) the store personnel mailing the application on behalf of the customer to the
originator at its operations center. A complete application is required
regardless of the method used to process the application.
The originator currently evaluates the creditworthiness of an applicant
by applying one of its several proprietary credit scoring models. These credit
scoring models use information supplied by the applicant and information
available from credit bureau reports. The scoring of a
24
<PAGE> 30
credit card application under the selected credit scoring model determines
whether the application for credit is approved or declined. These models use a
number of variables coming from information provided by an applicant and
obtained from credit bureaus. While no one variable is determinative, an
applicant's prior credit history is an important variable in the approval
system.
Periodically, the credit scoring models are reviewed and, if
appropriate, refined to take advantage of the most current statistical
information. No person may override the results from the credit scoring system,
although some applications may from time to time be manually checked to ensure
that the credit information is accurate.
In addition to applications generated from Fashion Bug stores, the
originator has issued, and may issue in the future, pre-approved credit card
accounts through mail solicitations. The list of customers who are offered
pre-approved accounts is based upon information received from credit services
and other entities in the business of selling customer lists. Before an account
is opened under the pre-approved program, the applicant's credit information is
reviewed for completeness and creditworthiness based upon independent credit
reporting bureau models that meet the originator's standards for approving
applications. The credit standards for pre-approved accounts are similar to the
standards established by the originator for all other accounts.
Credit limits are determined by policies established from time to time
by the originator. When an application for credit is approved, the
accountholder's initial credit limit will be based upon the results of the
credit scoring model. The range of initial credit limits is $100 to $700. Credit
limits are automatically increased periodically, if warranted by the
accountholder's purchase and payment activities. Any request to increase an
accountholder's credit limit over $1,500 must be approved by a vice president of
the originator or his or her designee. In addition to the automated credit limit
increase program described above, Fashion Bug store personnel may also request,
on behalf of an accountholder, an increase in a credit limit through the use of
a toll-free 800 number. An increase in the accountholder's credit limit may also
be requested directly by the accountholder. The average credit limit for all
accounts on March 31, 1999 was $541.
Each grant of credit by the originator to an accountholder is governed
by the terms and conditions contained in the originator's retail installment
credit agreement in effect at that time.
The originator reserves the right to change or terminate the terms,
conditions, services, or features of an account under the conditions described
in the applicable retail installment credit agreement. These changes include
increasing or decreasing periodic finance charges, late fees, returned check
charges, charges for credit protection services or the minimum payment required
each month. The originator may, at any time and without prior notice to the
accountholder, restrict further credit card use by the accountholder. The
originator restricts use because of poor payment performance or the occurrence
of events which may impair the creditworthiness of the accountholder. The
originator has the ability to prevent the accountholder from using his or her
credit card to make purchases at Fashion Bug stores until the reason for the
restriction has been resolved.
25
<PAGE> 31
All accounts are grouped into billing cycles. Each billing cycle has a
separate monthly billing date which may vary slightly from month to month. On
the monthly billing date, the activity in the account during the month ended
prior to that billing date is processed and billed to the accountholder. Payment
is due within 25 days after the billing date shown in the monthly statement,
with a grace period of up to 5 days for mailing time. A late fee of $20 is
assessed, in most states, if the minimum payment is not received within 30 days
after it is due. As long as the accountholder makes the minimum payment when
due, his or her account remains on current status.
DESCRIPTION OF SUBSERVICER
The servicer has entered into a multi-year agreement with Alliance Data
Systems, Inc. to act as subservicer. Under this agreement, the subservicer has
assumed a portion of the servicer's account maintenance and service
administration responsibilities. The subservicer provides customer and
collection services for delinquent accounts and other administrative services
through its facilities located in Voorhees, New Jersey. The subservicer also
provides billing, payment processing, and account maintenance services through
its facilities located in Columbus, Ohio and Dallas and San Antonio, Texas. The
subservicer has been performing these account servicing functions for the
servicer since October, 1988. The servicer's contract with the subservicer is
scheduled to expire in 2002. At this time, the servicer believes it will be able
to enter into a comparable servicing contract at comparable pricing either with
the current subservicer or another servicing provider upon the expiration of
that agreement.
BILLING AND PAYMENTS
If an accountholder elects not to pay the entire amount due on a
payment due date, the originator assesses finance charges and other fees on the
related account. The assessed charges are based upon the average daily balance
outstanding on the account during the monthly billing cycle. The average daily
balance outstanding on an account for any day during a monthly billing cycle is
equal to the sum of:
- the beginning balance of the account during any day,
- plus purchases and unpaid finance charges posted to the account
that day,
- minus any payments and credits posted to the account that day,
- divided by the number of days in the billing cycle.
Currently, the finance charge rate charged to all accountholders is
22.9% annually. Accountholders must make a minimum monthly payment equal to the
greater of 1/20th of their statement balance or $10.00. Currently, less than 10%
of all Accounts are paid off monthly.
No finance charges are charged on new purchases if the accountholder's
previous balance is paid in full on the most recent payment due date and if the
new purchases are paid in full by the next payment due date after they are
initially billed. If the entire outstanding balance of an account is not paid in
full by the payment due date, a finance charge is charged on the account balance
from the date that each purchase is made to the date of payment for that
purchase. The
26
<PAGE> 32
originator generally charges accountholders a late fee in an amount up to $20.00
for each late payment and a returned check fee in an amount up to $20.00 for
each returned check.
The originator charges an annual membership fee to cardholders in its
premium account program. These fees are treated as principal receivables.
Although the originator does not currently impose overlimit fees or other
transaction-related service fees, if any of these fees were imposed in the
future, they would be treated as principal receivables. The originator does not
currently charge any annual fees other than annual membership fees referred to
above. If any new annual fees were imposed in the future, they would be treated
as finance charge receivables.
The originator from time to time in conjunction with special
promotional offers allows customers to make purchases on their accounts without
imposing any finance charges until payments are due at some specified time in
the future.
DELINQUENCIES AND COLLECTIONS--COLLECTION EFFORTS
An account is considered delinquent when the minimum payment due is not
received by the payment due date specified in the accountholder's billing
statement. Messages regarding an accountholder's delinquency status are included
on the accountholder's billing statement when an account becomes delinquent.
Collection actions are initiated no later than five days after the date the
accountholder's scheduled payment is due, and these collection efforts escalate
in intensity as the delinquency continues.
If 90 days have elapsed since the payment due date without payment of
the minimum amount due, the accountholder is not permitted to use the credit
card to purchase any additional merchandise or services from Fashion Bug stores.
After 180 days have elapsed since the payment due date without payment of the
minimum amount due, the account is charged off and referred to various outside
collection agencies for recovery. In addition, accounts are also charged off at
the beginning of the first billing cycle occurring after the originator receives
notice that (1) the accountholder is the subject of a bankruptcy filing, (2) the
accountholder is deceased or imprisoned, or (3) there has been fraudulent
activity in connection with the account. The originator tracks the number of
accounts and amounts outstanding in six aging categories: 1- 29 days past due;
30-59 days past due; 60-89 days past due; 90-119 days past due; 120-149 days
past due; and 150-179 days past due.
The originator employs a monthly automated re-aging program that
reclassifies the status of accounts to current upon receipt of at least three
consecutive scheduled payments greater than $10.00. If an account was ever
greater than 90 days past due, that account is not eligible for purchasing
privileges under this re-aging program.
CREDIT RETURN POLICY
Charming Shoppes believes that its merchandise and credit return policy
is competitive with other specialty retailers. Return transactions are processed
nightly along with sales and payment data. During the fiscal year ending January
30, 1999, returns for credit represented approximately 7.8% of the average
outstanding receivables during that year.
27
<PAGE> 33
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for
the trust portfolio for each of the periods shown. We cannot assure you that the
delinquency and loss experience for the trust portfolio in the future will be
similar to the historical experience described in these tables.
DELINQUENCIES AS A PERCENTAGE OF THE TRUST PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT MONTH END
MARCH 31, 1999 AT YEAR END DECEMBER 31,
-------------- ------------------------
1998 1997 1996 1995
---- ---- ---- ----
Number of Days Delinquent Delinquent Delinquent Delinquent Delinquent
Delinquent Amount Percentage Amount Percentage Amount Percentage Amount Percentage Amount
---------- ------ ---------- ------ ---------- ------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30-59 Days...... $13,690 5.4% $12,789 4.5% $14,014 4.3 $18,106 5.2% $18,741
60-89 Days...... 5,857 2.3% 5,357 1.9% 6,480 2.0 % 7,739 2.2% 7,521
90-119 Days..... 4,246 1.7% 4,184 1.5% 4,613 1.4 % 5,492 1.6% 4,678
120 + Days...... 4,153 1.6% 3,955 1.4% 4,836 1.5 % 5,332 1.5% 3,510
----- ---- ----- ---- ----- --- ------- ---- -----
TOTAL........ $27,946 10.9% $26,285 9.3% $29,942 9.2 $36,870 10.5% $34,450
======= ===== ======= ==== ======= === ------- ===== =======
</TABLE>
<TABLE>
<CAPTION>
1995 1994
---- ----
Number of Days Delinquent
Delinquent Percentage Amount Percentage
---------- ---------- ------ ----------
<S> <C> <C> <C>
30-59 Days...... 4.8% $19,895 4.8%
60-89 Days...... 1.9% 6,996 1.7%
90-119 Days..... 1.2% 4,105 1.0%
120 + Days...... 0.9% 3,345 0.8%
---- ------ ---
TOTAL........ 8.8% $34,341 8.2%
=== ======= ===
</TABLE>
- ---------------------------
(1) The percentages are the result of dividing the delinquent amount by end of
the Due Period receivables outstanding on the applicable date. The
delinquent amount is the dollar amount of monthly sum of cycles
delinquencies in each category on the applicable date. The respective
cycle-end receivables outstanding for month end March 31, 1999 and at year
end December 1998, 1997, 1996, 1995 and 1994 were $255,665, $281,509,
$325,611, $348,124, $389,714 and $418,960, respectively. These amounts
represent the aggregation of the receivable balances at the close of the
respective monthly billing cycle periods, which may differ from the
respective month end outstanding receivable balances.
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<PAGE> 34
LOSS EXPERIENCE FOR THE TRUST PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
3 MONTHS ENDED
MARCH 31, 1999(1) 1998 1997 1996 1995 1994
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Average Receivables Outstanding(2) ...... $276,647 $290,514 $315,035 $351,560 $379,866 $392,301
Gross Losses ............................ $ 8,182 $ 34,906 $ 38,257 $ 40,914 $ 32,173 $ 28,194
Gross Losses as a Percentage of Average
Receivables Outstanding ........... 11.83% 12.0% 12.1% 11.6% 8.5% 7.2%
Net Recoveries .......................... $ 2,149 $ 6,630 $ 7,474 $ 7,009 $ 7,095 $ 5,635
Net Losses .............................. $ 6,033 $ 28,276 $ 30,783 $ 33,905 $ 25,078 $ 22,559
Net Losses as a Percentage of Average
Receivables Outstanding ............... 8.7% 9.7% 9.8% 9.6% 6.6% 5.8 %
</TABLE>
- ---------------------------
(1) The percentages shown for the three months ended March 31, 1999 are
annualized figures. Annualized figures are not necessarily indicative of
results for the entire year.
(2) Represents an average for all receivables outstanding for each account and
each billing cycle for January, February and March in 1999.
REVENUE EXPERIENCE
The next table describes the total revenues from finance charges and
fees billed on the trust portfolio for the three months ended March 31, 1999 and
for each year during the five-year period ended December 31, 1998. The figures
in the table represent amounts billed to accountholders before deductions for
charge-offs, returned merchandise, and customer disputes or other expenses and
reductions due to fraud.
REVENUE EXPERIENCE FOR THE TRUST PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
3 MONTHS ENDED
MARCH 31, 1999(1) 1998 1997 1996 1995 1994
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Average Receivables Outstanding(2) $276,647 $290,514 $315,035 $351,560 $379,866 $392,301
Finance Charges and Fees(3) ....... $ 19,173 $ 71,512 $ 78,716 $ 86,354 $ 88,569 $ 89,691
Yield from Finance Charges and Fees 27.7% 24.6% 25.0% 24.6% 23.3% 22.9%
</TABLE>
- ---------------------------
(1) The percentages shown for the three months ended March 31, 1999 are
annualized figures. Annualized figures are not necessarily indicative of
results for the entire year.
(2) Represents an average for all receivables outstanding at the corresponding
billing date.
(3) Finance charges and fees do not include interest on subsequent collections
on accounts previously charged off. Finance charges and fees include
monthly periodic rate finance charges, late charges and returned check
charges.
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<PAGE> 35
The revenue for the accounts in the trust portfolio shown in the above
table is comprised of monthly periodic rate finance charges and other service
charges which include late charges and returned check charges. If payment rates
decline, the balances which incur monthly periodic rate finance charges tend to
grow, assuming no change in the level of purchasing activity. Accordingly, under
these circumstances, the yield related to monthly periodic rate finance charges
normally increases. Conversely, if payment rates increase, the balances which
incur monthly periodic rate finance charges tend to fall, assuming no change in
the level of purchasing activity. Accordingly, under these circumstances, the
yield related to monthly periodic rate finance charges normally decreases. The
yield related to service charges varies with the type and volume of activity in
and the amount of each account.
Increased revenue for the first three months of 1999 reflects, in part,
the fact that the originator has increased its late fee to $20 from $10.
PAYMENT RATES
The next table describes the highest and lowest accountholder monthly
payment rates for the trust portfolio during any single month in the period
shown and the average of the accountholder monthly payment rates for all months
during the periods shown, in each case calculated as a percentage of the average
of the monthly account balances during the periods shown. Payment rates shown in
the table are based on amounts which would be payments of principal receivables
and finance charge receivables on the account.
ACCOUNTHOLDER MONTHLY PAYMENT RATES
FOR THE TRUST PORTFOLIO(1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
3 MONTHS ENDED -----------------------
MARCH 31 , 1999(1) 1998 1997 1996 1995 1994
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Lowest Month (2) (3)................. 13.2% 11.4% 10.7% 9.5% 10.9% 10.6%
Highest Month (2).................... 14.2% 14.0% 12.9% 12.2% 12.5% 12.8%
Average Payment for the Period....... 13.7% 12.8% 11.9% 11.6% 11.9% 12.0%
</TABLE>
- ---------------------------
(1) The monthly payment rates include amounts which are payments of principal
receivables and finance charge receivables on the Accounts.
(2) The monthly payment rates are calculated as the total amount of payments
received during the billing cycles for a month, divided by the monthly
receivables outstanding at the beginning of each month.
(3) In July 1996, the originator changed its billing cycle dates. The billing
cycle date changes resulted in spreading its billing dates evenly
throughout the month to improve collections workload distribution. This
change resulted in moving one of its six billing cycles to the following
calendar reporting period. The servicer is required to report in its
monthly servicer report the actual results during the reporting period of
the monthly payment rate, portfolio yield, net write-offs and net portfolio
excess spread for the 5 billing cycles in the reporting period expressed as
a percentage of the aggregate
30
<PAGE> 36
receivables in the trust. The resultant payment rate for July 1996 was
9.5%. Consequently, the resultant effect produces an inconsistent
comparison to previous and subsequent reported data. If the sixth
billing cycle had occurred in July 1996, the monthly payment rate would
have been 11.8%.
The increased accountholder payment rate for the first three months of
1999 reflects, in part, the annual historical increase in payment rates during
these months due to payments for holiday purchases.
THE RECEIVABLES
The receivables consist of finance charge receivables and principal
receivables arising under accounts designated by the seller from time to time.
If an account is designated, it means that the receivables that arise under that
account are transferred to the trust. We refer to these designated accounts as
"Accounts." Only the receivables arising under the Accounts are transferred to
the trust, and not the Accounts themselves. The originator continues to own and
control the Accounts.
"Finance charge receivables" consist of all amounts billed to
cardholders on any Account in the ordinary course of the originator's business
including:
- periodic rate finance charges
- late payment fees and returned check charges
- annual fees
- any other fees designated by the seller as finance
charge related items
- all amounts paid to the originator as allocated
interchange
- any Discount Option Receivables designated by the
seller
Finance charge receivables do not include any membership fees payable
for any special program credit cards because these fees are treated as principal
receivables.
"Principal receivables" consist of all amounts other than finance
charge receivables, which include Discount Option Receivables, billed to a
cardholder on any Account, including purchases of merchandise, services or
credit insurance premiums, and all other fees billed to cardholders on the
Accounts. Discount Option Receivables are described in "The Pooling
Agreement--Discount Option."
The seller automatically transfers receivables in existing Accounts to
the trust when they are originated. The seller will transfer to the trust
receivables outstanding in Accounts it designates from time to time in the
future on the designation date for those Accounts. The seller will then
automatically transfer receivables generated after that from those Accounts. The
seller represents that each receivable is an eligible receivable on the day it
is transferred to the trust. Eligibility requirements for the receivables are
described in "The Pooling Agreement--Eligible Accounts; Eligible Receivables."
31
<PAGE> 37
The seller has the right, and in some cases is required, to designate
from time to time additional Accounts and to transfer to the trust all
receivables arising under those additional Accounts. Any additional Accounts
that the seller designates must be eligible Accounts when designated. The
circumstances under which the seller is required to designate additional
accounts and the eligibility criteria for required or voluntary designations are
described in "The Pooling Agreement--Addition of Accounts."
Under the conditions described in "The Pooling Agreement--Removal of
Accounts," the seller has the right to remove Accounts from the pool of Accounts
designated as a source of receivables for the trust, and to require the trustee
to return all of its rights to receivables in those Accounts to the seller. Once
removed, an account is no longer an Account and receivables existing or
generated under that account are not transferred to the trust.
The Accounts today consist solely of accounts arising under private
label credit cards used primarily at Fashion Bug stores. In addition to store
purchases, cardholders may use these credit cards to purchase credit insurance
on their Account and to purchase other merchandise and services sold through
direct mail advertising. Some examples of merchandise and services that may be
purchased include credit insurance, housewares and consumer electronics.
Receivables generated from these other uses currently represent less than 5% of
the outstanding balance of all receivables.
The originator may in the future originate credit card accounts for
other purposes, including facilitating credit purchases at additional vendors.
For example, the originator expects to originate Visa and Mastercard accounts
this year. Prior to designating any accounts other than private label accounts
as "Accounts" for purposes of the trust, the seller must receive written
confirmation from each rating agency then rating any outstanding series issued
by the trust that the designation would not cause that rating agency to reduce
or withdraw its ratings. After receiving this rating agency confirmation, the
seller could only designate these accounts as Accounts if they were eligible on
the date of designation. For further information concerning these accounts, see
"The Pooling Agreement--Eligible Accounts; Eligible Receivables."
The aggregate total receivables outstanding in the trust on March 31,
1999 was approximately $261.3 million. This amount represents the total of the
receivables balances as of the close of the respective monthly billing cycle
periods, which may differ from the March 31, 1999 month end outstanding
receivables balance. The Accounts had an average principal receivables balance
of $213 and an average credit limit of $541. The aggregate total receivables
outstanding as a percentage of the aggregate total credit limit was 4.9%. The
average age of the Accounts was approximately 58 months. On March 31, 1999,
accountholders whose Accounts are included in the trust portfolio had billing
addresses as indicated in the table "Geographic Distribution of Accounts--Trust
Portfolio" below.
The following tables summarize the trust portfolio by various criteria
on March 31, 1999. References to "receivables" in the following tables include
both finance charge receivables and principal receivables. Because the future
composition of the trust portfolio may change over time, these tables do not
describe the composition of the trust portfolio at any future time. See
"Maturity Considerations."
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<PAGE> 38
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF TOTAL RECEIVABLES PERCENTAGE
ACCOUNTS NUMBER OF (DOLLARS IN OF TOTAL
ACCOUNT BALANCE RANGE (IN THOUSANDS) ACCOUNTS THOUSANDS) RECEIVABLES
- --------------------- --------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Credit Balance........................... 22 0.2% ($489) -0.2%
No Balance............................... 8,548 87.3% 0 0.0%
$.01 to $99.99........................... 487 5.1% 25,115 9.6%
$100 to $199.99.......................... 280 2.9% 40,804 15.6%
$200 to $299.99.......................... 172 1.7% 42,438 16.3%
$300 to $399.99.......................... 97 1.0% 33,572 12.8%
$400 to $499.99.......................... 56 0.6% 24,995 9.6%
$500 and Over............................ 114 1.2% 94,909 36.3%
TOTAL........................... 9,786 100.0% $261,346 100.0%
======== ===== ======== =====
</TABLE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF RECEIVABLES PERCENTAGE
ACCOUNTS TOTAL NUMBER (DOLLARS IN OF TOTAL
CREDIT LIMIT RANGE (IN THOUSANDS) OF ACCOUNTS THOUSANDS) RECEIVABLES
- ------------------ -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Less than $300........................... 2,442 24.9% $34,231 13.1%
$300 to $499............................. 3,520 36.0% 56,516 21.6%
$500 to $699............................. 1,473 15.1% 36,258 13.9%
$700 to $999............................. 919 9.4% 28,625 11.0%
$1,000 and Over.......................... 1,431 14.6% 105,716 40.4%
TOTAL........................... 9,786 100.0% $261,346 100.0%
====== ===== ======= =====
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERIOD OF
DELINQUENCY NUMBER OF PERCENTAGE OF RECEIVABLES PERCENTAGE
(DAYS CONTRACTUALLY ACCOUNTS TOTAL NUMBER (DOLLARS IN OF TOTAL
DELINQUENT) (IN THOUSANDS) OF ACCOUNTS THOUSANDS) RECEIVABLES
------------ -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Not Delinquent 9,551 97.6% $215,529 82.5%
Up to 29 Days 102 1.0% 26,509 10.1%
30 to 59 Days 30 0.3% 7,521 2.9%
60 to 89 Days 18 0.2% 4,709 1.8%
90 + Days .... 86 0.9% 7,078 2.7%
TOTAL ........ 9,786 100.0% $261,346 100.0%
======== ===== ======== =====
</TABLE>
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<PAGE> 39
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF RECEIVABLES PERCENTAGE
ACCOUNTS TOTAL NUMBER (DOLLARS IN OF TOTAL
ACCOUNT AGE (IN THOUSANDS) OF ACCOUNTS THOUSANDS) RECEIVABLES
----------- -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Not More than 6 Months....................... 369 3.8% $11,523 4.4%
Over 6 Months to 12 Months................... 487 5.0% 17,574 6.7%
Over 12 Months to 24 Months.................. 724 7.4% 23,185 8.9%
Over 24 Months to 36 Months.................. 680 6.4% 18,105 6.9%
Over 36 Months............................... 7,574 77.4% 190,959 73.1%
TOTAL 9,786 100.0% $261,346 100.0%
===== ===== ======== =====
</TABLE>
34
<PAGE> 40
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO
<TABLE>
<CAPTION>
RECEIVABLES PERCENTAGE
NUMBER OF PERCENTAGE OF OUTSTANDING OF TOTAL
ACCOUNTS TOTAL NUMBER (DOLLARS IN RECEIVABLES
STATE (IN THOUSANDS) OF ACCOUNTS THOUSANDS) OUTSTANDING
----- -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Alabama................................... 45 0.46% $1,479 0.57%
Alaska.................................... 3 0.03% 17 0.01%
Arizona................................... 51 0.52% 1,174 0.45%
Arkansas.................................. 11 0.11% 180 0.07%
California................................ 196 2.01% 3,100 1.19%
Colorado.................................. 38 0.39% 778 0.30%
Connecticut............................... 215 2.20% 5,996 2.29%
Delaware.................................. 62 0.63% 1,866 0.71%
Florida................................... 236 2.41% 4,718 1.80%
Georgia................................... 132 1.35% 3,620 1.38%
Hawaii.................................... 2 0.02% 13 0.01%
Idaho..................................... 42 0.43% 487 0.19%
Illinois.................................. 506 5.17% 13,960 5.34%
Indiana................................... 354 3.62% 10,450 4.00%
Iowa...................................... 91 0.93% 1,202 0.46%
Kansas.................................... 71 0.72% 1,295 0.50%
Kentucky.................................. 230 2.35% 7,931 3.03%
Louisiana................................. 9 0.09% 225 0.09%
Maine..................................... 166 1.70% 5,332 2.04%
Maryland.................................. 358 3.66% 9,824 3.76%
Massachusetts............................. 410 4.19% 11,642 4.45%
Michigan.................................. 654 6.68% 19,235 7.36%
Minnesota................................. 199 2.03% 2,171 0.83%
Mississippi............................... 9 0.09% 66 0.02%
Missouri.................................. 183 1.87% 4,825 1.85%
Montana................................... 9 0.10% 36 0.01%
Nebraska.................................. 35 0.36% 327 0.13%
Nevada.................................... 30 0.31% 678 0.26%
New Hampshire............................. 138 1.41% 3,700 1.42%
New Jersey................................ 512 5.23% 15,800 6.05%
New Mexico................................ 11 0.11% 215 0.08%
New York.................................. 703 7.19% 18,231 6.98%
North Carolina............................ 132 1.35% 3,624 1.39%
North Dakota.............................. 21 0.22% 147 0.06%
Ohio...................................... 986 10.08% 28,299 10.83%
Oklahoma.................................. 6 0.06% 54 0.02%
Oregon.................................... 64 0.65% 1,022 0.39%
Pennsylvania.............................. 1,359 13.89% 42,322 16.19%
Rhode Island.............................. 92 0.94% 2,831 1.08%
South Carolina............................ 43 0.44% 980 0.37%
South Dakota.............................. 14 0.14% 52 0.02%
Tennessee................................. 138 1.41% 3,636 1.39%
Texas..................................... 49 0.50% 475 0.18%
Utah...................................... 44 0.44% 460 0.18%
Vermont................................... 68 0.69% 1,938 0.74%
Virginia.................................. 287 2.93% 7,899 3.02%
Washington................................ 118 1.21% 2,275 0.87%
West Virginia............................. 183 1.87% 7,167 2.74%
Wisconsin................................. 370 3.78% 6,712 2.57%
Wyoming................................... 16 0.16% 232 0.09%
District of Columbia...................... 10 0.11% 327 0.12%
Other (1)................................. 74 0.76% 320 0.12%
TOTAL............................ 9,786 100.00% $261,346 100.00%
===== ====== ======== ======
</TABLE>
(1) Includes accounts which represent billing addresses in Canada and U.S.
Territories.
35
<PAGE> 41
USE OF PROCEEDS
The trust will pay the net proceeds from the sale of the Series 1999-1
certificates to the seller. The seller will use these proceeds to pay for
receivables and for its other general corporate purposes.
DESCRIPTION OF CHARMING SHOPPES ENTITIES
OVERVIEW
Charming Shoppes Inc. is a Pennsylvania corporation that provides for
the overall management of approximately 1,135 Fashion Bug stores throughout the
United States. We refer to Charming Shoppes Inc. in this prospectus as "Charming
Shoppes." For the fiscal year ended January 30, 1999, Charming Shoppes' net
sales were approximately $1.035 billion and consolidated assets were
approximately $684.6 million. Charming Shoppes and its affiliated companies
employ more than 12,000 people throughout 44 states in the United States. The
Fashion Bug stores have concentrations in the Middle Atlantic, New England and
Midwest markets. In addition to its purchase of merchandise through the domestic
market, Charming Shoppes also has a network of merchandise sourcing operations,
both domestic and international, that provide apparel to its affiliated Fashion
Bug stores.
Fashion Service Corp. is a Delaware corporation and a subsidiary of
Charming Shoppes. Fashion Service Corp.'s primary business is to provide
credit-related services to Charming Shoppes and its affiliated Fashion Bug
stores. Fashion Service Corp. also provides services for the establishment of
collection and credit policies in connection with the credit card program.
Spirit of America National Bank, the originator, is a subsidiary of
Fashion Service Corp. The originator is a national bank chartered by the Office
of the Comptroller of the Currency and was organized for the purposes of the
origination and purchase of credit card receivables and the establishment and
operation of the Charming Shoppes credit card programs.
Charming Shoppes Receivables Corp., the seller, is a Delaware
corporation and a subsidiary of Fashion Service Corp. It was organized to
facilitate receivables financing transactions by the originator.
Spirit of America, Inc., the servicer, is a Delaware corporation and is
a subsidiary of Fashion Service Corp. It was organized to service receivables
generated by the originator, including the receivables transferred to the trust.
The employees of the servicer are the same employees who previously serviced the
receivables when Spirit of America National Bank acted as servicer.
LEGAL PROCEEDINGS
Neither the servicer nor the originator is involved in any legal
proceedings that could have a material impact on operations or property.
36
<PAGE> 42
YEAR 2000 DISCLOSURE
For many years, dates have been stored in computer systems with two
digit rather than four digit years. The Year 2000 computer problem occurs when a
computer system cannot properly recognize dates stored with two digit years
beyond 1999. Calculations may inaccurately interpret a date stored in a format
of "00" as the year 1900 rather than 2000, resulting in improper computations,
execution of faulty logic, or outright computer system failure. Systems must be
remediated and tested in order to minimize the potential for failure caused by
the Year 2000 computer calculation.
Charming Shoppes and its subsidiaries, including the seller and the
servicer, use computer equipment and software in their retailing operations to
supply stores with products for sale, process customer transactions, including
credit transactions, and to record and report their financial condition and
results of operations. Since 1997 Charming Shoppes has been implementing a
comprehensive program to correct its computer systems, equipment and facilities
so that they will be Year 2000 compliant. Charming Shoppes has also communicated
with its important suppliers of merchandise and services to ensure that they are
addressing their Year 2000 issues.
An Executive Oversight Committee made up of Charming Shoppes' General
Counsel, Corporate Director of Human Resources and Chief Financial Officer,
oversees Charming Shoppes' overall Year 2000 initiatives. The committee is
implementing a comprehensive Year 2000 readiness program, which has been adopted
by all business units of Charming Shoppes. Individual department heads have
assigned resources to this program to coordinate and manage Year 2000 readiness
within and among Charming Shoppes' departments and to evaluate the state of Year
2000 readiness of outside vendors and suppliers. Charming Shoppes' Corporate
Audit Department facilitates the implementation of the Year 2000 readiness
program by identifying and reporting outstanding issues to the committee for
resolution, administering vendor compliance programs, and monitoring the
progress of each business unit. Charming Shoppes' Year 2000 readiness program is
currently on schedule. Internal resources and outside consultants are being used
to implement the Year 2000 readiness program.
The Year 2000 readiness program consists of five phases:
(a) Standardization: The development of a set of policies,
guidelines and standards to be used during the Year 2000
readiness program. Examples of these include standard date
routines to be used in computer programs, standard test plans
to be used for testing all systems, and guidelines for
migrating a tested system into the production environment.
These policies, guidelines, and standards are designed to
ensure that a consistent approach is followed by all personnel
in implementing the Year 2000 readiness program;
(b) Evaluation: The identification and evaluation of Charming
Shoppes' business systems so as to determine the method by
which the systems will be made Year 2000 compliant. All these
systems are prioritized for attention based on usage of
37
<PAGE> 43
dates, the extent to which they are critical to Charming
Shoppes' business, and the likelihood of failure;
(c) Remediation: The development of a remediation strategy for
each system. Strategies include system replacement,
remediation of existing systems, and coordination with the
supplying vendor to provide a version that is Year 2000
compliant;
(d) End-to-End Testing: The development and implementation of a
testing strategy and test plan for each system. Testing is
designed to cover all significant transition dates, and
includes testing within and among systems, as well as data
communications with critical vendors; and
(e) Contingency Planning: The development of contingency plans if
Charming Shoppes does not successfully complete significant
portions of its Year 2000 readiness program or if the critical
vendors are not Year 2000 compliant.
Corporate Business Systems
Charming Shoppes has been implementing its Year 2000 readiness program
for corporate business systems since 1997. These systems include all mainframe
and non-mainframe systems and software, the corporate computing infrastructure
and network of hardware and software, desktop equipment and software, and
external and internal communication software and equipment. Third-party
software, along with in-house developed systems, are included within the scope
of Charming Shoppes' Year 2000 readiness program. These corporate business
systems are located at Charming Shoppes' headquarters in Bensalem, Pennsylvania,
its distribution center in Greencastle, Indiana, and its private label credit
card operations in Milford, Ohio. They are also located in Charming Shoppes'
approximately 1,160 stores located in 44 states, its factory operations in the
Dominican Republic, and its international operations in Hong Kong, Singapore,
and Shanghai.
The standardization and evaluation phases covering these corporate
business systems have been completed. The remediation and end-to-end testing
phases are currently being implemented. The remediation phase for Charming
Shoppes' mainframe systems is approximately 98% complete and is schedule for
completion by the end of the first quarter ending May 1, 1999. The remediation
phase for Charming Shoppes' non-mainframe systems is approximately 65% complete
and is also scheduled for completion during the first quarter ending May 1,
1999. The remediation phase of Charming Shoppes' in-store systems has been
completed. Comprehensive test plans have been established for each corporate
business system. The end-to-end testing phase commenced during the fourth
quarter ended January 30, 1999 and is scheduled for completion during the second
quarter ending July 31, 1999.
Charming Shoppes' private label credit card organization is monitored
and regulated by the office of the Comptroller of the Currency. The Comptroller
has performed quarterly Year 2000 reviews of this organization since the quarter
ended April 30, 1998 and is scheduled to do so through year 2000. This
organization has two separate system components, namely, internal
38
<PAGE> 44
credit systems and a third-party credit card processing system used for all
primary functions of the private label credit card program. The standardization
and evaluation phases have been completed with respect to the internal credit
systems. The remediation phase with respect to these systems is scheduled to be
completed during the first quarter ended May 1, 1999. The end-to-end testing
phase is scheduled to commence during the first quarter ended May 1, 1999 and is
scheduled for completion during the second quarter ended July 31, 1999. Charming
Shoppes is regularly monitoring the progress of its third-party credit processor
in achieving Year 2000 compliance. Based on information provided to Charming
Shoppes by that third-party processor, the standardization and evaluation phases
with respect to the third-party credit card processing system has been completed
and the remediation phase is substantially complete. The third-party processor
expects the remediation phase to be completed during the first quarter ending
May 1, 1999. Similarly, testing of the third-party credit card processing
systems has commenced and is scheduled for completion during the second quarter
ending July 31, 1999.
Embedded Technologies
Embedded technologies refer to any equipment or machinery that relies
on a computer chip or microprocessor in order to operate. Examples include
office systems, such as fax machines and photocopiers; building systems such as
elevators, lighting, security systems, and environmental control units; and
business communication systems such as data switching equipment and telephone
exchange equipment. Certain microprocessors within such equipment may fail if
they cannot properly recognize dates into the Year 2000.
Charming Shoppes uses various technologies and computer controlled
equipment in the operation of its corporate and stores facilities. This
equipment includes security monitoring systems; primary and back-up power supply
systems; energy management systems; elevators, and office equipment. Some of
this equipment may contain embedded chip technology that may be affected by the
Year 2000 issue. Charming Shoppes has taken an inventory of all such equipment
and has begun discussions with vendors who supply and/or support such technology
and equipment to assess the sensitivity of these systems and equipment to the
Year 2000 issue. in conjunction with the Corporate Audit department's program of
auditing vendor preparedness for Year 2000, Charming Shoppes will be obtaining
assurances from these vendors and, to the extent possible, testing these systems
to ensure Year 2000 compliance. Private Branch Exchanges at Charming Shoppes'
Bensalem, Pennsylvania corporate facilities are Year 2000 compliant.
Telecommunication software at Charming Shoppes' corporate headquarters is in the
process of being upgraded and is scheduled for completion during the second
quarter ending July 31, 1999.
Distribution Center Computer Systems
Charming Shoppes' Distribution Center, located in Greencastle, Indiana,
uses a variety of computer systems and embedded technology equipment for its
day-to-day operations. Shop floor machinery, interacting with complex computer
systems, monitors, processes, and controls plant processes and material
movement. Automated equipment includes conveyor systems, palletizers, sorters,
scales, and radio frequency devices. Vendors have supplied software and
equipment which have been heavily customized for Charming Shoppes' Distribution
Center
39
<PAGE> 45
configuration. Charming Shoppes is working with appropriate Distribution Center
system vendors to perform all necessary Year 2000 remediation and testing
services. The standardization and evaluation phases covering the Distribution
Center systems have been completed. The remediation phase is currently being
implemented, and it is anticipated that Charming Shoppes' vendors will deliver
Year 2000 compliant systems to Charming Shoppes in several stages between the
first quarter ending May 1, 1999 and the third quarter ending October 30, 1999.
Vendors and Suppliers
Charming Shoppes has initiated a formal communication program with
significant vendors to evaluate their Year 2000 compliance, and will be
assessing their responses to Charming Shoppes' Year 2000 readiness
questionnaire. Comprehensive mailings were made during the fourth quarter ended
January 30, 1999. Questionnaires may be followed up with telephone interviews,
and where necessary, audits are being performed by Charming Shoppes' Corporate
Audit Department. Charming Shoppes cannot assure timely compliance of vendors
and may be adversely affected by the failure of a significant vendor to supply
merchandise or services due to Year 2000 compliance failures. Although Charming
Shoppes values its relationship with significant vendors, it may use an
alternative vendor if it determines that a particular vendor is unlikely to be
Year 2000 compliant.
Costs
The total cost of Charming Shoppes' Year 2000 readiness program is
estimated at $6.6 million. To-date, $2.4 million of Year 2000 costs have been
incurred, of which $1.1 million were incurred in the fiscal year ended January
30, 1999. Charming Shoppes expects to fund the estimated balance of $4.2 million
for its Year 2000 readiness program from operating cash flows. Charming Shoppes
does not anticipate delaying any significant information technology project as a
result of Charming Shoppes' Year 2000 compliance effort. Estimated future
expenditures are not expected to have a material adverse effect on Charming
Shoppes' financial position, results of operations, or cash flows.
Year 2000 Risk Assessment and Year 2000 Contingency Planning
Charming Shoppes is a retailer of women's apparel, and does not rely on
a single customer for any significant amount of sales. Charming Shoppes does not
sell products which use computer systems, embedded chip technology, or other
devices that may be sensitive to dates.
If Charming Shoppes does not complete a significant portion of its Year
2000 readiness program in a timely fashion, its financial condition may be
materially adversely impacted; however, management does not consider the
possibility of such an occurrence to be likely at the present time. Charming
Shoppes anticipates that the most reasonably likely worst case scenarios
include, but are not limited to, loss of communications to the stores, loss of
utilities, and the inability to process customer transactions or engage in
normal business activity. Charming Shoppes is in the initial stages of
developing a Year 2000 contingency plan, which is scheduled
40
<PAGE> 46
for completion during the third quarter ending October 30, 1999. Despite such
contingency plans, Charming Shoppes may be adversely affected by the failure of
significant third-party vendors to become Year 2000 compliant.
Projected completion dates and the estimated costs of Charming Shoppes'
Year 2000 readiness program are based on management's best estimates for future
events and are forward- looking statements that may be updated as additional
information becomes available. Such forward-looking statement are subject to
various risks and uncertainties that could cause actual results to differ
materially from those indicated. Such factors may include, but are not limited
to, the ability of Charming Shoppes, its critical vendors and service providers
to complete Year 2000 compliance remediation in a timely fashion, the ability to
identify and correct all relevant computer codes and embedded chips, delay in
the rendition of remediation services provided by third parties and disruptions
to operations as a result of Year 2000 compliance issues.
DESCRIPTION OF THE CERTIFICATES
OVERVIEW
The following statements about the certificates summarize the material
terms of the pooling agreement and the Series 1999-1 supplement, forms of which
are filed as exhibits to the registration statement of which this prospectus
forms a part.
Series 1999-1 will consist of the following floating rate certificates.
<TABLE>
<CAPTION>
Initial
Class Investor Interest
<S> <C>
A $
B $
C $
D $
</TABLE>
When we discuss the amounts due to each class of certificateholders in
this prospectus, we also refer to the Investor Interest of each class. For each
class of certificates, the corresponding "Investor Interest" is calculated as
follows:
(1) the initial Investor Interest of the class, less
(2) all prior principal payments made to the class, less
(3) for Class B, C and D, all unreimbursed reductions to its
initial Investor Interest because of Principal Collections
being reallocated from that class as described in
"--Reallocations and Payments of Principal" below, less
41
<PAGE> 47
(4) all unreimbursed Charge Offs for that class.
The Investor Interest for a class cannot be less than zero.
The Investor Interest for Series 1999-1 is an amount equal to the sum
of the Investor Interests for each class in Series 1999-1.
The Class A and Class B certificates are the only certificates offered
by this prospectus. The offered certificates will evidence a beneficial interest
entitling the holder to a proportional share in the trust's assets and the right
to receive funds up to the amounts required to make payments of principal and
interest on the certificates. Payments of interest and, when scheduled,
principal will be made, if there are funds available, on the fifteenth day of
each month, or if that day is not a business day, on the next business day. Each
of these payment dates is called a distribution date. The first distribution
date will be , 1999. Payments will be made to offered certificateholders
in whose names the offered certificates were registered on the last business day
of the calendar month preceding a distribution date.
The seller holds a certificate called the "Exchangeable Seller
Certificate." The Exchangeable Seller Certificate represents an undivided
interest in the receivables, including the right to a percentage of all
accountholder payments on the receivables equal to 100% minus the sum of the
allocation percentages for all outstanding series. This percentage is called the
"Seller Percentage." The Exchangeable Seller Certificate may be transferred in
whole or in part to an affiliate of the seller, but not to any other person
unless the seller consents to that transfer and the trustee receives an opinion
of counsel that the transfer will not adversely affect the federal income tax
characterization of the certificates of any outstanding certificate series.
The offered certificates initially will be represented by certificates
registered in the name of Cede & Co. as nominee of DTC. Accordingly, Cede & Co.
will be the holder of the offered certificates. We refer to persons acquiring
beneficial interests in the offered certificates as certificate owners.
Certificate owners will not be entitled to receive a certificate representing
their interest in the offered certificates unless definitive certificates are
issued under the circumstances described in "The Pooling Agreement--Definitive
Certificates." Until that time, all references in this prospectus to actions by
certificateholders mean actions taken by DTC upon instructions from its
participants, and all references to distributions, notices, reports and
statements to certificateholders refer to distributions, notices, reports and
statements to DTC or Cede & Co. DTC will distribute this information to
certificate owners under DTC procedures.
The trustee will distribute principal and interest on the offered
certificates directly to DTC or the holders of definitive certificates, as the
case may be, under the procedures described in this prospectus. The trust will
make interest payments and any principal payments on each distribution date to
holders in whose names the offered certificates were registered at the close of
business on the last business day of the calendar month preceding that
distribution date. The trust will make distributions by wire transfer of federal
funds to the account and number specified in the register maintained by the
trustee or, if no account number is specified, by check mailed to the address of
a holder as it appears on that register. The trust will make the final payment
on any offered certificate, however, only upon presentation and surrender of
that
42
<PAGE> 48
certificate at the office or agency specified in the notice of final
distribution to offered certificateholders. The trustee will provide this notice
no later than the fifth day of the month of the final distribution.
INTEREST PAYMENTS
Scheduled Interest
Interest will accrue on each class in Series 1999-1 during each
Interest Period at the interest rate specified for that class. An "Interest
Period" means, for each distribution date, the period from and including the
previous distribution date through the day preceding that distribution date. The
first Interest Period, however, will be the period from and including the
closing date through the day preceding the first distribution date.
Interest payable on each distribution date for each class is called its
"Class Monthly Interest." Class Monthly Interest will, except as noted below, be
calculated as follows:
days in Interest Period x Class Certificate Rate x Class Investor Interest
- -----------------------
360
where:
"Class Certificate Rate" = LIBOR + Applicable Spread.
The "Applicable Spread" for each class is as follows:
- Class A: [__]%
- Class B: [__]%
- Class C: [__]%
- Class D: [__]%.
Class Investor Interest = the Class Investor Interest on the
last business day of the calendar month preceding that
distribution date.
If Class A remains outstanding after [____________, 200_], its Class
Certificate Rate cannot exceed a per annum rate of [__]% for any Interest Period
ending after that date.
If Class B remains outstanding after [____________, 200_], its Class
Certificate Rate cannot exceed a per annum rate of [__]% for any Interest Period
ending after that date.
"LIBOR" = the rate for deposits in U.S. dollars for a
one-month period that appears on the Telerate Page 3750, or
similar replacement page, at 11:00 a.m., London time, on the
related LIBOR determination date. If that rate is not
available, LIBOR will be determined as described at the end of
this section.
43
<PAGE> 49
The LIBOR determination dates are:
- for the first Interest Period _________, 1999, for
the period beginning on and excluding _________, 1999
and ending on and excluding _________, 1999; and
_________, 1999, for the period beginning on and
including ________, 1999 and ending on and excluding
the first distribution date; and
- for the remaining Interest Periods, the second London
business day prior to the first day of that Interest
Period.
If LIBOR cannot be determined using the Telerate Page 3750, it will be
determined as follows:
- on the basis of the rates at which deposits in U.S. dollars
are offered by the London office of four major banks in the
London interbank market, selected by the servicer, at
approximately 11:00 a.m., London time, on that day to prime
banks in the London interbank market for a one-month
period--using the arithmetic mean of the quotations given by
those banks. If fewer than two quotations are given, then
- the rate for that date will be the arithmetic mean of the
rates quoted by major banks in New York City, selected by the
servicer, at approximately 11:00 a.m., New York City time, on
that day for loans in U.S. dollars to leading European banks
for a one-month period.
You may obtain the certificate rates for any current and immediately
preceding interest period by telephoning the trustee at 215/985-7585.
Late Interest Payments
If the trust does not pay Class Monthly Interest to any class when due
on a distribution date, the amount not paid for that class, called its "Class
Deficiency Amount," will itself accrue monthly interest payable on the next
distribution date.
The amount of monthly interest payable on any Class Deficiency Amount
for a class called its "Class Additional Interest" will be calculated as
follows:
<TABLE>
<S> <C> <C>
days in Interest Period x (1% + Class Certificate Rate) x Class Deficiency Amount
- -----------------------
360
</TABLE>
44
<PAGE> 50
INTEREST RATE CAP AGREEMENTS
To provide additional enhancement for the offered certificates, on or
before the closing date the trust will enter into two interest rate cap
agreements with [name of counterparty].
One interest rate cap is for the benefit of Class A. The other is for
the benefit of Class B. Each cap agreement will require its counterparty to make
a payment to the trust on a distribution date when LIBOR has exceeded the rate
specified in that agreement for the related Interest Period.
When a payment is required on a distribution date, the "Class A Cap
Payment" or "Class B Cap Payment," as applicable, will be calculated as follows:
days in Interest Period x Cap Rate x Cap Notional Amount
-----------------------
360
where:
Cap Rate = LIBOR - Specified Rate
Specified Rate:
- Class A Cap= [__]%
- Class B Cap= [__]%
Cap Notional Amount:
- Class A Cap= initial Investor Interest for Class A
- Class B Cap= sum of initial Investor Interests for Class B,
Class C and Class D
Class A Cap Payments will be included in Class A Available Funds. Class
B Cap Payments will be included in Class B Available Funds.
The Class A Cap will terminate on Class A's expected final payment
date. Similarly, the Class B Cap will terminate on Class B's expected final
payment date. Once an interest rate cap agreement has terminated, the Class
Certificate Rate for the class benefitted by that agreement may not exceed its
specified rate listed above.
The trust can only enter into and maintain interest rate cap agreements
with counterparties whose unsecured, unguaranteed, short-term debt carries a
rating of P-1 by Moody's and a rating of A-1 by Standard & Poor's or whose
obligations are guaranteed by an entity whose short-term debt carries those
ratings. If one of these rating agencies withdraws or lowers its rating for the
counterparty, the servicer may obtain a replacement Interest Rate Cap from a
counterparty having the required credit ratings, or to enter into an arrangement
satisfactory to the rating agencies that have rated certificates issued by the
trust.
If the servicer fails to comply with the conditions in the previous
sentence, an Early Amortization Event will occur.
45
<PAGE> 51
An Early Amortization Event for Series 1999-1 will also occur if a
counterparty fails to make a Class A Cap Payment or a Class B Cap Payment to the
trust within 5 calendar days of when due. See "--Early Amortization Events"
below.
PRINCIPAL PAYMENTS
The trustee will apply Available Principal Collections on each
distribution date as described in this section.
"Available Principal Collections" for any distribution date are an
amount equal to the sum of
(1) the Principal Allocation Percentage of all collections of
principal receivables received during the related Due Period,
minus the amount of all Principal Collections reallocated as
described in "--Reallocations and Payments of Principal"
below, and
(2) any shared principal collections that are allocated to Series
1999-1 as described in "--Series Shared Principal Collections"
below.
The Revolving Period
The "Revolving Period" for Series 1999-1 is the period from the closing
date to the beginning of the Controlled Amortization Period or, if earlier, the
Early Amortization Period. During the Revolving Period, no principal payments
will be made to Series 1999-1 certificateholders. All Available Principal
Collections for a Due Period during the Revolving Period will be applied on the
related distribution date as follows:
- as required by the certificate purchase agreement for the
Class C certificates
- as shared principal collections applied to other series in
group one that are principal sharing series
- as payment on the Exchangeable Seller Certificate, unless
needed to fund a shortfall in the Excess Funding Account.
The Controlled Amortization Period and Early Amortization Period
The "Controlled Amortization Period" is scheduled to commence on
___________, 200_, and will continue until payment in full of the offered
certificates or, if earlier, the beginning of the Early Amortization Period. If
an Early Amortization Period begins prior to the scheduled beginning of the
Controlled Amortization Period, there will not be a Controlled Amortization
Period for Series 1999-1.
During the Controlled Amortization Period, the trust will pay principal
only to the Class A certificateholders until the Class A expected final payment
date and then the trust will pay principal to the Class B certificateholders
until the Class B expected final payment date. The
46
<PAGE> 52
failure to pay either class in full on its expected final payment date is one of
the events that will trigger the Early Amortization Period.
If an Early Amortization Event occurs, the "Early Amortization Period"
will begin and will continue until the earlier to occur of the Series 1999-1
termination date, the date on which the trust terminates and the date on which
Series 1999-1 is paid in full.
Class A certificateholders will be entitled to begin receiving
principal payments on the distribution date following the Due Period in which
the earlier of the Controlled Amortization Period or Early Amortization Period
begins. The amount of monthly principal distributable on that distribution date
and each other distribution date during the Controlled Amortization Period and
the Early Amortization Period is referred to as "Class A Monthly Principal," and
will equal the least of:
(1) the Available Principal Collections then on deposit in the
Collection Account,
(2) during the Controlled Amortization Period, the Controlled
Payment Amount, and
(3) the outstanding Class A Investor Interest after taking into
account any adjustments to be made on that distribution date
for Charge-Offs.
The "Controlled Payment Amount" on any distribution date related to the
Controlled Amortization Period will equal the sum of the Controlled Amortization
Amount for that date and any portion of the Controlled Amortization Amount for
any prior due period not previously distributed to the Class A
certificateholders.
The "Controlled Amortization Amount" means $______.
The amount of monthly principal distributable to the Class B
certificates on each distribution date is referred to as the Class B Monthly
Principal. Beginning with the distribution date following the Due Period in
which the Class A Investor Interest has been paid in full or, during an Early
Amortization Period, beginning on the distribution date on which the Class A
Investor Interest is paid in full, the "Class B Monthly Principal" will be an
amount equal to the lesser of:
(1) the Available Principal Collections then on deposit in the
Collection Account, after making any payment of Class A
Monthly Principal, and
(2) the Class B Investor Interest after taking into account any
adjustments to be made on that distribution date for
Charge-Offs and reallocations of Principal Collections.
The Class B certificateholders are expected to receive a distribution
of Available Principal Collections equal to the amount of the Class B Investor
Interest on the Class B expected final payment date.
47
<PAGE> 53
Optional Cancellation of Certificates by the Seller
The seller may on any distribution date repurchase Series 1999-1
certificates on the secondary market and have the trustee cancel any
certificates repurchased. Cancellation of certificates in a class will
proportionately reduce the class investor of that class of certificates. The
seller may not, however, repurchase and cancel certificates of a subordinated
class unless the Class Investor Interest of that class, following a cancellation
and expressed as a percentage of the current Series 1999-1 Investor Interest,
would at least equal the percentage of the Series 1999-1 Investor Interest which
that class initially represented. These percentages are described in "Summary of
Series 1999-1 Terms." For purposes of this prospectus, the principal paid by the
seller for the cancelled certificates will be treated as a payment of principal
by the trust.
Series 1999-1 Termination Date
If the Series 1999-1 Investor Interest is not paid in full by the
Series 1999-1 termination date, the trustee will sell, or cause to be sold, an
amount of principal receivables and related finance charge receivables up to
110% of the Series 1999-1 Investor Interest at the close of business on that
date. The proceeds of that sale will be allocated in the same priority as
collections, in an amount up to the sum of all principal and accrued interest on
the Series 1999-1 certificates, and all accrued and unpaid fees and expenses and
unreimbursed Series 1999-1 Investor Loss Amounts and Series 1999-1 Investor
Dilution Amounts to the extent reimbursable under the Series 1999-1 Supplement.
The seller will be permitted to purchase those receivables being sold, and will
have a right of first refusal. The application of the sale proceeds will
constitute full and final payment of the Series 1999-1 certificate and related
amounts, even if Series 1999-1 certificates have not been paid in full.
ALLOCATION PERCENTAGES
Series Allocations
On each business day, the servicer will allocate to each series
outstanding and to the Seller Interest all collections of finance charge
receivables, principal receivables and Loss Amounts for any Due Period. The
servicer will make these allocations based on the applicable series allocation
percentage for each series as determined from the relevant supplements and
receivables purchase agreements, and based on the Seller Percentage for the
Exchangeable Seller Certificate. The servicer will also allocate Dilution
Amounts to each series on each distribution date in accordance with the
procedures described in "The Pooling Agreement--Loss Amount; Dilution Amounts"
below.
The series allocation percentage used for Series 1999-1 to allocate
collections of finance charge receivables and the Loss Amount for any Due Period
is the Floating Allocation Percentage.
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The "Floating Allocation Percentage" means, for any day during a Due
Period, the percentage equivalent of a fraction:
- the numerator of which is the Series 1999-1 Investor Interest
on the last day of the prior Due Period or for the first Due
Period ending after the Closing Date, the Series 1999-1
initial Investor Interest, and
- the denominator of which is the greater of (1) the sum of (A)
the aggregate amount of principal receivables in the trust at
the end of the last day of the prior Due Period or for the
first Due Period ending after the Closing Date, at the end of
the day on the Closing Date and (B) the amount on deposit in
the Excess Funding Account at the close of business of the
last day of the prior Due Period, and (2) the sum of the
numerators used to calculate the series allocation percentages
for finance charge receivables or Loss Amounts, as applicable,
for all certificate series and receivables purchase series
outstanding for that Due Period.
The denominator used in calculating the Floating Allocation Percentage
however, will be adjusted for any Due Period in which an Addition Date or
Removal Date occurs as follows:
- if the servicer is required to make daily deposits to the
collection account, the amount in clause (1) (A) of the
denominator will be (1) the aggregate amount of principal
receivables in the trust at the end of the day on the last day
of the prior Due Period or most recent Addition Date or
Removal Date, as applicable, for the period from and including
the first day of that Due Period or most recent Addition Date
or Removal Date, as applicable, to but excluding the related
Addition Date or Removal Date and (2) the aggregate amount of
principal receivables in the trust at the end of the day on
the related Addition Date or Removal Date for the period from
and including the related Addition Date or Removal Date to and
including the last day of that Due Period or to and excluding
the next Addition Date or Removal Date, as applicable,
- otherwise, the amount in clause (1) (A) of the denominator
will be the weighted average outstanding balance of principal
receivables in the trust during that Due Period.
The series allocation percentage used for Series 1999-1 to allocate
collections of principal receivables for any Due Period is the Principal
Allocation Percentage.
The "Principal Allocation Percentage" means, (1) for any day during a
Due Period occurring prior to the Fixed Principal Allocation Date, the Floating
Allocation Percentage for that Due Period, and (2) for any day during a Due
Period occurring on or after the Fixed Principal Allocation Date, the Fixed
Allocation Percentage.
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The "Fixed Allocation Percentage" is the percentage equivalent -which
percentage may never exceed 100%- of a fraction:
- the numerator of which is the Series 1999-1 Investor Interest
on the last day of the Due Period occurring immediately prior
to the Fixed Principal Allocation Date, and
- the denominator of which is the greater of (1) the sum of (A)
the aggregate amount of principal receivables in the trust at
the end of the day on the last day of the prior Due Period and
(B) the amount on deposit in the Excess Funding Account at the
end of the day on that date, and (2) the sum of the numerators
used to calculate the series allocation percentages for
principal receivables for all certificate series and
receivables purchase series outstanding for that Due Period.
The denominator of the Fixed Allocation Percentage however, will be
adjusted the same way that the denominator for the Floating Allocation
Percentage is adjusted for any Due Period in which an Addition Date or Removal
Date occurs.
The "Fixed Principal Allocation Date" is the earlier of (a) the date on
which the Early Amortization Period begins, and (b) the date on which the
Controlled Amortization Period begins.
Class Allocations
The Servicer will further allocate collections of principal receivables
and finance charge receivable allocated to Series 1999-1, the Series 1999-1
Investor Loss Amount and the Series 1999-1 Investor Dilution Amount among each
class of Series 1999-1 according to its Class Allocation. The servicer will make
this allocation among the classes on a daily basis, by allocating each day's
collections prior to the close of business on which those collections are
deposited into the Collection Account.
The "Class Allocation" equals, for each class and each Due Period:
- for the purpose of allocating Series 1999-1 Investor Loss
Amounts, Series 1999-1 Investor Dilution Amounts, collections
of finance charge receivables allocated to Series 1999-1 at
any time and collections of principal receivables allocated to
Series 1999-1 during the Revolving Period, its Class Floating
Allocation, and
- for the purpose of allocating collections of principal
receivables allocated to Series 1999-1 during the Controlled
Amortization Period or Early Amortization Period, its Class
Fixed Allocation.
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The "Class Floating Allocation" means, for each class and each Due
Period, the percentage equivalent -which may not exceed 100%- of a fraction:
- the numerator of which is its Class Investor Interest at the
close of business on the last day of the preceding Due Period,
and
- the denominator of which is equal to the Series 1999-1
Investor Interest at the close of business on that day.
For the first Due Period, however, the initial Class Investor Interest
will be used in the numerator and the initial Series 1999-1 Investor Interest
will be used in the denominator.
The "Class Fixed Allocation" means, for each class and each Due Period
other than a Due Period relating to the Revolving Period, the percentage
equivalent -which may not exceed 100%- of a fraction:
- the numerator of which is the Class A Investor Interest at the
close of business on the last day of the Revolving Period, and
- the denominator of which is equal to the Series 1999-1
Investor Interest at the close of business on the last day of
the Due Period occurring immediately before the Fixed
Principal Allocation Date.
A collection processed on an account in excess of the aggregate amount
of receivables in that account when received by the originator, seller, servicer
or trustee will be deemed to be a payment of principal receivables to the extent
of the excess.
SERVICING FEES
The portion of the monthly servicing fee payable by Series 1999-1 to
the servicer for each Due Period, called the "Series 1999-1 Servicing Fee" will
equal one-twelfth of the product of (1) 2% and (2) an amount equal to the sum of
(a) the Series 1999-1 Investor Interest determined on the last day of that Due
Period and (b) the servicing base amount, which equals the product of the
amount, if any, on deposit in the Excess Funding Account on the last day of that
Due Period times the Principal Allocation Percentage for that Due Period. The
Series 1999-1 Servicing Fee, however, will be prorated for the first Due Period.
The Series 1999-1 Servicing Fee for each Due Period will be allocated
among each class and payable on the related distribution date out of Available
Funds as described below under "--Application of Collections--Available Funds"
and out of Excess Spread and Shared Excess Finance Charge Collections as
described below under "--Application of Collections--Excess Spread; Shared
Excess Finance Charge Collections."
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The servicer will allocate the Series 1999-1 Servicing Fee to each
class in Series 1999-1 for each Due Period by multiplying its Class Floating
Allocation times 2% times the servicing base amount for that Due Period.
However, the servicing fee allocable to each class for the first Due Period will
be prorated. The portion of the fee allocated to each Class is called its "Class
Servicing Fee."
The Series 1999-1 Servicing Fee owed by the holders of any class will
be payable only if amounts are available to pay the fee either in full or in
part out of allocations of Available Funds, Excess Spread and Shared Excess
Finance Charge Collections allocated to the holders of that class and out of
reallocations of principal collections, in each case, for the purpose of paying
the fee as described under "--Application of Collections" and "--Reallocations
and Payments of Principal" below.
APPLICATION OF COLLECTIONS
Available Funds. To understand the allocation of Available Funds, you
need to understand the following definitions:
"Class Available Funds" means, for each class and each distribution
date, an amount equal to the sum of:
(1) its Class Floating Allocation of the collections of finance charge
receivables allocated to the Series 1999-1 certificates and deposited
in the Collection Account for the related Due Period,
(2) plus for Class A, if the distribution date is on or before to the
Class A expected final payment date, the amount of any Class A Cap
Payment received on that distribution date, plus any overdue payment
received since the last distribution date,
(3) plus for Class B, if the distribution date is on or before to the
Class B expected final payment date, the amount of any Class B Cap
Payment received on that distribution date, plus any overdue payment
received since the last distribution date.
"Available Funds" means the sum of the Class Available Funds for Class
A, B, C and D.
On each distribution date, the trustee, acting on the servicer's
instructions, will apply Available Funds in the following order:
(A) for Class A, an amount equal to its Class Available Funds
will be distributed in the following priority:
(1) the sum of its Class Monthly Interest, Class
Deficiency Amount and any Class Additional Interest for Class
A will be distributed to the Class A certificateholders;
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(2) its Class Servicing Fee, plus any of its unpaid
Class Servicing Fee from any prior distribution date, will be
distributed to the servicer;
(3) an amount equal to any unreimbursed Class
Investor Loss Amount for Class A will be treated as Available
Principal Collections;
(4) an amount equal to any unreimbursed Investor
Dilution Amount for Class A will be treated as Available
Principal Collections; and
(5) the balance, if any, will constitute Excess
Spread and will be allocated and distributed as described
under "--Excess Spread; Shared Excess Finance Charge
Collections" below.
(B) for Class B, an amount equal to its Class Available Funds
will be distributed in the following priority:
(1) the sum of its Class Monthly Interest, any Class
Deficiency Amount and any Class Additional Interest will be
distributed to the Class B certificateholders;
(2) its Class Servicing Fee, plus any of its unpaid
Class Servicing Fee from any prior distribution date, will be
distributed to the servicer; and
(3) the balance, if any, will constitute Excess
Spread and will be allocated and distributed as described
under "--Excess Spread; Shared Excess Finance Charge
Collections" below.
(C) for Class C, an amount equal to its Class Available Funds
will be distributed in the following priority:
(1) the sum of its Class C Servicing Fee, plus any of
its unpaid Class Servicing Fee from any prior distribution
date, will be distributed to the servicer; and
(2) the balance, if any, will constitute Excess
Spread and will be allocated and distributed as described
under "--Excess Spread; Shared Excess Finance Charge
Collections" below.
(D) for Class D, an amount equal to its Class Available Funds
will be distributed in the following priority:
(1) the sum of its Class D Servicing Fee, plus any of
its unpaid Class Servicing Fee from any prior distribution
date, will be distributed to the servicer; and
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(2) the balance, if any, will constitute Excess
Spread and will be allocated and distributed as described
under "--Excess Spread; Shared Excess Finance Charge
Collections" below.
"Excess Spread" means, for each distribution date, an amount equal to
the sum of the amounts described in clauses (A)(5), (B)(3), (C)(2) and (D)(2)
above.
Excess Spread; Shared Excess Finance Charge Collections. On each
distribution date, the trustee, acting on the servicer's instructions, will
apply Excess Spread and Shared Excess Finance Charge Collections allocated to
Series 1999-1 for the related Due Period to make the following distributions in
the following order:
(a) (1) the amount necessary to pay the Class Monthly
Interest, Class Deficiency Amount, Class Additional Interest and Class
Servicing Fee for Class A will be applied to these items, and (2) an
amount equal to any unfunded Investor Loss Amount and Investor Dilution
Amount for Class A will be treated as Available Principal Collections;
(b) an amount equal to the aggregate amount of Class Investor
Charge-Offs for Class A which have not been previously reimbursed will
be treated as Available Principal Collections;
(c) (1) the amount necessary to pay the Class Monthly
Interest, Class Deficiency Amount, Class Additional Interest and Class
Servicing Fee for Class B will be applied to these items, and (2) an
amount equal to any unfunded Investor Loss Amount and Investor Dilution
Amount for Class A will be treated as Available Principal Collections;
(d) the aggregate amount by which the Class Investor Interest
for Class B has been reduced below the Class B initial Investor
Interest for reasons other than the payment of principal, if not
previously reimbursed, will be treated as Available Principal
Collections;
(e) an amount equal to any unpaid Class Servicing Fee for
Class C, after applying its Class Available Funds, will be paid to the
servicer;
(f) the sum of the Class Monthly Interest plus any Class
Deficiency Amount for Class C will be distributed to the Class C
certificateholders;
(g) an amount equal to any unreimbursed Class Investor Loss
Amount for Class C will be treated as Available Principal Collections;
(h) an amount equal to any unreimbursed Class Investor
Dilution Amount for Class C will be treated as Available Principal
Collections;
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(i) an amount equal to the aggregate amount by which the Class
Investor Interest for Class C has been reduced below its initial Class
Investor Interest for reasons other than payment of principal, if not
previously reimbursed, will be treated as Available Principal
Collections;
(j) an amount equal any unpaid Class Servicing Fee for Class
D, after applying its Class Available Funds, will be paid to the
servicer;
(k) the Class Monthly Interest plus any past due Class Monthly
Interest for Class D will be distributed to the Class D
certificateholders;
(l) an amount equal to any unreimbursed Class Investor Loss
Amount for Class D will be treated as Available Principal Collections;
(m) an amount equal to any unreimbursed Class Investor
Dilution Amount for Class D will be treated as Available Principal
Collections;
(n) an amount equal to the aggregate amount by which the Class
Investor Interest for Class D has been reduced below its initial
Investor Interest for reasons other than the payment of principal, if
not previously reimbursed, will be treated as a portion of Available
Principal Collections;
(o) an amount equal to the aggregate of any other amounts then
due to the Class C certificateholders or required to be applied out of
Excess Spread and Shared Excess Finance Charge Collections allocated to
Series 1999-1 will be so applied; and
(p) any balance will constitute a portion of Shared Excess
Finance Charge Collections and will be available for allocation to
other series in group one and, if not required to be applied as Shared
Excess Finance Charge Collections, will be distributed to the holder of
the Exchangeable Seller Certificate unless required to fund a shortfall
in the Excess Funding Account.
Amounts specified to be treated as Available Principal Collections in
this section will be applied as described in clause (B) or (C), as applicable,
of "--Reallocations and Payments of Principal" below.
REALLOCATIONS AND PAYMENTS OF PRINCIPAL
On each day that collections are deposited into the Collection Account,
the servicer will allocate to the Series 1999-1 certificateholders on a
preliminary basis the series allocation percentage for Series 1999-1 of
collections processed for principal receivables on that day so as to determine
the initial Class Allocation of those principal collections for each class for
each particular day.
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On each distribution date, following the allocation of Available Funds
described above, the trustee, acting on the servicer's instructions, will
reallocate collections of principal receivables initially allocated to Series
1999-1, the "Series 1999-1 Principal Collections", in the following order:
(A) (i) if Class A Available Funds and Excess Spread and
Shared Excess Finance Charge Collections available to fund the Class
Monthly Interest, Class Deficiency Amount, Class Additional Interest,
Class Servicing Fee, Investor Loss Amount and Investor Dilution Amount
for Class A are insufficient to fund those amounts, then Class
Allocations of Series 1999-1 Principal Collections will be reallocated
as follows:
- from Class D until fully applied, then
- from Class C until fully applied, then
- from Class B until fully applied.
These reallocated collections will be used to pay the required
amounts for Class A in the order of clauses (A) (1), (2), (3) and (4)
under "--Available Funds" above;
(ii) if Class B Available Funds and Excess Spread and Shared
Excess Finance Charge Collections available to fund the Class Monthly
Interest, Class D Deficiency Amount, Class Additional Interest, Class
Servicing Fee, Investor Loss Amount and Investor Dilution Amount for
Class B are insufficient to fund these amounts, then Class Allocations
of Series 1999-1 Principal Collections that remain after reallocation
in clause (i) above will be reallocated as follows:
- from Class D until fully applied, then
- from Class C until fully applied.
These reallocated collections will be used to pay the required
amounts for Class B in the order of clauses (1) then (2) under
"--Available Funds" and then in the order of clause (c)(2) of "--Excess
Spread; Shared Excess Finance Change Collections" above until the Class
B Required Amount has been reduced to zero.
(iii) if Class C Available Funds and Excess Spread and Shared
Excess Finance Charge Collections available to fund the Class Monthly
Interest, Class C Deficiency Amount, Class Additional Interest, Class
Servicing Fee, Investor Loss Amount and Investor Dilution Amount for
Class C are insufficient to fund this amount, then Class Allocations of
Series 1999-1 Principal Collections for Class D that remain after
reallocation in clauses (i) and (ii) above will be reallocated to the
extent necessary to pay Class Servicing Fee for Class C and the other
amounts listed above in the priority listed.
On each distribution date, the Class Investor Interest for
Class D, Class C and Class B will be reduced by the amount, if any, of
Principal Collections for that class that have been reallocated as
provided above.
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(B) On each distribution date during the Revolving Period,
following the reallocations and distributions made under subsection (A)
above, remaining Available Principal Collections will be distributed in
the following order:
(1) any amounts required to be applied on that date
from Available Principal Collections under to the certificate
purchase agreement for Class C will be so applied;
(2) an amount equal to the product of the Cumulative
Principal Shortfall multiplied by a fraction, the numerator of
which is remaining Available Principal Collections on that
distribution date and the denominator of which is the sum of
the Available Principal Collections available for sharing for
each series in group one that is a principal sharing series,
will then be treated as shared principal collections and
applied to other series in group one; and
(3) remaining Available Principal Collections on that
distribution date will then be paid to the holder of the
Exchangeable Seller Certificate in an amount up to the Seller
Interest, except when necessary to fund a shortfall in the
Excess Funding Account.
(C) On each distribution date during the Controlled
Amortization Period, beginning with the distribution date following the
month in which the Controlled Amortization Period begins, or on each
distribution date during the Early Amortization Period, (1) following
the determination and allocation of all Charge-Offs for that
distribution date and (2) the reallocations and distributions made
under subsection (A) above, Available Principal Collections for the
related Due Period will be distributed in the following order:
(i) an amount equal to the Class A Monthly Principal
will be distributed to the Class A certificateholders;
(2) during the Controlled Amortization Period,
beginning with the distribution date following the Due Period
in which the Class A Investor Interest has been paid in full,
and, during the Early Amortization Period, beginning with the
distribution date on which the Class A Investor Interest has
been paid in full, an amount equal to the Class B Investor
Interest will be distributed to the Class B
certificateholders;
(3) beginning with the distribution date on which the
Class B Investor Interest has been paid in full, an amount
equal to the Class C Investor Interest will be distributed to
the Class C certificateholders;
(4) beginning with distribution date on which the
Class C Investor Interest has been paid in full, an amount
equal to the Class D Monthly Principal will be distributed to
the Class D certificateholders;
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(5) an amount equal to any amounts required to be
applied from Available Principal Collections on that date
under the Class C certificate purchase agreement will be so
applied;
(6) an amount equal to the product of the Cumulative
Principal Shortfall multiplied by a fraction the numerator of
which is Available Principal Collections remaining after the
application specified in the preceding clauses of this
subsection (C) above, and the denominator of which is the sum
of the Available Principal Collections available for sharing
for each series in group one that is a principal sharing
series, will be treated as shared principal collections and
applied to series in group one which are principal sharing
series other than Series 1999-1; and
(7) any remaining Available Principal Collections for
that distribution date will be paid to the holder of the
Exchangeable Seller Certificate, except when necessary to fund
a shortfall in the Excess Funding Account.
The amounts that the servicer collects, net of out-of-pocket costs of
collection, from receivables previously charged off are net recoveries. Amounts
the servicer recovers under any credit life, credit disability or unemployment
insurance policies covering any obligor on an account are insurance proceeds.
If the sum of insurance proceeds and other net recoveries received from
receivables during any Due Period exceeds the Loss Amount for that Due Period
and any prior Due Periods, that excess will be distributed to the seller and
will not be available to make payments on Series 1999-1.
SERIES SHARED EXCESS FINANCE CHARGE COLLECTIONS
The balance, if any, of Available Funds on deposit in the Collection
Account after giving effect to the distributions described in clauses (a)
through (p) under "--Application of Collections--Excess Spread; Shared Excess
Finance Charge Collections" above on any distribution date, will constitute a
portion of Shared Excess Finance Charge Collections for that distribution date
and will be available for allocation to other series in group one and, if not
required to be applied as Shared Excess Finance Charge Collections for any
series in group one, will be distributed to the holder of the Exchangeable
Seller Certificate or any other person then entitled to that amount.
When Series 1999-1 is issued, group one will consist of Series 1999-1,
Series 1997-1 [and Series 1994-2. Series 1994-2 is scheduled to be paid in full
and terminated on the May 1999 distribution date.] All or some of the
subsequently issued certificate series may also be included in group one.
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"Shared Excess Finance Charge Collections" are collections of finance
charge receivables allocated to any series in group one, to the extent they
exceed the amounts necessary to make required payments for that series,
including payments to any related enhancement provider.
Shared Excess Finance Charge Collections for the series in group one
for any distribution date will be allocated to Series 1999-1 in an amount equal
to the product of:
(1) the aggregate amount of Shared Excess Finance Charge
Collections for all series in group one, and
(2) a fraction the numerator of which is the Series 1999-1
Finance Charge Shortfall for that distribution date and the
denominator of which is the aggregate amount of Finance Charge
Shortfalls for all series in group one for that distribution
date.
The "Series 1999-1 Finance Charge Shortfall" for any distribution date
will be equal to the amount by which the full amount to be paid -- without
duplication -- under clauses (a) through (p) under "--Application of
Collections--Excess Spread; Shared Excess Finance Charge Collections" above on
that distribution date exceeds the Excess Spread for that distribution date.
"Finance Charge Shortfall" means for Series 1999-1, the Series 1999-1 Finance
Charge Shortfall, and for any other certificate series, the amount specified in
the related Supplement as a "Finance Charge Shortfall" for that certificate
series. The trust will distribute Shared Excess Finance Charge Collections
allocated to Series 1999-1 to the holders of Series 1999-1 certificates
described above under "--Application of Collections--Excess Spread; Shared
Excess Finance Charge Collections."
The servicer may terminate the sharing of Shared Excess Finance Charge
Collections among the series in group one if, in the reasonable belief of the
seller or its counsel, continued sharing would have adverse regulatory
implications on the seller or the originator.
SERIES SHARED PRINCIPAL COLLECTIONS
Series in group one also share shared principal collections.
Collections of principal receivables for any Due Period allocated to the
investor interest of any series in group one will first be used to cover the
amounts required in the related supplement, including any required deposits into
a principal funding account or required distributions. Any excess will be
treated as "shared principal collections." The servicer will allocate the shared
principal collections to cover any Principal Shortfalls for other series in
group one. A "Principal Shortfall" occurs for a series when the principal
receivables allocated to that series in a Due Period do not cover required
principal distributions to investor certificateholders and deposits to principal
funding accounts.
If Principal Shortfalls exceed shared principal collections for any Due
Period, shared principal collections will be allocated pro rata among the
certificate series in group one based on their respective Principal Shortfalls.
If shared principal collections exceed Principal Shortfalls,
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the balance will be allocated to the holder of the Exchangeable Seller
Certificate or, to the extent the Seller Interest is less than the Required
Seller Interest, to the Excess Funding Account. Shared principal collections for
any distribution date will be allocated to Series 1999-1 in an amount equal to
the product of:
(1) the aggregate amount of shared principal collections from all
series in group one that are entitled to receive shared principal
collections, called principal sharing series, and
(2) a fraction the numerator of which is the Series 1999-1 Principal
Shortfall for that distribution date and the denominator of which is
the Cumulative Principal Shortfall for that distribution date.
A "Series 1999-1 Principal Shortfall" includes:
(1) on any distribution date related to the Controlled Amortization
Period, the amount by which the Controlled Payment Amount for the prior
Due Period exceeds the amount of Available Principal Collections for
that distribution date, excluding any portion attributable to shared
principal collections;
(2) on the Class B expected final payment date, the amount by which the
Class B Investor Interest exceeds the amount of Available Principal
Collections for that distribution date, excluding any portion of that
amount attributable to shared principal collections; and
(3) on any distribution date related to the Early Amortization Period,
the amount by which the Series 1999-1 Investor Interest exceeds the
Available Principal Collections for that distribution date, excluding
any portion of that amount attributable to shared principal
collections.
The "Cumulative Principal Shortfall" means the sum of the Series 1999-1
Principal Shortfall plus the Principal Shortfalls, as that term is defined in
each of the related supplements or receivables purchase agreements, for each
other series in group one that is a principal sharing series. Shared principal
collections allocated to Series 1999-1 on any distribution date will be treated
as part of Available Principal Collections that distribution date and
distributed among the holders of Series 1999-1 certificates as described above
under "--Application of Collections" and "--Reallocations and Payments of
Principal."
On the second business day before each distribution date during the
Controlled Amortization Period or during any Early Amortization Period, the
servicer will determine whether a Principal Shortfall exists for any series. If
a Principal Shortfall does exist, then the servicer will instruct the trustee to
withdraw from the Excess Funding Account an amount equal to that Principal
Shortfall on the related distribution date and include that amount in shared
principal collections for that distribution date, to be distributed among each
certificate series, including Series 1999-1, entitled to share in shared
principal collections on that distribution date.
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If not needed to fund any Series 1999-1 Principal Shortfall amounts,
shared principal collections allocated to Series 1999-1 will be distributed to
the holder of the Exchangeable Seller Certificate, except where necessary to
fund a shortfall in the Excess Funding Account. See "The Pooling
Agreement--Excess Funding Account."
INVESTOR CHARGE-OFFS
Loss Amounts and Dilution Amounts are described in "The Pooling
Agreement--Loss Amount; Dilution Amounts." The allocation of Loss Amounts and
Dilution Amounts to Series 1999-1 and each class within Series 1999-1 are
described in "Description of the Certificates--Allocation Percentages" above.
When we refer to (1) the "Series 1999-1 Investor Loss Amount" for any Due
Period, we mean the Loss Amount allocated to Series 1999-1, and (2) the
"Investor Loss Amount" for any class for any Due Period, we mean the Series
1999-1 Investor Loss Amount allocated to that class. When we refer to (1) the
"Series 1999-1 Investor Dilution Amount" for any Due Period, we mean the Series
Dilution Amount allocated to Series 1999-1, and (2) the "Investor Dilution
Amount" for any class for any Due Period, we mean the Series 1999-1 Investor
Dilution Amount allocated to that class.
An amount equal to the sum of the Investor Loss Amount and the Investor
Dilution Amount for each class will be paid from Available Funds, if applicable
for that class, Excess Spread and Shared Excess Finance Charge Collections
allocated to Series 1999-1 and from Reallocated Principal Collections, if
applicable for that class, and applied as described above under "--Application
of Collections."
Classes A through D absorb excess losses and dilution in inverse order
of their payment priority. This means that Class B will only be reduced for
losses and dilutions allocated to Class A and Class B once Class C and Class D
have been reduced to zero. Class A will only be reduced for losses and dilutions
allocable to Class A once Class B, C and D have been reduced to zero. Actual
reductions to each class are described in this section.
These reductions will only occur on a class if allocations of Class
Available Funds, Excess Spread and Shared Excess Finance Charge Collections, and
reallocations of Principal Collections for the benefit of that class, are
insufficient to cover losses and dilution which that class is required to cover.
The Class Investor Interest for Class D will be reduced, but not below
zero, on each distribution date, for the following uncovered amounts in the
following priority:
(1) any uncovered Class Investor Loss amount for Class D;
(2) any Unfunded Seller Dilution Amount;
(3) any uncovered Class Investor Loss Amount for Class A;
(4) any uncovered Class Investor Loss Amount for Class B;
(5) any uncovered Class Investor Loss Amount for Class C.
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After giving effect to reductions to the Class Investor Interest for
Class D, the Class Investor Interest for Class C will be reduced, but not below
zero, on each distribution date, for the following uncovered amounts in the
following priority:
(1) any uncovered Class Investor Loss amount for Class C;
(2) any Unfunded Seller Dilution Amount;
(3) any uncovered Class Investor Loss Amount for Class A;
(4) any uncovered Class Investor Loss Amount for Class B.
After giving effect to reductions to the Class Investor Interest for
Class C and D, the Class Investor Interest for Class B will be reduced, but not
below zero, on each distribution date, for the following uncovered amounts in
the following priority:
(1) any uncovered Class Investor Loss amount for Class B;
(2) any Unfunded Seller Dilution Amount;
(3) any uncovered Class Investor Loss Amount for Class A.
After giving effect to reductions to the Class Investor Interest for
Class B, C and D, the Class Investor Interest for Class A will be reduced, but
not below zero, on each distribution date, for the following uncovered amounts
in the following priority:
(1) any uncovered Class Investor Loss amount for Class A;
(2) any Unfunded Seller Dilution Amount.
If the Class Investor Interest for any class is reduced, it will be
reinstated on any distribution date by the amount of Excess Spread and Shared
Excess Finance Charge Collections allocated and available for that purpose as
described in under "--Application of Collections --Excess Spread; Shared Excess
Finance Charge Collections."
The amount of any reduction to a class on any distribution date is
called the "Class Investor Charge-Off" for that class. The Class Investor
Charge-Offs for all classes on a distribution date are called "Charge-Offs."
PAIRED SERIES
With the consent of the Class C certificateholders, the Series 1999-1
certificates may be paired with one or more new series in group one issued as
described in "The Pooling Agreement--Issuance of Other Series." We refer to the
additional series, not including Series 1999-1, as the paired series. A paired
series will be either funded with an initial deposit to a prefunding account in
an amount up to the initial principal balance of that paired series from the
proceeds of the sale of the certificates related to the paired series, or will
have a variable principal amount. Any prefunding account for a paired series
will be held for the benefit of the paired series and not for the benefit of
Series 1999-1 certificateholders. The maximum prefunding period for any paired
series will not exceed one year.
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As funds in the Collection Account are allocated to Series 1999-1 for
distribution as Available Principal Collections during the Early Amortization
Period or Controlled Amortization Period, either (1) in the case of a prefunded
paired series, an equal amount of funds in any prefunding account for that
paired series will be released and distributed under the terms of the paired
series, or (2) in the case of a paired series having a variable principal
amount, an interest in that variable paired series in an equal or lesser amount
may be sold by the trust and the proceeds of that sale will be distributed under
the terms of the paired series, and, in either case, the series investor
interest of that paired series will increase by a corresponding amount. Upon
payment in full of the Series 1999-1 certificates, assuming that there have been
no unreimbursed Loss Amounts or Dilution Amounts for any related paired series,
the aggregate amount of that paired series will have been increased by an amount
up to an aggregate amount equal to the Series 1999-1 Investor Interest paid to
the Series 1999-1 certificateholders-- or that other amount as the holders of
that paired series agree.
If an early amortization period begins for the paired series, the
servicer could reduce the Fixed Allocation Percentage for Series 1999-1, but not
below the Series 1999-1 Investor Interest as of the date when the early
amortization period for the paired series began.
EARLY AMORTIZATION EVENTS
You need to understand the following terms to understand when an Early
Amortization Event has occurred for Series 1999-1.
"Base Rate" means, for any Due Period, the product of 12 times
a fraction, the numerator of which is the sum of the Monthly Interest
for the related distribution date and the Series 1999-1 Servicing Fee
for that Due Period, and the denominator of which is the Series 1999-1
Investor Interest on the last day of the prior Due Period.
"Controlling Certificateholders" means:
(1) on any date of determination on which the Class A
Investor Interest or the Class B Investor Interest is
greater than zero, the holders of Class A
certificates and Class B certificates evidencing more
than 50% of the sum of the Class A Investor Interest
and the Class B Investor Interest, and
(2) thereafter, the holders of Class C certificates
evidencing more than 50% of the Class C Investor
Interest.
"Monthly Interest" means, for to any distribution date, the
sum of:
(1) the Class A Monthly Interest, the Class A
Additional Interest, if any, and the unpaid Class A
Deficiency Amount, if any;
(2) the Class B Monthly Interest, the Class B
Additional Interest, if any, and the unpaid Class B
Deficiency Amount, if any,
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(3) the Class C Monthly Interest and the unpaid Class
C Deficiency Amount, if any, and
(4) the Class D Monthly Interest.
"Portfolio Yield" means, for any Due Period, the annualized
percentage equivalent of a fraction, the numerator of which is equal to
the sum of:
(1) the Floating Allocation Percentage of collections of
finance charge receivables allocated to Series 1999-1
certificates for that Due Period including net earnings for
that Due Period on amounts on deposit in the collection
account and the excess funding account, which are treated as
finance charge receivables, plus
(2) any Shared Excess Finance Charge Collections that are
allocated to Series 1999-1 for the related distribution date,
calculated on a cash basis after subtracting the Series 1999-1
Investor Loss Amount for that Due Period, plus
(3) any Class A Cap Payment and Class B Cap Payment scheduled
to be paid on the related distribution date, and
the denominator of which is the Series 1999-1 Investor
Interest on the last day of the preceding Due Period -- or for the
initial Due Period, the Series 1999-1 initial Investor Interest.
An "Early Amortization Event" refers to any of the following events:
(a) failure on the part of the seller or the originator:
(1) to make any payment or deposit required under the
pooling agreement, the Series 1999-1 supplement or
the purchase agreement within five days after the
date required, or
(2) to perform in any material respect any of its
agreements under the pooling agreement, the Series
1999-1 supplement or the purchase agreement, if the
failure has a material adverse effect on the Class A
and Class B certificateholders and continues
unremedied for a period of 60 days after the date on
which written notice of the failure has been given to
the seller by the trustee, or to the seller and
trustee by the Controlling Certificateholders;
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(b) any representation or warranty made by the seller or the
originator in the pooling agreement, the Series 1999-1 supplement or
the purchase agreement, or any information required to be given by the
seller to the trustee, or by the originator to the seller, to identify
the accounts:
(1) proves to have been incorrect in any material
respect when made or when delivered and which
continues to be incorrect in any material respect for
a period of 60 days after the date on which the
trustee gives written notice of the failure to the
seller or the Controlling Certificateholders give
written notice of the failure to the seller and the
trustee, and
(2) as a result the interests of the Class A and
Class certificateholders are, and continue to be,
materially and adversely affected during the 60 day
period;
provided, however, that an Early Amortization Event will not occur if
the seller has accepted reassignment of the receivables during the 60
day period;
(c) the average Portfolio Yield for any three consecutive Due
Periods is less than the average Base Rate for that period;
(d) the seller fails to convey receivables arising under
additional accounts to the trust when required by the pooling
agreement;
(e) any Servicer Default occurs which would have a material
adverse effect on the Class A certificateholders or Class B
certificateholders;
(f) the failure to pay in full the Class A Investor Interest
on the Class A expected final payment date or the failure to pay in
full the Class B Investor Interest on the Class B expected final
payment date;
(g) any counterparty to an Interest Rate Cap fails to make a
Class A Cap Payment or a Class B Cap Payment, as applicable, in full
within five days of the date on which payment was due;
(h) Standard & Poor's or Moody's shall have withdrawn the
short term debt rating of the counterparty under an Interest Rate Cap,
or reduced its short term debt rating below A-1 or P-1, as applicable,
and the servicer fails within 30 days of that reduction or withdrawal,
to either (1) obtain a replacement interest rate cap agreement having
substantially similar terms and conditions or (2) enter into any other
arrangement satisfactory to the applicable rating agency, so that the
rating of the Class A certificates or Class B certificates by the
applicable rating agency will not be withdrawn or reduced;
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(i) any of the following events -- called "Insolvency Events"
-- occurs:
(1) the seller, the originator, the servicer -- if an
affiliate of the originator -- or Charming Shoppes
consents to the appointment of a conservator or
receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to
all or substantially all of its property; or
(2) a decree or order of a court or agency or
supervisory authority having jurisdiction in the
premises for the appointment of a conservator or
receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, has been
entered against the seller, the originator, the
servicer -- if an affiliate of the originator -- or
Charming Shoppes; or
(3) the seller, the originator, the servicer -- if an
affiliate of the originator -- or Charming Shoppes
admits in writing its inability to pay its debts
generally as they become due, commences or have
commenced against it, unless dismissed within thirty
days, as a debtor a proceeding under any applicable
insolvency or reorganization statute, makes an
assignment for the benefit of its creditors or
voluntarily suspends payment of its obligations;
(j) the originator becomes unable for any reason to convey
receivables to the seller pursuant to the purchase agreement, or the
seller becomes unable for any reason to convey receivables to the trust
under the pooling agreement; or
(k) the trust or the seller is regulated as an "investment
company" within the meaning of the Investment Company Act of 1940.
An event described in paragraphs (a), (b), (e), (g) or (h) above will
be considered an Early Amortization Event for Series 1999-1 if the trustee or
the Controlling Certificateholders give written notice to the servicer, the
seller and -- if notice is given by certificateholders -- the trustee. The
notice must declare that an Early Amortization Event has occurred.
No notice or other action by the trustee or certificateholders is
required if circumstances described in subparagraphs (c), (d), (f), (i), (j) or
(k) occur. These circumstances result in the automatic occurrence of an Early
Amortization Event for Series 1999-1 and, in the case of subparagraphs (i), (j)
and (k), all other series issued by the trust.
If an Early Amortization Event occurs, an Early Amortization Period for
Series 1999-1 will commence. The period will start on the close of business on
the business day immediately preceding the Early Amortization Event and will end
on the Series 1999-1 termination date.
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If an insolvency event for the seller or the originator occurs, the
seller is required to (1) stop transferring principal receivables to the trust
and (2) give notice to the trustee, the rating agencies, each provider of
enhancement to any series and designated representatives of each receivables
purchase series. Finance charge receivables, whenever created, accrued on
principal receivables previously conveyed to the trust, will continue to be part
of the trust assets.
Within 15 days, the trustee will publish and give to each investor
certificateholder, to each representative of purchased interest holders and to
each enhancement provider, written notice of the Insolvency Event stating that
the trustee intends to sell, dispose of, or otherwise liquidate the receivables
in a commercially reasonable manner. The trustee will use its best efforts to do
so and may solicit competitive bids. The proceeds from the sale, disposition or
liquidation of the receivables will be treated as collections of the
receivables. The trustee will determine conclusively in its sole discretion
which proceeds are allocable to finance charge receivables and which proceeds
are allocable to principal receivables.
If the trustee is instructed, within 90 days from the day it publishes
notice of the sale, by investor certificateholders representing more than 50% of
the investor interest of each certificate series, by each enhancement provider
for any certificate series, and by the designated representative of holders of
each receivables purchase series, that they wish to continue having principal
receivables conveyed to the trust as before that Insolvency Event, the trustee
will continue to accept those conveyances. Unless the trustee receives written
instructions as provided in the preceding sentence, the trust will terminate
following the last distribution of proceeds of the sale, disposition or
liquidation to the investor certificateholders of each certificate series and
the purchasers of each receivables purchase series.
THE POOLING AGREEMENT
TRANSFER AND ASSIGNMENT OF RECEIVABLES
When the trust was formed, the originator transferred receivables
directly to the trust. In November, 1997, the originator restructured the
transfers to the trust so that it first sells the receivables to the seller, a
bankruptcy remote entity, which in turn transfers the receivables to the trust.
The receivables currently in the trust today arise from Accounts initially
designated upon the formation of the trust by the originator and Accounts
subsequently designated by the originator and, since the restructuring, the
seller.
When Accounts are designated, the originator indicates in its computer
files that the related receivables have been transferred to the trust and
provides the trustee with a computer file or microfiche list containing a
description of the designated accounts and the outstanding receivables balances
on the related cut-off date. The originator, the seller and the servicer will
not deliver any other records or agreements relating to the Accounts or the
receivables to the trust.
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The records and agreements relating to the Accounts and the receivables
maintained by the seller or the servicer are not segregated from other documents
and agreements relating to other credit card accounts and receivables. They are
not stamped or marked to reflect the transfer of the receivables to the trust.
ISSUANCE OF OTHER SERIES
The trust may from time to time issue additional series in one of two
ways. First, the trust may issue a new certificate series. If permitted by the
terms of any series, the holders of a series can tender their certificates in
exchange for certificates of a new series. Series 1999-1 does not provide for
exchanges by its certificateholders. Separately, the seller can cause the trust
to issue a new certificate series in exchange for a corresponding reduction to
the seller's interest in the trust. The seller will define the terms of any new
certificate series in a supplement for that series. Each new certificate series
will be issued in either public or private offerings under appropriate
disclosure documents which will describe the material terms of the new
certificate series.
The trust may also from time to time issue one or more receivables
purchase series. Like certificate series, receivables purchase series constitute
a claim to a percentage of the trust's assets. This allocation percentage is
described in a receivables purchase agreement that establishes the terms of a
receivables purchase series.
The choice to issue a certificate series or a receivables purchase
series is largely based on investor preference. An investor may have greater
power, given its own regulatory restrictions, to purchase uncertificated
interests in the trust. We refer to receivables purchase series and to
certificate series collectively as "series." None of the seller, the servicer,
the trustee or the trust is required to obtain the consent of the
certificateholders of any series to issue an additional series.
Series 1999-1 will not be subordinated to any other series issued by
the trust. Series 1999-1 will not be entitled to the benefits of any credit
enhancement provided for any other series.
The rights and obligations of investors may vary from series to series.
One series issued by the trust may have an amortization or accumulation period
with a different length, and beginning on a different date, than the period for
any other series. Further, one or more series may be in their amortization
periods while other series are not. The seller may specify different interest
rates and servicing fees for each series. Other series may also have different
provisions relating to repurchase of the series or transfer of interests by one
investor to another.
Although excess collections of finance charge receivables allocated to
Series 1999-1 may be shared with other series, excess collections from other
series may not be available to make payments on Series 1999-1.
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New series may only be issued if:
(a) each rating agency confirms that the issuance of the new
series will not result in a reduction or withdrawal of its previously
issued rating of any outstanding series, including Series 1999-1,
(b) the seller provides an opinion of counsel opining that the
new issuance (1) will not cause the trust to be treated as an
association or publicly traded partnership taxable as a corporation for
federal income tax purposes and (2) will not adversely affect the
federal income tax characterization of any outstanding series, and
(c) the seller provides the trustee with an officer's
certificate stating that, after giving effect to any exchange, the
Seller Interest will be at least equal to the Required Seller Interest.
There is no limit to the number of new series that may be issued by the
trust.
BOOK-ENTRY REGISTRATION
Certificate owners may hold their interests in the offered certificates
through DTC, in the United States, or Cedel Bank or the Euroclear System, in
Europe, if they are participants in those systems, or indirectly through
organizations that are participants in those systems. Cede & Co., as nominee for
DTC, will hold the offered certificates. Cedel and Euroclear will hold omnibus
positions on behalf of their respective participants, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries. The depositaries in turn will hold the positions in
customers' securities accounts in the depositaries' names on the books of DTC.
DTC has advised us and the underwriters that it is:
- a limited-purpose trust company organized under the New York
Banking Law;
- a "banking organization" within the meaning of the New York
Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York
Uniform Commercial Code; and
- a "clearing agency" registered under the provisions of
Section 17A of the Exchange Act.
DTC holds securities for its participants and facilitates the clearance and
settlement among its participants of securities transactions, including
transfers and pledges, in deposited securities through electronic book-entry
changes in its participants' accounts. This eliminates the need for physical
movement of securities certificates. DTC participants include securities brokers
and dealers, banks, trust companies, clearing corporations and other
organizations. Indirect access to the DTC system is also available to others
including securities brokers and dealers, banks, and
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trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Transfers between participants on the DTC system will occur in
accordance with DTC rules. Transfers between participants on the Cedel system
and participants on the Euroclear system will occur in accordance with their
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
participants or Euroclear participants, on the other, will be effected by DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by that system's depositary. However, these cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in that system in accordance
with its rules and procedures and within its established deadlines, European
time. The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
participants and Euroclear participants may not deliver instructions directly to
their system's depositary.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date. The credits for any transactions in these
securities settled during this processing will be reported to the relevant Cedel
participant or Euroclear participant on that business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
participant or a Euroclear participant to a DTC participant will be received and
available on the DTC settlement date. However, it will not be available in the
relevant Cedel or Euroclear cash account until the business day following
settlement in DTC.
Purchases of offered certificates under the DTC system must be made by
or through DTC participants, which will receive a credit for the offered
certificates on DTC's records. The ownership interest of each actual certificate
owner is in turn to be recorded on the DTC participants' and indirect
participants' records. Certificate owners will not receive written confirmation
from DTC of their purchase. However, certificate owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC participant or indirect participant
through which the certificate owner entered into the transaction. Transfers of
ownership interests in the offered certificates are to be accomplished by
entries made on the books of DTC participants acting on behalf of certificate
owners. Certificate owners will not receive certificates representing their
ownership interest in offered certificates unless use of the book-entry system
for the offered certificates is discontinued.
To facilitate subsequent transfers, all securities deposited by DTC
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of securities with DTC and their registration in the name of Cede &
Co. effects no change in beneficial ownership. DTC
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has no knowledge of the actual certificate owners of the offered certificates;
DTC's records reflect only the identity of the DTC participants to whose
accounts the offered certificates are credited, which may or may not be the
actual beneficial owners of the certificates. The DTC participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC
participants, by DTC participants to indirect participants, and by DTC
participants and indirect participants to certificate owners will be governed by
arrangements among them and by any statutory or regulatory requirements as may
be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote on behalf of the
offered certificates. Under its usual procedures, DTC mails an omnibus proxy to
the issuer as soon as possible after the record date, which assigns Cede & Co,'s
consenting or voting rights to those DTC participants to whose accounts the
offered certificates are credited on the record date, identified in a listing
attached the proxy.
Principal and interest payments on the offered certificates will be
made to DTC. DTC's practice is to credit its participants' accounts on the
applicable distribution date in accordance with their respective holdings shown
on DTC's records unless DTC has reason to believe that it will not receive
payment on that distribution date. Payments by DTC participants to certificate
owners will be governed by standing instructions, customary practices, and any
statutory or regulatory requirements as may be in effect from time to time.
These payments will be the responsibility of the DTC participant and not of DTC,
the trustee or the seller. Payment of principal and interest to DTC is the
responsibility of the trustee, disbursement of the payments to DTC participants
is the responsibility of DTC, and disbursement of the payments to certificate
owners is the responsibility of DTC participants and indirect participants.
DTC may discontinue providing its services as securities depository for
the offered certificates at any time by giving reasonable notice to the seller
or the trustee. Under these circumstances, if a successor securities depository
is not obtained, definitive certificates are required to be printed and
delivered. The seller and, upon the occurrence of a Servicer Default, a
specified percentage of each class of certificate owners may decide to
discontinue use of the system of book-entry transfers through DTC or a successor
securities depository. In that event, definitive certificates will be delivered
to certificate owners. See "--Definitive Certificates."
DTC management is aware that some computer applications, systems, and
the like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter Year 2000 problems.
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its systems continue
to function appropriately, as the same relate to the timely payment of
distributions to securityholders, book-entry deliveries, and settlement of
trades within DTC. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which it expects to complete within appropriate time frames.
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However, DTC's ability to perform properly its services is also
dependent upon other parties, including issuers and their agents, DTC's direct
and indirect participants, third party vendors from whom DTC licenses software
and hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers. DTC has informed us that it is contacting, and will continue
to contact, third party vendors from whom DTC acquires services to: (1) impress
upon them the importance of these services being Year 2000 compliant; and (2)
determine the extent of their efforts for Year 2000 remediation and testing of
their services. In addition, DTC is in the process of developing contingency
plans as it deems appropriate.
According to DTC, the foregoing information about DTC has been provided
to us for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Cedel participants through electronic book-entry changes in accounts of Cedel
participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedel in any of 32 currencies,
including United States dollars.
Cedel participants are financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
and clearing corporations. Indirect access to Cedel is also available to others,
including banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Cedel participant, either directly or
indirectly.
The Euroclear System was created in 1968 to hold securities for its
participants and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment. This
eliminates the need for physical movement of certificates. Transactions may be
settled in any of 32 currencies, including United States dollars.
The Euroclear System is operated by Morgan Guaranty Trust Company of
New York, Brussels, Belgium office, the Euroclear operator, under contract with
Euroclear Clearance System, Societe Cooperative, a Belgium cooperative
corporation, the Euroclear cooperative. All operations are conducted by the
Euroclear operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear operator, not the
Euroclear cooperative. The board of the Euroclear cooperative establishes policy
for the Euroclear System.
Euroclear participants include banks -- including central banks --
securities brokers and dealers and other professional financial intermediaries.
Indirect access to the Euroclear System is also available to other firms that
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
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Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System. These terms and
conditions govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments for securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear operator acts under
these terms and conditions only on behalf of Euroclear participants and has no
record of or relationship with persons holding through Euroclear participants.
Distributions on the offered certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel participants or
Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. These distributions must
be reported for tax purposes in accordance with United States tax laws and
regulations. Cedel or the Euroclear operator, as the case may be, will take any
other action permitted to be taken by a certificateholder on behalf of a Cedel
participant or Euroclear participant only in accordance with its rules and
procedures, and depending on its depositary's ability to effect these actions on
its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of offered certificates among
participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform these procedures and these procedures may be
discontinued at any time.
DEFINITIVE CERTIFICATES
Certificates issued in fully registered, certificated form are referred
to in this prospectus as "definitive certificates." The Series 1999-1
certificates will be issued as definitive certificates, rather than in book
entry form to DTC or its nominees, only if one of the following events occurs:
- the seller advises the trustee in writing that DTC is no
longer willing or able to discharge properly its
responsibilities as depository for the offered certificates,
and the trustee or the seller is not able to locate a
qualified successor;
- the seller, at its option, advises the trustee in writing that
it elects to terminate the book-entry system through DTC; or
- after the occurrence of a Servicer Default, Series 1999-1
certificate owners representing more than 662/3% of the Class
Investor Interest for Class A or Class B, as applicable,
advise the trustee and DTC through clearing agency
participants in writing that the continuation of a book-entry
system is no longer in the best interest of the certificate
owners of that class.
If any of these events occur, DTC is required to notify all of its
participants of the availability of definitive certificates.
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Definitive certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar, which is initially the Trustee. The
transfer agent and registrar will not impose a service charge for any
registration of transfer or exchange, but may require payment of an amount
sufficient to cover any tax or other governmental charge. The transfer agent and
registrar will not be required to register the transfer or exchange of
definitive certificates within the fifteen days preceding a payment date for the
definitive certificates.
REQUIRED REMOVAL OF RECEIVABLES FROM THE TRUST
The seller will represent and warrant to the trust, that on the
issuance date for Series 1999-1 and, for any additional Accounts, on the related
Addition Date that:
(1) Each receivable is an eligible receivable.
(2) Each receivable then existing (a) has been conveyed to the
trust, free of any lien of any person claiming through or
under the seller or its affiliates and in compliance, in all
material respects, with all requirements of law applicable to
the seller and (b) is the legal, valid and binding payment
obligation of the related account debtor, enforceable against
it, except as enforceability may be affected by bankruptcy or
similar laws affecting the rights of creditors, and by general
principles of equity.
(3) All approvals or authorizations of any governmental authority
required to be obtained by the seller in connection with the
conveyance of each receivable to the trust have been obtained.
(4) On each day on which any new receivable is created, the seller
will represent and warrant to the trust that (A) the
receivable is an eligible receivable, (B) the receivable has
been conveyed to the trust in compliance, in all material
respects, with all requirements of law applicable to the
seller, (C) all approvals or authorizations of any
governmental authority required to be obtained by the seller
in connection with the conveyance of the receivable to the
trust have been obtained and (D) the receivable is free of any
lien of any person claiming through the seller or its
affiliates.
(5) On the cut-off date specified to the trustee, each list of the
Accounts, and each related computer file or microfiche or
written list, is an accurate and complete listing in all
material respects of all the Accounts, and the information
contained in the list as to the identity of those Accounts and
the related receivables is true and correct in all material
respects.
Except as described in the next paragraph, if the seller breaches any
of these representations and warranties as to any receivable, and as a result
the receivable becomes charged off as uncollectible, the trust's rights in the
receivable or its proceeds are impaired or the proceeds of the receivable are
not available for any reason to the trust free and clear of any lien, then upon
the expiration of a 60 day grace period, the seller must remove that receivable
from
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the trust. The grace period will begin on the earlier to occur of the seller or
the servicer discovering the breach, or the seller receiving written notice of
the breach from the trustee. If, however, prior to the required Removal Date for
any receivable, the representations and warranties relating to that receivable
become true and correct in all material respects, the seller will not be
required to accept assignment of the receivable from the trust.
If, however, the seller breaches any of the representations and
warranties in clause (2) above as to any receivable, that receivable will be
removed from the trust and reassigned to the seller immediately upon the earlier
to occur of the seller or servicer discovering that breach or the seller
receiving written notice of that breach from the trustee, if any of the
following three conditions are met:
(1) as a result of the breach, the receivable is charged off as
uncollectible, the trust's rights in the receivable or its
proceeds are impaired, or the proceeds of the receivable are
not available for any reason to the trust free and clear of
any lien,
(2) the lien upon the receivable (A) arises in favor of the United
States, any state or any of their agencies or
instrumentalities for unpaid taxes or ERISA obligations or (B)
has been consented to by the originator or the seller, or
(3) the unsecured short-term debt rating of the originator is
rated lower than P-1 by Moody's and the lien upon the
receivable ranks prior to the lien in favor of the trust.
If a lien referred to above does not have a material adverse effect on
the collectibility of the receivables, on any holder of an interest in any
series or on any credit enhancement provider for any series, then the seller
will have 10 days to remove the lien prior to being required to accept
reassignment of the affected receivables.
When the seller is required to remove a receivable from the trust, it
will direct the servicer to deduct the amount of the receivable from the
aggregate amount of principal receivables used to calculate the allocation
percentages for each outstanding series and for the Seller Interest, and
decrease the Seller Interest by that amount. If the deduction would cause the
Seller Interest to be reduced below the Required Seller Interest, the seller
will within ten business days or on the next distribution date, if earlier, make
a deposit in the Excess Funding Account. The deposit will be equal to the amount
by which the Required Seller Interest exceeds the Seller Interest. If any
receivables purchase series is outstanding, the seller will deposit the portion
of the required deposit amount allocated to that series to the Collection
Account for the benefit of that series rather than to the Excess Funding
Account. Any deduction, and the related deposit, will be considered a repayment
in full for the receivables removed from the trust.
The seller also will represent and warrant to the trust that:
(a) the agreement that the seller or the originator has
executed relating to these transfers constitutes a legal, valid and
binding obligation of the seller or the originator, enforceable against
the seller or the originator in accordance with its terms, except as
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enforceability may be affected by bankruptcy or similar laws affecting
the rights of creditors, or by general principles of equity, and
(b) each transfer of receivables to the trust is either: (1) a
valid sale to the trust of the transferor rights in receivables, free
and clear of any lien of any person or entity claiming through or under
the seller or any of its affiliates, or (2) the grant of a first
priority perfected security interest in receivables.
If the seller breaches either of these representations and warranties,
then (1) the trustee or certificateholders whose certificates evidence more than
50% of the outstanding investor interest of all certificate series outstanding
or (2) any representative of purchasers of a receivables purchase series may
require the seller to designate an entity to accept reassignment of all
receivables from the trust. The reassignment will occur on a distribution date
within 60 days, or any longer period designated, from delivery of a notice of
that designation to the seller. If, however, before the required reassignment
date for the receivables, the representations and warranties referred to in the
preceding paragraph become true and correct in all material respects, the seller
or its designee will not be required to accept reassignment of receivables from
the trust.
If the trustee or the required certificateholders require a
reassignment of receivables, all certificate series will be affected by the
reassignment. Unless the terms of a certificate series specify a different
amount, the amount that the seller is required to deposit in the Collection
Account for each certificate series will be the outstanding Investor Interest of
that series, plus all accrued and unpaid interest for that series on that date,
plus the invested amount of any credit enhancement for that series. The required
amount for Series 1999-1 will be the Series 1999-1 Investor Interest plus
accrued and unpaid interest on the date of reassignment.
If a receivables purchase series also participates in a reassignment,
the amount that the seller is required to deposit in the Collection Account for
that series will be specified in the agreements for that series.
The removal of receivables from the trust is the sole remedy against
the seller for the breaches of representations and warranties referred to in
this section.
The originator has made substantially similar representations and
warranties to the seller regarding the receivables, and has agreed to accept the
reassignment from the seller of receivables on substantially similar terms. The
seller has assigned all of the seller's rights under the purchase agreement to
the trust, thereby permitting the trust to enforce the seller's reassignment
rights against the originator. See "Description of the Purchase
Agreement--Representations and Warranties."
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ELIGIBLE ACCOUNTS; ELIGIBLE RECEIVABLES
The seller designates accounts from which receivables will be
transferred to the trust. To be eligible for designation, the account must meet
the following eligibility criteria on the date of designation:
- amounts owing on the account must be payable in United States
dollars;
- the account must be in a Specified Program Account;
- the account is not classified as canceled, counterfeit or
fraudulent, and no credit card issued under the account has
been stolen or lost;
- amounts owing under the account have not been charged-off by
the originator;
- the account debtor of which has provided, as his or her most
recent billing address, an address that is located in the
United States or Canada; and
- the originator has obtained all necessary governmental
approvals relating to the creating of receivables under the
account and the performance by the originator of the related
cardholder agreement.
A "Specified Program Account" is a revolving credit card account
included in a Specified Program, so long as (a) the related credit application
was processed by the originator or its affiliate under the originator's
cardholder guidelines or (b) the account was acquired by the originator and
determined by the originator to comply with its cardholder guidelines, including
those related to extensions of credit.
The "Specified Programs" are as follows:
- the "Private Label Program" - a program to originate private
label credit card receivables primarily from sales at Fashion
Bug stores;
- the "Secured Account Program" - a program under which the
obligors are required to maintain a security deposit against
amounts charged;
- the "Co-Branded Program" - a program to originate charges on a
general purpose credit card under the Visa(R) or MasterCard(R)
system, which credit card will be co-branded with Fashion Bug;
- the "Unaffiliated Retailer Program" - a program to allow
holders of its private label credit card to use the card at
unaffiliated retail locations; and
- any other credit card program that is specified by the
originator.
Only Receivables generated under the Private Label Program are
currently included in the trust. Receivables generated under any other program
will only be included in the trust if the seller receives confirmation from each
rating agency then rating any outstanding series that inclusion will not cause
the rating agency to reduce or withdraw its ratings.
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When we refer to an "Eligible Receivable," we mean a Receivable that
meets the following criteria:
- it has arisen under an Eligible Account;
- it was created in compliance, in all material respects, with
all requirements of law;
- the originator, the seller or the trust had good and
marketable title to the receivable, free and clear of all
liens arising under or through the originator, the seller or
any of their affiliates, other than liens relating to the
trust;
- it is a legal, valid and binding payment obligation of the
obligor and is enforceable against the obligor in accordance
with its terms, subject to bankruptcy or similar laws
affecting the rights of creditors, and to general principles
of equity;
- it constitutes an "account" or a "general intangible" under
Article 9 of the UCC as then in effect in any applicable
jurisdiction.
Principal receivables owed by obligors with Canadian billing addresses
are considered eligible only to the extent they do not exceed 1.0% of principal
receivables in the trust, averaged on the last day of any two consecutive Due
Periods.
ADDITION OF ACCOUNTS
In our discussion of when the seller is obligated to identify
additional Accounts for the trust, we use the following terms:
"Seller Interest Test" means that, on the last business day of any Due
Period, the average of the Seller Interest over the 30-day period then
ended is equal to or greater than the Required Seller Interest.
"Required Seller Interest" means the greater of (1) the sum of the
minimum Seller Interests specified for each series and (2) zero. The
minimum Seller Interest for Series 1999-1 is zero. Other series may
have minimum Seller Interests that are greater zero.
If the Seller Interest Test is not satisfied on the last day of any Due
Period, then on or before the 10th business day following the last day of that
Due Period, unless the Seller Interest Test is satisfied in the intervening
period, the Seller must designate sufficient additional Accounts so that the
Seller Interest Test is satisfied after adding the related receivables to the
trust. If the seller fails to add the amount of receivables necessary to meet
the Seller Interest Test solely because of the unavailability of a sufficient
amount of eligible receivables, this failure will, after a grace period, be an
Early Amortization Event for Series 1999-1. This failure will not constitute a
breach of the pooling agreement by the seller.
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The Seller Interest includes amounts on deposit in the Excess Funding
Account. The servicer is required to deposit collections of principal
receivables payable to the holder of the Exchangeable Seller Certificate into
the Excess Funding Account if the seller does not designate sufficient
additional Accounts necessary to comply with the Seller Interest Test. This
deposit may forestall the occurrence of an Early Amortization Event.
The seller may designate, from time to time at its sole discretion,
additional Accounts that meet the eligibility criteria. The amount of
receivables arising under these voluntarily designated Accounts, together with
additional Accounts the seller was required to designate to meet the Seller
Interest Test, is limited to (1) in any calendar quarter, 10% of the receivables
in the trust on the first day of the related calendar year and (2) in any 12
month period ending on the most recent Addition Date, 15% of the receivables in
the trust on the first day of that 12 month period. However, this limitation
does not apply if each rating agency then rating any outstanding series confirms
that including receivables from the new Accounts would not cause the rating
agency to reduce or withdraw its ratings.
The seller has agreed for the benefit of Series 1999-1
certificateholders that it will not exercise its option to designate any
additional accounts unless on or prior to the related Addition Date the seller
provides the trustee and Class C certificateholders with an officer's
certificate stating that the designation of additional accounts to the trust
will not, on the related Addition Date:
(1) be reasonably expected by the seller to result in a rating agency
reducing or withdrawing its rating on any then outstanding certificate
series or receivables purchase series,
(2) cause the occurrence of an Early Amortization Event for Series
1999-1, or
(3) be reasonably expected by the seller to materially adversely affect
in any manner the timing or amount of payments to the Class C
certificateholders.
The date on which an additional Account is designated is called an
"Addition Date."
REMOVAL OF ACCOUNTS
The seller may, but is not obligated to, remove accounts from the list
of designated Accounts. Receivables arising in the removed Accounts will be
removed from the trust and reassigned to the seller. The seller may not remove
accounts more than once in any Due Period. The seller will be permitted to
remove accounts only if (1) the removal of the related receivables will not
cause an early amortization event to occur for any outstanding series and will
not result in the failure to make any required payment on any outstanding
series, (2) the seller represents and warrants that no selection procedures
believed by it to be materially adverse to the interests of any series were used
in selecting the accounts to be removed from the trust, and (3) each rating
agency then rating any outstanding series has confirmed that removing the
accounts would not cause the rating agency to reduce or withdraw its ratings.
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COLLECTION ACCOUNT
The Servicer has established and maintains a collection account for the
benefit of all certificateholders and purchasers of receivables purchase series.
The collection account is currently maintained with the trustee and must always
be maintained with a qualified depository institution.
A qualified depository institution is any depository institution or
trust company: (1) that is organized under the laws of the United States or any
state or the District or Columbia or is the domestic branch of a foreign
depository institution, (2) whose short-term deposits have a rating of P-1 by
Moody's and of A-1+ by Standard & Poor's and (3) for which deposit insurance is
provided by either the Bank Insurance Fund or the Savings Association Insurance
Fund, each administered by the FDIC.
Funds in the collection account will be invested, at the direction of
the servicer, in highly rated liquid investments that meet criteria specified in
the pooling agreement. Any investments will be required to mature monthly prior
to each distribution date. Any earnings, net of losses and investment expenses
on funds in the collection account will be treated as collections of finance
charge receivables.
DEPOSITS IN COLLECTION ACCOUNT
The seller and the servicer have agreed to the following procedures for
handling collections on the receivables:
- for payments made by mail, (1) to cause these payments to be
delivered to the subservicer, and (2) to cause the subservicer
to deposit these payments into a lockbox account within two
business days of receipt; and
- for payments made at any Fashion Bug store, (1) to cause these
payments to be deposited into an account of that store
established for deposits of store payments, and (2) to cause
these store payments to be deposited into a lockbox account
within two business days of deposit into a store account.
Unless the servicer maintains a certificate of deposit, short-term
deposit or commercial paper rating of P-1 by Moody's and of A-1+ by Standard &
Poor's or a commercial paper rating of A-1 by Standard & Poor's, and a long-term
unsecured debt obligation rating of at least Aa3 by Moody's and AA- by Standard
& Poor's, all amounts deposited into a lockbox account on any business day will
on that same day be withdrawn from the lockbox account and deposited into the
collection account. If the servicer maintains the required rating, it may
withdraw funds from the lockbox accounts and commingle them with its other funds
pending allocation under the terms of the trust. However, during the continuance
of an early amortization event, the servicer will be required to deposit funds
into the collection account within two business days of deposit to the lockbox
account.
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The holder of the Exchangeable Seller Certificate is entitled to the
Seller Percentage of collections on principal receivables and finance charge
receivables, and any additional amounts under any series that are payable to it.
The servicer may pay these amounts to the holder of the Exchangeable Seller
Certificate, rather than depositing these amounts in the collection account, on
any day.
The servicer will stop depositing insurance proceeds and other amounts
constituting net recoveries into the collection account once the aggregate
insurance proceeds and other net recoveries received during any Due Period
exceed the unrecovered Loss Amount for that Due Period and any prior Due
Periods. The excess will be paid to the seller.
EXCESS FUNDING ACCOUNT
When we refer to the "Excess Funding Account," we mean the deposit
account established and maintained by the servicer for the benefit of the
investor certificateholders of each certificate series, in the name of the
trustee. This account is to be maintained with the trustee or a qualified
depository institution.
If on any date the Seller Interest is less than the Required Seller
Interest, the servicer will not distribute to the holder of the Exchangeable
Seller Certificate any collections of principal receivables that otherwise would
be distributed to the holder of the Exchangeable Seller Certificate. Instead, it
will deposit those funds in the Excess Funding Account.
Funds on deposit in the Excess Funding Account will be withdrawn and
paid to the holder of the Exchangeable Seller Certificate on any distribution
date to the extent that the Seller Interest exceeds the Required Seller Interest
on that date.
If an accumulation period, controlled amortization period or early
amortization period commences for any certificate series in group one, funds on
deposit in the Excess Funding Account will be released and treated as shared
principal collections to the extent needed to cover principal payments due to or
for the benefit of that certificate series, if the supplement for that series so
provides.
Funds on deposit in the Excess Funding Account will be invested by the
trustee, at the direction of the servicer, in permitted investments. The trustee
will withdraw any earnings, net of losses and investment expenses, earned on
amounts on deposit in the Excess Funding Account during any Due Period.
Withdrawn funds will be treated as collections of finance charge receivables for
that Due Period.
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LOSS AMOUNT; DILUTION AMOUNTS
The following definitions are necessary to understand our discussion of
loss allocations.
"Defaulted Receivables" for any Due Period are principal receivables
that were charged off as uncollectible in that Due Period, or consistent with
the originator's cardholder guidelines should have been written off as
uncollectible in that Due Period, in accordance with the servicer's customary
and usual servicing procedures for consumer revolving credit accounts.
The "Loss Amount" for any Due Period will be an amount, not less than
zero, equal to:
(1) the aggregate principal balance of Accounts, or any portion of
that balance, which became Defaulted Receivables for that Due
Period minus
(2) the aggregate amount of net recoveries received in that Due
Period of both finance charge receivables and principal
receivables previously charged off as uncollectible.
The current policy of the seller is to charge off as uncollectible an
account 180 days after a customer has failed to make the minimum payment due,
unless the seller receives notice that: (a) the accountholder is the subject of
a bankruptcy filing; (b) the accountholder is deceased or imprisoned; or (c)
there has been fraudulent activity in connection with that account, in which
case the Seller will charge off that account at the beginning of the first
billing cycle occurring after receipt of that notice.
The servicer may adjust downward the amount of any principal receivable
because of:
- a rebate, refund, chargeback or error
- a fraudulent or counterfeit charge
- merchandise being refused or returned by an accountholder
- a counterclaim or defense by an accountholder
- any other adjustment for reasons other than payment or
charge-off due to credit problems.
We refer to aggregate amount of these reductions for any Due Period as
the "Dilution Amount" for that Due Period.
The Dilution Amount for any Due Period will be initially allocated to
the Seller Interest to the extent that, on the last day of that Due Period, the
Seller Interest is greater than the Required Seller Interest. The aggregate
amount of principal receivables used to calculate the Seller Interest will be
reduced by an amount equal to the Dilution Amount so allocated.
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A portion of any remaining Dilution Amount, called the "Series Dilution
Amount," will be allocated to each certificate series and receivable purchase
series based upon the percentage calculated as of the last day of the
immediately preceding Due Period:
<TABLE>
<S> <C> <C>
adjusted investor interest receivable purchase interest
sum of all outstanding or the sum of all adjusted investor interests
adjusted investor interests and and Receivables purchase interests
receivables purchase interests
</TABLE>
If Available Funds, Reallocated Principal Collections, Excess Spread
and Shared Excess Finance Charge Collections allocated and available to make
payments on Series 1999-1 certificates on any distribution date will not be
sufficient to cover the Series 1999-1 Investor Dilution Amount on that
distribution date, the remaining Series 1999-1 Investor Dilution Amount will be
allocated to the Seller Interest.
Because these allocation will cause the Seller Interest to be less than
the Required Seller Interest, the Seller, on or prior to the 10th business day
following the last business day of the Due Period during which the Dilution
Amounts arose, will be required to compensate the trust for that deficiency by
either:
- making a deposit in the Excess Funding Account in immediately
available funds;
- conveying receivables arising in additional Accounts to the
trust; or
- instructing the servicer to deposit a portion of the seller
allocations to the Excess Funding Account so that, after that
deposit or conveyance, the Seller Interest will be at least
equal to the Required Seller Interest.
If the seller fails to take these actions, the remaining deficiency,
called the "Unfunded Seller Dilution Amount," will cause an Investor Charge-Off
on the related distribution date as described in "Description of the
Certificates--Investor Charge-Offs" above.
DISCOUNT OPTION
The pooling agreement allows the seller to designate a portion of
principal receivables to be treated as finance charge receivables. The portion
of the principal receivables that the seller may designate as finance charge
receivables is a fixed or variable percentage of up to 4% of the amount of
principal receivables arising in the Accounts after the exercise of the discount
option. We refer to this percentage as the "Discount Percentage" and to this
portion of the principal receivables as the "Discount Option Receivables."
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Any Discount Option Receivables will be subtracted from the total
amount of principal receivables in the trust. The seller must provide 30 days'
prior written notice to the servicer, the trustee and each rating agency of this
designation, and this designation will become effective on the date specified in
that notice only if:
- in the reasonable belief of the seller the designation would
not cause an early amortization event to occur or an event
which, with notice or the lapse of time or both, would
constitute an early amortization event; and
- each rating agency confirms in writing that the designation
will not cause the rating on any outstanding certificate
series to be reduced or withdrawn.
On the date of processing of any collections, the product of the
Discount Percentage and collections of receivables that arise in the Accounts
after the exercise of that option and that otherwise would be principal
receivables, will be deemed "Discount Option Receivables Collections." The
seller will deposit the Floating Allocation Percentage of these collections.
The trustee will pay the holder of the Exchangeable Seller Certificate
the Seller Percentage of Discount Option Receivables Collections.
DEFEASANCE
The seller may, at its option, terminate its obligations under the
pooling agreement for a certificate series, including Series 1999-1, by
depositing with the trustee funds sufficient to make all remaining scheduled
interest and principal payments on that series. These payments would be made as
scheduled under the terms of the related supplement. This procedure is referred
to as "defeasance."
The seller would make the deposit for the defeased series from
collections on the receivables otherwise allocable to the defeased series. The
seller would use these collections to purchase permitted investments rather than
additional receivables.
Prior to the defeasance of any series, the seller must deliver to the
trustee an opinion of tax counsel stating that the defeasance will not adversely
affect the federal income tax characterization of any investor certificates that
are currently outstanding and that were characterized as debt at the time of
their issuance. Also, each rating agency must confirm that the defeasance will
not cause the rating on any outstanding series of investor certificates to be
reduced or withdrawn. Finally, the seller is required to deliver to the trustee
a certificate of its authorized officer stating that, based on facts known to
that officer at that time, in the reasonable opinion of the seller, the
defeasance will not cause an early amortization event to occur for any series.
OPTIONAL REPURCHASE; FINAL PAYMENT OF PRINCIPAL; TERMINATION
The seller, at its option, may purchase the Series 1999-1 certificates
on any distribution date when the Investor Interest for Series 1999-1 is 10% or
less of the Series 1999-1 initial
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Investor Interest. To do so, the seller must deposit into the collection account
an amount equal to (1) the Series 1999-1 Investor Interest, plus (2) accrued and
unpaid interest on this series through the date preceding the distribution date
on which the optional repurchase will occur.
The Series 1999-1 certificates will be retired on the day following the
distribution date on which the final payment of principal is made to the Series
1999-1 certificateholders, whether as a result of optional repurchase by the
seller or otherwise. The investor interest of each certificate series which is
redeemed by the trust, and of each receivables purchase interest which is
repurchased by the trust, will be deemed to be equal to zero on the distribution
date following the making of the deposit. At this time, the Seller Interest will
be deemed to have been increased by the investor interest of the certificate
series or repurchased receivables purchase interest.
Unless the servicer and the holder of the Exchangeable Seller
Certificate instruct the trustee otherwise, the trust will terminate on the
earliest of:
- the day after the distribution to investor certificateholders
and receivables purchasers of the proceeds of the sale,
disposition or liquidation of receivables due to the
insolvency of the originator or the seller, unless the
investor certificateholders, enhancement providers and
purchaser representatives instructed the Trustee otherwise as
described under "Description of the Certificates--Early
Amortization Events,"
- the day after all funds distributed with the trustee for the
defeasance of outstanding series and related obligations have
been distributed, provided that no other series or related
obligations to enhancement providers remain outstanding, and
- December 24, 2025.
Upon the termination of the trust and the surrender of the Exchangeable
Seller Certificate, the trustee will convey to the holder of the Exchangeable
Seller Certificate all right, title and interest of the trust in and to the
receivables and other trust assets, other than funds on deposit in bank accounts
of the trust designated under any series.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's compensation for its servicing activities and
reimbursement for its expenses will take the form of the payment to it of a
monthly servicing fee. The monthly servicing fee will be allocated between the
Seller Interest and the investor interest for all certificate series and
receivables purchase series, including Series 1999-1.
The portion of the monthly servicing payable by Series 1999-1 will be
funded from collections of finance charge receivables allocated to Series
1999-1, and will be paid each month from the amount so allocated. Neither the
trust nor the Series 1999-1 certificateholders will have any obligation to pay
the portion of the servicing fee allocable to the Seller Interest or any other
certificate series or receivables purchase series.
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The servicer will pay, from its servicing compensation, expenses
incurred in connection with servicing the receivables including the fees and
disbursements of the trustee and the subservicer and independent public
accountants. However the servicer is not liable for federal, state and local
income and franchise taxes, if any, of the trust.
RESIGNATION OF SERVICER; SCOPE OF INDEMNITIES
The servicer may not resign from its duties unless performance of its
duties is no longer permissible under applicable law, and there is no reasonable
action which the servicer could take to make the performance permissible. No
resignation will become effective until the trustee or a successor servicer has
assumed the servicer's duties under the pooling agreement. Spirit of America,
Inc., as servicer, has delegated some of its servicing duties to Alliance Data
Systems, Inc. However, delegation of its duties will not relieve the servicer of
its obligation to perform these duties.
The servicer will indemnify the trust, the trustee, and its officers,
directors, employees and agents, against loss, liability, expense, damage or
injury suffered or sustained by reason of any acts or omissions or alleged acts
or omissions of the servicer relating to the activities of the trust or the
trustee. The servicer will not indemnify the trust or trustee for expenses:
(a) for any action taken by the trustee at the request of any
investor certificateholders, any receivables purchasers or any
purchaser representative, or
(b) arising under any tax law, including any federal, state or
local income or franchise tax or any other tax imposed on or measured
by income, or any related interest or penalties required to be paid by
the trust.
The seller also indemnifies the trust and the trustee, and the
officers, directors, employees and agents of the trustee, against third party
claims and proceedings that arise from acts or omissions under the arrangements
created by the pooling agreement, any supplement or any receivables purchase
agreement. These claims could include a claim that the pooling agreement creates
a partnership under the New York Uniform Partnership Law.
None of the foregoing indemnities will cover any loss, liability,
expense, damage, injury or claim (a) caused by fraud, gross negligence, or
willful misconduct by the trustee, (b) for any action taken by the trustee at
the request of the investor certificateholders or receivables purchasers, or (c)
arising under any tax law, including any federal, state, local or foreign income
or franchise taxes or any other tax imposed on or measured by income, or any
related interest or penalties, required to be paid by the trust.
The seller, the servicer and their respective directors, officers,
employees or agents will not be under any other liability to the trust, the
trustee or any other person for any action taken, or for refraining from taking
any action, in good faith and without gross negligence. The servicer is not
required to appear in, prosecute or defend any legal action which is not
incidental to its servicing responsibilities and which, in its opinion, exposes
it to expense or liability.
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If the seller or the servicer are reorganized, including as a result of
a merger, consolidation or transfer of their assets, any person succeeding to
the business of the seller or the servicer, as the case may be, will be the
successor seller or servicer under the pooling agreement.
SERVICER DEFAULT
The servicer may be removed if a Servicer Default occurs and is
continuing. The notice of removal may be given by (1) the trustee or (2)
investor certificateholders and representatives of holders of purchased
interests representing more than 66 2/3% of the aggregate interests held by
investor certificateholders, holders of receivables purchase interests and
enhancement providers. This notice of removal must be sent to the servicer and,
if the notice is not given by the trustee, to the trustee.
The trustee will as promptly as possible appoint a successor servicer.
If no successor has been appointed and has accepted that appointment by the time
the servicer ceases to act, all authority, power and obligations of the servicer
under the pooling agreement will pass to the trustee.
If (1) the trustee is unable to obtain any bids from eligible successor
servicers, (2) the exiting servicer certifies that it cannot in good faith cure
the Servicer Default which gave rise to a transfer of servicing, and (3) the
trustee is legally unable to act as successor servicer, then the trustee will
offer the receivables for sale. The trustee will notify each investor
certificateholder, purchaser representative and enhancement provider of the
proposed sale of receivables, and will provide each receivables purchaser and
enhancement provider with an opportunity to bid on the receivables. The trustee
will also offer the seller a right of first refusal to purchase the receivables
on terms equal to the best purchase offer. The trustee will sell the receivables
only if it is able to obtain the minimum purchase price specified in the pooling
agreement. That purchase price is intended to cover the obligation of the trust
to its investors and related fees and expenses.
A "Servicer Default" means any of the following events:
(a) failure by the servicer: (1) to make any payment or
deposit or (2) to instruct the Trustee to make a required payment or
deposit, or to draw under an enhancement facility, in each case within
one business day after receipt by the servicer of written notice from
the trustee or any purchaser representative that that action is
required under the pooling agreement, a supplement or a receivables
purchase agreement;
(b) failure on the part of the servicer to perform any other
agreements of the servicer contained in the pooling agreement, any
supplement or any receivables purchase agreement which has a material
adverse effect on:
(1) the servicer's ability to collect the receivables
or otherwise perform its obligations; or
(2) the collectibility or value of the receivables;
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if that failure continues unremedied for a period of 45 days after written
notice of the failure, requiring the failure to be remedied, has been given to
the servicer by the trustee, or to the servicer and the trustee by investor
certificateholders whose investor certificates evidence not less than 25% of the
investor interest of any certificate series; or
(c) delegation by the servicer of its duties under the pooling
agreement, except as specifically permitted thereunder;
(d) any representation or warranty made by the servicer in the
pooling agreement, any supplement or any receivables purchase
agreement, or in any certificate, proves to have been incorrect when
made, and this breach has a material adverse effect on:
(1) the servicer's ability to collect the receivables
or otherwise perform its obligations; or
(2) the collectibility or value of the receivables,
if the representation, warranty or certification continues to be incorrect in
any material respect for a period of 45 days after written notice of that
failure, requiring the breach to be remedied, has been given to the servicer by
the trustee, or to the servicer and the trustee by investor certificateholders
whose investor certificates evidence not less than 25% of the investor interest
of any certificate series; or
(e) the occurrence of an Insolvency Event relating to the
servicer, after a 60 day grace period in the case of involuntary
proceedings against the servicer.
A delay in or failure of performance referred to in clause (a) above
for a period of 10 business days, or referred to under clause (b), (c) or (d)
for a cumulative period of 60 business days, will not constitute a Servicer
Default if that delay or failure could not be prevented by the exercise of
reasonable diligence by the servicer and that delay or failure was caused by
circumstances beyond the servicer's control.
If there is a total systems failure, a distribution date may be
postponed for up to 10 business days without default. A "total systems failure"
means a total failure of the computer system, including off-site backup systems,
of the servicer or the subservicer that contains records relating to the
receivables, if the failure would make it impossible or impracticable for the
servicer or the subservicer to perform the acts required in anticipation of a
distribution date. The servicer will not be relieved from using its best efforts
to perform its obligations in a timely manner, and the servicer will provide the
trustee with prompt notice of that failure or delay by it, together with a
description of the cause of the failure or delay and its efforts to perform its
obligations.
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REPORTS TO SERIES 1999-1 CERTIFICATEHOLDERS
The initial paying agent for Series 1999-1 will be the trustee.
On each distribution date, the paying agent will send each Series
1999-1 certificateholder a statement prepared by the servicer. The statement
will include information relating to the following:
- collections received during the preceding Due Period, and the
portion allocable to Series 1999-1,
- allocation percentages used to make allocations to Series
1999-1 and each class in Series 1999-1,
- the Class Investor Interest for each class in Series 1999-1,
- the aggregate outstanding balance of Accounts which were more
than 30, more than 60, more than 90 and more than 120 days
past due at the end of the preceding Due Period,
- losses, dilutions and charge-offs allocated to each class of
Series 1999-1 for the preceding Due Period,
- principal reallocations during the preceding Due Period, and
- Portfolio Yield for the preceding Due Period.
On or before January 31 of each calendar year, the trustee will furnish
to each person who at any time during the preceding calendar year was a
certificateholder of record a statement prepared by the servicer containing a
description of payments made to that certificateholder during the prior year,
together with other information to enable the certificateholder to prepare its
tax returns.
AGREED UPON PROCEDURES
The servicer is required to cause a firm of independent certified
public accountants to annually evaluate, according to procedures described in
the pooling agreement, the servicer's internal accounting controls for the
servicing of the Accounts. The accountants may also perform other services for
the servicer, the seller or the originator. The accountants will prepare a
report for the trustee.
The report will assume the accuracy of information provided by the
servicer's third party agents, and the accountants may qualify the report in a
manner that is typical for reports of this type. A copy of the report may be
obtained by any investor certificateholder upon written request of the trustee.
A new report will be prepared by May 30 of each year.
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The Servicer is also required to deliver an annual certificate signed
by its officer stating that, to the best of the officer's knowledge, the
servicer has fully performed its obligations under the pooling agreement
throughout the preceding year, or, if there has been a default in its
performance, specifying the nature and status of the default.
AMENDMENTS
The pooling agreement and the Series 1999-1 supplement may be amended
without the consent of the holders of Series 1999-1 certificates, so long as
either:
(a) the trustee receives (1) confirmation that the amendment
will not cause the ratings on the Series 1999-1 certificates to be
reduced or withdrawn, and (2) an opinion of counsel opining that the
amendment will not adversely affect, in any material respect, the
interests of any holder of Series 1999-1 certificates, or
(b) the amendment is made to conform the terms of the
supplement to the terms described in this prospectus.
The pooling agreement and any supplement, including the Series 1999-1
supplement, may be amended with the consent of investor certificateholders
representing at least 66-2/3% of the investor interest of each certificate
series adversely affected by the amendment and, if the amendment adversely
affects a receivables purchase series, the representative of the purchasers in
those series. Additionally, amendments having the following effects require the
consent of all, rather than just a majority, of the investor certificateholders
adversely affected:
(a) reducing the amount of distributions, or delaying the
timing of distributions, required to made on the certificates,
(b) changing the manner of calculating interest, the Loss
Amount or the series allocation percentage for any certificate series,
or
(c) reducing the percentage of outstanding interests required
to consent to an amendment to the pooling agreement or any supplement.
The pooling agreement or any supplement may also be amended to permit
the trust, or portion of the trust, to be treated as a FASIT without the consent
of any investor certificateholder if the seller provides the trustee with:
(1) an opinion of counsel opining that the amendment would (A)
permit the trust or a relevant portion of the trust to be treated as a
FASIT, (B) would not cause the trust to be classified, for U.S. federal
income tax purposes, as an association or publicly traded partnership
taxable as a corporation, and (C) would not cause or constitute an
event in which gain or loss would be recognized by any investor
certificateholder;
(2) a certificate that the amendment or modification would not
materially and adversely affect any investor certificateholder; and
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(3) confirmation that the amendment would not cause the
ratings on any certificate series to be reduced or withdrawn.
The servicer will furnish written notice of the substance of each
amendment to certificateholders adversely affected by an amendment promptly
following its execution.
LIST OF INVESTOR CERTIFICATEHOLDERS
Series 1999-1 certificateholders of record representing at least 10% of
the Series 1999-1 Investor Interest may have access, during business hours, to
the current list of investor certificateholders of the trust if the following
conditions are satisfied:
(1) the access is for purposes of communicating with investor
certificateholders about their rights under the pooling agreement,
(2) the request for access is in writing, and
(3) the certificateholders making the request have adequately
indemnified the trustee for its costs and expenses
The amendment provisions of the pooling agreement do not apply to the
issuance of a new series or the addition or removal of receivables from the
trust.
THE TRUSTEE
First Union National Bank is the trustee under the pooling agreement.
The Corporate Trust Department of First Union National Bank is located at 123 S.
Broad Street, Philadelphia, Pennsylvania 19109, telephone number 215/985-7585.
The seller, the servicer and their respective affiliates may from time
to time enter into other banking and trustee relationships with the trustee and
its affiliates. The trustee, the seller, the servicer and any of their
respective affiliates may hold Series 1999-1 certificates in their own names.
For purposes of meeting the legal requirements of some jurisdictions, the
trustee will have the power to appoint a co-trustee or separate trustees of all
or any part of the trust. All rights, powers, duties and obligations of the
trustee will be conferred or imposed upon the trustee and any separate trustee
or co-trustee jointly, or, in any jurisdiction in which the trustee is
incompetent or unqualified to act, singly upon each separate trustee or
co-trustee. Any separate trustee or co-trustee will exercise and perform its
rights, powers, duties and obligations solely at the direction of the trustee
under the pooling agreement.
The trustee may resign at any time, in which event the servicer will be
obligated to appoint a successor trustee. The servicer may also remove the
trustee if the trustee ceases to be eligible to act as trustee under the pooling
agreement, or if the trustee becomes insolvent. In these circumstances, the
seller or the servicer will be obligated to appoint a successor trustee. Any
resignation or removal of the trustee, does not become effective until
acceptance of the appointment by the successor trustee.
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DESCRIPTION OF THE PURCHASE AGREEMENT
OVERVIEW
The originator transfers receivables, together with related net
recoveries, insurance proceeds and other proceeds, to the seller pursuant to the
purchase agreement. Newly originated receivables are transferred each day, and
will continue to be transferred until termination of the purchase agreement. The
agreement may be terminated at the originator's election, upon 15 days' prior
written notice to the seller and the trustee or upon shorter notice if that
notice is acceptable to the trustee. The agreement will also automatically
terminate on the termination of the trust.
Under the purchase agreement, principal receivables originated after an
Insolvency Event occurs relating to the originator will not be conveyed to the
seller.
The originator has filed the financing statements, and has agreed to
file continuation statements, as are necessary to perfect the transfer to the
seller of the receivables. In addition, the originator has:
(a) indicated in its computerized pool index file, identifying
revolving credit card accounts of the originator, that receivables
created in connection with the Accounts have been transferred by the
originator to the seller and by the seller to the trustee; and
(b) delivered to the seller and the trustee a computer file or
microfiche or written list containing a true and complete list of all
Accounts, identified by account number, obligor name and address, and
setting forth the receivables balance on a specified date.
The originator has agreed not to alter its pool index file relating to
any account unless and until that account is no longer designated as an account
from which receivables will be transferred to the trust.
The originator and the seller have documented the transfer of
receivables under the purchase agreement as a sale. However, if the transfer is
deemed to be a financing arrangement instead, then the originator will be deemed
to have granted the seller a first priority, perfected security interest in the
receivables, all net recoveries on the receivables, all insurance proceeds and
other proceeds of the receivables.
PURCHASE PRICE FOR RECEIVABLES
The purchase price paid by the seller to the originator for each
receivable is currently 102% of the outstanding principal balance of that
receivable. The percentage used to calculate the purchase price may be adjusted
periodically, by agreement of the originator and the seller, to account for
changes in historical losses on the receivables and changes in the seller's
carrying costs.
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Seller will pay the originator for newly originated receivables on each
day. If, on any day, the amount of cash available to the seller from the trust
is less than the amount it owes to the originator, the seller may borrow the
difference from its affiliates. If borrowings are not available, payment of the
purchase price will be deferred. The deferred purchase price will accrue
interest at the prime rate published in The Wall Street Journal on the last
business day of the most recent Due Period.
The purchase price otherwise payable by the seller to the originator
will be reduced by the amount of dilution for which the originator is liable. If
the dilution exceeds the purchase price payable on any day when an early
amortization events exists or receivables are no longer being transferred to the
seller, the originator will be required to deposit the uncovered dilution amount
into the collection account. The deposit will be applied as if it were
collections on receivables.
REQUIRED REASSIGNMENT OF RECEIVABLES TO THE ORIGINATOR
Under the purchase agreement, the originator will make representations
and warranties regarding the receivables that are substantially similar to the
representations and warranties made by the seller to the trust under the pooling
agreement. If the Seller has an obligation under the pooling agreement to remove
receivables for breaches of its representations and warranties, the originator
will have a corresponding obligation under the purchase agreement to accept the
reassignment of the receivables. In this case, reconveyance will constitute the
seller's sole remedy for the breach by the originator of its representations and
warranties.
If any receivables, but less than the entire trust portfolio, are to be
reassigned to the originator, the originator will pay to the seller an amount
equal to the outstanding unpaid balance for the receivables so reassigned. The
originator will pay in cash if the seller is obligated to pay the trust in cash
for the related removal under the pooling agreement. Otherwise, the originator
will pay for reassigned receivables by reducing the purchase price that the
seller must pay for new receivables or the amount then owing for the deferred
purchase price of receivables.
MATERIAL COVENANTS
The originator agrees to perform its obligations under the cardholder
agreements relating to the Accounts and the cardholder guidelines, unless any
failure to comply or perform would not materially and adversely affect the
rights of the seller, trust, the investor certificateholders, any enhancement
provider or any receivables purchasers. The originator may change the terms of
the cardholder agreements or the cardholder guidelines in any way, including
reducing the required minimum monthly payment, changing the calculation of the
amount, or the timing, of charge-offs and the periodic finance charges and other
fees to be assessed on accounts, unless the change would have a material adverse
effect on the collectibility of the receivables. However, the originator may not
change the required minimum monthly payment or periodic finance charge unless
(a) it has received confirmation that the change will not cause the rating of
any outstanding certificates to be reduced or withdrawn, or (b) the changes are
mandated by applicable law.
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The originator has also agreed that:
(1) it will defend the rights of the seller in the receivables
against claims of third parties claiming through the originator, other
than liens for local taxes not yet due or being contested in good
faith;
(2) it will not convey any interest in the receivables to any
person other than the seller;
(3) it will give the trustee notice of changes which would
require modifications to the UCC filings made against the originator;
and
(4) it will take reasonable steps to make it apparent to third
parties that the seller is an entity with assets and liabilities
distinct from those of the originator, and the seller is not a division
of the originator.
ADDITION AND REMOVAL OF ACCOUNTS
If the seller is required under the pooling agreement to designate
additional Accounts, the originator may elect to so designate additional
Accounts, and convey receivables in the additional Accounts. These designations
will be covered by the same restrictions as are on the seller's ability to
designate Accounts under the pooling agreement as described in "The Pooling
Agreement--Addition of Accounts." The failure of the originator to transfer
receivables to the seller solely as a result of the unavailability of a
sufficient amount of eligible receivables will not constitute a breach of the
purchase agreement. However, a failure which has not been timely cured will
nevertheless result in the occurrence of an Early Amortization Event for Series
1999-1 and any other series that includes this event as an early amortization
event.
The originator may request seller to reacquire receivables from the
trust and to reconvey the receivables to the originator. The date of any removal
is called a "Removal Date." The following conditions must be satisfied for a
removal:
(1) the removal will not, in the reasonable belief of the
originator, cause an early amortization event to occur or result in the
failure to make any payment required for a series;
(2) the originator has delivered, for execution by the seller
and the trustee, a written assignment, together with a computer file or
microfiche or written list containing a list of the affected Accounts
and the aggregate amount of receivables in those Accounts;
(3) the originator will have represented and warranted that no
selection procedure believed by it to be materially adverse to the
investor certificateholders were utilized in selecting the assets to be
removed; and
(4) no early amortization event has occurred for any series.
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The originator will pay to the seller, for each removed receivable, a
reassignment price equal to the unpaid amount of that receivable in cash. The
cash will be deposited in the collection account.
DESCRIPTION OF THE SECURITY AGREEMENT
The originator has documented the transfers under the purchase
agreement as absolute sales. However, to protect certificateholders if the
transfers are determined to be financing arrangements, the originator has
executed a security agreement in favor of the trustee. Under this agreement, the
originator granted to the trustee a security interest in any rights it may have
in the receivables, net recoveries on the receivables, and all insurance
proceeds and other proceeds of the receivables.
The parties secured by the security agreement include the investor
certificateholders, including any holder of Series 1999-1 certificates, holders
of receivables purchase interests and enhancement providers for series issued by
the trust, excluding in each case affiliates of the originator.
If a holder of a Series 1999-1 certificate is a secured party, the
security agreement will secure its right to be paid amounts specified to be
payable to it under the supplement for Series 1999-1. The secured claims of
other secured parties will be the amounts owed to them under their respective
contracts with the trust. However, no beneficiary of the security agreement will
be entitled to receive an amount in excess of the amount it would have received
if the transfer of assets under the purchase agreement were determined to be an
absolute sale by the originator.
LEGAL ASPECTS OF THE RECEIVABLES
NATURE OF INTERESTS IN THE RECEIVABLES
The originator and the seller both have represented that the
receivables are either "accounts" or "general intangibles" within the meaning of
the UCC.
If the receivables constitute accounts, both the sale of the
receivables and the transfer of those receivables as security for an obligation
are governed by Article 9 of the UCC and the filing of financing statements is
required to perfect the transfer of the receivables by the originator to the
seller, and the seller to the Trust. Financing statements covering the
receivables have been filed in states where the originator and the seller are
located.
If the receivables constitute general intangibles and the transfer of
the receivables is deemed to be a transfer as security for an obligation, the
provisions of Article 9 of the UCC relating to the perfection of the transfer
are applicable to the same extent as they are applicable to receivables
constituting accounts.
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If the transfer of receivables constituting general intangibles is
deemed to be a sale, then the UCC does not apply. Applicable state statutes do
not set forth requirements for the sale of general intangibles, and case law
does not clearly establish the requirements. However, no further action should
be required to protect the interests of the trust from creditors of the
originator or the seller.
Liens may have arisen on the receivables, as assets of the originator
or the seller, after the pooling agreement was executed but before the
receivables are originated and transferred to the trust. Competing liens could
include federal tax and ERISA liens, which can obtain priority status against
newly originated assets. Statutory and judgment liens created under local law
may also gain priority over the claims of the trust. Each of the originator and
the seller has agreed to defend the trust against competing claims of this type,
but we cannot assure that they will always be able to do so.
CONSUMER PROTECTION LAWS
The relationship between the holder of a credit card and the card's
issuer is extensively regulated by federal and state consumer protection and
related laws. For credit cards issued by the originator, the most significant
laws include the federal Truth-in-Lending Act, Fair Credit Billing Act, Fair
Debt Collection Practices Act, Equal Credit Opportunity Act, Fair Credit
Reporting Act and Electronic Funds Transfer Act, as well as applicable state
laws in the originator's home jurisdiction and in the other states in which
cardholders reside.
These statutes impose disclosure requirements when a credit card
account is advertised, when it is opened, at the end of monthly billing cycles
and at year end. These statutes also prohibit discriminatory practices in
extending credit and impose limitations on the type of account-related charges
that may be assessed. Federal legislation requires credit card issuers to
disclose to consumers the interest rates, cardholder fees, grace periods and
balance calculation methods associated with their credit card accounts. In
addition, cardholders are entitled under current laws to have payments and
credits applied to the credit card account promptly, to receive prescribed
notices and to require billing errors to be resolved promptly.
Applicable laws, including the laws described above, may limit the
servicer's ability to collect amounts owing on the receivables regardless of any
act or omission on the part of the originator, the servicer or their affiliates.
For example, under the federal Fair Credit Billing Act, a credit card issuer is
subject to all claims, other than tort claims, and defenses arising out of
transactions in which: (1) a credit card is used as a method of payment or
extension of credit, (2) the obligor has made a good faith attempt to obtain
satisfactory resolution of a disagreement relative to the transaction from the
person honoring the credit card, (3) the amount of the initial transaction
exceeds $50, and (4) the place where the initial transaction occurred was in the
same state as the cardholder's mailing address or within 100 miles of that
address. These statutes further provide that in some cases cardholders cannot be
held liable for, or the cardholder's liability is limited for, charges to the
credit card account that result from unauthorized use of the credit card.
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Additional consumer protection laws may be enacted that would impose
requirements on the making, enforcement and collection of consumer credit loans.
Any new laws or rulings that may be adopted, and existing consumer protection
laws, may adversely affect the ability to collect on the receivables or maintain
the level of yield on the trust's portfolio. In addition, failure of the
servicer to comply with applicable legal requirements could adversely affect the
servicer's ability to enforce the receivables.
The OCC currently takes the position that a national bank, like the
originator, is entitled to apply the same interest rate in all states, without
regard to state-by-state usury limitations. Some jurisdictions may attempt to
require out-of-state credit card issuers to comply with that jurisdiction's
consumer protection laws, including laws limiting the charges imposed by these
credit card issuers. If it were determined that out-of-state credit card issuers
must comply with a jurisdiction's laws limiting the charges imposed by credit
card issuers, this determination could have an adverse impact on a originator's
credit card operations and on the earnings of the trust.
Application of federal and state bankruptcy and debtor relief laws,
including the Soldiers' and Sailors' Civil Relief Act of 1940, could affect the
interests of the holders of the Series 1999-1 certificates if the protection
provided to debtors under these laws result in receivables of the trust being
written off as uncollectible.
The trust may be liable for violations of consumer protection laws that
apply to the receivables transferred to it, either as assignee from the
originator or the seller for obligations arising before the transfer or as a
party directly responsible for obligations arising after the transfer. In
addition, a cardholder may be entitled to assert these violations by way of
set-off against his obligation to pay the trust amounts owing under his Account.
The originator and the seller have warranted that receivables transfer
to the trust are created in compliance with the requirements of applicable law,
and are required to repurchase receivables as to which this warranty is
breached. However, we cannot assure that they will always be able to do so.
CLAIMS AND DEFENSES OF CARDHOLDERS AGAINST THE TRUST
The provisions of the UCC apply to the trust if the trustee is deemed
to have acquired a security interest in the receivables transferred to it. The
UCC provides that:
(1) unless a cardholder has made an enforceable agreement not
to assert defenses or claims arising out of a transaction, the rights
of the trust, as assignee, are governed by all the terms of the
cardholder agreement between the originator and the cardholder, and to
rights of set off and to any other defense or claim of the cardholder
against the originator, and
(2) any cardholder is authorized to continue to pay the
originator until (a) the cardholder receives notification, reasonably
identifying the rights assigned, that the amount due or to become due
has been assigned and that payment is to be made to the
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trustee or the servicer and (b) if requested by the cardholder, the
trustee or the servicer has furnished reasonable proof of assignment.
No notice of the assignment of the receivable to the trust will be sent
to the cardholders obligated on the Accounts in connection with the transfer of
the receivables to the trust.
The Federal Trade Commission's Preservation of Claims and Defenses
Trade Regulation Rule has the effect of preserving claims and defenses that the
cardholder may have against the seller of goods or services, or against the
originator, when an account or any amount owed under an account is sold or
assigned to another creditor, including the trust.
INSOLVENCY LAWS AFFECTING TRANSFERS
In connection with the purchase agreement and the pooling agreement,
there are three transfers of Receivables to consider: the transfer by the
originator to the seller under the purchase agreement; the transfer by the
seller to the trustee under the pooling agreement; and the transfer by the
Originator to the Trustee under the Security Agreement. The originator and the
seller intend the transfer from the originator to the seller under the purchase
agreement to be a true sale. It is possible, however, that creditors or other
persons, including a trustee, receiver or conservator of the originator, or the
originator as debtor-in-possession, could argue that the transfer instead is a
grant of a security interest in the receivables. The seller intends the transfer
of receivables to the trustee to be either a true sale or the grant of a
security interest. The transfer by the originator to the trustee under the
security agreement is intended to be characterized as the grant of a security
interest.
The effect of characterizing any of the foregoing transfers as the
grant of a security interest was described in the following Risk Factors:
- Insolvency of Spirit of America National Bank could result in
accelerated, delayed or reduced payments;
- Insolvency of the seller, the servicer or Charming Shoppes
could result in accelerated, delayed or reduced payments; or
- Other liens could be given priority over your securities.
The following discussion is not intended to fully repeat the discussion
in the Risk Factors. Instead, it is intended to provide additional background on
the issues described in the Risk Factors.
Transfers by the Originator. Under the Federal Deposit Insurance Act, a
conservator or receiver for a federally insured bank can avoid security
interests granted by the bank. In its 1993 policy statement regarding security
interests, the FDIC stated that it would not seek to avoid a security interest
that was validly perfected before the insolvency of the bank if (1) the security
interest was not granted or taken in contemplation of insolvency or with the
intent to hinder,
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delay or defraud the bank or its creditors and (2) the security interest was not
granted for the benefit of any affiliate of the bank.
The transfer by the originator to the seller under the purchase
agreement could be treated as the grant of a security interest for the benefit
of the originator's affiliate, and therefore may be repudiated by the FDIC. To
provide additional protection to holders of Series 1999-1 certificates, the
originator has granted a security interest directly to the trustee under the
security agreement for the benefit of non-affiliate Series 1999-1
certificateholders. It is possible that a conservator or receiver for the
Originator could attempt to avoid this security interest and/or recover payments
to the seller or the trustee for receivables.
A conservator or receiver may also require the seller or the trustee to
establish its right to payments by submitting to and completing the
administrative claims procedure under the Federal Deposit Insurance Act, or
requesting a stay of proceedings regarding the originator as provided under the
Act. In these events, delays in payments on the Series 1999-1 certificates and
possible reductions in the amount of those payments could occur.
The Federal Deposit Insurance Act also provides that the FDIC may
repudiate contracts determined by it to be burdensome. If the FDIC were to
repudiate the purchase agreement, the seller and the trust would be limited to
actual direct compensatory damages. The security interests securing such claims
would be enforceable only to the extent of such damages.
The Act does not define the term "actual direct compensatory damages",
but requires such damages to be determined as of the date of the appointment of
the conservator or receiver. Measuring damages as of the date of the appointment
potentially creates a gap in the interest recoverable by the holder of the claim
against the insolvent bank for the rejection of a contract, if the rejection is
not contemporaneous with the date of appointment. Also, the FDIC might argue
that "actual direct compensatory damages" is an amount other than principal and
interest due under the rejected contract.
Comparable regulatory schemes do not create a clear precedent for
action to be taken by the FDIC. For example, issues similar to those raised by
the Federal Deposit Insurance Act have been addressed in contradictory ways in
the savings and loan industry. On April 10, 1990, the RTC, formerly a sister
agency of the FDIC, adopted a statement of policy with respect to the payment of
interest on direct collateralized borrowings of savings associations. The RTC
policy statement states that interest on such borrowings will be payable at the
contract rate up to the date of the redemption or payment, so that a secured
creditor could claim an amount equal to (1) the principal owed, plus (2)
interest at the contract rate of interest up to the date of such payment or
redemption, plus (3) any expense of liquidation if provided for in the contract
and to the extent secured by the collateral. However, in a case involving
zero-coupon bonds directly issued by a savings association which were repudiated
by the RTC, a federal district court in the Southern District of New York held,
in 1993, that the RTC was obligated to pay holders the fair market value of
repudiated bonds as of the date of repudiation. The fair market value was
different than the par value due to interest rate fluctuations.
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The FDIC itself has not adopted a policy statement on payment of
interest on collateralized borrowings of banks. However, the FDIC, in its 1993
policy statement regarding security interests, indicated that in the case of
repudiation of a secured obligation by the FDIC as conservator or receiver, the
liability for such repudiation is limited to actual direct compensatory damages,
determined as of the date of appointment.
The FDIC, as conservator or receiver, would also have the rights and
powers conferred under applicable state or Federal law, including laws regarding
bank insolvencies and applicable laws regarding preferences or fraudulent
conveyances. The appointment of a receiver or conservator could:
(1) adversely affect the originator's ability to repurchase
receivables or make cash deposits in respect of credits, adjustments or
fraudulent charges,
(2) result in administrative expenses of the receiver or
conservator having priority over the interest of the trust in the
receivables to a third party,
(3) prevent or require the sale, liquidation or disposition of
the receivables to a third party, or
(4) prevent or require the continued sale of receivables to
the seller.
If the transfer of receivables by the seller to the trust is deemed to
be the creation of a security interest and the seller became subject to
bankruptcy proceedings, the receivables would be part of the seller's bankruptcy
estate and subject to the jurisdiction of the bankruptcy court. To gain access
to the receivables, the trust would need court approval. The court has the power
to allow the seller to continue using proceeds of receivables, so long as
substitute collateral would be available to the trust. If the court were to
allow substitution of collateral in this way, the payments on the Series 1999-1
certificates could be delayed or ultimately reduced.
Additional Legal Concerns Regarding Transfers by the Seller. The seller
will warrant in the pooling agreement that the transfer of the receivables is
either a sale to the trustee or a grant of a first priority perfected security
interest in the receivables to the trustee. The seller will take actions under
the UCC in effect in its principal place of business, Delaware, to perfect the
trustee's interest in the receivables. Nevertheless, a tax or other statutory or
nonconsensual lien on the property of the originator or the seller arising
before an interest in a receivable is transferred to the trustee may have
priority over the trustee's interest in that receivable. If the seller were to
become a debtor in a bankruptcy case and a bankruptcy trustee or creditor of the
seller were to take the position that the transfer of an interest in the
receivables to the trustee should be recharacterized as a pledge of those
receivables, then delays in distributions on the Series 1999-1 certificates or
reductions in those distributions could result.
Upon the occurrence of an Early Amortization Event, if the Seller were
the subject of bankruptcy or insolvency proceedings, the bankruptcy court may
have the power to prevent the early sale, liquidation or disposition of the
receivables and the commencement of an Early Amortization Period.
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OTHER ISSUES UNDER INSOLVENCY LAWS
While the originator or any of its affiliates is the servicer, cash
collections held by that entity may sometimes be commingled and used for the
benefit of that entity prior to the date on which those collections are required
to be deposited in the collection account. If the servicing entity becomes
insolvent or if the statutory time period under the UCC has lapsed, the trust
may not have a perfected interest in those collections. In that event, the trust
may suffer a loss of all or part of those collections which may result in a loss
to Series 1999-1 certificateholders.
If a conservator, receiver or liquidator is appointed for the servicer,
and no Servicer Default other than that conservatorship, receivership,
liquidation or insolvency of the servicer exists, the conservator, receiver or
liquidator may have the power to prevent the trustee, investor
certificateholders and receivables purchasers from appointing a successor
servicer.
U.S. FEDERAL INCOME TAX CONSEQUENCES
OVERVIEW
The following is a summary of the material Federal income tax
consequences of the purchase, ownership and disposition of the offered
certificates. This summary is based upon current provisions of the Internal
Revenue Code of 1986, called the "Code", proposed, temporary and final Treasury
regulations under the Code, and published rulings and court decisions. The
current tax laws and the current regulations, rulings and court decisions may be
changed, possibly retroactively. The parts of this summary which relate to
matters of law or legal conclusions, represent the opinion of Mayer, Brown &
Platt, special Federal tax counsel for the seller, and are qualified in this
summary. We have not sought and will not seek any rulings from the IRS about any
of the Federal income tax consequences we discuss. We cannot assure you that the
IRS will not take positions contrary to those we discuss.
This summary of material Federal income tax consequences has been
prepared in compliance with the directive of the SEC that "plain English" be
used. As a result, we have excluded some of the complex technical rules which
would not apply to most investors but may apply to some specific types of
investors. For example, we do not discuss tax consequences to investors that are
subject to special treatment under the Federal income tax laws, including banks
and thrifts, insurance companies, regulated investment companies, dealers in
securities, holders that will hold the offered certificates as a position in a
"straddle" for tax purposes or as a part of a "synthetic security" or
"conversion transaction" or other integrated investment comprised of the offered
certificates and one or more other investments, foreign investors, trusts and
estates and pass-through entities with any of these types of investors as equity
holders. Further, we do not furnish information in this summary in the level of
detail or with the attention to an investor's specific tax circumstances that
would be provided by an investor's own tax advisor. Additionally, the discussion
is limited to the federal income tax consequences to initial investors and not
to purchasers in the secondary market. Because this summary of material Federal
income tax consequences is intended to be general in nature, we recommend that
prospective
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investors consult with their own tax advisors about the Federal, state, local,
foreign and any other tax consequences to them of the purchase, ownership and
disposition of the notes.
CHARACTERIZATION OF THE CERTIFICATES AND THE TRUST
In the opinion of Mayer, Brown & Platt, the trust will not be
classified as an association or publicly traded partnership taxable as a
corporation for Federal income tax purposes. Mayer, Brown & Platt is also of the
opinion that, based on the substantive terms of the offered certificates, the
offered certificates will be treated as indebtedness for Federal income tax
purposes.
In general, whether for Federal income tax purposes a transaction
constitutes a sale of property or a loan which is secured by the property, is a
question of fact, and is based upon the economic substance of the transaction
rather than its form or label. The primary factor in determining whether the
substance of a transaction is a sale or a loan is whether the person who has
purchased the property or made a loan secured by the property has assumed the
risk of loss from the property and has obtained the benefits of ownership of the
property. The intention of the parties is another important factor in
determining whether a transaction will be treated as a sale or a loan for
Federal income tax purposes. The seller expresses in the pooling agreement its
intent that for federal, state and local income and franchise tax purposes, the
offered certificates will be indebtedness. Further, the seller, the servicer and
each initial and subsequent investor, by acquiring an interest in an offered
certificate, agrees or will be deemed to agree to treat the offered certificates
as indebtedness for Federal, state and local income or franchise tax purposes.
Based on its analysis of the substance of the transaction contemplated
in this Prospectus and the parties' intentions, Mayer, Brown & Platt has
concluded that the purchasers of the offered certificates will be treated as
making a loan to the seller secured by the receivables. Therefore, Mayer, Brown
& Platt is of the opinion that the offered certificates will be treated as debt
for Federal income tax purposes. However, no transaction closely comparable to
that contemplated in this Prospectus has been the subject of any Treasury
regulation, revenue ruling or judicial decision. Prospective investors should
also be aware that opinions of counsel are not binding on the IRS, and the IRS
could successfully challenge treatment of the offered certificates as
indebtedness for Federal income tax purposes.
Except as otherwise expressly indicated, the remaining discussion
assumes that the offered certificates will be treated as debt for Federal income
tax purposes and that payments on the offered certificates are denominated in
U.S. dollars.
TAXATION OF INTEREST INCOME OF CERTIFICATEHOLDERS
If the offered certificates are not treated as issued with "original
issue discount" or "OID", investors will be required to include the stated
interest on the offered certificates in income either when received or accrued,
according to their method of tax accounting. The offered certificates will not
be treated as issued with OID if (1) the interest payable on the offered
certificates meets the requirements for "qualified stated interest" under
Treasury Regulations relating to OID, and (2) any excess of the principal amount
of the offered
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certificates over the issue price of the offered certificates does not exceed a
de minimis amount. Qualified stated interest generally includes interest that is
payable unconditionally at least annually at a single fixed rate that
appropriately takes into account the length of time between payments. It is
uncertain whether interest payable on the offered certificates will be treated
as qualified stated interest. A de minimis amount is defined by Treasury
Regulations as 1/4% of the principal amount of the offered certificates
multiplied by the number of full years included in their term.
If the offered certificates are treated as issued with OID, then the
excess of the payments other than "qualified stated interest" over the original
issue price for the offered certificates will constitute OID. The original issue
price for the offered certificates will be the initial offering price at which a
substantial amount of the offered certificates are sold to the public. The owner
of an offered certificate must include OID, if any, in income as interest over
the term of the certificate under a constant yield method. In general, OID must
be included in income in advance of the receipt of cash representing that
income. Further, under the Code, special rules relating to OID, market discount
and acquisition premium apply to debt obligations which may be accelerated due
to prepayments of obligations securing the debt obligation. It is uncertain
whether these special rules apply to the offered certificates. If they were to
apply, the seller would calculate and report OID, if any, based upon a
reasonable prepayment assumption.
A subsequent investor who purchases an offered certificate for less
than or more than the adjusted issue price of an offered certificate will be
subject to special rules. A subsequent investor who purchases an offered
certificate for less than the adjusted issue price of the offered certificate,
which is referred to as market discount, may be subject to the "market discount"
rules of the Code. These rules provide, in part, that gain attributable to
accrued market discount will be treated as ordinary income upon the receipt of
partial principal payments, or upon the sale or disposition of the offered
certificate. These rules also provide for the deferral of interest deductions
related to debt incurred to acquire or carry the offered certificate. A
subsequent investor who purchases an offered certificate for more than the
adjusted issue price of the offered certificate, which is referred to as a
premium, may elect to amortize and deduct this premium over the remaining term
of the offered certificate pursuant to Section 171 of the Code.
SALE OF A CERTIFICATE
An investor who disposes of an offered certificate by sale, exchange,
redemption or otherwise will recognize gain or loss equal to the difference
between the amount of cash and the fair market value of any property received,
other than amounts attributable to, and taxable as, accrued interest, and the
investor's adjusted tax basis in the offered certificate. In general, the
adjusted tax basis of an offered certificate will equal the investor's cost for
the offered certificate. Any gain or loss will generally be long-term capital
gain or loss, provided that the offered certificate was held as a capital asset
for more than one year. The maximum ordinary income tax rate for individuals
exceeds the maximum long-term capital gains rate for individuals. Any realized
capital losses may generally be used by a corporate taxpayer only to offset
capital gains and by an individual taxpayer only to the extent of capital gains
plus $3,000 of other income.
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POSSIBLE CLASSIFICATION AS A PARTNERSHIP OR AS AN ASSOCIATION TAXABLE AS A
CORPORATION
The opinions of Mayer, Brown & Platt that the trust will not be treated
as an association or publicly traded partnership taxable as a corporation and
that the offered certificates will be treated as debt are not binding on the
courts or the IRS. Further, the IRS could assert that, for purposes of the Code,
the transactions contemplated in this Prospectus constitute a sale of the
receivables, or an interest therein, to the investors and that the legal
relationship between the seller and some or all of the investors resulting from
the transactions is a partnership, including a publicly traded partnership, or a
publicly traded partnership taxable as a corporation. The seller currently does
not intend to comply with the Federal income tax reporting requirements that
would apply if any offered certificates were treated as interests in a
partnership or a publicly traded partnership taxable as a corporation.
If a partnership between the seller and investors were held to exist,
the partnership itself would not be required to pay Federal income tax. Rather,
the partners of the partnership, including the investors, would be taxed
individually on their distributive shares of the partnership's income, gain,
loss, deductions and credits. The amount and timing of items of income and
deductions of an investor could differ if the offered certificates were held to
constitute partnership interests, rather than debt. Moreover, unless the
partnership were treated as engaged in a trade or business, an individual
investor's share of expenses of the partnership would be miscellaneous itemized
deductions that, in the aggregate, are allowed as deductions only to the extent
they exceed two percent of the individual's adjusted gross income, and could be
reduced under Section 68 of the Code if the individual's adjusted gross income
exceeded specified limits. Furthermore, these deductions would be eliminated
altogether for purposes of the alternative minimum tax. As a result, the
individual might be taxed on a greater amount of income than the stated rate on
the offered certificates. Finally, if a partnership were held to exist, all or a
portion of any taxable income allocated to an investor that is a pension,
profit-sharing or employee benefit plan or other tax-exempt entity, including an
individual retirement account, may constitute "unrelated business taxable
income" which generally would be taxable to the tax-exempt investor under the
Code.
If it were determined that a transaction created an entity classified
as a publicly traded partnership taxable as a corporation, the trust would be
required to pay Federal income tax at corporate income tax rates on its income,
and may have to pay certain state and local taxes, which would reduce the
amounts available for distribution to the investors. If the offered certificates
were treated as partnership interests in a publicly traded partnership, taxable
as a corporation, distributions to the investors generally would not be
deductible in computing the taxable income of the publicly traded partnership.
Also, cash distributions to the investors generally would be treated as
dividends for tax purposes.
FASIT LEGISLATION
Recent legislation created a new type of entity for Federal income tax
purposes called a "financial asset securitization investment trust" or "FASIT."
Arrangements similar to the trust may elect to be treated as a FASIT. A FASIT
election would enable the trust to avoid Federal income taxation and to issue
securities, similar to the offered certificates, which would be treated
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as debt for Federal income tax purposes. If specified in the related Supplement,
the trust may make an election for newly-authorized trust interests to be
treated as interests in a FASIT. The pooling agreement may contain any of these
terms and provide for the issuance of certificates on such terms and conditions
as are permitted to a FASIT and described in the related Supplement. In
addition, the pooling agreement or any Supplement, including the Series 1999-1
Supplement, may be amended to permit a FASIT election to be made for the trust,
and to make the modifications to the pooling agreement and any Supplement as may
be permitted by the making of a FASIT election. It is not known whether the
seller will or will not cause a FASIT election to be made with respect to the
trust or any certificate series, or amend the pooling agreement or any
Supplement in connection with any election.
Although the FASIT legislation was effective as of September 1, 1997,
many technical issues have not been addressed by Treasury regulations.
Transition rules permit an entity in existence on or after August 31, 1997, like
the trust, to elect FASIT status. However, it is not clear how outstanding
interests of an electing entity would be treated after an election. Thus, it is
not clear how the offered certificates would be treated if the trust made a
FASIT election. Therefore, as a condition to making a FASIT election, the seller
must provide the trustee with the following:
(1) an opinion of counsel stating that any amendment permitting a
FASIT election: (a) would permit the trust or a relevant portion
thereof to be treated as a FASIT, (b) would not cause the trust to be
classified as an association or publicly traded partnership taxable as
a corporation for Federal income tax purposes, (c) would not cause or
constitute an event in which gain or loss would be recognized by any
holder of investor certificates in the trust, including a holder of
offered certificates, and (d) would not materially or adversely affect
the tax characterization of the offered certificates; and
(2) a certificate that the amendment would not materially and adversely
affect any holder of an interest in any certificate series, receivables
purchase series or any enhancement provider.
Prospective investors should consult their tax advisors about the effects of a
FASIT election upon them.
FOREIGN INVESTORS
The following information describes the U.S. Federal income tax
treatment of investors that are not United States persons, or "Foreign
Investors", if the offered certificates are treated as debt. The term "Foreign
Investor" means any person who is not:
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision
thereof,
(3) an estate, the income of which is includible in gross income for
United States Federal income tax purposes, regardless of its
source, or
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(4) a trust if a U.S. court is able to exercise primary supervision
over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions
of the trust.
Tax would be withheld from payments of interest, including OID, paid to
a Foreign Investor at a rate of 30% unless (1) the income is "effectively
connected" with the conduct by the Foreign Investor of a trade or business in
the United States as evidenced by an IRS Form 4224 or new IRS Form W-8ECI,
signed by the investor or its agent; (2) the Foreign Investor delivers an IRS
Form 1001 or new IRS Form W-8BEN, signed by the investor or its agent, claiming
exemption from withholding or a reduced rate of withholding under an applicable
tax treaty; or (3) the Foreign Investor and each securities clearing
organization, bank, or other financial institution that holds the offered
certificates on behalf of the customer in the ordinary course of its trade or
business, in the chain between the investor and the United States person
otherwise required to withhold the United States tax, complies with applicable
identification requirements, and the investor does not actually or
constructively own 10% or more of the voting stock of the seller and is not a
controlled foreign corporation with respect to the holder of the offered
certificates. Applicable identification requirements generally will be satisfied
if there is delivered to a securities clearing organization and to the United
States entity otherwise required to withhold tax an IRS Form W-8 or new IRS Form
W-8BEN signed under penalties of perjury by the investor, stating that the
investor is not a United States person and providing the investor's name and
address. In the case of (1), (2) or (3) above, the appropriate form will be
effective provided, that (a) the applicable form is delivered pursuant to
applicable procedures and is properly transmitted to the United States entity
otherwise required to withhold tax, and (b) none of the entities receiving the
form has actual knowledge that the investor is a United States person.
An investor that is a nonresident alien or foreign corporation will not
be liable for United States Federal income tax on gain realized upon the sale,
exchange, or redemption of an offered certificate, if (1) this gain is not
effectively connected with the conduct of a trade or business in the United
States, (2) in the case of an individual foreign investor, the investor is not
present in the United States for 183 days or more during the taxable year of the
sale, exchange, or redemption, and (3) in the case of gain representing accrued
interest, the conditions described in the last paragraph are satisfied.
If the trust were reclassified as a partnership that is not taxable as
a corporation, a Foreign Investor might be required to file a U.S. Federal
income tax return and pay tax on its share of partnership income at regular
United States rates, including the branch profits tax in the case of a Foreign
Investor that is a corporation. Withholding tax, at the current rate of 39.6% in
the case of individuals and 35% in the case of corporations would also be
deducted from a Foreign Investor's share of the partnership's "effectively
connected taxable income." If the offered certificates were recharacterized as
equity interests in a publicly traded partnership taxable as a corporation, tax
would be withheld from distributions on the offered certificates treated as
dividends generally at a rate of 30% unless reduced by an applicable treaty or
other exemption.
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New Withholding Regulations. The Treasury Department has issued new
withholding regulations containing modifications to the withholding, backup
withholding and information reporting rules described herein. For example,
persons currently required to file Form W-8 or Form 1001 will be required to
file new Form W-8BEN and persons currently required to file Form 4224 will be
required to file new Form W-8ECI. The New Withholding Regulations will generally
be effective for payments made after December 31, 1999, but Forms W-8, 1001 and
4224 filed before that date will continue to be effective until the earlier of
December 31, 2000 or their current expiration date. Prospective investors are
advised to consult their tax advisors regarding the New Withholding Regulations.
BACKUP WITHHOLDING
Backup withholding taxes will be imposed on payments to any investor,
other than an exempt holder like a corporation, tax exempt organization,
qualified pension and profit sharing trust, individual retirement account or
nonresident alien who provides certification of their status as nonresident, at
the rate of 31% with respect to interest paid, and original issue discount
accrued, if any, on the offered certificates if the investor, upon issuance,
fails to supply the Trustee or its broker with a certified statement, under
penalties of perjury, containing the investor's name, address, correct taxpayer
identification number, and a statement that it is not subject to backup
withholding. Information returns will be sent annually to the IRS and to each
investor stating the amount of interest paid, and original issue discount
accrued, if any, on the offered certificates and the amount of tax withheld from
payments on the certificates. We advise investors to consult with their tax
advisors about their eligibility for, and the procedure for obtaining, exemption
from backup withholding.
OHIO STATE TAX CONSEQUENCES
Material Ohio tax consequences to the trust and of an investment in the
offered certificates are described below. This discussion does not address every
aspect of the Ohio tax laws that may be relevant to some investors in light of
their specific circumstances or their special treatment under Ohio law. The tax
consequences arising to the investors under the laws of other jurisdictions are
also not discussed in this summary. Therefore, prospective certificate owners
are advised to consult their own tax advisors in determining the state,
including Ohio, and local tax consequences to them as a result of purchasing,
owning and disposing of the certificates.
The following summary is based upon existing provisions of the Ohio
Revised Code pertaining to Ohio taxation, the regulations under these
provisions, relevant judicial rulings, and administrative decisions and
pronouncements, all of which are may be changed, which change may be applied
retroactively. There are no existing Ohio authorities addressing similar
transactions or involving a trust that issues interests with terms similar to
those of the offered certificates, and no ruling addressing the matters
discussed below is being sought from Ohio authorities. Accordingly, there can be
no assurances that Ohio authorities would agree with this summary.
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Except as noted below, in the opinion of Squire, Sanders & Dempsey
L.L.P., special Ohio tax counsel, the trust will not be subject to the Ohio
personal income tax, the Ohio corporate franchise tax, or the Ohio tax on
dealers in intangibles, as those taxes do not apply to trusts of the type used
in this transaction.
In general, the treatment of the offered certificates for federal
income tax purposes should apply for Ohio tax purposes. Thus, if the
certificates are treated as indebtedness for federal income tax purposes, they
would be treated as indebtedness for Ohio income tax purposes. As a result,
investors not otherwise required to pay Ohio tax would not be required to pay
Ohio tax solely as a result of their ownership of the certificates.
For purposes of determining Ohio taxable income, Ohio has adopted the
Code and the regulations under the Code. Therefore, the Ohio tax consequences to
investors who are Ohio residents or who are otherwise required to pay Ohio
personal income tax, Ohio corporate franchise tax, or the Ohio tax on dealers in
intangibles will be the same as the consequences to those investors for federal
income tax purposes. Accordingly, the stated interest on the certificates will
be taxable as ordinary interest income, and a gain or loss on the sale of
disposition of the certificates will be capital gain or loss for Ohio tax
purposes. See "U.S. Federal Income Tax Consequences".
If some or all of the offered certificates are treated as equity
interests in a partnership, other than a "publicly traded partnership", for
federal income tax purposes, those certificates should be treated as partnership
interests for Ohio personal income tax and corporate franchise tax purposes. In
that case, Ohio could view the partnership as doing business in Ohio, but the
partnership would not itself be taxed in Ohio. However, each item of income,
gain, loss, deduction and credit generated through the ownership of the
receivables by the partnership would be passed through to the certificate owners
as partners of the partnership, who would then be responsible for any income or
franchise tax imposed at the partner level. Nonresident individual partners who
receive allocations of the partnership's Ohio taxable income would be taxed in
Ohio on that income. Corporate partners generally would be required to take into
account income from their partnership interests for purposes of calculating the
amount of their income apportioned or allocated to Ohio. However, corporate
limited partners not otherwise required to pay the Ohio corporate franchise tax
should not be required to pay that tax by reason of mere ownership of the
offered certificates.
If the offered certificates are instead treated for federal income tax
purposes as equity interests in an entity classified as an association taxable
as a corporation or in a "publicly traded partnership" taxable as a corporation,
the entity would be required to pay the Ohio corporate franchise tax on its
taxable income generated by ownership of the receivables. Investors probably
would be taxed on distributions by the entity on their offered certificates in
the same way they are taxed on regular corporate dividends and other
distributions. The equity-level taxes could result in reduced distributions to
all investors in that case. If corporate treatment were to apply, an investor
not otherwise taxed in Ohio should not be required to pay Ohio tax on
distributions from the entity as a result of its mere ownership of the offered
certificates.
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In addition, Ohio imposes a withholding tax on a "qualifying
investor's" distributive share of the Ohio apportioned income of a "qualifying
pass-through entity." If the transaction is recharacterized by federal
authorities as creating a partnership that is doing business in Ohio, it is
likely that the Ohio authorities would also treat the trust as a partnership, in
which case the trust may be required to withhold and pay over an Ohio tax if
offered certificates are held by "qualifying investors." In general, a
"qualifying investor" is an individual or entity not otherwise required to pay
the Ohio personal income tax, corporate franchise tax or Ohio dealers in
intangibles tax. If the trust is considered to be a "qualifying pass-through
entity," then it would be required to pay an entity-level 8.5% tax on the net
sum of the distributive share of trust income apportioned to Ohio of
nonindividual investors who are "qualifying investors," and would be required to
withhold 5% of the net sum of the distributive share of trust income apportioned
to Ohio of individual investors who are "qualifying investors." The amount of
the tax paid or withheld may be claimed as a credit against the qualifying
investor's Ohio income or franchise tax liability in an amount equal to the
qualifying investor's proportionate share of the lesser of the tax due or paid.
ERISA CONSIDERATIONS
When we refer to a "Benefit Plan " we mean (1) any employee benefit
plan, trust or account (including an individual retirement account) within the
meaning of Section 3(3) of Title I of the Employee Retirement Income Security
Act of 1974, whether or not subject to that law and (2) any plan that is
described in Section 4975(e)(1) of the Code.
Offered certificates may not be acquired by or for the account of (1) a
Benefit Plan or (2) any entity whose underlying assets include any Benefit Plan
assets because of a Benefit Plan's investment in that entity.
By accepting and holding an offered certificate, an investor will be
deemed to have represented and warranted that either (1) it is not a Benefit
Plan, and that its acquisition and holding of an offered certificate complies
with the foregoing restrictions on Benefit Plan assets or (2) it is an insurance
company purchasing the offered certificates with assets of its general account,
and at the time of acquisition and throughout the period of holding, (A) it
meets all of the requirements of and is eligible for exemptive relief under
Prohibited Transaction Class Exemption 95-60 and (B) less than 25% of the assets
of its general account are Benefit Plan assets.
UNDERWRITING
The seller has agreed to sell and Bear, Stearns & Co., Inc. and
[Others] have agreed to purchase the principal amount of the Class A
certificates listed in the table below. Additionally, the seller has agreed to
sell and Bear, Stearns & Co., Inc. has agreed to purchase the entire principal
amount of the Class B certificates. The terms of these purchases are governed by
an underwriting agreement between the seller and Bear, Stearns & Co, for itself
and as representative of all underwriters.
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<PAGE> 115
<TABLE>
<CAPTION>
Principal Amount of Underwriter's Price to
Underwriters of Class A Certificates Class A Certificates Commission Public
- ------------------------------------ -------------------- ---------- ------
<S> <C> <C> <C>
Bear, Stearns & Co. Inc.
[Others]
</TABLE>
<TABLE>
<CAPTION>
Principal Amount of Underwriter's Price to
Underwriters of Class B Certificates Class A Certificates Commission Public
- ------------------------------------ -------------------- ---------- ------
<S> <C> <C> <C>
Bear, Stearns & Co. Inc.
</TABLE>
The underwriters have agreed to purchase all of the offered
certificates if any of the offered certificates are purchased.
Bear, Stearns & Co. Inc., as representative of the Class A
underwriters, has advised the seller that the Class A underwriters propose
initially to offer the Class A certificates to the public at the public offering
price stated on the cover page of this prospectus, and to some dealers at that
price, less a concession of up to [____]% for each Class A certificate. The
Class A underwriters may allow, and those dealers may reallow, concessions up to
[____]% of the principal amount of the Class A certificates to some brokers and
dealers.
Bear, Stearns & Co Inc. has advised the seller that it proposes
initially to offer the Class B certificates to the public at the public offering
price stated on the cover page of this prospectus, and to some dealers at that
price, less a concession not in excess of [____]% for each Class B certificate.
Bear, Stearns & Co Inc. may allow, and those dealers may reallow, concessions of
up to [____]% of the principal amount of the Class B certificates to some
brokers and dealers.
Additional offering expenses are estimated to be $[____________].
The seller, the servicer and Fashion Service Corp. will indemnify the
underwriters against liabilities caused by (1) any untrue statement or alleged
untrue statement of a material fact contained in this prospectus or the related
registration statement or (2) any omission or alleged omission to state a
material fact required to be stated in this prospectus or the related
registration statement or necessary to make the statements in this prospectus or
the related registration statement not misleading. The seller, the servicer and
Fashion Service Corp., will not, however, indemnify the underwriters against
liabilities caused by any untrue statement or omission, real or alleged, made in
reliance upon and in conformity with information relating to and provided by any
underwriter for use in this prospectus and the related registration statement.
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The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids for the offered
certificates in accordance with Regulation M under the Exchange Act.
- Over-allotment transactions involve syndicate sales in excess
of the offering size, which creates a syndicate short
position.
- Stabilizing transactions permit bids to purchase the offered
certificates so long as the stabilizing bids do not exceed a
specified maximum.
- Syndicate covering transactions involve purchases of the
offered certificates in the open market after the distribution
has been completed in order to cover syndicate short
positions.
- Penalty bids permit the underwriters to reclaim a selling
concession from a syndicate member when the offered
certificates originally sold by that syndicate member are
purchased in a syndicate covering transaction.
These transactions may cause the prices of the offered certificates to
be higher than they would otherwise be in the absence of those transactions.
Neither the seller nor any of the underwriters represent that the underwriters
will engage in any of those transactions or that those transactions, once
commenced, will not be discontinued without notice at any time.
LEGAL MATTERS
Certain legal matters relating to the issuance of the offered
certificates will be passed upon for the Seller by Colin D. Stern, Executive
Vice President and General Counsel of Charming Shoppes, and by Mayer, Brown &
Platt, Chicago, Illinois, special counsel to the Seller. Certain legal matters
relating to the federal tax consequences of the issuance of the offered
certificates will be passed upon for the Seller by Mayer, Brown & Platt. Certain
legal matters relating to the issuance of the offered certificates will be
passed upon for the underwriters by Orrick, Herrington & Sutcliffe LLP,
Washington, D.C.
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<PAGE> 117
CERTIFICATE RATINGS
Any rating of your certificates by a rating agency will indicate:
- its view on the likelihood that you will receive interest
payments and principal payments by the Series 1999-1
termination date; and
- its evaluation of the receivables and the availability of the
credit enhancement for your certificates.
Among the things a rating will not indicate are:
- the likelihood that principal payments will be paid on a
scheduled date prior to the Series 1999-1 termination date;
- the likelihood that an early amortization event will occur; -
the likelihood that a United States withholding tax will be
imposed on non-U.S. certificateholders;
- the marketability of your certificates;
- the market price of your certificates; or
- whether your certificates are an appropriate investment for
any purchaser.
A rating will not be a recommendation to buy, sell or hold the
certificates. A rating may be lowered or withdrawn at any time.
The seller will request a rating of the Class A certificates from at
least two nationally recognized rating agencies. The seller will request a
rating of the Class B certificates from at least one nationally recognized
rating agency. Rating agencies other than those requested could assign a rating
to the certificates, and its rating could be lower than any rating assigned by a
rating agency chosen by the seller.
REPORTS TO CERTIFICATEHOLDERS
The Servicer will prepare monthly and annual reports that will contain
information about the trust. The financial information contained in the reports
will not be prepared in accordance with generally accepted accounting
principals. Unless and until definitive certificates are issued, the reports
will be sent to Cede & Co., the nominee of DTC and the registered holder of the
certificates. No financial reports will be sent to you. See "Description of the
Certificates--Book-Entry Registration," and "--Reports to Series 1999-1
Certificateholders."
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the certificates with the
SEC. This prospectus is part of the registration statement, but the registration
statement includes additional information.
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<PAGE> 118
The Servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the trust.
You may read and copy any reports, statements or other information we
file at the SEC's public reference room in Washington, D.C. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
SEC. Please call the SEC at (800) SEC-0330 for further information on the
operation of the public reference rooms. Our SEC filings are also available to
the public on the SEC internet site (http://www.sec.gov).
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<PAGE> 119
INDEX OF TERMS FOR PROSPECTUS
PAGE
Accounts......................................................................31
Addition Date.................................................................79
Available Funds...............................................................52
Available Principal Collections...............................................46
Base Rate.....................................................................63
Benefit Plans................................................................109
Charge-Offs...................................................................62
Charming Shoppes..............................................................36
Class A Cap Payment...........................................................45
Class A Monthly Principal.....................................................47
Class A Underwriters.........................................................109
Class Additional Interest.....................................................44
Class Allocation..............................................................50
Class Available Funds.........................................................52
Class B Cap Payment...........................................................45
Class B Monthly Principal.....................................................47
Class B Underwriter..........................................................109
Class Certificate Rate........................................................43
Class Deficiency Amount.......................................................44
Class Fixed Allocation........................................................51
Class Floating Allocation.....................................................51
Class Investor Charge-Off.....................................................62
Class Monthly Interest........................................................43
Class Servicing Fee...........................................................52
Code.........................................................................101
Controlled Amortization Amount................................................47
Controlled Amortization Period................................................46
Controlled Payment Amount.....................................................47
Controlling Certificateholders................................................63
Cumulative Principal Shortfall................................................60
Defaulted Receivables.........................................................82
defeasance....................................................................84
Dilution Amount...............................................................82
Discount Option Receivables...................................................83
Discount Option Receivables Collections.......................................84
Discount Percentage...........................................................83
Early Amortization Event......................................................64
Early Amortization Period.....................................................47
Eligible Receivable...........................................................78
ERISA........................................................................109
Excess Funding Account........................................................81
Excess Spread.................................................................54
114
<PAGE> 120
PAGE
Exchangeable Seller Certificate..............................................42
Finance Charge Receivables...................................................31
Finance Charge Shortfall.....................................................59
FIRREA.......................................................................99
Fixed Allocation Percentage..................................................50
Fixed Principal Allocation Date..............................................50
Floating Allocation Percentage...............................................49
Foreign Investor............................................................105
Insolvency Events............................................................66
Interest Period .............................................................43
Investor Dilution Amount.....................................................61
Investor Interest............................................................41
Investor Loss Amount.........................................................61
LIBOR........................................................................43
Loss Amount..................................................................82
Monthly Interest.............................................................63
Portfolio Yield..............................................................64
Principal Allocation Percentage..............................................49
Principal Receivables........................................................31
Principal Shortfall..........................................................59
private label................................................................24
receivables..................................................................32
Removal Date.................................................................94
Required Seller Interest.....................................................78
Revolving Period.............................................................46
Seller Interest Test.........................................................78
Seller Percentage............................................................42
series.......................................................................68
Series 1999-1 Finance Charge Shortfall.......................................59
Series 1999-1 Investor Dilution Amount.......................................61
Series 1999-1 Investor Loss Amount...........................................61
Series 1999-1 Principal Collections..........................................56
Series 1999-1 Principal Shortfall............................................60
Series 1999-1 Servicing Fee..................................................51
Servicer Default.............................................................87
Shared Excess Finance Charge Collections.....................................59
shared principal collections.................................................59
Specified Program Account....................................................77
Specified Programs...........................................................77
Unfunded Seller Dilution Amount..............................................83
Year 2000 Disclosure.........................................................37
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<PAGE> 121
ANNEX I
OTHER SERIES OUTSTANDING
The table below sets forth the principal characteristics of the other
outstanding series issued by the trust, Series 1994-2, Series 1997-1 and the
1996 receivables purchase series, as well as Series 1999-2, being issued
concurrently with Series 1999-1. Each of these series are in group one for
purposes of sharing Shared Excess Finance Charge Collections and shared
principal collections. For more specific information about any series, any
prospective investor should contact the servicer at its address listed on page
1. An asterisk appearing before any series name or any class was issued in a
private transaction, thus limiting the disclosure we have made available for
that series.
<TABLE>
<S> <C>
1. *SERIES 1994-2
initial Investor Interest.................................................................$13,250,000
expected final payment date................................................May 1999 distribution date
Series 1994-2 termination date...........................................April 2003 distribution date
Series Issuance Date..................................................................August 15, 1994
Minimum Required Seller Interest.............................................................$280,000
2. *SERIES 1997-1
Class A initial Investor Interest.........................................................$56,000,000
Class B initial Investor Interest..........................................................$8,500,000
Class C initial Investor Interest..........................................................$9,500,000
Class D initial Investor Interest..........................................................$9.500,000
Class A expected final payment date...................................December 2002 distribution date
Class B expected final payment date....................................January 2003 distribution date
Class C expected final payment date......................................March 2003 distribution date
Class D expected final payment date......................................April 2003 distribution date
Series 1997-1 termination date...........................................April 2006 distribution date
Series Issuance Date................................................................November 25, 1997
Minimum Required Seller Interest..................................2% of outstanding investor interest
3. *1996 RECEIVABLES PURCHASE SERIES
Maximum Investor Interest.................................................................$50,000,000
Current outstanding amount........................................................$
Minimum Required Seller Interest .................................2% of outstanding investor interest
4. *SERIES 1999-2 (VARIABLE FUNDING SERIES)
Maximum Investor Interest.................................................................$50,000,000
Current outstanding amount.........................................................................$0
Minimum Required Seller Interest................................[2% of outstanding investor interest]
</TABLE>
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<PAGE> 122
ANNEX II
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES
In most circumstances, the certificates offered by this prospectus will be
issued only as global certificates which are registered and held by a
depository. Certificate owners of the global certificates may hold their global
certificates through any of DTC, Cedel or Euroclear. The Global Certificates
will be tradeable as home market instruments in both the European and U.S.
domestic markets. Initial settlement and all secondary trades will settle in
same-day funds.
Secondary market trading between investors holding Global Certificates
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice, which is seven calendar day settlement.
Secondary market trading between investors holding Global Certificates
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
participants holding global certificates will be effected on a
delivery-against-payment basis through the respective depositaries of Cedel and
Euroclear and the DTC participants.
Non-U.S. holders of global certificates may have to pay U.S. withholding
taxes unless the holders meet the requirements for exemption from the tax and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All global certificates will be held in book-entry form by DTC in the name
of Cede & Co., as nominee of DTC. Certificate owners' interests in the global
certificates will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, which in turn will hold their positions in accounts as
DTC participants.
Certificate owners electing to hold their global certificates through DTC
will follow the settlement practices applicable to U.S. corporate debt
obligations. Certificate owner securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Certificate owners electing to hold their global certificates through Cedel
or Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global certificates will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
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<PAGE> 123
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel participants or Euroclear participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When global
certificates are to be transferred from the account of a DTC participant to the
account of a Cedel participant or a Euroclear participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel participant or Euroclear
participant at least one business day before settlement. Cedel or Euroclear will
instruct the respective Depositary, as the case may be, to receive the global
certificates against payment. Payment will include interest accrued on the
global certificates from and including the last coupon payment date to and
excluding the settlement date. Payment will then be made by the respective
Depositary to the DTC participant's account against delivery of the global
certificates. After settlement has been completed, the global certificates will
be credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedel participant's or Euroclear
participant's account. The global certificates credit will appear the next day
according to European time, and the cash debit will be back-valued to, and the
interest on the global certificates will accrue from, the value date. The value
date would be the preceding day when settlement occurred in New York. If the
trade fails and settlement is not completed on the intended value date, the
Cedel or Euroclear cash debit will be valued instead on the actual settlement
date.
Cedel participants and Euroclear participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the global
certificates are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel participants or Euroclear participants can elect not to pre-position
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel participants or Euroclear participants purchasing global
certificates would incur overdraft charges for one day, assuming they cleared
the overdraft when the global certificates were credited to their accounts.
However, interest on the global certificates would accrue from the value date.
Therefore, in many cases the investment income on the global certificates earned
during that one-day period may substantially
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<PAGE> 124
reduce or offset the amount of the overdraft charges, although this result will
depend on each Cedel participant's or Euroclear participant's particular cost of
funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global certificates
to the respective Depositary for the benefit of Cedel participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel participants and Euroclear participants
may employ their customary procedures for transactions in which global
certificates are to be transferred by the respective clearing system, through
the respective Depositary, to a DTC participant. The seller will send
instructions to Cedel or Euroclear through a Cedel participant or Euroclear
participant at least one business day before settlement. In these cases, Cedel
or Euroclear will instruct the respective Depositary, as appropriate, to deliver
the bonds to the DTC participant's account against payment. Payment will include
interest accrued on the global certificates from and including the last coupon
payment date to and excluding the settlement date. The payment will then be
reflected in the account of the Cedel participant or Euroclear participant the
following day, and receipt of the cash proceeds in the Cedel participant's or
Euroclear participant's account would be back-valued to the value date. The
value date would be the preceding day, when settlement occurred in New York.
Should the Cedel participant or Euroclear participant have a line of credit with
its respective clearing system and elect to be in debit in anticipation of
receipt of the sale proceeds in its account, the back-valuation will extinguish
any overdraft charges incurred over that one-day period. If the trade fails and
settlement is not completed on the intended value date, receipt of the cash
proceeds in the Cedel participant's or Euroclear participant's account would
instead be valued on the actual settlement date. Finally, day traders that use
Cedel or Euroclear and that purchase global certificates from DTC participants
for delivery to Cedel participants or Euroclear participants should note that
these trades would automatically fail on the sale side unless affirmative action
were taken. At least three techniques should be readily available to eliminate
this potential problem:
(a) borrowing through Cedel or Euroclear for one day, until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts, in accordance with the clearing system's customary procedures;
(b) borrowing the global certificates in the U.S. from a DTC
participant no later than one day prior to settlement, which would give the
global certificates sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC participant is at least one
day prior to the value date for the sale to the Cedel participant or Euroclear
participant.
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U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Certificates holding securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8 or new Form W-8BEN). Beneficial
owners of Global Certificates that are non-U.S. Persons can obtain a complete
exemption form the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status). If the information shown on Form W-8 changes (or new Form
W-8BEN), a new Form W-8 (or new Form W- 8BEN) must be filed within 30 days of
such change.
Exemption for non-U.S. Persons with effectively connected income (Form 4224
or new Form W-8ECI). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax
on Income Effectively Connected with the Conduct of a Trade or Business in the
United States or New Form w-8ECI (Certificate of Foreign Persons Claim for
Exemption from Withholding on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001 or new Form W-8BEN). Non-U.S. Persons that are beneficial owners of
Global Certificates residing in a country that has a tax treaty with the United
States can obtain an exemption or reduced tax rate (depending on the treaty
terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate or
new Form W-8BEN). If the treaty provides only for a reduced rate, withholding
tax will be imposed at that rate unless the filer alternatively files Form W-8.
Form 1001 may be filed by the certificate owner or his agent whereas new Form
W-8BEN must be filed by the beneficial owner.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
Global Certificate or in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the books
of the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year, but Forms W-8, 1001 and
4224 will not be effective after December 31, 2000.
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A new Form W-8BEN, if furnished with a taxpayer identification number
("TIN"), will remain in effect until the status of the beneficial owner changes,
or a change in circumstances makes any information on the form incorrect. A new
Form W-8BEN, if furnished without a TIN, and a new Form W-8ECI will remain in
effect for a period starting on the date the form is signed and ending on the
last day of the third succeeding calendar year, unless a change in circumstances
makes any information on the form incorrect.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate, the income
of which is includible in gross income for United States tax purposes,
regardless of its source, or (iv) a trust if a U.S. court is able to exercise
primary supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the trust.
This summary does not deal with all aspects of U.S. Federal income tax
withholding that may be relevant to foreign holders of the Global Certificates.
Certificate owners are advised to consult their own tax advisers for specific
tax advice concerning their holding and disposing of the Global Certificates.
In 1997, final Treasury regulations (the "New Withholding Regulations")
were issued that modify certain of the filing requirements with which non-U.S.
persons must comply in order to be entitled to an exemption from U.S.
withholding tax or a reduction to the applicable U.S. withholding tax rate.
Those persons currently required to file Form W-8 or Form 1001 will be required
to file new Form W-8BEN, while those persons currently required to file Form
4224 will be required to file new Form W-8ECI. The New Withholding Regulations
generally are effective for payments of interest due after December 31, 1999,
but Forms W-8, 1001 and 4224 filed prior to that date will continue to be
effective until the earlier of December 31, 2000 or the current expiration date
of those forms. Prospective investors are urged to consult their tax advisors
with respect to the effect of the New Withholding Regulations.
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CHARMING SHOPPES MASTER TRUST
ISSUER
CHARMING SHOPPES RECEIVABLES CORP.
SELLER
SPIRIT OF AMERICA INC.
SERVICER
SERIES 1999-1
$[_________] FLOATING RATE CLASS A ASSET BACKED CERTIFICATES
$[_________] FLOATING RATE CLASS B ASSET BACKED CERTIFICATES
----------
PROSPECTUS
----------
UNDERWRITERS OF THE CLASS A CERTIFICATES
BEAR, STEARNS & CO. INC.
[OTHERS]
UNDERWRITER OF THE CLASS B CERTIFICATES
BEAR, STEARNS & CO. INC.
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information.
We are not offering the Class A Certificates or the Class B Certificates in
any state where the offer is not permitted.
Dealers will deliver a prospectus when acting as underwriters of the Class
A Certificates or the Class B Certificates and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the Class A or the
Class B Certificates will deliver a prospectus until [___________, 1999].
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Certificates being
registered herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee $[_________]
Legal fees and expenses [_________]
Accounting fees and expenses [_________]
Blue sky fees and expenses [_________]
Rating agency fees [_________]
Trustee fees and expenses [_________]
Printing [_________]
Miscellaneous [_________]
Total $[_________]
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the laws of Delaware. Section 145
of the General Corporation Law of Delaware provides that a Delaware corporation
may indemnify any director or officer who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that the
person is or was an officer or director of the corporation, or is or was serving
at the request of the corporation as an officer or director of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. A corporation may also indemnify any officer or director in an action
by or in the right of the corporation under the same conditions, except that no
such indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought determines upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper. If an officer or director is successful
on the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify such person against the expenses (including
attorneys' fees) actually and reasonably incurred by such officer or director in
connection therewith.
The Certificate of Incorporation of the Registrant provides that the
Registrant will indemnify its officers and directors to the fullest extent
permitted by Delaware General Corporation Law.
II-1
<PAGE> 129
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) A list of exhibits filed herewith is contained in the Exhibit
Index, which is incorporated herein by reference.
(b) Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertakes as follows:
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than payment by a registrant
of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(c) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE> 130
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON
FORM S-1 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF BENSALEM AND STATE OF PENNSYLVANIA, ON THE 14TH DAY
OF APRIL, 1999.
CHARMING SHOPPES RECEIVABLES CORP.
By: /s/ Eric M. Specter
----------------------------------------
Name: Eric M. Specter
Title: President and Assistant Secretary
(Principal Financial and Accounting Officer)
SPIRIT OF AMERICA, INC., as Servicer on behalf
of the Trust
By: /s/ Eric M. Specter
----------------------------------------
Name: Eric M. Specter
Title: President
(Principal Financial and Accounting Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSONS FOR CHARMING SHOPPES RECEIVABLES CORP. IN THE CAPACITIES
AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Eric M. Specter Director, President and Assistant April 14, 1999
------------------------- Secretary (Principal Executive
Eric M. Specter Officer and Principal Financial
and Accounting Officer)
/s/ Kirk R. Simme Director April 14, 1999
-------------------------
Kirk R. Simme
/s/ Colin D. Stern Director April 14, 1999
-------------------------
Colin D. Stern
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSONS FOR SPIRIT OF AMERICA, INC. IN THE CAPACITIES AND ON THE
DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Eric M. Specter Director and President April 14, 1999
------------------------- (Principal Executive Officer
Eric M. Specter and Principal Financial and
Accounting Officer)
/s/ Kirk R. Simme Director April 14, 1999
-------------------------
Kirk R. Simme
/s/ Kathleen H. Lieberman Director April 14, 1999
---------------------
Kathleen H. Lieberman
</TABLE>
<PAGE> 131
EXHIBIT INDEX
EXHIBIT DESCRIPTION
1.1 -- Form of Underwriting Agreement
3.1 -- Certificate of Incorporation of Charming Shoppes
Receivables Corp.
3.2 -- Bylaws of Charming Shoppes Receivables Corp.
4.1 -- Form of Second Amended and Restated Pooling and Servicing
Agreement, as amended, among Charming Shoppes Master
Trust, Spirit of America, Inc., as successor Servicer, and
First Union National Bank, as the Trustee
4.2 -- Form of Series 1999-1 Supplement between Charming Shoppes
Master Trust, Spirit of America, Inc., as Servicer, and
First Union National Bank, as the Trustee
4.3 -- Form of Series 1999-1 Floating Rate Class A Asset Backed
Certificate (included in Exhibit 4.2)
4.4 -- Form of Series 1999-1 Floating Rate Class B Asset Backed
Certificate (included in Exhibit 4.2)
5.1 -- Opinion of Mayer, Brown & Platt with respect to the
validity of the securities being offered
8.1 -- Opinion of Mayer, Brown & Platt with respect to federal
income tax matters
8.2 -- Opinion of Squire Sanders & Dempsey, L.L.P. with respect
to Ohio income tax matters
10.1(a) -- Purchase and Sale Agreement between Spirit of America
National Bank and Charming Shoppes Receivables Corp.
10.1(b) -- Form of First Amendment to Purchase and Sale Agreement
between Spirit of America National Bank and Charming
Shoppes Receivables Corp.
23.1 -- Consent of Mayer, Brown & Platt (included in Exhibit 8.1)
23.2 -- Consent of Squire Sanders & Dempsey, L.L.P. (included in
Exhibit 8.2)
24.1 -- Powers of attorney for Charming Shoppes Receivables Corp.
(contained on the signature page to this Registration
Statement as filed on February 4, 1999)
24.2 -- Powers of attorney for Spirit of America, Inc.
<PAGE> 1
EXHIBIT 1.1
CHARMING SHOPPES RECEIVABLES CORP.,
as Seller
SPIRIT OF AMERICA, INC.,
as Servicer
CHARMING SHOPPES MASTER TRUST ASSET BACKED CERTIFICATES
April __, 1999
FORM OF UNDERWRITING AGREEMENT
(Standard Terms)
Bear, Stearns & Co. Inc.,
as Underwriter or as a Representative
of the Underwriters named in the Terms Agreement
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
Charming Shoppes Receivables Corp. ("CSRC") has duly authorized the
issuance of the Series of Asset Backed Certificates designated in the applicable
Terms Agreement (as hereinafter defined) and the sale, pursuant to this
Agreement of the Class A Asset Backed Certificates (the "Class A Certificates")
and the Class B Asset Backed Certificates (the "Class B Certificates") included
in such series (such Class A Certificates and the Class B Certificates,
collectively, the "Certificates"). The Certificates will be issued pursuant to
the Second Amended and Restated Pooling and Servicing Agreement, dated as of
November 25, 1997, as amended by the First Amendment thereto dated as of
_________, 1999 (the "First Amendment"). Such Second Amended and Restated
Pooling and Servicing Agreement as so amended is among CSRC, as Seller, Spirit
of America, Inc., as Servicer and First Union National Bank, as trustee (the
"Trustee") (the Second Amended and Restated Pooling and Servicing Agreement as
amended by the First Amendment and as amended from time to time hereafter is, in
this Agreement referred to as the "Pooling and Servicing Agreement"). The terms
of the Certificates as well as the Class C Certificates and Class D Certificates
described herein will be set forth in the Series Supplement having the date
stated in the applicable Terms Agreement, among CSRC, as Seller, Spirit of
America, Inc., as Servicer, and the Trustee (the "Supplement").
<PAGE> 2
The Certificates designated in the applicable Terms Agreement may be
sold in a public offering by the Trust (as hereinafter defined) through Bear,
Stearns & Co. Inc. ("Bear Stearns"), as sole underwriter, or through certain
underwriters which include Bear Stearns, one or more of which may with Bear
Stearns act as representative of such underwriters listed on Schedule I to the
applicable Terms Agreement (any underwriter through which Certificates are sold
shall be referred to herein as an "Underwriter" or, collectively, all such
underwriters may be referred to as the "Underwriters"; any representatives
thereof may be referred to herein as a "Representative," which, if the context
herein does require, shall include Bear Stearns in its capacity as sole
underwriter of any Series, or the "Representatives"). The Certificates sold to
the Underwriters for which Bear Stearns is a Representative shall be sold
pursuant to a Terms Agreement by and among CSRC, Fashion Service Corp. ("FSC"),
Spirit of America, Inc. ("SOAI"), and the Underwriters, a form of which is
attached hereto as Exhibit A (a "Terms Agreement"), which incorporates by
reference this Underwriting Agreement (the "Agreement," which may include the
applicable Terms Agreement if the context so requires). The standard provisions
set forth herein shall not be construed as an obligation of CSRC to sell any of
the Certificates. The obligation of CSRC to sell the Certificates shall be
evidenced by the applicable Terms Agreement.
Credit enhancement for the Certificates will be provided by the
issuance, as part of the same series as the Certificates, of two subordinated
classes, designated as the Class C Asset Backed Certificates (the "Class C
Certificates") and the Class D Asset Backed Certificates (the "Class D
Certificates"). The Class C Certificates will be sold in a private transaction
and not pursuant to this Agreement. The Class D Certificates will be sold in a
private transaction and not pursuant to this Agreement and all or a portion of
the Class D Certificates may be purchased by an affiliate of CSRC. The term
"applicable Terms Agreement" means the Terms Agreement dated the date hereof.
Each Certificate will represent a specified percentage of undivided interest in
the Charming Shoppes Master Trust (the "Trust"). The assets of the Trust
include, among other things, certain amounts due (the "Receivables") on a pool
of private label credit card accounts owned by Spirit of America National Bank
(the "Bank") and proceeds of credit insurance policies relating to the
Receivables. The Receivables originated by the Bank have been and will be
conveyed to and purchased by CSRC under the terms of a Purchase and Sale
Agreement dated as of November 25, 1997 (the "Purchase Agreement"). To the
extent not defined herein, capitalized terms used herein shall have the meanings
specified in the Pooling and Servicing Agreement.
Unless otherwise stated herein or in the applicable Terms Agreement,
as the context otherwise requires or if such term is otherwise defined in the
Pooling and Servicing Agreement, each capitalized term used or defined herein or
in the applicable Terms Agreement shall relate only to the Certificates
designated in the applicable Terms Agreement and no other Asset Backed
Certificates issued by the Trust.
CSRC has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-1 (having the registration number stated in the applicable Terms
Agreement), including a form of prospectus, relating to the Certificates. The
registration
2
<PAGE> 3
statement as amended has been declared effective by the Commission. If any
post-effective amendment has been filed with respect thereto, prior to the
execution and delivery of the applicable Terms Agreement, the most recent such
amendment has been declared effective by the Commission. Such registration
statement, as amended at the time of effectiveness, including all material
incorporated by reference therein and including all information (if any) deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rule 430A under the Act, is referred to in the Agreement as the "Registration
Statement," and the form of prospectus relating to the applicable Certificates,
as first filed with the Commission pursuant to and in accordance with Rule
424(b) ("Rule 424(b)") or (if no such filing is required) as included in the
Registration Statement, including all material incorporated by reference in such
prospectus under the Act, is referred to in this Agreement as the "Prospectus."
Upon the execution of the applicable Terms Agreement, CSRC agrees
with the Underwriters as follows:
1. Subject to the terms and conditions herein set forth and in the
applicable Terms Agreement, CSRC agrees to sell and deliver the Certificates to
the several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from CSRC the respective principal amount of the Class A Certificates set forth
opposite such Underwriter's name in the applicable Terms Agreement and the
respective principal amount of the Class B Certificates set forth opposite such
Underwriter's name in the applicable Terms Agreement. The Certificates are to be
purchased by the Underwriters at the purchase price or purchase prices set forth
in such Terms Agreement.
2. CSRC understands that the Underwriters intend (i) to make a
public offering of their respective portions of the Certificates as soon after
the Registration Statement and this Agreement and the applicable Terms Agreement
have become effective as in the judgment of the Representative is advisable and
(ii) initially to offer the Certificates upon the terms set forth in the
Prospectus.
3. Unless otherwise provided in the applicable Terms Agreement,
payment for Certificates shall be made to CSRC or to its order by wire transfer
of same day funds at the offices of Mayer, Brown & Platt in Chicago, Illinois at
9:00 a.m., Central time, on the Closing Date (as hereinafter defined), or at
such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representative and CSRC may agree upon in
writing. The time and date of such payment for the applicable Series of
Certificates are referred to herein as the "Closing Date." As used herein, the
term "Business Day" means any day other than a day on which banks are permitted
or required to be closed in New York City. Unless otherwise provided in the
applicable Terms Agreement, payment for the Certificates shall be made against
delivery to the Representative for the respective accounts of the several
Underwriters of the Certificates registered in the name of Cede & Co. as nominee
of The Depository Trust Company and in such denominations as the Representative
shall request in writing not later than two full Business Days prior to the
Closing Date, with any transfer taxes payable in connection with the transfer to
the Underwriters of the Certificates duly paid by FSC. The Certificates will be
made available for inspection by the Representative at the offices of Mayer,
Brown & Platt not later
3
<PAGE> 4
than five hours before the close of business in New York City on the Business
Day prior to the Closing Date.
4. Upon the execution of the applicable Terms Agreement, CSRC
represents and warrants to and agrees with each Underwriter that:
(a) The Registration Statement on Form S-1 (having the registration
number stated in the applicable Terms Agreement), including the Prospectus
and such amendments thereto as may have been required on the date of the
applicable Terms Agreement, relating to the Certificates, has been filed
with the Commission, and such Registration Statement as amended has been
declared effective by the Commission. The conditions to the use of a
registration statement on Form S-1 under the Act as set forth in the
General Instructions to Form S-1 have been satisfied with respect to CSRC
and the Registration Statement.
(b) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of CSRC, threatened by the Commission, and
on the effective date of the Registration Statement, the Registration
Statement and the Prospectus conformed in all respects to the requirements
of the Act and the rules and regulations of the Commission under the Act
(the "Rules and Regulations"), and did not include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and on
the date of the applicable Terms Agreement, the Registration Statement and
the Prospectus conform, and at the time of filing of the Prospectus
pursuant to Rule 424(b), such documents will conform in all respects to
the requirements of the Act and the Rules and Regulations, and on the
Closing Date the Registration Statement and the Prospectus will conform in
all respects to the requirements of the Act and the Rules and Regulations,
and neither of such documents will include on the date of the applicable
Terms Agreement and on the Closing Date any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that
CSRC makes no representations or warranties with respect to the
Underwriters' Information.
(c) As of the Closing Date, the representations and warranties of
CSRC, as Seller, in the Pooling and Servicing Agreement will be true and
correct in all material respects, except as they expressly relate to prior
dates.
(d) CSRC is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has full corporate power,
authority and legal right to own its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business and
is in good standing (or is exempt from such requirements) under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have a
material adverse effect on CSRC and its Affiliates, taken as a whole.
4
<PAGE> 5
(e) The Certificates have been duly authorized, and, when issued and
delivered pursuant to the Pooling and Servicing Agreement and the
Supplement, duly authenticated by the Trustee and paid for by the
Underwriters in accordance with the terms of this Agreement and the
applicable Terms Agreement, will be duly and validly executed,
authenticated, issued and delivered and entitled to the benefits provided
by the Pooling and Servicing Agreement and the Supplement; each of the
Pooling and Servicing Agreement, the Supplement and the Purchase Agreement
have been duly authorized, executed and delivered by CSRC and constitute
the valid, binding and enforceable agreements of CSRC and this Agreement
and the applicable Terms Agreement have been duly authorized by CSRC and
when executed and delivered by CSRC, SOAI, FSC and the other parties
thereto, each of this Agreement and the applicable Terms Agreement will
constitute a valid, binding and enforceable agreement of CSRC; provided
that with respect to all such documents such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity) and subject to the unenforceability, under certain circumstances,
of provisions indemnifying a party against liability where such
indemnification is contrary to public policy; and, the Class C
Certificates and the Class D Certificates have been duly authorized, and,
when issued and delivered pursuant to the Pooling and Servicing Agreement
and the Supplement, duly authenticated by the Trustee and paid for by the
respective purchasers thereof, will be duly and validly executed,
authenticated, issued and delivered and entitled to the benefits provided
by the Pooling and Servicing Agreement and the Supplement and will be
subordinated to the Certificates and provide credit enhancement for the
Certificates.
(f) No consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required to be obtained or
made by CSRC for the consummation of the transactions contemplated by this
Agreement, the applicable Terms Agreement, the Purchase Agreement, the
Pooling and Servicing Agreement or the Supplement or for the issuance of
the Certificates or the Class C Certificates or the Class D Certificates
except such as have been obtained and made under the Act, such as may be
required under state securities laws and the filing of any financing
statements required to perfect CSRC's and the Trust's interest in the
Receivables.
(g) CSRC is not in violation of its Certificate of Incorporation or
By-Laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any agreement or instrument
to which it is a party or by which it or its properties is bound which
would have a material adverse effect on the transactions contemplated
herein or in the Pooling and Servicing Agreement and the Supplement. The
execution, delivery and performance of this Agreement, the applicable
Terms Agreement, the Pooling and Servicing Agreement, the Supplement, the
Purchase Agreement, and the issuance and sale of the Certificates, the
Class C Certificates and the Class D Certificates and compliance with the
terms and provisions thereof will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any governmental agency or body or
any
5
<PAGE> 6
court having jurisdiction over CSRC or any of its properties or any
agreement or instrument to which CSRC is a party or by which CSRC is bound
or to which any of the properties of CSRC is subject, or the Certificate
of Incorporation or By-laws of CSRC.
(h) CSRC has full power and authority to authorize, issue and sell
the Certificates as contemplated by this Agreement and the applicable
Terms Agreement and to enter into this Agreement, the applicable Terms
Agreement, the Pooling and Servicing Agreement, the Supplement, the
Purchase Agreement and to issue the Class C Certificates and Class D
Certificates.
(i) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending or, to the knowledge of
CSRC, threatened to which any of CSRC or its Affiliates is or may be a
party or to which any property of CSRC or its Affiliates is or may be the
subject which, if determined adversely to CSRC, could individually or in
the aggregate reasonably be expected to have a material adverse effect on
the general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of CSRC and its Affiliates,
taken as a whole or that would reasonably be expected to materially
adversely affect the interests of the holders of the Certificates; and
there are no contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which are not
filed or described as required;
(j) This Agreement and the applicable Terms Agreement have been duly
executed and delivered by CSRC.
(k) Except as set forth in or contemplated in the Registration
Statement and the Prospectus, there has been no material adverse change in
the condition (financial or otherwise) of CSRC or any of its subsidiaries
since ___________ __, 1999.
(l) Any taxes, fees and other governmental charges in connection
with the execution, delivery and performance of this Agreement, the
applicable Terms Agreement, the Pooling and Servicing Agreement, the
Supplement, the Purchase Agreement, the Certificates, the Class C
Certificates and the Class D Certificates shall have been paid or will be
paid by or on behalf of CSRC at or prior to the Closing Date to the extent
then due.
5. Upon the execution of the applicable Terms Agreement, FSC
represents and warrants to and agrees with each Underwriter that:
(a) FSC is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has full corporate power,
authority and legal right to own its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business and
is in good standing (or is exempt from such requirements) under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to
6
<PAGE> 7
be so qualified or in good standing would not have a material adverse
effect on FSC and its Affiliates, taken as a whole.
(b) The Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United States
of America, and has full corporate power, authority and legal right to own
its properties and conduct its business as described in the Prospectus,
and is duly qualified to do business and is in good standing (or is exempt
from such requirements) under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to require
such qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on the Bank and its
Affiliates, taken as a whole.
(c) As of the Closing Date, the representations and warranties of
the Bank in the Purchase Agreement will be true and correct in all
material respects, except as they expressly relate to prior dates.
(d) The Purchase Agreement has been duly authorized, executed and
delivered by the Bank and constitutes the valid, binding and enforceable
agreement of the Bank, and this Agreement and the applicable Terms
Agreement have been duly authorized by FSC and, when executed and
delivered by FSC, CSRC and SOAI, each of this Agreement and the applicable
Terms Agreement will constitute a valid, binding and enforceable agreement
of FSC; provided that, with respect to each of such documents, such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general, the
rights of creditors of national banking associations and such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity) and subject to the
unenforceability, under certain circumstances, of provisions indemnifying
a party against liability where such indemnification is contrary to public
policy.
(e) No consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required to be obtained or
made by FSC for the consummation of the transactions contemplated by this
Agreement and the applicable Terms Agreement, or by the Bank for the
consummation of the transactions contemplated by the Purchase Agreement,
except such as have been obtained and made under the Act, such as may be
required under state securities laws and the filing of any financing
statements required to perfect the Seller's and the Trust's interest in
the Receivables.
(f) FSC is not in violation of its Certificate of Incorporation or
By-Laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any agreement or instrument
to which it is a party or by which it or its properties are bound which
would have a material adverse effect on the transactions contemplated
herein. The execution, delivery and performance of this Agreement and the
applicable Terms Agreement will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any governmental agency or body or
any court having jurisdiction over FSC; or any of its
7
<PAGE> 8
properties or any agreement or instrument to which FSC is a party or by
which FSC is bound or to which any of the property of FSC is subject, or
the Certificate of Incorporation or By-Laws of FSC.
(g) The Bank is not in violation of its Articles of Association or
By-Laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any agreement or instrument
to which it is a party or by which it or its properties are bound which
would have a material adverse effect on the transactions contemplated in
the Purchase Agreement, the Pooling and Servicing Agreement and the
Supplement. The execution, delivery and performance of the Purchase
Agreement will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over the Bank; or any of its properties or any agreement or
instrument to which the Bank is a party or by which the Bank is bound or
to which any of the property of the Bank is subject, or the Articles of
Association or By-Laws of the Bank.
(h) The Bank had at the time of execution thereof and continues to
have full power and authority to enter into the Purchase Agreement and
convey the Receivables as provided therein and carry out the other
obligations of the Bank therein, and FSC has full power and authority to
enter into the applicable Terms Agreement and to enter into this
Agreement.
(i) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending or, to the knowledge of
FSC, threatened to which any of FSC or its Affiliates is or may be a party
or to which any property of FSC or its Affiliates is or may be the subject
which, if determined adversely to FSC, could individually or in the
aggregate reasonably be expected to have a material adverse effect on the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of FSC and its Affiliates,
taken as a whole or that would reasonably be expected to materially
adversely affect the interests of the holders of the Certificates; and
there are no contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which are not
filed or described as required.
(j) This Agreement and the applicable Terms Agreement have been duly
executed and delivered by FSC.
(k) Except as set forth in or contemplated in the Registration
Statement and the Prospectus, there has been no material adverse change in
the condition (financial or otherwise) of FSC or any of its subsidiaries
since ___________ __, 1999.
(l) Any taxes, fees and other governmental charges in connection
with the execution, delivery and performance of this Agreement and the
applicable Terms Agreement shall have been paid or will be paid by or on
behalf of FSC at or prior to the Closing Date to the extent then due.
8
<PAGE> 9
6. Upon the execution of the applicable Terms Agreement, SOAI
represents and warrants to and agrees with each Underwriter that:
(a) As of the Closing Date, the representations and warranties of
SOAI in the Pooling and Servicing Agreement will be true and correct in
all material respects, except as they expressly relate to prior dates.
(b) SOAI is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has full corporate power,
authority and legal right to own its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business and
is in good standing (or is exempt from such requirements) under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have a
material adverse effect on SOAI and its Affiliates, taken as a whole.
(c) The First Amendment has been duly authorized, executed and
delivered by the Servicer and was entered into in full compliance with the
terms of the Pooling and Servicing Agreement as it existed immediately
prior to such amendment.
(d) The Pooling and Servicing Agreement and the Supplement have been
duly authorized, executed and delivered by SOAI and constitute the valid,
binding and enforceable agreements of SOAI and this Agreement and the
applicable Terms Agreement have been duly authorized by SOAI and when
executed and delivered by SOAI, CSRC and FSC, this Agreement and the
applicable Terms Agreement will constitute a valid, binding and
enforceable agreement of SOAI; provided that, with respect to each of such
documents, such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity) and subject to
the unenforceability, under certain circumstances, of provisions
indemnifying a party against liability where such indemnification is
contrary to public policy.
(e) No consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required to be obtained or
made by SOAI for the consummation of the transactions contemplated by this
Agreement, the applicable Terms Agreement, the Pooling and Servicing
Agreement or the Supplement except such as have been obtained and made
under the Act, such as may be required under state securities laws and the
filing of any financing statements required to perfect the Trust's
interest in the Receivables.
(f) SOAI is not in violation of its Certificate of Incorporation or
By-Laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any agreement or instrument
to which it is a party or by which it
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<PAGE> 10
or its properties is bound which would have a material adverse effect on
the transactions contemplated herein or in the Pooling and Servicing
Agreement and the Supplement. The execution, delivery and performance of
this Agreement, the applicable Terms Agreement, the Pooling and Servicing
Agreement and the Supplement and compliance with the terms and provisions
thereof will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over SOAI; or any of its properties or any agreement or
instrument to which SOAI is a party or by which SOAI is bound or to which
any of the properties of SOAI is subject, or the Certificate of
Incorporation or By-Laws of SOAI; and SOAI has full power and authority to
enter into this Agreement, the applicable Terms Agreement, the Pooling and
Servicing Agreement and the Supplement.
(g) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending or, to the knowledge of
SOAI, threatened to which any of SOAI or its Affiliates is or may be a
party or to which any property of SOAI or its Affiliates is or may be the
subject which, if determined adversely to SOAI, could individually or in
the aggregate reasonably be expected to have a material adverse effect on
the general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of SOAI and its Affiliates,
taken as a whole or that would reasonably be expected to materially
adversely affect the interests of the holders of the Certificates; and
there are no contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which are not
filed or described as required;
(h) This Agreement and the applicable Terms Agreement have been duly
authorized, executed and delivered by SOAI.
(i) Any taxes, fees and other governmental charges in connection
with the execution, delivery and performance of this Agreement, the
applicable Terms Agreement, the Pooling and Servicing Agreement and the
Supplement shall have been paid or will be paid by or on behalf of SOAI at
or prior to the Closing Date to the extent then due.
7. Upon the execution of the applicable Terms Agreement, CSRC
covenants and agrees with the several Underwriters that:
(a) CSRC will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A under the Act.
(b) CSRC will deliver, at the expense of CSRC, to the
Representative, two signed copies of the Registration Statement and each
amendment thereto, in each case including exhibits, and to each other
Underwriter a conformed copy of the Registration Statement and each
amendment thereto, in each case without exhibits, and, during the period
mentioned in paragraph (e) below, to each of the Underwriters as many
copies of
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<PAGE> 11
the Prospectus (including all amendments and supplements thereto) as the
Representative may reasonably request.
(c) Before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, CSRC will furnish to the
Representative a copy of the proposed amendment or supplement for review
and will not file any such proposed amendment or supplement to which the
Representative reasonably objects.
(d) CSRC will advise the Representative promptly, and will confirm
such advice in writing, (i) when the Registration Statement shall become
effective, (ii) when any amendment to the Registration Statement shall
become effective, (iii) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or for any additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceeding
for that purpose, and (v) of the receipt by CSRC of any notification with
respect to any suspension of the qualification of the Certificates for
offer and sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and to use its best efforts to prevent the
issuance of any such stop order or notification and, if issued, to obtain
as soon as possible the withdrawal thereof.
(e) CSRC will if (i) during such period of time after the first date
of the public offering of the Certificates as in the opinion of counsel
for the Underwriters a Prospectus relating to the Certificates is required
by law to be delivered in connection with sales by an Underwriter or
dealer, (ii) any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or (iii) it is necessary to
amend or supplement the Prospectus to comply with the law, forthwith
prepare and furnish, at the expense of CSRC, to the Underwriters and to
the dealers (whose names and addresses the Representative will furnish to
CSRC) to which Certificates may have been sold by the Representative on
behalf of the Underwriters and to any other dealers upon request, such
amendments or supplements to the Prospectus as may be necessary so that
the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus will comply with the
law.
(f) CSRC will endeavor to qualify the Certificates for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and will continue such
qualification in effect so long as reasonably required for distribution of
the Certificates and to pay all fees and expenses (including fees and
disbursements of counsel to the Underwriters) reasonably incurred in
connection with such qualification and in connection with the
determination of the eligibility of the Certificates for investment under
the laws of such jurisdictions as the Representative may designate;
provided, however, that CSRC shall not be obligated to qualify to do
business in any jurisdiction in which it is not currently so qualified;
and provided further that
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<PAGE> 12
CSRC shall not be required to file a general consent to service of process
in any jurisdiction.
(g) On or before December 31 of the year following the year in which
the Closing Date occurs, CSRC will cause the Trust to make generally
available to Certificateholders and to the Representative as soon as
practicable an earnings statement covering a period of at least twelve
months beginning with the first fiscal quarter of the Trust occurring
after the effective date of the Registration Statement, which shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the
Commission promulgated thereunder.
(h) So long as any of the Certificates are outstanding, CSRC will
furnish to the Representative copies of all reports or other
communications (financial or other) furnished to holders of the
Certificates and copies of any reports and financial statements furnished
to or filed with the Commission or any national securities exchange.
(i) For a period from the date of this Agreement until the
retirement of the Certificates (x) CSRC will furnish to the Representative
copies of each certificate and the annual statements of compliance
delivered to the Trustee pursuant to Article III of the Pooling and
Servicing Agreement and the annual independent certified public
accountant's servicing reports furnished to the Trustee pursuant to
Article III of the Pooling and Servicing Agreement, by first-class mail as
soon as practicable after such statements and reports are furnished to the
Trustee, and (y) on each Determination Date or as soon thereafter as
practicable, CSRC will give notice by telex or telecopy to the
Representative of the Pool Factor as of the related Record Date.
(j) During the period beginning on the date hereof and continuing to
and including the Business Day following the Closing Date, CSRC will not
offer, sell, contract to sell or otherwise dispose of any debt securities
of or guaranteed by CSRC which are substantially similar to the
Certificates without the prior written consent of the Representative.
(k) CSRC will cause the Certificates to be registered in a timely
manner pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
8. Upon the execution of the applicable Terms Agreement, FSC, CSRC
and SOAI each severally covenant and agree with the several Underwriters that to
the extent, if any, that the rating provided with respect to the Certificates by
the rating agency or rating agencies rating the Certificates (the "Rating
Agency") is conditional upon the furnishing of documents or the taking of any
other action by CSRC, FSC, the Bank or SOAI agreed upon on or prior to the
Closing Date, CSRC, FSC, the Bank and SOAI each shall use its best efforts to
furnish such documents and take any such other action.
9. CSRC will pay all costs and expenses incident to the performance
of its obligations under this Agreement and the related Terms Agreement,
including without limiting the generality of the foregoing, all costs and
expenses (i) incident to the preparation, issuance,
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<PAGE> 13
execution, authentication and delivery of the Certificates, (ii) incident to the
preparation, printing and filing under the Act of the Registration Statement,
the Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection with
the registration or qualification and determination of eligibility for
investment of the Certificates under the laws of such jurisdictions as the
Underwriters may designate (including fees of counsel for the Underwriters and
their disbursements), (iv) related to any filing with the National Association
of Securities Dealers, Inc., (v) in connection with the printing (including word
processing and duplication costs) and delivery of this Agreement, the applicable
Terms Agreement, the Pooling and Servicing Agreement and any Blue Sky Memorandum
and the furnishing to Underwriters and dealers of copies of the Registration
Statement and the Prospectus as herein provided, (vi) the fees and disbursements
of CSRC's counsel and accountants, and (vii) payable to each Rating Agency in
connection with the rating of the Certificates.
10. The several obligations of the Underwriters hereunder are
subject to the performance by each of CSRC, FSC and SOAI of its obligations
hereunder and under the applicable Terms Agreement and to the following
additional conditions:
(a) On or prior to the date of this Agreement, the Representative
shall have received a letter, dated the date of the applicable Terms
Agreement, of Ernst & Young LLP (or such other independent accountants as
shall be named in the applicable Terms Agreement) confirming that they are
independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and substantially in
the form heretofore agreed and otherwise in form and in substance
satisfactory to the Representative and its counsel.
(b) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the Rules and Regulations and in accordance with Section
7(a) of this Agreement; and, as of the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be pending before or, to
the knowledge of CSRC, threatened by the Commission, and all requests for
additional information from the Commission with respect to the
Registration Statement shall have been complied with to the satisfaction
of the Representative.
(c) The representations and warranties of each of CSRC, FSC and SOAI
contained herein are true and correct on and as of the Closing Date as if
made on and as of the Closing Date, and each of CSRC, FSC and SOAI shall
have complied with all agreements and all conditions on its part to be
performed or satisfied hereunder and under the applicable Terms Agreement
at or prior to the Closing Date.
(d) The Representative shall have received an opinion of Colin D.
Stern, Esq., Executive Vice President and General Counsel of Charming
Shoppes, Inc. (or such other counsel as may be named in the applicable
Terms Agreement), dated the Closing Date, in form and substance reasonably
satisfactory to the Representative and its counsel, to the effect that:
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<PAGE> 14
(i) CSRC is duly organized, validly existing and in good
standing under the laws of the State of Delaware; SOAI is duly
organized, validly existing and in good standing under the laws of
the State of Delaware; FSC is duly organized, validly existing and
in good standing under the laws of the State of Delaware; the Bank
is a national banking association duly organized, validly existing
and in good standing under the laws of the United States of America;
neither CSRC, SOAI, FSC nor the Bank is required to qualify, nor to
register as a foreign corporation, in any state in order to conduct
its business, except those states where it has so qualified or
registered or where the failure to so qualify or register would not
have a material adverse effect upon the Certificateholders; each of
CSRC, SOAI, FSC and the Bank has full power and authority to own its
assets and to transact its business as described in the Prospectus;
and the Bank had at all relevant times, and now has, the power,
authority and legal right to acquire and own the Accounts and sell
and convey the Receivables; CSRC had all relevant times and now has
the power, authority and legal right to purchase, own and sell the
Receivables;
(ii) CSRC has and at all relevant times had the power and
authority to execute and deliver this Agreement, the applicable
Terms Agreement, the Purchase Agreement, the Pooling and Servicing
Agreement and the Supplement and to consummate the transactions
contemplated herein and therein; SOAI has the power and authority to
execute and deliver this Agreement, the applicable Terms Agreement,
the Pooling and Servicing Agreement and the Supplement and to
consummate the transactions contemplated herein and therein; FSC has
the power and authority to execute and deliver this Agreement and
the applicable Terms Agreement; and the Bank has the power and
authority to execute and deliver the First Amendment and the
Purchase Agreement and to consummate the transactions contemplated
herein and therein;
(iii) Neither the execution, delivery and performance by CSRC
of its obligations under this Agreement, the applicable Terms
Agreement, the Purchase Agreement, the Supplement or the Pooling and
Servicing Agreement, the purchase of the Receivables or the transfer
of the Receivables to the Trust, the issuance and sale of the
Certificates, the issuance and sale of the Class C Certificates and
the Class D Certificates nor the consummation of any other of the
transactions contemplated herein, in the applicable Terms Agreement,
the Purchase Agreement, the Supplement or the Pooling and Servicing
Agreement will conflict with, result in a breach of or violation of
any material term of, or constitute a default under, the certificate
of incorporation or by-laws of CSRC, each as amended, or any order
of any court, regulatory body, administrative agency or governmental
body having jurisdiction over CSRC or the material terms of any
material indenture or other material agreement or instrument known
to such counsel to which CSRC is a party or by which it or its
properties are bound (except as set forth in such opinion or the
Prospectus);
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(iv) Neither the execution, delivery and performance by SOAI
of its obligations under this Agreement, the applicable Terms
Agreement, the Supplement, the Pooling and Servicing Agreement nor
the consummation of any other of the transactions contemplated
herein, in the applicable Terms Agreement, the Supplement, the
Pooling and Servicing Agreement, will conflict with, result in a
breach of or violation of any material term of, or constitute a
default under, the certificate of incorporation or by-laws of SOAI,
each as amended, or any order of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
SOAI or the material terms of any material indenture or other
material agreement or instrument known to such counsel to which SOAI
is a party or by which it or its properties are bound (except as set
forth in such opinion or the Prospectus);
(v) Neither the execution, delivery and performance by FSC of
its obligations under this Agreement and the applicable Terms
Agreement nor the consummation of any other of the transactions
contemplated herein or in the applicable Terms Agreement, will
conflict with, result in a breach or violation of any material term
of, or constitute a default under, the Certificate of Incorporation
or By-Laws of FSC, each as amended, or any order of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over FSC or the material terms of any material
indenture or other material agreement or instrument known to such
counsel to which FSC is a party or by which it or its properties are
bound (except as set forth in such opinion or the Prospectus);
(vi) Neither the execution, delivery and performance by the
Bank of its obligations under the Purchase Agreement or the First
Amendment nor the consummation of any other of the transactions
contemplated in the Supplement or the First Amendment, will conflict
with, result in a breach of or violation of any material term of, or
constitute a default under, the Articles of Association or By-Laws
of the Bank, each as amended, or any order of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over the Bank or the material terms of any material indenture or
other material agreement or instrument known to such counsel to
which the Bank is a party or by which it or its properties are bound
(except as set forth in such opinion or the Prospectus);
(vii) Except as otherwise disclosed in the Prospectus or the
Registration Statement, there are no actions, proceedings or
investigations pending or, to the best of such counsel's knowledge,
threatened before any court, administrative agency or other tribunal
(A) asserting the invalidity of this Agreement, the applicable Terms
Agreement, the Purchase Agreement, the Supplement, the Pooling and
Servicing Agreement or the Certificates or the Class C Certificates
or the Class D Certificates, (B) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement, the applicable Terms Agreement, the
Purchase Agreement, the Supplement or the Pooling and Servicing
Agreement or the Certificates, which might materially and adversely
affect the performance by any of CSRC, SOAI, FSC or the Bank of its
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<PAGE> 16
obligations under, or the validity or enforceability of, this
Agreement, the applicable Terms Agreement, the Purchase Agreement,
the Supplement, the Pooling and Servicing Agreement or the
Certificates, or (C) seeking adversely to affect the federal income
tax attributes of the Certificates as described in the Prospectus
under the headings "Summary -- Tax Status" and "U.S. Federal Income
Tax Consequences"; and
(viii) Each of the applicable Terms Agreement, incorporating
by reference this Agreement, the Pooling and Servicing Agreement,
the First Amendment, the Supplement and the Purchase Agreement has
been duly authorized, executed and delivered by CSRC; each of the
applicable Terms Agreement, incorporating by reference this
Agreement, the Pooling and Servicing Agreement, the First Amendment
and the Supplement has been duly authorized, executed and delivered
by SOAI; the applicable Terms Agreement, incorporating by reference
this Agreement, has been delivered authorized, executed and
delivered by FSC; and the First Amendment and the Purchase Agreement
have been duly authorized, executed and delivered by the Bank.
(e) The Representative shall have received an opinion of Mayer,
Brown & Platt (or such other counsel as may be named in the applicable
Terms Agreement), special counsel for CSRC, SOAI, FSC and the Bank dated
the Closing Date, in form and substance reasonably satisfactory to the
Representative and its counsel, to the effect that:
(i) The Certificates have been duly authorized and, when
executed and authenticated in accordance with the terms of the
Pooling and Servicing Agreement and the Supplement and delivered and
paid for pursuant to this Agreement and the applicable Terms
Agreement, will be duly and validly issued and outstanding and will
be entitled to the benefits of the Pooling and Servicing Agreement
and the Supplement;
(ii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated
herein, in the applicable Terms Agreement, the Pooling and Servicing
Agreement, the Supplement or the Purchase Agreement, except for such
consents, approvals, orders or filings as may be required under
federal or state securities laws and any UCC-1 financing statements
that will be filed on or about the Closing Date;
(iii) The applicable Terms Agreement, incorporating by
reference this Agreement, the Purchase Agreement, the Pooling and
Servicing Agreement, the First Amendment and the Supplement each
constitutes the legal, valid and binding agreement of CSRC,
enforceable against CSRC in accordance with its terms, the
applicable Terms Agreement, incorporating by reference this
Agreement, the Pooling and Servicing Agreement, the First Amendment
and the Supplement each constitutes the legal, valid and binding
agreement of SOAI, enforceable against SOAI in accordance with its
terms; the applicable Terms Agreement,
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<PAGE> 17
incorporating by reference this Agreement, constitutes the legal,
valid and binding agreement of FSC; and the First Amendment and the
Purchase Agreement each constitutes the legal, valid and binding
agreement of the Bank enforceable against the Bank in accordance
with its terms; provided that, as to enforcement, such opinions are
subject to (A) the effect of bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership, or other similar laws of
general applicability relating to or affecting creditors' rights in
general and the rights of creditors of national banking
associations, (B) the application of general principles of equity
(regardless of whether enforceability is considered in a proceeding
in equity or at law) and (C) the unenforceability under certain
circumstances of provisions indemnifying a party against liability
where such indemnification is contrary to public policy;
(iv) The Registration Statement has become effective under the
Act and the Prospectus has been filed with the Commission pursuant
to Rule 424(b) promulgated under the Act; to the best of such
counsel's knowledge after due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act; and the Registration Statement and the
Prospectus (other than the financial and statistical information
therein as to which such counsel express no opinion) as of their
respective effective date or date of issuance complied as to form in
all material respects with the requirements of the Act and the rules
and regulations promulgated thereunder;
(v) This Agreement, the applicable Terms Agreement, the
Pooling and Servicing Agreement, the Supplement, the Purchase
Agreement and the Certificates conform in all material respects to
the descriptions thereof contained in the Registration Statement and
the Prospectus;
(vi) The Pooling and Servicing Agreement and the Supplement
will not be required to be qualified under the Trust Indenture Act
of 1939, as amended, and the Trust is not now, and immediately
following the sale of the Certificates pursuant hereto, will not be
required to be registered under the Investment Company Act of 1940,
as amended;
(vii) The disclosure in the Prospectus of certain legal
proceedings, contracts and other documents and the filing of such
contracts and documents as exhibits to the Registration Statement
are appropriately responsive in all material respects to the
applicable requirements of the Act and the rules and regulations
promulgated thereunder;
(viii) The statements in the Prospectus under the heading
"U.S. Federal Income Tax Consequences" and the summary thereof under
the heading "Summary -- Tax Status," to the extent they constitute
matters of law or legal conclusions with respect thereto, have been
reviewed by such counsel and are correct in all material respects;
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<PAGE> 18
(ix) The statements in the Prospectus under the headings
"Certain Legal Aspects of the Receivables" and "ERISA
Considerations," to the extent they constitute matters of law or
legal conclusions with respect thereto, have been reviewed by such
counsel and are correct in all material respects;
(x) For federal income tax purposes, the Trust will be
disregarded and treated as a mere security device and the
Certificates will be characterized as indebtedness of CSRC that is
secured by the Receivables and the issuance of the Certificates will
not be treated as a sale of the Receivables by CSRC; and
(xi) Neither the execution, delivery and performance by CSRC
of its obligations under this Agreement, the applicable Terms
Agreement, the Supplement, the Pooling and Servicing Agreement or
the Purchase Agreement, the purchase of the Receivables and the
transfer of the Receivables to the Trust, the issuance and sale of
the Certificates nor the consummation of any of the other
transactions contemplated herein, in the applicable Terms Agreement,
the Supplement, the Pooling and Servicing Agreement or the Purchase
Agreement will conflict with, result in a breach of or violation of
any rule, statute or regulation (including federal banking laws), or
any order or decree known to us, of any regulatory body,
administrative agency or governmental body having jurisdiction over
CSRC.
(xii) Neither the execution, delivery and performance by SOAI
of its obligations under this Agreement, the applicable Terms
Agreement, the Supplement or the Pooling and Servicing Agreement,
nor the consummation of any of the other transactions contemplated
herein, in the applicable Terms Agreement, the Supplement or the
Pooling and Servicing Agreement, will conflict with, result in a
breach of or violation of any rule, statute or regulation (including
federal banking laws), or any order or decree known to us, of any
regulatory body, administrative agency or governmental body having
jurisdiction over SOAI.
(xiii) Neither the execution, delivery and performance by FSC
of its obligations under this Agreement and the applicable Terms
Agreement nor the consummation of any of the other transactions
contemplated herein and in the applicable Terms Agreement, will
conflict with, result in a breach or violation of any rule, statute
or regulation including federal banking laws, or any order or decree
known to us, of any regulatory body, administrative agency or
governmental body having jurisdiction over FSC;
(xiv) Neither the execution, delivery and performance by the
Bank of its obligations under this Agreement, the applicable Terms
Agreement or the Purchase Agreement, the conveyance of the
Receivables, nor the consummation of any of the other transactions
contemplated herein, in the applicable Terms Agreement, the
Supplement or the Pooling and Servicing Agreement nor the
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<PAGE> 19
Purchase Agreement, will conflict with, result in a breach of or
violation of any rule, statute or regulation (including federal
banking laws), or any order or decree known to us, of any regulatory
body, administrative agency or governmental body having jurisdiction
over the Bank.
Such counsel also shall state that they have participated in
conferences with officers and other representatives of CSRC, SOAI,
FSC, the Bank and the Underwriters, counsel to the Underwriters,
representatives of the independent accountants for CSRC, SOAI, FSC
and the Bank and the Underwriters at which the contents of the
Registration Statement and the Prospectus were discussed and,
although they are not passing upon and do not assume responsibility
for, the factual accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus
(except as stated in paragraphs (vii) and (ix) above) and have made
no independent check or verification thereof for the purpose of
rendering their opinion, on the basis of the foregoing (relying as
to materiality to a large extent upon the certificates of officers
and other representatives of CSRC, SOAI, FSC and the Bank), nothing
has come to such counsel's attention that leads such counsel to
believe that either the Registration Statement, as of its effective
date, or the Prospectus as of its date and as of the Closing Date,
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which
they were made, not misleading; provided, however, that such counsel
express no view with respect to the financial and statistical data
included in the Registration Statement or the Prospectus.
(f) The Representative shall have received an opinion or opinions of
Mayer, Brown & Platt (or such other counsel as may be named in the
applicable Terms Agreement), special counsel for the Bank and CSRC, dated
the Closing Date, in form and substance reasonably satisfactory to the
Representative and its counsel, with respect to certain matters relating
to the transfer of the Receivables to CSRC and to the Trust, with respect
to the perfection of the Trust's interest in the Receivables, with respect
to the security interest of any Receivable Purchaser in the assets of the
Trust not being superior to the security interest of the Trustee in the
assets of the Trust held for the benefit of the Investor
Certificateholders, with respect to the applicability of certain
provisions of the National Bank Act and the Federal Deposit Insurance Act,
as amended by the Financial Institutions, Reform, Recovery and Enforcement
Act of 1989 with respect to the effect of receivership of the Bank on such
interest in the Receivables, and with respect to other related matters in
a form previously approved by the Representative and its counsel.
(g) The Representative shall have received from Orrick, Herrington &
Sutcliffe LLP (or such other counsel as may be named in the applicable
Terms Agreement), special counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, in form and substance satisfactory to
the Representative, with respect to the organization of each of CSRC,
SOAI, FSC and the Bank, the validity of the Certificates, the Registration
Statement, the Prospectus and other related matters as the Representative
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may require, and each of CSRC and FSC shall have furnished to such counsel
such documents as they may request for the purpose of enabling them to
pass upon such matters.
(h) The Representative shall have received a certificate or
certificates, dated the Closing Date, of a Vice President or more senior
officer of each of CSRC, SOAI and FSC in which such officer, to the best
of his or her knowledge after reasonable investigation, shall state that
(A) the representations and warranties of each of CSRC, SOAI and FSC in
this Agreement are true and correct in all material respects on and as of
the Closing Date, (B) each of CSRC, SOAI and FSC has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder and under the applicable Terms Agreement at or prior
to the Closing Date, (C) the representations and warranties of CSRC, SOAI
and the Bank, respectively in the Supplement, in the Pooling and Servicing
Agreement and in the Purchase Agreement are true and correct as of the
dates specified in the Supplement, in the Pooling and Servicing Agreement
and in the Purchase Agreement, and are true on the Closing Date except to
the extent such representations and warranties relate to an earlier date,
(D) the Registration Statement has become effective, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are threatened
by the Commission and (E) subsequent to the date of the Prospectus, there
has been no material adverse change in the condition (financial or
otherwise) of CSRC, SOAI or FSC or any of their respective Affiliates
except as set forth in or contemplated in the Registration Statement and
the Prospectus or as described in such certificate;
(i) The Representative shall have received an opinion of Squire,
Sanders & Dempsey LLP, special counsel for CSRC, dated the Closing Date,
in form and substance reasonably satisfactory to the Representative and
its counsel, with respect to the characterization of the Certificates
under Ohio tax law; and, with respect to the perfection of the Trust's
interest in the Receivables and with respect to other related matters in a
form previously approved by the Representative and its counsel.
(j) The Representative shall have received an opinion of [Pepper,
Hamilton & Scheetz] (or such other counsel as may be named in the
applicable Terms Agreement), counsel to the Trustee, dated the Closing
Date, in form and substance reasonably satisfactory to the Representative
and its counsel, to the effect that:
(i) The Trustee is a national banking association duly
organized, validly existing and in good standing under the laws of
the United States of America, has full power and authority to
transact the business of banking and has the power and authority to
enter into and to perform all actions required of it under the
Pooling and Servicing Agreement and the Supplement;
(ii) Each of the Pooling and Servicing Agreement and the
Supplement has been duly authorized, executed and delivered by the
Trustee and constitutes a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its
terms, except as such enforceability may be limited by (A)
20
<PAGE> 21
bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereafter
in effect relating to the enforcement of creditors' rights in
general, as such laws would apply in the event of a bankruptcy,
insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or similar occurrence affecting the
Trustee, and (B) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law) as well as concepts of reasonableness, good faith and fair
dealing;
(iii) The Certificates have been duly authenticated and
delivered by the Trustee;
(iv) The execution and delivery of the Pooling and Servicing
Agreement and the Supplement by the Trustee and the performance by
the Trustee of their respective terms do not conflict with or result
in a violation of (A) any law or regulation of the United States of
America or the State of Pennsylvania governing the banking or trust
powers of the Trustee, or (B) the Certificate of Incorporation or
By-laws of the Trustee; and
(v) No approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or
the State of Pennsylvania having jurisdiction over the banking or
trust powers of the Trustee is required in connection with the
execution and delivery by the Trustee of the Pooling and Servicing
Agreement and the Supplement or the performance by the Trustee
thereunder.
(k) The Representative shall have received a letter, dated the
Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section 10.
(l) The Representative shall have received evidence satisfactory to
it that the Certificates shall be rated in accordance with the applicable
Terms Agreement by each Rating Agency.
CSRC will furnish the Representative, or cause the Representative to
be furnished with, such conformed copies of such opinions, certificates, letters
and documents as the Representative reasonably requests.
11. (a) Each of CSRC, SOAI and FSC agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, damages, liabilities and expenses
(including, without limitation, the reasonable legal fees and other
reasonable expenses incurred in connection with any suit, action or
proceeding or any claim asserted) caused by any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (as amended or supplemented
if CSRC shall have furnished any amendments or supplements thereto)
or any preliminary prospectus,
21
<PAGE> 22
or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and
in conformity with information relating to any Underwriter furnished to
CSRC in writing by such Underwriter through the Representative expressly
for use in the Prospectus. Each of CSRC, SOAI and FSC hereby acknowledge
that the only information relating to any Underwriter furnished to CSRC
for use in the Prospectus is the following (the "Underwriters'
Information"): the information on the cover page in the chart under the
headings Class A Certificates and Class B Certificates, the "Price to
public for certificate"; the first sentence under the caption "Risk
Factors--It may not be possible to find an investor to purchase your
certificates"; and, under the caption "Underwriting," the information in
the table, the second and third paragraphs following the table and the
last paragraph under such "Underwriting" caption. The Underwriters agree,
however, that the foregoing indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter (or to the
benefit of any person controlling such Underwriter) from whom the person
asserting any such losses, claims, damages, liabilities or expenses
purchased Certificates if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary prospectus is
eliminated or remedied in the Prospectus (as amended or supplemented if
CSRC shall have furnished any amendments or supplements thereto) and, if
required by law, a copy of the Prospectus (as so amended or supplemented)
shall not have been furnished to such person at or prior to the written
confirmation of the sale of such Certificates to such person.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless each of CSRC, SOAI and FSC, its directors, its officers
who sign the Registration Statement and each person who controls CSRC,
SOAI or FSC within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act, to the same extent as the indemnity from
each of CSRC, SOAI and FSC to each Underwriter in paragraph (a) of this
Section 11, but only with reference to the Underwriters' Information.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to
either paragraph (a) or (b) of this Section 11, such person (the
"Indemnified Person") shall promptly notify the person against whom such
indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in
such proceeding and shall pay the reasonable fees and reasonable expenses
of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying
Person has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person or
22
<PAGE> 23
(iii) the named parties in any such proceeding (including any impleaded
parties) include both the Indemnifying Person and the Indemnified Person
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters and such control persons of
Underwriters shall be designated in writing by the Representative and any
such separate firm for CSRC, SOAI and FSC, its directors, its officers who
sign the Registration Statement and such control persons of CSRC, SOAI and
FSC or authorized representatives shall be designated in writing by CSRC,
SOAI and FSC. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement
or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or
could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are
the subject matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 11 is unavailable to an Indemnified Person in respect of all
losses, claims, damages, liabilities or expenses referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate
to reflect the relative benefits received by CSRC, SOAI and FSC on the one
hand and the Underwriters on the other hand from the offering of the
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of CSRC, SOAI and FSC on the one hand and the
Underwriters on the other in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relative equitable considerations. The relative benefits
received by CSRC, SOAI and FSC on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the net
proceeds from the offering of such Certificates (before deducting
expenses) received by CSRC and the total underwriting discounts and the
commissions received by the Underwriters bear to the aggregate public
offering price of the Certificates. The relative fault of CSRC, SOAI and
FSC on the one hand and the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by CSRC, SOAI
23
<PAGE> 24
or FSC or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
(e) CSRC, SOAI and FSC and the Underwriters agree that it would not
be just and equitable if contribution pursuant to paragraph (d) of this
Section 11 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in such paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) of this Section 11
shall be deemed to include, subject to the limitations set forth above,
any reasonable legal or other reasonable expenses incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 11, in no
event shall an Underwriter be required to contribute any amount in excess
of the amount by which the underwriting discount on the Certificates
purchased by such Underwriter exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 11 are several in
proportion to the respective principal amount of the Certificates set
forth opposite their names in Schedule I to the Terms Agreement and not
joint.
The indemnity and contribution agreements contained in this Section
11 are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section
11 and the representations and warranties of each of CSRC, SOAI and FSC set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or by or on behalf of each of CSRC, SOAI and
the Bank, its officers or directors or any other person controlling each of
CSRC, SOAI and the Bank and (iii) acceptance of and payment for any of the
Certificates.
12. Notwithstanding anything herein contained, this Agreement and
the applicable Terms Agreement may be terminated in the absolute discretion of
the Representative, by notice given to CSRC, if after the execution and delivery
of this Agreement and the applicable Terms Agreement and prior to the Closing
Date (i) there has occurred any material adverse change or any development
involving a prospective material adverse change, in or affecting the general
affairs, business, prospects, management, financial position, stockholders'
equity or results of operation of CSRC, SOAI or FSC or Charming Shoppes, Inc.,
and their respective subsidiaries, taken as a whole, the effect of which in the
reasonable judgment of the Representative after consultation with CSRC, SOAI,
FSC and Charming Shoppes, Inc. materially impairs the investment quality of the
Certificates; (ii) there has occurred any downgrading or placement on "credit
watch" for possible downgrade in the rating accorded any
24
<PAGE> 25
securities of or guaranteed by CSRC, SOAI or FSC or Charming Shoppes, Inc., by
any "nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Act; (iii) trading generally
shall have been suspended or materially limited on or by, as the case may be,
the New York Stock Exchange; (iv) trading of any securities of or guaranteed by
CSRC or FSC or Charming Shoppes, Inc. shall have been suspended on any exchange
or in any over-the-counter market; (v) a general moratorium on commercial
banking activities in New York shall have been declared by either Federal or New
York State authorities; or (vi) there shall have occurred any outbreak or
escalation of hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the reasonable judgment of the
Representative, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impracticable or inadvisable to proceed with
completion of the sale and payment for the Certificates.
13. If any Underwriter defaults in its obligations to purchase
Certificates hereunder and the aggregate principal amount of the Certificates
that such defaulting Underwriter agreed but failed to purchase does not exceed
10% of the total principal amount of such Certificates, the Representative may
make arrangements satisfactory to CSRC for the purchase of such Certificates by
other persons, including the non-defaulting Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated, in proportion to their commitments hereunder, to purchase the
Certificates that such defaulting Underwriter agreed but failed to purchase. If
any Underwriter so defaults and the aggregate principal amount of the
Certificates with respect to which such default or defaults occur exceeds 10% of
the total principal amount of such Certificates and arrangements satisfactory to
the Representative and CSRC for the purchase of such Certificates by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any nondefaulting Underwriter or
CSRC, except as provided in Section 9. In any such case, either the
Representative or CSRC shall have the right to postpone the Closing Date, but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
may be effected. Any action taken under this paragraph shall not relieve a
defaulting Underwriter from liability for its default.
14. If for any reason other than as set forth in Section 13 the
purchase of the Certificates by the Underwriters is not consummated, CSRC shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 9 and the respective obligations of CSRC and the Underwriters pursuant
to Section 11 shall remain in effect. If the purchase of the Certificates by the
Underwriters is not consummated for any reason other than solely because of the
occurrence of any event specified in clauses (iii), (iv), (v) or (vi) of Section
12, CSRC will reimburse the Underwriters for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) reasonably incurred by
it in connection with the offering of the Certificates.
15. Any action by the Underwriters hereunder may be taken by Bear
Stearns on behalf of the Underwriters, and any such action taken by Bear Stearns
shall be binding upon the Underwriters. All notices and other communications
hereunder shall be in writing and shall
25
<PAGE> 26
be deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication. Notices to the Underwriters shall be given to the
Representative, c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New
York 10167 (Facsimile No.: 212-___-____), Attention: ________________. Notices
to CSRC shall be given to it, c/o Charming Shoppes, Inc., 450 Winks Lane,
Bensalem, Pennsylvania 19020, Attention: General Counsel.
16. This Agreement shall become effective upon execution and
delivery of the applicable Terms Agreement.
17. This Agreement shall inure to the benefit of and be binding upon
CSRC, SOAI, FSC, the Underwriters, any controlling persons referred to herein
and their respective successors and assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person, firm
or corporation any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. No purchaser of
Certificates from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
18. THIS AGREEMENT MAY BE SIGNED IN COUNTERPARTS, EACH OF WHICH
SHALL BE AN ORIGINAL AND ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME
INSTRUMENT. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
26
<PAGE> 27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon it will
become a binding agreement among CSRC, SOAI, FSC and the several Underwriters in
accordance with its terms.
Very truly yours,
CHARMING SHOPPES RECEIVABLES CORP.
By: ___________________________________
Name:
Title:
SPIRIT OF AMERICA, INC.
By: ___________________________________
Name:
Title:
FASHION SERVICE CORP.
By: ___________________________________
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
BEAR, STEARNS & CO. INC.,
as Representative of the Underwriters
named in Schedule I to the Terms Agreement
By:___________________________________
Name:
Title:
<PAGE> 28
EXHIBIT A
[FORM OF SERIES 1999-1 TERMS AGREEMENT]
CHARMING SHOPPES MASTER TRUST
Series [ %] [Floating Rate]
Asset Backed Certificates
TERMS AGREEMENT
Dated: _______ , 19__
To: Charming Shoppes Receivables Corp.
Re: Underwriting Agreement dated _______ , 19__ .
Underwriters: The Underwriters named on Schedule I attached hereto are the
"Underwriters" for the purpose of this Agreement and for the
purposes of the above referenced Underwriting Agreement as such
Underwriting Agreement is incorporated herein and made a part
hereof.
Terms of Certificates:
Initial Investor Interest Interest Rate or Formula Price to Public (1)
- ------------------------- ------------------------ -------------------
(1) Plus accrued interest at the applicable rate from ______ , 199_ .
Certificate Rating [s]: ["_______ " by Moody's Investors Service, Inc.]
["_______ " by Standard & Poor's Corporation] [other]
Distribution Dates: ____________________ .
Closing Date:______
<PAGE> 29
Credit Enhancement Provider:
Trustee:
Pooling and Servicing Agreement:
Supplement:
Purchase Price:
The purchase price payable by the Underwriters for the Certificates
covered by this Agreement will be the following percentage of the principal
amounts to be issued:
Per Certificate _____________ %
Registration Statement:
Underwriting Commissions, Concessions and Discounts:
The Underwriters' discounts and commissions, the concessions that
the Underwriters may allow to certain dealers, and the discounts that such
dealers may reallow to certain other dealers, each expressed as a percentage of
the principal amount of the Certificates, shall be as follows:
<TABLE>
<CAPTION>
Underwriting
Discounts and Selling
Concessions Concessions Reallowance
- ----------- ----------- -----------
<S> <C> <C>
% % %
</TABLE>
Location of Closing:
Payment for the Certificates:
Opinion Modifications:
<PAGE> 30
The Underwriters agree, severally and not jointly, subject to the
terms and provisions of the above referenced Underwriting Agreement which is
incorporated herein in its entirety and made a part hereof, to purchase the
respective principal amounts of the above referenced Series of Certificates set
forth opposite their names on Schedule I hereto.
BEAR STEARNS & CO. INC.
as Representative of the Underwriters
named in Schedule I hereto
By:___________________________________
Name:
Title:
Accepted:
CHARMING SHOPPES RECEIVABLES CORP.
By:___________________________________
Name:
Title:
SPIRIT OF AMERICA, INC.
By:___________________________________
Name:
Title:
FASHION SERVICE CORP.
By:___________________________________
Name:
Title:
<PAGE> 31
SCHEDULE I
UNDERWRITERS
$_____________________________ Principal Amount of Series ______
[______ %] [Floating Rate] Asset Backed Certificates.
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
[Name of Underwriter] $
----------
==========
</TABLE>
<PAGE> 32
CHARMING SHOPPES MASTER TRUST
$__________ Floating Rate Class A Asset Backed Certificates
$__________ Floating Rate Class B Asset Backed Certificates
TERMS AGREEMENT
Dated: April __, 1999
To: Charming Shoppes Receivables Corp.
Re: Underwriting Agreement dated April ___, 1999.
Underwriters: The Underwriters named on Schedule I attached hereto are the
"Underwriters" for the purpose of this Agreement and for the
purposes of the above referenced Underwriting Agreement as such
Underwriting Agreement is incorporated herein and made a part
hereof.
Terms of Class A Certificates:
<TABLE>
<CAPTION>
Initial Investor Interest Interest Rate or Formula Price to Public (1)
- ------------------------- ------------------------ -------------------
<S> <C> <C>
$ %
- --------------- ---------
</TABLE>
(1) Plus accrued interest at the applicable rate from _________, 1999.
Terms of Class B Certificates:
<TABLE>
<CAPTION>
Initial Investor Interest Interest Rate or Formula Price to Public (1)
- ------------------------- ------------------------ -------------------
<S> <C> <C>
$ %
- --------------- ---------
</TABLE>
(1) Plus accrued interest at the applicable rate from __________, 1999.
Certificate Rating
Class A: "__________" Moody's Investors Service Inc.
"__________" Standard & Poor's Rating Group
Class B: "__________" Moody's Investors Service Inc.
Distribution Dates:_____________ .
Closing Date: April __, 1999.
<PAGE> 33
Trustee: First Union National Bank
Pooling and Servicing Agreement: Second Amended and Restated Pooling and
Servicing Agreement dated as of November 25, 1997 as amended by the First
Amendment dated as of ______________, 1999
Supplement: Series 1999-1 Supplement dated as of _______, 1999
Purchase Price:
The purchase price payable by the Underwriters for the Class A
Certificates covered by this Agreement will be the following percentage of the
principal amounts to be issued:
Per Certificate _____________ %
The purchase price payable by the Underwriters for the Class B
Certificates covered by this Agreement will be the following percentage of the
principal amounts to the issued:
Per Certificate _____________%
Registration Statement:
Underwriting Commissions, Concessions and Discounts:
The Underwriters' discounts and commissions, the concessions that
the Underwriters may allow to certain dealers, and the discounts that such
dealers may reallow to certain other dealers, each expressed as a percentage of
the principal amount of the Certificates, shall be as follows:
<TABLE>
<CAPTION>
Underwriting
Discounts and Selling
Concessions Concessions Reallowance
----------- ----------- -----------
<S> <C> <C> <C>
Class A % % %
Class B % % %
</TABLE>
Location of Closing: Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Payment for the Certificates: Wire transfer of immediately available funds.
<PAGE> 34
The Underwriters agree, severally and not jointly, subject to the
terms and provisions of the above referenced Underwriting Agreement which is
incorporated herein in its entirety and made a part hereof, to purchase the
respective principal amounts of the above referenced Series of Certificates set
forth opposite their names on Schedule I hereto.
BEAR STEARNS & CO. INC.
as Representative of the Underwriters
named in Schedule I hereto
By:____________________________________
Name:
Title:
Accepted:
CHARMING SHOPPES RECEIVABLES CORP.
By:____________________________________
Name:
Title:
SPIRIT OF AMERICA, INC.
By:____________________________________
Name:
Title:
FASHION SERVICE CORP.
By: ____________________________________
Name:
Title:
<PAGE> 35
SCHEDULE I
CLASS A
UNDERWRITERS
$________________ Principal Amount of Floating Rate Class A Asset
Backed Certificates.
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
[Name of Underwriter] $
----------
==========
</TABLE>
CLASS B
UNDERWRITERS
$________________ Principal Amount of Floating Rate Class B Asset
Backed Certificates.
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
[Name of Underwriter] $
----------
==========
</TABLE>
S-1
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
*****
FASHION SPC, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the
unanimous written consent of its members, adopted a resolution proposing and
declaring advisable the following amendment to the Certificate of Incorporation
of said corporation:
RESOLVED, that the certificate of Incorporation of FASHION
SPC, INC. be amended by changing the First and Third Article
thereof so that, as amended, said Article shall be and read
as follows:
"FIRST: The name of the corporation is Charming Shoppes
Receivables Corp."
"THIRD: The purposes for which this corporation is formed are:
(a) to purchase, own, acquire interests in, hold, sell,
transfer and pledge accounts receivable ("Receivables")
generated or acquired by entities affiliated with the
Corporation; (b) to enter into and perform its obligations in
accordance with an agreement that effectuates the purchase,
ownership, acquisition, holding, sale, transfer or pledge of
Receivables or an interest therein; (c) to dividend, loan or
otherwise divest proceeds from Receivables and any other
income as determined by the Corporation's Board of Directors,
and (d) to engage in any lawful act or activity and to
exercise any powers permitted to corporations organized under
the General Corporation Law of the State of Delaware that are
incidental to and necessary, suitable or convenient for the
accomplishment of the purposes specified in the foregoing
clauses (a), (b), or (c), except that the Corporation shall
not incur any of the following types of indebtedness: (i)
indebtedness for borrowed money other than to the extent
incurred in transactions related to the financing of the
Receivables; (ii) obligations as lessee under leases which
shall have been or should be, in accordance with generally
accepted accounting
<PAGE> 2
principles, recorded as capital leases; and (iii) obligations
under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) and (ii) above."
SECOND: That in lieu of a meeting and vote of stockholders,
the stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in
accordance with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said FASHION SPC, INC. has caused this
certificate to be signed by Eric M. Specter its President, this 20th day of
August, 1997.
FASHION SPC, INC.
By______________________
Eric M. Specter, President
2
<PAGE> 3
CERTIFICATE OF INCORPORATION
OF
FASHION SPC, INC.
FIRST: The name of the corporation is FASHION SPC, INC.
SECOND: The registered office of the corporation is to be
located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, in the County of New Castle, in the State of Delaware. The name of
its registered agent at that address in The Corporation Trust Company.
THIRD: The purposes for which this corporation is formed are:
(a) to purchase, own, acquire interests in, hold, sell,
transfer and pledge accounts receivable ("Receivables") generated or acquired by
entities affiliated with the Corporation; (b) to enter into and perform its
obligations in accordance with any agreement that effectuates the purchase,
ownership, acquisition, holding, sale, transfer or pledge of Receivables or an
interest therein; (c) to dividend, loan or otherwise divest proceeds from
Receivables and any other income as determined by the Corporation's Board of
Directors; and (d) to engage in any lawful act or activity and to exercise any
powers permitted to corporations organized under the General Corporation Law of
the State of Delaware that are incidental to and necessary, suitable or
convenient for the accomplishment of the purposes specified in the foregoing
clauses (a), (b) or (c), except that the Corporation shall. not incur any of the
following types of indebtedness: (i) indebtedness for borrowed money; (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments;
(iii) obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases; and (iv) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iii)
above.
FOURTH: The corporation shall be authorized to issue 1000 shares of
stock all of which are to be of one class and without par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Name Address
Kathleen H. Lieberman 450 Winks Lane
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Bensalem, PA 18977
SIXTH: Elections of directors need not be by written ballot, unless the
bylaws so provide.
SEVENTH: The original by-laws of the corporation shall be adopted by
the initial incorporator named herein. Thereafter the board of directors shall
have the power, in addition to the stockholders, to make, alter, or repeal the
by-laws of the corporation.
EIGHTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided in, the by-laws. The
number of directors constituting the initial board of directors shall be three.
(2) At all times, at least one of the directors of the Corporation
shall be an Independent Director. Such Independent Director must also, at all
times as he or she serves as a Director, be one of the executive officers of the
Corporation. "Independent Director" shall mean a director of the Corporation who
shall at no time be or have been, within the five year period preceding
election, a director, officer or employee of the Corporation or any Affiliate of
the Corporation and who shall at no time hold any beneficial interest in the
Corporation or any beneficial interest in any Affiliate which beneficial
interest in the Affiliate exceeds a market value of Ten Thousand Dollars.
"Affiliate" means, with respect to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such Person. For purposes of this definition, control of a Person shall
mean the power, direct or indirect, (i) to vote 5% or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. "Person" means an individual, a
corporation (including a business trust), a company, a voluntary association, a
partnership, a trust, an unincorporated organization or a government or any
agency, instrumentally or political subdivision thereof.
(3) Notwithstanding any of the foregoing, the Corporation will conduct
its affairs in the following manner: (i) the Corporation's assets will not be
commingled with the assets of any other Person; (ii) the Corporation will
maintain corporate records and financial and accounting books and records
separate from those of any other Person; and (iii) the Corporation shall pay
from its assets all obligations and indebtedness of any kind incurred by the
Corporation, and shall not pay from its assets any obligations or indebtedness
of any other Person. If the Corporation shall share office facilities with
Affiliates, the Corporation shall be obligated to pay a fair market rent for
the space it occupies.
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(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this certificate, and to any by-laws from time to time
made by the stockholders; provided, however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid if such
by-law had not been made.
NINTH: A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability,(i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit, it being the intention of the foregoing provision to eliminate
the liability of the Corporation's directors to the Corporation or its
stockholders to the fullest extent permitted by Section 102 (b) (7) and 145 of
the Delaware General Corporation Law, as amended from tine to time. The
Corporation shall indemnify to the fullest extent permitted by Sections
102(b)(7) and 145 of the Delaware General Corporation Law, as amended from tine
to time, each person that such Sections grant the Corporation the power to
indemnify.
TENTH: Subject to Article ELEVENTH of this Certificate of
Incorporation, the corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders are granted subject to this reservation; provided however, that any
action in respect of this Certificate of Incorporation that bears upon whether
the separate corporate identity of the Corporation and its Affiliates (as
defined in Article EIGHTH hereof) will be respected and the assets of the
Corporation not consolidated with those of any Affiliate under applicable
federal or state bankruptcy or insolvency law must receive the prior consent of
the Independent Director (as defined in Article EIGHTH hereof).
ELEVENTH: The corporation shall not, without the unanimous consent of
all the directors including the consent of the Independent Director both in his
or her capacity as a director and as an executive officer, (i) make an
assignment for the benefit of creditors, (ii) file a petition in bankruptcy,
(iii) petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or for a substantial part of its property, (iv)
commence any proceeding under any bankruptcy, reorganization, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereinafter in effect, (v) consent or acquiesce in the filing of any such
petition, application, proceeding or appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the corporation or any substantial part of its property,
(vi) except as required by law, admit its inability to pay its debts generally
as they become due, or (vii) authorize any of the foregoing to
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be done or taken on behalf of the corporation. The corporation shall not,
without the unanimous consent of all of the directors and the consent of any
collateral agent holding a security interest in assets of the corporation, amend
the provisions of either Article THIRD, Article EIGHTH or this Article ELEVENTH
of this Certificate of Incorporation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed and that the facts herein stated are true, and
accordingly have hereunto set my hand and seal this 16th day of December, 1992.
---------------------
Incorporator
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EXHIBIT 3.2
B Y L A W S
OF
Fashion SPC, Inc.
(a Delaware Corporation)
... 00000 ...
ARTICLE I
Offices and Fiscal Year
SECTION 1.01. Registered Office.--The registered office of the
corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware until otherwise established by resolution of the board of directors,
and a certificate certifying the change is filed in the manner provided by
statute.
SECTION 1.02. Other Offices.--The corporation may also have offices at
such other places within or without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation
requires.
SECTION 1.03. Fiscal Year.--The fiscal year of the corporation shall
end on the last Saturday of January closest to January 31st.
ARTICLE II
Notice - Waivers - Meetings
SECTION 2.01. Notice, What Constitutes.--Whenever, under the provisions
of the Delaware General Corporation Law ("GCL") or the certificate of
incorporation or of these bylaws, notice is required to be given to any director
or stockholder, it shall not be construed to mean personal notice, but such
notice may be given in writing, by mail or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier service, charges
prepaid, or by facsimile transmission to the address (or to the telex, TWX,
facsimile or telephone number) of the person appearing on the books of the
corporation, or in the case of
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directors, supplied to the corporation for the purpose of notice. If the notice
is sent by mail, telegraph or courier service, it shall be deemed to be given
when deposited in the United States mail or with a telegraph office or courier
service for delivery to that person or, in the case of telex or TWX, when
dispatched, or in the case of facsimile transmission, when received.
SECTION 2.02. Notice of Meetings of Board of Directors.--Notice of a
regular meeting of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
telex, TWX or facsimile transmission) or 48 hours (in the case of notice by
telegraph, courier service or express mail) or five days (in the case of notice
by first class mail) before the time at which the meeting is to be held. Every
such notice shall state the time and place of the meeting. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
board need be specified in a notice of the meeting.
SECTION 2.03. Notice of Meetings of Stockholders.--Written notice of
the place, date and hour of every meeting of the stockholders, whether annual or
special, shall be given to each stockholder of record entitled to vote at the
meeting not less than ten nor more than 60 days before the date of the meeting.
Every notice of a special meeting shall state the purpose or purposes thereof.
If the notice is sent by mail, it shall be deemed to have been given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at the address of the stockholder as it appears on the records of
the corporation.
SECTION 2.04. Waivers of Notice.
(a) Written Waiver.--Whenever notice is required to be given under any
provisions of the GCL or the certificate of incorporation or these bylaws, a
written waiver, signed by the person or persons entitled to the notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors, or members of a committee of
directors need be specified in any written waiver of notice of such meeting.
(b) Waiver by Attendance.--Attendance of a person at a meeting, either
in person or by proxy, shall constitute a waiver of notice of such meeting,
except where a person attends a meeting for the express purpose of objecting at
the beginning of the meeting to the transaction of any business because the
meeting was not lawfully called or convened.
SECTION 2.05. Exception to Requirements of Notice.
(a) General Rule.--Whenever notice is required to be given, under any
provision of the GCL or of the certificate of incorporation or these bylaws, to
any person with whom communication is unlawful, the giving of such notice to
such person shall not be required and there shall be no duty to apply to any
governmental authority or agency for a license or permit to
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give such notice to such person. Any action or meeting which shall be taken or
held without notice to any such person with whom communication is unlawful shall
have the same force and effect as if such notice had been duly given.
SECTION 2.06. Conference Telephone Meetings.--One or more directors may
participate in a meeting of the board, or of a committee of the board, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
ARTICLE III
Meetings of Stockholders
SECTION 3.01. Place of Meeting.--All meetings of the stockholders of
the corporation shall be held at the registered office of the corporation, or at
such other place within or without the State of Delaware as shall be designated
by the board of directors in the notice of such meeting.
SECTION 3.02. Annual Meeting.--The board of directors may fix and
designate the date and time of the annual meeting of the stockholders, but if no
such date and time is fixed and designated by the board, the meeting for any
calendar year shall be held on the third Tuesday of June in such year, if not a
legal holiday under the laws of Delaware, and, if a legal holiday, then on the
next succeeding business day, not a Saturday, at 10:00 o'clock A.M., and at said
meeting the stockholders then entitled to vote shall elect directors and shall
transact such other business as may properly be brought before the meeting.
SECTION 3.03. Special Meetings.--Special meetings of the stockholders
of the corporation may be called at any time by the chairman of the board, a
majority of the board of directors, the president, or at the request, in
writing, of stockholders entitled to cast at least a majority of the votes that
all stockholders are entitled to cast at the particular meeting. At any time,
upon the written request of any person or persons who have duly called a special
meeting, which written request shall state the purpose or purposes of the
meeting, it shall be the duty of the secretary to fix the date of the meeting
which shall be held at such date and time as the secretary may fix, not less
than ten nor more than 60 days after the receipt of the request, and to give due
notice thereof. If the secretary shall neglect or refuse to fix the time and
date of such meeting and give notice thereof, the person or persons calling the
meeting may do so.
SECTION 3.04. Quorum, Manner of Acting and Adjournment.
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(a) Quorum.--The holders of a majority of the shares entitled to vote,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders except as otherwise provided by the GCL, by the
certificate of incorporation or by these bylaws. If a quorum is not present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum is present or represented. At any such adjourned
meeting at which a quorum is present or represented, the corporation may
transact any business which might have been transacted at the original meeting.
If the adjournment is for more than 30 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
(b) Manner of Acting .--Directors shall be elected by a plurality of
the votes of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. In all matters other than the
election of directors, the affirmative vote of the majority of shares present in
person or represented by proxy at the meeting and entitled to vote thereon shall
be the act of the stockholders, unless the question is one upon which, by
express provision of the applicable statute, the certificate of incorporation or
these bylaws, a different vote is required in which case such express provision
shall govern and control the decision of the question. The stockholders present
in person or by proxy at a duly organized meeting can continue to do business
until adjournment, notwithstanding withdrawal of enough stockholders to leave
less than a quorum.
SECTION 3.05. Organization.--At every meeting of the stockholders, the
chairman of the board, if there be one, or in the case of a vacancy in the
office or absence of the chairman of the board, one of the following persons
present in the order stated: the vice chairman, if one has been appointed, the
president, the vice presidents in their order of rank or seniority, a chairman
designated by the board of directors or a chairman chosen by the stockholders
entitled to cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast, shall act as chairman, and the
secretary, or, in the absence of the secretary, an assistant secretary, or in
the absence of the secretary and the assistant secretaries, a person appointed
by the chairman, shall act as secretary.
SECTION 3.06. Voting.
(a) General Rule.--Unless otherwise provided in the certificate of
incorporation, each stockholder shall be entitled to one vote, in person or by
proxy, for each share of capital stock having voting power held by such
stockholder.
(b) Voting and Other Action by Proxy.--
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(1) A stockholder may execute a writing authorizing another
person or persons to act for the stockholder as proxy. Such execution
may be accomplished by the stockholder or the authorized officer,
director, employee or agent of the stockholder signing such writing or
causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature.
A stockholder may authorize another person or persons to act for the
stockholder as proxy by transmitting or authorizing the transmission of
a telegram, cablegram, or other means of electronic transmission to the
person who will be the holder of the proxy or to a proxy solicitation
firm, proxy support service organization or like agent duly authorized
by the person who will be the holder of the proxy to receive such
transmission if such telegram, cablegram or other means of electronic
transmission sets forth or is submitted with information from which it
can be determined that the telegram, cablegram or other electronic
transmission was authorized by the stockholder.
(2) No proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period.
(3) A duly executed proxy shall be irrevocable if it states
that it is irrevocable and if, and only so long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A proxy
may be made irrevocable regardless of whether the interest with which
it is coupled is an interest in the stock itself or an interest in the
corporation generally.
SECTION 3.07. Consent of Stockholders in Lieu of Meeting.--Unless
otherwise provided by the Certificate of Incorporation, any action required to
be taken at any annual or special meeting of stockholders of the corporation, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the corporation by delivery to its registered office
in Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered in the manner required in this
section to the corporation, written consents signed by a sufficient number of
holders to take action are delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to a corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested.
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Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
SECTION 3.08. Voting Lists.--The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting. The list shall be arranged in alphabetical order, showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 3.09. Inspectors of Election.
(a) Appointment.--All elections of directors shall be by written
ballot, unless otherwise provided in the certificate of incorporation; the vote
upon any other matter need not be by ballot. In advance of any meeting of
stockholders the board of directors may appoint inspectors, who need not be
stockholders, to act at the meeting. If inspectors are not so appointed, the
chairman of the meeting may, and upon the demand of any stockholder or his proxy
at the meeting and before voting begins shall, appoint inspectors. The number of
inspectors shall be either one or three, as determined, in the case of judges
appointed upon demand of a stockholder, by stockholders present entitled to cast
a majority of the votes which all stockholders present are entitled to cast
thereon. No person who is a candidate for office shall act as an inspector. In
case any person appointed as an inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment made by the board of directors in
advance of the convening of the meeting, or at the meeting by the chairman of
the meeting.
(b) Duties.--If inspectors are appointed, they shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum and the authenticity,
validity and effect of proxies, shall receive votes or ballots, shall hear and
determine all challenges and questions in any way arising in connection with the
right to vote, shall count and tabulate all votes, shall determine the result,
and shall do such acts as may be proper to conduct the election or vote with
fairness to all stockholders. If there be three inspectors of election, the
decision, act or certificate of a majority shall be effective in all respects as
the decision, act or certificate of all.
(c) Report.--On request of the chairman of the meeting or of any
stockholder or his proxy, the inspectors shall make a report in writing of any
challenge or question or matter determined by them, and execute a certificate of
any fact found by them.
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ARTICLE IV
Board of Directors
SECTION 4.01. Powers.--All powers vested by law in the corporation
shall be exercised by or under the authority of, and the business and affairs of
the corporation shall be managed under the direction of, the board of directors.
SECTION 4.02. Number and Term of Office.--Subject to the applicable
provisions of the Certificate of Incorporation, the board of directors shall
consist of such number of directors, not less than three nor more than five, as
may be determined from time to time by resolution of the board of directors.
Each director shall hold office until the expiration of the term for which he or
she was selected and until a successor shall have been elected and qualified or
until his or her earlier death, resignation or removal. Directors need not be
residents of Delaware or stockholders of the corporation. At all times at least
one of the directors shall be an Independent Director. "Independent Director"
shall mean a director of the corporation who shall at no time be or have been,
within the five year period preceding election, a director, officer or employee
of the corporation or any Affiliate of the corporation and who shall at no time
hold any beneficial interest in the corporation or any beneficial interest in
any Affiliate which beneficial interest in the Affiliate exceeds a market value
of Ten Thousand Dollars. "Affiliate" means, with respect to any Person, any
other Person which, directly or indirectly, is in control of, is controlled by,
or is under common control of such Person. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (i) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such Person or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Person" means an individual, a corporation (including a business trust), a
company, a voluntary association, a partnership, a trust, an unincorporated
organization or a government or any agency, instrumentality or political
subdivision thereof.
SECTION 4.03. Vacancies.--Vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by all
of the stockholders having a right to vote as a single class may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until
their successors are elected and qualified or until their earlier death,
resignation or removal. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. Whenever the holders of
any class or classes of stock or series thereof are entitled to elect one or
more directors by the provisions of the certificate of incorporation, vacancies
and newly created directorships of such class or classes or series may be filled
by a majority of the directors elected by such class or classes or series
thereof then in office, or by a sole remaining director so elected. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board
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(as constituted immediately prior to any such increase), the Court of Chancery
may, upon application of any stockholder or stockholders holding at least ten
percent of the total number of the shares at the time outstanding having the
right to vote for such directors, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office.
SECTION 4.04. Resignations.--Any director may resign at any time upon
written notice to the corporation. The resignation shall be effective upon
receipt thereof by the corporation or at such subsequent time as shall be
specified in the notice of resignation and, unless otherwise specified in the
notice, the acceptance of the resignation shall not be necessary to make it
effective.
SECTION 4.05. Removal.--Any director or the entire board of directors
may be removed, with or without cause, by the holders of shares entitled to cast
a majority of the votes which all stockholders are entitled to cast at an
election of directors. The Independent Director may not be removed until the
vacancy will be filled by another Independent Director immediately thereafter.
SECTION 4.06. Organization.--At every meeting of the board of
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the vice chairman of the board,
if there be one, the president, the vice presidents in their order of rank and
seniority, or a chairman chosen by a majority of the directors present, shall
preside, and the secretary, or, in the absence of the secretary, an assistant
secretary, or in the absence of the secretary and the assistant secretaries, any
person appointed by the chairman of the meeting, shall act as secretary.
SECTION 4.07. Place of Meeting.--Meetings of the board of directors
shall be held at such place within or without the State of Delaware as the board
of directors may from time to time determine, or as may be designated in the
notice of the meeting.
SECTION 4.08. Regular Meetings.--Regular meetings of the board of
directors shall be held without notice at such time and place as shall be
designated from time to time by resolution of the board of directors.
SECTION 4.09. Special Meetings.--Special meetings of the board of
directors shall be held whenever called by the president or by two or more of
the directors.
SECTION 4.10. Quorum, Manner of Acting and Adjournment.
(a) General Rule.--At all meetings of the board a majority of the total
number of directors shall constitute a quorum for the transaction of business
provided that such majority shall include the Independent Director on all
matters that require the vote of the Independent
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Director. The vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
may be otherwise specifically provided by the GCL or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present.
(b) Unanimous Written Consent.--Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors may be taken without a meeting, if all
members of the board consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the board.
SECTION 4.11. Executive and Other Committees.
(a) Establishment.--The board of directors may, by resolution adopted
by a majority of the whole board, establish an Executive Committee and one or
more other committees, each committee to consist of one or more directors. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee and the
alternate or alternates, if any, designated for such member, the member or
members of the committee present at any meeting and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of any such absent or disqualified
member.
(b) Powers.--The Executive Committee, if established, and any such
other committee to the extent provided in the resolution establishing such
committee shall have and may exercise all the power and authority of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors as provided in
Section 151(a) of the GCL, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of shares of any series), adopting an agreement of merger or
consolidation under Section 251 or 252 of the GCL, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation. The Executive Committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock and to adopt
a certificate of ownership and merger pursuant to Section 253 of the GCL. Such
committee or
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committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors. Each committee so formed shall
keep regular minutes of its meetings and report the same to the board of
directors when required.
(c) Committee Procedures.--The term "board of directors" or "board,"
when used in any provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of directors, shall be
construed to include and refer to the Executive Committee or other committee of
the board.
SECTION 4.12. Compensation of Directors.--Unless otherwise restricted
by the certificate of incorporation, the board of directors shall have the
authority to fix the compensation of directors.
ARTICLE V
Officers
SECTION 5.01. Number, Qualifications and Designation.--The officers of
the corporation shall be chosen by the board of directors and shall be a
president, one or more vice presidents, a secretary, a treasurer, and such other
officers as may be elected in accordance with the provisions of section 5.03 of
this Article. Any number of offices may be held by the same person. Officers
may, but need not, be directors or stockholders of the corporation. The board of
directors may elect from among the members of the board a chairman of the board
and a vice chairman of the board who shall be officers of the corporation. The
chairman of the board or the president, as designated from time to time by the
board of directors, shall be the chief executive officer of the corporation. At
all times at least one of the executive officers of the corporation shall be an
Independent Officer who may be the same person as the Independent Director.
"Independent officer" shall mean an officer of the corporation who shall at no
time be or have been, within the five year period preceding election, a
director, officer or employee of the corporation or any Affiliate of the
corporation and who shall at no time hold any beneficial interest in the
corporation or any beneficial interest in any Affiliate which beneficial
interest in the Affiliate exceeds a market value of Ten Thousand Dollars.
"Affiliate" means, with respect to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control of
such Person. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise. "Person" means an individual, a corporation
(including a business trust), a company, a voluntary association, a partnership,
a trust, an unincorporated organization or a government or any agency,
instrumentality or political subdivision thereof.
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SECTION 5.02. Election and Term of Office.--The officers of the
corporation, except those elected by delegated authority pursuant to section
5.03 of this Article, shall be elected annually by the board of directors, and
each such officer shall hold office for a term of one year and until a successor
is elected and qualified, or until his or her earlier resignation or removal.
Any officer may resign at any time upon written notice to the corporation.
SECTION 5.03. Subordinate Officers, Committees and Agents.--The board
of directors may from time to time elect such other officers and appoint such
committees, employees or other agents as it deems necessary, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as are provided in these bylaws, or as the board of directors may from
time to time determine. The board of directors may delegate to any officer or
committee the power to elect subordinate officers and to retain or appoint
employees or other agents, or committees thereof, and to prescribe the authority
and duties of such subordinate officers, committees, employees or other agents.
SECTION 5.04. The Chairman and Vice Chairman of the Board.--The
chairman of the board, if there be one, or in the absence of the chairman, the
vice chairman of the board, if there be one, shall preside at all meetings of
the stockholders and of the board of directors, and shall perform such other
duties as may from time to time be assigned to them by the board of directors.
SECTION 5.05. The President.--The president shall have general
supervision over the business and operations of the corporation, subject,
however, to the control of the board of directors. The president shall, in
general, perform all duties incident to the office of president, and such other
duties as from time to time may be assigned by the board of directors and, if
the chairman of the board is the chief executive officer, the chairman of the
board.
SECTION 5.06. The Vice Presidents.--The vice presidents shall perform
the duties of the president in the absence of the president and such other
duties as may from time to time be assigned to them by the board of directors or
by the president.
SECTION 5.07. The Secretary.--The secretary, or an assistant secretary,
shall attend all meetings of the stockholders and of the board of directors and
shall record the proceedings of the stockholders and of the directors and of
committees of the board in a book or books to be kept for that purpose; shall
see that notices are given and records and reports properly kept and filed by
the corporation as required by law; shall be the custodian of the seal of the
corporation and see that it is affixed to all documents to be executed on behalf
of the corporation under its seal; and, in general, shall perform all duties
incident to the office of secretary, and such other duties as may from time to
time be assigned by the board of directors or the president.
SECTION 5.08. The Treasurer.--The treasurer, or an assistant treasurer,
shall have or provide for the custody of the funds or other property of the
corporation; shall collect and
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receive or provide for the collection and receipt of moneys earned by or in any
manner due to or received by the corporation; shall deposit all funds in his or
her custody as treasurer in such banks or other places of deposit as the board
of directors may from time to time designate; whenever so required by the board
of directors, shall render an account showing his or her transactions as
treasurer and the financial condition of the corporation; and, in general, shall
discharge such other duties as may from time to time be assigned by the board of
directors or the president.
SECTION 5.09. Officers' Bonds.--No officer of the corporation need
provide a bond to guarantee the faithful discharge of the officer's duties
unless the board of directors shall by resolution so require a bond in which
event such officer shall give the corporation a bond (which shall be renewed if
and as required) in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of office.
SECTION 5.10. Salaries.--The salaries of the officers and agents of the
corporation elected by the board of directors shall be fixed from time to time
by the board of directors.
ARTICLE VI
Certificates of Stock, Transfer, Etc.
SECTION 6.01. Form and Issuance.
(a) Issuance.--The shares of the corporation shall be represented by
certificates unless the board of directors shall by resolution provide that some
or all of any class or series of stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until the
certificate is surrendered to the corporation. Notwithstanding the adoption of
any resolution providing for uncertificated shares, every holder of stock
represented by certificates and upon request every holder of uncertificated
shares shall be entitled to have a certificate signed by, or in the name of the
corporation by, the chairman or vice chairman of the board of directors, or the
president or vice president, and by the treasurer or an assistant treasurer, or
the secretary or an assistant secretary, representing the number of shares
registered in certificate form.
(b) Form and Records.--Stock certificates of the corporation shall be
in such form as approved by the board of directors. The stock record books and
the blank stock certificate books shall be kept by the secretary or by any
agency designated by the board of directors for that purpose. The stock
certificates of the corporation shall be numbered and registered in the stock
ledger and transfer books of the corporation as they are issued.
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(c) Signatures.--Any of or all the signatures upon the stock
certificates of the corporation may be a facsimile. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any share certificate shall have ceased to be such officer,
transfer agent or registrar, before the certificate is issued, it may be issued
with the same effect as if the signatory were such officer, transfer agent or
registrar at the date of its issue.
SECTION 6.02. Transfer.--Transfers of shares shall be made on the share
register or transfer books of the corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made which would be
inconsistent with the provisions of Article 8, Title 6 of the Delaware Uniform
Commercial Code-Investment Securities.
SECTION 6.03. Lost, Stolen, Destroyed or Mutilated Certificates.--The
board of directors may direct a new certificate of stock or uncertificated
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or the legal representative of the owner,
to give the corporation a bond sufficient to indemnify against any claim that
may be made against the corporation on account of the alleged loss, theft or
destruction of such certificate or the issuance of such new certificate or
uncertificated shares.
SECTION 6.04. Record Holder of Shares.--The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
SECTION 6.05. Determination of Stockholders of Record.
(a) Meetings of Stockholders.--In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the board of directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the board of directors, and which record
date shall not be more than 60 nor less than ten days before the date of such
meeting. If no record date is fixed by the board of directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
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stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the board of
directors fixes a new record date for the adjourned meeting.
(b) Consent of Stockholders.--In order that the corporation may
determine the stockholders entitled to consent to corporate action in writing
without a meeting, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which date shall not be more than ten
days after the date upon which the resolution fixing the record date is adopted
by the board of directors. If no record date has been fixed by the board of
directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the board
of directors is required by the GCL, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by the GCL, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the board of directors adopts the resolution
taking such prior action.
(c) Dividends.--In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than 60 days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the board of directors adopts the resolution relating
thereto.
ARTICLE VII
Indemnification of Directors, Officers and
Other Authorized Representatives
SECTION 7.01. Indemnification of Authorized Representatives in Third
Party Proceedings.--The corporation shall indemnify any person who was or is an
authorized representative of the corporation, and who was or is a party, or is
threatened to be made a party to any third party proceeding, by reason of the
fact that such person was or is an authorized
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representative of the corporation, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such third party proceeding if such person acted in good faith
and in a manner such person reasonably believed to be in, or not opposed to, the
best interests of the corporation and, with respect to any criminal third party
proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of any third party proceeding by judgement, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the authorized representative did not act in
good faith and in a manner which such person reasonably believed to be in or not
opposed to, the best interests of the corporation, and, with respect to any
criminal third party proceeding, had reasonable cause to believe that such
conduct was unlawful.
SECTION 7.02. Indemnification of Authorized Representatives in
Corporate Proceedings.--The corporation shall indemnify any person who was or is
an authorized representative of the corporation and who was or is a party or is
threatened to be made a party to any corporate proceeding, by reason of the fact
that such person was or is an authorized representative of the corporation,
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such corporate proceeding if such person acted
in good faith and in a manner reasonably believed to be in, or not opposed to,
the best interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such corporate proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such authorized
representative is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
SECTION 7.03. Mandatory Indemnification of Authorized
Representatives.--To the extent that an authorized representative or other
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any third party or corporate proceeding or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith.
SECTION 7.04. Determination of Entitlement to Indemnification.--Any
indemnification under section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the authorized representative
or other employee or agent is proper in the circumstances because such person
has either met the applicable standard of conduct set forth in section 7.01 or
7.02 or has been successful on the merits or otherwise as set forth in section
7.03 and that the amount requested has been actually and reasonably incurred.
Such determination shall be made:
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(1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such third party or
corporate proceeding; or
(2) if such a quorum is not obtainable, or even if obtainable,
a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion; or
(3) by the stockholders.
SECTION 7.05. Advancing Expenses.--Expenses actually and reasonably
incurred in defending a third party or corporate proceeding shall be paid on
behalf of an authorized representative by the corporation in advance of the
final disposition of such third party or corporate proceeding upon receipt of an
undertaking by or on behalf of the authorized representative to repay such
amount if it shall ultimately be determined that the authorized representative
is not entitled to be indemnified by the corporation as authorized in this
Article. The financial ability of any authorized representative to make a
repayment contemplated by this section shall not be a prerequisite to the making
of an advance. Expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.
SECTION 7.06. Definitions.--For purposes of this Article:
(1) "authorized representative" shall mean any and all
directors and officers of the corporation and any person designated as
an authorized representative by the board of directors of the
corporation (which may, but need not, include any person serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise) ;
(2) "corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, employee or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of
this Article with respect to the resulting or surviving corporation as
such person would have with respect to such constituent corporation if
its separate existence had continued;
(3) "corporate proceeding" shall mean any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor or investigative proceeding by the
corporation;
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(4) "criminal third party proceeding" shall include any action
or investigation which could or does lead to a criminal third party
proceeding;
(5) "expenses" shall include attorneys' fees and
disbursements;
(6) "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan;
(7) "not opposed to the best interests of the corporation"
shall include actions taken in good faith and in a manner the
authorized representative reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan;
(8) "other enterprises" shall include employee benefit plans;
(9) "party" shall include the giving of testimony or similar
involvement;
(10) "serving at the request of the corporation" shall include
any service as a director, officer or employee of the corporation which
imposes duties on, or involves services by, such director, officer or
employee with respect to an employee benefit plan, its participants, or
beneficiaries; and
(11) "third party proceeding" shall mean any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, other than an action by or
in the right of the corporation.
SECTION 7.07. Insurance.--The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
the person and incurred by the person in any such capacity, or arising out of
his or her status as such, whether or not the corporation would have the power
or the obligation to indemnify such person against such liability under the
provisions of this Article.
SECTION 7.08. Scope of Article.--The indemnification of authorized
representatives and advancement of expenses, as authorized by the preceding
provisions of this Article, shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office. The indemnification and advancement of
expenses provided by or granted pursuant to this Article shall, unless otherwise
provided when authorized
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or ratified, continue as to a person who has ceased to be an authorized
representative and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 7.09. Reliance on Provisions.--Each person who shall act as an
authorized representative of the corporation shall be deemed to be doing so in
reliance upon rights of indemnification provided by this Article.
ARTICLE VIII
Transactions with Affiliates
SECTION 8.01. Transactions with Affiliates. Except as otherwise
provided in these Bylaws or in the Certificate of Incorporation, all business
transactions entered into by the corporation with any Affiliate shall be on
terms and conditions that are not more or less favorable to the corporation than
terms and conditions available at the time to the corporation for comparable
transactions with unaffiliated persons, and except as otherwise provided in
these Bylaws or in the Certificate of Incorporation, must be approved by a
majority of the Board of Directors, including the Independent Director.
SECTION 8.02. Separate Offices, Etc. The corporation shall at all times
(a) maintain the corporation's principal executive office distinct from that of
any Affiliate, but may lease office space at fair market rates from any such
Affiliate, (b) maintain the corporation's financial statements, accounting
records and other corporate documents separate from those of any Affiliate or
other entity, (c) not commingle the corporation's assets with those of any
Affiliate or other entity, (d) maintain the corporation's bank accounts and
books of account separate from those of any Affiliate or other entity, (e) act
solely on its corporate name and through its own authorized officers and agents,
(f) make investments directly or by brokers engaged and paid by the corporation
or its agents, (g) separately manage the corporation's liabilities from those of
any Affiliate and pay its own liabilities, including all administrative
expenses, from its own assets, and (h) pay from the corporation's assets all
obligations and indebtedness of any kind incurred by the corporation; provided,
however, the corporation shall not pay for any liabilities of others.
ARTICLE IX
General Provisions
SECTION 9.01. Dividends.--Subject to the restrictions contained in the
GCL and any restrictions contained in the certificate of incorporation, the
board of directors may declare and pay dividends upon the shares of capital
stock of the corporation.
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SECTION 9.02. Contracts.--Except as otherwise provided in these bylaws,
the board of directors may authorize any officer or officers including the
chairman and vice chairman of the board of directors, or any agent or agents, to
enter into any contract or to execute or deliver any instrument on behalf of the
corporation and such authority may be general or confined to specific instances.
SECTION 9.03. Corporate Seal.--The corporation shall have a corporate
seal, which shall have inscribed thereon the name of the corporation, the year
of its organization and the words "Corporate Seal, Delaware". The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
SECTION 9.04. Deposits.--All funds of the corporation shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies, or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.
SECTION 9.05. Corporate Records.
(a) Examination by Stockholders.--Every stockholder shall, upon written
demand under oath stating the purpose thereof, have a right to examine, in
person or by agent or attorney, during the usual hours for business, for any
proper purpose, the stock ledger, list of stockholders, books or records of
account, and records of the proceedings of the stockholders and directors of the
corporation, and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent shall be the person who seeks
the right to inspection, the demand under oath shall be accompanied by a power
of attorney or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath shall be directed
to the corporation at its registered office in Delaware or at its principal
place of business. Where the stockholder seeks to inspect the books and records
of the corporation, other than its stock ledger or list of stockholders, the
stockholder shall first establish (1) that the stockholder has complied with the
provisions of this section respecting the form and manner of making demand for
inspection of such documents; and (2) that the inspection sought is for a proper
purpose. Where the stockholder seeks to inspect the stock ledger or list of
stockholders of the corporation and has complied with the provisions of this
section respecting the form and manner of making demand for inspection of such
documents, the burden of proof shall be upon the corporation to establish that
the inspection sought is for an improper purpose.
(b) Examination by Directors.--Any director shall have the right to
examine the corporation's stock ledger, a list of its stockholders and its other
books and records for a purpose reasonably related to the person's position as a
director.
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SECTION 9.06. Amendment of Bylaws.--Subject to the restrictions set
forth in the Certificate of Incorporation, these bylaws may be altered, amended
or repealed or new bylaws may be adopted either (1) by vote of the stockholders
at a duly organized annual or special meeting of stockholders, or (2) by vote of
a majority of the board of directors at any regular or special meeting of
directors.
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EXHIBIT 4.1
CHARMING SHOPPES RECEIVABLES CORP.
Seller
SPIRIT OF AMERICA, INC.
Servicer
and
FIRST UNION NATIONAL BANK
Trustee
Charming Shoppes Master Trust
FORM OF
SECOND AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of November 25, 1997
(as amended as of _________ __, 1999)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS
Section 1.1 Definitions......................................................................................... 1
Section 1.2 Other Definitional Provisions....................................................................... 23
Section 1.3 Purchaser Representatives........................................................................... 24
ARTICLE II CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Receivables........................................................................... 24
Section 2.2 Acceptance by Trustee............................................................................... 26
Section 2.3 Representations and Warranties of the Seller........................................................ 27
Section 2.4 Representations and Warranties of the Seller Relating to the Receivables;
Notice of Breach............................................................................. 28
Section 2.5 Covenants of the Seller............................................................................. 33
Section 2.6 Addition of Accounts................................................................................ 37
Section 2.7 Removal of Accounts................................................................................. 41
Section 2.8 Trustee May Perform................................................................................. 42
Section 2.9 No Assumption of Liability.......................................................................... 42
Section 2.10 Discount Option.................................................................................... 42
ARTICLE III ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to the Servicer................................ 43
Section 3.2 Servicing Compensation.............................................................................. 44
Section 3.3 Representations, Warranties and Covenants of the Servicer........................................... 44
Section 3.4 Reports and Records for the Trustee................................................................. 47
Section 3.5 Annual Servicer's Certificate....................................................................... 47
Section 3.6 Annual Independent Accountants' Servicing Report.................................................... 48
Section 3.7 Tax Treatment....................................................................................... 49
Section 3.8 Notices to the Seller............................................................................... 49
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS AND RECEIVABLES
PURCHASERS AND ALLOCATION AND APPLICATION OF
COLLECTIONS
Section 4.1 Rights of Certificateholders and Receivables Purchasers............................................. 49
Section 4.2 Establishment of Accounts........................................................................... 50
Section 4.3 Collections and Allocations......................................................................... 51
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE V DISTRIBUTIONS AND REPORTS TO RECEIVABLES
PURCHASERS AND CERTIFICATEHOLDERS
ARTICLE VI THE CERTIFICATES AND RECEIVABLES PURCHASE INTERESTS
Section 6.1 Certificates........................................................................................ 55
Section 6.2 Authentication of Certificates...................................................................... 56
Section 6.3 Registration of Transfer and Exchange of Certificates............................................... 56
Section 6.4 Mutilated, Destroyed, or Stolen Certificates........................................................ 60
Section 6.5 Persons Deemed Owners............................................................................... 61
Section 6.6 Appointment of Paying Agent......................................................................... 61
Section 6.7 Access to List of Certificateholders' and Receivables Purchasers' Names and
Addresses.................................................................................... 62
Section 6.8 Authenticating Agent................................................................................ 62
Section 6.9 Tender of Exchangeable Seller Certificate........................................................... 63
Section 6.10 Book-Entry Certificates............................................................................ 66
Section 6.11 Notices to Clearing Agency......................................................................... 66
Section 6.12 Definitive Certificates............................................................................ 66
Section 6.13 Global Certificate; Exchange Date.................................................................. 67
Section 6.14 Meetings of Certificateholders..................................................................... 69
Section 6.15 Uncertificated Classes............................................................................. 71
Section 6.16 Conveyance of Receivables Purchase Interests by the Trust.......................................... 71
Section 6.17 Notice of Receivables Purchase Series.............................................................. 71
Section 6.18 Principal Terms of Receivables Purchase Series..................................................... 72
ARTICLE VII OTHER MATTERS RELATING
TO THE SELLER
Section 7.1 Liability of the Seller............................................................................. 72
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations of, the Seller......................... 73
Section 7.3 Limitation on Liability............................................................................. 73
Section 7.4 Indemnification..................................................................................... 74
ARTICLE VIII OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer........................................................................... 74
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations of, the Servicer....................... 74
Section 8.3 Limitation on Liability............................................................................. 75
Section 8.4 Servicer Indemnification of the Trust and the Trustee............................................... 76
Section 8.5 The Servicer Not to Resign.......................................................................... 76
Section 8.6 Access to Certain Documentation and Information Regarding the Receivables........................... 77
Section 8.7 Delegation of Duties................................................................................ 77
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Section 8.8 Examination of Records.............................................................................. 77
ARTICLE IX EARLY AMORTIZATION EVENTS
Section 9.1 Early Amortization Events........................................................................... 78
Section 9.2 Additional Rights Upon the Occurrence of Certain Events............................................. 78
ARTICLE X SERVICER DEFAULTS
Section 10.1 Servicer Defaults.................................................................................. 79
Section 10.2 Trustee to Act; Appointment of Successor........................................................... 82
Section 10.3 Notification of Servicer Default and Successor Servicer............................................ 84
Section 10.4 Waiver of Past Defaults............................................................................ 84
ARTICLE XI THE TRUSTEE
Section 11.1 Duties of Trustee.................................................................................. 84
Section 11.2 Certain Matters Affecting the Trustee.............................................................. 86
Section 11.3 Trustee Not Liable for Recitals in Certificates.................................................... 87
Section 11.4 Trustee May Own Certificates and Purchase Receivables.............................................. 88
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses.................................................... 88
Section 11.6 Eligibility Requirements for Trustee............................................................... 88
Section 11.7 Resignation or Removal of Trustee.................................................................. 89
Section 11.8 Successor Trustee.................................................................................. 89
Section 11.9 Merger or Consolidation of Trustee................................................................. 90
Section 11.10 Appointment of Co-Trustee or Separate Trustee..................................................... 90
Section 11.11 Tax Return........................................................................................ 91
Section 11.12 Trustee May Enforce Claims without Possession of Certificates..................................... 92
Section 11.13 Suits for Enforcement............................................................................. 92
Section 11.14 Rights of Purchaser Representatives and Investor Certificateholders to
Direct Trustee............................................................................... 94
Section 11.15 Representations and Warranties of the Trustee..................................................... 94
Section 11.16 Maintenance of Office or Agency................................................................... 94
ARTICLE XII TERMINATION
Section 12.1 Termination of Trust............................................................................... 95
Section 12.2 Optional Purchase.................................................................................. 96
Section 12.3 Final Payment with Respect to Any Certificate Series............................................... 97
Section 12.4 Termination of Rights of Holder of Exchangeable Seller Certificate................................. 98
Section 12.5 Defeasance......................................................................................... 98
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ARTICLE XIII MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.......................................................................................... 99
Section 13.2 Protection of Right, Title and Interest to Trust................................................... 101
Section 13.3 Limitation on Rights of Certificateholders......................................................... 102
Section 13.4 Limitation on Rights of Receivables Purchasers and Purchaser
Representatives.............................................................................. 103
Section 13.5 GOVERNING LAW...................................................................................... 104
Section 13.6 Notices............................................................................................ 104
Section 13.7 Severability of Provisions......................................................................... 105
Section 13.8 Assignment......................................................................................... 105
Section 13.9 Certificates Non-Assessable and Fully Paid......................................................... 105
Section 13.10 Further Assurances................................................................................ 105
Section 13.11 Non-petition Covenant............................................................................. 105
Section 13.12 No Waiver; Cumulative Remedies.................................................................... 106
Section 13.13 Counterparts...................................................................................... 106
Section 13.14 Third-Party Beneficiaries......................................................................... 106
Section 13.15 Actions by Certificateholders..................................................................... 106
Section 13.16 Rule 144A Information............................................................................. 106
Section 13.17 Merger and Integration............................................................................ 106
Section 13.18 Headings.......................................................................................... 107
Section 13.19 Inconsistent Provisions........................................................................... 107
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EXHIBITS
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Exhibit A - Form of Exchangeable Seller Certificate
Exhibit B - Form of Assignment of Receivables in Additional Accounts
Exhibit C - Form of Monthly Servicer's Report
Exhibit D - Form of Opinion of Counsel Regarding Additional Accounts
Exhibit E-1 - Form of Reassignment of Receivables in Removed Accounts
Exhibit E-2 - Form of Reassignment of Removed Receivables
Exhibit F - Form of Annual Servicer's Certificate
Exhibit G - Procedures of Independent Accountants
Exhibit H-1 - Form of Certificate Legend
Exhibit H-2 - Form of Representation Letter
Exhibit H-3 - Form of Certificate Legend
Exhibit I-1 - Form of Foreign Clearing Agency Certificate
Exhibit I-2 - Form of U.S. Investor Certificate to Foreign Clearing Agency
Exhibit I-3 - Form of Certificate to Foreign Clearing Agency
Exhibit J - Form of Conveyance to Holder of Exchangeable Seller
Certificate
Exhibit K - Form of Annual Opinion of Counsel
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SECOND AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as
of November 25, 1997 as amended as of , 1999, by and between Charming
Shoppes Receivables Corp., a Delaware corporation, as Seller, Spirit of America,
Inc., a Delaware corporation ("Spirit Inc."), as Servicer, and First Union
National Bank, a national banking association, as Trustee.
WHEREAS, Spirit of America National Bank, as seller and servicer, and
the Trustee are parties to that certain Pooling and Servicing Agreement dated as
of December 24, 1992, as amended and restated as of May 4, 1994, and as amended
by Amendment No. 1, dated as of December 22, 1995, and Amendment No. 2, dated as
of March 22, 1996 and amended and restated as of November 25, 1997 (the "Prior
PSA"); and
WHEREAS, the parties desire to amend in its entirety the Prior PSA in
order to, among other things, provide for the substitution of Spirit Inc. for
Spirit of America National Bank, as Servicer;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Prior PSA is hereby amended in its entirety to read as follows and
each party agrees as follows for the benefit of the other parties, the
Certificateholders, any Receivables Purchasers and any Enhancement Provider (to
the extent provided herein and in any Supplement or Receivables Purchase
Agreement):
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings, and the definitions of such
terms are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as the feminine and neuter genders of such terms:
"Account" shall mean each Spirit of America National Bank revolving
credit card account, including, without limitation, accounts which have been
written off as uncollectible, issued to an Obligor pursuant to a Cardholder
Agreement between the Originator and any Person, which account is an Eligible
Account on the Initial Cut Off Date (or, in the case of Additional Accounts, as
of the applicable Addition Cut Off Date), and which is identified by account
number, Obligor name, Obligor address and Receivable balance as of the Cut Off
Date (or, in the case of Additional Accounts, as of the applicable Addition Cut
Off Date) in each computer file or microfiche list delivered to the Trustee by
the Servicer pursuant to Section 2.1 or 2.6. The term Account shall include each
"Renumbered Account". The term "Account" shall be deemed to refer to an
Additional Account only from and after the Addition Date with respect thereto,
and the term "Account" shall be deemed to refer to any Removed Account only
prior to the Removal Date with respect thereto.
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"Account Information" shall have the meaning specified in subsection
2.2(b).
"Accumulation Period" shall mean, with respect to any Series, if
applicable, a period following the Revolving Period, which shall be the
accumulation or other period in which Collections of Principal Receivables are
accumulated in an account for the benefit of the Investor Certificateholders or
Receivables Purchasers of such Series, in each case as defined for such Series
in the related Supplement or Receivables Purchase Agreement.
"Addition Cut Off Date" shall mean, with respect to Additional Accounts
the Receivables of which are Conveyed to the Trust on any Addition Date, the
date, which shall be not less than 3, nor more than 20, days prior to the
applicable Addition Date, specified by the Seller in the related Addition Notice
in accordance with subsection 2.6(d)(i).
"Addition Date" shall mean each date as of which Additional Accounts
will be included as Accounts pursuant to Section 2.6.
"Addition Notice" shall have the meaning specified in subsection
2.6(d)(i).
"Addition Notice Date" shall have the meaning specified in subsection
2.6(d)(i).
"Additional Account" shall mean each revolving credit card account
established pursuant to a Cardholder Agreement, which account is designated
pursuant to Section 2.6 to be included as an Account and is identified in a
computer file, microfiche or written list delivered to the Trustee by the
Servicer pursuant to Sections 2.1 and 2.6.
"Additional Assignment" shall have the meaning specified in the
Purchase Agreement.
"Adjusted Investor Interest" shall mean with respect to any Certificate
Series, the meaning provided in the related Supplement.
"Administrative Servicer" shall mean, initially, Alliance Data and
shall also include any other Person who succeeds to the functions performed by
the Administrative Servicer, as provided in the Administrative Servicer
Agreement.
"Administrative Servicer Agreement" shall mean the Credit Processing
Agreement effective as of July 8, 1988, as amended from time to time, between
Fashion Service Corp. and the Administrative Servicer and assigned by Fashion
Service Corp. to Spirit of America National Bank, and by Spirit of America
National Bank to Spirit Inc. and all agreements, instruments and documents
attached thereto or delivered in connection therewith, as any of the same may
from time to time be hereafter amended, supplemented, or otherwise modified in
accordance with the terms thereof.
"Affiliate" of any Person shall mean any other Person controlling,
controlled by or under common control with such Person.
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"Aggregate Addition Limit" shall have the meaning specified in
subsection 2.6(c).
"Aggregate Investor/Purchaser Interest" shall mean, as of any date of
determination, the aggregate amount of the sum of the Investor Interests of all
Certificate Series issued and outstanding on such date of determination, the sum
of the Enhancement Invested Amounts, if any, for all outstanding Series on such
date of determination, and the sum of the Receivables Purchase Interests of all
Receivables Purchase Series outstanding on such date of determination.
"Aggregate Minimum Seller Interest" shall mean, as of any date of
determination, the greater of (i) the sum of the Minimum Seller Interests of all
Series and (ii) zero.
"Agreement" shall mean this Second Amended and Restated Pooling and
Servicing Agreement and all amendments hereof, including any Supplement.
"Alliance Data" means Alliance Data Services, Inc., a Delaware
corporation, and its successors.
"Allocated Interchange" means Interchange arising out of transactions
in each Account on or after the Addition Cut-Off Date for such Account.
"Amendment Date" shall mean ____________, 1999.
"Amortization Period", with respect to any Series, shall have the
meaning specified in the related Supplement, and with respect to any Receivables
Purchase Series, shall have the meaning specified in the related Receivables
Purchase Agreement.
"Applicants" shall have the meaning specified in Section 6.7.
"Appointment Day" shall have the meaning specified in subsection
9.2(a).
"Approved Rating" shall mean a rating of P-1 by Moody's and a rating of
A-1+ by Standard & Poor's.
"Assignment" shall have the meaning specified in subsection 2.6(d)(ii).
"Authorized Newspaper" shall mean a newspaper of general circulation in
the Borough of Manhattan, The City of New York, printed in the English language
(and with respect to any Certificate Series, if and so long as the Investor
Certificates of such Series are listed on the Luxembourg Stock Exchange and such
exchange shall so require, in Luxembourg, printed in any language satisfying the
requirements of such exchange) and customarily published on each Business Day,
whether or not published on Saturdays, Sundays or holidays.
"Automatic Additional Account" shall mean each revolving credit card
account established pursuant to a Credit Card Agreement, which account is
designated pursuant to
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Section 2.6(c) to be included as an Account and is identified in a computer
file, microfiche or written list delivered to the Trustee by the Servicer
pursuant to Sections 2.1 and 2.6.
"Bank Portfolio" shall mean the revolving credit card accounts acquired
by the Seller.
"Bearer Certificate" shall have the meaning specified in Section 6.1.
"Benefit Plan" shall have the meaning specified in subsection 6.3(c).
"BIF" shall mean the Bank Insurance Fund administered by the FDIC.
"Book-Entry Certificates" shall mean certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.10; provided, that after the occurrence of a condition whereupon
book-entry registration and transfer are no longer authorized and Definitive
Certificates are to be issued to the Certificate Owners, such certificates shall
no longer be "Book-Entry Certificates."
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York, Philadelphia,
Pennsylvania, or Milford, Ohio (and, with respect to any Series, any additional
city or state specified in the related Supplement or Receivables Purchase
Agreement), are authorized or obligated by law, executive order or governmental
decree to be closed.
"Cardholder Agreement" shall mean the agreement (and the related
application) for any Account, as such agreement may be amended, modified or
otherwise changed from time to time in accordance with the terms hereof.
"Cardholder Guidelines" shall mean the Originator's policies and
procedures relating to the operation of its credit card business in effect on
the date hereof, including, without limitation, the policies and procedures for
determining the creditworthiness of potential and existing credit card
customers, and relating to the maintenance of credit card accounts and
collection of credit card receivables, as such policies and procedures may be
amended from time to time.
"Cedel" shall mean Cedel S.A.
"Certificate" shall mean any one of the Investor Certificates of any
Certificate Series or the Exchangeable Seller Certificate.
"Certificateholder" or "Holder" shall mean the Person in whose name a
Certificate is registered in the Certificate Register and, if applicable, the
holder of any Bearer Certificate or Coupon, as the case may be.
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"Certificate Interest" shall mean interest payable in respect of the
Investor Certificates of any Certificate Series pursuant to the Supplement for
such Certificate Series.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as may be reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly or
as an indirect participant, in accordance with the rules of such Clearing
Agency).
"Certificate Principal" shall mean principal payable in respect of the
Investor Certificates of any Certificate Series pursuant to the Supplement for
such Certificate Series.
"Certificate Rate" shall mean, with respect to any Series of
Certificates, the percentage (or formula on the basis of which such rate shall
be determined) stated in the related Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.3, providing for the registration of the Certificates and transfers
and exchanges thereof.
"Certificate Series" shall mean any series of Investor Certificates.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Class" shall mean a class of Certificates of a particular Certificate
Series.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency or Foreign Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency or Foreign Clearing Agency.
"Closing Date" shall mean, with respect to any Certificate Series, the
date of issuance of such Series of Certificates, as specified in the related
Supplement, or, with respect to any Receivables Purchase Series, the date of the
initial Conveyance of the related Receivables Purchase Interest, as specified in
the related Receivables Purchase Agreement.
"Co-Branded Program" means a program of the Originator to originate
charges on a general purpose credit card under the Visa or MasterCard system,
which credit card will be co-branded with Fashion Bug, as specified in the
Cardholder Guidelines.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection" shall mean any payment by or on behalf of Obligors
received by the Originator, Seller, Servicer or Trustee in respect of the
Receivables, in the form of cash, checks, wire transfers, electronic transfers,
ATM transfers or other form of payment on any Receivables,
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including, without limitation, all Recoveries. The term "Collection" shall
include Insurance Proceeds and other amounts constituting Recoveries generally,
but shall exclude Insurance Proceeds and other amounts constituting Recoveries
of Receivables to the extent the aggregate Insurance Proceeds and other
Recoveries received in respect of Receivables during any Due Period exceed the
Loss Amount for such Due Period and any prior Due Periods; which excess shall be
distributed to the Seller on the Distribution Date related to such Due Period. A
Collection processed on an Account in excess of the aggregate amount of
Receivables in such Account as of the date of receipt by the Originator, Seller,
Servicer or Trustee of such Collection shall be deemed to be a payment in
respect of Principal Receivables to the extent of such excess.
"Collection Account" shall have the meaning specified in subsection
4.2(a).
"Convey" shall mean to transfer, reassign, assign, set over and
otherwise convey.
"Conveyance " shall mean the act of Conveying property.
"Corporate Trust Office" shall mean the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 123 South Broad Street, M.B.O., 18th Floor, Philadelphia, PA 19109,
Attention: Corporate Trust Administration.
"Coupon" shall have the meaning specified in Section 6.1.
"Cut Off Date" shall mean the Initial Cut Off Date and any Addition Cut
Off Date.
"Cycle" shall mean each monthly billing cycle for an Account, as
determined by the Seller in accordance with its normal practice.
"Debtor Relief Laws" shall mean the Bankruptcy Code of the United
States of America and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments or similar debtor relief laws from time to time in effect
affecting the rights of creditors (including creditors of national banking
associations generally), and general principles of equity (whether considered in
a suit at law or in equity).
"Defeasance" shall have the meaning specified in subsection 12.5(a).
"Defeased Series" shall have the meaning specified in subsection
12.5(a).
"Definitive Certificate" shall have the meaning specified in Section
6.10.
"Definitive Euro-Certificate" shall have the meaning specified in
Section 6.13.
"Depository" shall have the meaning specified in Section 6.10.
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"Depository Agreement" shall mean, with respect to each Certificate
Series, the agreement, if any, among the Seller, the Trustee and the Clearing
Agency, or as otherwise provided in the related Supplement.
"Depository Bank" means any of the banks holding one or more Initial
Depository Accounts.
"Depository Bank Agreement" shall mean an agreement from the Servicer
to any Depository Bank.
"Determination Date" shall mean the second Business Day preceding each
Distribution Date.
"Dilution Amount" shall have, with respect to any Due Period, the
meaning specified in subsection 4.3(d).
"Discount Option Date" shall mean each date on which a Discount
Percentage designated by the Seller pursuant to Section 2.10 takes effect.
"Discount Option Receivables" shall have the meaning specified in
Section 2.10. The aggregate amount of Discount Option Receivables on any date
occurring on or after the Discount Option Date shall equal the sum of (a) the
aggregate Discount Option Receivables at the end of the prior date (which
amount, prior to the Discount Option Date, shall be zero) plus (b) any new
Discount Option Receivables created on such date minus (c) any Discount Option
Receivable Collections received on such date. Discount Option Receivables
created on any date shall mean the product of the amount of any Principal
Receivables created on such date (without giving effect to the proviso in the
definition of Principal Receivables) and the Discount Percentage.
"Discount Option Receivable Collections" shall mean on any date
occurring in any Due Period succeeding the Due Period in which the Discount
Option Date occurs, the product of (a) a fraction the numerator of which is the
Discount Option Receivables and the denominator of which is the sum of the
Principal Receivables and the Discount Option Receivables in each case (for both
the numerator and the denominator) at the end of the preceding Due Period and
(b) Collections of Principal Receivables on such date (without giving effect to
the proviso in the definition of Principal Receivables).
"Discount Percentage" shall mean the percentages, if any, designated by
the Seller pursuant to Section 2.10.
"Distribution Date" shall mean the fifteenth day of each month, or if
such day is not a Business Day, the next succeeding Business Day; provided, that
the initial Distribution Date for any Series shall be set forth in the related
Supplement or Receivables Purchase Agreement. Notwithstanding the foregoing, in
the event a Total Systems Failure exists on any Distribution Date, the date of
such Distribution Date shall mean the fourth Business Day after the date on
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which the Seller or the Servicer delivers the monthly report in the form of
Exhibit C; provided, that in no event shall a Distribution Date be postponed
more than 10 Business Days due to a Total Systems Failure.
"Dollars", "$" or "U.S. $" shall mean United States dollars.
"Due Period" shall mean, initially, the period from the close of
business on March 28, 1994 to the close of business on the last day of the last
Cycle for the month of April, 1994, and thereafter, the period from the close of
business on the last day of the prior Due Period to the close of business on the
last day of the last Cycle for the following month.
"Early Amortization Event" shall mean, with respect to each Series, a
Trust Early Amortization Event or a Series Early Amortization Event.
"Effective Date" shall mean November 25, 1997.
"Eligible Account" shall mean, as of the Initial Cut Off Date (or, with
respect to Additional Accounts as of the relevant Addition Cut Off Date), each
Account:
1.1.1 which is payable in Dollars;
1.1.2 which has been originated in connection with the
extension of credit through a Specified Program to an Obligor whose application
for the extension of credit was processed through the Originator or an Affiliate
of the Originator or which has been acquired by the Originator from a third
party and determined by the Originator to be in compliance with the Cardholder
Guidelines, including those relating to the extension of credit; provided that
an Account originated in a Specified Program other than the Private Label
Program shall be an Eligible Account only if the Rating Agency Condition has
been satisfied with respect thereto;
1.1.3 which the Originator has not classified on its
electronic records as counterfeit, canceled or fraudulent, and with respect to
which any card issued in connection therewith has not been stolen or lost;
1.1.4 the Obligor on which has provided, as its most recent
billing address, an address which is located in the United States; provided,
that an Account, the Obligor on which has provided, as its most recent billing
address, an address which is located in Canada, shall be an Eligible Account,
but only to the extent that the aggregate amount of Principal Receivables in all
such Accounts shall be less than 1.0% of the aggregate Principal Receivables of
all Accounts averaged as of the last day of any two consecutive Due Periods;
provided, further, that the Receivables of any such Account shall not be treated
as Receivables for purposes of calculating the Seller Interest, the Aggregate
Minimum Seller Interest or Minimum Aggregate Principal Receivables or the
Investor/Purchaser Percentage of any Series;
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1.1.5 which the Originator has not charged off in its
customary and usual manner for charging off such Accounts as of the Initial Cut
Off Date (or with respect to Additional Accounts, as of the relevant Addition
Cut Off Date); and
1.1.6 with respect to which all filings, consents, licenses,
approvals or authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given by the
Originator in connection with the creation of the underlying Receivable in such
Account or the execution, delivery and performance by the Originator of the
Cardholder Agreement pursuant to which such underlying Receivable was created,
have been duly obtained, effected or given and are in full force and effect as
of such date of creation.
"Eligible Receivable" shall mean each Receivable which satisfies each
of the following conditions:
(a) which has arisen under an Eligible Account;
(b) which was created in compliance, in all material respects, with all
Requirements of Law applicable to the Originator and pursuant to a Cardholder
Agreement that complies in all material respects with all Requirements of Law
applicable to the Originator;
(c) as to which, at the time of and at all times after the creation of
such Receivable, the Originator, the Seller or the Trust had good and marketable
title thereto, free and clear of all Liens arising under or through the
Originator, the Seller or any of their Affiliates;
(d) which is the legal, valid and binding payment obligation of the
Obligor thereon, enforceable against such Obligor in accordance with its terms,
subject to Debtor Relief Laws; and
(e) which constitutes an "account" or a "general intangible" under
Article 9 of the UCC as then in effect in any applicable jurisdiction.
"Enhancement" shall mean, with respect to any Series, the cash
collateral account, letter of credit, surety bond, guaranteed rate agreement,
maturity guaranty facility, tax protection agreement, interest rate swap or any
other contract or agreement for the benefit of the Investor Certificateholders
or the Receivables Purchasers of such Series (including any subordinated
interest and any subordination of one Series to another), as designated in the
applicable Supplement or Receivables Purchase Agreement.
"Enhancement Invested Amount" shall have the meaning, if applicable
with respect to any Certificate Series, specified in the related Supplement.
"Enhancement Provider" shall mean, with respect to any Series, the
Person or Persons, if any, designated as such in the related Supplement or
Receivables Purchase Agreement.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New
York, Brussels office, as operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in subsection
4.3(e).
"Excess Funding Amount" shall mean the amount on deposit in the Excess
Funding Account.
"Exchange" shall mean the procedure described under Section 6.9.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Date" shall have the meaning, with respect to any Certificate
Series issued pursuant to an Exchange, specified in subsection 6.9(b).
"Exchange Notice" shall have the meaning, with respect to any
Certificate Series issued pursuant to an Exchange, specified in subsection
6.9(b).
"Exchangeable Seller Certificate" shall mean the certificate or
certificates executed and authenticated by the Trustee, substantially in the
form of Exhibit A and exchangeable as provided in Section 6.9.
"Extended Trust Termination Date" shall have the meaning specified in
subsection 12.1(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor.
"Finance Charge Receivables" shall mean (i) all amounts billed to the
Obligors on any Account in the ordinary course of the Originator's business in
respect of (a) periodic rate finance charges, (b) late payment fees, (c) annual
fees, if any, with respect to Accounts (excluding any membership fees payable
with respect to any special program credit cards which fees shall not be deemed
to be Finance Charge Receivables but shall be deemed to be Principal
Receivables), (d) returned check charges, and (e) any other fees with respect to
the Accounts designated by the Seller by notice to the Trustee at any time and
from time to time to be included as Finance Charge Receivables and (ii) all
amounts paid to the Originator in respect of Allocated Interchange; provided,
however, that after the Discount Option Date, Finance Charge Receivables on any
date of determination thereafter shall mean Finance Charge Receivables as
otherwise determined pursuant to this definition plus the amount of any Discount
Option Receivables.
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"Finance Charge Shortfalls" shall have the meaning specified in
subsection 4.3(g).
"Foreign Clearing Agency" shall mean CEDEL and the Euroclear Operator.
"Global Certificate" shall have the meaning specified in Section 6.13.
"Governmental Authority" shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" shall mean, with respect to any Certificate Series, the group
of Certificate Series, if any, in which the related Supplement specifies such
Series is to be included.
"Holder of the Exchangeable Seller Certificate" shall mean Charming
Shoppes Receivables Corp., a Delaware corporation, and its successors and
assigns.
"Ineligible Receivable" shall have the meaning specified in subsection
2.4(d)(iii).
"Initial Closing Date" shall mean December 24, 1992.
"Initial Cut off Date" shall mean the close of business of the Seller
on November 28, 1992.
"Initial Depository Account" shall mean an account established by the
Originator for the purpose of collecting payments made by Obligors, as specified
in writing by the Seller to the Trustee and each Purchaser Representative;
provided, that each of the Originator and the Seller shall have assigned all of
its right, title and interest in such account to the Trustee; provided, further,
that the establishment of such account shall be agreed to by the Trustee and
each Purchaser Representative; provided, further, that upon the occurrence of a
Servicer Default and the appointment of a Successor Servicer pursuant to Article
X, Initial Depository Account shall mean an account established by such
Successor Servicer for the purpose of collecting payments made by Obligors as
shall be agreed to by such Successor Servicer, the Trustee and each Purchaser
Representative.
"Initial Investor Interest" shall mean, with respect to any Certificate
Series, the amount specified as such in the related Supplement.
"Insolvency Event" shall have the meaning specified in Section 9.2(a).
"Insurance Proceeds" shall mean any amounts recovered by the Servicer
pursuant to any credit life, credit disability or unemployment insurance
policies covering any Obligor with respect to Receivables under such Obligor's
Account to the extent such amounts are used to make payments on such Account.
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"Interchange" means interchange fees payable to the Originator in its
capacity as credit card issuer.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended from time to time.
"Investor Certificate" shall mean any one of the certificates including
the Bearer Certificates, the Registered Certificates or any Global Certificates
executed and authenticated by the Trustee substantially in the form of the
investor certificate attached to the related Supplement evidencing an Undivided
Trust Interest, other than the Exchangeable Seller Certificate.
"Investor Certificateholder" shall mean the holder of record of an
Investor Certificate.
"Investor Exchange" shall have the meaning specified in subsection
6.9(b).
"Investor Interest" of any Certificate Series shall have the meaning
specified in the related Supplement.
"Investor Monthly Servicing Fee" for any Certificate Series, shall have
the meaning specified in the related Supplement.
"Investor/Purchaser Percentage" with respect to Collections of
Principal Receivables, Collections of Finance Charge Receivables, Series
Dilution Amounts or Loss Amounts, for any Certificate Series or Receivables
Purchase Series, shall have the meaning specified in the related Supplement or
Receivables Purchase Agreement.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, participation or equity interest deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
that any Conveyance of any Receivables Purchase Interest pursuant to a
Receivables Purchase Agreement, any issuance of an Undivided Trust Interest
pursuant to any Supplement, any assignment pursuant to Section 8.2 hereof, and
any Lien created by or in connection with this Agreement or the Purchase
Agreement shall not be deemed to constitute a Lien.
"Loss Amount" for any Due Period means an amount (which shall not be
less than zero) equal to (a) the principal balance of any Account, or any
portion thereof, that has been written off or, consistent with the Cardholder
Guidelines, should have been written off the Originator's books as uncollectible
during such Due Period, minus (b) the amount of Recoveries received in
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such Due Period with respect to Receivables previously charged off as
uncollectible or as otherwise defined in the applicable Series Supplement.
"Manager" shall mean the lead manager, manager or co-manager or person
performing a similar function with respect to an offering of Definitive
Euro-Certificates.
"Minimum Aggregate Principal Receivables," (x) on the last Business Day
of any Due Period occurring prior to the payment in full of all Certificate
Series outstanding prior to November 25, 1997, shall equal the sum of the
aggregate Series Investor Interests for all Certificate Series, and the
aggregate Receivables Purchase Interests for all Receivables Purchase Series,
issued and outstanding on such date, and (y) thereafter, shall equal zero.
"Minimum Seller Interest", with respect to any Series, shall have the
meaning specified in the related Supplement or Receivables Purchase Agreement.
"Monthly Period" shall mean the period from and including the first day
of a calendar month to and including the last day of a calendar month.
"Monthly Servicing Fee" shall have the meaning specified in Section
3.2.
"Moody's" shall mean Moody's Investors Service, Inc.
"Obligor" shall mean, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account, including any
guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any Vice
President or more senior officer of the Originator, Seller or Servicer, as
applicable.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be counsel for or an employee of the Person providing the opinion, and who shall
be reasonably acceptable to the Trustee, and in the case of an opinion to be
delivered to the Originator, Seller, any Enhancement Provider or any Purchaser
Representative, reasonably acceptable to the Originator, Seller, such
Enhancement Provider or such Purchaser Representative.
"Original Pooling and Servicing Agreement" shall have the meaning
specified in the preamble to this Agreement.
"Originator" shall mean Spirit of America National Bank, a national
banking association.
"Paired Series" shall mean one Series that, in its Supplement, is
designated as the "Paired Series" for another Series, it being understood that
the Series Investor Interest of the Paired Series will increase as the Series
Investor Interest of the other Series is reduced; provided that no Series shall
be designated as a Paired Series unless the Rating Agency Condition is satisfied
with respect to such designation.
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"Paying Agent" shall mean any paying agent appointed pursuant to
Section 6.6 and shall initially be the Trustee.
"Permitted Investments" shall mean, unless otherwise provided in the
Supplement or the Receivables Purchase Agreement with respect to any Series,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form which evidence any of the following:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America or any agency or instrumentality of
the United States of America, the obligations of which are backed by
the full faith and credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit
of, bankers' acceptances issued by, or federal funds sold by, any
depository institution or trust company (including the Trustee or any
agent of the Trustee, acting in their respective commercial capacities)
incorporated under the laws of the United States of America, any State
thereof or the District of Columbia or any foreign depository
institution with a branch or agency licensed under the laws of the
United States of America or any State, subject to supervision and
examination by Federal and/or State banking authorities and having an
Approved Rating at the time of such investment or contractual
commitment providing for such investment or otherwise approved in
writing by each Rating Agency and Purchaser Representative or (B) any
other demand or time deposit or certificate of deposit which is fully
insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii)(A) above;
(iv) short-term debt securities bearing interest or sold at a
discount issued by any corporation incorporated under the laws of the
United states of America or any State, the short-term unsecured
obligations of which have an Approved Rating at the time of such
investment; provided, however, that securities issued by any particular
corporation will not be Permitted Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the corpus of
the Trust to exceed 10% of amounts held in the Collection Account;
(v) commercial paper having an Approved Rating at the time of
such investment or pledge as security; or
(vi) any other investments approved in writing by each Rating
Agency and each Purchaser Representative; provided, that such
investments shall be made only so long as
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making such investments will not require the Trust to register as an
investment company under the Investment Company Act of 1940, as
amended.
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company, governmental
entity or other entity of similar nature.
"Pool Factor", as such term is used in any Supplement, shall mean a
number carried out to seven decimals representing the ratio of the applicable
Investor Interest as of the last Business Day of the preceding Due Period
(determined after taking into account any reduction in the Investor Interest
that will occur on the following Distribution Date) to the applicable Initial
Investor Interest.
"Pool Index File" shall mean the file on the Originator's computer
system that identifies revolving credit card accounts of the Originator, which
file is designated by the Originator as its "Pool Index File."
"Principal Receivables" shall mean (a) all amounts (other than amounts
which represent Finance Charge Receivables) billed to the Obligor on any
Account, including without limitation amounts billed in respect of purchases of
merchandise or services or credit insurance premiums and (b) all other fees
(other than Finance Charge Receivables) billed to Obligors on the Accounts;
provided, however, that after the Discount Option Date, Principal Receivables on
any date of determination thereafter shall mean Principal Receivables as
otherwise determined pursuant to this definition minus the amount of any
Discount Option Receivables. In calculating the aggregate amount of Principal
Receivables on any day, the amount of Principal Receivables shall be reduced by
the aggregate amount of credit balances in the Accounts on such day. Any
Receivables that the Seller is unable to transfer to the Trust as provided in
Sections 2.1 and 2.6 shall not be included in calculating the aggregate amount
of Principal Receivables.
"Principal Sharing Series" shall mean a Certificate Series that,
pursuant to the Supplement therefor, is entitled to receive Shared Principal
Collections.
"Principal Shortfalls" shall have the meaning specified in subsection
4.3(f).
"Principal Terms", with respect to any Certificate Series issued
pursuant to an Exchange, shall have the meaning specified in subsection 6.9(c),
and with respect to any Receivables Purchase Series, shall have the meaning
specified in Section 6.18.
"Prior PSA" shall have the meaning specified in the recitals hereto.
"Private Holder" shall mean each holder of a right to receive interest
or principal in respect of any direct or indirect interest in the Trust,
including any financial instrument or contract the value of which is determined
in whole or part by reference to the Trust (including the Trust's assets, income
of the Trust or distributions made by the Trust), excluding any interest
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in the Trust represented by any Series, Class of Certificates, Receivables
Purchase Interest, or any other interests as to which the Seller has received an
Opinion of Counsel to the effect that such Series, Class, Receivables Purchase
Interest or other interest will be treated as debt or otherwise not as an equity
interest in either the Trust or the Receivables for federal income tax purposes
(unless such interest is convertible or exchangeable into an interest in the
Trust or the Trust's income or such interest provides for payment of equivalent
value). Notwithstanding the immediately preceding sentence, "Private Holder"
shall also include any other Person that the Seller determines is a "partner"
within the meaning of Section 1.7704-1(h)(1)(ii) of the U.S. Treasury
Regulations (including by reason of Section 1.7704-1(h)(3)) or any successor
provision of law. Any Person holding more than one interest in the Trust, each
of which separately would cause such Person to be a Private Holder, shall be
treated as a single Private Holder. Each holder of an interest in a Private
Holder which is a partnership, S corporation or a grantor trust under the
Internal Revenue Code shall be treated as a Private Holder unless excepted with
the consent of the Seller (which consent shall be based on an Opinion of Counsel
generally to the effect that the action taken pursuant to the consent will not
cause the Trust to become a publicly traded partnership treated as a
corporation). Notwithstanding anything to the contrary herein, each Person
designated as a "Private Holder" in any Supplement or Receivables Purchase
Agreement shall be considered to be a Private Holder.
"Private Label Program" means the Originator's program of originating
private label credit card receivables primarily from sales at Fashion Bug and
Fashion Bug Plus stores, as specified in the Cardholder Guidelines.
"Purchase Agreement" shall mean the Purchase and Sale Agreement, dated
as of November 25, 1997 between the Seller and the Originator, as amended or
otherwise modified from time to time.
"Purchaser Representative" shall have the meaning specified in Section
1.3.
"Qualified Depository Institution" shall mean the Trustee or a
depository institution or trust company organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or the domestic branch of a foreign depository institution), with deposit
insurance provided by BIF or SAIF, the short-term deposits of which have an
Approved Rating.
"Quarterly Period" shall have the meaning specified in Section 2.6(c).
"Rating Agency" shall mean, with respect to any Certificate Series, the
rating agency or agencies, if any, selected by the Seller to rate the Investor
Certificates of such Certificate Series.
"Rating Agency Condition" shall mean, with respect to any action, that
each Rating Agency shall have notified the Seller, the Servicer and the Trustee
in writing that such action will not result in a reduction or withdrawal of its
rating on any Investor Certificates.
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"Reassignment" shall have the meaning specified in subsection
2.7(b)(ii).
"Reassignment Date" shall have the meaning specified in subsection
2.4(e).
"Receivables" shall mean Principal Receivables and Finance Charge
Receivables; provided, that upon the reassignment by the Trustee to the Seller
of Receivables pursuant to Section 2.4 or upon the removal of Receivables from
the Trust pursuant to Section 2.7, such Conveyed Receivables, as of the date of
such reassignment or removal, shall no longer be treated as Receivables.
"Receivables Purchase Agreement", shall mean each agreement between the
Trust and one or more Persons providing for the Conveyance by the Trust to such
Person or Persons of undivided ownership interests in Receivables, including,
without limitation, any "Receivables Purchase Agreement" or "Parallel Purchase
Commitment".
"Receivables Purchase Date", with respect to any Receivables Purchase
Series, shall have the meaning specified in Section 6.17.
"Receivables Purchase Interest" of any Receivables Purchase Series
shall have the meaning specified in the related Receivables Purchase Agreement.
"Receivables Purchase Notice", with respect to any Receivables Purchase
Series, shall have the meaning specified in Section 6.17.
"Receivables Purchase Series" shall mean the Series created pursuant to
any Receivables Purchase Agreement.
"Receivables Purchase Series Interest" shall have, with respect to any
Receivables Purchase Series, the meaning specified in the related Receivables
Purchase Agreement.
"Receivables Purchaser" shall mean any Person acquiring (or entering
into a commitment to acquire) an undivided percentage ownership interest in
Receivables pursuant to any Receivables Purchase Agreement.
"Receivables Purchaser Monthly Servicing Fee" for any Receivables
Purchase Series, shall have the meaning specified in the related Receivables
Purchase Agreement.
"Record Date" shall mean, with respect to any Distribution Date, the
last calendar day of the preceding calendar month.
"Recoveries" shall mean all amounts received (net of out-of-pocket
costs of collection) with respect to Receivables previously charged off as
uncollectible and all Insurance Proceeds.
"Registered Certificates" shall have the meaning specified in Section
6.1.
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"Removal Cut Off Date" shall mean, with respect to Receivables in
certain designated Removed Accounts, the date, which shall be not less than 3
nor more than 20 days prior to the applicable Removal Date, specified as such in
the computer file or microfiche or written list required to be delivered by the
Seller pursuant to subsection 2.7(b)(ii)(B).
"Removal Date" shall mean the date on which Receivables in certain
designated Removed Accounts will be reassigned by the Trustee to an entity
designated by the Seller.
"Removal Notice Date" shall have the meaning specified in subsection
2.7(a).
"Removed Accounts" shall have the meaning specified in subsection
2.7(a).
"Renumbered Account" shall mean an Account with respect to which a new
credit account number has been issued by the Servicer or the Originator under
circumstances resulting from a lost or stolen credit card, from the transfer
from one group to another group, from the transfer from one Obligor to another
Obligor or from the addition of any Obligor and not requiring standard
application and credit evaluation procedures under the Cardholder Guidelines,
and which in any such case can be traced or identified by reference to or by way
of the computer files or microfiche or written lists delivered to the Trustee
pursuant to subsection 2.1, 2.6(d)(ii) or 2.7(b)(ii)(B) as an Account which has
been renumbered.
"Required Designation Date" shall have the meaning specified in
subsection 2.6(a).
"Requirements of Law" means any law, treaty, rule or regulation, or
determination of an arbitrator of, the United States of America, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, whether federal, state or local (including any usury law, the
Federal Truth-in-Lending Act and Regulation Z of the Board of Governors of the
Federal Reserve System), and, when used with respect to any Person, the
certificate of incorporation and by-laws or other charter or other governing
documents of such Person.
"Responsible Officer" shall mean any officer within the Corporate Trust
Office (or any successor group of the Trustee), including any Vice President,
any Assistant Secretary or any other officer of the Trustee customarily
performing functions similar to those performed by any person who at the time
shall be an above-designated officer and also, with respect to a subject, a
particular officer to whom any corporate trust matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Revolving Period" shall have, with respect to any Series, the meaning
specified in the related Supplement or Receivables Purchase Agreement.
"SAIF" shall mean the Savings Association Insurance Fund administered
by the FDIC.
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"Secured Account Program" means a credit card program of the Originator
under which the Obligors are required to maintain a security deposit against
amounts charged, as specified in the Cardholder Guidelines.
"Secured Obligations" shall have the meaning set forth in the Security
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Security Agreement" means the security interest letter agreement,
dated as of the date hereof between the Originator and the Trustee.
"Seller" shall mean Charming Shoppes Receivables Corp., a Delaware
corporation.
"Seller Allocations" shall mean, with respect to any Due Period,
amounts required to be allocated to the Exchangeable Seller Certificate in
respect of Finance Charge Receivables pursuant to subsections 4.3(c), 4.3(e) or
4.3(g).
"Seller Exchange" shall have the meaning specified in subsection
6.9(b).
"Seller Interest" shall mean at any time the aggregate amount of
Principal Receivables in the Trust plus the amounts on deposit in the Excess
Funding Account minus the Aggregate Investor/Purchaser Interest. It is
understood and agreed that the Seller Interest may be less than zero and
expressed as a negative number.
"Seller Monthly Servicing Fee" shall mean, with respect to any Due
Period, an amount equal to one-twelfth of the product of 2% and the Seller
Interest as of the last day of the preceding Due Period.
"Seller Percentage" shall mean, on any date of determination, when used
with respect to Principal Receivables and Finance Charge Receivables, a
percentage equal to 100% minus the aggregate Investor/Purchaser Percentages for
all Series with respect to such categories of Receivables.
"Series" shall mean a Certificate Series or a Receivables Purchase
Series.
"Series Account" shall mean, with respect to any Series, any account or
accounts established pursuant to the related Supplement or Receivables Purchase
Agreement for the benefit of such Series.
"Series Dilution Amount" shall have the meaning specified in Section
4.3(d).
"Series Early Amortization Event" shall mean, with respect to any
Series, each "Early Amortization Event" or "Series Early Amortization Event"
specified in the related Supplement or Receivables Purchase Agreement.
"Series Investor Interest", with respect to any Certificate Series,
shall have the meaning specified in the related Supplement.
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"Series Percentage" shall mean, for any Series with respect to any Due
Period, the percentage equivalent of a fraction, the numerator of which is the
Series Investor Interest or the Receivables Purchase Series Interest, as the
case may be, for such Series as of the last day of the immediately preceding Due
Period and the denominator of which is the sum of the Series Investor Interests
and the Receivables Purchase Series Interests for all outstanding Series, in
each case as of the last day of the immediately preceding Due Period.
"Series Servicing Fee Percentage" shall mean, with respect to any
Series, the amount specified in the related Supplement or Receivables Purchase
Agreement.
"Series Termination Date" shall mean, with respect to any Series, the
date specified in the related Supplement or Receivables Purchase Agreement.
"Series Unfunded Dilution Amount" shall have the meaning specified in
subsection 4.3(d).
"Servicer" shall mean Spirit Inc., a Delaware corporation, and its
permitted successors and assigns and thereafter any Person appointed Successor
Servicer as herein provided.
"Servicer Default" shall have the meaning specified in Section 10.1.
"Servicer Termination Notice" shall have the meaning specified in
Section 10.1.
"Servicing Officer" shall mean any officer of the Servicer involved in,
or responsible for, the administration and servicing of the Receivables whose
name appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
"Shared Excess Finance Charge Collections" shall have the meaning
specified in subsection 4.3(g).
"Shared Principal Collections" shall have the meaning specified in
subsection 4.3(f).
"Specified Programs" means (i) the Private Label Program, (ii) the
Co-Branded Program, (iii) the Secured Account Program, (iv) the Unaffiliated
Retailer Program, or (v) any other credit card origination program initiated by
the Originator.
"Spirit Inc." shall have the meaning specified in the preamble.
"Standard & Poor's" shall mean Standard & Poor's.
"Store" shall mean a retail location of any Affiliate of the
Originator.
"Store Account" shall mean a deposit account established by a Store for
the purpose of collecting Store Payments.
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"Store Payment" shall mean any payment by an Obligor on account of a
Receivable made by means of cash or check delivered in person by such Obligor to
an employee at any Store.
"Subject Instrument" shall mean any Certificate or Receivables Purchase
Interest with respect to which the Seller shall not have received an Opinion of
Counsel to the effect that such Certificate or Receivables Purchase Interest
will be treated as debt for Federal income tax purposes.
"Successor Servicer" shall have the meaning specified in subsection
10.2(a).
"Supplement" shall mean, with respect to any Certificate Series, a
supplement to this Agreement complying with the terms of Section 6.9 of this
Agreement, executed in conjunction with any issuance of any Series of
Certificates, and all amendments and supplements thereto.
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel to the effect that, for Federal income tax purposes, such action will
not adversely affect the federal income tax characterization of Investor
Certificates of any outstanding Certificate Series.
"Total Systems Failure" means, in respect of any Distribution Date, a
total failure of the computer system (including but not limited to off-site
backup systems) of the Servicer or the Administrative Servicer which contain
records relating to the Receivables, the effect of which would make it
impossible or impracticable for the Servicer or the Administrative Servicer to
perform the acts required to be performed hereunder on or in anticipation of
such Distribution Date.
"Transaction Documents" shall mean this Agreement, the Purchase
Agreement, each Assignment, each Additional Assignment, the Security Agreement,
each Supplement, each Receivables Purchase Agreement, each Investor Certificate,
each agreement to purchase Investor Certificates, and each other agreement
designated as a Transaction Document in any Supplement or Receivables Purchase
Agreement.
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.3 and shall initially be the Trustee.
"Trust" shall mean the Charming Shoppes Master Trust created by the
Prior PSA and this Agreement (formerly known as the Spirit of America Master
Trust), the corpus of which shall consist of the Receivables now existing or
hereafter created, all monies due or to become due with respect thereto, all
Collections, all Recoveries, all rights, remedies powers and privileges with
respect to such Receivables, all rights, remedies, powers and privileges of the
Seller under the Purchase Agreement, such funds as from time to time are
deposited in the Collection Account and any Series Account and the rights to any
Enhancement with respect to any Series, and all proceeds of the foregoing;
provided, that the corpus of the Trust shall not include any undivided
percentage ownership interest in Receivables to the extent Conveyed by the Trust
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pursuant to any Receivables Purchase Agreement; provided further, that any
Series Account or Enhancement shall be held by the Trust for the benefit of the
related Series.
"Trust Early Amortization Event" shall have the meaning specified in
Section 9.1.
"Trust Extension" shall have the meaning specified in subsection
12.1(a).
"Trust Termination Date" shall mean the earlier of (a) the date of the
termination of the Trust pursuant to subsection 9.2(b), (b) (i) unless a Trust
Extension shall have occurred, the day after the Distribution Date following the
date on which funds shall have been deposited in the applicable Series Accounts
(A) for the payment of Investor Certificateholders of each Certificate Series
then issued and outstanding sufficient to pay in full the Investor Interest and,
if applicable, the Enhancement Invested Amount of each such Certificate Series
(including any unreimbursed Loss Amounts allocated to such Certificate Series to
the extent such amounts are required to be reimbursed pursuant to the related
Supplement) plus accrued interest at the applicable Certificate Rate through the
date specified in the related Supplement with respect to each such Certificate
Series plus all fees and expenses of the Trustee, the Servicer, any Enhancement
Provider and any other Person as specified therein and (B) for the repayment of
the Receivables Purchase Interest of each Receivables Purchase Series then
outstanding sufficient to pay in full the Receivables Purchase Interest of each
such Receivables Purchase Series (including any unreimbursed Loss Amounts
allocated to such Receivables Purchase Series to the extent such amounts may be
reimbursed pursuant to the related Receivables Purchase Agreement) plus accrued
interest at the applicable rate through the date specified in the related
Receivables Purchase Agreement with respect to each such Receivables Purchase
Series plus all fees and expenses of the Trustee, the Servicer, any Enhancement
Provider and any other Person as specified therein; and (ii) if a Trust
Extension shall have occurred, the Extended Trust Termination Date, and (c)
December 24, 2025.
"Trustee" shall mean First Union National Bank, a national banking
association, in its capacity as trustee on behalf of the Trust, and its
successors and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor trustee
appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in the Commonwealth of Pennsylvania, the State of Ohio, the
State of New York, and any other state where the filing of a financing statement
is required or advisable to perfect an interest in the Receivables and the
proceeds thereof, or in any other specified jurisdiction.
"Unaffiliated Retailer Program" means a credit card program of the
Originator to allow holders of its private label Fashion Bug credit card to use
the card at certain unaffiliated retail locations, as specified in the
Cardholder Guidelines.
"Undivided Trust Interest" shall mean the undivided interest in the
Trust evidenced by a Certificate.
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"U.S. Person" or "United States Person" shall mean a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States, or an estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source.
"Variable Certificate" means any Investor Certificate that is
designated as a variable funding certificate in the related Supplement.
"Yield Change" shall have the meaning specified in subsection 2.5(c).
Section 1.2 Other Definitional Provisions.
1.2.1 All terms defined in this Agreement or any Supplement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
1.2.2 As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partially defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles or regulatory accounting principles, as
applicable. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under generally accepted accounting
principles or regulatory accounting principles, the definitions contained herein
shall control.
1.2.3 The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; and Section, subsection,
Schedule and Exhibit references contained in this Agreement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement, unless
otherwise specified. The Monthly Servicer Report, the form of which is attached
as Exhibit C to this Agreement, shall be in substantially the form of Exhibit C,
with such additional information with respect to any Series as shall be
specified in the related Supplement or Receivables Purchase Agreement, and such
changes as the Servicer may determine to be necessary or desirable; provided,
however, that no such change shall serve to exclude information required by the
Agreement, any Supplement or any Receivables Purchase Agreement. The Servicer
shall, upon making such determination, deliver to the Trustee an Officer's
Certificate to which shall be annexed the form of the related Exhibit, as so
changed. Upon the delivery of such Officer's Certificate to the Trustee, the
related Exhibit, as so changed, shall for all purposes of this Agreement
constitute such Exhibit. The Trustee may conclusively rely upon such Officer's
Certificate in determining whether the related Exhibit, as changed, conforms to
the requirements of this Agreement.
Section 1.3 Purchaser Representatives. Receivables Purchasers of any
Receivables Purchase Series, pursuant to the related Receivables Purchase
Agreement, shall appoint a purchaser representative (each, a "Purchaser
Representative") who shall have the right to vote, or
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to give or receive any request, demand, authorization, direction, notice,
consent or waiver, hereunder on behalf of all of the Receivables Purchasers of
the related Receivables Purchase Series, all to the extent set forth in this
Agreement and in the related Receivables Purchase Agreement.
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Receivables. The Seller does hereby Convey to
the Trust without recourse (except as expressly provided herein), all of its
right, title and interest in and to the Receivables now existing and hereafter
created and arising from time to time in connection with the Accounts, until the
termination of the Trust, all monies due or to become due with respect thereto,
all Collections, all Recoveries, all rights, remedies, powers and privileges
with respect to the Receivables, all of its rights, remedies, powers and
privileges under the Purchase Agreement, and all proceeds of the foregoing.
In connection with such Conveyance, the Seller agrees to record and
file, at its own expense, a financing statement or financing statements
(including any continuation statements with respect to each such financing
statement when applicable) with respect to the Receivables now existing and
hereafter created meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect the Conveyance of
the Receivables to the Trust and the first priority nature of the Trustee's
interest in the Receivables, and to deliver a file-stamped copy of such
financing statement or continuation statement or other evidence of such filing
(which may, for purposes of this Section 2.1, consist of telephone confirmation
of such filing followed by delivery of a file- stamped copy as soon as
practicable) to the Trustee, as soon as practicable after receipt thereof by the
Seller. The foregoing Conveyance shall be made to the Trust for the benefit of
the Certificateholders, any Receivables Purchasers and any Enhancement Providers
(to the extent set forth in the related Supplement or Receivables Purchase
Agreement) and each reference in this Agreement to such Conveyance shall be
construed accordingly.
In connection with such Conveyance, the Servicer agrees, on behalf of
the Seller, as an expense of the Servicer, paid out of the Seller's Monthly
Servicing Fee, (i) to indicate in the Pool Index File maintained in its computer
files that Receivables created in connection with the Accounts have been
Conveyed to the Trust pursuant to this Agreement, and (ii) to deliver to the
Trustee a computer file or microfiche or written list containing a true and
complete list of all such Accounts, identified by account number, Obligor name
and Obligor address and setting forth the Receivable balance as of ___________.
Such file or list shall be marked as Schedule 1 to this Agreement, delivered to
the Trustee as confidential and proprietary, and is hereby incorporated into and
made a part of this Agreement. The Servicer further agrees not to alter the file
designation referenced in clause (i) of this paragraph with respect to any
Account during the term of this Agreement unless and until such Account becomes
a Removed Account.
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The parties intend that if, and to the extent that, such Conveyance is
not deemed to be a sale, the Seller shall be deemed hereunder to have granted to
the Trust a first priority perfected security interest (to secure the Secured
Obligations) in all of the Seller's right, title and interest in, to and under
the Receivables now existing and hereafter created and arising from time to time
in connection with the Accounts until the termination of the Trust, all monies
due or to become due with respect thereto, all Collections, all Recoveries, all
rights, remedies, powers and privileges with respect to the Receivables, all of
its rights, remedies, powers and privileges under the Purchase Agreement, and
all proceeds of the foregoing, and that this Agreement shall constitute a
security agreement under applicable law.
Pursuant to the request of the Seller, the Trustee shall cause
Certificates in authorized denominations evidencing the entire interest in the
Trust to be duly authenticated and delivered to or upon the order of the Seller
pursuant to Section 6.2.
By executing and delivering this Agreement and the Purchase Agreement,
the parties do not intend to cancel, release or in any way impair any conveyance
made by the Originator to the Trustee under the Prior PSA. Without limiting the
foregoing, the parties hereto acknowledge and agree as follows:
(i) Any Conveyance by the Originator to the Seller of assets
hereunder or under any other Transaction Document shall be subject to
any rights in such assets granted by the Originator to the Trustee
pursuant to the Prior PSA.
(ii) The trust created by and maintained under the Prior PSA
shall continue to exist and be maintained under this Agreement.
(iii) All series of certificates or purchased interests issued
under the Prior PSA shall constitute Series issued and outstanding
under this Agreement, and any supplement or receivables purchase
agreement executed in connection with such series shall constitute a
Supplement or Receivables Purchase Agreement (as applicable) executed
hereunder.
(iv) All references to the Prior PSA in any other instruments
or documents shall be deemed to constitute references to this
Agreement. All references in such instruments or documents to the
Originator in its capacity as the seller of receivables and related
assets under the Prior PSA shall be deemed to include reference to the
Seller in such capacity hereunder.
(v) The Seller hereby assumes and agrees to perform all
obligations of Spirit of America National Bank, in its capacity as
seller (but not as servicer) under or in connection with the Prior PSA
(as amended and restated by this Agreement)and any supplements to the
Prior PSA.
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(vi) To the extent this Agreement requires that certain
actions are to be taken as of the Initial Cut Off Date or another date
prior to the date of this Agreement, the Originator's execution of such
action under the Prior PSA shall constitute satisfaction of such
requirement.
Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf of the
Trust, of all right, title and interest previously held by the Seller in and to
the Receivables now existing and hereafter created from time to time and arising
in connection with the Accounts until the termination of the Trust, all monies
due or to become due with respect thereto, all Collections, all Recoveries, all
rights, remedies, powers and privileges with respect to the Receivables, all
rights, remedies, powers and privileges under the Purchase Agreement, and all
proceeds of the foregoing, and declares that it shall maintain such right, title
and interest, upon the Trust herein set forth, for the benefit of all
Certificateholders, any Receivables Purchasers and any Enhancement Providers (to
the extent set forth in the related Supplement or Receivables Purchase
Agreement). The Trustee further acknowledges that, on or prior to the Initial
Closing Date, it has received from the Servicer (on behalf of the Seller) the
computer file or microfiche or written list required to be delivered to it
pursuant to the third paragraph of Section 2.1.
(b) The Trustee hereby agrees not to disclose to any Person any of the
account numbers or other information contained in the computer files or
microfiche or written lists delivered to the Trustee pursuant to Sections 2.1,
2.6 and 2.7 ("Account Information") except as is required in connection with the
performance of its duties hereunder or in enforcing the rights of the
Certificateholders and Receivables Purchasers or to a Successor Servicer
appointed pursuant to Section 10.2 or as mandated pursuant to any Requirement of
Law applicable to the Trustee. The Trustee agrees to take such measures as shall
be reasonably requested by the Seller to protect and maintain the security and
confidentiality of such information, and, in connection therewith, shall allow
the Seller to inspect the Trustee's security and confidentiality arrangements
from time to time during normal business hours. In the event that the Trustee is
required by law to disclose any Account Information, the Trustee shall provide
the Seller with prompt written notice, unless such notice is prohibited by law,
of any such request or requirement so that the Seller may request a protective
order or other appropriate remedy. The Trustee shall use its best efforts to
provide the Seller with written notice no later than five days prior to any
disclosure pursuant to this subsection 2.2(b).
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3 Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Trust as of the Initial Closing Date, the
Effective Date and the Amendment Date:
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(a) Organization and Good Standing. The Seller is a corporation duly
organized and validly existing under the laws of the State of Delaware and has
full corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement and the other Transaction Documents to which it is a party and to
execute and deliver to the Trustee the Certificates pursuant hereto.
(b) Due Qualification. The Seller is duly qualified to do business and
is in good standing (or is exempt from such requirement) in any state required
in order to conduct its business, and has obtained all necessary licenses and
approvals with respect to the Seller required under applicable law.
(c) Due Authorization. The execution and delivery by the Seller of this
Agreement and the other Transaction Documents to which it is a party and the
consummation of the transactions provided for in this Agreement and each other
Transaction Document to which the Seller is a party have been duly authorized by
the Seller by all necessary corporate action on its part and this Agreement and
each such Transaction Document will remain, from the time of its execution, an
official record of the Seller.
(d) Enforceability. Each of this Agreement and each other Transaction
Document to which the Seller is a party constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by Debtor Relief Laws.
(e) No Conflict. The execution and delivery of this Agreement and each
other Transaction Document to which the Seller is a party, the performance of
the transactions contemplated hereunder and thereunder and the fulfillment of
the terms hereof and thereof will not conflict with, result in any breach of any
of the material terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Seller is a party or
by which it or any of its properties are bound.
(f) No Violation. The execution and delivery of this Agreement, the
Certificates and each other Transaction Document to which the Seller is a party,
the performance of the transactions contemplated hereunder and thereunder and
the fulfillment of the terms hereof and thereof will not conflict with or
violate in any material respect any Requirements of Law applicable to the
Seller.
(g) No Proceedings. There are no proceedings pending or, to the best
knowledge of the Seller, threatened against the Seller before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Agreement, the Certificates
or any other Transaction Document to which the Seller is a party, (ii) seeking
to prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Certificates or any other
Transaction Document to which
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the Seller is a party, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Seller, would materially and adversely affect the
performance by the Seller of its obligations under this Agreement or any other
Transaction Document to which the Seller is a party, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement, the Certificates or any other Transaction
Document to which the Seller is a party or (v) seeking to affect adversely the
income tax attributes of the Trust.
(h) All Consents Required. All appraisals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery of this Agreement, the
Certificates and each other Transaction Document to which the Seller is a party,
the performance of the transactions contemplated hereunder and thereunder and
the fulfillment of the terms hereof and thereof have been obtained.
(i) Eligibility of Accounts. As of the Initial Cut Off Date (or in the
case of an Additional Account, the applicable Addition Cut Off Date), each
Account was an Eligible Account and no selection procedures adverse to the
Investor Certificateholders or Receivables Purchasers have been employed by the
Seller in selecting the Accounts from among the Eligible Accounts in the Bank
Portfolio.
(j) Originator's Deposit Accounts. As of the Initial Closing Date, the
Effective Date and the Amendment Date, deposits in Originator's deposit accounts
were insured to the limits provided by law by BIF.
The representations and warranties set forth in this Section 2.3 shall
survive the transfer and assignment of the respective Receivables to the Trust
and the termination of the rights and obligations of the Servicer pursuant to
Section 10.1. The Seller hereby represents and warrants to the Trust, with
respect to any Series, as of its Closing Date, unless otherwise specified in the
related Supplement or Receivables Purchase Agreement, that the representations
and warranties of the Seller set forth in this Section 2.3 are true and correct
as of such date.
Section 2.4 Representations and Warranties of the Seller Relating to
the Receivables; Notice of Breach.
(a) Valid Conveyance and Assignment; Eligibility of Receivables.
The Seller hereby represents and warrants to the Trust as of the
Initial Closing Date, the Effective Date and the Amendment Date, and with
respect to any Additional Accounts, as of the related Addition Date:
(i) This Agreement constitutes either (A) a valid sale to the
Trust of all right, title and interest of the Seller in and to the
Receivables now existing and hereafter created and arising from time to
time in connection with the Accounts until the termination of the
Trust, all monies due or to become due with respect thereto, all
Collections, all Recoveries, all rights, remedies, powers and
privileges with respect to the Receivables,
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all of its rights, remedies, powers and privileges under the Purchase
Agreement, and all proceeds of the foregoing, and such property will be
held by the Trust free and clear of any Lien of any Person claiming
through or under the Seller or any of its Affiliates, or (B) a grant of
a security interest (as defined in the UCC as in effect in any
applicable jurisdiction) in such property to the Trust, which is
enforceable with respect to the Receivables now existing and hereafter
created and arising from time to time in connection with the Accounts
until the termination of the Trust, all monies due or to become due
with respect thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the Receivables, all of
its rights, remedies, powers and privileges under the Purchase
Agreement, and all proceeds of the foregoing, upon such creation. To
the extent that this Agreement constitutes the grant of a security
interest to the Trust in such property, upon the filing of the
financing statements described in Section 2.1 and in the case of the
Receivables hereafter created, all monies due or to be become due with
respect thereto, all Collections, all Recoveries, all rights, remedies,
powers and privileges with respect to such Receivables, and the
proceeds of the foregoing, upon such creation, the Trust shall have a
first priority perfected security interest in such property (subject to
Section 9-306 of the UCC as in effect in any applicable jurisdiction).
Neither the Seller nor any Person claiming through or under the Seller
shall have any claim to or interest in the Collection Account or any
Series Account, except for the Seller's rights to receive interest
accruing on, and investment earnings in respect of, the Collection
Account, as provided in this Agreement (and, if applicable, any Series
Account as provided in any Supplement or any Receivables Purchase
Agreement),to the extent that this Agreement constitutes the grant of a
security interest in such property, except for the interest of the
Seller in such property as a debtor for purposes of the UCC as in
effect in any applicable jurisdiction.
(ii) Each Receivable is an Eligible Receivable.
(iii) Each Receivable then existing has been Conveyed to the
Trust free and clear of any Lien of any Person claiming through or
under the Seller, the Originator, or any of their Affiliates and in
compliance, in all material respects, with all Requirements of Law
applicable to the Seller.
(iv) With respect to each Receivable, all consents, licenses,
approvals or authorizations of or registrations or declarations with
any Governmental Authority required to be obtained, effected or given
by the Seller in connection with the Conveyance of such Receivable to
the Trust have been duly obtained, effected or given and are in full
force and effect.
(v) On each day on which any new Receivable is created, the
Seller shall be deemed to represent and warrant to the Trust that (A)
each Receivable created on such day is an Eligible Receivable, (B) each
Receivable created on such day has been Conveyed to the Trust in
compliance, in all material respects, with all Requirements of
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Law applicable to the Seller, (C) with respect to each such Receivable,
all consents, licenses, approvals or authorizations of or registrations
or declarations with, any Governmental Authority required to be
obtained, effected or given by the Seller in connection with the
Conveyance of such Receivable to the Trust have been duly obtained,
effected or given and are in full force and effect and (D) the
representations and warranties set forth in subsection 2.4(a)(i) are
true and correct with respect to each Receivable created on such day as
if made on such day.
(vi) As of the Initial Cut Off Date, and, with respect to
Additional Accounts, as of the related Addition Cut Off Date, Schedule
1 to this Agreement and the related computer file or microfiche or
written list referred to in subsection 2.6(d)(ii), is an accurate and
complete listing in all material respects of all the Accounts, and the
information contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is true and correct in
all material respects as of the Initial Cut Off Date or such applicable
Addition Cut Off Date, and as of the Initial Cut Off Date, the
aggregate amount of Receivables in all the Accounts was $45,431,401 of
which $45,431,401 were Principal Receivables.
(b) Survival. The representations and warranties set forth in this
Section 2.4 shall survive the Conveyance of any of the respective Receivables to
the Trust.
(c) Notice of Breach. Upon discovery by the Seller, the Servicer or the
Trustee of a breach of any of the representations and warranties set forth in
Section 2.3 or 2.4, the party discovering such breach shall give prompt written
notice to the other parties hereto, each Purchaser Representative and each
Enhancement Provider as soon as practicable and in any event within three
Business Days following such discovery.
(d) Transfer of Ineligible Receivables.
(i) Automatic Removal. In the event of a breach with respect
to a Receivable of any representations and warranties set forth in
subsection 2.4(a)(iii), or in the event that a Receivable is not an
Eligible Receivable as a result of the failure to satisfy the
conditions set forth in clause (d) of the definition of Eligible
Receivable, and any of the following three conditions is met: (A) as a
result of such breach or event such Receivable is charged off as
uncollectible or the Trust's rights in, to or under such Receivable or
its proceeds are impaired or the proceeds of such Receivable are not
available for any reason to the Trust free and clear of any Lien; (B)
the Lien upon the subject Receivable (1) arises in favor of the United
States of America or any State or any agency or instrumentality thereof
and involves taxes or liens arising under Title IV of ERISA or (2) has
been consented to by the Originator or the Seller; or (C) the unsecured
short term debt rating of the Originator is not at least P-1 by Moody's
and the Lien upon the subject Receivable ranks prior to the Lien
created pursuant to this Agreement; then, upon the earlier to occur of
the discovery of such breach or event by the Seller or the Servicer or
receipt by the Seller of written notice of such breach or event given
by the Trustee, each
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such Receivable shall be automatically removed from the Trust on the
terms and conditions set forth in subsection 2.4(d)(iii) and shall no
longer be treated as a Receivable; provided, that if such Lien does not
have a material adverse effect on the collectibility of the Receivables
or on the interests of the Certificateholders or Receivables Purchasers
of any Series or the Enhancement Provider, the Seller shall have 10
days within which to remove any such Lien.
(ii) Removal After Cure Period. In the event of a breach of
any of the representations and warranties set forth in subsection
2.4(a)(ii)-(vi), other than a breach or event as set forth in clause
(d)(i) above, and as a result of such breach the Receivable becomes
charged off or the Trust's rights in, to or under the Receivable or its
proceeds are impaired or the proceeds of such Receivable are not
available for any reason to the Trust free and clear of any Lien, then,
upon the expiration of 60 days from the earlier to occur of the
discovery of any such event by either the Seller or the Servicer, or
receipt by the Seller of written notice of any such event given by the
Trustee or any Purchaser Representative, each such Receivable shall be
removed from the Trust on the terms and conditions set forth in
subsection 2.4(d)(iii) and shall no longer be treated as a Receivable;
provided, however, that no such removal shall be required to be made
if, on any day within such applicable period, such representations and
warranties with respect to such Receivable shall then be true and
correct in all material respects as if such Receivable had been created
on such day.
(iii) Procedures for Removal. When the provisions of
subsection 2.4(d)(i) or (ii) above require removal of a Receivable, the
Seller shall accept reassignment of each such Receivable (an
"Ineligible Receivable") by directing the Servicer to deduct the
principal balance of each such Ineligible Receivable from the Principal
Receivables in the Trust and to decrease the Seller Interest by such
amount (but not below zero). On and after the date of such removal,
each Ineligible Receivable shall be deducted from the aggregate amount
of Principal Receivables used in the calculation of any
Investor/Purchaser Percentage, the Seller Percentage or the Seller
Interest. In the event that the exclusion of an Ineligible Receivable
from the calculation of the Seller Interest would cause the Seller
Interest to be reduced below the Aggregate Minimum Seller Interest, the
Seller shall immediately, but in no event later than 10 Business Days
after such event, or, if earlier, the next succeeding Distribution
Date, make a deposit in the Excess Funding Account (except that the
portion of such amount allocable to any Receivables Purchase Series
shall be deposited in the Collection Account for the benefit of such
Receivables Purchase Series) in immediately available funds in an
amount equal to the amount by which the Seller Interest would be
reduced below the Aggregate Minimum Seller Interest. Upon the
reassignment to the Seller of an Ineligible Receivable, the Trust shall
automatically and without further action be deemed to Convey to the
Seller, without recourse, representation or warranty, all the right,
title and interest of the Trust in and to such Ineligible Receivable
(and if all the Receivables of an Account are Ineligible Receivables,
all Receivables then existing and thereafter created in the related
Account), all monies due or to become due with respect thereto, all
Collections, all Recoveries, all
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rights, remedies, powers and privileges with respect to such Ineligible
Receivable, and all proceeds of the foregoing and any such reassigned
Ineligible Receivable shall no longer be treated as a Receivable. The
Trustee shall execute such documents and instruments of transfer or
assignment, including a written assignment in substantially the form of
Exhibit E-2, and take other actions as shall reasonably be requested by
the Seller to evidence the Conveyance of such Ineligible Receivable
pursuant to this subsection 2.4(d)(iii). The obligation of the Seller
set forth in this subsection 2.4(d)(iii), or the automatic removal of
such Receivable from the Trust, as the case may be, shall constitute
the sole remedy respecting any breach of the representations and
warranties set forth in the above-referenced subsections with respect
to such Receivable available to Certificateholders or Receivables
Purchasers or the Trustee on behalf of Certificateholders or
Receivables Purchasers, except as otherwise specified in any Supplement
or Receivables Purchase Agreement.
(e) Reassignment of Trust Portfolio. In the event of a breach of the
representations and warranties set forth in subsection 2.3(d) or 2.4(a)(i) of
this Agreement or subsection 2.1(d) or 2.2(a)(i) of the Purchase Agreement,
either (i) the Trustee or the Holders of Investor Certificates evidencing
Undivided Trust Interests aggregating more than 50% of the aggregate Investor
Interests of all Certificate Series or (ii) any Purchaser Representative, by
notice then given in writing to the Seller (and to the Trustee and the Servicer,
if given by the Investor Certificateholders or any Purchaser Representative) may
direct the Seller to accept reassignment of an amount of Principal Receivables
(as specified below) within 60 days of such notice and the Seller shall be
obligated to accept reassignment of such Principal Receivables on a Distribution
Date specified by such Person (such Distribution Date, the "Reassignment Date")
occurring within such applicable period on the terms and conditions set forth
below; provided, however, that no such reassignment shall be required to be made
if, at any time during such applicable period, the representations and
warranties contained in subsection 2.3(d) and 2.4(a)(i) of this Agreement and
Subsection 2.1(d) and 2.2(a)(i) of the Purchase Agreement shall then be true and
correct in all material respects. The Trustee shall promptly notify each
Purchaser Representative of any such notice of reassignment, and each Purchaser
Representative may, by notice to the Seller and the Trustee, designate the
Series it represents as participating in such reassignment. The Seller shall
deposit on the Reassignment Date an amount equal to the reassignment deposit
amount for such Receivables in the applicable Series Account, as provided in the
related Supplement or Receivables Purchase Agreement, for distribution to the
Investor Certificateholders pursuant to Article XII or the Receivables
Purchasers pursuant to the related Receivables Purchase Agreement or any
Enhancement Provider pursuant to the applicable Supplement. The reassignment
deposit amount for each Series with respect to which a notice directing
reassignment has been given, unless otherwise stated in the related Supplement
or Receivables Purchase Agreement, shall be equal to (a) in the case of any
Certificate Series, (i) the Investor Interest of such Series and, if applicable,
the Enhancement Invested Amount at the end of the day on the last day of the Due
Period preceding the Reassignment Date, less the amount, if any, previously
allocated for payment of principal to such Certificateholders on the related
Distribution Date in the Due Period in which the Reassignment Date occurs, plus
(ii) an amount equal to all interest accrued but unpaid on the Investor
Certificates and, if applicable, the
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Enhancement Invested Amount of such Series at the applicable Certificate Rate
through such last day, less the amount, if any, previously allocated for payment
of interest to the Certificateholders of such Series on the related Distribution
Date in the Due Period in which the Reassignment Date occurs, and (b) in the
case of any Receivables Purchase Series, all principal and accrued interest on
such Receivables Purchase Series through such Reassignment Date and all accrued
and unpaid fees and expenses and unreimbursed Loss Amounts under the related
Receivables Purchase Agreement. Payment of the reassignment deposit amount with
respect to each Series and all other amounts in the applicable Series Account in
respect of the preceding Due Period shall be considered a prepayment in full of
the interest in the Receivables represented by such Series. On the Distribution
Date on which such amount has been deposited in full into the applicable Series
Account, Receivables with an aggregate principal balance equal to the aggregate
Investor Interests and Receivables Purchase Interests of all Series with respect
to which a notice directing reassignment has been given and all monies due or to
become due with respect thereto, all Collections, all Recoveries, and all
proceeds of such Receivables be released to the Seller after payment of all
amounts otherwise due hereunder on or prior to such dates and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be prepared by and as are
reasonably requested by the Seller to vest in the Seller, all right, title and
interest of the Trust in and to the Receivables then existing and thereafter
created in the related Accounts, all monies due or to become due with respect
thereto, all Collections, all Recoveries, all rights, remedies, powers and
privileges with respect to such Receivables, and all proceeds of the foregoing.
If the Trustee, the Investor Certificateholders or the Purchaser Representatives
give notice directing the Seller to accept reassignment as provided above, the
obligation of the Seller to accept reassignment of the Receivables and pay the
reassignment deposit amount pursuant to this subsection 2.4(e) shall constitute
the sole remedy respecting a breach of the representations and warranties
contained in subsections 2.3(d) and 2.4(a)(i) available to the Investor
Certificateholders, the Trustee on behalf of the Investor Certificateholders or
the Receivables Purchasers.
Section 2.5 Covenants of the Seller. The Seller hereby covenants that:
(a) Receivables to be Accounts. The Seller will take no action to cause
any Receivable to be evidenced by any instrument (as defined in the UCC as in
effect in any applicable jurisdiction). Each Receivable shall be payable
pursuant to a contract which does not create a Lien on any goods purchased
thereunder. The Seller will take no action to cause any Receivable to be
anything other than an "account," or a "general intangible" or the "proceeds" of
either for purposes of the UCC as in effect in any applicable jurisdiction.
(b) Security Interests. Except for the Conveyances contemplated
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
Receivable, whether now existing or hereafter created, or any interest therein;
the Seller will promptly notify the Trustee of the existence of any Lien on any
Receivable; and the Seller shall defend the right, title and interest of the
Trust in, to and under the Receivables, whether now existing or hereafter
created, against all claims of third parties claiming through or under the
Seller or the Originator; provided, however, that nothing in this
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subsection 2.5(b) shall prevent or be deemed to prohibit the Seller from
suffering to exist upon any of the Receivables any Liens for municipal and other
local taxes if such taxes shall not at the time be due and payable or if the
Seller or the Originator, as applicable, shall currently be contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto.
(c) Cardholder Agreements and Cardholder Guidelines. The Seller shall
enforce the covenant in the Purchase Agreement requiring the Originator to
comply with and perform its obligations under the Cardholder Agreements relating
to the Accounts and the Cardholder Guidelines except insofar as any failure to
comply or perform would not materially and adversely affect the rights of the
Trust, the Certificateholders, any Enhancement Provider or any Receivables
Purchasers. The Seller may permit the Originator to change the terms and
provisions of the Cardholder Agreements or the Cardholder Guidelines in any
respect (including, without limitation, the reduction of the required minimum
monthly payment, the calculation of the amount, or the timing, of charge-offs
and the periodic finance charges and other fees to be assessed thereon), unless
such change would have a material adverse effect on the collectibility of the
Receivables; provided, however, that the Seller may not permit the Originator to
change the required minimum monthly payment or periodic finance charge
(collectively, a "Yield Change") unless, after five Business Days' prior written
notice to the Rating Agency of a Yield Change, the Rating Agency shall have
provided written notice to the Seller that the Rating Agency Condition shall be
satisfied or unless such Yield Change is mandated by applicable law.
(d) Account Allocations. In the event that the Seller is unable for any
reason to transfer Receivables to the Trust in accordance with the provisions of
this Agreement (including, without limitation, by reason of the application of
the provisions of Section 9.1(a) or 9.1(b) or by an order by any federal or
state governmental agency having regulatory authority over the Seller or any
court of competent jurisdiction that the Seller not transfer any additional
Principal Receivables to the Trust) then, in any such event, (A) the Seller
agrees to allocate and pay to the Trust, after the date of such inability, all
Collections with respect to Principal Receivables, and all amounts which would
have constituted Collections with respect to Principal Receivables but for the
Seller's inability to transfer such Receivables (up to an aggregate amount equal
to the amount of Principal Receivables in the Trust on such date); (B) the
Seller agrees to have such amounts applied as Collections in accordance with
Article IV; and (C) for only so long as all Collections and all amounts which
would have constituted Collections are allocated and applied in accordance with
clauses (A) and (B) above, Principal Receivables (and all amounts which would
have constituted Principal Receivables but for the Seller's inability to
transfer Receivables to the Trust) that are charged off as uncollectible in
accordance with this Agreement shall continue to be allocated in accordance with
Article IV, and all amounts that would have constituted Principal Receivables
but for the Seller's inability to transfer Receivables to the Trust shall be
deemed to be Principal Receivables for the purpose of calculating (i) the
applicable Investor/Purchaser Percentage with respect to any Series and (ii) the
Aggregate Investor/Purchaser Interest thereunder. If the Seller is unable
pursuant to any Requirement of Law to allocate Collections as described above,
the Seller agrees that it shall in any such event allocate, after the occurrence
of such event, payments on each Account with respect to the
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principal balance of such Account first to the oldest principal balance of such
Account and to have such payments applied as Collections in accordance with
Article IV. The parties hereto agree that Finance Charge Receivables, whenever
created, accrued in respect of Principal Receivables that have been conveyed to
the Trust, or that would have been conveyed to the Trust but for the above
described inability to transfer such Receivables, shall continue to be a part of
the Trust notwithstanding any cessation of the transfer of additional Principal
Receivables to the Trust and Collections with respect thereto shall continue to
be allocated and paid in accordance with Article IV.
(e) Delivery of Collections. The Seller agrees to pay to the Servicer
all payments received by the Seller in respect of the Receivables as soon as
practicable after receipt thereof by the Seller.
(f) Conveyance of Accounts. The Seller covenants and agrees that it
will not Convey the Accounts to any person prior to the termination of this
Agreement pursuant to Article XII.
(g) Notice of Adverse Claims. The Seller shall notify the Trustee, each
Purchaser Representative and each Enhancement Provider after becoming aware of
any Lien on any Receivable.
(h) Information Provided to Rating Agencies. The Seller will use its
best efforts to cause all information provided to any Rating Agency pursuant to
this Agreement or in connection with any action required or permitted to be
taken under this Agreement to be complete and accurate in all material respects.
(i) Notice of Certain Events. The Seller shall notify the Trustee, each
Rating Agency and each Purchaser Representative of any Early Amortization Event
or Servicer Default of which it has knowledge, promptly upon obtaining such
knowledge.
(j) Offices, Records and Books of Account. The Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Receivables at the address of the Seller set
forth under its name on the signature page to the Agreement or, upon 30 days'
prior written notice to the Trustee and each Purchaser Representative, at any
other locations in jurisdictions where all actions reasonably requested by the
Trustee and any Purchaser Representative to protect and perfect the interest in
the Receivables have been taken and completed. The Seller also will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables and related
Cardholder Agreements in the event of the destruction of the originals thereof),
and keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
existing Receivable).
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(k) Amendments to Purchase Agreement. The Seller shall make no
amendment to the Purchase Agreement that would adversely affect in any material
respect the interests of the Investor Certificateholders, any Receivables
Purchaser or any Enhancement Provider. Promptly after the execution of any
amendment to the Purchase Agreement, the Seller shall furnish a copy thereof to
the Trustee and each Purchaser Representative.
(l) Separate Corporate Existence. The Seller hereby acknowledges that
the Trustee and the Investor Certificateholders are, and will be, entering into
the transactions contemplated by the Transaction Documents in reliance upon
Seller's identity as a legal entity separate from the Originator, Servicer and
any other Person. Therefore, Seller shall take all reasonable steps to maintain
its existence as a corporation separate and apart from the Originator, the
Servicer, and any other Affiliate of the Originator or the Servicer. Without
limiting the generality of the foregoing, Seller shall:
(i) (a) observe the corporate procedures required by its
certificate of incorporation, its by-laws and the corporate law of the
State of Delaware, including, without limitation, holding separate
director and shareholder meetings from those of any other Person and
otherwise ensuring at all times that it is maintained as a separate
corporate entity from any other Person and (b) not amend or modify any
provision of its Certificate of Incorporation or by-laws unless the
Rating Agency Condition shall have been satisfied with respect to such
amendment or modification;
(ii) (a) ensure that its Board of Directors duly authorizes
all of its corporate actions, and (b) keep correct and complete books
and records of account separate from those of any other Person, and
correct and complete minutes of the meetings and other proceedings of
its stockholders and Board of Directors, and (c) where necessary,
obtain proper authorization from its directors or stockholders, as
appropriate, for corporate action;
(iii) provide for its operating expenses and liabilities
from its own funds and maintain deposit accounts and other bank
accounts separate from those of the Originator, the Servicer, or any of
their respective Affiliates;
(iv) act solely in its corporate name and through its duly
authorized officers or agents in the conduct of its business and ensure
that neither the Originator nor the Servicer nor any of their
respective Affiliates controls any corporate decisions made by it;
(v) to the extent that it obtains any services from the
Originator or the Servicer or any of their respective Affiliates,
ensure that the terms of such arrangements are comparable to those that
would be obtained in an arm's-length transaction;
(vi) ensure that its assets are not commingled with those
of the Originator, the Servicer, or any other Person;
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(vii) maintain separate corporate records and books of
account from those of the Originator, the Servicer or any other Person;
(viii) not conduct any business or engage in any activities
other than in accordance with its Certificate of Incorporation;
(ix) (a) not hold itself out, or permit itself to be held
out, as having agreed to pay, or as being liable for, the debts of the
Originator, the Servicer, or any other Person; (b) maintain an
arm's-length relationship with the Originator and the Servicer and
their respective Affiliates with respect to any transactions between
itself and such other Person; and (c) continuously maintain as official
records the resolutions, agreements and other instruments underlying
the transactions contemplated by this Agreement;
(x) select and at all times maintain as its Independent
Director (as defined in the Seller's Certificate of Incorporation) a
Person who meets the following qualifications (which qualifications are
in addition to those set forth in the its Certificate of
Incorporation): the Independent Director shall have (a) prior
experience as an independent director for a corporation whose charter
documents require the unanimous written consent of all independent
directors thereof before such corporation could consent to the
institution of bankruptcy or insolvency proceedings against it or could
file a petition seeking relief under any applicable federal or state
law relating to bankruptcy, and (b) at least three years of employment
experience with one or more entities that provide, in the ordinary
course of their respective businesses, advisory, management or
placement services to issuers of securitization or structured finance
instruments, agreements or securities.
(m) Enforcement of Purchase Agreement. The Seller covenants and agrees
that it will perform all of its obligations under the Purchase Agreement in all
material respects and, if requested by the Trustee, enforce (for the benefit of
the Trust) the obligations of the Originator under the Purchase Agreement.
Section 2.6 Addition of Accounts.
(a) Required Additions. If, either (i) the average of the Seller
Interest over any 30 day period ending on the last day of the Due Period is less
than the Aggregate Minimum Seller Interest (after giving effect to any reduction
to the Seller Interest to be made on the related Distribution Date pursuant to
Section 4.3(d)) or (ii) on the last Business Day of any Due Period occurring on
or prior to the Series Termination Date of any Certificate Series outstanding
prior to the Effective Date, the aggregate amount of Principal Receivables is
less than the Minimum Aggregate Principal Receivables on such date, the Seller
shall on or prior to the close of business on the 10th Business Day following
the last Business Day of such Due Period (the "Required Designation Date"),
unless the Seller Interest exceeds the Aggregate Minimum Seller Interest or the
aggregate amount of Principal Receivables exceeds the Minimum Aggregate
Principal Receivables, as the case may be, in either case as of the close of
business on any day after the
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last Business Day of such Due Period and prior to the Required Designation Date,
designate additional Eligible Accounts to be included as Accounts as of the
Required Designation Date ("Additional Accounts") or any earlier date in a
sufficient amount such that after giving effect to such addition, the Seller
Interest as of the close of business on the Addition Date is at least equal to
the Aggregate Minimum Seller Interest on such date and the aggregate amount of
Principal Receivables equals or exceeds the Minimum Aggregate Principal
Receivables on such date. The failure of any condition set forth in paragraph
(c) or (d) below as the case may be, shall not relieve the Seller of its
obligation pursuant to this paragraph; provided, however, that the failure of
the Seller to transfer Receivables to the Trust as provided in this paragraph
solely as a result of the unavailability of a sufficient amount of Eligible
Receivables shall not constitute a breach of this Agreement; provided further,
that any such failure which has not been timely cured will nevertheless result
in the occurrence of a Series Early Amortization Event with respect to each
Series for which, pursuant to the Supplement therefor, a failure by the Seller
to convey Receivables in Additional Accounts to the Trust by the day on which it
is required to convey such Receivables constitutes a "Series Early Amortization
Event" (as defined in such Supplement).
(b) Permitted Additions. The Seller may from time to time, at its sole
discretion, subject to the conditions specified in paragraph (c) or (d) below,
as the case may be, designate additional Eligible Accounts to be included as
Accounts in either case as of the applicable Addition Date.
(c) Automatic Additional Accounts. (i) The Seller may from time to
time, at its sole discretion, subject to and in compliance with the limitations
specified in clause (ii) below and the applicable conditions specified in
paragraph (d) below, designate Eligible Accounts to be included as Accounts as
of the applicable Addition Date.
(ii) Unless each Rating Agency otherwise consents, the Receivables in
such Automatic Additional Accounts plus the Receivables in Additional Accounts
added pursuant to Section 2.6(a), without satisfaction of the Rating Agency
Condition described under Section 2.6(d)(vi), shall not exceed during any of the
three consecutive Monthly Periods commencing in January, April, July and October
of each calendar year, commencing in July 1994 (each, a "Quarterly Period"), the
amount of Receivables equal to 10% of the Receivables as of the first day of the
calendar year during which such Quarterly Period commences (or the Addition Date
occurring on May 4, 1994, in the case of 1994) and during each 12 month period
ending as of the most recent Addition Date shall not exceed the amount of
Receivables equal to 15% of the Receivables as of the first day of such 12 month
period (collectively, the "Aggregate Addition Limit"). Additionally, the
conditions set forth in Section 2(d)(ii), 2(d)(vii) and 2(d)(viii) shall only be
required to be delivered on the last day of any Due Period in which Receivables
have been conveyed to the Trust pursuant to this Section 2.6(c). Following the
addition of any such Automatic Additional Accounts and any Additional Accounts
made pursuant to Section 2.6(a), the Servicer shall provide information (x) to
Moody's with respect to such Additional Accounts not later than the last
Business Day of the month following the Quarterly Period in which such addition
occurs in the form approved from time to time by
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Moody's and the Servicer and (y) to any Rating Agency such information as shall
be requested by such Rating Agency with respect to such Additional Accounts.
(d) Conditions to Additions. The Seller agrees that any such Conveyance
of Receivables from Additional Accounts under subsection 2.6(a), (b) or (c)
shall satisfy the following conditions (to the extent provided below) (provided,
however, that the conditions set forth in clauses (i) and (vi) shall not apply
to Additional Accounts which are governed by Section 2.6(c)):
(i) on or before the tenth Business Day prior to the
Addition Date with respect to additions pursuant to subsection
2.6(a) and subsection 2.6(b) (the "Addition Notice Date"), the
Seller shall give the Trustee, the Servicer, the Rating
Agencies, each Purchaser Representative and each Enhancement
Provider written notice that such Additional Accounts will be
included, which notice (the "Addition Notice") shall specify
the approximate aggregate amount of the Receivables to be
Conveyed and the applicable Addition Cut Off Date;
(ii) on or before the Addition Date, the Seller shall
have delivered to the Trustee a written assignment in
substantially the form of Exhibit B (the "Assignment"), with a
copy to each Purchaser Representative, and the Servicer shall
have indicated in its computer files that the Receivables
created in connection with the Additional Accounts have been
Conveyed to the Trust and, within five Business Days
thereafter, the Servicer (on behalf of the Seller) shall have
delivered to the Trustee a computer file or microfiche or
written list containing a true and complete list of all
Additional Accounts, identified by account number and the
aggregate amount of the Receivables in such Additional
Accounts, as of the Addition Cut Off Date, which computer file
or microfiche or written list shall be as of the date of such
Assignment incorporated into and made a part of such
Assignment and this Agreement;
(iii) the Seller shall represent and warrant that no
selection procedures believed by the Seller to be materially
adverse to the interests of the Investor Certificateholders or
any Receivables Purchasers were utilized in selecting the
Additional Accounts from the available Eligible Accounts from
the Bank Portfolio and that as of the Addition Date, the
Seller is not insolvent;
(iv) the Seller shall represent and warrant that, as
of the Addition Date, the Assignment constitutes either (x) a
valid sale to the Trust of all right, title and interest of
the Seller in and to the Receivables then existing and
thereafter created from time to time in the Additional
Accounts until the termination of the Trust, all monies due or
to become due with respect thereto, all Collections, all
Recoveries, all rights, remedies, powers and privileges with
respect to the Receivables, and all proceeds of the foregoing
and such property will be held by the Trust free and clear of
any Lien of any Person claiming through or under the Seller or
any of its
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Affiliates, or (y) a grant of a security interest (as defined
in the UCC as in effect in any applicable jurisdiction) in
such property to the Trust, which is enforceable with respect
to then existing Receivables in the Additional Accounts, all
monies due or to become due with respect thereto, all
Collections, all Recoveries, and all proceeds of the
foregoing, upon the Conveyance of such Receivables to the
Trust, and which will be enforceable with respect to the
Receivables thereafter created from time to time in respect of
Additional Accounts conveyed on such Addition Date until the
termination of the Trust, all monies due or to become due with
respect thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the
Receivables, and all proceeds of the foregoing upon such
creation; and (z) if the Assignment constitutes the grant of a
security interest to the Trust in such property, upon the
filing of financing statements as described in Section 2.1
with respect to such Additional Accounts and the Receivables
thereafter created from time to time in such Additional
Accounts until the termination of the Trust, monies due or to
become due with respect thereto, all Collections, all
Recoveries, all rights, remedies, powers and privileges with
respect to the Receivables, and proceeds of the foregoing,
upon the creation of such property, the Trust shall have a
first priority perfected security interest in such property
(subject to Section 9-306 of the UCC as in effect in any
applicable jurisdiction), free and clear of any Lien of any
Person claiming through or under the Seller or any of its
Affiliates;
(v) the Seller shall represent and warrant that each
Additional Account is, as of the Addition Cut Off Date, an
Eligible Account, and each Receivable in such Additional
Account is, as of the Addition Cut Off Date, an Eligible
Receivable;
(vi) if any Certificate Series is outstanding, the
Seller shall have received written evidence that the Rating
Agency Condition has been satisfied, and if no Certificate
Series shall be outstanding, the Seller shall have received
the written consent of each Purchaser Representative;
(vii) the Seller shall deliver to the Trustee and
each Purchaser Representative an Officer's Certificate
substantially in the form of Schedule 2 to Exhibit B
confirming the items set forth in clauses (iii), (iv) and (v)
above; and
(viii) the Seller shall deliver to the Trustee an Opinion of
Counsel addressed to the Trustee, each Rating Agency, Purchaser
Representative and Enhancement Provider with respect to the Receivables
substantially in the form of Exhibit D and such opinion shall be of an
independent, nationally recognized law firm; provided, however, that
such Opinion of Counsel may be delivered at such other times as may be
permitted by the Rating Agencies as evidenced by written notice
thereof.
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(e) No account shall be added to the Trust hereunder if such addition
would be prohibited by or inconsistent with the terms of any Supplement or
Receivables Purchase Agreement.
Section 2.7 Removal of Accounts.
(a) Subject to the conditions set forth below, the Seller may, but
shall not be obligated to, designate Accounts the Receivables of which will be
removed from the Trust ("Removed Accounts"); provided, however, that the Seller
shall not make more than one such designation in any Due Period. On or before
the fifth Business Day (the "Removal Notice Date") prior to the date on which
the Receivables in the designated Removed Accounts will be reassigned by the
Trust to the Seller (the "Removal Date"), the Seller shall give the Trustee, the
Servicer, each Purchaser Representative and each Enhancement Provider written
notice that the Receivables from such Removed Accounts are to be removed from
the Trust and reassigned to it.
(b) The Seller shall be permitted to designate and require reassignment
to it of the Receivables from Removed Accounts only upon satisfaction of the
following conditions:
(i) the removal of any Receivables of any Removed Accounts
on any Removal Date shall not, in the reasonable belief of the Seller,
(A) cause an Early Amortization Event to occur; or (B) result in the
failure to make any payment specified in the related Supplement or
Receivables Purchase Agreement with respect to any Series;
(ii) on or prior to the Removal Date, the Seller shall have
delivered to the Trustee (with a copy to each Purchaser Representative)
(A) for execution, a written assignment in substantially the form of
Exhibit E-1 (the "Reassignment"), and (B) a computer file or microfiche
or written list containing a true and complete list of all Removed
Accounts identified by account number and the aggregate amount of the
Receivables in such Removed Accounts as of the Removal Cut Off Date
specified therein, which computer file or microfiche or written list
shall as of the Removal Date modify and amend and be made a part of
this Agreement;
(iii) the Seller shall represent and warrant that no
selection procedures believed by the Seller to be materially adverse to
the interests of the Investor Certificateholders or any Receivables
Purchasers or any Enhancement Provider were utilized in selecting the
Removed Accounts to be removed from the Trust;
(iv) on or before the tenth Business Day prior to the
Removal Date, each Rating Agency shall have received notice of such
proposed removal of the Receivables of such Accounts and the Seller
shall have received written evidence that the Rating Agency Condition
has been satisfied;
(v) the Seller shall have delivered to the Trustee, each
Purchaser Representative and each Enhancement Provider an Officer's
Certificate confirming the
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items set forth in clauses (i) through (iii) above. The Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying; and
(vi) no Early Amortization Event shall have occurred with
respect to any Series.
Upon satisfaction of the above conditions, the Trustee shall execute
and deliver the Reassignment to the Seller (with a copy to each Purchaser
Representative), and the Receivables from the Removed Accounts shall no longer
constitute a part of the Trust.
(c) No Account shall be removed from the Trust hereunder if such
removal would be prohibited by or inconsistent with the terms of any Supplement
or Receivables Purchase Agreement.
Section 2.8 Trustee May Perform. If the Seller fails to perform any of
its agreements or obligations under this Agreement, the Trustee may (but shall
not be obligated to) itself perform, or cause performance of, such agreement or
obligation, and the expenses incurred in connection therewith shall be payable
by the Seller as provided in Section 11.5.
Section 2.9 No Assumption of Liability. Nothing in this Agreement shall
constitute or is intended to result in the creation or assumption by the Trust,
the Trustee, or any Purchaser Representative, Certificateholder, Certificate
Owner, Receivables Purchaser or Enhancement Provider of any obligation of the
Originator, the Seller or the Servicer or any other Person to any Obligor in
connection with the Receivables, the Accounts, the Cardholder Agreements or
other agreement or instrument relating thereto.
Section 2.10 Discount Option.
(a) The Seller shall have the option to designate at any time and from
time to time a percentage or percentages from 0% to 4%, which may be a fixed
percentage or a variable percentage based on a formula, but in no event greater
than 4% (the "Discount Percentage"), of all or any specified portion of
Principal Receivables created after the Discount Option Date to be treated as
Finance Charge Receivables ("Discount Option Receivables"). The Seller shall
provide to the Servicer, the Trustee, each Purchaser Representative, each
Enhancement Provider and each Rating Agency 30 days prior written notice of the
Discount Option Date, and such designation shall become effective on the
Discount Option Date (i) unless such designation in the reasonable belief of the
Seller would cause an Early Amortization Event with respect to any Series to
occur, or an event which, with notice or lapse of time or both, would constitute
an Early Amortization Event with respect to any Series and (ii) only if the
Rating Agency Condition shall have been satisfied with respect to such
designation.
(b) After the Discount Option Date, the Seller shall treat Discount
Option Receivable Collections as Collections of Finance Charge Receivables for
the purposes of this Agreement
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until such time as the Seller shall designate upon 30 days prior written notice
to the Servicer, the Trustee, each Purchaser Representative, each Enhancement
Provider and each Rating Agency.
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to the
Servicer.
(a) Spirit Inc. agrees to act as the Servicer under this Agreement. The
Investor Certificateholders of each Certificate Series, by their acceptance of
the related Certificates, and the Receivables Purchasers, by their purchase of a
Receivables Purchase Interest, consent to Spirit Inc. acting as Servicer
hereunder.
(b) The Servicer shall service and administer the Receivables and shall
collect payments due under the Receivables in accordance with its customary and
usual servicing procedures for servicing credit card receivables comparable to
the Receivables and in accordance with the Cardholder Guidelines and applicable
laws, rules and regulations and shall have full power and authority, acting
alone or through any party properly designated by it hereunder, to do any and
all things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the foregoing
and subject to Section 10.1, the Servicer is hereby authorized and empowered (i)
to make deposits to and withdrawals from, and to instruct the Trustee to make
deposits to and withdrawals from, the Collection Account and the Excess Funding
Account as set forth in this Agreement, (ii) to make withdrawals and payments
from, and to instruct the Trustee to make withdrawals and payments from, any
Series Account, in accordance with the related Supplement or Receivables
Purchase Agreement, (iii) to instruct the Trustee in writing, as set forth in
this Agreement, (iv) to execute and deliver, on behalf of the Trust for the
benefit of the Certificateholders and any Receivables Purchasers, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Receivables
and, after the delinquency of any Receivable and to the extent permitted under
and in compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables and (v) to make any filings,
reports, notices, applications, registrations with, and to seek any consents or
authorizations from, the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or advisable to
comply with any federal or state securities or reporting requirements. The
Trustee agrees that it shall promptly follow the instructions of the Servicer to
withdraw funds from the Collection Account or any Series Account (unless, with
respect to any portion of such funds allocable to any Receivables Purchase
Series, such instruction is contrary to the instructions of the Purchaser
Representative for such Receivables Purchase Series who is entitled to instruct
the Trustee in such matter pursuant to the related Receivables Purchase
Agreement) and to take any action required under this Agreement, any Supplement
or any Receivables Purchase Agreement. The Trustee shall execute at the
Servicer's written request such documents prepared by the Seller and acceptable
to
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the Trustee as may be necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
(c) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other credit card receivables.
(d) The Servicer shall maintain fidelity bond coverage insuring against
losses through the wrongdoing of its officers who are involved in the servicing
of credit card receivables covering such actions and in such amounts as the
Servicer believes to be reasonable from time to time.
Section 3.2 Servicing Compensation. As compensation for its servicing
activities hereunder and reimbursement for its expenses as set forth in the
immediately following paragraph, the Servicer shall be entitled to receive a
monthly servicing fee in respect of any Due Period prior to the termination of
the Trust pursuant to Section 12.1 (with respect to each Due Period, the
"Monthly Servicing Fee") which shall equal the sum of (i) the Seller Monthly
Servicing Fee (payable only out of Collections allocable to the Seller
Interest), (ii) the aggregate amount of all Investor Monthly Servicing Fees as
specified in each Supplement (payable only to the extent set forth in the
related Supplement) and (iii) the aggregate amount of all Receivables Purchaser
Monthly Servicing Fees specified in each Receivables Purchase Agreement (payable
only to the extent set forth in the related Receivables Purchase Agreement).
The Servicer's expenses include the amounts due to the Trustee pursuant
to Section 11.5 and the reasonable fees and disbursements of independent public
accountants and all other expenses incurred by the Servicer in connection with
its activities hereunder; provided, that the Servicer shall not be liable for
any liabilities, costs or expenses of the Trust, any Purchaser Representative,
any Enhancement Provider, the Investor Certificateholders, the Certificate
Owners or any Receivables Purchasers, arising under any tax law, including
without limitation any federal, state or local income or franchise taxes or any
other tax imposed on or measured by income (or any interest or penalties with
respect thereto or arising from a failure to comply therewith). The Servicer
shall be required to pay such expenses for its own account and shall not be
entitled to any payment therefor other than the Monthly Servicing Fee.
Section 3.3 Representations, Warranties and Covenants of the Servicer.
Spirit Inc., as initial Servicer, hereby makes, and any Successor Servicer by
its appointment hereunder shall make, the following representations, warranties
and covenants (the representations and warranties below to be modified, if
appropriate, with respect to any Successor Servicer to reflect a different
jurisdiction of organization or type of institution) on which the Trustee has
relied in accepting the Receivables in trust:
(a) Organization and Good Standing. The Servicer is a corporation duly
organized and validly existing under the laws of Delaware and has full corporate
power, authority and legal right to own its properties and conduct its credit
card servicing business as such properties are
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presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement and each other
Transaction Document to which it is a party.
(b) Due Qualification. The Servicer is not required to qualify nor
register as a foreign corporation in any state in order to service the
Receivables as required by this Agreement and has obtained all licenses and
approvals necessary in order to so service the Receivables as required under
applicable law. If the Servicer shall be required by any Requirement of Law to
so qualify or register or obtain such license or approval, then it shall do so.
(c) Due Authorization. The execution, delivery and performance of this
Agreement and each other Transaction Document to which the Servicer is a party
have been duly authorized by the Servicer by all necessary corporate action on
the part of the Servicer and this Agreement and each other Transaction Document
to which the Servicer is a party will remain, from the time of its execution, an
official record of the Servicer.
(d) Binding Obligation. This Agreement and each other Transaction
Document to which the Servicer is a party constitutes a legal, valid and binding
obligation of the Servicer, enforceable in accordance with its terms, except as
enforceability may be limited by Debtor Relief Laws.
(e) No Violation. The execution and delivery by the Servicer of this
Agreement and each other Transaction Document to which it is a party, and the
performance of the transactions contemplated hereunder and thereunder and the
fulfillment of the terms hereof and thereof applicable to the Servicer, will not
conflict with, violate, result in any breach of any of the material terms and
provisions of, constitute (with or without notice or lapse of time or both) a
default under, or require any authorization, consent, order or approval of or
registration or declaration with any Governmental Authority (other than as have
been obtained) under, any Requirement of Law applicable to the Servicer or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it is bound.
(f) No Proceedings. There are no proceedings pending or, to the best
knowledge of the Servicer, threatened against the Servicer before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, any Supplement, any Receivables Purchase
Agreement, any Enhancement or any other Transaction Document to which it is a
party, or seeking any determination or ruling that, in the reasonable judgment
of the Servicer, would materially and adversely affect the performance by the
Servicer of its obligations under this Agreement, any Supplement, any
Receivables Purchase Agreement, any Enhancement or any other Transaction
Document to which it is a party, or seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of this
Agreement, any Supplement, any Receivables Purchase Agreement, any Enhancement
or any other Transaction Document to which it is a party.
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(g) Compliance with Requirements of Law. The Servicer shall duly
satisfy all obligations on its part to be fulfilled under or in connection with
each Receivable and the related Account, will maintain in effect all
qualifications required under Requirements of Law in order to service properly
each Receivable and the related Account and will comply in all material respects
with all other Requirements of Law in connection with servicing each Receivable
and the related Account the failure to comply with which would have a material
adverse effect on the Investor Certificateholders, any Receivables Purchasers or
any Enhancement Providers.
(h) No Rescission or Cancellation. The Servicer shall not permit any
rescission or cancellation of any Receivable except as ordered by a court of
competent jurisdiction or other Governmental Authority.
(i) Protection of Certificateholders', Enhancement Providers' and
Receivables Purchasers' Rights. The Servicer shall take no action which, nor
omit to take any action the omission of which, would impair the rights of
Investor Certificateholders or Receivables Purchasers in, or to receive,
Collections, or would impair the rights of any Enhancement Provider, nor shall
it reschedule, revise or defer payments due on any Receivable except in
accordance with the Cardholder Agreements and the Cardholder Guidelines.
(j) Receivables Not to be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of a Receivable, the Servicer will
take no action to cause any Receivable to be evidenced by any "instrument" (as
defined in the UCC).
(k) Total Systems Failure. The Servicer shall promptly notify the
Trustee, each Purchaser Representative and each Enhancement Provider of any
Total Systems Failure and shall advise the Trustee and each Purchaser
Representative of the estimated time required in order to remedy such Total
Systems Failure and of the estimated date on which a monthly Servicer's report
can be delivered. Until a Total Systems Failure is remedied, the Servicer will
(i) furnish to the Trustee, each Purchaser Representative and each Enhancement
Provider such periodic status reports and other information relating to such
Total Systems Failure as the Trustee, any Purchaser Representative and each
Enhancement Provider may reasonably request and (ii) promptly notify the Trustee
and each Purchaser Representative and each Enhancement Provider if the Servicer
believes that such Total Systems Failure cannot be remedied by the estimated
date, which notice shall include a description of the circumstances which gave
rise to such delay, and the action proposed to be taken in response thereto, and
a revised estimate of the date on which a monthly Servicer's report can be
delivered. The Servicer shall promptly notify the Trustee, each Purchaser
Representative and each Enhancement Provider when a Total Systems Failure has
been remedied.
(l) Change in Payment Instructions to Obligors. The Servicer will not
add or terminate any Depository Bank, or make any change in its instructions to
Obligors regarding the method by which payments are to be made in respect of
Receivables, unless the Trustee, each Purchaser Representative and each
Enhancement Provider shall have received notice of such addition, termination or
change and copies of Depository Bank Agreements with each new
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Depository Bank, duly executed by the Originator, assigned to the Seller and
duly acknowledged by such Depository Bank, or such other notice or
acknowledgments as the Trustee, each Purchaser Representative or each
Enhancement Provider may reasonably request. The names and addresses of all the
Depository Banks, together with the account numbers of the Initial Depository
Accounts of the Servicer at such Depository Banks, are specified in Schedule II
hereto (or at such other Depository Banks and/or with such other Initial
Depository Accounts as have been notified to the Trustee and each Purchaser
Representative in accordance with this subsection.)
Section 3.4 Reports and Records for the Trustee.
(a) Daily Reports. On each Business Day after an Early Amortization
Event has occurred with respect to any Series, the Servicer, with prior notice,
shall prepare and make available to the Trustee and each Purchaser
Representative, upon request, a report setting forth (i) the Collections in
respect of the Receivables processed by the Servicer on or prior to the second
preceding Business Day and (ii) the amount of Receivables as of the close of
business on the second preceding Business Day.
(b) Monthly Servicer's Certificate. Unless otherwise stated in the
related Supplement or Receivables Purchase Agreement with respect to any Series,
on each Determination Date, the Servicer shall forward to the Trustee, the
Paying Agent, any Enhancement Provider, the Rating Agencies and each Purchaser
Representative a certificate of a Servicing Officer in the form of Exhibit C
(which includes the Schedule thereto specified as such in any Supplement or
Receivables Purchase Agreement) setting forth (i) the aggregate amount of
Collections processed during the preceding Due Period, (ii) the aggregate amount
of Collections of Principal Receivables processed by the Servicer pursuant to
Article IV during the preceding Due Period, (iii) the aggregate amount of
Collections of Finance Charge Receivables processed by the Servicer pursuant to
Article IV during the preceding Due Period, (iv) the aggregate amount of
Principal and Finance Charge Receivables processed as of the end of the last day
of the preceding Due Period, (v) the amounts on deposit in the Excess Funding
Account and other accounts established pursuant to the related Supplements; (vi)
amounts drawn on any Enhancement; (vii) amounts to be paid to an Enhancement
Provider; (viii) the sum of all amounts payable to the Investor
Certificateholders of each Certificate Series on the succeeding Distribution
Date in respect of Certificate Principal and Certificate Interest, (ix) the sum
of all amounts payable to the Receivables Purchasers of each Receivables
Purchase Series on the succeeding Distribution Date in respect of Receivables
Purchase Interests and accrued interest thereon and (x) such other matters as
are set forth in Exhibit C.
Section 3.5 Annual Servicer's Certificate. On or prior to the date of
the delivery of each accountant's report pursuant to Section 3.6(a), the
Servicer will deliver to the Trustee, each Purchaser Representative and each
Enhancement Provider an Officer's Certificate substantially in the form of
Exhibit F stating that (a) a review of the activities of the Servicer during the
prior calendar year and of its performance under this Agreement was made under
the supervision of the officer signing such certificate and (b) to the best of
such officer's knowledge, based on such
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review, the Servicer has fully performed all its obligations under this
Agreement throughout such period, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such certificate may be
obtained by any Investor Certificateholder or any Receivables Purchaser by a
request in writing to the Trustee addressed to the Corporate Trust Office, or as
set forth in any Supplement or Receivables Purchase Agreement.
Section 3.6 Annual Independent Accountants' Servicing Report. (a) On or
before May 30 of each calendar year, beginning with May 30, 1994, the Servicer
shall cause a firm of nationally recognized independent certified public
accountants (who may also render other services to the Servicer, the Seller or
the Originator) to furnish a report to the Trustee, each Purchaser
Representative and each Enhancement Provider, to the effect that such firm has
made a study and evaluation, in accordance with the procedures specified in
Exhibit G, of the Servicer's internal accounting controls relative to the
servicing of Accounts under this Agreement, any Supplement and any Receivables
Purchase Agreement for the prior calendar year, and that, on the basis of such
study and evaluation, such firm is of the opinion (assuming the accuracy of any
reports generated by the Servicer's third party agents) that the system of
internal accounting controls in effect on the date set forth in such report,
relating to servicing procedures performed by the Servicer, taken as a whole,
was sufficient for the prevention and detection of errors and irregularities in
amounts that would be material to the financial statements of Charming Shoppes,
Inc. or the assets of the Trust and that such servicing was conducted in
compliance with this Agreement during the period covered by such report, except
for such exceptions, errors or irregularities as such firm shall believe to be
immaterial to the financial statements of Charming Shoppes, Inc. or immaterial
to the assets of the Trust and such other exceptions, errors or irregularities
as shall be set forth in such report. The Servicer shall investigate and correct
such material exceptions, errors or irregularities at its own expense. A copy of
such report may be obtained by any Investor Certificateholder or Receivables
Purchaser by a request in writing to the Trustee addressed to the Corporate
Trust Office or as set forth in any Supplement or Receivables Purchase
Agreement.
(b) On or before May 30 of each calendar year, beginning with May 30,
1994, the Servicer shall cause a firm of nationally recognized independent
certified Public accountants (who may also render other services to the
Servicer, the Seller or the Originator) to furnish a report to the Trustee, each
Purchaser Representative and each Enhancement Provider, prepared using generally
accepted auditing standards, to the effect that such firm has compared the
mathematical calculations of each amount set forth in the monthly certificates
forwarded by the Servicer pursuant to subsection 3.4(b) during the prior
calendar year with the Servicer's computer reports which were the source of such
amounts and that on the basis of such comparison, such firm is of the opinion
that such amounts are in agreement, except for such exceptions as it believes to
be immaterial to the accuracy of the information set forth in such certificates
of the Servicer and such other exceptions as shall be set forth in such report.
A copy of such report may be obtained by any Investor Certificateholder or
Receivables Purchaser by a request in writing to the Trustee addressed to the
Corporate Trust Office or as set forth in any Supplement or Receivables Purchase
Agreement.
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Section 3.7 Tax Treatment. The Seller has structured this Agreement,
the Investor Certificates and the Receivables Purchase Interests with the
intention that the Investor Certificates and the Receivables Purchase Interests
will qualify under applicable federal, state and local tax law as indebtedness.
The Seller, the Servicer, the Holder of the Exchangeable Seller Certificate,
each Investor Certificateholder, each Certificate Owner and each Receivables
Purchaser agree to treat and to take no action inconsistent with the treatment
of the Investor Certificates (or beneficial interest therein) or the Receivables
Purchase Interests as indebtedness for purposes of federal, state and local
income or franchise taxes and any other tax imposed on or measured by income.
Each Investor Certificateholder and the Holder of the Exchangeable Seller
Certificate, by acceptance of its Certificate, each Certificate Owner, by
acquisition of a beneficial interest in a Certificate, and each Receivables
Purchaser, by its purchase of a Receivables Purchase Interest, agree to be bound
by the provisions of this Section 3.7. Each Certificateholder agrees that it
will cause any Certificate Owner acquiring an interest in a Certificate through
it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.7.
Section 3.8 Notices to the Seller. In the event that Spirit Inc. is no
longer acting as Servicer, any Successor Servicer appointed pursuant to Section
10.2 shall deliver or make available to the Seller each certificate and report
required to be prepared, forwarded or delivered thereafter pursuant to Sections
3.4, 3.5 and 3.6.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND RECEIVABLES PURCHASERS
AND ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders and Receivables Purchasers.
(a) Each Certificate Series shall represent an undivided interest in the Trust,
including the benefits of any Enhancement issued with respect to the related
Certificate Series and the right to receive the Collections and other amounts at
the times and in the amounts specified in this Article IV to be deposited in the
Collection Account or the Excess Funding Account or to be paid to the Investor
Certificateholders of such Certificate Series; provided, however, that the
aggregate interest represented by such Certificate Series at any time in the
Principal Receivables shall not exceed an amount equal to the Investor Interest
at such time. The Exchangeable Seller Certificate shall represent the remaining
undivided interest in the Trust (provided, that the Trust shall not include any
undivided percentage ownership interest in Receivables to the extent sold by the
Trust pursuant to any Receivables Purchase Agreement), including the right to
receive the Collections and other amounts at the times and in the amounts
specified in this Article IV to be paid to the Holder of the Exchangeable Seller
Certificate; provided, however, that the aggregate interest represented by such
Exchangeable Seller Certificate at any time in the Principal Receivables shall
not exceed the Seller Interest at such time and such Exchangeable Seller
Certificate shall not represent any interest in the Collection Account or the
Excess Funding Account, except as provided in this Agreement, or the benefits of
any Enhancement issued with respect to any Certificate Series, except as set
forth in the related Supplement.
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(b) Each Receivables Purchase Interest shall represent undivided
interests in the Receivables, including the benefits of any Enhancement issued
with respect to such Receivables Purchase Interest and the right to receive the
Collections and other amounts at the times and in the amounts specified in this
Article IV to be deposited in the Collection Account or to be paid to the
Receivables Purchasers of such Receivables Purchase Interest; provided, however,
that the aggregate interest represented by such Receivables Purchase Interest at
any time in the Principal Receivables shall not exceed an amount equal to the
Receivables Purchase Interest at such time.
Section 4.2 Establishment of Accounts.
(a) The Collection Account. The Servicer, for the benefit of the
Certificateholders and any Receivables Purchasers, shall establish and maintain,
with an office or branch of a Qualified Depository Institution, in the name of
the Trustee and on behalf of the Trust, a segregated account (the "Collection
Account") bearing a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Certificateholders, any
Receivables Purchasers and any Enhancement Provider. The Trustee, for the
ratable benefit of the Investor Certificateholders in accordance with their
Investor Interests, the Receivables Purchasers, to the extent of their undivided
interest in the Receivables, the Holder of the Exchangeable Seller Certificate
(to the extent of the Seller Interest) and any Enhancement Provider to the
extent of any Enhancement Invested Amount, shall possess all right, title and
interest in all funds on deposit from time to time in the Collection Account and
in all proceeds thereof. The Collection Account shall be under the sole dominion
and control of the Trustee for the ratable benefit of the Investor
Certificateholders, the Receivables Purchasers, the Holder of the Exchangeable
Seller Certificate and any Enhancement Provider to the extent of any Enhancement
Invested Amount, as set forth above. Except as expressly provided in this
Agreement, the Servicer agrees that it shall have no right of set-off or
banker's lien against, and no right to otherwise deduct from, any funds held in
the Collection Account for any amount owed to it by the Trustee, the Trust, the
Seller, the Originator, or any Certificateholder, Receivables Purchaser,
Purchaser Representative or Enhancement Provider. Upon the occurrence of an
Early Amortization Event with respect to any Series, Collections shall be
withdrawn from the Initial Depository Accounts and deposited in the Collection
Account as specified in Section 4.3(a). Pursuant to authority granted to it
hereunder, the Servicer shall have the power to instruct the Trustee or such
Qualified Depository Institution to withdraw funds from the Collection Account
for the purpose of carrying out the Servicer's duties hereunder; provided, that
upon the occurrence of an Early Amortization Event with respect to any
Receivables Purchase Series, if so authorized pursuant to the related
Receivables Purchase Agreement for such Receivables Purchase Series, the related
Purchaser Representative shall have the power to instruct the Trustee or such
Qualified Depository Institution (to the extent of the undivided interest of the
related Receivables Purchase Series in the Receivables and Collections thereof)
to withdraw funds from the Collection Account as authorized pursuant to such
Receivables Purchase Agreement.
(b) Series Accounts. Any Supplement or Receivables Purchase Agreement
may provide for additional accounts ("Series Accounts") for the purpose of
allocation and distribution of amounts allocated hereunder for the related
Series.
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(c) Administration of the Collection Account. Funds on deposit in the
Collection Account shall at all times be invested in Permitted Investments. Any
such investment shall mature and such funds shall be available for withdrawal on
or prior to the next following Distribution Date; provided, that if, upon the
occurrence of an Early Amortization Event with respect to any Receivables
Purchase Series, the Purchaser Representative is authorized pursuant to the
related Receivables Purchase Agreement for such Receivables Purchase Series to
direct the Trustee to withdraw funds from the Collection Account prior to the
next succeeding Distribution Date, the portion of such amounts in the Collection
Account allocable to such Series must be invested in investments which mature on
or prior to such day upon which such withdrawal of funds is authorized. Subject
to the conditions set forth herein, the Servicer shall have the authority to
instruct the Trustee with respect to the investment of such funds. At the end of
each month, all interest and earnings (net of losses and investment expenses) on
funds on deposit in the Collection Account shall be treated as Collections of
Finance Charge Receivables.
Section 4.3 Collections and Allocations.
(a) Collections. The Seller and the Servicer hereby agree: (i) (A) to
cause all Collections which may be sent by Obligors by mail to be delivered to
the Administrative Servicer; (B) to cause the Administrative Servicer to deposit
all such Collections into the Initial Depository Account within two Business
Days of receipt by the Administrative Servicer; and (C) upon the occurrence of
an Early Amortization Event with respect to any Series, to cause all such
payments to be deposited into the Collection Account within two Business Days of
deposit of such payment into the Initial Depository Account; and (ii) (A) to
cause all Store Payments to be deposited in the related Store Account; (B) to
cause all such Store Payments to be deposited into the Initial Depository
Account within two Business Days of deposit of such payments into a Store
Account; and (C) upon the occurrence of an Early Amortization Event with respect
to any Series, to cause all such Store Payments to be deposited into the
Collection Account within two Business Days of deposit of such Store Payments
into the Initial Depository Account. Notwithstanding the foregoing, unless the
certificates of deposit, short-term deposits or commercial paper or the
long-term unsecured debt obligations (other than any obligation whose rating is
based on collateral or on the credit of a Person other than the Servicer) of the
Servicer shall have a credit rating from Moody's and Standard & Poor's of P-1
and A-1+ (or, from and after the Series Termination Date for all Certificate
Series outstanding prior to the Effective Date, A-1), respectively, in the case
of the certificates of deposit, short-term deposits or commercial paper, or a
rating from Moody's of at least Aa3 and from Standard & Poor's of at least AA-
in the case of the long term unsecured debt obligations, all amounts deposited
into the Initial Depository Account on any Business Day shall on the same
Business Day be withdrawn from the Initial Depository Account and deposited into
the Collection Account.
The Servicer hereby agrees not to deposit or otherwise credit, or cause
or permit to be so deposited or credited, to the Collection Account or the
Initial Depository Account cash or cash proceeds other than Collections of
Receivables. The Seller and Servicer agree to clearly and unambiguously identify
each Account (including any Additional Account designated pursuant to Section
2.6) in its computer or other records to reflect that an interest in the
Receivables arising
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in such Account has been sold pursuant to this Agreement and any Receivables
Purchase Agreements and shall, prior to the sale or transfer to a third party of
any Receivable held in its custody, examine its computer and other records to
determine that an interest in such Receivable has not been sold.
(b) Series Allocations. The Servicer shall allocate Collections of
Principal Receivables, Collections of Finance Charge Receivables, Series
Dilution Amounts and Loss Amounts to each Certificate Series, each Receivables
Purchase Series and to the Holder of the Exchangeable Seller Certificate, based
on the Investor/Purchaser Percentage for each such Series and the Seller
Percentage for the Exchangeable Seller Certificate, in accordance with this
Article IV and shall withdraw the required amounts from the Collection Account
or the Initial Depository Account or the Excess Funding Account to pay such
amounts in accordance with this Article IV and any Supplement or Receivables
Purchase Agreement. The Servicer shall make such deposits or payments on the
date indicated therein by wire transfer or as otherwise provided in the related
Supplement or Receivables Purchase Agreement with respect to any Series.
(c) Allocations for the Exchangeable Seller Certificate. Throughout the
existence of the Trust, unless otherwise stated in any Supplement or any
Receivables Purchase Agreement, the Servicer shall allocate to the Holder of the
Exchangeable Seller Certificate an amount equal to the sum of (i) the product of
(A) the Seller Percentage and (B) the aggregate amount of such Collections
allocated to Principal Receivables and Finance Charge Receivables, respectively,
in respect of each Due Period, and (ii) any additional amounts out of the
Aggregate Investor/Purchaser Interest allocated to the "Seller Interest"
pursuant to any Supplement or Receivables Purchase Agreement; provided, however,
that the Servicer, at the option of the Seller, may allocate all or a portion of
such amounts to maintain any cash collateralization requirement in connection
with the Investor Interest under any Variable Certificate from time to time.
Unless otherwise stated in any Supplement or Receivables Purchase Agreement, the
Servicer need not deposit this amount or any other amounts so allocated to the
Exchangeable Seller Certificate pursuant to any Supplement or Receivables
Purchase Agreement into the Collection Account and shall pay such amounts as
collected to the Holder of the Exchangeable Seller Certificate; provided,
however, the Servicer shall be entitled to deduct from such amounts and retain
an amount equal to the unpaid portion of any Seller Monthly Servicing Fee then
due and payable.
(d) Adjustments for Miscellaneous Credits and Fraudulent Charges. With
respect to each Due Period, the aggregate amount of Principal Receivables (i)
which were created in respect of merchandise refused or returned by the Obligor
thereunder or as to which the Obligor thereunder has asserted a counterclaim or
defense, (ii) which were reduced by the Servicer by any rebate, refund,
charge-back or adjustment (including Servicer errors) or (iii) which were
created as a result of a fraudulent or counterfeit charge (with respect to such
Due Period, the "Dilution Amount") will be allocated initially to the Seller
Interest if and to the extent that as of the last day of such Due Period, the
Seller Interest is greater than the Aggregate Minimum Seller Interest, and the
aggregate amount of Principal Receivables used to calculate the Seller Interest
will be reduced by an amount equal to the Dilution Amount so allocated. Any
remaining
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Dilution Amount (with respect to each Due Period, the "Series Dilution Amount")
will be allocated to each Series based upon the Series Percentage for such
Series. The Series Dilution Amount for each Receivables Purchase Series will be
provided for in the related Receivables Purchase Agreement. If available funds
for any Series, including funds allocated to any Series on any Distribution Date
as described in subsection (b) above, are insufficient to cover the Series
Dilution Amount for such Series on such Distribution Date pursuant to the terms
of the related Supplement or Receivables Purchase Agreement, as applicable, such
Supplement or Receivables Purchase Agreement may provide that the remaining
Series Dilution Amount for such Series shall be reallocated to, and reduce, the
Seller Interest (as calculated as of the last day of the related Due Period).
Because such reduction will cause the Seller Interest to be less than
the Aggregate Minimum Seller Interest, the Seller shall on or prior to the
Required Designation Date for such Due Period (i) Convey Receivables arising in
Additional Accounts to the Trust, (ii) instruct the Servicer to deposit (or
cause to be deposited) all or a portion of the Seller Allocations in the Excess
Funding Account and (iii) to the extent the Seller is not able to eliminate the
deficiency through the actions specified in clauses (i) and (ii), make a deposit
in the Excess Funding Account in immediately available funds, such that upon
such deposit and/or Conveyance the Seller Interest shall be at least equal to
the Aggregate Minimum Seller Interest.
If so provided for any Series in the related Supplement or Receivables
Purchase Agreement, as applicable, any Series Dilution Amount remaining for such
Series, after giving effect to any deposit and/or Conveyance by the Seller
described in the preceding paragraph (such amount, for any Series its "Series
Unfunded Dilution Amount") shall be reallocated to such Series and shall reduce
the Investor Interest of that Series to the extent provided in the related
Supplement or Receivables Purchase Agreement, as applicable.
(e) Excess Funding Account. The Servicer, for the benefit of the
Investor Certificateholders, shall establish and maintain in the name of the
Trustee, on behalf of the Trust, a segregated trust account with a Qualified
Depository Institution bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Investor Certificateholders
(the "Excess Funding Account"). The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Excess Funding Account
and in all proceeds thereof. The Excess Funding Account shall be under the sole
dominion and control of the Trustee for the benefit of the Investor
Certificateholders. Except as expressly provided in this Agreement, the Servicer
agrees that it shall have no right of setoff or banker's lien against, and no
right to otherwise deduct from, any funds held in the Excess Funding Account for
any amount owed to it by the Trustee, the Trust, any Certificateholder, any
Receivables Purchaser or any Enhancement Provider. If, at any time, the
institution holding the Excess Funding Account ceases to be a Qualified
Depository Institution, the Trustee upon notice by Servicer (or the Servicer on
its behalf) shall promptly establish a new Excess Funding Account with a
Qualified Depository Institution meeting the conditions specified above,
transfer any cash or any investments to such new Excess Funding Account and from
the date such new Excess Funding Account is established, it shall be the "Excess
Funding Account."
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Funds on deposit in the Excess Funding Account shall at the direction
of the Servicer be invested by the Trustee in Permitted Investments selected by
the Servicer. All such Permitted Investments shall be held by the Trustee for
the benefit of the Investor Certificateholders. The Trustee shall maintain for
the benefit of the Investor Certificateholders possession of the negotiable
instruments or securities, if any, evidencing such Permitted Investments. Funds
on deposit in the Excess Funding Account on any date (after giving effect to any
withdrawals from the Excess Funding Account on such date) will be invested in
Permitted Investments that will mature so that funds will be available at the
close of business on the Distribution Date following such date. On each
Determination Date, the Servicer shall instruct the Trustee to withdraw on the
related Distribution Date from the Excess Funding Account and deposit in the
Collection Account all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Excess Funding Account, for
application as Collections of Finance Charge Receivables (allocable to the
Certificates Series pro rata based on the Investor/Purchaser Percentage of each
Certificate Series until paid in full) with respect to the prior Due Period.
Interest (including reinvested interest) and other investment income and
earnings on funds on deposit in the Excess Funding Account shall not be
considered part of the Excess Funding Amount for purposes of this Agreement. On
any Determination Date on which no Certificate Series is in an Accumulation
Period or Amortization Period, the Servicer shall determine the amount by which
the Seller Interest exceeds the Aggregate Minimum Seller Interest on such date
and shall instruct the Trustee to withdraw such amount from the Excess Funding
Account on the related Distribution Date and pay such amount to the Holder of
the Exchangeable Seller Certificate. On any Determination Date on which one or
more Certificate Series is in an Accumulation Period or Amortization Period, the
Servicer shall determine the aggregate amount of Principal Shortfalls, if any,
with respect to each such Certificate Series that is a Principal Sharing Series
(after giving effect to the allocation and payment provisions in the Supplement
with respect to each such Certificate Series), and the Servicer shall instruct
the Trustee to withdraw such amount (up to the Excess Funding Amount) from the
Excess Funding Account on the succeeding Distribution Date and allocate such
amount among each such Certificate Series as Shared Principal Collections as
specified in each related Supplement.
(f) Shared Principal Collections. On each Business Day other than a
Distribution Date, if permitted by the related Supplement or Receivables
Purchase Agreement for any Series, Shared Principal Collections from such Series
may, at the option of Seller, be withdrawn and paid as principal to the holder
of any Variable Certificate (or held in the Collection Account for later
allocation as principal to any Variable Certificate), so long as no Series that
is in an Amortization Period will have a Principal Shortfall on the next
Distribution Date after giving effect to such allocation and the other
allocations to be made on the next Distribution Date (assuming no Early
Amortization Event occurs). On each Distribution Date, (i) the Servicer shall
allocate Shared Principal Collections not previously applied pursuant to the
preceding sentence to each Principal Sharing Series in a Group, pro rata, in
proportion to the Principal Shortfalls, if any, with respect to each such Series
and (ii) the Servicer shall withdraw from the Collection Account or the Excess
Funding Account and pay to the Holder of the Exchangeable Seller Certificate an
amount equal to the excess, if any, of (x) the aggregate amount for all such
Series of Collections of Principal Receivables that the related Supplements or
this Agreement
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specify are to be treated as "Shared Principal Collections" for such
Distribution Date over (y) the aggregate amount for all such Series that the
related Supplements specify are "Principal Shortfalls" for such Distribution
Date; provided, however, that such amounts shall be paid to the Holder of the
Exchangeable Seller Certificate only if the Seller Interest for such
Determination Date (determined after giving effect to any Principal Receivables
transferred to the Trust on such date) exceeds the Aggregate Minimum Seller
Interest; and provided further that, if on any Distribution Date the Seller
Interest is less than or equal to the Aggregate Minimum Seller Interest, the
Servicer will not distribute to the Holder of the Exchangeable Seller
Certificate any Shared Principal Collections then on deposit in the Collection
Account that otherwise would be distributed to such Holder, but shall deposit
such funds in the Excess Funding Account.
(g) Shared Excess Finance Charge Collections. On each Distribution
Date, (i) the Servicer shall allocate Shared Excess Finance Charge Collections
with respect to the Certificate Series in a Group to each Certificate Series in
such Group, pro rata, in proportion to the Finance Charge Shortfalls, if any,
with respect to each such Certificate Series and (ii) the Servicer shall
withdraw (or shall instruct the Trustee to withdraw) from the Collection Account
and pay to the Holder of the Exchangeable Seller Certificate an amount equal to
the excess, if any, of (x) the aggregate amount for all outstanding Certificate
Series in a Group of the amounts that the related Supplements specify are to be
treated as "Shared Excess Finance Charge Collections" for such Distribution Date
over (y) the aggregate amount for all outstanding Certificate Series in such
Group that the related Supplements specify are "Finance Charge Shortfalls" for
such Distribution Date; provided, however, that the sharing of Shared Excess
Finance Charge Collections among Certificate Series in a Group will continue
only until such time, if any, at which the Seller shall deliver to the Trustee
an Officer's Certificate to the effect that, in the reasonable belief of the
Seller or its counsel, the continued sharing of Shared Excess Finance Charge
Collections among Certificate Series in any Group would have adverse regulatory
implications with respect to the Originator. Following the delivery by the
Seller of such an Officer's Certificate to the Trustee there will not be any
further sharing of such Shared Excess Finance Charge Collections among
Certificate Series in any Group.
ARTICLE V
DISTRIBUTIONS AND REPORTS TO RECEIVABLES
PURCHASERS AND CERTIFICATEHOLDERS
Distributions shall be made to, and reports shall be provided to,
Certificateholders and Receivables Purchasers of each Series as set forth in the
applicable Supplement or Receivables Purchase Agreement.
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ARTICLE VI
THE CERTIFICATES AND RECEIVABLES PURCHASE INTERESTS
Section 6.1 Certificates. The Investor Certificates of each Certificate
Series may be issued, (i) if not issued to a United States Person and such
Certificate Series otherwise meets the requirements specified in Treas. Reg.
Section 5f.163-1, in bearer form ("Bearer Certificates") with attached interest
coupons and any other applicable coupon (collectively, the "Coupons") or (ii) in
fully registered form ("Registered Certificates") and shall be substantially in
the form of the exhibits with respect thereto attached to the related
Supplement. The Exchangeable Seller Certificate shall be substantially in the
form of Exhibit A. The Investor Certificates and the Exchangeable Seller
Certificate shall, upon issue pursuant hereto or to Section 6.9 or Section 6.10,
be executed and delivered by the Seller to the Trustee for authentication and
redelivery as provided in Sections 2.1 and 6.2. Any Investor Certificate shall
be issuable in a minimum denomination of $1,000 and integral multiples thereof,
unless otherwise specified in any Supplement, and shall be issued upon original
issuance in an aggregate original principal amount equal to the Initial Investor
Interest for the related Certificate Series. The Exchangeable Seller Certificate
shall be initially issued as a single certificate to the Seller. Each
Certificate shall be executed by manual or facsimile signature on behalf of the
Trustee by a duly authorized signatory. Certificates bearing the manual or
facsimile signature of the individual who was, at the time when such signature
was affixed, authorized to sign on behalf of the Trustee shall not be rendered
invalid, notwithstanding that such individual has ceased to be so authorized
prior to the authentication and delivery of such Certificates or does not hold
such office at the date of such Certificates. No Certificate shall be entitled
to any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Certificate a certificate of authentication substantially in the
form provided for herein, executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication, except that Bearer
Certificates shall be dated the related Closing Date.
Section 6.2 Authentication of Certificates. The Trustee shall
authenticate and deliver any Series of Investor Certificates, upon the written
order of the Seller, to such Person as shall be designated by the Seller,
against payment to the Seller of the applicable Initial Investor Interest (net
of any discount). Upon the receipt of such payment and the issuance of the
Investor Certificates, such Investor Certificates shall be fully paid and
non-assessable. The Trustee shall authenticate and deliver the Exchangeable
Seller Certificate to the Seller simultaneously with the initial Conveyance to
the Trust of Receivables. Upon an Exchange as provided in Section 6.9 and the
satisfaction of certain other conditions specified therein, the Trustee shall
authenticate and deliver the Investor Certificates of additional Certificate
Series (with the designation provided in the related Supplement), upon the order
of the Seller, to the persons designated in such Supplement. Upon the order of
the Seller, the Certificates of any Certificate Series shall be duly
authenticated by or on behalf of the Trustee, in authorized denominations equal
to (in the aggregate) the Initial Investor Interest of such Certificate Series.
If specified in the related
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Supplement for any Certificate Series, the Trustee shall authenticate Book-Entry
Certificates that are issued upon original issuance thereof, upon the written
order of the Seller, to a Clearing Agency or its nominee as provided in Section
6.10 against payment of the purchase price thereof. If specified in the related
Supplement for a Certificate Series, the Trustee shall authenticate and deliver
outside the United States the Global Certificate that is issued upon original
issuance thereof.
Section 6.3 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or agency to be
maintained by a transfer agent and registrar (the "Transfer Agent and
Registrar"), in accordance with the provisions of Section 11.16, a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Transfer Agent and Registrar shall provide for the
registration of the Investor Certificates of each Certificate Series (unless
otherwise provided in the related Supplement) and of transfers and exchanges of
the Investor Certificates as herein provided. First Union National Bank, is
hereby initially appointed Transfer Agent and Registrar for the purposes of
registering the Investor Certificates and transfers and exchanges of the
Investor Certificates as herein provided. Any reference in this Agreement to the
Transfer Agent and Registrar shall include any co-transfer agent and
co-registrar including, if and so long as any Series is listed on the Luxembourg
Stock Exchange and such exchange shall so require, a co-transfer agent and
co-registrar in Luxembourg, unless the context otherwise requires. The Trustee
shall be permitted to resign as Transfer Agent and Registrar upon 30 days'
written notice to the Servicer. In the event that the Trustee shall no longer be
the Transfer Agent and Registrar, the Trustee shall appoint a successor Transfer
Agent and Registrar.
The Trustee may revoke such appointment, or any subsequent appointment,
and remove the Transfer Agent and Registrar if the Trustee determines in its
sole discretion that the Transfer Agent and Registrar has failed to perform its
obligations under this Agreement in any material respect. The Transfer Agent and
Registrar shall be permitted to resign as Transfer Agent and Registrar upon 30
days' notice to the Seller, the Servicer, the Trustee and each Purchaser
Representative; provided, that such resignation shall not be effective and the
Transfer Agent and Registrar shall continue to perform its duties as Transfer
Agent and Registrar until the Trustee has appointed a successor Transfer Agent
and Registrar reasonably acceptable to the Seller.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Transfer Agent and Registrar, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of like
aggregate Undivided Trust Interests. Registered Certificates, including
Registered Certificates received in exchange for Bearer Certificates, may not be
exchanged for Bearer Certificates. At the option of the Holder of a Bearer
Certificate, subject to applicable laws and regulations, Bearer Certificates may
be exchanged for other Bearer Certificates or Registered Certificates (of the
same Certificate Series) of authorized denominations of like aggregate Undivided
Trust Interests, upon surrender of the Bearer Certificates to be exchanged at an
office or agency of the Transfer Agent and Registrar located outside the United
States. Each
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Bearer Certificate surrendered pursuant to this Section shall have attached
thereto all unmatured Coupons; provided, that any Bearer Certificate, so
surrendered after the close of business on the Record Date preceding the
relevant payment date after the expected final payment date need not have
attached the Coupon relating to such payment date (in each case as specified in
the related Supplement).
At the option of an Investor Certificateholder, Registered Certificates
may be exchanged for other Registered Certificates of the same Certificate
Series in authorized denominations of like aggregate Undivided Trust Interests
in the Trust, upon surrender of the Registered Certificates to be exchanged at
any office or agency of the Transfer Agent and Registrar maintained for such
purpose.
Whenever any Investor Certificates of any Certificate Series are so
surrendered for exchange, the Seller shall execute, and the Trustee shall
authenticate and (unless the Transfer Agent and Registrar is different than the
Trustee, in which case the Transfer Agent and Registrar shall) deliver (in the
case of Bearer Certificates, outside the United States), the Investor
Certificates of such Certificate Series which the Certificateholder making the
exchange is entitled to receive. Every Investor Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Certificateholder thereof or
his attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding, the
Trustee or the Transfer Agent and Registrar, as the case may be, shall not be
required to register the transfer of or exchange any Investor Certificate of any
Certificate Series for a period of 15 days preceding the due date for any
payment with respect to the Investor Certificates of such Certificate Series.
Unless otherwise provided in the related Supplement, no service charge
shall be made for any registration of transfer or exchange of Certificates, but
the Transfer Agent and Registrar may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange shall be canceled by the Transfer Agent
and Registrar and disposed of in a manner satisfactory to the Trustee. The
Trustee shall cancel and destroy any Global Certificate upon its exchange in
full for Definitive Euro-Certificates and shall deliver a certificate of
destruction to the Seller. Such certificate shall also state that a certificate
or certificates of a Foreign Clearing Agency to the effect referred to in
Section 6.13 was received with respect to each portion of the Global Certificate
exchanged for Definitive Euro-Certificates.
The Seller shall execute and deliver to the Trustee or the Transfer
Agent and Registrar, as applicable, Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement and the
Certificates.
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(b) Except as provided in Section 6.9 or in any Supplement, in no event
shall the Exchangeable Seller Certificate or any interest therein be transferred
hereunder, in whole or in part to a person other than the Seller or an Affiliate
of the Seller, unless the Seller shall have consented in writing to such
transfer and unless the Trustee shall have received a Tax Opinion.
(c) (i) Registration of transfer of Investor Certificates containing a
legend substantially to the effect set forth on Exhibit H-1 shall be effected
only if such transfer (x) is made pursuant to an effective registration
statement under the Securities Act, or is exempt from the registration
requirements under the Securities Act, and (y) is made to a Person which is not
an employee benefit plan, trust or account, including an individual retirement
account, that is an "employee benefit plan" within the meaning of Section 3(3)
of ERISA (whether or not subject to ERISA) or that is a "plan" described in
Section 4975(e)(1) of the Code or an entity whose underlying assets include plan
assets by reason of a plan's investment in such entity (each, a "Benefit Plan"),
unless such Person is an insurance company purchasing the Investor Certificates
with assets of its general account, and at the time of acquisition and
throughout the period of holding (a) it meets all of the requirements of and is
eligible for exemptive relief under Prohibited Transaction Class Exemption 95-60
and (B) less than 25% of the assets of such account are Benefit Plan assets. In
the event that registration of a transfer is to be made in reliance upon an
exemption from the registration requirements under the Securities Act, the
transferor or the transferee shall deliver, at its expense, to the Seller, the
Servicer and the Trustee, an investment letter from the transferee,
substantially in the form of the investment and ERISA representation letter
attached hereto as Exhibit H-2, and no registration of transfer shall be made
until such letter is so delivered.
Investor Certificates issued upon registration or transfer of, or
Investor Certificates issued in exchange for, Investor Certificates bearing the
legend referred to above shall also bear such legend unless the Seller, the
Servicer, the Trustee and the Transfer Agent and Registrar receive an Opinion of
Counsel, satisfactory to each of them, to the effect that such legend may be
removed.
Whenever an Investor Certificate containing the legend referred to
above is presented to the Transfer Agent and Registrar for registration of
transfer, the Transfer Agent and Registrar shall promptly seek instructions from
the Servicer regarding such transfer and shall be entitled to receive
instructions signed by a Servicing Officer prior to registering any such
transfer. The Seller hereby agrees to indemnify the Transfer Agent and Registrar
and the Trustee and to hold each of them harmless against any loss, liability or
expense incurred without gross negligence or bad faith on their part arising out
of or in connection with actions taken or omitted by them in relation to any
such instructions furnished pursuant to this clause (i).
(ii) Registration or transfer of Investor Certificates containing a
legend to the effect set forth in Exhibit H-3 shall be effected only if such
transfer is made to a Person which is not a Benefit Plan. By accepting and
holding any such Investor Certificate, an Investor Certificateholder shall be
deemed to have represented and warranted that it is not a Benefit Plan. By
acquiring any interest in a Book-Entry Certificate which contains such legend, a
Certificate
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Owner shall be deemed to have represented and warranted that it is not a Benefit
Plan, unless such Person is an insurance company purchasing the Investor
Certificates with assets of its general account, and at the time of acquisition
and throughout the period of holding (a) it meets all of the requirements of and
is eligible for exemptive relief under Prohibited Transaction Class Exemption
95-60 and (B) less than 25% of the assets of such account are Benefit Plan
assets.
(iii) if so requested by the Seller, the Trustee will make available to
any prospective purchaser of Investor Certificates who so requests, a copy of a
letter provided to the Trustee by or on behalf of the Seller relating to the
transferability of any Series to a Benefit Plan.
(d) The Transfer Agent and Registrar shall maintain at its expense in
the Borough of Manhattan, the City of New York and, if and so long as any
Certificate Series is listed on the Luxembourg Stock Exchange, Luxembourg shall
maintain at Seller's expense (and subject to this Section 6.3, if specified in
the related Supplement for any Certificate Series, any other city designated in
such Supplement) an office or offices or an agency or agencies where Investor
Certificates of such Certificate Series may be surrendered for registration of
transfer or exchange (except that Bearer Certificates may not be surrendered for
exchange at any such office or agency in the U.S.).
(e) Notwithstanding anything to the contrary in this Section 6.3,
Seller shall not execute, and (if given prior written notice by the Servicer of
the inability of the Seller to execute any Subject Instrument by operation of
this clause (e)) the Transfer Agent and Registrar shall not register the
transfer of, any Subject Instrument if after giving effect to the execution or
transfer of such Subject Instrument, there would be more than 100 Private
Holders. No transfer, assignment or other conveyance of, or sale of a
participation interest in, a Subject Instrument shall be permitted unless the
Transfer Agent and Registrar is permitted to register the same in accordance
with the immediately preceding sentence. Additionally, no Subject Instrument, or
portion thereof, shall be transferred on or through (i) an "established
securities market" within the meaning of Section 7704(b)(1) of the Internal
Revenue Code and any proposed, temporary or final treasury regulation
thereunder, including, without limitation, an over-the-counter market or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations or (ii) "secondary market" or "substantial equivalent thereof" within
the meaning of Section 7704(b)(2) of the Internal Revenue Code and any proposed,
temporary or final treasury regulation thereunder, including a market wherein
interests in the Trust are regularly quoted by any Person making a market in
such interests and a market wherein any Person regularly makes available bid or
offer quotes with respect to interests in the Trust and stands ready to effect
buy or sell transactions at the quoted prices for itself or on behalf of others.
Any attempted transfer, assignment, conveyance, participation or subdivision in
contravention of the preceding restrictions, as reasonably determined by the
Seller, shall be void ab initio and the purported transferor, seller or
subdivider of such Subject Instrument shall be treated as the Holder of such
Subject Instrument for all purposes of this Agreement.
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Section 6.4 Mutilated, Destroyed, or Stolen Certificates. If (a) any
mutilated Certificate (together, in the case of Bearer Certificates, with all
unmatured Coupons (if any) appertaining thereto) is surrendered to the Transfer
Agent and Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and (b)
there is delivered to the Transfer Agent and Registrar and the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Seller shall execute and the Trustee
shall authenticate and (unless the Transfer Agent and Registrar is different
from the Trustee, in which case the Transfer Agent and Registrar shall) deliver
(in compliance with applicable law, and in the case of Bearer Certificates,
outside the United States), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
aggregate Undivided Trust Interest. In connection with the issuance of any new
Certificate under this Section 6.4, the Trustee or the Transfer Agent and
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Transfer Agent
and Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section 6.4 shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a
Registered Certificate for registration of transfer, the Trustee, the Paying
Agent, the Transfer Agent and Registrar and any agent of any of them may treat
the Person in whose name any Registered Certificate is registered as the owner
of such Registered Certificate for the purpose of receiving distributions
pursuant to any Supplement and for all other purposes whatsoever, and treat the
bearer of a Bearer Certificate or Coupon as the owner of such Bearer Certificate
or Coupon for the purpose of receiving distributions pursuant to the terms of
the applicable Supplement and for all purposes whatsoever; and in any such case
neither the Trustee, the Paying Agent, the Transfer Agent and Registrar nor any
agent of any of them shall be affected by any notice to the contrary; provided,
however, for purposes of voting or the giving of any request, demand,
authorization, direction, notice, consent or waiver hereunder, Investor
Certificates owned by the Originator, the Seller, the Servicer or any Affiliate
thereof shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Investor Certificates which a Responsible Officer in the Corporate Trust Office
of the Trustee knows to be so owned shall be so disregarded. Investor
Certificates so owned that have been pledged in good faith shall not be
disregarded as outstanding, if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Investor
Certificates and that the pledgee is not the Originator, the Seller, the
Servicer or an Affiliate thereof.
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Section 6.6 Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Investor
Certificateholders from the appropriate account or accounts maintained for the
benefit of Investor Certificateholders as specified in any Supplement. Any
Paying Agent shall have the revocable power to withdraw funds from such
appropriate account or accounts for the purpose of making distributions referred
to above and shall report such withdrawals to the Trustee. The Trustee (or the
Servicer if the Trustee is the Paying Agent) may revoke such power and remove
the Paying Agent, if the Trustee (or the Servicer if the Trustee is the Paying
Agent) determines in its sole discretion that the Paying Agent shall have failed
to perform its obligations under this Agreement in any material respect or for
other good cause. The Paying Agent shall initially be the Trustee and any
co-paying agent chosen by the Seller and acceptable to the Trustee, including,
if and so long as any Certificate Series is listed on the Luxembourg Stock
Exchange and such exchange so requires, a co-paying agent in Luxembourg or
another Western European city. The Trustee shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Servicer. In the event that the
Trustee shall no longer be the Paying Agent, the Trustee shall appoint a
successor to act as Paying Agent who shall be acceptable to the Seller and the
Trustee. The provisions of Sections 11.1, 11.2 and 11.3 shall apply to the
Trustee also in its role as Paying Agent, for so long as the Trustee shall act
as Paying Agent. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
(b) The Trustee shall cause the Paying Agent (other than itself) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums, if any,
held by it for payment to the Investor Certificateholders in trust for the
benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Investor Certificateholders, and shall agree, and if the
Trustee is the Paying Agent it hereby agrees, that it shall comply with all
requirements of the Code regarding the withholding by the Trustee of payments in
respect of federal income taxes due from Certificate Owners (consistent with the
treatment of the Investor Certificates as debt instruments for federal income
tax purposes).
Section 6.7 Access to List of Certificateholders' and Receivables
Purchasers' Names and Addresses. The Trustee shall furnish or cause to be
furnished by the Transfer Agent and Registrar to the Servicer or the Paying
Agent, within five Business Days after receipt by the Trustee of a request
therefor from the Servicer or the Paying Agent, respectively, in writing, a list
in such form as the Servicer or the Paying Agent may reasonably require, of the
names and addresses of the Registered Certificateholders and Receivables
Purchasers as of the most recent Record Date. Unless otherwise provided in the
related Supplement or Receivables Purchase Agreement, Holders of Investor
Certificates evidencing Undivided Trust Interests aggregating not less than 10%
of the Undivided Trust Interest of any Certificate Series or Receivables
Purchasers whose Receivables Purchase Interest evidences not less than 10% of
the Receivables Purchase Interest of any Receivables Purchase Series or any
Purchaser Representative (the "Applicants") may apply in writing to the Trustee,
and if such application states that the Applicants desire to communicate with
other Investor Certificateholders of any Certificate Series
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and other Receivables Purchasers of any Receivables Purchase Series with respect
to their rights under this Agreement and is accompanied by a copy of the
communication which such Applicants propose to transmit, then the Trustee, after
having been adequately indemnified by such Applicants for its costs and
expenses, shall afford or shall cause the Transfer Agent and Registrar to afford
such Applicants access during normal business hours to the most recent list of
Registered Certificateholders or Receivables Purchasers of such Series or all
outstanding Series, as applicable, held by the Trustee and shall give the
Servicer notice that such request has been made, within five Business Days after
the receipt of such application. The Trustee shall keep in as current a form as
is reasonably practicable the most recent list available to it of
Certificateholders and Receivables Purchasers. Every Registered
Certificateholder, by receiving and holding a Registered Certificate, and every
Receivables Purchaser, by its purchase of a Receivables Purchase Interest,
agrees with the Trustee that neither the Trustee, the Transfer Agent and
Registrar, nor any of their respective agents shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Registered Certificateholders or the Receivables Purchasers hereunder,
regardless of the source from which such information was obtained.
Section 6.8 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents with
respect to the Certificates which shall be authorized to act on behalf of the
Trustee in authenticating the Certificates in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an authenticating agent and a certificate of authentication executed on behalf
of the Trustee by an authenticating agent. Each authenticating agent must be
acceptable to the Seller.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Seller. The Trustee may at any
time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Seller. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the Trustee or the Seller,
the Trustee promptly may appoint a successor authenticating agent. Any successor
authenticating agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an authenticating agent. No successor
authenticating agent shall be appointed unless acceptable to the Trustee and the
Seller.
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(d) The Trustee agrees to pay each authenticating agent from time to
time reasonable compensation for its services under this Section 6.8, and the
Trustee shall be entitled to be reimbursed and the Servicer shall reimburse the
Trustee for such reasonable payments actually made, subject to the provisions of
Section 11.5.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be applicable
to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the certificates described in the Pooling and Servicing
Agreement.
_______________________________
as Authenticating Agent
for the Trustee,
By: __________________________
Authorized Officer
Section 6.9 Tender of Exchangeable Seller Certificate.
(a) Upon any Exchange (as defined below) the Trustee shall issue to the
Holder of the Exchangeable Seller Certificate under Section 6.1, for execution
and redelivery to the Trustee for authentication under Section 6.2, one or more
new Series of Investor Certificates. Any such Series of Investor Certificates
shall be substantially in the form specified in the related Supplement and shall
bear, upon its face, the designation for the Certificate Series to which it
belongs, as selected by the Seller. Except as specified in any Supplement for a
related Certificate Series, all Investor Certificates of any Certificate Series
shall rank pari passu and be equally and ratably entitled as provided herein to
the benefits hereof (except that the Enhancement and any Series Accounts
provided for any Certificate Series shall not be available for any other
Certificate Series) without preference, priority or distinction on account of
the actual time or times of authentication and delivery, all in accordance with
the terms and provisions of this Agreement and the related Supplement.
(b) The Holder of the Exchangeable Seller Certificate may tender the
Exchangeable Seller Certificate to the Trustee in exchange for (i) one or more
newly issued Series of Investor Certificates and (ii) a reissued Exchangeable
Seller Certificate (any such tender, a "Seller Exchange"). In addition, to the
extent permitted for any Series of Investor Certificates as specified in the
related Supplement, the Investor Certificateholders of such Certificate Series
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may tender their Investor Certificates and the Holder of the Exchangeable Seller
Certificate may tender the Exchangeable Seller Certificate to the Trustee
pursuant to the terms and conditions set forth in such Supplement in exchange
for (i) one or more newly issued Series of Investor Certificates and (ii) a
reissued Exchangeable Seller Certificate (an "Investor Exchange"). The Seller
Exchange and Investor Exchange are referred to collectively herein as an
"Exchange." The Holder of the Exchangeable Seller Certificate may perform an
Exchange by notifying the Trustee in writing at least five days in advance (an
"Exchange Notice") of the date upon which the Exchange is to occur (an "Exchange
Date"). Any Exchange Notice shall state the designation of any Certificate
Series to be issued on the Exchange Date and, with respect to each such
Certificate Series: (a) its Initial Investor Interest (or the method for
calculating such Initial Investor Interest), which at any time may not be
greater than the current principal amount of the Exchangeable Seller Certificate
at such time, (b) its Certificate Rate (or the method for allocating interest
payments or other cash flows to such Certificate Series), if any, and (c) the
Enhancement Provider, if any, with respect to such Certificate Series. The
Seller shall also notify each Purchaser Representative of an Exchange in writing
at least five days in advance of the date upon which the Exchange is to occur
specifying the Exchange Date, the designation of any Certificate Series to be
issued on the Exchange Date and the Initial Investor Interest (or the method for
calculating such Initial Investor Interest) of such Certificate Series. On the
Exchange Date, the Trustee shall authenticate and deliver any such Series of
Investor Certificates only upon delivery to it of the following: (a) a
Supplement satisfying the criteria set forth in subsection 6.9(c) executed by
the Seller and specifying the Principal Terms of such Certificate Series, (b)
the applicable Enhancement, if any, (c) the agreement, if any, pursuant to which
the Enhancement Provider agrees to provide the Enhancement, if any, (d) written
confirmation that the Rating Agency Condition has been satisfied with respect to
the Exchange, (e) an Officer's Certificate of the Seller, a copy of which shall
be delivered to each Purchaser Representative, that on the Exchange Date, after
giving effect to the Exchange, the Seller Interest will be at least equal to the
Aggregate Minimum Seller Interest and the aggregate amount of Principal
Receivables will be at least equal to the Minimum Aggregate Principal
Receivables, and (f) the existing Exchangeable Seller Certificate or applicable
Investor Certificates, as the case may be. If any Certificate Series or
Receivables Purchase Series is outstanding, it is a condition to the issuance of
any newly created Series of Investor Certificates that the Trustee and (if any
such outstanding Certificate Series is rated) each Rating Agency shall have
received an Opinion of Counsel that, (i) the issuance of such new Series of
Investor Certificates will not cause the Trust to be treated as an association
(or publicly traded partnership) taxable as a corporation and (ii) the issuance
of the newly issued Series of Investor Certificates will not adversely affect
the federal income tax characterization of any outstanding Investor Certificates
or Receivables Purchase Interests. Upon satisfaction of such conditions, the
Trustee shall cancel the existing Exchangeable Seller Certificate or applicable
Investor Certificates, as the case may be, and issue, as provided above, such
Series of Investor Certificates and a new Exchangeable Seller Certificate, dated
the Exchange Date. There is no limit to the number of Exchanges that may be
performed under this Agreement.
(c) In conjunction with an Exchange, the parties hereto shall execute a
Supplement, which shall specify the relevant terms with respect to any newly
issued Series of Investor
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Certificates, which may include without limitation: (i) its name or designation,
(ii) an Initial Investor Interest and Series Investor Interest or the method of
calculating the Initial Investor Interest or the Series Investor Interest, as
the case may be, (iii) the Certificate Rate (or formula for the determination
thereof), (iv) the Closing Date, (v) the rating agency or agencies rating such
Certificate Series, (vi) the interest payment date or dates and the date or
dates from which interest shall accrue, (vii) the name of the Clearing Agency,
if any, (viii) the method of allocating Collections with respect to Principal
Receivables, Finance Charge Receivables and Loss Amounts for such Certificate
Series and the method by which the principal amount of Investor Certificates of
such Certificate Series shall amortize or accrete, (ix) the names of any
accounts to be used by such Certificate Series and the terms governing the
operation of any such accounts, (x) the Investor Monthly Servicing Fee, (xi) the
Minimum Seller Interest (if any), (xii) the Enhancement Provider, if applicable,
and the terms of any Enhancement with respect to such Certificate Series, (xiii)
the base rate applicable to such Certificate Series, (xiv) the terms on which
the Certificates of such Series may be repurchased or remarketed to other
investors, (xv) the Series Termination Date, (xvi) any deposit into any account
provided for such Certificate Series, (xvii) the priority of such Certificate
Series with respect to any other Series, (xviii) the rights, if any, of the
Holder of the Exchangeable Seller Certificate that have been transferred to the
holders of such Certificate Series, (xix) the Pool Factor, (xx) the Minimum
Aggregate Principal Receivables, (xxi) whether such Certificate Series will be
part of a Group, and (xxii) any other relevant terms (including whether or not
such Certificate Series will be pledged as collateral for the issuance of any
other securities, including commercial paper) (all such terms, the "Principal
Terms" of such Certificate Series). The terms of such Supplement may modify or
amend the terms of this Agreement solely as applied to such new Certificate
Series.
Section 6.10 Book-Entry Certificates. Unless otherwise provided in any
related Supplement, the Investor Certificates, upon original issuance, shall be
issued in the form of typewritten Certificates representing Book-Entry
Certificates, to be delivered to the depository specified in such Supplement
(the "Depository") which shall be the Clearing Agency by or on behalf of such
Certificate Series. The Investor Certificates of each Certificate Series shall,
unless otherwise provided in the related Supplement, initially be registered on
the Certificate Register in the name of the nominee of the Clearing Agency. No
Certificate Owner shall receive a definitive certificate representing such
Certificate Owner's interest in the related Series of Investor Certificates,
except as provided in Section 6.12. Unless and until definitive, fully
registered Investor Certificates of any Certificate Series ("Definitive
Certificates") have been issued to Certificate Owners pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full
force and effect with respect to each such Certificate Series;
(ii) the Seller, the Servicer, the Paying Agent, the
Transfer Agent and Registrar and the Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for all purposes (including
the making of distributions on the Investor
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Certificates of each such Certificate Series) as the authorized
representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.10
conflict with any other provisions of this Agreement, the provisions of
this Section 6.10 shall control with respect to each such Certificate
Series; and
(iv) the rights of Certificate Owners of each such
Certificate Series shall be exercised only through the Clearing Agency
and the applicable Clearing Agency Participants and shall be limited to
those established by law and agreements between such Certificate Owners
and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depository Agreement applicable to a Certificate
Series, unless and until Definitive Certificates of such Certificate
Series are issued pursuant to Section 6.12, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of principal and interest on the
Investor Certificates to such Clearing Agency Participants.
Section 6.11 Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 6.12, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Investor
Certificates to the Clearing Agency for distribution to Holders of Investor
Certificates.
Section 6.12 Definitive Certificates. If (i) (A) the Seller advises the
Trustee in writing that the Clearing Agency for any Certificate Series is no
longer willing or able to discharge properly its responsibilities under the
applicable Depository Agreement, and (B) the Trustee or the Seller is unable to
locate a qualified successor, (ii) the Seller, at its option, advises the
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency with respect to any Certificate Series or (iii) after the
occurrence of a Servicer Default, Certificate Owners of any Class of a
Certificate Series representing beneficial interests aggregating more than
66-2/3% of the Investor Interest of such Class advise the Trustee and the
applicable Clearing Agency through the applicable Clearing Agency Participants
in writing that the continuation of a book-entry system through the applicable
Clearing Agency is no longer in the best interests of such Certificate Owners,
the Trustee shall notify all Certificate Owners of such Certificate Series or
Class, as applicable, through the applicable Clearing Agency Participants, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Certificate Series or Class
requesting the same. Upon surrender to the Trustee of the Investor Certificates
of such Certificate Series or Class by the applicable Clearing Agency,
accompanied by registration instructions from the applicable Clearing Agency for
registration, the Trustee shall issue the Definitive Certificates of such
Certificate Series or Class. Neither the Seller nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates of a Certificate Series or Class, all references herein
to obligations imposed upon or to be performed by the applicable Clearing Agency
shall cease
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and the functions relating to registration, transfers and payment contained in
Article VI hereof shall be performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee shall recognize
the Holders of the Definitive Certificates of such Certificate Series or Class
as Certificateholders hereunder.
Section 6.13 Global Certificate; Exchange Date.
(a) If specified in the related Supplement for any Series, the Investor
Certificates for such Series will initially be issued in the form of a single
temporary global Certificate (the "Global Certificate") in bearer form, without
interest coupons, in the denomination of the entire aggregate principal amount
of such Series and substantially in the form set forth in the exhibit with
respect thereto attached to the related Supplement. The Global Certificate will
be executed by the Seller and authenticated by the Trustee upon the same
conditions, in substantially the same manner and with the same effect as the
Definitive Certificates. The Global Certificate may be exchanged as described
below for Bearer or Registered Certificates in definitive form (the "Definitive
Euro-Certificates").
(b) The Manager shall, upon its determination of the date of completion
of the distribution of the Investor Certificates of such Series, so advise the
Trustee, the Seller, the Depositaries, and each Foreign Clearing Agency
forthwith. Without unnecessary delay, but in any event not prior to the Exchange
Date, the Seller will execute and deliver to the Trustee at its designated agent
outside the United States definitive Bearer Certificates in an aggregate
principal amount equal to the entire aggregate principal amount of such Series.
All Bearer Certificates so issued and delivered will have Coupons attached. The
Global Certificate may be exchanged for an equal aggregate principal amount of
Definitive Euro-Certificates only on or after the Exchange Date. An investor
that is a U.S. Person may exchange the portion of the Global Certificate
beneficially owned by it only for an equal aggregate principal amount of
Registered Certificates bearing the applicable legend set forth in the form of
Registered Certificates attached to the related Supplement and having a minimum
denomination of $500,000, which may be in temporary form if the Seller so
elects. The Seller may waive the $500,000 minimum denomination requirement if it
so elects. Upon any demand for exchange for Definitive Euro-Certificates in
accordance with this paragraph, the Seller shall cause the Trustee to
authenticate and deliver the Definitive Euro-Certificates to the Holder (x)
outside the United States, in the case of Bearer Certificates, and (y) according
to the instructions of the Holder, in the case of Registered Certificates, but
in either case only upon presentation to the Trustee of a written statement
substantially in the form of Exhibit I-1 with respect to the Global Certificate
or portion thereof being exchanged, signed by a Foreign Clearing Agency and
dated on the Exchange Date or a subsequent date, to the effect that it has
received in writing or by tested telex a certification substantially in the form
of (i) in the case of beneficial ownership of the Global Certificate or a
portion thereof being exchanged by a United States investor pursuant to the
second preceding sentence, the certificate in the form of Exhibit I-2 signed by
the Manager which sold the relevant Certificates or (ii) in all other cases, the
certificate in the form of Exhibit I-3, the certificate referred to in this
clause (ii) being dated on the earlier of the first actual payment of interest
in respect of such Certificates and the date of the delivery of such
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Certificate in definitive form. Upon receipt of such certification, the Trustee
shall cause the Global Certificate to be endorsed in accordance with paragraph
(d) below. Any exchange as provided in this Section shall be made free of charge
to the Holders and the beneficial owners of the Global Certificate and to the
beneficial owners of the Definitive Euro-Certificates issued in exchange, except
that a person receiving Definitive Euro-Certificates must bear the cost of
insurance, postage, transportation and the like in the event that such person
does not receive such Definitive Euro-Certificates in person at the offices of a
Foreign Clearing Agency.
(c) The delivery to the Trustee by a Foreign Clearing Agency of any
written statement referred to above may be relied upon by the Seller and the
Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
(d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such Global
Certificate shall be endorsed by or on behalf of the Trustee to reflect the
reduction of its principal amount by an amount equal to the aggregate principal
amount of such Definitive Euro-Certificates. Until so exchanged in full, such
Global Certificate shall in all respects be entitled to the same benefits under
this Agreement as Definitive Euro-Certificates authenticated and delivered
hereunder except that the beneficial owners of such Global Certificate shall not
be entitled to receive payments of interest on the Certificates until they have
exchanged their beneficial interests in such Global Certificate for Definitive
Euro-Certificates.
Section 6.14 Meetings of Certificateholders.
(a) If at the time any Bearer Certificates are issued and outstanding
with respect to any Series to which any meeting described below relates, the
Servicer or the Trustee may at any time call a meeting of Investor
Certificateholders of any Certificate Series or of all Certificate Series, to be
held at such time and at such place as the Servicer or the Trustee, as the case
may be, shall determine, for the purpose of approving a modification of or
amendment to, or obtaining a waiver of any covenant or condition set forth in,
this Agreement, any Supplement or the Investor Certificates or of taking any
other action permitted to be taken by Investor Certificateholders hereunder or
under any Supplement. Notice of any meeting of Investor Certificateholders,
setting forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be given in accordance with Section
13.6, the first mailing and publication to be not less than 20 nor more than 180
days prior to the date fixed for the meeting. To be entitled to vote at any
meeting of Investor Certificateholders a person shall be (i) a Holder of one or
more Investor Certificates of the applicable Certificate Series or (ii) a person
appointed by an instrument in writing as proxy by the Holder of one or more such
Investor Certificates. The only persons who shall be entitled to be present or
to speak at any meeting of Investor Certificateholders shall be the persons
entitled to vote at such meeting and their counsel and any representatives of
the Originator, the Seller, the Servicer, the Trustee and the Enhancement
Provider and their respective counsel.
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(b) At a meeting of Investor Certificateholders, persons entitled to
vote Investor Certificates evidencing a majority of the aggregate unpaid
principal amount of the applicable Certificate Series or all outstanding
Certificate Series, as the case may be, shall constitute a quorum. No business
shall be transacted in the absence of a quorum, unless a quorum is present when
the meeting is called to order. In the absence of a quorum at any such meeting,
the meeting may be adjourned for a period of not less than 10 days; in the
absence of a quorum at any such meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days; at the reconvening of any
meeting further adjourned for lack of a quorum, the persons entitled to vote
Investor Certificates evidencing at least 25% of the aggregate unpaid principal
amount of the applicable Certificate Series or all outstanding Certificate
Series, as the case may be, shall constitute a quorum for the taking of any
action set forth in the notice of the original meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided above except
that such notice must be given not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage of the aggregate
principal amount of the outstanding applicable Investor Certificates which shall
constitute a quorum.
(c) Any Investor Certificateholder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that such
Investor Certificateholder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Subject to the
provisions of Section 13.1, any resolution passed or decision taken at any
meeting of Investor Certificateholders duly held in accordance with this Section
shall be binding on all Investor Certificateholders whether or not present or
represented at the meeting.
(d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate, satisfactory to the
Servicer, executed by any bank, trust company or recognized securities dealer,
wherever situated, satisfactory to the Servicer. Each such certificate shall be
dated and shall state that on the date thereof a Bearer Certificate bearing a
specified serial number was deposited with or exhibited to such bank, trust
company or recognized securities dealer by the Person named in such certificate.
Any such certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the Person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some other
Person or (iii) the Bearer Certificate specified in such certificate shall have
ceased to be outstanding. The appointment of any proxy shall be proved by having
the signature of the Person executing the proxy guaranteed by any bank, trust
company or recognized securities dealer satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Holders of Investor Certificates evidencing a majority of the
aggregate unpaid principal amount of Investor
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Certificates of the applicable Certificate Series or all outstanding Certificate
Series, as the case may be, represented at the meeting. No vote shall be cast or
counted at any meeting in respect of any Investor Certificate challenged as not
outstanding and ruled by the chairman of the meeting to be not outstanding. The
chairman of the meeting shall have no right to vote except as an Investor
Certificateholder or proxy. Any meeting of Investor Certificateholders duly
called at which a quorum is present may be adjourned from time to time, and the
meeting may be held as so adjourned without further notice.
(f) The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and on which shall be
inscribed the serial number or numbers of the Investor Certificates held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided above. The record shall be
signed and verified by the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Servicer and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
Section 6.15 Uncertificated Classes. Notwithstanding anything to the
contrary contained in this Article VI or in Article XII, unless otherwise
specified in any Supplement, any provisions contained in this Article VI and in
Article XII relating to the registration, form, execution, authentication,
delivery, presentation, cancellation and surrender of Certificates shall not be
applicable to any uncertificated Certificates.
Section 6.16 Conveyance of Receivables Purchase Interests by the Trust.
(a) Pursuant to the terms of a Receivables Purchase Agreement, the Trustee, on
behalf of the Trust, from time to time may sell Receivables Purchase Interests
to one or more Receivables Purchasers (or to a Purchaser Representative for the
account of such Receivables Purchaser or Purchasers). Pursuant to a Receivables
Purchase Agreement, Collections allocated to Receivables Purchase Interests may
be reinvested and such Receivables Purchase Interests may be recomputed, each
from time to time as provided therein. No owner of a Receivables Purchase
Interest shall have a claim to Collections allocated to another Series (unless
otherwise agreed to by such other Series) and each Receivables Purchase Interest
shall be equally and ratably entitled as provided herein to the benefits of this
Agreement without preference, priority or distinction, all in accordance with
the terms and provisions of this Agreement and the applicable Receivables
Purchase Agreement.
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(b) The Trustee shall pay to the Trust all amounts received from
Receivables Purchasers with respect to such Receivables Purchase Interests sold
from time to time.
Section 6.17 Notice of Receivables Purchase Series. The Trustee, on
behalf of the Trust, at the direction of the Servicer, may enter into a
Receivables Purchase Agreement if the Servicer notifies the Trustee in writing
at least five days in advance (a "Receivables Purchase Notice") of the date upon
which the initial Conveyance of Receivables Purchase Interests pursuant to the
applicable Receivables Purchase Agreement shall occur (a "Receivables Purchase
Date"). Any Receivables Purchase Notice shall state the designation of any
Receivables Purchase Series to be issued on the Receivables Purchase Date and,
with respect to each such Receivables Purchase Series: (a) its initial
Receivables Purchase Interest (or the method for calculating such initial
Receivables Purchase Interest), (b) the applicable interest rate (or the method
for allocating interest payments or other cash flows to such Receivables
Purchase Series), if any, and (c) the Enhancement Provider, if any, with respect
to such Receivables Purchase Series. The Servicer shall also notify each
Purchaser Representative of such Conveyance in writing at least five days in
advance of the date upon which such Conveyance is to occur specifying the
designation of any Receivables Purchase Series to be created on the Receivables
Purchase Date and the initial Receivables Purchase Interest (or the method for
calculating such initial Receivables Purchase Interest) of such Receivables
Purchase Series. On the Receivables Purchase Date, the Trustee shall execute and
deliver any such Receivables Purchase Agreement only upon delivery to it of the
following: (a) a Receivables Purchase Agreement satisfying the criteria set
forth in subsection 6.18 executed by the Seller and specifying the Principal
Terms of such Receivables Purchase Series, (b) the applicable Enhancement, if
any, (c) the agreement, if any, pursuant to which the Enhancement Provider
agrees to provide the Enhancement, if any, (d) written confirmation that the
Rating Agency Condition shall have been satisfied with respect to such
Conveyance of Receivables Purchase Interests, (e) an Officer's Certificate of
the Seller, a copy of which shall be delivered to the Trustee and each Purchaser
Representative, that on the Receivables Purchase Date, after giving effect to
the Conveyance of Receivables Purchase Interests, the Seller Interest would be
at least equal to the Aggregate Minimum Seller Interest and the aggregate amount
of Principal Receivables will be at least equal to the Minimum Aggregate
Principal Receivables, and (f) if any Certificate Series are outstanding, a Tax
Opinion addressed to the Trustee and each Rating Agency, dated the Exchange
Date, with respect to such Conveyance of Receivables Purchase Interests. If any
Certificate Series or Receivables Purchase Series is outstanding, it is a
condition to the creation of any Receivables Purchase Series that the Trustee
and (if any such outstanding Series is rated) each Rating Agency shall have
received an Opinion of Counsel that (i) the issuance of such Receivables
Purchase Series will not cause the Trust to be treated as an association (or
publicly traded partnership) taxable as a corporation and (ii) the creation of
such Receivables Purchase Series will not adversely affect the federal income
tax characterization of any outstanding Investor Certificates or Receivables
Purchase Interests.
Section 6.18 Principal Terms of Receivables Purchase Series. In
conjunction with a sale of Receivables Purchase Interests, the parties thereto
shall execute a Receivables Purchase Agreement, which shall specify the relevant
terms with respect to any newly created Receivables Purchase Series, which may
include without limitation: (i) its name or designation, (ii) an initial
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Receivables Purchase Interest or the method of calculating the initial
Receivables Purchase Interest, (iii) the applicable interest rate (or formula
for the determination thereof), (iv) the Closing Date, (v) the interest payment
date or dates and the date or dates from which interest shall accrue, (vi) the
method of allocating Collections with respect to Principal Receivables and
Finance Charge Receivables for such Receivables Purchase Series, (vii) the
method by which the principal amount of the Receivables Purchase Interest shall
amortize or accrete, (viii) the names of any accounts to be used by such
Receivables Purchase Series and the terms governing the operation of any such
accounts, (ix) the Minimum Seller Interest (if any), (x) the Series Termination
Date, (xi) the terms of any Enhancement with respect to such Receivables
Purchase Series, (xii) the Enhancement Provider, if applicable, (xiii) the terms
on which the Receivables Purchase Interests may be repurchased, and (xiv) any
other relevant terms of such Receivables Purchase Series (all such terms, the
"Principal Terms" of such Receivables Purchase Series). The terms of such
Receivables Purchase Agreement may modify or amend the terms of this Agreement
solely as applied to such new Receivables Purchase Series.
ARTICLE VII
OTHER MATTERS RELATING
TO THE SELLER
Section 7.1 Liability of the Seller. The Seller shall be liable
hereunder only to the extent of the obligations specifically undertaken by it in
its capacity as the Seller.
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller.
(a) The Seller shall not consolidate with or merge into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
Seller is merged or the Person that acquires by conveyance or transfer
the properties and assets of Seller substantially as an entirety shall
be, if Seller is not the surviving entity, organized and existing under
the laws of the United States of America or any state thereof or the
District of Columbia, shall satisfy the requirements set forth in
Section 2.5(l) and shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the performance of every covenant and obligation of the
Seller, as applicable hereunder and shall benefit from all the rights
granted to the Seller, as applicable hereunder. To the extent that any
right, covenant or obligation of the Seller, as applicable hereunder,
is inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity;
(ii) the Seller shall have delivered to the Trustee an
Officer's Certificate signed by a Vice President (or any more senior
officer) of the Seller stating that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply
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with this Section 7.2 and that all conditions precedent herein provided
for relating to such transaction have been complied with and an Opinion
of Counsel that such supplemental agreement is legal, valid and
binding; and
(iii) the Rating Agency Condition is satisfied with respect to
such consolidation, merger, conveyance or transfer.
(b) The obligations of the Seller hereunder shall not be assignable nor
shall any Person succeed to the obligations of the Seller hereunder except for
mergers, consolidations, assumptions, conveyances or transfers in accordance
with the provisions of the foregoing paragraph.
Section 7.3 Limitation on Liability. The directors, officers, employees
or agents of the Seller shall not be under any liability to the Trust, the
Trustee, the Certificateholders, the Certificate Owners, the Receivables
Purchasers, any Purchaser Representative, any Enhancement Provider or any other
Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement, any
Supplement and any Receivables Purchase Agreement and the issuance of the
Certificates; provided, however, that this provision shall not protect the
officers, directors, employees, or agents of the Seller against any liability
which would otherwise be imposed by reason of willful misconduct, bad faith or
gross negligence in the performance of their duties. The Seller and any
director, officer, employee or agent may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder.
Section 7.4 Indemnification. The Seller shall indemnify and hold
harmless the Trust and the Trustee, its officers, directors, employees and
agents from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of any acts, omissions or alleged acts or omissions
arising out of or based upon the arrangement created by this Agreement, any
Supplement or any Receivables Purchase Agreement arising out of any third-party
action, claim, suit or proceeding, including, but not limited to, any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim, as though this Agreement, such Supplement or such
Receivables Purchase Agreement created a partnership under the New York Uniform
Partnership Act in which the Seller is a general partner; provided, however,
that the Seller shall not indemnify the Trustee if such acts, omissions or
alleged acts or omissions constitute or are caused by fraud, gross negligence,
or willful misconduct by the Trustee; provided, further, that the Seller shall
not indemnify the Trust or the Trustee for any liabilities, costs or expenses
with respect to any action taken by the Trustee at the request of the Investor
Certificateholders or Receivables Purchasers; and provided, further, that the
Seller shall not indemnify the Trust or the Trustee for any liabilities, costs
or expenses of the Trust or the Trustee arising under any tax law, including
without limitation any federal, state, local or foreign income or franchise
taxes or any other tax imposed on or measured by income (or any interest or
penalties with respect thereto or arising from a failure to comply therewith)
required to be paid by the Trust in connection
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herewith to any taxing authority. Any such indemnification shall not be payable
from the assets of the Trust. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be liable
hereunder only to the extent of the obligations specifically undertaken by the
Servicer in such capacity herein.
Section 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
the Servicer is merged or which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety
shall be a state or national banking or savings association or other
entity which is not subject to the bankruptcy laws of the United States
of America and, if the Servicer is not the surviving entity, shall
expressly assume, by an agreement supplemental hereto, executed and
delivered to the Trustee and each Purchaser Representative in form
satisfactory to the Trustee and each Purchaser Representative, the
performance of every covenant and obligation of the Servicer hereunder
(to the extent that any right, covenant or obligation of the Servicer,
as applicable hereunder, is inapplicable to the successor entity, such
successor entity shall be subject to such covenant or obligation, or
benefit from such right, as would apply, to the extent practicable, to
such successor entity);
(ii) the Servicer shall have delivered to the Trustee and
each Purchaser Representative an Officer's Certificate of the Servicer,
upon which the Trustee may conclusively rely, that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply
with this Section 8.2 and that all conditions precedent herein provided
for relating to such transaction have been complied with and an Opinion
of Counsel, upon which the Trustee may conclusively rely, that such
supplemental agreement is legal, valid and binding with respect to the
Servicer;
(iii) the Servicer shall have given at least 10 Business
Days' prior notice to the Rating Agencies, the Trustee and each
Purchaser Representative of such consolidation, merger, conveyance or
transfer;
(iv) the Rating Agency Condition shall have been satisfied
with respect to such assignment and succession; and
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(v) if the Person described in clause (i) is not an
Affiliate of the Servicer, the Trustee and each Purchaser
Representative shall have consented in writing to such consolidation,
merger, conveyance or transfer.
Section 8.3 Limitation on Liability. The directors, officers, employees
or agents of the Servicer shall not be under any liability to the Trust, the
Trustee, the Certificateholders, the Receivables Purchasers, any Enhancement
Provider or any other Person hereunder or pursuant to any document delivered
hereunder, it being expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the execution
of this Agreement, any Supplement and any Receivables Purchase Agreement, and
the issuance of the Certificates; provided, however, that this provision shall
not protect the directors, officers, employees and agents of the Servicer
against any liability that would otherwise be imposed by reason of willful
misconduct, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. Except as
provided in Section 8.4 with respect to the Trust and the Trustee, its officers,
directors, employees and agents, and except as provided in any Supplement or
Receivables Purchase Agreement with respect to the related Series, the Servicer
shall not be under any liability to the Trust, the Trustee, its officers,
directors, employees and agents, the Certificateholders, the Receivables
Purchasers, any Enhancement Provider, or any other Person for any action taken
or for refraining from the taking of any action in its capacity as Servicer
pursuant to this Agreement, any Supplement or any Receivables Purchase
Agreement; provided, however, that this provision shall not protect the Servicer
against any liability which would otherwise be imposed by reason of willful
misconduct, bad faith or gross negligence in the performance of duties or by
reason of its reckless disregard of its obligations and duties hereunder, or
under any Supplement or Receivables Purchase Agreement. The Servicer may rely in
good faith on any document of any kind properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Receivables in accordance with this
Agreement which in its reasonable opinion may involve it in any expense or
liability.
Section 8.4 Servicer Indemnification of the Trust and the Trustee. The
Servicer shall indemnify and hold harmless the Trust and the Trustee, its
officers, directors, employees and agents, from and against any loss, liability,
expense, damage or injury suffered or sustained by reason of any acts or
omissions or alleged acts or omissions of the Servicer with respect to
activities of the Trust or the Trustee pursuant to this Agreement, any
Supplement or any Receivables Purchase Agreement, including, but not limited to,
any judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided, however, that the Servicer shall not
indemnify the Trustee if such acts, omissions or alleged acts or omissions
constitute or are caused by fraud, gross negligence, or willful misconduct by
the Trustee; provided, further, that with respect to any action taken by the
Trustee at the request of the Investor Certificateholders, Receivables
Purchasers or any Purchaser Representative such costs, expenses or other
liabilities shall be at the expense of the requesting party and such party shall
not be entitled to reimbursement from the Trust; and provided, further, that the
Servicer shall not indemnify the
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Trust or the Trustee for any liabilities, costs or expenses of the Trust arising
under any tax law, including without limitation any federal, state, local or
foreign income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith) required to be paid by the Trust in connection
herewith to any taxing authority. Any such indemnification shall not be payable
from the assets of the Trust. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
Section 8.5 The Servicer Not to Resign. The Servicer shall not resign
from the obligations and duties hereby imposed on it except upon a determination
by the Servicer that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (i) above by an
Opinion of Counsel to such effect delivered to the Trustee and each Purchaser
Representative. No such resignation shall become effective until the Trustee or
a Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.2 hereof. The Trustee shall give
prompt notice to each Rating Agency, Purchaser Representative and Enhancement
Provider upon the appointment of a Successor Servicer. If the Trustee is unable
within 120 days of the date of such determination to appoint a Successor
Servicer, the Trustee shall serve as Successor Servicer hereunder.
Section 8.6 Access to Certain Documentation and Information Regarding
the Receivables. Subject to the terms of any Supplement or Receivables Purchase
Agreement, the Servicer shall provide to the Trustee, each Purchaser
Representative and each Enhancement Provider access to the documentation
regarding the Accounts and the Receivables in such cases where the Trustee, any
Purchaser Representative, or any Enhancement Provider is required in connection
with the enforcement of the rights of the Investor Certificateholders, the
Receivables Purchasers, or any Enhancement Provider, or by applicable statutes
or regulations, to review such documentation, such access being afforded without
charge but only (i) upon reasonable request, (ii) during the Servicer's and
Administrative Servicer's normal business hours (but, with respect to the
Administrative Servicer, only to the extent of the Servicer's access to such
documentation pursuant to the Administrative Servicer Agreement), (iii) subject
to the Servicer's normal security and confidentiality procedures and (iv) at
offices designated by the Servicer. Nothing in this Section 8.6 shall derogate
from the obligation of the Originator, the Seller, the Trustee, the Servicer,
any Purchaser Representative or any Enhancement Provider to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section 8.6 as
a result of such obligations shall not constitute a breach of this Section 8.6.
Section 8.7 Delegation of Duties. In the ordinary course of business,
the Servicer may at any time delegate any duties hereunder to any Person who
agrees to conduct such duties in accordance with the Cardholder Guidelines,
including the delegation of duties pursuant to the Administrative Servicer
Agreement. Any such delegations shall not relieve the Servicer of its
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liability and responsibility with respect to such duties, and shall not
constitute a resignation within the meaning of Section 8.5 hereof. The Seller,
the Trustee and the Purchaser Representatives hereby acknowledge and consent to
the continuation of Alliance Data as the Administrative Servicer pursuant to the
terms and conditions set forth in the Administrative Servicer Agreement. The
Seller may at any time appoint any other Person, including the Originator or an
Affiliate of the Originator, as a successor Administrative Servicer to perform
the responsibilities and obligations previously performed by Alliance Data on
behalf of the Seller, subject to any requirement in any Supplement or
Receivables Purchase Agreement. The Seller shall give at least five Business
Days' prior notice to the Rating Agencies and each Enhancement Provider of any
such appointment.
Section 8.8 Examination of Records. The Servicer shall clearly and
unambiguously identify each Account (including any Additional Account designated
pursuant to Section 2.6) in its computer or other records to reflect that the
Receivables arising in such Account have been Conveyed to the Trust pursuant to
this Agreement. The Servicer shall, prior to the sale or transfer to a third
party of any receivable held in its custody, examine its computer and other
records to determine that such receivable is not a Receivable.
ARTICLE IX
EARLY AMORTIZATION EVENTS
Section 9.1 Early Amortization Events. If any one of the following
events (each, a "Trust Early Amortization Event") shall occur:
(a) the Seller, the Originator, the Servicer (if an Affiliate of the
Originator) or Charming Shoppes, Inc. shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
all or substantially all of its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Seller, the Originator, the Servicer (if an Affiliate
of the Originator) or Charming Shoppes, Inc.; or the Seller, the Originator, the
Servicer (if an Affiliate of the Originator) or Charming Shoppes, Inc. shall
admit in writing its inability to pay its debts generally as they become due,
commence or have commenced against it (unless dismissed within thirty days) as a
debtor a proceeding under any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
(b) the Originator shall become unable for any reason to Convey
Receivables to the Seller pursuant to the Purchase Agreement; or the Seller
shall become unable for any reason to Convey Receivables to the Trust in
accordance with the provisions of this Agreement; or
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(c) the Seller or the Trust shall become subject to regulation by the
Securities and Exchange Commission as an "investment company" within the meaning
of the Investment Company Act;
then an Early Amortization Event with respect to all Series shall occur without
any notice or other action on the part of the Trustee, the Investor
Certificateholders or the Receivables Purchasers immediately upon the occurrence
of such event.
Section 9.2 Additional Rights Upon the Occurrence of Certain Events.
(a) Upon the occurrence of any event described in Section 9.1(a) with
respect to the Originator or the Seller (an "Insolvency Event"), the Seller
shall on the day of such Insolvency Event (the "Appointment Day") immediately
cease to transfer Principal Receivables to the Trust and shall promptly give
notice to the Trustee, the Rating Agencies, each Enhancement Provider and each
Purchaser Representative of such Insolvency Event. Notwithstanding any cessation
of the Conveyance to the Trust of additional Principal Receivables, Finance
Charge Receivables, whenever created, accrued in respect of Principal
Receivables which have been Conveyed to the Trust shall continue to be a part of
the Trust, and Collections with respect thereto shall continue to be allocated
and paid in accordance with Article IV, any Supplement and any Receivables
Purchase Agreement. Within 15 days of the Appointment Day, the Trustee shall (i)
publish a notice in an Authorized Newspaper that an Insolvency Event has
occurred and that the Trustee intends to sell, dispose of or otherwise liquidate
the Receivables in a commercially reasonable manner and (ii) send written notice
to each Investor Certificateholder, each Purchaser Representative and
Enhancement Provider, if applicable, describing the provisions of this Section
9.2 and requesting instructions from such Investor Certificateholders,
Enhancement Providers and Purchaser Representatives. Unless within 90 days from
the day notice pursuant to clause (i) above is first published, the Trustee
shall have received written instructions from (A) Holders of Investor
Certificates evidencing more than 50% of the Investor Interest of each
Certificate Series, (B) in the case of any Certificate Series with respect to
which there is an Enhancement Invested Amount, the applicable Enhancement
Provider, and (C) each Purchaser Representative to the effect that such Investor
Certificateholders, Enhancement Provider, if applicable, and such Purchaser
Representatives disapprove of the liquidation of the Receivables and wish to
continue having Principal Receivables Conveyed to the Trust as before such
Insolvency Event, the Trustee shall use its best efforts to sell, dispose of or
otherwise liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms and to maximize the proceeds of such disposition
or other liquidation of the Receivables, which shall include the solicitation of
competitive bids. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions of
Sections 9.1 and 9.2 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to subsection (a) above shall be treated as Collections on
the Receivables and shall be allocated and deposited in accordance with the
provisions of Article IV, any Supplement and any
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Receivables Purchase Agreement; provided that the Trustee shall determine
conclusively in its sole discretion the amount of such proceeds which are
allocable to Finance Charge Receivables and the amount of such proceeds which
are allocable to Principal Receivables. Unless the Trustee receives written
instructions from Investor Certificateholders, Enhancement Providers and
Purchaser Representatives as provided in subsection 9.2(a) above, on the day
following the last Distribution Date in the Due Period during which such
proceeds are distributed to the Investor Certificateholders of each Certificate
Series and the Receivables Purchasers of each Receivables Purchase Series, the
Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article IX with respect to competitive bids.
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Trustee pursuant to Article IV
or to instruct the Trustee to make any required drawing, withdrawal, or payment
under any Enhancement, in each case, within one Business Day after the date of
the receipt by the Servicer of written notice from the Trustee or any Purchaser
Representative that such payment, transfer, deposit, withdrawal or drawing or
such instruction or notice is required to be made or given, as the case may be,
under the terms of this Agreement, any Supplement or any Receivables Purchase
Agreement;
(b) failure on the part of the Servicer duly to observe or perform in
any respect any other covenants or agreements of the Servicer set forth in this
Agreement, any Supplement or any Receivables Purchase Agreement, which has a
material adverse effect on (i) the Servicer's ability to collect the Receivables
or otherwise perform its obligations under the Agreement, any Supplement or any
Receivables Purchase Agreement or (ii) the collectibility or value of the
Receivables, and which continues unremedied for a period of 45 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee, a Purchaser Representative
or an Enhancement Provider, or to the Servicer and the Trustee by Holders of
Investor Certificates evidencing not less than 25% of the Investor Interest of
any Certificate Series, or an Enhancement Provider and such material adverse
effect continues for such period; or the Servicer shall delegate its duties
under this Agreement, except as permitted by Section 8.7;
(c) any representation, warranty or certification made by the Servicer
in this Agreement, any Supplement or any Receivables Purchase Agreement or in
any certificate delivered pursuant to this Agreement, any Supplement or any
Receivables Purchase Agreement shall prove to have been incorrect when made,
which has a material adverse effect on (i) the
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Servicer's ability to collect the Receivables or otherwise perform its
obligations under the Agreement, any Supplement or any Receivables Purchase
Agreement or (ii) the collectibility or value of the Receivables, and which
continues to be incorrect in any material respect for a period of 45 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, a Purchaser
Representative, or an Enhancement Provider or to the Servicer and the Trustee by
the Holders of Investor Certificates evidencing not less than 25% of the
Investor Interest of any Certificate Series or an Enhancement Provider and such
material adverse effect continues for such period; or
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all of its property, or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its debts generally as they
become due, commence or have commenced against it (unless dismissed within
thirty days) as debtor a proceeding under any applicable insolvency or
reorganization statute, make any assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations;
then, so long as such Servicer Default shall not have been remedied, either the
Trustee, or the Holders of Investor Certificates evidencing Undivided Trust
Interests and Purchaser Representatives of Receivables Purchase Series
aggregating more than 66-2/3% of the Aggregate Investor/Purchaser Interest, by
notice then given in writing to the Servicer, and each Purchaser Representative
(and to the Trustee if given by the Investor Certificateholders or the Purchaser
Representatives) (a "Servicer Termination Notice"), may terminate all of the
rights and obligations of the Servicer as Servicer under this Agreement. The
Trustee shall promptly notify any Enhancement Provider of any such Servicer
Default.
After receipt by the Servicer of such Servicer Termination Notice, and
on the date that a Successor Servicer shall have been appointed by the Trustee
pursuant to Section 10.2, all authority and power of the Servicer under this
Agreement shall pass to and be vested in a Successor Servicer; and, without
limitation, the Trustee is hereby authorized and empowered (upon the failure of
the Servicer to cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such transfer of servicing rights and obligations. The Servicer
agrees to cooperate with the Trustee and such Successor Servicer in effecting
the termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder including, without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the Receivables
provided for under this Agreement, including, without limitation, all authority
over all Collections which shall on the date of transfer be held by the
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Servicer for deposit, or which have been deposited by the Servicer, in the
Collection Account or any Series Account, or which shall thereafter be received
with respect to the Receivables, and in assisting the Successor Servicer in
enforcing all rights to Insurance Proceeds applicable to the Trust. The Servicer
shall promptly transfer its electronic records or electronic copies thereof
relating to the Receivables to the Successor Servicer in such electronic form as
the Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary for
the continued servicing of the Receivables in the manner and at such times as
the Successor Servicer shall reasonably request. To the extent that compliance
with this Section 10.1 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall deem
necessary to protect its interests. The Servicer shall, on the date of any
servicing transfer, transfer all of its rights and obligations under any
Enhancement with respect to any Series to the Successor Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in subsection 10.1(a), for a cumulative period of ten Business Days,
or under subsection 10.1(b) or (c), for a cumulative period of sixty Business
Days, shall not constitute a Servicer Default if such delay or failure could not
be prevented by the exercise of reasonable diligence by the Servicer and such
delay or failure was caused by an act of God or the public enemy, acts of
declared or undeclared war, public disorder, rebellion, riot or sabotage,
epidemics, landslides, lightning, fire, hurricanes, tornadoes, earthquakes,
nuclear disasters or meltdowns, floods, power outages or similar causes. The
preceding sentence shall not relieve the Servicer from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement and the Servicer shall provide the Trustee, any Enhancement Provider,
the Seller, and each Purchaser Representative with an Officer's Certificate
giving prompt notice of such failure or delay by it, together with a description
of the cause of such failure or delay and its efforts so to perform its
obligations.
Section 10.2 Trustee to Act; Appointment of Successor.
(a) On and after the occurrence of a Servicer Default pursuant to
Section 10.1 or a resignation of the Servicer pursuant to Section 8.5, the
Servicer shall continue to perform all servicing functions under this Agreement
until the date of the appointment of a Successor Servicer hereunder. The Trustee
shall notify each Rating Agency of such removal of the Servicer. The Trustee
shall, as promptly as possible after the giving of a Servicer Termination Notice
appoint a successor servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee. Purchaser Representatives for each Receivables
Purchase Series and each Enhancement Provider, if any, must consent in writing
to any Successor Servicer. The Trustee may obtain bids from any potential
successor servicer. Any Successor Servicer shall not be an Affiliate of any
Purchaser Representative so long as any Certificate Series is outstanding. If
(i) the Trustee is unable to obtain any bids from any potential successor
servicer, or if no such bid is acceptable to Purchaser Representatives
representing each Receivable Purchase Series, and (ii) the Servicer
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delivers to the Trustee an Officer's Certificate to the effect that it cannot in
good faith cure the Servicer Default which gave rise to a transfer of servicing,
and if the Trustee is legally unable to act as Successor Servicer, then the
Trustee shall notify each Investor Certificateholder, each Purchaser
Representative and any Enhancement Provider of the proposed sale of the
Receivables and shall provide each Receivables Purchaser and Enhancement
Provider an opportunity to bid on the Receivables and shall offer the Seller the
right of first refusal to purchase the Receivables on terms equivalent to the
best purchase offer as determined by the Trustee, but in no event less than an
amount equal to the Aggregate Investor/Purchaser Interest an the date of such
purchase (including, with respect to any Series, any unreimbursed Loss Amounts
allocated to such Series to the extent such amounts are required to be
reimbursed pursuant to the related Supplement or Receivables Purchase Agreement)
plus all interest accrued but unpaid on all of the outstanding Investor
Certificates at the applicable Certificate Rate, all interest accrued but unpaid
with respect to all outstanding Receivables Purchase Interests at the applicable
rate, and all fees and expenses under any Supplement or any Receivables Purchase
Agreement due but unpaid through the date of such purchase; provided, however,
that if the short-term deposits or long-term unsecured debt obligations of the
Seller (or if neither such deposits nor such obligations of the Seller are rated
by Moody's, if Moody's is a Rating Agency with respect to any Certificate Series
outstanding, then of the holding company of the Seller so long as such holding
company shall be Charming Shoppes, Inc.) are not rated at the time of such
purchase at least P-3 or Baa-3, respectively, by Moody's, if Moody's is a Rating
Agency with respect to any Certificate Series outstanding, no such purchase by
the Seller shall occur unless the Seller shall deliver an Opinion of Counsel
reasonably acceptable to the Trustee that such purchase would not constitute a
fraudulent conveyance of the Seller. The proceeds of such sale shall be
deposited in the Collection Account or any Series Account, as provided in the
related Supplement or Receivables Purchase Agreement, for distribution to the
Investor Certificateholders of each outstanding Certificate Series and the
Receivables Purchasers of each outstanding Receivables Purchase Series, pursuant
to Section 12.3 of this Agreement. Notwithstanding the above, the Trustee may
petition a court of competent jurisdiction to appoint as the Successor Servicer
hereunder any established financial institution having, in the case of an entity
that is subject to risk-based capital adequacy requirements, risk-based capital
of at least $50,000,000 or, in the case of an entity that is not subject to
risk-based capital requirements, a net worth of not less than $50,000,000, and
whose regular business includes the servicing of credit card receivables.
(b) Upon its appointment, the Successor Servicer shall be the successor
in all respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer. Any Successor Servicer, by its acceptance of
its appointment, will automatically agree to be bound by the terms and
provisions of each Supplement, Receivables Purchase Agreement and Enhancement.
(c) In connection with such appointment and assumption, the Trustee
shall be entitled to such compensation, or may make such arrangements for the
compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided, however,
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that no such compensation shall be in excess of the Monthly Servicing Fee
permitted to the Servicer pursuant to Section 3.2. The Holder of the
Exchangeable Seller Certificate agrees that if the Servicer is terminated
hereunder, it will agree to deposit a portion of the Collections in respect of
Finance Charge Receivables that it is entitled to receive pursuant to Article IV
to pay its share of the compensation of the Successor Servicer.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.1 and shall pass to and be vested in the Seller
and, without limitation, the Seller is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Seller in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Seller in such electronic form as the Seller may reasonably request and
shall transfer all other records, correspondence and documents to the Seller in
the manner and at such times as the Seller shall reasonably request. To the
extent that compliance with this Section 10.2 shall require the Successor
Servicer to disclose to the Seller information of any kind which the Successor
Servicer deems to be confidential, the Seller shall be required to enter into
such customary licensing and confidentiality agreements as the Successor
Servicer shall deem necessary to protect its interests.
Section 10.3 Notification of Servicer Default and Successor Servicer.
Within two Business Days after the Servicer becomes aware of any Servicer
Default, the Servicer shall give prompt written notice thereof to the Trustee,
each Purchaser Representative, each Rating Agency and each Enhancement Provider.
Upon any termination or appointment of a Successor Servicer pursuant to this
Article X, the Trustee shall give prompt written notice thereof to each
Purchaser Representative, each Rating Agency and each Enhancement Provider.
Section 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Trust Interests aggregating not less than
66-2/3% of the Investor Interest of any Certificate Series outstanding, or any
Purchaser Representative for any Receivables Purchase Series, adversely affected
by a default by the Servicer or the Seller in the performance of its obligations
hereunder may waive such default and its consequences on behalf of such Series,
except a default in the failure to make any required deposits or payment of
interest or principal relating to such Series pursuant to Article IV which
default does not result from the failure of the Paying Agent to perform its
obligations to make any required deposits or payments of interest and principal
in accordance with Article IV. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
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ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of any Servicer Default of
which it has actual knowledge and after the curing of all Servicer Defaults
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement, each Supplement and each
Receivables Purchase Agreement. If a Responsible Officer has received written
notice that a Servicer Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in its exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Subject to subsection 11.1(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own grossly negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of Holders of Investor
Certificates evidencing Undivided Trust Interests aggregating more than
50% of the Investor Interest of any Certificate Series or any Purchaser
Representative, relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee in relation to the
related Series, under this Agreement, any Supplement or any Receivables
Purchase Agreement; and
(iii) the Trustee shall not be charged with knowledge of any
failure by the Servicer referred to in Section 10.1 unless a
Responsible Officer of the Trustee obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from the
Servicer or any Holders of Investor Certificates evidencing Undivided
Trust Interests aggregating not less than 10% of the Investor Interest
of any Certificate Series adversely affected thereby, any Purchaser
Representative or any Enhancement Provider.
(c) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
under this Agreement, any Supplement or any Receivables Purchase Agreement, or
in the exercise of any of its rights or powers, unless adequate indemnity
against such risk or liability is reasonably assured and provided to it, and
none of the provisions contained in this Agreement shall in any event require
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the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, any Supplement or any
Receivables Purchase Agreement except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement, any
Supplement or any Receivables Purchase Agreement.
(d) Except for actions expressly authorized by this Agreement and not
prohibited by any Supplement or any Receivables Purchase Agreement, the Trustee
shall take no action reasonably likely to impair the interests of the Trust in
any Receivable now existing or hereafter created or to impair the value of any
Receivable now existing or hereafter created.
(e) Except as expressly provided in this Agreement and each Supplement
and Receivables Purchase Agreement, the Trustee shall have no power to vary the
corpus of the Trust including, without limitation, the power to (i) accept any
substitute obligation for a Receivable initially assigned to the Trust under
Section 2.1 or 2.6 hereof, (ii) add any other investment, obligation or security
to the Trust, except for an addition permitted under Section 2.6, (iii) withdraw
from the Trust any Receivables, except for a withdrawal permitted under Section
2.7, 9.2, 10.2, 12.1 or 12.2 or Article IV or subsections 2.4(d) or 2.4(e), or
(iv) Convey any interest in Receivables, except pursuant to a Receivables
Purchase Agreement.
(f) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day required to be performed by the Paying Agent or the Transfer Agent
and Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated promptly to perform such obligation, duty or agreement in the manner
so required.
(g) If the Seller has agreed to transfer any of its credit card
receivables (other than the Receivables) to another Person, upon the written
request of the Seller, and 10 Business Days' notice to each Purchaser
Representative, the Trustee shall enter into such intercreditor agreements with
the transferee of such receivables as are customary and necessary to identify
separately the rights, if any, of the Trust and such other Person in the
Seller's credit card receivables, and shall provide to each Purchaser
Representative a copy of each such intercreditor agreement; provided, that the
Trustee shall not be required to enter into any intercreditor agreement which
could adversely affect the interests of the Certificateholders, the Receivables
Purchasers, or any Enhancement Provider, and, upon the request of the Trustee,
any Purchaser Representative or any Enhancement Provider, the Seller shall
deliver to it an Opinion of Counsel (with a copy to each Purchaser
Representative) on any matters relating to such intercreditor agreement,
reasonably requested by the Trustee, any Purchaser Representative or any
Enhancement Provider.
(h) The Trustee shall notify each Purchaser Representative and
Enhancement Provider of any Early Amortization Event of which a Responsible
Officer has actual knowledge, promptly upon obtaining such knowledge.
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Section 11.2 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 11.1 or in any Supplement or Receivables Purchase Agreement:
(a) the Trustee may conclusively rely on and shall be protected in
acting, or in refraining from acting, in accord with any written assignment of
Receivables in Additional Accounts, the initial report, the Monthly Servicer
Report, the annual Servicer's certificate, the monthly payment instructions, the
monthly Certificateholder's statement, any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented to
it pursuant to this Agreement by the proper party or parties; provided, that if
Spirit Inc. is not the Servicer at the time the Trustee receives any such paper
or document, the Trustee shall provide a copy of such document to the Seller;
(b) the Trustee may consult with counsel, and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, any Supplement, any Receivables
Purchase Agreement or any Enhancement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Investor Certificateholders or any Purchaser Representative unless
such Investor Certificateholders or Purchaser Representative shall have offered
and provided to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligations, upon
the occurrence of any Servicer Default (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, any Supplement or
any Receivables Purchase Agreement, and to use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of its own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement,
any Supplement or any Receivables Purchase Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any written assignment of Receivables in Additional
Accounts, the initial report, the Monthly Servicer Report, the annual Servicer's
certificate, the monthly payment instructions and notification to the Trustee,
the monthly Certificateholder's statement, any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing so to do
by Holders of Investor Certificates evidencing Undivided Trust Interests
aggregating more than 50% of the Investor Interest, any Purchaser Representative
or Enhancement Provider for any Series, in each case that could be adversely
affected thereby if the Trustee does not perform such acts;
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(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian to the extent not otherwise prohibited by any
Supplement or Receivables Purchase Agreement, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney or custodian appointed with reasonable care by it hereunder; and
(g) except as may be required by subsection 11.1(a), the Trustee shall
not be required to make any initial or periodic examination of any documents or
records related to the Receivables or the Accounts for the purpose of
establishing the presence or absence of defects or the compliance by the Seller
with its representations and warranties or for any other purpose.
Section 11.3 Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates)
or of any Receivable or related document. The Trustee in its individual capacity
shall not be accountable for the use or application by the Seller of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller in respect of the Receivables or
deposited in or withdrawn from the Collection Account, the Excess Funding
Account or any Series Account (or any other account hereafter established to
effectuate the transactions contemplated by the terms of this Agreement) by the
Servicer.
Section 11.4 Trustee May Own Certificates and Purchase Receivables. The
Trustee in its individual or any other capacity may become the owner or pledgee
of Investor Certificates, or may purchase Receivables Purchase Interests, with
the same rights as it would have if it were not the Trustee.
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the Trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer shall pay or reimburse the
Trustee (without reimbursement from the Collection Account, the Excess Funding
Account, any Series Account or otherwise) upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement except any such expense,
disbursement or advance as may arise from its own gross negligence or willful
misconduct and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.2, the provisions of this
Section 11.5 shall not apply to expenses, disbursements and advances made or
incurred by the Trustee in its capacity as Successor Servicer.
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The obligations of the Servicer under this Section 11.5 shall survive
the termination of the Trust and the resignation or removal of the Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee
hereunder (or, alternatively, a Person which is the direct or indirect parent
corporation of the Trustee) shall at all times be a corporation organized and
doing business under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
long-term unsecured debt rating of at least Baa3 by Moody's and BBB- by Standard
& Poor's, having, in the case of an entity that is subject to risk-based capital
adequacy requirements, risk-based capital of at least $50,000,000 or, in the
case of an entity that is not subject to risk-based capital adequacy
requirements, a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by federal or state authority and, prior to its
appointment hereunder, must be acceptable to each Purchaser Representative. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 11.6, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.6, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.7.
Section 11.7 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the Trust
hereby created by giving written notice thereof to the Seller, the Servicer,
each Enhancement Provider, the Rating Agencies and each Purchaser
Representative. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. Any successor Trustee shall not be an Affiliate
of any Purchaser Representative so long as any Certificate Series is
outstanding. The Servicer shall deliver a copy of such instrument to each
Purchaser Representative. Any such appointment shall be subject to the prior
written consent of each Purchaser Representative. If no successor trustee shall
have been so appointed and have accepted within 30 days after the giving of such
notice of resignation, the resigning Trustee, upon notice to the Seller, the
Servicer and each Purchaser Representative, may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.6 hereof and shall fail to resign after
written request therefor by the Seller, the Servicer or any Purchaser
Representative, or if at any time the Trustee shall be legally unable to act, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Seller, the Servicer or
any Purchaser Representative may, but shall not be required to, upon 10
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days' prior written notice to the others, remove the Trustee and then the
Servicer shall promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee. Any successor Trustee shall not
be an Affiliate of any Purchaser Representative so long as any Certificate
Series is outstanding. The Servicer shall deliver a copy of such instrument to
each Purchaser Representative. Any such appointment shall be subject to the
prior written consent of the Servicer, each Purchaser Representative and each
Enhancement Provider.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.8 hereof and any liability of the Trustee arising
hereunder shall survive such appointment of a successor trustee.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.7 hereof
shall execute, acknowledge and deliver to the Seller, the Servicer, each
Purchaser Representative and its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver to the successor trustee all documents and statements held by it
hereunder, and the Seller and the predecessor Trustee shall execute and deliver
such instruments requested by any Purchaser Representative or otherwise required
or contemplated hereunder or under any Supplement or Receivables Purchase
Agreement and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations. Thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, shall become fully vested with all the rights, powers, duties
and obligations of its predecessor hereunder and under each Supplement and
Receivables Purchase Agreement, with like effect as if originally named as
Trustee herein and therein.
(b) No successor trustee shall accept appointment as provided in this
Section 11.8 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 11.8, such successor trustee shall mail notice of such
succession hereunder to each Purchaser Representative, Rating Agency and
Enhancement Provider and to all Investor Certificateholders at their addresses
as shown in the Certificate Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person
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succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 11.6 hereof without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, any
Supplement or any Receivables Purchase Agreement, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust may at the time be located, the Trustee shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Investor Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 11.10,
such powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.6 and no notice to Certificateholders, Receivables Purchasers or any
Purchaser Representatives of the appointment of any co-trustee or separate
trustee shall be required under Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any laws of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this
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Agreement and the conditions of this Article XI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee and a copy thereof given to the Servicer and each Purchaser
Representative.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.11 Tax Return. In the event the Trust shall be required to
file tax returns, the Trustee, as soon as practicable after it is made aware of
such requirement, shall prepare or cause to be prepared any tax returns required
to be filed by the Trust and, to the extent possible, shall file such returns at
least five days before such returns are due to be filed. The Trustee is hereby
authorized to sign any such return on behalf of the Trust. The Servicer shall
also prepare or cause to be prepared all tax information required by law to be
distributed to Certificateholders or Receivables Purchasers and shall deliver
such information to the Trustee and each Purchaser Representative at least five
days prior to the date it is required by law to be distributed to
Certificateholders or Receivables Purchasers. The Servicer, upon request, shall
furnish the Trustee with all such information known to the Servicer as may be
reasonably required in connection with the preparation of all tax returns of the
Trust. In no event shall the Trustee or the Servicer be liable for any
liabilities, costs or expenses of the Trust, the Investor Certificateholders,
the Certificate Owners or the Receivables Purchasers arising under any tax law,
including without limitation federal, state, local or foreign income or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect thereto or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims without Possession of
Certificates. All rights of action and claims under this Agreement or any Series
may be prosecuted and enforced by the Trustee without the possession of any of
the Certificates or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee or agent. Any recovery of judgment shall, after provision for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable benefit of any Series
in respect of which such judgment has been obtained.
Section 11.13 Suits for Enforcement. (a) If a Servicer Default shall
occur and be continuing, the Trustee, in its discretion may, for the equal and
ratable benefit of the Investor Certificateholders (in accordance with their
Investor Interests) and the Receivables Purchasers
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(to the extent of their undivided interest in the Receivables), subject to the
provisions of Sections 10.1 and 11.14, proceed to protect and enforce its rights
and the rights of the Investor Certificateholders and Certificate Owners of any
Certificate Series and the Receivables Purchasers of any Receivables Purchase
Series under this Agreement or any Supplement or Receivables Purchase Agreement
by a suit, action or proceeding in equity or at law or otherwise, whether for
the specific performance of any covenant or agreement contained in this
Agreement or any Supplement or Receivables Purchase Agreement, or in aid of the
execution of any power granted in this Agreement or any Supplement or
Receivables Purchase Agreement, or for the enforcement of any other legal,
equitable or other remedy as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee, the
Investor Certificateholders or Certificate Owners of any Certificate Series or
the Receivables Purchasers of any Receivables Purchase Series.
(b) If the FDIC, the RTC or any equivalent governmental agency or
instrumentality or any designee of any of them shall have been appointed as
receiver, conservator, assignee, trustee in bankruptcy or reorganization,
liquidator, sequestrator or custodian with respect to the Originator or any
other Person shall have been appointed as receiver, conservator, assignee,
trustee in bankruptcy or reorganization, liquidator, sequestrator or custodian
with respect to the Seller (either with respect to the Originator or the Seller,
a "Receiver"), the Trustee shall, irrespective of whether the principal of any
Series of Certificates or Receivables Purchase Interests shall then be due and
payable:
(i) unless prohibited by applicable law or regulation or
unless under FIRREA or other applicable law, the Receiver is required
to participate in the process as a defendant or otherwise, promptly
take or cause to be taken any and all necessary or advisable
commercially reasonable action as a secured creditor on behalf of the
Certificateholders, any Receivables Purchasers or any Enhancement
Provider to recover, repossess, collect or liquidate the Receivables or
any other assets of the Trust on a "self-help" basis or otherwise and
exercise any rights or remedies of a secured party under the applicable
UCC and take any other appropriate action to protect and enforce the
rights and remedies of the Trustee and the Certificateholders, the
Receivables Purchasers and any Enhancement Provider;
(ii) promptly, and in any case within any applicable claims
bar period specified under FIRREA or other applicable law, file and
prove a claim or claims under FIRREA or otherwise, by filing proofs of
claim, protective proofs of claim or otherwise, for the whole amount of
unpaid principal and interest in respect of the Certificates and the
Receivables Purchase Interests and/or the whole amount due any
Enhancement Provider and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
and the Certificateholders, the Receivables Purchasers and any
Enhancement Providers allowed in any judicial, administrative,
corporate or other proceedings relating to the Originator, the Seller
or either of their creditors or property, including any actions
relating to the preservation of deficiency claims or for the protection
against loss of any claim in the event the Trustee's or the
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Certificateholders', the Receivables Purchasers', or any Enhancement
Provider's status as secured creditors are successfully challenged; and
(iii) collect and receive any moneys or other property
payable or deliverable on any such claims and distribute all amounts
with respect to the claims of the Certificateholders, the Receivables
Purchasers and any Enhancement Provider to the Certificateholders, the
Receivables Purchasers and any Enhancement Provider, as applicable.
(c) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any
Certificateholder, Certificate Owner or Receivables Purchaser any plan of
reorganization, arrangement, adjustment or composition affecting any interests
in the Receivables or the rights of any owner thereof, or to authorize the
Trustee to vote in respect of the claim of any Certificateholder, Certificate
Owner or Receivables Purchaser in any such proceeding.
Section 11.14 Rights of Purchaser Representatives and Investor
Certificateholders to Direct Trustee. (a) The Purchaser Representatives (or,
with respect to any remedy, trust or power that does not relate to all
Receivables Purchase Series, the Purchaser Representatives for all Receivables
Purchase Series to which such remedy, trust or power relates) and Holders of
Investor Certificates evidencing Undivided Trust Interests aggregating more than
50% of the aggregate Investor Interests (or with respect to any remedy, trust or
power that does not relate to all Series, 50% of the aggregate Investor Interest
of the Investor Certificates of all Certificate Series to which such remedy,
trust or power relates) shall have the right to direct the Trustee (i) with
respect to the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, and (ii) to exercise any right, remedy or power provided to
Investor Certificateholders of a Certificate Series pursuant to the related
Supplement or Receivables Purchasers of a Receivables Purchase Series (or their
Purchaser Representative) pursuant to the related Receivables Purchase
Agreement, and the Trustee shall so act; provided, however, that, subject to
Section 11.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Investor Certificateholders or
Receivables Purchasers not parties to such direction; and provided, further,
that nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction of the Purchaser Representatives or such Holders of Investor
Certificates.
(b) In connection with any action taken by the Trustee pursuant to
instructions given in accordance with paragraph (a) above, any legal counsel
retained by the Trustee shall be acceptable to each Series and the Trustee shall
notify promptly each Purchaser Representative of such action. In addition, any
Purchaser Representative may, at its own cost, elect to participate
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in such action along with the Trustee, which participation may include retaining
separate counsel.
Section 11.15 Representations and Warranties of the Trustee. The
Trustee, in its individual capacity, represents and warrants that:
(i) the Trustee is a national banking association
authorized to engage in the business of banking under the laws
of the United States of America;
(ii) the Trustee has full power, authority and
right to execute, deliver and perform this Agreement, and has
taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement; and
(iii) this Agreement has been duly executed and
delivered by the Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee shall
maintain at its expense in New York, New York or Philadelphia, Pennsylvania an
office or offices, or agency or agencies, where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served. The
Trustee initially appoints First Union National Bank, 123 South Broad Street,
Philadelphia, Pennsylvania 19109, as its office for such purposes. The Trustee
shall give prompt written notice to the Servicer, Certificateholders, each
Purchaser Representative and each Enhancement Provider of any change in the
location of the Certificate Register or any such office or agency.
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust.
(a) The Trust and the respective obligations and responsibilities of
the Seller, the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Receivables Purchasers and
Certificateholders as hereinafter set forth) shall terminate, except with
respect to the duties described in Sections 7.4, 8.4 and 11.5 and subsection
12.3(b), on the Trust Termination Date; provided, however, that the Trust shall
not terminate on the date specified in clause (b)(i) of the definition of "Trust
Termination Date" if each of the Servicer and the Holder of the Exchangeable
Seller Certificate notify the Trustee in writing, not later than 5 Business Days
preceding such date, that they desire that the Trust not terminate on such date,
which notice (such notice, a "Trust Extension") shall specify the date on which
the Trust shall terminate (such date, the "Extended Trust Termination Date");
provided, however, that the Extended Trust Termination Date shall be not later
than December 24, 2025. The Servicer and the Holder of the Exchangeable Seller
Certificate may, on any date following the Trust Extension, so long as no
Certificate Series is outstanding and no Receivables Purchase
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Interests are outstanding, deliver a notice in writing to the Trustee changing
the Extended Trust Termination Date.
(b) In the event that (i) the Trust has not terminated by the last
Distribution Date occurring in the second month preceding the Trust Termination
Date, and (ii) (A) the Investor Interest and, if applicable, the Enhancement
Invested Amount of any Certificate Series or the Receivables Purchase Interest
of any Receivables Purchase Series (after giving effect to all transfers,
withdrawals, deposits and drawings to occur on such date and the payment of
principal on any Series of Certificates or with respect to any Receivables
Purchase Interest to be made on the related Distribution Date during such month
pursuant to Article IV, any Supplement or any Receivables Purchase Agreement)
are greater than zero or (B) Loss Amounts allocated to any Series to the extent
such amounts can be reimbursed pursuant to the related Supplement or Receivables
Purchase Agreement remain unreimbursed, or (C) any party to a Supplement or
Receivables Purchase Agreement is owed accrued interest, fees or expenses, the
Servicer shall sell within 30 days after such Distribution Date all the
Receivables. The proceeds of any sale shall be treated as Collections on the
Receivables and shall be allocated and deposited in accordance with Article IV,
each Supplement and each Receivables Purchase Agreement; provided, however, that
the Trustee shall determine conclusively in its sole discretion the amount of
such proceeds which are allocable to Finance Charge Receivables and the amount
of such proceeds which are allocable to Principal Receivables. During such
thirty day period, the Servicer shall continue to collect payments on the
Receivables and allocate and deposit such payments in accordance with the
provisions of Article IV.
(c) All principal, interest, fees and expenses with respect to any
Series shall be due and payable no later than the applicable Series Termination
Date. Unless otherwise provided in a Supplement or Receivables Purchase
Agreement, in the event that the Investor Interest and, if applicable, the
Enhancement Invested Amount of any Certificate Series, or any Receivables
Purchase Interest is greater than zero on its Series Termination Date (after
giving effect to all transfers, withdrawals, deposits and drawings to occur on
such date and the payment of principal, interest and fees to be made on such
Series on such date), the Trustee will sell or cause to be sold, and pay the
proceeds to all Certificateholders of such Certificate Series or Receivables
Purchasers of such Receivables Purchase Interest all pro rata in final payment
of all principal of and accrued interest on such Series, and all accrued and
unpaid fees and expenses and unreimbursed Loss Amounts (to the extent such
amounts can be reimbursed pursuant to the related Supplement or Receivables
Purchase Agreement) under the related Supplement or Receivables Purchase
Agreement, an amount of Principal Receivables and the related Finance Charge
Receivables (or interests therein) up to 110% of the sum of the Investor
Interest and the Enhancement Invested Amount, if any, or the Receivables
Purchase Interest of such Series at the close of business on such date;
provided, that such amount shall include any unreimbursed Loss Amounts payable
to such Certificateholders or Receivables Purchasers to the extent such amounts
can be reimbursed pursuant to the related Supplement or Receivables Purchase
Agreement. The Seller shall be permitted to purchase such Receivables in such
case and shall have a right of first refusal with respect thereto. Any proceeds
of such sale in excess of such principal, interest, fees and expenses and
unreimbursed Loss Amounts paid, shall be paid to the
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Holder of the Exchangeable Seller Certificate. Upon such Series Termination Date
with respect to the applicable Series, final payment of all amounts allocable to
any Investor Certificates or, if applicable, Enhancement Invested Amounts of
such Certificate Series or Receivables Purchase Interests of such Receivables
Purchasers shall be made in the manner provided in Section 12.3.
Section 12.2 Optional Purchase.
(a) If so provided in any Supplement or any Receivables Purchase
Agreement, the Seller may, but shall not be obligated to, cause a final
distribution to be made in respect of the related Series on a Distribution Date
specified in such Supplement or Receivables Purchase Agreement by depositing
into the Collection Account or the applicable Series Account, not later than
such Distribution Date, for application in accordance with Section 12.3 (in the
case of a Certificate Series) or as provided in such Receivables Purchase
Agreement, the amount specified in such Supplement or Receivables Purchase
Agreement.
(b) The amount deposited pursuant to subsection 12.2(a) shall be paid
on the related Distribution Date to the Investor Certificateholders of the
related Certificate Series pursuant to Section 12.3 or Receivables Purchasers of
the related Receivables Purchase Series. All Certificates of a Certificate
Series which are to be redeemed by the Trust pursuant to subsection 12.2(a)
shall be canceled by the Transfer Agent and Registrar and be disposed of in a
manner satisfactory to the Trustee and the Seller. The Investor Interest of each
Certificate Series which is redeemed by the Trust pursuant to subsection
12.2(a), and the Receivables Purchase Interests which are repurchased by the
Trust pursuant to subsection 12.2(a), shall, for the purposes of the definition
of "Seller Interest," be deemed to be equal to zero on the Distribution Date
following the making of the deposit, and the Seller Interest shall thereupon be
deemed to have been increased by the Investor Interest of such Certificate
Series or the repurchased Receivables Purchase Interest.
Section 12.3 Final Payment with Respect to Any Certificate Series.
(a) Written notice of any termination, specifying the Distribution Date
upon which the Investor Certificateholders of any Certificate Series may
surrender their Certificates for payment of the final distribution with respect
to such Certificate Series and cancellation, shall be given (subject to at least
two Business Days' prior notice from the Servicer to the Trustee) by the Trustee
to Investor Certificateholders of such Certificate Series mailed not later than
the fifth day of the month of such final distribution (or in the manner provided
by the Supplement relating to such Certificate Series) specifying (i) the
Distribution Date (which shall be the Distribution Date in the month (x) in
which the deposit is made pursuant to subsection 2.4(e), 9.2(b), 10.2(a), or
12.2(a) of this Agreement or such other section as may be specified in the
related Supplement, or (y) in which the related Series Termination Date occurs)
upon which final payment of such Investor Certificates will be made upon
presentation and surrender of such Investor Certificates at the office or
offices therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Investor Certificates at the office or offices
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therein specified. The Trustee shall give such notice to the Transfer Agent and
Registrar and the Paying Agent at the time such notice is given to such Investor
Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to subsection
12.1(a) or the occurrence of the Series Termination Date with respect to any
Certificate Series, all funds then on deposit in the Collection Account, the
Excess Funding Account or any Series Account applicable to the related
Certificate Series shall continue to be held in trust for the benefit of the
Investor Certificateholders of the related Certificate Series, and the Paying
Agent or the Trustee shall pay such funds to the Certificateholders of the
related Certificate Series upon surrender of their Certificates. In the event
that all of the Investor Certificateholders of any Certificate Series shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Investor Certificateholders of such Certificate
Series upon receipt of the appropriate records from the Transfer Agent and
Registrar to surrender their Certificates for cancellation and receive the final
distribution with respect thereto. The Trustee and the Paying Agent shall pay to
the Seller upon written request any funds held by them for the payment of
principal or interest which remains unclaimed for two years. After payment to
the Seller, Investor Certificateholders entitled to the such funds may seek
recovery only from the Seller as general creditors unless an applicable
abandoned property law designates another Person.
(c) All Certificates surrendered for payment of the final distribution
with respect to such Certificates and cancellation shall be canceled by the
Transfer Agent and Registrar and be disposed of in a manner satisfactory to the
Trustee and the Seller.
Section 12.4 Termination of Rights of Holder of Exchangeable Seller
Certificate. Upon the termination of the Trust pursuant to Section 12.1, and
after payment of all amounts due hereunder on or prior to such termination and
the surrender of the Exchangeable Seller Certificate, the Trustee shall execute
a written reconveyance substantially in the form of Exhibit J pursuant to which
it shall reconvey to the Holder of the Exchangeable Seller Certificate (without
recourse, representation or warranty) all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, all monies due
or to become due with respect thereto, all Collections, all Recoveries, all
rights, remedies, powers and privileges of the Trust with respect to the
Receivables, all rights, remedies, powers and privileges of the Trust under the
Purchase Agreement and all proceeds of the foregoing, except for amounts held by
the Trustee pursuant to subsection 12.3(b). The Trustee shall execute and
deliver such instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by the Holder of the Exchangeable
Seller Certificate to vest in such Holder all right, title and interest which
the Trust had in the Receivables.
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Section 12.5 Defeasance. Notwithstanding anything to the contrary in
this Agreement or any Supplement:
(a) The Seller and any Affiliate of Seller that is a Holder of the
Exchangeable Seller Certificate may at Seller's option be discharged from its
obligations hereunder with respect to any Certificate Series or all outstanding
Certificate Series (the "Defeased Series") on the date the applicable conditions
set forth in subsection 12.5(c) are satisfied (a "Defeasance"); provided,
however, that the following rights, obligations, powers, duties and immunities
shall survive with respect to the Defeased Series until otherwise terminated or
discharged hereunder: (i) the rights of the Holders of Investor Certificates of
the Defeased Series to receive, solely from the trust fund provided for in
subsection 12.5(c), payments in respect of principal of and interest on such
Investor Certificates when such payments are due; (ii) the right of any
Enhancement Provider to the repayment of any amount due to it under the
applicable Enhancement and Supplement, including interest thereon; (iii) the
Seller's obligations with respect to such Certificates under Sections 6.3 and
6.4; (iv) the rights, powers, trusts, duties, and immunities of the Trustee, the
Paying Agent and the Registrar hereunder; and (v) this Section 12.5.
(b) Subject to Section 12.5(c), the Seller at its option may cause
Collections allocated to the Defeased Series and available to purchase Principal
Receivables to be applied to purchase Permitted Investments rather than
Principal Receivables.
(c) The following shall be the conditions to Defeasance under
subsection 12.5(a):
(i) The Seller irrevocably shall have deposited or caused to
be deposited with the Trustee (such deposit to be made from other than
the Seller's or any Affiliate of the Seller's funds), under the terms
of an irrevocable trust agreement in form and substance satisfactory to
the Trustee, as trust funds in trust for making the payments described
below, (A) Dollars in an amount, or (B) Permitted Investments which
through the scheduled payment of principal and interest in respect
thereof will provide, not later than the due date of payment thereon,
money in an amount, or (C) a combination thereof, in each case
sufficient to pay and discharge, and which shall be applied by the
Trustee to pay and discharge, all remaining scheduled interest and
principal payments on all outstanding Investor Certificates of the
Defeased Series on the dates scheduled for such payments in this
Agreement and the applicable Supplements and all amounts owing to the
Enhancement Providers with respect to the Defeased Series;
(ii) prior to its first exercise of its right pursuant to this
Section 12.5 with respect to a Defeased Series to substitute money or
Permitted Investments for Receivables, if any Series of Investor
Certificates are outstanding that were characterized as debt at the
time of their issuance, the Seller shall have delivered to the Trustee
a Tax Opinion with respect to such deposit and termination of
obligations and (in any case) an Opinion of Counsel to the effect that
such deposit and termination of obligations will not result in the
Trust being required to register as an "investment company" within the
meaning of the Investment Company Act;
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(iii) the Seller shall have delivered to the Trustee and any
Enhancement Provider an Officer's Certificate of the Seller stating the
Seller reasonably believes that such deposit and termination of
obligations will not, based on the facts known to such officer at the
time of such certification, then cause an Early Amortization Event with
respect to any Series or any event that, with the giving of notice or
the lapse of time, would result in the occurrence of an Early
Amortization Event with respect to any Series; and (iv) the Rating
Agency Condition shall have been satisfied and the Seller shall have
delivered copies of such written notice to the Servicer and the
Trustee.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
(a) This Agreement or any Supplement may be amended in writing from
time to time by the Servicer, the Seller, the Holder of the Exchangeable Seller
Certificate and the Trustee upon 10 Business Days' notice to each Purchaser
Representative (along with a copy of the form of the proposed amendment),
without the consent of any Purchaser Representative, Investor Certificateholder
or Receivables Purchaser; provided, that such action shall not, as evidenced by
an Opinion of Counsel for the Seller addressed and delivered to the Trustee and
each Purchaser Representative, adversely affect in any material respect the
interests of any Investor Certificateholder, any Receivables Purchaser or any
Enhancement Provider; provided, further, that the Rating Agency Condition shall
have been satisfied with respect to such amendment.
In addition, from and after the Series Termination Date for all
Certificate Series outstanding prior to the Effective Date, the Pooling
Agreement or any Supplement may also be amended in writing from time to time by
the Servicer, the Seller, the Holder of the Exchangeable Seller Certificate and
the Trustee upon 10 Business Days' notice to each Purchaser Representative
(along with a copy of the form of the proposed amendment), without the consent
of any Purchaser Representative, Investor Certificateholder, or Receivables
Purchaser if the Seller shall have provided the Trustee with: (i) an Opinion of
Counsel to the effect that such amendment or modification would (A) permit the
Trust or a relevant portion thereof to be treated as a "financial asset
securitization investment trust" and (B)(1) would not cause the Trust to be
classified, for Federal income tax purposes, as an association (or publicly
traded partnership) taxable as a corporation and (2) would not cause or
constitute an event in which gain or loss would be recognized by any Investor
Holder; (ii) a certificate that such amendment or modification would not
materially and adversely affect any Investor Certificateholder, Receivables
Purchaser or any Enhancement Provider; provided that no such amendment shall be
deemed effective without the Trustee's consent, if the Trustee's rights, duties
and obligations hereunder are thereby modified; and (iii) evidence of
satisfaction of the Rating Agency Condition.
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(b) This Agreement or any Supplement may also be amended in writing
from time to time by the Servicer, the Seller, the Holder of the Exchangeable
Seller Certificate and the Trustee upon 10 Business Days' notice to each
Purchaser Representative (along with a copy of the form of the proposed
amendment), with the consent of each Purchaser Representative, and the Holders
of Investor Certificates evidencing Undivided Trust Interests aggregating not
less than 66 2/3% of the Investor Interest, of each outstanding Series adversely
affected by such amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
any Supplement or modifying in any manner the rights of Investor
Certificateholders or Receivables Purchasers of any outstanding Series;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, distributions that are required to be made on
any Investor Certificates of any such Certificate Series without the consent of
each Investor Certificateholder of such Certificate Series affected thereby,
(ii) change the definition of or the manner of calculating the Investor
Interest, the Loss Amount or the Investor/Purchaser Percentage without the
consent of each Investor Certificateholder of all Certificate Series adversely
affected thereby, or (iii) reduce the aforesaid percentage required to consent
to any such amendment, without the consent of each Investor Certificateholder of
each Certificate Series adversely affected thereby. Any amendment to be effected
pursuant to this Article XIII shall be deemed to affect adversely all
outstanding Series, other than any Series with respect to which such action
shall not, as evidenced by an Opinion of Counsel as described in Section
13.1(a), adversely affect in any material respect the interests of such Series.
The Trustee may, but shall not be obligated to, enter into any such Amendment
which affects the Trustee's rights, duties or immunities under this Agreement or
otherwise.
(c) Notwithstanding anything in this Section 13.1 to the contrary, the
Supplement with respect to any Certificate Series may be amended on the terms
and in accordance with the procedures provided in such Supplement and the
Receivables Purchase Agreement with respect to any Receivables Purchase Series
may be amended on the terms and in accordance with the procedures provided in
such Receivables Purchase Agreement.
(d) Promptly after the execution of any amendment to this Agreement or
any Supplement, the Servicer shall furnish notification of the substance of such
amendment to each Purchaser Representative, each Investor Certificateholder of
each Certificate Series adversely affected thereby, each Enhancement Provider,
and each Rating Agency and a copy of such amendment to each Purchaser
Representative.
(e) It shall not be necessary for the consent of Investor
Certificateholders or Receivables Purchasers under this Section 13.1 to approve
the particular form of any proposed amendment, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Investor Certificateholders or Receivables Purchasers shall be subject to such
reasonable requirements as the Trustee may prescribe.
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(f) Any Supplement executed and delivered pursuant to Section 6.9, any
Receivables Purchase Agreement executed and delivered pursuant to Section 6.18,
and any amendment to Schedule 1 in connection the addition to or removal of
Receivables from the Trust as provided in Sections 2.6 and 2.7, executed in
accordance with the provisions hereof, shall not be considered amendments to
this Agreement for the purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, the Trustee may request an
Opinion of Counsel from the Seller or Servicer to the effect that the amendment
complies with all requirements of this Agreement.
Section 13.2 Protection of Right, Title and Interest to Trust.
(a) The Servicer shall cause this Agreement, each Supplement, each
Receivables Purchase Agreement, and all certificates of assignment, agreements
and documents, and all amendments hereto and thereto and/or all financing
statements and continuation statements and any other necessary documents
covering the Trust's and the Certificateholders' right, title and interest to
the property comprising the Trust and the Receivables Purchasers' right, title
and interest in the Receivables to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Certificateholders or the Trust, as the case
may be, hereunder to all property comprising the Trust, and the right, title and
interest of the Receivables Purchasers hereunder to the Receivables. The
Servicer shall deliver to the Trustee file-stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above (with a copy
thereof to each Purchaser Representative), as soon as available following such
recording, registration or filing. The Seller shall cooperate fully with the
Servicer in connection with the obligations set forth above and shall execute
any and all documents reasonably required to fulfill the intent of this
subsection 13.2(a).
(b) Within 30 days after the Seller or the Trustee makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a)
above, any Supplement or any Receivables Purchase Agreement materially
misleading within the meaning of Section 9-402(7) of the UCC, the Seller or the
Trustee, as applicable, shall give the Trustee or the Seller, as applicable, any
Enhancement Provider and the Purchaser Representatives notice of any such change
and shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's interest in the property comprising the
Trust and the perfection of the Receivables Purchasers' interest in the
Receivables and the proceeds thereof as contemplated by Section 2.1 hereof.
(c) Each of the Seller and the Servicer shall give the Trustee and each
Purchaser Representative prompt written notice of any relocation of any office
from which it services Receivables or keeps records concerning the Receivables
or of its principal executive office and whether, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
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new financing statement and shall file such financing statements or amendments
as may be necessary to continue the perfection of the interests in the
Receivables and the proceeds thereof. Each of the Seller and the Servicer shall
at all times maintain each office from which it services Receivables and its
principal executive office within the United States of America.
(d) The Servicer will deliver to the Trustee on or before March 31 of
each year, beginning with March 31, 1995 an Opinion of Counsel, substantially in
the form of Exhibit K addressed to the Trustee, each Enhancement Provider, and
each Purchaser Representative.
Section 13.3 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust, nor shall such death or incapacity
entitle such Certificateholders or heirs to claim an accounting or to take any
action or commence any proceeding in any court for a partition or winding up of
the Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) Except as set forth in this Agreement or any Supplement, no
Certificateholder shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement or any Supplement pursuant to any
provision hereof or thereof.
(c) No Investor Certificateholder shall have any right by virtue of any
provisions of this Agreement or any Supplement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement
or any Supplement, unless such Investor Certificateholder previously shall have
made, and unless the Holders of Investor Certificates evidencing more than 50%
of the aggregate unpaid principal amount of all Certificates (or, with respect
to any such action, suit or proceeding that does not relate to all Series, 50%
of the aggregate unpaid principal amount of all Series to which such action,
suit or proceeding relates), shall have made, a request in writing to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 30 days after such request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Certificateholder, Receivables
Purchaser and the Trustee, that no one or more Investor Certificateholders shall
have the right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement or any Supplement to affect,
disturb or prejudice the rights of any other Investor Certificateholders or
Receivables Purchasers, or to obtain or seek to obtain priority over or
preference to any other such Investor Certificateholders or Receivables
Purchaser, or to enforce any right under this Agreement or any Supplement,
except in the manner
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herein provided and for the equal, ratable and common benefit of all Investor
Certificateholders and Receivables Purchasers except as otherwise expressly
provided in this Agreement or any Supplement with respect to any Enhancement
applicable to any Certificate Series or Receivables Purchase Series. For the
protection and enforcement of the provisions of this Section 13.3, each and
every Certificateholder, Receivables Purchaser and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 13.4 Limitation on Rights of Receivables Purchasers and
Purchaser Representatives. (a) Except as expressly provided in this Agreement,
neither any Receivables Purchaser nor any Purchaser Representative shall have
any right to vote, or in any manner otherwise control the operation and
management of the Trust.
(b) The Receivables Purchasers and any Purchaser Representative shall
not have the right to institute any suit, action or proceeding in equity or at
law against the Servicer or the Seller for the enforcement of this Agreement or
any Receivables Purchase Agreement, except to the extent that such Receivables
Purchase Agreement creates independent and nonduplicative rights against the
Seller or the Servicer, unless any Purchaser Representative previously shall
have (i) made a request in writing to the Trustee to institute such action, suit
or proceeding and (ii) offered and provided to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities to be incurred by it in
compliance with such request, and the Trustee, shall either have refused to
institute any such suit, action or proceeding or, for 15 days after such request
and offer of security or indemnity, shall have neglected to institute any such
action, suit or proceeding.
(c) It is understood and intended, and upon the purchase of each
Receivables Purchase Interest the related Purchaser Representative and the
related Receivables Purchaser shall be deemed to have expressly covenanted and
agreed with every other Receivables Purchaser and Investor Certificateholder and
the Trustee, that the Receivable Purchase Interests and the Investor Interests
shall rank pari passu among one another and amongst themselves (except for any
Enhancement that may apply to only the Receivables Purchasers or any Series of
Investor Certificates) and that neither such Purchaser Representative nor any
Receivables Purchaser shall have any right hereunder or under a Receivables
Purchase Agreement (i) to surrender, waive, impair, disturb or prejudice the
rights of the holders of any other of the Receivables Purchase Interests or the
Investor Certificates, (ii) to obtain or seek to obtain priority over or
preference to any other such Receivables Purchaser or Investor Certificateholder
or (iii) to enforce any right under this Agreement or any Receivables Purchase
Agreement against the Servicer or the Seller, except in the manner herein
provided and for the equal, ratable and common benefit of all Receivables
Purchasers and Investor Certificateholders, except as otherwise expressly
provided in this Agreement and except for any direct rights against the Seller
or Servicer that any Receivables Purchaser may have under the Receivables
Purchase Agreement. For the protection and enforcement of the provisions of this
section, each and every Receivables Purchaser and Investor Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
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Section 13.5 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 13.6 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at, sent by facsimile to, sent by courier at or mailed by registered
mail, return receipt requested, (a) in the case of the Seller, to Charming
Shoppes Receivables Corp., c/o Charming Shoppes, Inc., 450 Winks Lane, Bensalem,
Pennsylvania 19020, Attention: General Counsel, (b) in the case of the Servicer,
to Spirit Inc., c/o Charming Shoppes, Inc., 450 Winks Lane, Bensalem,
Pennsylvania 19020, Attention: General Counsel, (c) in the case of the Trustee,
to the Corporate Trust Office, (d) in the case of the Enhancement Provider for a
particular Series, to the address, if any, specified in the related Supplement
or Receivables Purchase Agreement, (e) in the case of the Rating Agency for a
particular Series, to the address, if any, specified in the related Supplement
or Receivables Purchase Series or (f) in the case of the Purchaser
Representative for a particular Receivables Purchase Series, to the address, if
any, specified in the related Receivables Purchase Agreement. Unless otherwise
provided with respect to any Certificate Series in the related Supplement, any
notice required or permitted to be mailed to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such Certificateholder
as shown in the Certificate Register or, with respect to any notice required or
permitted to be provided to Holders of Bearer Certificates, by publication in
the manner provided in the related Supplement. If and so long as any Series is
listed on the Luxembourg Stock Exchange and such exchange shall so require, any
notice to Investor Certificateholders shall be published in an authorized
newspaper of general circulation in Luxembourg within the time period prescribed
in this Agreement. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.
Section 13.7 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders thereof or of the Receivables Purchasers
hereunder.
Section 13.8 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.2, this Agreement may not be
assigned by the Seller or the Servicer without the prior written consent of each
Purchaser Representative and the Holders of Investor Certificates evidencing
Undivided Trust Interests aggregating not less than 66 2/3% of the Investor
Interest of each Certificate Series on a Series by Series basis.
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Section 13.9 Certificates Non-Assessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the Undivided Trust
Interests represented by the Certificates shall be non-assessable for any losses
or expenses of the Trust or for any reason whatsoever, and that Certificates
upon authentication thereof by the Trustee pursuant to Sections 2.1 and 6.2 are
and shall be deemed fully paid.
Section 13.10 Further Assurances. The Seller and the Servicer agree to
do and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the Trustee and any
Purchaser Representative more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
Section 13.11 Non-petition Covenant. Notwithstanding any prior
termination of this Agreement, the Servicer, the Enhancement Provider, any
Holder of the Exchangeable Seller Certificate, the Trustee, each Purchaser
Representative and (with respect to the Trust only) the Seller, shall not, prior
to the date which is one year and one day after the last day on which any
Investor Certificate shall have been outstanding, acquiesce, petition or
otherwise invoke or cause the Trust or the Seller to invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against the Trust or the Seller under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or the
Seller or any substantial part of its property or ordering the winding up or
liquidation of the affairs of the Trust or the Seller.
Section 13.12 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee, any Enhancement
Provider, any Purchaser Representative, the Investor Certificateholders or the
Receivables Purchasers, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, and privileges provided by law.
Section 13.13 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 13.14 Third-Party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Receivables Purchasers, the Purchaser Representatives and, to the extent
provided in the related Supplement or Receivables Purchase Agreement, to any
Enhancement Provider named therein, and their respective successors and
permitted assigns. Except as otherwise provided in this Article XIII, no other
Person shall have any right or obligation hereunder.
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Section 13.15 Actions by Certificateholders. (a) Whenever in this
Agreement a provision is made that an action may be taken or a notice, demand or
instructions given by Investor Certificateholders, such action, notice or
instruction may be taken or given by any Investor Certificateholder, unless such
provision requires a specific percentage of Investor Certificateholders. (b) Any
request, demand, authorization, direction, notice, consent, waiver or other act
by a Certificateholder shall bind such Certificateholder and every subsequent
holder of such Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done or omitted
to be done by the Trustee or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
Section 13.16 Rule 144A Information. For so long as any of the Investor
Certificates of any Certificate Series are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, each of the Seller, the
Servicer, the Trustee and the Enhancement Provider for such Certificate Series
agree to cooperate with each other to provide to any Investor Certificateholders
of such Certificate Series and to any prospective purchaser of Certificates
designated by such an Investor Certificateholder upon the request of such
Investor Certificateholder or prospective purchaser, any information required to
be provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act.
Section 13.17 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement, together with each Supplement and Receivables
Purchase Agreement, sets forth the entire understanding of the parties relating
to the subject matter hereof, and all prior understandings, written or oral, are
superseded by this Agreement. This Agreement may not be modified, amended,
waived or supplemented except as provided herein.
Section 13.18 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 13.19 Inconsistent Provisions. To the extent that any provision
in any Supplement or any Receivables Purchase Agreement or in any certificate or
document delivered in connection with any Supplement or any Receivables Purchase
Agreement is inconsistent with any provision under this Agreement, or in any
circumstance in which it is unclear whether such Supplement or Receivables
Purchase Agreement or this Agreement shall control, the provisions contained in
such Supplement or Receivables Purchase Agreement (or such certificate or other
document) shall control with respect to the related Series.
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
CHARMING SHOPPES RECEIVABLES CORP., as Seller
By:__________________________________
Name: Eric M. Specter
Title: President
Address: c/o Charming Shoppes
450 Winks Lane
Bensalem, PA 19020
Attention: Legal Department
Facsimile: (215) 638-6919
Confirmation: (215) 638-6954
SPIRIT OF AMERICA, INC.,
Servicer
By:__________________________________
Name: Kirk R. Simme
Title: President
Address: c/o Charming Shoppes
450 Winks Lane
Bensalem, PA 19020
Attention: Legal Department
Facsimile: (215) 638-6919
Confirmation: (215) 638-6954
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FIRST UNION NATIONAL BANK, Trustee
By:__________________________________
Name: George Rayzis
Title: Vice President
Address: 123 South Broad Street
Philadelphia, Pennsylvania 19109
Attention: Corporate Trust Department
Facsimile: (215) 985-7290
Confirmation: (215) 985-7321
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EXHIBIT A
FORM OF EXCHANGEABLE SELLER CERTIFICATE
No. 1 One Unit
CHARMING SHOPPES MASTER TRUST
ASSET BACKED CERTIFICATE
THIS CERTIFICATE WAS ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE ACT), AND MAY BE SOLD ONLY PURSUANT TO A
REGISTRATION STATEMENT EFFECTIVE UNDER THE ACT OR AN EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE ACT. IN ADDITION, THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. A COPY OF THE POOLING AND SERVICING AGREEMENT WILL
BE FURNISHED TO THE HOLDER OF THIS CERTIFICATE BY THE TRUSTEE UPON WRITTEN
REQUEST.
This Certificate represents an
undivided interest in the
Charming Shoppes Master Trust
Evidencing an undivided interest in a Trust, the corpus of which consists of a
portfolio of receivables now existing or hereafter created under selected
revolving credit card accounts generated or acquired by Spirit of America
National Bank and conveyed to Charming Shoppes Receivables Corp. and other
assets and interests constituting the Trust under the Pooling and Servicing
Agreement described below.
(Not an interest in or an obligation of Charming Shoppes Receivables
Corp., Spirit of America National Bank, Spirit of America, Inc., Charming
Shoppes, Inc. or any Affiliate thereof.)
This certifies that Charming Shoppes Receivables Corp. is the
registered owner of an undivided interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of receivables (the "Receivables") now existing
or hereafter created under selected credit card accounts (the "Accounts")
originated by Spirit of America National Bank (the "Originator"), a national
banking association, that have been conveyed to Charming Shoppes Receivables
Corp. (the "Seller"), a Delaware corporation, all monies due or to become due
with respect thereto, all Collections, all Recoveries, certain rights against
the Originator with respect thereto, such funds
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as from time to time are deposited in the Collection Account and any Series
Account and the rights to any Enhancement with respect to any Series and all
proceeds of the foregoing; provided, that the corpus of the Trust shall not
include any undivided percentage ownership interest in Receivables to the extent
Conveyed by the Trust pursuant to any Receivables Purchase Agreement; such
corpus more fully described pursuant to the Second Amended and Restated Pooling
and Servicing Agreement dated as of November 25, 1997 as amended as of ________
___, 1999 (the "Pooling and Servicing Agreement") between Charming Shoppes
Receivables Corp., Seller, Spirit of America, Inc., Servicer, and First Union
National Bank, Trustee. A summary of certain of the pertinent provisions of the
Pooling and Servicing Agreement is set forth herein below. Such summary shall in
all cases be subject to the terms set forth in the Pooling and Servicing
Agreement.
To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Pooling and Servicing Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Holder by virtue of the
acceptance hereof assents and by which the Holder is bound.
This Certificate has not been registered or qualified under the
Securities Act of 1933, as amended, or any state securities law. No sale,
transfer or other disposition of this Certificate shall be permitted other than
in accordance with the provisions of Section 6.3 or 6.9 of the Pooling and
Servicing Agreement.
This Certificate is the Exchangeable Seller Certificate (the
"Certificate"), which represents an undivided interest in the Trust, including
the right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement to be paid to the
Holder of the Exchangeable Seller Certificate. The aggregate interest
represented by this Certificate at any time in the Principal Receivables in the
Trust shall not exceed the Seller Interest at such time. In addition to this
Certificate, (i) Series of Investor Certificates may be issued to investors
pursuant to one or more Supplements to the Pooling and Servicing Agreement, each
of which will represent an undivided interest in the Trust, to the extent set
forth in the Pooling and Servicing Agreement and the related Supplement and (ii)
Receivables Purchase Interests may be sold by the Trust to one or more
Receivables Purchasers pursuant to one or more Receivables Purchase Agreements,
each of which interests shall represent an undivided interest in the
Receivables, Collections with respect thereto and other items, to the extent set
forth in the Pooling and Servicing Agreement and the related Receivables
Purchase Agreement. This Certificate shall not represent any interest in any
Series Accounts or any Enhancement, except to the extent provided in the Pooling
and Servicing Agreement or the related Supplement or Receivables Purchase
Agreement. The Seller Interest shall be the amount defined as such in the
Pooling and Servicing Agreement.
This Certificate does not represent an obligation of, or any interest
in, the Originator, the Seller or the Servicer, and neither the Certificates nor
the Accounts or Receivables are insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency.
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This Certificate is limited in right of payment to certain Collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement, or be valid
for any purpose.
IN WITNESS WHEREOF, the Seller has caused this Certificate to be duly
executed under its official seal.
By:_________________________________
[SEAL]
Attested to:
By:________________________
Date:_________________, 1997
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<PAGE> 119
Form of Trustee's Certificate of Authentication
CERTIFICATE OF AUTHENTICATION
This is the Exchangeable Seller Certificate referred to in the
within-mentioned Pooling and Servicing Agreement.
FIRST UNION NATIONAL BANK,
Trustee
By:______________________________
Authorized Officer
<PAGE> 120
EXHIBIT B
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
ASSIGNMENT No. __ OF RECEIVABLES IN ADDITIONAL ACCOUNTS, dated as of
___________ ___, _____ (this "Assignment") by and between CHARMING SHOPPES
RECEIVABLES CORP., a Delaware corporation (the "Seller"), SPIRIT OF AMERICA,
INC., a Delaware Corporation (the "Servicer"), and First Union National Bank, as
trustee (the "Trustee") of the CHARMING SHOPPES MASTER TRUST (the "Trust"),
pursuant to the Pooling and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Seller, the Servicer and the Trustee are parties to the
Second Amended and Restated Pooling and Servicing Agreement, dated as of
November 25, 1997 and amended as of ________ ___, 1999 (hereinafter as such
agreement may have been, or may from time to time be, amended, supplemented or
otherwise modified, the "Pooling and Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Seller
wishes to designate Additional Accounts to be included as Accounts and to Convey
the Receivables of such Additional Accounts, whether now existing or hereafter
created, to the Trust as part of the corpus of the Trust (as each such term is
defined in the Pooling and Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and
Conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Seller and the Trust hereby agree as follows:
1. Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when used
herein, unless otherwise defined herein.
"Addition Cut Off Date" shall mean, with respect to the Additional
Accounts designated hereby, _______________ ___, ____.
"Addition Date" shall mean, with respect to the Additional Accounts
designated hereby, _______________ ___, ____.
"Addition Notice Date" shall mean, with respect to the Additional
Accounts designated hereby, ______________ ___, ____.
"Additional Accounts" shall mean the Additional Accounts designated
hereby.
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<PAGE> 121
2. Designation of Additional Accounts. The Servicer (on behalf
of the Seller) shall deliver to the Trustee not later than five Business Days
after the Addition Date, a computer file, microfiche or written list containing
a true and complete list of Accounts which as of the Addition Date shall be
deemed to be Additional Accounts, such accounts being identified by account
number, Obligor name, Obligor address, and by the aggregate amount of
Receivables in such accounts as of the close of business on the Addition Cut Off
Date. Such file or list shall be delivered to the Trustee as confidential and
proprietary, shall be marked as Schedule 1 to this Assignment and, as of the
Addition Date, shall be incorporated into and made a part of this Assignment.
3. Conveyance of Receivables in Additional Accounts. The
Seller does hereby Convey to the Trust without recourse (except as expressly
provided herein and in the Pooling and Servicing Agreement), all of its right,
title and interest in and to the Receivables now existing and hereafter created
and arising from time to time in connection with the Additional Accounts until
the termination of the Trust, all monies due or to become due with respect
thereto, all Collections, all Recoveries, all rights, remedies, powers and
privileges with respect to the Receivables in Additional Accounts, and all
proceeds of the foregoing.
In connection with such Conveyance, the Seller agrees to
record and file, at its own expense, a financing statement or financing
statements (or an amendment to such financing statement or financing statements)
(including any continuation statements with respect to each such financing
statements when applicable) with respect to the Receivables now existing and
hereafter created in the Additional Accounts meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect the Conveyance of the Receivables in Additional Accounts to the Trust
and the first priority nature of the Trust's interest in the Receivables in
Additional Accounts, and to deliver a file-stamped copy of such financing
statement or continuation statement (or an amendment to such financing statement
or financing statements) or other evidence of such filing (which may, for
purposes of this Section 3, consist of telephone confirmation of such filing
followed by delivery of a file-stamped copy as soon as practicable) to the
Trustee on or prior to the Addition Date, and in the case of any continuation
statements filed pursuant to this Section 3, as soon as practicable after
receipt thereof by the Seller. The foregoing Conveyance shall be made to the
Trust for the benefit of the Certificateholders, any Receivables Purchasers and
any Enhancement Providers (to the extent set forth in the Pooling and Servicing
Agreement and any Supplement or Receivables Purchase Agreement) and each
reference in this Assignment to such Conveyance shall be construed accordingly.
In connection with such Conveyance, the Servicer agrees, on
behalf of the Seller, as an expense of the Servicer paid out of the Seller's
Monthly Servicing Fee, on or prior to the Addition Date, to indicate in the Pool
Index File maintained in its computer files that Receivables created in
connection with the Additional Accounts have been Conveyed to the Trust pursuant
to this Assignment. The Servicer further agrees not to alter the file
designation referenced in this paragraph with respect to any Additional Account
during the term of this Assignment unless and until such Additional Account
becomes a Removed Account.
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<PAGE> 122
The parties intend that if, and to the extent that, such
Conveyance is not deemed to be a sale, the Seller shall be deemed hereunder to
have granted to the Trust a first priority perfected security interest in all of
the Seller's right, title and interest in, to and under the Receivables now
existing and hereafter created and arising from time to time in connection with
the Additional Accounts until the termination of the Trust, all monies due or to
become due with respect thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the Receivables in Additional
Accounts, and all proceeds of the foregoing, and that this Assignment shall
constitute a security agreement under applicable law.
4. Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf
of the Trust, of all right, title and interest previously held by the Seller in
and to the Receivables now existing and hereafter created from time to time and
arising in connection with the Additional Accounts until the termination of the
Trust, all monies due or to become due with respect thereto, all Collections,
all Recoveries, all rights, remedies, powers and privileges with respect to the
Receivables in Additional Accounts, and all proceeds of the foregoing, and
declares that it shall maintain such right, title and interest, upon the Trust
herein set forth, for the benefit of all Certificateholders, any Receivables
Purchasers and any Enhancement Providers (to the extent set forth in the Pooling
and Servicing Agreement and the related Supplement or Receivables Purchase
Agreement).
(b) The Trustee hereby agrees not to disclose to any Person
any of the account numbers or other information contained in the computer files
or microfiche or written lists delivered to the Trustee by the Servicer (on
behalf of the Seller) pursuant to this Assignment ("Account Information") except
as is required in connection with the performance of its duties hereunder or in
enforcing the rights of the Certificateholders and Receivables Purchasers or to
a Successor Servicer appointed pursuant to Section 10.2 of the Pooling and
Servicing Agreement or as mandated pursuant to any Requirement of Law applicable
to the Trustee. The Trustee agrees to take such measures as shall be reasonably
requested by the Seller to protect and maintain the security and confidentiality
of such information, and, in connection therewith, shall allow the Seller to
inspect the Trustee's security and confidentiality arrangements from time to
time during normal business hours. In the event that the Trustee is required by
law to disclose any Account Information, the Trustee shall provide the Seller
with prompt written notice, unless such notice is prohibited by law, of any such
request or requirement so that the Seller may request a protective order or
other appropriate remedy. The Trustee shall use its best efforts to provide the
Seller with written notice no later than five days prior to any disclosure
pursuant to this subsection 4(b).
5. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Trust as of the Addition Date:
(a) Organization and Good Standing. The Seller is a Delaware
corporation duly organized and validly existing under the laws of the State of
Delaware and has full corporate power, authority and legal right to own its
properties and conduct its business as such properties are
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<PAGE> 123
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Assignment.
(b) Due Qualification. The Seller is duly qualified to do
business and is in good standing (or is exempt from such requirement) in any
state required in order to conduct its business, and has obtained all necessary
licenses and approvals with respect to the Seller required under applicable law.
(c) Due Authorization. The execution and delivery of this
Assignment by the Seller and the consummation of the transactions provided for
in this Assignment have been duly authorized by the Seller by all necessary
corporate action on its part.
(d) Enforceability. This Assignment constitutes a legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws.
(e) No Conflict. The execution and delivery of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which the
Seller is a party or by which it or any of its properties are bound.
(f) No Violation. The execution and delivery of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof will not conflict with or violate in any
material respect any Requirements of Law applicable to the Seller.
(g) No Proceedings. There are no proceedings pending or, to
the best knowledge of the Seller, threatened against the Seller before any
court, regulatory body, administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Assignment, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Assignment, (iii) seeking any determination or ruling that, in the reasonable
judgment of the Seller, would materially and adversely affect the performance by
the Seller of its obligations under this Assignment, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Assignment, or (v) seeking to affect adversely the
income tax attributes of the Trust.
(h) All Consents Required. All appraisals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof, have been obtained.
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<PAGE> 124
(i) Solvency. No Insolvency Event with respect to the Seller
has occurred and the Conveyance by the Seller to the Trust of the Receivables in
the Additional Accounts has not been made in contemplation of the occurrence
thereof.
The representations and warranties set forth in this Section 5
shall survive the transfer and assignment of the respective Receivables in
Additional Accounts to the Trust and the termination of the rights and
obligations of the Servicer pursuant to Section 10.1 of the Pooling and
Servicing Agreement.
6. Representations and Warranties of the Seller Relating to
the Receivables.
(a) The Seller hereby represents and warrants to the Trust as
of the date hereof:
(i) This Assignment constitutes either (A) a valid sale to the
Trust of all right, title and interest of the Seller in and to the
Receivables now existing and hereafter created and arising from time to
time in connection with the Additional Accounts until the termination
of the Trust, all monies due or to become due with respect thereto, all
Collections, all Recoveries, all rights, remedies, powers and
privileges with respect to the Receivables, and all proceeds of the
foregoing, and such property will be held by the Trust free and clear
of any Lien of any Person claiming through or under the Seller or any
of its Affiliates or (B) a grant of a security interest (as defined in
the UCC as in effect in any applicable jurisdiction) in such property
to the Trust, which is enforceable with respect to the Receivables now
existing and hereafter created and arising from time to time in
connection with the Additional Accounts until the termination of the
Trust, all monies due or to become due with respect thereto, all
Collections, all Recoveries, all rights, remedies, powers and
privileges with respect to the Receivables, and all proceeds of the
foregoing, upon such creation. To the extent that this Assignment
constitutes the grant of a security interest to the Trust in such
property, upon the filing of the financing statements described in
Section 3 and in the case the Receivables hereafter created, all monies
due or to become due with respect thereto, all Collections, all
Recoveries, and the proceeds of the foregoing, upon such creation, the
Trust shall have a first priority perfected security interest in such
property (subject to Section 9-306 of the UCC as in effect in any
applicable jurisdiction). Neither the Seller nor any Person claiming
through or under the Seller shall have any claim to or interest in the
Collection Account or any Series Account, except for the Seller's
rights to receive interest accruing on, and investment earnings in
respect of, the Collection Account, as provided in the Pooling and
Servicing Agreement (and, if applicable, any Series Account as provided
in any Supplement or any Receivables Purchase Agreement) and, to the
extent that this Assignment constitutes the grant of a security
interest in such property, except for the interest of the Seller in
such property as a debtor for purposes of the UCC as in effect in any
applicable jurisdiction.
(ii) Each Additional Account is an Eligible Account and each
Receivable in each such Additional Account is an Eligible Receivable.
B-5
<PAGE> 125
(iii) Each Receivable in the Additional Accounts has been
Conveyed to the Trust in compliance, in all material respects, with all
Requirements of Law applicable to the Seller.
(iv) With respect to each Receivable in the Additional
Accounts, all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by the Seller in connection with the
Conveyance of such Receivable to the Trust have been duly obtained,
effected or given and are in full force and effect.
(v) As of the Addition Date, Schedule 1 to this Assignment and
the related computer file or microfiche or written list referred to in
Section 3 of this Assignment is an accurate and complete listing in all
material respects of all the Additional Accounts, and the information
contained therein with respect to the identity of such Additional
Accounts and the Receivables existing thereunder is true and correct in
all material respects as of the Addition Date, and as of the Addition
Date, the aggregate amount of Receivables in all the Additional
Accounts was $____________________.
(vi) No selection procedures believed by the Seller to be
materially adverse to the interests of the Investor Certificateholders
or any Receivables Purchasers were utilized in selecting the Additional
Accounts from the available Eligible Accounts from the Bank Portfolio.
(b) The representations and warranties set forth in this
Section 6 shall survive the Conveyance of any of the respective Receivables to
the Trust.
7. Conditions Precedent. The acceptance by the Trustee set
forth in Section 4 and the amendment of the Pooling and Servicing Agreement set
forth in Section 8 are subject to the satisfaction, on or prior to the Addition
Date, of each of the conditions precedent set forth in the Pooling and Servicing
Agreement, any Supplement or any Receivables Purchase Agreement.
8. Amendment of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby amended to provide that all references
therein to the "Pooling and Servicing Agreement," to "this Agreement" and
"herein" shall be deemed from and after the Addition Date to be a dual reference
to the Pooling and Servicing Agreement as supplemented by this Assignment.
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions of the Pooling and Servicing Agreement shall
remain unamended and shall continue to be, and shall remain, in full force and
effect in accordance with its terms and except as expressly provided herein
shall not constitute or be deemed to constitute a waiver of compliance with or a
consent to noncompliance with any term or provision of the Pooling and Servicing
Agreement.
9. Counterparts. This Assignment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
B-6
<PAGE> 126
10. Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
IN WITNESS WHEREOF, the undersigned have caused this
Assignment of Receivables in Additional Accounts to be duly executed and
delivered by their respective duly authorized officers on the day and year first
above written.
CHARMING SHOPPES RECEIVABLES CORP.
By:_______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK, Trustee on
behalf of the CHARMING SHOPPES MASTER
TRUST
By:_______________________________________
Name:
Title:
B-7
<PAGE> 127
Schedule 1
to Assignment of
Receivables in
Additional Accounts
ADDITIONAL ACCOUNTS
<PAGE> 128
Schedule 2
to Assignment of
Receivables in
Additional Accounts
Charming Shoppes Master Trust
Officer's Certificate of an Officer
of Charming Shoppes Receivables Corp.
_______________________, a duly authorized officer of Charming
Shoppes Receivables Corp. (the "Seller"), hereby certifies and acknowledges on
behalf of the Seller that to the best of such officer's knowledge, the following
statements are true on _________________ ______, ______ (the "Addition Date"):
(a) The Seller has delivered to the Trustee a written
assignment in substantially the form of Exhibit B to the Second Amended and
Restated Pooling and Servicing Agreement dated as of November 25, 1997 and as
amended as of ________ ___, 1999 (the "Pooling and Servicing Agreement"; any
capitalized term used but not otherwise defined herein shall have the meaning
specified in the Pooling and Servicing Agreement) between Charming Shoppes
Receivables Corp., Seller, Spirit of America, Inc., Servicer, and First Union
National Bank, Trustee, with a copy to each Purchaser Representative, and has
indicated in its computer files that the Receivables created in connection with
the Additional Accounts have been Conveyed to the Trust.
(b) Each Additional Account is an Eligible Account and each
Receivable in each such Additional Account is an Eligible Receivable.
(c) No selection procedures believed by the Seller to be
materially adverse to the interests of the Investor Certificateholders or any
Receivables Purchasers were utilized in selecting the Additional Accounts from
the available Eligible Accounts from the Bank Portfolio.
IN WITNESS WHEREOF, I have hereunto set my hand this
___________ day of ______________, __________.
CHARMING SHOPPES RECEIVABLES CORP.
By:________________________
Name:
Title:
<PAGE> 129
EXHIBIT C
[Monthly Servicer's Report]
<PAGE> 130
EXHIBIT D
FORM OF OPINION OF COUNSEL REGARDING ADDITIONAL ACCOUNTS
[Insert form of Opinion]
D-1
<PAGE> 131
EXHIBIT E-1
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
REASSIGNMENT NO. ___ OF RECEIVABLES IN REMOVED ACCOUNTS, dated as of
(this "Reassignment") by and among FIRST UNION NATIONAL BANK, as
trustee (the "Trustee") of the CHARMING SHOPPES MASTER TRUST (the"Trust") and
CHARMING SHOPPES RECEIVABLES CORP., a Delaware corporation (the "Seller"),
pursuant to the Pooling and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Seller and the Trustee are parties to the Second Amended
and Restated Pooling and Servicing Agreement, dated as of November 25, 1997 and
as amended as of ________ ___, 1999 (hereinafter as such agreement may have
been, or may from time to time be, amended, supplemented or otherwise modified,
the "Pooling and Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Seller
wishes to remove all Receivables from certain designated Accounts of the
Originator (the "Removed Accounts") and to cause the Trust to reconvey the
Receivables of such Removed Accounts, whether now existing or hereafter created,
from the Trust to the Seller; and
WHEREAS, the Trustee is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts, and the Assignee is willing to
accept the reconveyance of such Receivables, subject to the terms and conditions
hereof.
NOW, THEREFORE, the Trustee and the Seller hereby agree as follows:
1. Defined Terms. All terms defined in the Pooling and Servicing Agreement and
used herein shall have such defined meanings when used herein, unless otherwise
defined herein.
"Removal Cut Off Date" shall mean, with respect to the Removed
Accounts designated hereby, ___________ __, ____.
"Removal Date" shall mean, with respect to the Removed
Accounts designated hereby, ___________ __, ____.
"Removal Notice Date" shall mean, with respect to the removed
Accounts designated hereby, ___________ __, ____.
"Removed Accounts" shall mean the Removed Accounts designated
hereby.
E-1-1
<PAGE> 132
2. Designation of Removed Accounts. The Servicer (on behalf of
the Seller) shall have delivered to the Trustee on or prior to the Removal Date,
a computer file, microfiche list, or written list containing a true and complete
list of Accounts which as of the Removal Date shall be deemed to be Removed
Accounts, such accounts being identified by account number and by the aggregate
amount of Receivables in such accounts as of the close of business on the
Removal Cut Off Date. Such list shall be marked as Schedule 1 to this
Reassignment and, as of the Removal Date, shall be incorporated into and made a
part of this Reassignment.
3. Conveyance of Receivables in Removed Accounts.
(a) The Trustee does hereby Convey to the Seller without
recourse, all of its right, title and interest in and to the Receivables now
existing and hereafter created and arising from time to time in connection with
the Removed Accounts until the termination of the Trust, all monies due or to
become due with respect thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the Receivables in Removed
Accounts, and all proceeds of the foregoing.
(b) In connection with such transfer, the Trustee agrees to
execute and deliver to the Seller on or prior to the date of this Reassignment,
a termination statement with respect to the Receivables now existing and
hereafter created in the Removed Accounts designated hereby (which may be a
single termination statement with respect to all such Receivables) evidencing
the release by the Trustee of its Lien on the Receivables in the Removed
Accounts, and meeting the requirements of applicable state law, in such manner
and such jurisdictions as are necessary to remove such Lien.
4. Representations and Warranties of the Seller and the
Assignee. The Seller hereby represents and warrants to the Trust as of the
Removal Date:
(a) Enforceability. This Reassignment constitutes a legal,
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws.
(b) Selection Procedures. No selection procedures believed by
the Seller to be materially adverse to the interests of the Investor
Certificateholders, the Receivables Purchasers or any Enhancement Provider were
utilized in selecting the Removed Accounts designated hereby.
(c) Schedule 1 Information. Schedule 1 to this Reassignment is
an accurate and complete listing in all material respects of all the Removed
Accounts as of the Removal Cut Off Date, and the information contained therein
with respect to the identity of such Removed Accounts and the Receivables
existing thereunder is true and correct in all material respects as of the
Removal Cut Off Date, and as of the Removal Cut Off Date, the aggregate amount
of Receivables in all the Removed Accounts was $______________.
E-1-2
<PAGE> 133
5. Conditions Precedent. The Conveyance of Receivables set
forth in Section 3 and the amendment of the Pooling and Servicing Agreement set
forth in Section 6 are subject to the satisfaction, on or prior to the Removal
Date, of each of the conditions precedent to such removal set forth in the
Pooling and Servicing Agreement, any Supplement or any Receivables Purchase
Agreement.
6. Amendment of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby amended to provide that all references
therein to the "Pooling and Servicing Agreement," to "this Agreement" and
"herein" shall be deemed from and after the Removal Date to be a dual reference
to the Pooling and Servicing Agreement as supplemented by this Reassignment.
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions of the Pooling and Servicing Agreement shall
remain unamended and shall continue to be, and shall remain, in full force and
effect in accordance with its terms and except as expressly provided herein
shall not constitute or be deemed to constitute a waiver of compliance with or a
consent to noncompliance with any term or provision of the Pooling and Servicing
Agreement.
7. Counterparts. This Reassignment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
8. Governing Law. This Reassignment shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
E-1-3
<PAGE> 134
IN WITNESS WHEREOF, the undersigned have caused this
Reassignment of Receivables in Removed Accounts to be duly executed and
delivered by their respective duly authorized officers on the day and year first
above written.
CHARMING SHOPPES RECEIVABLES CORP.
By:______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK, Trustee of the
CHARMING SHOPPES MASTER TRUST
By:______________________________________
Name:
Title:
E-1-4
<PAGE> 135
Schedule 1
to Assignment of
Receivables in
Removed Accounts
REMOVED ACCOUNTS
<PAGE> 136
EXHIBIT E-2
FORM OF REASSIGNMENT OF INELIGIBLE RECEIVABLES
REASSIGNMENT NO.___ OF INELIGIBLE RECEIVABLES, dated as of
____________ ____ , ____ (this "Reassignment") by and among FIRST UNION NATIONAL
BANK, as trustee of the CHARMING SHOPPES MASTER TRUST (the "Trust"), and
CHARMING SHOPPES RECEIVABLES CORP., a Delaware corporation (the "Seller"),
pursuant to the Pooling and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Seller and the Trustee are parties to the Second
Amended and Restated Pooling and Servicing Agreement, dated as of November 25,
1997 as amended as of ________ ___, 1999 (hereinafter as such agreement may have
been, or may from time to time be, amended, supplemented or otherwise modified,
the "Pooling and Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Seller wishes to remove from the Trust certain Receivables (the "Ineligible
Receivables") and to cause the Trustee to reconvey such Ineligible Receivables,
whether now existing or hereafter created, from the Trust to the Seller; and
WHEREAS, the Trust is willing to accept such designation and
to reconvey the Ineligible Receivables, and the Assignee is willing to accept
such reconveyance of Ineligible Receivables, subject to the terms and conditions
hereof.
NOW, THEREFORE, the Trustee and the Seller hereby agree as
follows:
1. Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when used
herein, unless otherwise defined herein.
"Removal Cut Off Date" shall mean, with respect to the
Ineligible Receivables designated hereby, ____________ ____ , ____
"Removal Date" shall mean, with respect to the Ineligible
Receivables designated hereby, ____________ ____ , ____.
E-2-1
<PAGE> 137
"Removal Notice Date" shall mean, with respect to the
Ineligible Receivables designated hereby, ____________ ____ , ____.
"Ineligible Receivables" shall mean the Ineligible Receivables
designated hereby.
2. Designation of Ineligible Receivables. The Servicer (on
behalf of the Seller) shall have delivered to the Trustee on or prior to the
Removal Date, a computer file, microfiche list or written list containing a true
and complete list of Receivables which as of the Removal Date shall be deemed to
be Ineligible Receivables, such Ineligible Receivables being identified by the
related account number and by the aggregate amount of Ineligible Receivables in
each such Account as of the close of business on the Removal Cut Off Date, and,
if less than all of the Receivables in an Account are to be Conveyed by the
Trust hereunder, such other means of identification which shall be adequate to
distinguish the Ineligible Receivables from the other Receivables in such
Account. Such list shall be marked as Schedule 1 to this Reassignment and, as of
the Removal Date, shall be incorporated into and made a part of this
Reassignment.
3. Conveyance of Ineligible Receivables.
(a) The Trustee does hereby Convey to the Seller without
recourse, all of its right, title and interest in and to the Ineligible
Receivables (and, in the event that all the Receivables of an account are
Ineligible Receivables, all Receivables now existing and hereafter created and
arising from time to time in connection with such account until the termination
of the Trust), all monies due or to become due with respect thereto, all
Collections, all Recoveries, all rights, remedies, powers and privileges with
respect to such Ineligible Receivables, and all proceeds of the foregoing.
(b) In connection with such transfer, the Trustee agrees to
execute and deliver to the Seller on or prior to the date of this Reassignment,
a termination statement with respect to the Ineligible Receivables (and, in the
event that all the Receivables of an account are Ineligible Receivables, all
Receivables now existing and hereafter created in such accounts) designated
hereby (which may be a single termination statement with respect to all such
Ineligible Receivables) evidencing the release by the Trust of its Lien on the
Ineligible Receivables, and meeting the requirements of applicable state law, in
such manner and such jurisdictions as are necessary to remove such Lien.
4. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Trustee as of the Removal Date:
(a) Enforceability. This Reassignment constitutes a legal,
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws.
E-2-2
<PAGE> 138
(b) Selection Procedures. No selection procedures believed by
the Seller to be materially adverse to the interests of the Investor
Certificateholders, the Receivables Purchasers or any Enhancement Provider were
utilized in selecting the Ineligible Receivables designated hereby.
(c) Schedule 1 Information. Schedule 1 to this Reassignment is
an accurate and complete listing in all material respects of all the Ineligible
Receivables as of the Removal Cut Off Date, and the information contained
therein with respect to the identity of such Ineligible Receivables and, if
applicable, the related accounts, is true and correct in all material respects
as of the Removal Cut Off Date, and as of the Removal Cut Off Date, the
aggregate amount of Ineligible Receivables was $ .
5. Conditions Precedent. The Conveyance of Ineligible
Receivables set forth in Section 3 and the amendment of the Pooling and
Servicing Agreement set forth in Section 6 are subject to the satisfaction, on
or prior to the Removal Date, of each of the conditions precedent to such
removal set forth in the Pooling and Servicing Agreement, any Supplement or any
Receivables Purchase Agreement.
6. Amendment of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby amended to provide that all references
therein to the "Pooling and Servicing Agreement," to "this Agreement" and
"herein" shall be deemed from and after the Removal Date to be a dual reference
to the Pooling and Servicing Agreement as supplemented by this Reassignment.
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions of the Pooling and Servicing Agreement shall
remain unamended and shall continue to be, and shall remain, in full force and
effect in accordance with its terms and except as expressly provided herein
shall not constitute or be deemed to constitute a waiver of compliance with or a
consent to noncompliance with any term or provision of the Pooling and Servicing
Agreement.
7. Counterparts. This Reassignment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
8. Governing Law. This Reassignment shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
E-2-3
<PAGE> 139
IN WITNESS WHEREOF, the undersigned have caused this
Reassignment of Ineligible Receivables to be duly executed and delivered by
their respective duly authorized officers on the day and year first above
written.
CHARMING SHOPPES RECEIVABLES CORP.
By:______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK, Trustee of the
CHARMING SHOPPES MASTER TRUST
By:______________________________________
Name:
Title:
E-2-4
<PAGE> 140
Schedule 1
to Reassignment of
Ineligible Receivables
INELIGIBLE RECEIVABLES
<PAGE> 141
EXHIBIT F
FORM OF ANNUAL SERVICER'S CERTIFICATE
Charming Shoppes Master Trust
The undersigned, a duly authorized representative of
____________________(the "Servicer"), as Servicer pursuant to the Second Amended
and Restated Pooling and Servicing Agreement dated as of November 25, 1997 as
amended as of ________ ___, 1999 (the "Pooling and Servicing Agreement") by and
between Charming Shoppes Receivables Corp., as Seller, Spirit of America, Inc.,
Servicer, and First Union National Bank, as trustee (the "Trustee"), does hereby
certify that:
1. ______________ is the Servicer under the Pooling
and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the
Pooling and Servicing Agreement to execute and deliver this
Certificate to the Trustee.
3. This Certificate is delivered pursuant to Section
3.5 of the Pooling and Servicing Agreement.
4. A review of the activities of the Servicer during
the prior calendar year was conducted under our supervision.
5. Based on such review, the Servicer has, to the
best of our knowledge, fully performed all its obligations
under the Pooling and Servicing Agreement throughout such
period and no default in the performance of such obligations
has occurred or is continuing except as set forth in paragraph
6 below.
6. The following in a description of each default in
the performance of the Servicer's obligations under the
provisions of the Pooling and Servicing Agreement, including
any Supplement, known to us to have been made during such
period which sets forth in detail (i) the nature of each such
default, (ii) the action taken by the Servicer, if any, to
remedy each such default and (iii) the current status of each
such default:
[If applicable, insert "None."]
F-1
<PAGE> 142
IN WITNESS WHEREOF, the undersigned has duly executed
this Certificate this ____ day of ________ , ____ .
______________________________________
Name:
Title:
F-2
<PAGE> 143
Exhibit G
Procedures of Independent Accountants
1. Select a sample of applications for testing of proper approval or
denial of credit, applying the criteria specified in the Operating
Policies and Procedures.
2. Determine that the operators responsible for approving credit are
evaluated using a standard scoring system on a monthly basis.
3. Select a sample of transactions representing both credit authorizations
and line changes and will review them for compliance with Operating
Policies and Procedures.
4. Determine that the operators responsible for authorizing credit and
approving line changes are being evaluated using a standard scoring
system on a monthly basis.
5. Perform observation tests for individual credit card accounts to
determine if the collections procedures are being performed in
accordance with the operating policies and procedures agreement.
6. For the accounts observed in the step above, review prior account
statements to determine if the system is properly aging the minimum
balances.
7. Select a sample of accounts from the Dylakor reports which are in
excess of 180 days delinquent and determine that the account has been
written off in accordance with operating policies and procedures.
8. Compare the monthly totals of new bad debt less recoveries from the
daily write-off and recovery reports maintained at Alliance Data
Services, Inc. ("Alliance Data") to the amounts indicated in the
Fashion Service Corporation's Accounts Receivable Reconciliation
Reports for each of the months in a period of 12 months.
9. Select ten days within the tested period and compare the total payments
per the Fashion Service Corporation's Accounts Receivable
Reconciliation Report to the daily Charming Shoppes Accounts Receivable
Report prepared by Alliance Data.
10. Using the same ten days selected above, compare the gross sales, polled
payments, returns and the net transmission amounts per Fashion Service
Corporation's Monthly Transmission Report to the applicable daily
Charming Shoppes Tapes Transmission Report prepared at Alliance Data.
11. Using the same ten days selected in the second preceding step, compare
the amounts of the lockbox deposits per the daily Charming Shoppes
Accounts Receivable Report
G-1
<PAGE> 144
prepared by Alliance Data and the Monthly Cash Report prepared by
Fashion Service Corporation to the applicable bank statement.
12. Using the same ten days selected in the third preceding step above,
reconcile the total payments posted per the daily Charming Shoppes
Accounts Receivable Report prepared by Alliance Data to the sum of the
lockbox deposit and the prior day's polled payments per the Charming
Shoppes Monthly Cash Report prepared by Fashion Service Corporation.
13. Select one day within the tested period and compare the credit sales,
sales credits, and credit payments per the Daily Sales Register to the
Daily Transaction Register for one store. In addition, compare the
total cash receipts per the Daily Sales Register to the bank statement.
G-2
<PAGE> 145
EXHIBIT H-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF
MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF
THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES
LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF
A BENEFIT PLAN (AS DEFINED BELOW) UNLESS IT IS AN INSURANCE COMPANY USING THE
ASSETS OF ITS GENERAL ACCOUNT TO PURCHASE THE CERTIFICATE, AND (i) MEETS ALL OF
THE REQUIREMENTS OF, AND IS ELIGIBLE FOR, RELIEF UNDER PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 AND (ii) LESS THAN 25% OF THE ASSETS OF SUCH ACCOUNT ARE
BENEFIT PLAN ASSETS.(1/)
___________________
(1/) The following text should be included in any Certificate in which the above
legend appears:
The Certificates may not be acquired by or for the account of
any employee benefit plan, trust or account, including an individual retirement
account, that is an "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not subject to ERISA, or that is a "plan" described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended, or an entity whose
underlying assets include plan assets by reason of a plan's investment in such
entity (each, a "Benefit Plan"). By accepting and holding this Certificate, the
Holder hereof shall be deemed to have represented and warranted that either (i)
it is not a Benefit Plan or (ii) it is an insurance company purchasing the
Investor Certificates with assets of its general account, and at the time of
acquisition and throughout the period of holding (a) it meets all of the
requirements of and is eligible for exemptive relief under Prohibited
Transaction Class Exemption 95-60 and (b) less than 25% of the assets of such
account are Benefit Plan assets. By acquiring any interest in this Certificate,
the applicable Certificate Owner or Owners shall be deemed to have made the
representations in the preceding sentence.
H-1-1
<PAGE> 146
EXHIBIT H-2
[FORM OF REPRESENTATION LETTER]
[Date]
First Union National Bank
123 South Broad Street, M.B.O., l8th Floor
Philadelphia, PA 19109
Attn: Corporate Trust Administration
Charming Shoppes Receivables Corp.
[Address]
Re: Purchase of $ _____ principal amount of
Charming Shoppes Master Trust
Series [ ] [ %] [Floating Rate]
Asset Backed Certificates
Ladies and Gentlemen:
In connection with our purchase of the above Asset Backed
Certificates (the "Certificates") we confirm that:
(i) we understand that the Certificates are not being
registered under the Securities Act of 1933 (the "1933 Act"), and are
being sold to us in a transaction that is exempt from the registration
requirements of the 1933 Act;
(ii) any information we desire concerning the Certificates or
any other matter relevant to our decision to purchase the Certificates
is or has been made available to us;
(iii) we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
an investment in the Certificates, and we (and any account for which we
are purchasing under paragraph (iv) below) are able to bear the
economic risk of an investment in the Certificates; we (and any account
for which we are purchasing under paragraph (iv) below) are an
"accredited investor" (as such term is defined in Rule 501(a)(1), (2)
or (3) of Regulation D under the 1933 Act); and either (i) we are not,
and none of such accounts is, a Benefit Plan (as defined below) or (ii)
we are (and any account for which we are purchasing under paragraph
(iv) below is) an insurance company purchasing the Certificates with
assets of its general account,
H-2-1
<PAGE> 147
and at the time of acquisition and throughout the period of holding (a)
we (and any such accounts) meet all of the requirements of and are
eligible for exemptive relief under Prohibited Transaction Class
Exemption 95-60 and (B) less than 25% of the assets of each such
account are Benefit Plan assets;
(iv) we are acquiring the Certificates for our own account or
for accounts as to which we exercise sole investment discretion and not
with a view to any distribution of the Certificates, subject,
nevertheless, to the understanding that the disposition of our property
shall at all times be and remain within our control;
(v) we agree that the Certificates must be held indefinitely
by us unless subsequently registered under the 1933 Act or an exemption
from any registration requirements of that Act and any applicable state
securities law is available;
(vi) we agree that in the event that at some future time we
wish to dispose of or exchange any of the Certificates (such
disposition or exchange not being currently foreseen or contemplated),
we will not transfer or exchange any of the Certificates unless:
(A) (1) the sale is of at least U.S. $ principal
amount of Certificates to an Eligible Purchaser (as defined
below), (2) a letter to substantially the same effect as
paragraphs (i), (ii), (iii), (iv), (v) and (vi) of this letter
is executed promptly by the purchaser and (3) all offers or
solicitations in connection with the sale, whether directly or
through any agent acting on our behalf, are limited only to
Eligible Purchasers and are not made by means of any form of
general solicitation or general advertising whatsoever; or
(B) the Certificates are transferred pursuant to Rule
144 under the 1933 Act by us after we have held them for more
than three years; or
(C) the Certificates are sold in any other
transaction that does not require registration under the 1933
Act and, if the Seller, the Servicer, the Trustee or the
Transfer Agent and Registrar so requests, we theretofore have
furnished to such party an opinion of counsel satisfactory to
such party, in form and substance satisfactory to such party,
to such effect; or
(D) the Certificates are transferred pursuant to an
exception from the registration requirements of the 1933 Act
under Rule 144A under the 1933 Act; and
(vii) we understand that the Certificates will bear a legend
to substantially the following effect:
H-2-2
<PAGE> 148
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR
ANY PORTION HEREOF MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF
THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY OR
SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN
CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN."
"THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF
A BENEFIT PLAN (AS DEFINED BELOW) UNLESS IT IS AN INSURANCE COMPANY
USING THE ASSETS OF ITS GENERAL ACCOUNT TO PURCHASE THE CERTIFICATE,
AND (i) MEETS ALL OF THE REQUIREMENTS OF, AND IS ELIGIBLE FOR, RELIEF
UNDER PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 AND (ii) LESS THAN
25% OF THE ASSETS OF SUCH ACCOUNT ARE BENEFIT PLAN ASSETS."
The first paragraph of this legend may be removed if the Sellers, the Servicer,
the Trustee and the Transfer Agent and Registrar have received an opinion of
counsel satisfactory to them, in form and substance satisfactory to them, to the
effect that such paragraph may be removed.
"Eligible Purchaser" means either an Eligible Dealer or a
corporation, partnership or other entity which we have reasonable grounds to
believe and do believe can make representations with respect to itself to
substantially the same effect as the representations set forth herein. "Eligible
Dealer" means any corporation or other entity the principal business of which is
acting as a broker and/or dealer in securities. "Benefit Plan" means any
employee benefit plan, trust or account, including an individual retirement
account, that is an "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not subject to ERISA, or a "plan" that is described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended, or an entity whose
underlying assets include plan assets by reason of a plan's investment in such
entity. Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Second Amended and Restated Pooling and Servicing
Agreement dated as of November 25, 1997, as amended as of ________ ___, 1999
between Spirit of America, Inc., as Servicer, Charming Shoppes Receivables
Corp., as Seller and First Union National Bank, as trustee.
Very truly yours,
______________________________________
(Name of Purchaser)
H-2-3
<PAGE> 149
By:______________________________________
(Authorized Officer)
H-2-4
<PAGE> 150
EXHIBIT H-3
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF
A BENEFIT PLAN (AS DEFINED BELOW) UNLESS IT IS AN INSURANCE COMPANY USING THE
ASSETS OF ITS GENERAL ACCOUNT TO PURCHASE THE CERTIFICATE, AND (i) MEETS ALL OF
THE REQUIREMENTS OF, AND IS ELIGIBLE FOR, RELIEF UNDER PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 AND (ii) LESS THAN 25% OF THE ASSETS OF SUCH ACCOUNT ARE
BENEFIT PLAN ASSETS.(2/)
_________________
(2/) The following text should be included in any Certificate in which the above
legend appears:
The Certificates may not be acquired by or for the account of
any employee benefit plan, trust or account, including an individual retirement
account, that is an "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not subject to ERISA, or that is a "plan" described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended, or an entity whose
underlying assets include plan assets by reason of a plan's investment in such
entity (each, a "Benefit Plan"). By accepting and holding this Certificate, the
Holder hereof shall be deemed to have represented and warranted that either (i)
it is not a Benefit Plan or (ii) it is an insurance company purchasing the
Investor Certificates with assets of its general account, and at the time of
acquisition and throughout the period of holding (a) it meets all of the
requirements of and is eligible for exemptive relief under Prohibited
Transaction Class Exemption 95-60 and (b) less than 25% of the assets of such
account are Benefit Plan assets. By acquiring any interest in this Certificate,
the applicable Certificate Owner or Owners shall be deemed to have made the
representations in the preceding sentence.
H-3-1
<PAGE> 151
EXHIBIT I-1
[FORM OF CLEARANCE SYSTEM CERTIFICATE
TO BE GIVEN TO THE TRUSTEE BY
EUROCLEAR OR CEDEL FOR
DELIVERY OF DEFINITIVE CERTIFICATES
IN EXCHANGE FOR A PORTION OF A
TEMPORARY GLOBAL SECURITY]
CHARMING SHOPPES MASTER TRUST,
Series [ ] [ %] [Floating Rate]
Asset Backed Certificates
[Insert title or sufficient description
of Certificates to be delivered]
We refer to that portion of the temporary Global Certificate
in respect of the above-captioned issue which is herewith submitted to be
exchanged for definitive Certificates (the "Submitted Portion") as provided in
the Second Amended and Restated Pooling and Servicing Agreement dated as of
November 25, 1997 as amended as of ________ ___, 1999 (as amended and
supplemented, the "Agreement") in respect of such issue. This is to certify that
(i) we have received a certificate or certificates, in writing or by tested
telex, with respect to each of the persons appearing in our records as being
entitled to a beneficial interest in the Submitted Portion and with respect to
such persons' beneficial interest either (a) from such person, substantially in
the form of Exhibit I-2 to the Agreement, or (b) from [ ], substantially in the
form of Exhibit I-3 to the Agreement, and (ii) the Submitted Portion includes no
part of the temporary Global Certificate excepted in such certificates.
We further certify that as of the date hereof we have not
received any notification from any of the persons giving such certificates to
the effect that the statements made by them with respect to any part of the
Submitted Portion are no longer true and cannot be relied on as of the date
hereof.
We understand that this certificate is required in connection
with certain securities and tax laws in the United States of America. If
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate or a copy thereof to any interested party in
such proceedings.
I-1-1
<PAGE> 152
Dated: (3/) [Morgan Guaranty Trust
Company of New York,
Brussels office, as
operator of the
Euroclear System ] (3)
[Cedel S.A.) (4/)
By:___________________
___________________
(3/) To be dated on the Exchange Date.
(4/) Delete the inappropriate reference.
I-1-2
<PAGE> 153
EXHIBIT I-2
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL
BY [INSERT NAME OF MANAGER]
WITH RESPECT TO REGISTERED CERTIFICATES SOLD TO
QUALIFIED INSTITUTIONAL BUYERS]
CHARMING SHOPPES MASTER TRUST,
Series [ ] [ %] [Floating Rate]
Asset Backed Certificates
In connection with the initial issuance and placement of the
above referenced Asset Backed Certificates (the "Certificates"), an
institutional investor in the United States ("institutional investor") is
purchasing U.S. $__________ aggregate principal amount of the Certificates held
in our account at [Morgan Guaranty Trust Company of New York, Brussels office,
as operator of the Euroclear System) [Cedel S.A.] on behalf of such investor.
We reasonably believe that such institutional investor is a
qualified institutional buyer as such term is defined under Rule 144A of the
Securities Act of 1933.
[We understand that this certificate is required in connection
with United States laws. We irrevocably authorize you to produce this
certificate or a copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters covered by
this certificate.]
The Definitive Certificates in respect of this certificate are to be
issued in registered form in the minimum denomination of U.S. $__________ and
such Definitive Certificates (and, unless the Pooling and Servicing Agreement or
Supplement relating to the Certificates otherwise provides, any Certificates
issued in exchange or substitution for or on registration of transfer of
Certificates) shall bear the following legend:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933. NEITHER THIS CERTIFICATE NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY,
IN THE UNITED STATES OR TO U.S. PERSONS (EACH AS DEFINED HEREIN),
EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS
SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING AND
I-2-1
<PAGE> 154
SERVICING AGREEMENT REFERRED TO HEREIN. THIS CERTIFICATE
CANNOT BE EXCHANGED FOR A BEARER CERTIFICATE."
Dated:
[ ],
By:______________________________________
Authorized Officer
I-2-2
<PAGE> 155
EXHIBIT I-3
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL BY A BENEFICIAL OWNER
OF CERTIFICATES, OTHER THAN A QUALIFIED INSTITUTIONAL BUYER]
CHARMING SHOPPES MASTER TRUST,
Series [ ] [ %] [Floating Rate]
Asset Backed Certificates
This is to certify that as of the date hereof and except as
provided in the third paragraph hereof, the above-captioned Certificates held by
you for our account (i) are owned by a person that is a United States person, or
(ii) are owned by a United States person that is (A) the foreign branch of a
United States financial institution (as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v)) (a "financial institution") purchasing for its own
account or for resale, or (B) a United States person who acquired the
Certificates through the foreign branch of a financial institution and who holds
the Certificates through the financial institution on the date hereof (and in
either case (A) or (B), the financial institution hereby agrees to comply with
the requirements of Section 165(i)(3)(A), (B) or (C) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by
a financial institution for purposes of resale during the Restricted Period (as
defined in U.S. Treasury Regulations Section 1.1635(c)(2)(i)(D)(7)). In
addition, financial institutions described in clause (iii) of the preceding
sentence (whether or not also described in clause (i) or (ii)) certify that they
have not acquired the Certificates for purposes of resale directly or indirectly
to a United States person or to a person within the United States or its
possessions.
We undertake to advise you by tested telex if the above
statement as to beneficial ownership is not correct on the date of delivery of
the above-captioned Certificates in bearer form with respect to such of said
Certificates as then appear in your books as being held for our account.
This certificate excepts and does not relate to U.S.
$___________ principal amount of Certificates held by you for our account, as to
which we are not yet able to certify beneficial ownership. We understand that
delivery of Definitive Certificates in such principal amount cannot be made
until we are able to so certify.
We understand that this certificate is required in connection
with certain securities and tax laws in the United States of America. If
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we
I-3-1
<PAGE> 156
irrevocably authorize you to produce this certificate or a copy thereof to any
interested party in such proceedings. As used herein, "United States" means the
United States of America (including the States and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction;
and "United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States, or any political subdivision thereof, or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
Dated: (1/)
By:______________________________________
As, or as agent for, the beneficial
owner(s) of the interest in the
Certificates to which this
certificate relates.
_________________
(1/) This Certificate must be dated on the earlier of the date of the first
actual payment of interest in respect of the Certificates and the date of the
delivery of the Certificates in definitive form.
I-3-2
<PAGE> 157
EXHIBIT J
FORM OF CONVEYANCE OF RECEIVABLES
CONVEYANCE of RECEIVABLES, dated as of _____________ , ____
(this "Conveyance") by and between First Union National Bank, as Trustee (the
"Trustee") of the Charming Shoppes Master Trust (the "Trust") and the Holder of
the Exchangeable Seller Certificate pursuant to the Pooling and Servicing
Agreement referred to below (the "Transferee").
W I T N E S S E T H:
WHEREAS, Charming Shoppes Receivables Corp., a Delaware
corporation, as Seller, Spirit of America, Inc., as Servicer, and First Union
National Bank, as Trustee, are parties to the Second Amended and Restated
Pooling and Servicing Agreement dated as of November 25, 1997 as amended as of
________ ___, 1999 (hereinafter as such agreement may have been, or may from
time to time be, amended, supplemented or otherwise modified, the "Pooling and
Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferee wishes to cause the Trustee to Convey all of the Receivables and
proceeds thereof, whether now existing or hereafter created, from the Trustee to
the Transferee pursuant to the terms of Section 12.4 of the Pooling and
Servicing Agreement upon termination of the Trust pursuant to Article XII of the
Pooling and Servicing Agreement (as each such term is defined in the Pooling and
Servicing Agreement);
WHEREAS, the Trustee is willing to Convey the Receivables
subject to the terms and conditions hereof;
NOW THEREFORE, the Transferee and the Trustee hereby agree as
follows:
1. Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when used
herein, unless otherwise defined herein.
"Conveyance Date" shall mean ___________ __, 19__.
2. Return of Lists of Accounts. The Trustee shall deliver to
the Transferee, not later than three Business Days after the Conveyance Date,
each and every computer file or microfiche or written list of Accounts delivered
to the Trustee pursuant to the terms of the Pooling and Servicing Agreement.
J-1
<PAGE> 158
3. Conveyance of Receivables.
(a) The Trustee does hereby convey to the Transferee (without
recourse, representation or warranty) all right, title and interest of the
Trustee in the Receivables, whether then existing or thereafter created, all
monies due or to become due with respect thereto, all Collections, all
Recoveries, all rights, remedies, powers and privileges of the Trustee with
respect to the Receivables and all proceeds of the foregoing, except for amounts
held by the Trustee pursuant to subsection 12.3(b) of the Pooling and Servicing
Agreement.
(b) The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, as shall be reasonably
requested by the Transferee to vest in such Transferee all right, title and
interest which the Trustee had in the Receivables.
4. Counterparts. This Conveyance may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
5. Governing Law. This Conveyance shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
J-2
<PAGE> 159
IN WITNESS WHEREOF, the undersigned have caused this
Conveyance to be duly executed and delivered by their respective duly authorized
officers on the day and year first above written.
FIRST UNION NATIONAL BANK,
Trustee of the
CHARMING SHOPPES MASTER TRUST
By:____________________________________________
Name:
Title:
[HOLDER OF THE EXCHANGEABLE SELLER
CERTIFICATE]
By:____________________________________________
Name:
Title:
J-3
<PAGE> 160
EXHIBIT K
FORM OF ANNUAL OPINION OF COUNSEL
[INSERT FORM OF OPINION]
K-1
<PAGE> 1
EXHIBIT 4.2
CHARMING SHOPPES RECEIVABLES CORP
Seller
SPIRIT OF AMERICA, INC.
Servicer
and
FIRST UNION NATIONAL BANK
Trustee
on behalf of the Series 1999-1 Certificateholders
FORM OF SERIES 1999-1 SUPPLEMENT
Dated as of _____________ __, 1999
to
SECOND AMENDED AND RESTATED POOLING AND
SERVICING AGREEMENT
Dated as of November 25, 1997
(as amended on ________ __, 1999)
$________________
CHARMING SHOPPES MASTER TRUST
SERIES 1999-1
<PAGE> 2
TABLE OF CONTENTS
PAGE
SECTION 1. Designation.....................................................1
SECTION 2. Definitions.....................................................1
SECTION 3. Servicing Compensation.........................................21
SECTION 4. Reassignment and Transfer Terms................................22
SECTION 5. Delivery and Payment for the Series 1999-1 Certificates........22
SECTION 6. Depository; Form of Delivery of Series 1999-1 Certificates.....22
SECTION 7. Article IV of Agreement........................................22
SECTION 8. Article V of the Agreement.....................................39
SECTION 9. Series 1999-1 Early Amortization Events........................43
SECTION 10. Series 1999-1 Termination.....................................44
SECTION 11. Limitations on Addition of Accounts...........................44
SECTION 12. Ratification of Agreement.....................................45
SECTION 13. Counterparts..................................................45
SECTION 14. Governing Law.................................................45
SECTION 15. No Petition...................................................45
SECTION 16. Tax Representation and Covenant...............................45
SECTION 17. Certain Tax Related and Other Amendments......................45
i
<PAGE> 3
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT A-3 Form of Class C Certificate
EXHIBIT A-4 Form of Class D Certificate
EXHIBIT B Form of Monthly Payment Instructions and Notification
to the Trustee
EXHIBIT C Form of Monthly Certificateholders' Statement
EXHIBIT D-1 Form of Class A Cap Agreement
EXHIBIT D-2 Form of Class B Cap Agreement
ii
<PAGE> 4
This SERIES 1999-1 SUPPLEMENT, dated as of ____ __, 1999 (this
"Supplement"), is among CHARMING SHOPPES RECEIVABLES CORP., a Delaware
corporation, as Seller (the "Seller"), SPIRIT OF AMERICA, INC., a Delaware
corporation, as Servicer (the "Servicer"), and FIRST UNION NATIONAL BANK, as
Trustee (the "Trustee") under the Second Amended and Restated Pooling and
Servicing Agreement dated as of November 25, 1997 among the Seller, the Servicer
and the Trustee, as amended on ________ __, 1999 (as further amended or
otherwise modified from time to time, the "Agreement").
Section 6.9 of the Agreement provides, among other things,
that the Seller, the Servicer and the Trustee may at any time and from time to
time enter into a supplement to the Agreement for the purpose of authorizing the
delivery by the Trustee to the Seller for the execution and redelivery to the
Trustee for authentication of one or more Series of Certificates.
Pursuant to this Supplement, the Seller and the Trustee shall
create a new Series of Investor Certificates and shall specify the Principal
Terms thereof.
SECTION 1. Designation.
(a) There is hereby created a Series of Investor Certificates
to be issued in four classes pursuant to the Agreement and this Series
Supplement and to be known together as the "Series 1999-1 Certificates." The
four classes shall be designated the Class A Floating Rate Asset Backed
Certificates, Series 1999-1 (the "Class A Certificates"), the Class B Floating
Rate Asset Backed Certificates, Series 1999-1 (the "Class B Certificates"), the
Class C Floating Rate Asset Backed Certificates, Series 1999-1 (the "Class C
Certificates") and the Class D Floating Rate Asset Backed Certificates, Series
1999-1 (the "Class D Certificates"). The Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates shall be
substantially in the form of Exhibits A-1, A-2, A-3 and A-4 hereto,
respectively.
(b) Series 1999-1 shall be included in Group One. Series
1999-1 shall not be subordinated to any other Series.
SECTION 2. Definitions. In the event that any term or
provision contained herein shall conflict with or be inconsistent with any
provision contained in the Agreement, the terms and provisions of this
Supplement shall govern with respect to this Series. All Article, Section or
subsection references herein shall mean Article, Section or subsections of the
Agreement, except as otherwise provided herein. All capitalized terms not
otherwise defined herein are defined in the Agreement. Each capitalized term
defined herein shall relate only to the Series 1999-1 Certificates and no other
Series of Certificates or Receivables Purchase Series issued by the Trust.
"Amortization Period" shall mean, with respect to Series
1999-1, the Controlled Amortization Period.
"Available Funds" shall mean, with respect to any Distribution
Date, the sum of Class A Available Funds, Class B Available Funds, Class C
Available Funds and Class D Available Funds, in each case for such Distribution
Date.
1
<PAGE> 5
"Available Principal Collections" shall mean, with respect to
any Distribution Date, the sum of (a) the Principal Allocation Percentage of all
Collections of Principal Receivables received during the related Due Period,
minus the amount of Reallocated Class D Principal Collections, Reallocated Class
C Principal Collections and Reallocated Class B Principal Collections with
respect to such Due Period which pursuant to Section 4.12 are required to fund
the Class A Required Amount, the Class B Required Amount and the Class C
Required Amount, (b) any Shared Principal Collections with respect to other
Series in Group One that are allocated to Series 1999-1 in accordance with
Section 4.15 for such Distribution Date and (c) any other amounts which pursuant
to Section 4.9 and 4.11(a) (to the extent allocable to the Class A Investor Loss
Amount or the Class A Investor Dilution Amount), (b), (c), (d), (g), (h), (i),
(l), (m) and (n) for such Due Period (other than such amounts paid from
Reallocated Principal Collections) are to be treated as Available Principal
Collections for such Distribution Date.
"Average Principal Balance" shall mean, for any Due Period in
which one or more Reset Dates occur, the weighted average of the Principal
Receivables on the first day of each Subperiod in such Due Period, it being
understood that such average will be weighted according to a fraction, the
numerator of which is the number of days during the relevant Subperiod and the
denominator of which is the number of days in such Due Period.
"Base Rate" shall mean, for any Due Period, (a) the sum of
Monthly Interest for the related Distribution Date and the Series 1999-1
Investor Monthly Servicing Fee for such Due Period, divided by (b) the Series
Investor Interest as of the last day of the prior Due Period, times (c) 12.
"Class" shall mean any of the Class A Investor Interest, the
Class B Investor Interest, the Class C Investor Interest or the Class D Investor
Interest.
"Class A Additional Interest" shall have the meaning
specified in subsection 4.6(a).
"Class A Available Funds" shall mean, with respect to any
Distribution Date, an amount equal to the sum of (a) the Class A Floating
Allocation of the Collections of Finance Charge Receivables allocated to the
Series 1999-1 Certificates and deposited in the Collection Account for the
related Due Period (including certain other amounts that are to be treated as
Collections of Finance Charge Receivables in accordance with the Agreement), and
(b) if such Distribution Date is on or prior to the Class A Expected Final
Distribution Date the amount of any Class A Cap Payment with respect to such
Distribution Date, and the amount of any payments due from the Class A Cap
Provider but not paid with respect to any prior date (to the extent received by
the Trustee).
"Class A Cap Agreement" shall mean the interest rate cap
agreement dated the Closing Date between the Trust and the Class A Cap Provider
for the benefit of the Class A Certificateholders in substantially the form
attached hereto as Exhibit D-1, or any Replacement Interest Rate Cap Agreement
therefor.
2
<PAGE> 6
"Class A Cap Payment" shall mean, with respect to a
Distribution Date, the payment received from the Class A Cap Provider on the day
preceding such Distribution Date, as determined pursuant to the Class A Cap
Agreement.
"Class A Cap Provider" shall mean [________________________],
or any successor or assign thereto appointed as provided in the Class A Cap
Agreement, in its individual capacity pursuant to the Class A Cap Agreement, or
if any Replacement Interest Rate Cap Agreement is obtained therefor pursuant to
Section 4.18, the replacement cap provider named therein the short-term debt
obligations of which shall be rated at least A-1 by Standard & Poor's and P-1 by
Moody's.
"Class A Certificate Rate" shall mean from the Closing Date
through [___________ __, 1999], from [___________ __, 1999] through [___________
__, 1999] and with respect to each Interest Period thereafter, a per annum rate
equal to ____% per annum in excess of LIBOR as determined on the related LIBOR
Determination Date; provided that if the Class A Certificates are not paid in
full on the Class A Expected Final Payment Date, the Class A Certificate Rate
applicable to the Interest Period commencing on such date and each Interest
Period thereafter will not exceed _____% per annum.
"Class A Certificateholder" shall mean each Person in whose
name a Class A Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean each of the certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
"Class A Deficiency Amount" shall have the meaning specified
in subsection 4.6(a).
"Class A Expected Final Payment Date" shall mean the
__________, ______ Distribution Date.
"Class A Fixed Allocation" shall mean, with respect to any Due
Period other than a Due Period relating to the Revolving Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Class A Investor Interest as of the close of business
on the last day of the Revolving Period and the denominator of which is equal to
the Series Investor Interest as of the end of the day on the last day of the Due
Period occurring immediately prior to the Fixed Principal Allocation Date.
"Class A Floating Allocation" shall mean, with respect to any
Due Period (including any day within such Due Period), the percentage equivalent
(which percentage shall never exceed 100%) of a fraction:
(a) the numerator of which is the Class A Investor Interest as
of the close of business on the last day of the preceding Due Period
(or with respect to the first Due Period ending after the Closing Date,
the Class A Initial Investor Interest); and
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<PAGE> 7
(b) the denominator of which is equal to the Series Investor
Interest as of the close of business on such day (or with respect to
the first Due Period ending after the Closing Date, the Initial
Investor Interest).
"Class A Initial Investor Interest" shall mean the aggregate
initial principal amount of the Class A Certificates, which is $______________.
"Class A Investor Allocation" shall mean, with respect to any
Due Period, (a) with respect to Series 1999-1 Investor Loss Amounts, Series
1999-1 Investor Dilution Amount and Collections of Finance Charge Receivables at
any time and Collections of Principal Receivables during the Revolving Period,
the Class A Floating Allocation and (b) with respect to Collections of Principal
Receivables during the Controlled Amortization Period or Early Amortization
Period, the Class A Fixed Allocation.
"Class A Investor Charge-Offs" shall have the meaning
specified in subsection 4.10(a).
"Class A Investor Dilution Amount" shall mean, on any date of
determination, an amount equal to the product of (a) the Series 1999-1 Investor
Dilution Amount and (b) the Class A Floating Allocation.
"Class A Investor Interest" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial Investor Interest,
minus (b) the aggregate amount of principal payments made to Class A
Certificateholders prior to such date minus (c) the excess, if any, of the
aggregate amount of Class A Investor Charge-Offs pursuant to subsection 4.10(a)
over Class A Investor Charge-Offs reimbursed pursuant to subsection 4.11(b)
prior to such date of determination minus (d) the amount of any reduction to the
Class A Investor Interest as a result of the purchase by the Seller and
subsequent cancellation of the Class A Certificates pursuant to Section 4.16;
provided, however, that the Class A Investor Interest may not be reduced below
zero.
"Class A Investor Loss Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (a) the Investor Loss
Amount for the related Due Period and (b) the Class A Floating Allocation
applicable for the related Due Period.
"Class A Monthly Interest" shall mean the monthly interest
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.6(a).
"Class A Monthly Principal" shall mean the monthly principal
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.7(a).
"Class A Required Amount" shall have the meaning specified in
subsection 4.8(a).
"Class A Servicing Fee" shall have the meaning specified in
Section 3.
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<PAGE> 8
"Class B Additional Interest" shall have the meaning specified
in subsection 4.6(b).
"Class B Available Funds" shall mean, with respect to any
Distribution Date, an amount equal to the sum of (a) the Class B Floating
Allocation of the Collections of Finance Charge Receivables allocated to the
Series 1999-1 Certificates and deposited in the Collection Account for the
related Due Period (including certain other amounts that are to be treated as
Collections of Finance Charge Receivables in accordance with the Agreement) and
(b) if such Distribution Date is on or prior to the Class B Expected Final
Payment Date, the amount of any Class B Cap Payment with respect to such
Distribution Date and the amount of any payments due from the Class B Cap
Provider but not paid with respect to any prior date (to the extent received by
the Trustee).
"Class B Cap Agreement" shall mean the interest rate cap
agreement dated the Closing Date between the Trust and the Class B Cap Provider,
for the benefit of the Class B Certificateholders, the Class C
Certificateholders and the Class D Certificateholders in substantially the form
attached hereto as Exhibit D-2, or any Replacement Interest Rate Cap Agreement
therefor.
"Class B Cap Payment" shall mean, with respect to a
Distribution Date, the payment received from the Class B Cap Provider on the day
preceding such Distribution Date, as determined pursuant to the Class B Cap
Agreement.
"Class B Cap Provider" shall mean [_______________________],
or any successor or assign thereto appointed as provided in the Class B Cap
Agreement, in its individual capacity pursuant to the Class B Cap Agreement, or
if any Replacement Interest Rate Cap Agreement is obtained therefor pursuant to
Section 4.18, the replacement cap provider named therein the short-term debt
obligations of which are rated at least A-1 by Standard & Poor's and P-1 by
Moody's.
"Class B Certificate Rate" shall mean from the Closing Date
through [_________ __, 1999], from [___________ ___, 1999] through [__________
__, 1999] and with respect to each Interest Period thereafter, a per annum rate
equal to ___% per annum in excess of LIBOR as determined on the related LIBOR
Determination Date; provided that if the Class B Certificates are not paid in
full on the Class B Expected Final Payment Date, the Class B Certificate Rate
applicable to the Interest Period commencing on such date and each Interest
Period thereafter will not exceed _____% per annum.
"Class B Certificateholder" shall mean each Person in whose
name a Class B Certificate is registered in the Certificate Register.
"Class B Certificates" shall mean each of the certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"Class B Deficiency Amount" shall have the meaning specified
in subsection 4.6(b).
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<PAGE> 9
"Class B Expected Final Payment Date" shall mean the ________,
____ Distribution Date.
"Class B Fixed Allocation" shall mean, with respect to any Due
Period other than a Due Period relating to the Revolving Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Class B Investor Interest as of the close of business
on the last day of the Revolving Period, and the denominator of which is equal
to the Series Investor Interest as of the end of the day on the last day of the
Due Period occurring immediately prior to the Fixed Allocation Principal Date.
"Class B Floating Allocation" shall mean, with respect to any
Due Period (including any day within such Due Period), the percentage equivalent
(which percentage shall never exceed 100%) of a fraction:
(a) the numerator of which is the Class B Investor Interest as
of the close of business on the last day of the preceding Due Period
(or with respect to the first Due Period ending after the Closing Date,
the Class B Initial Investor Interest); and
(b) the denominator of which is equal to the Series Investor
Interest as of the close of business on such day (or with respect to
the first Due Period ending after the Closing Date, the Initial
Investor Interest).
"Class B Initial Investor Interest" shall mean the aggregate
initial principal amount of the Class B Certificates, which is $___________.
"Class B Investor Allocation" shall mean, with respect to any
Due Period (a) with respect to Series 1999-1 Investor Loss Amounts, Series
1999-1 Investor Dilution Amounts and Collections of Finance Charge Receivables
at any time and Collections of Principal Receivables during the Revolving
Period, the Class B Floating Allocation and (b) with respect to Collections of
Principal Receivables during the Controlled Amortization Period or Early
Amortization Period, the Class B Fixed Allocation.
"Class B Investor Charge-Offs" shall have the meaning
specified in subsection 4.10(b).
"Class B Investor Dilution Amount" shall mean, on any date of
determination, an amount equal to the product of (a) the Series 1999-1 Investor
Dilution Amount and (b) the Class B Floating Allocation.
"Class B Investor Interest" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial Investor Interest,
minus (b) the aggregate amount of principal payments made to Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates pursuant to subsection
4.10(b), minus (d) the aggregate amount of Reallocated Class B Principal
Collections allocated pursuant to subsection 4.12 on all prior Distribution
Dates, minus (d) the amount of any reduction to the Class B Investor Interest as
a result of the purchase by the Seller and subsequent cancellation of
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<PAGE> 10
the Class B Certificates pursuant to Section 4.16, and plus (e) the aggregate
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available on all prior Distribution Dates pursuant to subsection 4.11(d) for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c) and (d); provided, however, that the Class B Investor Interest may not be
reduced below zero.
"Class B Investor Loss Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (a) the Investor Loss
Amount for the related Due Period and (b) the Class B Floating Allocation
applicable for the related Due Period.
"Class B Monthly Interest" shall mean the monthly interest
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.6(b).
"Class B Monthly Principal" shall mean the monthly principal
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.7(b).
"Class B Principal Commencement Date" shall have the meaning
specified in subsection 4.7(b).
"Class B Required Amount" shall have the meaning specified in
subsection 4.8(b).
"Class B Servicing Fee" shall have the meaning specified in
Section 3.
"Class C Available Funds" shall mean, with respect to any
Distribution Date, an amount equal to the Class C Floating Allocation of
Collections of Finance Charge Receivables allocated to the Series 1999-1
Certificates and deposited in the Collection Account for the related Due Period
(including certain other amounts that are to be treated as Collections of
Finance Charge Receivables in accordance with the Agreement).
"Class C Certificate Rate" shall mean, from the Closing Date
through [_________ __, 1999], from [__________ __, 1999] through [____________
__, 1999], and with respect to each Interest Period thereafter, the rate
specified in the Class C Purchase Agreement.
"Class C Certificateholder" shall mean each Person in whose
name a Class C Certificate is registered in the Certificate Register.
"Class C Certificates" shall mean each of the certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-3 hereto.
"Class C Deficiency Amount" shall have the meaning specified
in subsection 4.6(c).
"Class C Fixed Allocation" shall mean, with respect to any Due
Period other than a Due Period relating to the Revolving Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Class C Investor Interest as of
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<PAGE> 11
the close of business on the last day of the Revolving Period, and the
denominator of which is equal to the Series Investor Interest as of the end of
the day on the last day of the Due Period occurring immediately prior to the
Fixed Allocation Principal Date.
"Class C Floating Allocation" shall mean, with respect to any
Due Period (including any day within such Due Period), the percentage equivalent
(which percentage shall never exceed 100%) of a fraction:
(a) the numerator of which is the Class C Investor Interest as
of the close of business on the last day of the preceding Due Period
(or with respect to the first Due Period ending after the Closing Date,
the Class C Initial Investor Interest); and
(b) the denominator of which is equal to the Series Investor
Interest as of the close of business on such day (or with respect to
the first Due Period ending after the Closing Date, the Initial
Investor Interest).
"Class C Initial Investor Interest" shall mean the aggregate
initial principal amount of the Class C Certificates, which is $__________.
"Class C Investor Allocation" shall mean, with respect to any
Due Period (a) with respect to Series 1999-1 Investor Loss Amounts, Series
1999-1 Investor Dilution Amounts and Collections of Finance Charge Receivables
at any time and Collections of Principal Receivables during the Revolving
Period, the Class C Floating Allocation and (b) with respect to Collections of
Principal Receivables during the Controlled Amortization Period or Early
Amortization Period, the Class C Fixed Allocation.
"Class C Investor Charge-Offs" shall have the meaning
specified in subsection 4.10(c).
"Class C Investor Dilution Amount" shall mean, on any date of
determination, an amount equal to the product of (a) the Series 1999-1 Investor
Dilution Amount and (b) the Class C Floating Allocation.
"Class C Investor Interest" shall mean, on any date of
determination, an amount equal to (a) the Class C Initial Investor Interest,
minus (b) the aggregate amount of principal payments made to the Class C
Certificateholders prior to such date, minus (c) the aggregate amount of Class C
Investor Charge-Offs for all prior Distribution Dates pursuant to subsection
4.10(c), minus (d) the aggregate amount of Reallocated Class C Principal
Collections allocated pursuant to subsections 4.12(a) and (b) on all prior
Distribution Dates, minus (e) the amount of any reduction to the Class C
Investor Interest as a result of the purchase by the Seller and subsequent
cancellation of the Class C Certificates pursuant to Section 4.16, and plus (f)
the aggregate amount of Excess Spread and Shared Excess Finance Charge
Collections allocated and available on all prior Distribution Dates pursuant to
subsection 4.11(i) for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (c) and (d); provided further, however, that the Class C
Investor Interest may not be reduced below zero.
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<PAGE> 12
"Class C Investor Loss Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Investor Loss
Amount for the related Due Period and (b) the Class C Floating Allocation
applicable for the related Due Period.
"Class C Monthly Interest" shall mean the monthly interest
distributable in respect of the Class C Certificates as calculated in accordance
with subsection 4.6(c).
"Class C Monthly Principal" shall mean the monthly principal
distributable in respect of the Class C Certificates as calculated in accordance
with subsection 4.7(c).
"Class C Purchase Agreement" shall mean the agreement among
the Seller, the Servicer, the Trustee and the Class C Certificateholders, dated
as of the Closing Date, as amended or modified from time to time.
"Class C Required Amount" shall mean the amount, if any, equal
to the sum of (a) the amount, if any, by which the sum of (i) the Class C
Monthly Interest for such Distribution Date, plus (ii) the Class C Deficiency
Amount, if any, for such Distribution Date, plus (iii) the Class C Investor Loss
Amount, if any, for the prior Due Period, plus (iv) the Class C Investor
Dilution Amount, if any, for the prior Due Period exceeds the amount of Excess
Spread available to be applied to such amounts pursuant to subsections 4.11(f),
(g) and (h), plus (b) the amount, if any, by which the sum of (i) the Class C
Servicing Fee for the prior Due Period, plus (ii) the Class C Servicing Fee, if
any, due but not paid on any prior Distribution Date, exceeds the Class C
Available Funds for the related Due Period and the amount of any Excess Spread
available to be applied to such amount pursuant to subsection 4.11(e).
"Class C Servicing Fee" shall have the meaning specified in
Section 3.
"Class D Available Funds" shall mean, with respect to any
Distribution Date, an amount equal the Class D Floating Allocation of
Collections of Finance Charge Receivables allocated to the Series 1999-1
Certificates and deposited in the Collection Account for the related Due Period
(including certain other amounts that are to be treated as Collections of
Finance Charge Receivables in accordance with the Agreement).
"Class D Certificate Rate" shall mean, from the Closing Date
through [_________ __, 1999], from [___________ __, 1999], through [___________
__, 1999], and with respect to any Interest Period thereafter, a per annum rate
equal to ___% per annum in excess of the Class C Certificate Rate.
"Class D Certificateholder" shall mean any person in whose
name a Class D Certificate is registered in the Certificate Register.
"Class D Certificates" shall mean each of the certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-4 hereto.
"Class D Fixed Allocation" shall mean, with respect to any Due
Period other than a Due Period relating to the Revolving Period, the percentage
equivalent (which percentage shall
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<PAGE> 13
never exceed 100%) of a fraction, the numerator of which is the Class D Investor
Interest as of the close of business on the last day of the Revolving Period,
and the denominator of which is equal to the Series Investor Interest as of the
end of the day on the last day of the Due Period occurring immediately prior to
the Fixed Allocation Principal Date.
"Class D Floating Allocation" shall mean, with respect to any
Due Period (including any day within such Due Period), the percentage equivalent
(which percentage shall never exceed 100%) of a fraction:
(a) the numerator of which is the Class D Investor Interest as
of the close of business on the last day of the preceding Due Period
(or with respect to the first Due Period ending after the Closing Date,
the Class D Initial Investor Interest); and
(b) the denominator of which is equal to the Series Investor
Interest as of the close of business on such day (or with respect to
the first Due Period ending after the Closing Date, the Initial
Investor Interest).
"Class D Initial Investor Interest" shall mean the aggregate
initial principal amount of the Class D Investor Interest, which is
$____________.
"Class D Investor Allocation" shall mean, with respect to any
Due Period, (a) with respect to Series 1999-1 Investor Loss Amounts, Series
1999-1 Investor Dilution Amounts and Collections of Finance Charge Receivables
at any time and Principal Receivables during the Revolving Period, the Class D
Floating Allocation and (b) with respect to Collections of Principal Receivables
during the Controlled Amortization Period or Early Amortization Period, the
Class D Fixed Allocation.
"Class D Investor Charge-Offs" shall have the meaning
specified in subsection 4.10(d).
"Class D Investor Dilution Amount" shall mean, on any date of
determination, an amount equal to the product of (a) the Series 1999-1 Investor
Dilution Amount and (b) the Class D Floating Allocation.
"Class D Investor Interest" shall mean, on any date of
determination, an amount equal to (a) the Class D Initial Investor Interest,
minus (b) the aggregate amount of principal payments made to the holders of the
Class D Certificates prior to such date, minus (c) the aggregate amount of Class
D Investor Charge-Offs for all prior Distribution Dates pursuant to subsection
4.10(d), minus (d) the aggregate amount of Reallocated Class D Principal
Collections allocated pursuant to subsections 4.12(a), (b) and (c) on all prior
Distribution Dates, minus (e) the amount of any reduction to the Class D
Investor Interest as a result of the purchase by the Seller and subsequent
cancellation of the Class D Certificates pursuant to Section 4.16, and plus (f)
the aggregate amount of Excess Spread and Shared Excess Finance Charge
Collections allocated and available on all prior Distribution Dates pursuant to
subsection 4.11(o) for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (c) and (d); provided further, however, that the Class D
Investor Interest may not be reduced below zero.
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<PAGE> 14
"Class D Investor Loss Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Investor Loss
Amount for the related Due Period and (b) the Class D Floating Allocation
applicable for the related Due Period.
"Class D Monthly Interest" shall mean the monthly interest
distributable in respect of the Class D Certificates as calculated in accordance
with subsection 4.6(d).
"Class D Monthly Principal" shall mean the monthly principal
distributable in respect of the Class D Certificates as calculated in accordance
with subsection 4.7(d).
"Class D Servicing Fee" shall have the meaning specified in
Section 3.
"Closing Date" shall mean ____ ___, 1999.
"Controlled Amortization Amount" for any Due Period related to
the Controlled Amortization Period shall mean $____________; provided, however,
that such amount shall be adjusted downward to reflect any reduction to the
Class A Investor Interest as a result of any cancellation of Class A
Certificates pursuant to Section 4.16.
"Controlled Amortization Period" shall mean, unless an Early
Amortization Event shall have occurred prior thereto, the period commencing on
_______ __, ____ and ending upon the first to occur of (a) the commencement of
the Early Amortization Period and (b) the Series 1999-1 Termination Date.
"Controlled Amortization Shortfall" shall mean (i) with
respect to the first Due Period related to the Controlled Amortization Period,
zero, and (ii) with respect to each other Due Period during the Controlled
Amortization Period, means the excess, if any, of the Controlled Payment Amount
for the previous Due Period over the amount of Available Principal Collections
distributed as payment of such Controlled Payment Amount on the Distribution
Date related to such previous Due Period.
"Controlled Payment Amount" for any Due Period, shall mean,
the sum of (a) the Controlled Amortization Amount and (b) any existing
Controlled Amortization Shortfall.
"Controlling Certificateholders" shall mean (a) on any date of
determination on which the Class A Investor Interest or the Class B Investor
Interest is greater than zero, the Holders of Class A Certificates and Class B
Certificates evidencing more than 50% of the sum of the Class A Investor
Interest and the Class B Investor Interest and (b) thereafter, the Holders of
Class C Certificates evidencing more than 50% of the Class C Investor Interest.
"Cumulative Principal Shortfall" shall mean the sum of the
Principal Shortfalls (as such term is defined in each of the related Supplements
or Receivables Purchase Agreement) for each Series in Group One that are
Principal Sharing Series.
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<PAGE> 15
"Distribution Date" shall mean ________ 15, 1999 and the
fifteenth day of each calendar month thereafter, or if such fifteenth day is not
a Business Day, the next succeeding Business Day.
"Early Amortization Period" shall mean the period commencing
at the close of business on the Business Day immediately preceding the day on
which an Early Amortization Event with respect to Series 1999-1 is deemed to
have occurred, and ending on the Series 1999-1 Termination Date.
"Enhancement" shall mean (a) with respect to the Class A
Certificates, the subordination of the Class B Certificates, the Class C
Certificates and the Class D Certificates, (b) with respect to the Class B
Certificates, the subordination of the Class C Certificates and the Class D
Certificates and (c) with respect to the Class C Certificates, the subordination
of the Class D Certificates.
"Excess Spread" shall mean, with respect to any Distribution
Date, the sum of the amounts with respect to such Distribution Date, if any,
specified pursuant to subsections 4.9(a)(v), 4.9(b)(iii), 4.9(c)(ii) and
4.9(d)(ii).
"Finance Charge Shortfall" shall have the meaning specified in
subsection 4.14(b).
"Fixed Allocation Percentage" shall mean, with respect to any
Due Period (including any day within such Due Period) occurring on or after the
Fixed Principal Allocation Date, the percentage equivalent of a fraction:
(a) the numerator of which is the Series Investor Interest as
of the end of the day on the last day of the Due Period occurring
immediately prior to the Fixed Principal Allocation Date, as
applicable; provided, that if Series 1999-1 is paired with a Paired
Series and an Early Amortization Event occurs with respect to such
Paired Series during the Controlled Amortization Period, the Seller
may, by written notice delivered to the Trustee, the Servicer and the
Rating Agencies, designate a different numerator (provided that such
numerator is not less than the Series 1999-1 Investor Interest as of
the last day of the revolving period for such Paired Series) and
(b) the denominator of which is the greater of (i) the sum of
(A) the aggregate amount of Principal Receivables in the Trust at the
end of the day on the last day of the prior Due Period and (B) the
Excess Funding Amount as of the close of business of the last day of
the prior Due Period, and (ii) the sum of the numerators used to
calculate the Investor/Purchaser Percentages for such Due Period with
respect to Principal Receivables for all Series of Certificates and
Receivable Purchase Series outstanding;
provided, that with respect to any Due Period in which a Reset Date occurs, the
denominator determined pursuant to subclause (b)(i)(A) shall be (1) the
aggregate amount of Principal Receivables in the Trust as of the close of
business on the later of the last day of the preceding Due Period or the
preceding Reset Date, for the period from and including the first day of the
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<PAGE> 16
current Due Period or preceding Reset Date, as applicable, to but excluding such
Reset Date and (2) the aggregate amount of Principal Receivables in the Trust as
of the close of business on such Reset Date, for the period from and including
such Reset Date to the earlier of the last day of such Due Period (in which case
such period shall include such day) or the next succeeding Reset Date (in which
case such period shall not include such succeeding Reset Date); provided further
that with respect to any Due Period in which a Reset Date occurs, if the
Servicer need not make daily deposits of Collections into the Collection
Account, the amount in subclause (b)(i)(A) shall be the Average Principal
Balance.
"Fixed Principal Allocation Date" shall mean the earlier of
(a) the date on which an Early Amortization Period with respect to Series 1999-1
commences; and (b) the date of commencement of the Controlled Amortization
Period.
"Floating Allocation Percentage" shall mean, with respect to
any Due Period (including any day within such Due Period), the percentage
equivalent of a fraction:
(a) the numerator of which is the Investor Interest at the end of
the day on the last day of the prior Due Period (or with respect to
the first Due Period ending after the Closing Date, the Initial
Investor Interest), and
(b) the denominator of which is the greater of (1) the sum of (A)
the aggregate amount of Principal Receivables in the Trust at the end
of the day on such date (or with respect to the first Due Period
ending after the Closing Date, at the end of the day on the Closing
Date) and (B) the Excess Funding Amount as of the close of business of
the last day of the prior Due Period, and (2) the sum of the
numerators used to calculate the Investor/Purchaser Percentages for
such Due Period with respect to Finance Charge Receivables, Series
Dilution Amounts or Loss Amounts, as applicable, for all Series of
Certificates and Receivable Purchase Series outstanding;
provided that with respect to any Due Period in which a Reset Date occurs:
(x) the numerator determined pursuant to clause (a) above shall
be (1) the Investor Interest as of the close of business on the later
of the last day of the preceding Due Period or the Reset Date, for the
period from and including the first day of the current Due Period or
the preceding Reset Date, as applicable, to but excluding such Reset
Date and (2) the Investor Interest as of the close of business on such
Reset Date, for the period from and including such Reset Date to the
earlier of the last day of such Due Period (in which case such period
shall include such day) or the next succeeding Reset Date (in which
case such period shall not include such succeeding Reset Date);
(y) the denominator determined pursuant to subclause (b)(1)(A)
shall be (1) the aggregate amount of Principal Receivables in the
Trust as of the close of business on the later of the last day of the
preceding Due Period or the preceding Reset Date, for the period from
and including the first day of the current Due Period or preceding
Reset Date, as applicable, to but excluding such Reset Date and (2)
the aggregate amount of Principal Receivables in the Trust as of the
close of business on such Reset Date, for the
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<PAGE> 17
period from and including such Reset Date to the earlier of the last day of such
Due Period (in which case such period shall include such day) or the next
succeeding Reset Date (in which case such period shall not include such
succeeding Reset Date); provided that with respect to any Due Period in which a
Reset Date occurs, if the Servicer need not make daily deposits of Collections
into the Collection Account, the amount in subclause (b)(1)(A) shall be the
Average Principal Balance; and
(z) the denominator determined pursuant to subclause (b)(2)
shall be (1) the sum of the numerators used to calculate the
Investor/Purchaser Percentages for all outstanding Series for
allocations with respect to Finance Charge Receivables, Series Dilution
Amounts, Loss Amounts or Principal Receivables, as applicable, for all
such Series as of the close of business on the later of the last day of
the preceding Due Period or the preceding Reset Date, for the period
from and including the first day of the current Due Period or preceding
Reset Date, as applicable, to but excluding such Reset Date and (2) the
sum of the numerators used to calculate the Investor/Purchaser
Percentages for all outstanding Series for allocations with respect to
Finance Charge Receivables, Series Dilution Amounts, Loss Amounts or
Principal Receivables, as applicable, for all such Series as the close
of business on such Reset Date, for the period from and including such
Reset Date to the earlier of the last day of such Due Period (in which
case such period shall include such day) or the next succeeding Reset
Date (in which case such period shall not include such succeeding Reset
Date).
"Group One" shall mean Series 1999-1 and each other Series
specified in the related Supplement or Receivables Purchase Agreement to be
included in Group One.
"Initial Investor Interest" shall mean the sum of the Class A
Initial Investor Interest, the Class B Initial Investor Interest, the Class C
Initial Investor Interest and the Class D Initial Investor Interest.
"Interest Period" shall mean, with respect to any Distribution
Date, the period from and including the previous Distribution Date through the
day preceding such Distribution Date, except that the initial Interest Period
shall be the period from and including the Closing Date through the day
preceding the initial Distribution Date.
"Interest Rate Cap Agreements" shall mean the Class A Cap
Agreement and the Class B Cap Agreement.
"Interest Rate Cap Provider" shall mean either of the Class A
Cap Provider or the Class B Cap Provider.
"Investor Charge-Offs" shall mean, on any date of
determination, an amount equal to the sum of (i) the Class A Investor
Charge-Offs, (ii) the Class B Investor Charge-Offs, (iii) the Class C Investor
Charge-Offs and (iv) the Class D Investor Charge-Offs.
"Investor Interest" for Series 1999-1 means the Series
Investor Interest.
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"Investor Loss Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the aggregate of the
Loss Amounts for the related Due Period and (b) the Floating Allocation
Percentage for such Due Period.
"Investor/Purchaser Percentage" for Series 1999-1 shall mean,
with respect to Collections of Principal Receivables, the Principal Allocation
Percentage, and with respect to Collections of Finance Charge Receivables,
Series Dilution Amounts or Loss Amounts, the Floating Allocation Percentage.
"LIBOR" shall mean, for any Interest Period, the London
interbank offered rate for one-month United States dollar deposits determined by
the Trustee for each Interest Period in accordance with the provisions of
Section 4.17.
"LIBOR Determination Date" shall mean [_________, __, 1999]
for the period from the Closing Date through [_________, __, 1999] , [_________,
__, 1999] for the period from [_________, __, 1999] through [_________, __,
1999], and the second London Business Day prior to the commencement of the
second and each subsequent Interest Period.
"London Business Day" shall mean a day on which the Trustee
and commercial banks in the City of London are open for the transaction of
commercial banking business.
"Minimum Seller Interest" for Series 1999-1 shall mean zero.
"Monthly Interest" shall mean, with respect to any
Distribution Date, the sum of (a) the Class A Monthly Interest, the Class A
Additional Interest, if any, and the unpaid Class A Deficiency Amount, if any;
(b) the Class B Monthly Interest, the Class B Additional Interest, if any, and
the unpaid Class B Deficiency Amount, if any; (c) the Class C Monthly Interest
and the unpaid Class C Deficiency Amount, if any; and (d) the Class D Monthly
Interest, each with respect to such Distribution Date.
"Portfolio Yield" shall mean, with respect to any Due Period,
the annualized percentage equivalent of a fraction, the numerator of which is an
amount equal to the sum of (a) the Floating Allocation Percentage of Collections
of Finance Charge Receivables allocated to the Series 1999-1 Certificates for
such Due Period (including certain other amounts that are to be treated as
Collections of Finance Charge Receivables in accordance with the Agreement) plus
(b) any Shared Excess Finance Charge Collections that are allocated to Series
Section 4.14 for the related Distribution Date plus (c) the Class A Cap Payment
and the Class B Cap Payment, if any, scheduled to be paid on the related
Distribution Date, such sum to be calculated on a cash basis after subtracting
the Investor Loss Amount for such Due Period, and the denominator of which is
the Series Investor Interest as of the last day of the preceding Due Period (or
with respect to the initial Due Period, the Initial Investor Interest).
"Principal Allocation Percentage" shall mean, (a) with respect
to any Due Period (including any day within such Due Period) occurring prior to
the Fixed Principal Allocation Date, the Floating Allocation Percentage for such
Due Period, and (b) with respect to any Due
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<PAGE> 19
Period (including any day within such Due Period) occurring on or after the
Fixed Principal Allocation Date, the Fixed Allocation Percentage for such Due
Period.
"Principal Shortfall" shall mean, as the context requires, any
of the following: (a) on any Distribution Date with respect to the Controlled
Amortization Period, the Controlled Payment Amount for the prior Due Period
exceeds the amount of Available Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Shared Principal Collections);
and (b) on the Class B Expected Final Payment Date (if an Early Amortization
Event with respect to Series 1999-1 has not occurred), the amount by which the
Class B Investor Interest exceeds the amount of Available Principal Collections
for such Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections); and (c) on any Distribution Date with respect to the
Early Amortization Period, the amount by which the Investor Interest exceeds the
Available Principal Collections for such Distribution Date (excluding any
portion thereof attributable to Shared Principal Collections).
"Rating Agency" shall mean Moody's and Standard & Poor's.
"Reallocated Class B Principal Collections" shall mean, with
respect to any Distribution Date, Collections of Principal Receivables allocated
to the Class B Investor Interest applied in accordance with subsection 4.12(a)
(applying Reallocated Class D Principal Collections and Reallocated Class C
Principal Collections pursuant to subsection 4.12(a) before applying any
Reallocated Class B Principal Collections) in an amount not to exceed the amount
described in subsection 4.5(a)(iv) during the Revolving Period, subsection
4.5(b)(iv) during the Controlled Amortization Period and Subsection 4.5(c)(iv)
during the Early Amortization Period; provided, however, that such amount shall
not exceed the Class B Investor Interest after giving effect to any Class B
Investor Charge-Offs for such Distribution Date.
"Reallocated Class C Principal Collections" shall mean, with
respect to any Distribution Date, Collections of Principal Receivables allocated
to the Class C Investor Interest applied in accordance with subsections 4.12(a)
and (b) (applying Reallocated Class D Principal Collections pursuant to
subsections 4.12(a) and (b) before applying any Reallocated Class C Principal
Collections) in an amount not to exceed the amount described in subsection
4.5(a)(iii) during the Revolving Period, subsection 4.5(b)(iii) during the
Controlled Amortization Period and subsection 4(c)(iii) during the Early
Amortization Period; provided, however, that such amount shall not exceed the
Class C Investor Interest after giving effect to any Class C Investor
Charge-Offs for such Distribution Date.
"Reallocated Class D Principal Collections" shall mean, with
respect to any Distribution Date, Collections of Principal Receivables allocated
to the Class D Investor Interest applied in accordance with subsections 4.12(a),
(b) and (c) in an amount not to exceed the amount described in subsection
4.5(a)(ii) during the Revolving Period, subsection 4.5(b)(ii) during the
Controlled Amortization Period and subsection 4.5(c)(ii) during the Early
Amortization Period; provided, however, that such amount shall not exceed the
Class D Investor Interest after giving effect to any Class D Investor
Charge-Offs for such Distribution Date.
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<PAGE> 20
"Reallocated Principal Collections" shall mean the sum of (a)
Reallocated Class B Principal Collections, (b) Reallocated Class C Principal
Collections and (c) Reallocated Class D Principal Collections.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer.
"Replacement Interest Rate Cap Agreement" shall mean any
replacement interest cap having substantially similar terms and conditions as
the Interest Rate Cap Agreement it replaces.
"Reset Date" shall mean the occurrence of any Addition Date or
any Removal Date.
"Revolving Period" shall mean the period from and including
the Closing Date to, but not including, the Fixed Principal Allocation Date.
"Series Investor Interest" shall mean, on any date of
determination, an amount equal to the sum of (i) the Class A Investor Interest,
(ii) the Class B Investor Interest, (iii) the Class C Investor Interest and (iv)
the Class D Investor Interest, each as of such date.
"Series 1999-1" shall mean the Series of the Charming Shoppes
Master Trust represented by the Investor Certificates.
"Series 1999-1 Certificateholder" shall mean the Holder of
record of any Series 1999-1 Certificate.
"Series 1999-1 Certificates" shall mean the Class A
Certificates, the Class B Certificates, the Class C Certificates and the Class D
Certificates.
"Series 1999-1 Early Amortization Event" shall have the
meaning specified in Section 9 of this Supplement.
"Series 1999-1 Investor Dilution Amount" shall mean, with
respect to any Distribution Date, an amount equal to the product of (a) the
Floating Allocation Percentage for the related Due Period and (b) the Series
Dilution Amount allocated to Series 1999-1 pursuant to Section 4.3(d).
"Series 1999-1 Investor Monthly Servicing Fee" shall have the
meaning specified in Section 3.
"Series 1999-1 Termination Date" shall mean the earliest to
occur of (a) the Distribution Date on which the Series 1999-1 Certificates are
paid in full, (b) the ________, ________ Distribution Date or (c) the date of
termination of the Trust pursuant to Section 12.1.
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"Series 1999-1 Unfunded Dilution Amount" shall mean, on any
Distribution Date, an amount equal to any unfunded Series 1999-1 Dilution Amount
remaining after reallocation to the Seller Interest and any addition of Accounts
pursuant to Section 4.3(d).
"Series Servicing Fee Percentage" shall mean 2.0%.
"Shared Excess Finance Charge Collections" shall mean, with
respect to any Distribution Date, as the context requires, either (a) the
aggregate amount of Collections of Finance Charge Receivables allocated to the
Series 1999-1 Certificates but available to cover Finance Charge Shortfalls for
other Series in Group One, if any, or (b) the aggregate amount of Collections of
Finance Charge Receivables and other amounts allocable to other Series in Group
One in excess of the amounts necessary to make required payments with respect to
such Series, if any, and available to cover any Finance Charge Shortfall with
respect to the Series 1999-1 Certificates as described in Section 4.14.
"Shared Principal Collections" shall mean, as the context
requires, either (a) the amount allocated to the Series 1999-1 Certificates
which may be applied to cover Principal Shortfalls with respect to other
outstanding Series in Group One, or (b) the amounts allocated to the Investor
Certificates of other Series in Group One that the applicable Supplements for
such Series specify are to be treated as "Shared Principal Collections" and
which may be applied to cover Principal Shortfalls with respect to the Series
1999-1 Certificates pursuant to Section 4.15.
"Subperiod" means, with respect to a Due Period in which one or more
Reset Dates occur (the "Subject Due Period"), any of the following:
(i) the period from and including the last day of the prior Due
Period to but excluding the first Reset Date in the Subject
Due Period,
(ii) the period from and including the last Reset Date in the
Subject Due Period to and including the last day of the
Subject Due Period, and
(iii) the period, if any, from and including one Reset Date in the
Subject Due Period to but excluding the next Reset Date.
"Telerate Page 3750" shall mean the display page currently so
designated on the Dow Jones Telerate Service (or such other page as may replace
that page on that service for displaying comparable rates or prices).
SECTION 3. Servicing Compensation. The share of the Monthly
Servicing Fee allocable to Series 1999-1 (the "Series 1999-1 Investor Monthly
Servicing Fee") with respect to any Due Period shall be equal to one-twelfth of
the product of (i) the Series Servicing Fee Percentage and (ii) (a) the Investor
Interest as of the last day of such Due Period minus (b) the product of the
amount, if any, on deposit in the Excess Funding Account as of the last day of
such Due Period and the Principal Allocation Percentage for such Due Period (the
amount calculated pursuant to this clause (ii) is referred to as the "Servicing
Base Amount"); provided, however, that with respect to the first Due Period
ending after the Closing Date, the Series 1999-
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<PAGE> 22
1 Investor Monthly Servicing Fee shall be equal to $_________. The share of the
Series 1999-1 Investor Monthly Servicing Fee allocable to the Class A Investor
Interest with respect to any Due Period (the "Class A Servicing Fee") shall be
equal to one-twelfth of the product of (i) the Class A Floating Allocation, (ii)
the Series Servicing Fee Percentage, and (iii) the Servicing Base Amount for
such Due Period; provided, however, that with respect to the first Due Period
ending after the Closing Date, the Class A Servicing Fee shall be equal to
$_________. The share of the Series 1999-1 Investor Monthly Servicing Fee
allocable to the Class B Investor Interest with respect to any Due Period (the
"Class B Servicing Fee") shall be equal to one-twelfth of the product of (i) the
Class B Floating Allocation, (ii) the Series Servicing Fee Percentage and (iii)
the Servicing Base Amount for such Due Period; provided, however, that with
respect to the first Due Period ending after the Closing Date, the Class B
Servicing Fee shall be equal to $__________. The share of the Series 1999-1
Investor Monthly Servicing Fee allocable to the Class C Investor Interest with
respect to any Due Period (the "Class C Servicing Fee") shall be equal to
one-twelfth of the product of (i) the Class C Floating Allocation, (ii) the
Series Servicing Fee Percentage and (iii) the Servicing Base Amount for such Due
Period; provided, however, that with respect to the first Due Period ending
after the Closing Date, the Class C Servicing Fee shall be equal to $__________.
The share of the Series 1999-1 Investor Monthly Servicing Fee allocable to the
Class D Investor Interest with respect to any Due Period (the "Class D Servicing
Fee") shall be equal to one-twelfth of the product of (i) the Class D Floating
Allocation, (ii) the Series Servicing Fee Percentage and (iii) the Servicing
Base Amount for such Due Period; provided, however, that with respect to the
first Due Period ending after the Closing Date, the Class D Servicing Fee shall
be equal to $___________. Except as specifically provided above, the Monthly
Servicing Fee shall be paid by the cash flows from the Trust allocated to the
Seller or the Certificateholders of other Series (as provided in the related
Supplements or Receivables Purchase Agreements) and in no event shall the Trust,
the Trustee or the Investor Certificateholders be liable therefor. The Class A
Servicing Fee shall be payable to the Servicer solely to the extent amounts are
available for distribution in respect thereof pursuant to subsections 4.9(a)(ii)
and 4.11(a). The Class B Servicing Fee shall be payable solely to the extent
amounts are available for distribution in respect thereof pursuant to
subsections 4.9(b)(ii) and 4.11(c). The Class C Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsections 4.9(c)(i) and 4.11(e). The Class D Servicing Fee shall
be payable solely to the extent amounts are available for distribution in
respect thereof pursuant to subsections 4.9(d)(i) and 4.11(k).
SECTION 4. Reassignment and Transfer Terms. The Series 1999-1
Certificates shall be subject to retransfer to the Seller at its option, in
accordance with the terms specified in subsection 12.2(a), on any Distribution
Date on or after the Distribution Date on which the Series Investor Interest is
less than or equal to 10% of the Initial Investor Interest. The deposit required
in connection with any such repurchase shall be equal to the Series Investor
Interest plus accrued and unpaid interest on the Series 1999-1 Certificates
through the day preceding the Distribution Date on which the repurchase occurs.
SECTION 5. Delivery and Payment for the Series 1999-1
Certificates. The Seller shall execute and deliver the Series 1999-1
Certificates to the Trustee for authentication in accordance with Section 6.1.
The Trustee shall deliver the Series 1999-1 Certificates when authenticated in
accordance with Section 6.2.
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SECTION 6. Depository; Form of Delivery of Series 1999-1
Certificates.
(a) The Class A Certificates and the Class B Certificates
shall be delivered as Book-Entry Certificates as provided in Sections 6.2 and
6.10. The Class C Certificates and the Class D Certificates shall be delivered
as Definitive Certificates as provided in Sections 6.2 and 6.12.
(b) The Depository for Series 1999-1 shall be The Depository
Trust Company, and the Class A Certificates and Class B Certificates shall be
initially registered in the name of Cede & Co., its nominee.
SECTION 7. Article IV of Agreement. Sections 4.1, 4.2 and 4.3
of the Agreement shall be read in their entirety as provided in the Agreement.
Article IV of the Agreement (except for Sections 4.1, 4.2 and 4.3) shall read in
its entirety as follows and shall be applicable only to the Series 1999-1
Certificates.
ARTICLE IV.
RIGHTS OF CERTIFICATEHOLDERS AND RECEIVABLES
PURCHASERS AND ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Series 1999-1 Certificateholders. The
Series 1999-1 Certificates shall represent undivided interests in the Trust,
consisting of the right to receive, to the extent necessary to make the required
payments with respect to such Series 1999-1 Certificates at the times and in the
amounts specified in this Agreement, (a) the Floating Allocation Percentage and
Principal Allocation Percentage (as applicable from time to time) of Collections
received with respect to the Receivables (including certain other amounts that
are to be treated as collections of Receivables in accordance with the terms of
this Agreement, (b) any other funds on deposit (or to be deposited) in the
Collection Account or the Excess Funding Account allocated to Series 1999-1, (c)
any Class A Cap Payments and Class B Cap Payments, and (d) any other amounts
that pursuant to this Agreement or any Supplement are allocable to Series
1999-1. The Class D Certificate shall be subordinate to the Class A
Certificates, the Class B Certificates and the Class C Certificates. The Class C
Certificates shall be subordinate to the Class A Certificates and the Class B
Certificates. The Class B Certificates shall be subordinate to the Class A
Certificates. The Exchangeable Seller Certificate shall not represent any
interest in the Collection Account or the Excess Funding Account except as
specifically provided in this Article IV.
SECTION 4.5. Allocations.
(a) Allocations During the Revolving Period. During the
Revolving Period, the Servicer shall, prior to the close of business on the day
any Collections are deposited in the Collection Account, allocate to the Series
1999-1 Certificateholders, the following amounts as set forth below:
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<PAGE> 24
(i) Allocate to the Series 1999-1 Certificateholders an
amount equal to the product of (A) the Floating Allocation Percentage
on such date and (B) the aggregate amount of Collections processed in
respect of Finance Charge Receivables on such date, to be applied in
accordance with Sections 4.9 and 4.11.
(ii) An amount equal to the product of (A) the Class D
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(e).
(iii) An amount equal to the product of (A) the Class C
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(e).
(iv) An amount equal to the product of (A) the Class B
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(e).
(v) An amount equal to the product of (A) the Class A
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied in
accordance with subsection 4.9(e);
provided, however, that (A) the aggregate amount allocated to the Series 1999-1
Certificateholders pursuant to this subsection 4.5(a)(ii) through (v) during any
Due Period shall not exceed the amounts required to be distributed on the
Distribution Date related to such Due Period pursuant to subsections 4.9(a)
through (e)(i) and subsections 4.11(a) through (o) and (B) any amounts not so
allocated as a result of clause (A) of this proviso shall be treated as Shared
Excess Finance Charge Collections.
(b) Allocations During the Controlled Amortization Period.
During the Controlled Amortization Period, the Servicer shall, prior to the
close of business on the day any Collections are deposited in the Collection
Account, allocate to the Series 1999-1 Certificateholders, the following amounts
as set forth below:
(i) Allocate to the Series 1999-1 Certificateholders an
amount equal to the product of (A) the Floating Allocation Percentage
on such date and (B) the aggregate amount of Collections processed in
respect of Finance Charge Receivables on such date, to be applied in
accordance with Sections 4.9 and 4.11.
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<PAGE> 25
(ii) An amount equal to the product of (A) the Class D
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(f).
(iii) An amount equal to the product of (A) the Class C
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(f).
(iv) An amount equal to the product of (A) the Class B
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(f).
(v) An amount equal to the product of (A) the Class A
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied in
accordance with subsection 4.9(f);
provided, however, that (A) the aggregate amount allocated to the Series 1999-1
Certificateholders pursuant to this subsection 4.5(b)(ii) through (v) during any
Due Period shall not exceed the amounts required to be distributed on the
Distribution Date related to such Due Period pursuant to subsection 4.9(e)(i) or
subsection 4.9(f)(i) through (v) and (B) any amounts not so allocated as a
result of clause (A) of this proviso shall be treated as Shared Principal
Collections.
(c) Allocations During the Early Amortization Period. During
the Early Amortization Period, the Servicer shall, prior to the close of
business on the day any Collections are deposited in the Collection Account,
allocate to the Series 1999-1 Certificateholders, the following amounts as set
forth below:
(i) Allocate to the Series 1999-1 Certificateholders an
amount equal to the product of (A) the Floating Allocation Percentage
on such date and (B) the aggregate amount of such Collections processed
in respect of Finance Charge Receivables on such date, to be applied in
accordance with Sections 4.9 and 4.11.
(ii) An amount equal to the product of (A) the Class D
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with sub section
4.9(f).
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<PAGE> 26
(iii) An amount equal to the product of (A) the Class C
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(f).
(iv) An amount equal to the product of (A) the Class B
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied first in
accordance with Section 4.12 and then in accordance with subsection
4.9(f).
(v) An amount equal to the product of (A) the Class A
Investor Allocation on such date, (B) the Investor/Purchaser Percentage
on such date and (C) the aggregate amount of Collections processed in
respect of Principal Receivables on such date, to be applied in
accordance with subsection 4.9(f).
SECTION 4.6. Determination of Monthly Interest.
(a) The amount of monthly interest distributable in respect of
the Class A Certificates on each Distribution Date shall be an amount equal to
the product of (i) a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, (ii)
the Class A Certificate Rate, and (iii) the outstanding principal balance of the
Class A Certificates determined as of the Record Date preceding such
Distribution Date (the "Class A Monthly Interest"); provided, however, that with
respect to the first Distribution Date, Class A Monthly Interest will be equal
to interest accrued on the initial outstanding principal balance of the Class A
Certificates at the Class A Certificate Rate from the Closing Date through
__________, ___ 1999; provided further, however, that in addition to Class A
Monthly Interest an amount equal to the amount of any unpaid Class A Deficiency
Amounts, as defined below, plus an amount equal to the product of (A) a
fraction, the numerator of which is the actual number of days in the related
Interest Period and the denominator of which is 360, (B) the sum of the Class A
Certificate Rate and 1.0% per annum, and (C) any Class A Deficiency Amounts from
the prior Distribution Date, as defined below, or the portion thereof which has
not theretofore been paid to Class A Certificateholders (the "Class A Additional
Interest"), shall also 9be distributable in respect of the Class A Certificates.
The "Class A Deficiency Amount" for any Distribution Date shall be equal to the
excess, if any, of the aggregate amount accrued pursuant to this subsection
4.6(a) for all Interest Periods prior to the immediately preceding Interest
Period, over the amount actually paid to Class A Certificateholders in respect
of such amounts on all prior Distribution Dates.
(b) The amount of monthly interest distributable in respect of
the Class B Certificates on each Distribution Date shall be an amount equal to
the product of (i) a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, (ii)
the Class B Certificate Rate, and (iii) the outstanding principal balance of the
Class B Certificates determined as of the Record Date preceding such
Distribution Date (the "Class B Monthly Interest"); provided, however, that with
respect to the first
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Distribution Date, Class B Monthly Interest will be equal to interest accrued on
the initial outstanding principal balance of the Class B Certificates at the
Class B Certificate Rate from the Closing Date through ____________, ___, 1999;
provided further, however, that in addition to the Class B Monthly Interest an
amount equal to the amount of any unpaid Class B Deficiency Amounts, as defined
below, plus an amount equal to the product of (A) a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360, (B) the sum of the Class B Certificate Rate and
1.0% per annum, and (C) any Class B Deficiency Amount from the prior
Distribution Date, as defined below, or the portion thereof which has not
theretofore been paid to Class B Certificateholders (the "Class B Additional
Interest"), shall also be distributable in respect of the Class B Certificates.
The "Class B Deficiency Amount" for any Distribution Date shall be equal to the
excess, if any, of the aggregate amount accrued pursuant to this subsection
4.6(b) for all Interest Periods prior to the immediately preceding Interest
Period, over the amount actually paid to the Class B Certificateholders in
respect of such amounts on all prior Distribution Dates.
(c) The amount of monthly interest distributable in respect of
the Class C Certificates on each Distribution Date shall be an amount equal to
the product of (i) a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, (ii)
the Class C Certificate Rate in effect with respect to the related Interest
Period, and (iii) the Class C Investor Interest determined as of the Record Date
preceding such Distribution Date (the "Class C Monthly Interest"); provided,
however, that in addition to the Class C Monthly Interest an amount equal to any
unpaid Class C Deficiency Amounts, as defined below, shall also be distributed
to the Class C Certificateholders. The "Class C Deficiency Amount" for any
Distribution Date shall be equal to the excess, if any, of the aggregate amount
accrued pursuant to this subsection 4.6(c) for all Interest Periods prior to the
immediately preceding Interest Period, over the amount actually paid to the
Class C Certificateholders in respect of such amounts on all prior Distribution
Dates.
(d) The amount of monthly interest distributable in respect of
the Class D Certificates on each Distribution Date shall be an amount equal to
the product of (i) a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, (ii)
the Class D Certificate Rate in effect with respect to the related Interest
Period, and (iii) the Class D Investor Interest determined as of the Record Date
preceding such Distribution Date (the "Class D Monthly Interest").
SECTION 4.7. Determination of Monthly Principal.
(a) The amount of monthly principal distributable with respect
to the Class A Certificates on each Distribution Date (the "Class A Monthly
Principal"), beginning with the Distribution Date in the month following the
month in which the Controlled Amortization Period or, if earlier, the Early
Amortization Period, begins, shall be equal to the least of (i) the Available
Principal Collections with respect to such Distribution Date, (ii) for each
Distribution Date with respect to the Controlled Amortization Period prior to
the Class A Expected Final Payment Date, the Controlled Payment Amount for such
Distribution Date and (iii) the Class A Investor Interest on such Distribution
Date (after taking into account any adjustments to be made on such Distribution
Date pursuant to Section 4.10).
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(b) The amount of monthly principal distributable with respect
to the Class B Certificates on each Distribution Date (the "Class B Monthly
Principal") beginning with the Distribution Date immediately following the
Distribution Date on which the Class A Investor Interest has been paid in full,
and during the Early Amortization Period, beginning with the Distribution Date
on which the Class A Investor Interest has been paid in full (the "Class B
Principal Commencement Date"), shall be an amount equal to the lesser of (i) the
Available Principal Collections with respect to such Distribution Date (minus
the portion of such Available Principal Collections applied to Class A Monthly
Principal on such Distribution Date) and (ii) the Class B Investor Interest
(after taking into account any adjustments to be made on such Distribution Date
pursuant to Sections 4.10 and 4.12) on such Distribution Date.
(c) The amount of monthly principal distributable with respect
to the Class C Certificates on each Distribution Date (the "Class C Monthly
Principal") shall be, beginning with the Distribution Date on which the Class B
Investor Interest has been paid in full, an amount equal to the lesser of (i)
the Available Principal Collections with respect to such Distribution Date
(minus the portion of such Available Principal Collections applied to Class A
Monthly Principal and Class B Monthly Principal on such Distribution Date) and
(ii) the Class C Investor Interest (after taking into account any adjustments to
be made on such Distribution Date pursuant to Sections 4.10 and 4.12) on such
Distribution Date.
(d) The amount of monthly principal distributable with respect
to the Class D Certificates on each Distribution Date (the "Class D Monthly
Principal") shall be, beginning with the Distribution Date on which the Class C
Investor Interest has been paid in full, an amount equal to the lesser of (i)
the Available Principal Collections with respect to such Distribution Date
(minus the portion of such Available Principal Collections applied to Class A
Monthly Principal, Class B Monthly Principal and Class C Monthly Principal on
such Distribution Date) and (ii) the Class D Investor Interest (after taking
into account any adjustments to be made on such Distribution Date pursuant to
Sections 4.10 and 4.12) on such Distribution Date.
SECTION 4.8. Coverage of Class A and Class B Required Amounts.
(a) On or before each Distribution Date, the Servicer shall
determine the amount (the "Class A Required Amount"), if any, by which the sum
of (i) the Class A Monthly Interest for such Distribution Date, plus (ii) the
Class A Deficiency Amount, if any, for such Distribution Date, plus (iii) the
Class A Additional Interest, if any, for such Distribution Date, plus (iv) the
Class A Servicing Fee for the related Due Period, plus (v) the Class A Servicing
Fee, if any, due but not paid on any prior Distribution Date, plus (vi) the
Class A Investor Loss Amount, if any, for the related Due Period, plus (vii) the
Class A Investor Dilution Amount, if any, for the related Due Period exceeds the
Class A Available Funds for the related Due Period.
(b) On or before each Distribution Date, the Servicer shall
also determine the amount (the "Class B Required Amount"), equal to the sum of
(i) the amount, if any, by which (A) the sum of (1) the Class B Monthly Interest
for such Distribution Date, plus (2) the Class B Deficiency Amount, if any, for
such Distribution Date, plus (3) the Class B Additional Interest, if any, for
such Distribution Date, plus (4) the Class B Servicing Fee for the related Due
Period,
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plus (5) the Class B Servicing Fee, if any, due but not paid on any prior
Distribution Date, exceeds (B) the Class B Available Funds for the related Due
Period plus (ii) the sum of the Class B Investor Loss Amount, if any, for the
related Due Period, plus the Class B Investor Dilution Amount, if any, for the
related Due Period.
(c) In the event that the Class A Required Amount or the Class
B Required Amount for such Distribution Date is greater than zero, the Servicer
shall give written notice to the Trustee of such positive Class A Required
Amount or Class B Required Amount on or before such Distribution Date. For any
Distribution Date, in the event that the Class A Required Amount for such
Distribution Date is greater than zero, all or a portion of the Excess Spread
and Shared Excess Finance Charge Collections with respect to such Distribution
Date in an amount equal to the Class A Required Amount, to the extent available,
for such Distribution Date shall be distributed on such Distribution Date
pursuant to subsection 4.11(a). In the event that the Class A Required Amount
for such Distribution Date exceeds the amount of Excess Spread and Shared Excess
Finance Charge Collections with respect to such Distribution Date, the
Collections of Principal Receivables allocable to the Class D Certificates, the
Collections of Principal Receivables allocable to the Class C Certificates and
the Collections of Principal Receivables allocable to the Class B Certificates
with respect to the related Due Period shall be applied as specified in Section
4.12. In the event that the Class B Required Amount for such Distribution Date
exceeds the amount of Excess Spread and Shared Excess Finance Charge Collections
available to fund the Class B Required Amount pursuant to subsection 4.11(c),
the Collections of Principal Receivables allocable to the Class D Certificates
and the Collections of Principal Receivables allocable to the Class C
Certificates (after application, in each case, to the Class A Required Amount)
with respect to the related Due Period shall be applied as specified in Section
4.12; provided, however, that the sum of any payments pursuant to this paragraph
shall not exceed the sum of the Class A Required Amount and the Class B Required
Amount.
SECTION 4.9. Monthly Payments. On or before each Distribution
Date, the Servicer shall instruct the Trustee in writing (which writing shall be
substantially in the form of Exhibit B hereto) to withdraw and the Trustee,
acting in accordance with such instructions, shall withdraw on such Distribution
Date, to the extent of available funds, the amounts required to be withdrawn
from the Collection Account as follows:
(a) An amount equal to the Class A Available Funds for the
related Due Period shall be distributed on each Distribution Date in the
following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Deficiency Amount for
such Distribution Date, plus the amount of any Class A Additional
Interest for such Distribution Date, shall be distributed to the Class
A Certificateholders;
(ii) an amount equal to the Class A Servicing Fee for such
Distribution Date plus the amount of any Class A Servicing Fee due but
not paid to the Servicer on any prior Distribution Date shall be
distributed to the Servicer;
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(iii) an amount equal to the Class A Investor Loss Amount, if
any, for the related Due Period shall be treated as a portion of
Available Principal Collections for such Distribution Date;
(iv) an amount equal to the Class A Investor Dilution Amount,
if any, for the related Due Period shall be treated as a portion of
Available Principal Collections for such Distribution Date; and
(v) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.11.
(b) An amount equal to the Class B Available Funds for the
related Due Period shall be distributed on each Distribution Date in the
following priority:
(i) an amount equal to the Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Deficiency Amount for
such Distribution Date, plus the amount of any Class B Additional
Interest for such Distribution Date, shall be distributed to the Class
B Certificateholders;
(ii) an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee due but
not paid to the Servicer on any prior Distribution Date shall be
distributed to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.11.
(c) An amount equal to the Class C Available Funds for the
related Due Period shall be distributed on each Distribution Date in the
following priority:
(i) an amount equal to the Class C Servicing Fee for such
Distribution Date plus the amount of any Class C Servicing Fee due but
not paid to the Servicer on any prior Distribution Date shall be
distributed to the Servicer; and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.11.
(d) An amount equal to the Class D Available Funds for the
related Due Period shall be distributed on each Distribution Date in the
following priority:
(i) an amount equal to the Class D Servicing Fee for such
Distribution Date plus the amount of any Class D Servicing Fee due but
not paid to the Servicer on any prior Distribution Date shall be
distributed to the Servicer; and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.11.
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(e) During the Revolving Period, an amount equal to the
Available Principal Collections for the related Due Period shall be distributed
on each Distribution Date in the following priority:
(i) an amount equal to any amounts required to be applied on
such date from Available Principal Collections pursuant to the Class C
Purchase Agreement shall be so applied;
(ii) an amount equal to the lesser of (A) Available Principal
Collections for such Distribution Date after giving effect to the
applications specified in subsection 4.9(e)(i) above and, (B) the
product of (1) a fraction, the numerator of which is equal to the
Available Principal Collections remaining after giving effect to the
applications specified in subsection 4.9(e)(i) above and the
denominator of which is equal to the sum of the Available Principal
Collections available for sharing as specified in the related
Supplement and Receivables Purchase Agreement for each Series
(including this Series 1999-1) in Group One that are Principal Sharing
Series and (2) the Cumulative Principal Shortfall, shall be treated as
Shared Principal Collections and applied to Series in Group One that
are Principal Sharing Series other than this Series 1999-1; and
(iii) an amount equal to the excess, if any, of (A) the
Available Principal Collections for such Distribution Date over (B) the
applications specified in subsections 4.9(e)(i) and (ii) above shall be
paid to the Holder of the Exchangeable Seller Certificate; provided,
however, that in no event shall the amount payable to the Holder of the
Exchangeable Seller Certificate pursuant to this subsection 4.9(e)(iii)
be greater than the Seller Interest on such Distribution Date; provided
further, that, if on any Distribution Date the Seller Interest is less
than the Aggregate Minimum Seller Interest, the Servicer will not
distribute to the Holder of the Exchangeable Seller Certificate any
amounts hereunder, but shall deposit such funds in the Excess Funding
Account.
(f) During the Controlled Amortization Period (beginning with
the Distribution Date in the month following the month in which the Controlled
Amortization Period begins) or the Early Amortization Period, an amount equal to
the Available Principal Collections for the related Due Period shall be
distributed on each Distribution Date in the following priority:
(i) an amount equal to the Class A Monthly Principal for such
Distribution Date shall be distributed to the Class A
Certificateholders;
(ii) after giving effect to the distribution referred to in
clause (i) above, beginning on the Class B Principal Commencement Date,
an amount equal to the Class B Monthly Principal shall be distributed
to the Class B Certificateholders;
(iii) after giving effect to the distribution referred to in
clauses (i) and (ii) above, beginning with the Distribution Date on
which the Class B Investor Interest has been paid in full, an amount
equal to the Class C Monthly Principal shall be distributed to the
Class C Certificateholders in accordance with the Class C Purchase
Agreement;
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(iv) after giving effect to the distributions referred to in
clauses (i), (ii) and (iii) above, beginning with the Distribution Date
on which the Class C Investor Interest has been paid in full, an amount
equal to the Class D Monthly Principal shall be distributed to the
Class D Certificateholders;
(v) after giving effect to the distributions referred to in
clauses (i), (ii), (iii) and (iv) above, an amount equal to any amounts
required to be applied from Available Principal Collections on such
date pursuant to the Class C Purchase Agreement shall be so applied;
(vi) an amount equal to the lesser of (A) the product of (1) a
fraction, the numerator of which is equal to the Available Principal
Collections remaining after the applications specified in clauses (i),
(ii), (iii), (iv) and (v) above and the denominator of which is equal
to the sum of the Available Principal Collections available for sharing
as specified in the related Supplement or Receivables Purchase
Agreement for each Series (including this Series 1999-1) in Group One
which is a Principal Sharing Series and (2) the Cumulative Principal
Shortfall and (B) the Available Principal Collections remaining after
the applications specified in clauses (i), (ii), (iii), (iv) and (v)
above, shall be treated as Shared Principal Collections and applied to
Series in Group One which are Principal Sharing Series other than this
Series 1999-1; and
(vii) an amount equal to the excess, if any, of (A) the
Available Principal Collections over (B) the applications specified in
clauses (i) through (vi) above shall be paid to the Holder of the
Exchangeable Seller Certificate; provided, however, that in no event
shall the amount payable to the Holder of the Exchangeable Seller
Certificate pursuant to this subsection 4.9(f)(vii) be greater than the
Seller Interest on such Distribution Date; provided further, that, if
on any Distribution Date the Seller Interest is less than the Aggregate
Minimum Seller Interest, the Servicer will not distribute to the
Holder of the Exchangeable Seller Certificate any amounts hereunder,
but shall deposit such funds in the Excess Funding Account.
SECTION 4.10. Investor Charge-Offs.
(a) On or before each Distribution Date, the Servicer shall
calculate the Class A Investor Loss Amount. If on any Distribution Date, the
Class A Investor Loss Amount for the prior Due Period exceeds the sum of the
amounts allocated with respect thereto pursuant to subsection 4.9(a)(iii),
subsection 4.11(a) and Section 4.12 with respect to such Due Period, the Class D
Investor Interest (after giving effect to reductions for any Class D Investor
Charge-Offs described in paragraph (d) and any Reallocated Class D Principal
Collections on such Distribution Date) will be reduced by the amount of such
excess. If such reduction would cause the Class D Investor Interest to be a
negative number, the Class D Investor Interest will be reduced to zero, and the
Class C Investor Interest (after giving effect to reductions for any Class C
Investor Charge-Offs described in paragraph (c) and any Reallocated Class C
Principal Collections on such Distribution Date) will be reduced by the amount
by which the Class D Investor Interest would have been reduced below zero. If
such reduction would cause the Class C Investor Interest to be a negative
number, the Class C Investor Interest will be reduced to zero,
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<PAGE> 33
and the Class B Investor Interest (after giving effect to reductions for any
Class B Investor Charge-Offs described in paragraph (b) and any Reallocated
Class B Principal Collections on such Distribution Date) will be reduced by the
amount by which the Class C Investor Interest would have been reduced below
zero. If such reduction would cause the Class B Investor Interest to be a
negative number, the Class B Investor Interest will be reduced to zero, and the
Class A Investor Interest will be reduced by the amount by which the Class B
Investor Interest would have been reduced below zero, but not by more than the
Class A Investor Loss Amount for such Distribution Date. Additionally, the Class
A Investor Interest shall be reduced by the amount of any Series 1999-1 Unfunded
Dilution Amount remaining after giving effect to any related Class B Investor
Charge-Off, Class C Investor Charge-Off and Class D Investor Charge-Off
(collectively, a "Class A Investor Charge-Off"). If the Class A Investor
Interest has been reduced by the amount of any Class A Investor Charge-Offs, it
will be reimbursed on any Distribution Date (but not by an amount in excess of
the aggregate Class A Investor Charge-Offs) by the amount of Excess Spread
allocated and available for such purpose pursuant to subsection 4.11(b).
(b) On or before each Distribution Date, the Servicer shall
calculate the Class B Investor Loss Amount. If on any Distribution Date, the
Class B Investor Loss Amount for the prior Due Period exceeds the amounts
allocated with respect thereto pursuant to subsection 4.9(b)(iii), subsection
4.11(c) and Section 4.12 with respect to such Due Period, the Class D Investor
Interest (after giving effect to reductions for any Class D Investor Charge-Offs
described in paragraphs (a) and (d) and any Reallocated Class D Principal
Collections on such Distribution Date and any adjustments with respect thereto
as described in subsection 4.10(a) above) will be reduced by the amount of such
excess. If such reduction would cause the Class D Investor Interest to be a
negative number, the Class D Investor Interest will be reduced to zero, and the
Class C Investor Interest (after giving effect to reductions for any Class C
Investor Charge-Offs described in paragraph (a) and (c) and any Reallocated
Class C Principal Collections on such Distribution Date and any adjustment with
respect thereto as described in subsection 4.10(a) above) will be reduced by the
amount by which the Class D Investor Interest would have been reduced below
zero. If such reduction would cause the Class C Investor Interest to be a
negative number, the Class C Investor Interest shall be reduced to zero and the
Class B Investor Interest shall be reduced by the amount by which the Class C
Investor Interest would have been reduced below zero, but not by more than the
Class B Investor Loss Amount for such Distribution Date. Additionally, the Class
B Investor Interest shall be reduced by the amount of any Series 1999-1 Unfunded
Dilution Amount remaining after giving effect to any related Class C Investor
Charge-Off and Class D Investor Charge-Off (collectively, together with all
reductions to the Class B Investor Interest under subsection 4.10(a), a "Class B
Investor Charge-Off"). The Class B Investor Interest will also be reduced by the
amount of Reallocated Class B Principal Collections in excess of the Class C
Investor Interest pursuant to Section 4.12 and the amount of any portion of the
Class B Investor Interest allocated to the Class A Certificates to avoid a
reduction in the Class A Investor Interest pursuant to subsection 4.10(a) above.
The Class B Investor Interest will thereafter be reimbursed (but not to an
amount in excess of the unpaid principal balance of the Class B Certificates) on
any Distribution Date by the amount of Excess Spread allocated and available for
that purpose as described under subsection 4.11(d).
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(c) On or before each Distribution Date, the Servicer shall
calculate the Class C Investor Loss Amount. If on any Distribution Date, the
Class C Investor Loss Amount for the prior Due Period exceeds the amount of
Excess Spread, Shared Excess Finance Charge Collections and Reallocated Class D
Principal Collections which are allocated and available to fund such amount
pursuant to subsection 4.11(g) and Section 4.12, the Class D Investor Interest
(after giving effect to reductions for any Class D Investor Charge-Offs
described in paragraphs (a), (b) and (d) and any Reallocated Class D Principal
Collections on such Distribution Date and any adjustments thereto as described
in subsection 4.10(a) or (b) above) will be reduced by the amount of such
excess. If such reduction would cause the Class D Investor Interest to be a
negative number, the Class D Investor Interest will be reduced to zero, and the
Class C Investor Interest (after giving effect to reductions for any Class C
Investor Charge-Offs described in paragraphs (a) and (b) and any Reallocated
Class C Principal Collections on such Distribution Date and any adjustments with
respect thereto as described in subsection 4.10(a) or 4.10(b) above) will be
reduced by the amount by which the Class D Investor Interest would have been
reduced below zero, but not by more than the sum of the Class C Investor Loss
Amount for such Distribution Date. Additionally, the Class C Investor Interest
shall be reduced by the amount of any Series 1999-1 Unfunded Dilution Amount
remaining after giving effect to any related Class D Investor Charge-Off
(collectively, together with all reductions to the Class C Investor Interest
under subsections 4.10(a) and (b), a "Class C Investor Charge-Off"). The Class C
Investor Interest will also be reduced by the amount of Reallocated Class C
Principal Collections pursuant to Section 4.12 and the amount of any portion of
the Class C Investor Interest allocated to the Class A Certificates or the Class
B Certificates to avoid a reduction in the Class A Investor Interest, pursuant
to subsection 4.10(a), or the Class B Investor Interest, pursuant to subsection
4.10(b), respectively. The Class C Investor Interest will thereafter be
reimbursed (but not in excess of the unreimbursed amount of such reductions) on
any Distribution Date by the amount of the Excess Spread allocated and available
under subsection 4.11(i).
(d) On or before each Distribution Date, the Servicer shall
calculate the Class D Investor Loss Amount. If on any Distribution Date, the
Class D Investor Loss Amount for the prior Due Period exceeds the amount of
Excess Spread which is allocated and available to fund such amount pursuant to
subsection 4.11(l), the Class D Investor Interest will be reduced by the amount
of such excess, but not by more than the Class D Investor Loss Amount for such
Distribution Date. Additionally, the Class D Investor Interest shall be reduced
by the amount of any Series 1999-1 Unfunded Dilution Amount (collectively,
together with all reductions to the Class D Investor Interest under subsections
4.10(a), (b) and (c), a "Class D Investor Charge-Off"). The Class D Investor
Interest will also be reduced by the amount of Class D Reallocated Principal
Collections pursuant to Section 4.12 and the amount of any portion of the Class
D Investor Interest allocated to the Class A Certificates, the Class B
Certificates or the Class C Certificates to avoid a reduction in the Class A
Investor Interest, pursuant to subsection 4.10(a), the Class B Investor
Interest, pursuant to subsection 4.10(b), or the Class C Investor Interest,
pursuant to Section 4.10(c), respectively. The Class D Investor Interest will
thereafter be reimbursed (but not in excess of the unreimbursed amount of such
reductions) on any Distribution Date by the amount of the Excess Spread
allocated and available for that purpose as described under subsection 4.11(n).
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SECTION 4.11. Excess Spread; Shared Excess Finance Charge
Collections. On or before each Distribution Date, the Servicer shall instruct
the Trustee in writing (which writing shall be substantially in the form of
Exhibit B hereto) to apply Excess Spread and Shared Excess Finance Charge
Collections allocated to Series 1999-1 with respect to the related Due Period to
make the following distributions on each Distribution Date in the following
priority:
(a) an amount equal to the Class A Required Amount, if any,
with respect to such Distribution Date shall be used to fund the Class A
Required Amount and be applied in accordance with, and in the priority set forth
in, subsection 4.9(a);
(b) an amount equal to the aggregate amount of Class A
Investor Charge-Offs which have not been previously reimbursed shall be treated
as a portion of Available Principal Collections for such Distribution Date;
(c) an amount equal to the Class B Required Amount, if any,
with respect to such Distribution Date shall be (I) used to fund any deficiency
pursuant to subsections 4.9(b)(i) and (ii) in the order of priority specified
therein and (II) an amount equal to the sum of the Class B Investor Loss Amount
and Class B Investor Dilution Amount for the related Due Period shall be treated
as a portion of Available Principal Collections for such Distribution Date;
(d) an amount equal to the aggregate amount by which the Class
B Investor Interest has been reduced below the Class B Initial Investor Interest
for reasons other than the payment of principal to the Class B
Certificateholders or the cancellation of Class B Certificates (but not in
excess of the unreimbursed amount of such reductions) shall be treated as a
portion of Available Principal Collections for such Distribution Date;
(e) an amount equal to the excess, if any, of the Class C
Servicing Fee for such Distribution Date plus the amount of any Class C
Servicing Fee due but not paid to the Servicer on any prior Distribution Date
over the Class C Available Funds for such Distribution Date shall be paid to the
Servicer;
(f) an amount equal to the Class C Monthly Interest plus the
Class C Deficiency Amount for such Distribution Date shall be distributed to the
Class C Certificateholders in accordance with the Class C Purchase Agreement;
(g) an amount equal to the Class C Investor Loss Amount, if
any, for the related Due Period shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(h) an amount equal to the Class C Investor Dilution Amount,
if any, for the related Due Period shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(i) an amount equal to the aggregate amount by which the Class
C Investor Interest has been reduced below the Class C Initial Investor Interest
for reasons other than the payment of principal to the Class C
Certificateholders or the cancellation of Class C Certificates
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(but not in excess of the unreimbursed amount of such reductions) shall be
treated as a portion of Available Principal Collections for such Distribution
Date;
(j) an amount equal to the excess, if any, of the Class D
Servicing Fee over the Class D Available Funds for such Distribution Date shall
be paid to the Servicer;
(k) an amount equal to the Class D Monthly Interest plus the
amount of any past due Class D Monthly Interest for such Distribution Date shall
be distributed to the Class D Certificateholders;
(l) an amount equal to the Class D Investor Loss Amount, if
any, for the related Due Period shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(m) an amount equal to the Class D Investor Dilution Amount,
if any, for the related Due Period shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(n) an amount equal to the aggregate amount by which the Class
D Investor Interest has been reduced below the Class D Initial Investor Interest
for reasons other than the payment of principal to the Class D
Certificateholders or the cancellation of Class D Certificates (but not in
excess of the unreimbursed amount of such reductions) shall be treated as a
portion of Available Principal Collections for such Distribution Date;
(o) an amount equal to the aggregate of any other amounts then
due to the Class C Certificateholders or required to be applied pursuant to the
Class C Purchase Agreement out of Excess Spread and Shared Excess Finance Charge
Collections allocated to Series 1999-1 shall be distributed for application in
accordance with the Class C Purchase Agreement; and
(p) the balance, if any, will constitute a portion of Shared
Excess Finance Charge Collections for such Distribution Date and will be
available for allocation to other Series in Group One and, to the extent not
required to be applied as Shared Excess Finance Charge Collections with respect
to any Series in Group One, shall be distributed to the Holder of the
Exchangeable Seller Certificate or any other Person then entitled to such
amounts.
SECTION 4.12. Reallocated Principal Collections. On or before
each Distribution Date, the Servicer shall instruct the Trustee in writing
(which writing shall be substantially in the form of Exhibit B hereto) to apply
Reallocated Principal Collections (applying all Reallocated Class C Principal
Collections in accordance with subsections 4.12(a) and (b) prior to applying any
Reallocated Class B Principal Collections in accordance with subsection 4.12(a)
for any amounts still owing after the application of Reallocated Class C
Principal Collections and applying Reallocated Class D Principal Collections in
accordance with subsections 4.12(a), (b) and (c) prior to applying any
Reallocated Class C Principal Collections in accordance with subsections 4.12(a)
or (b) for any amounts still owing after the application of Reallocated Class D
Principal Collections) with respect to such Distribution Date, to make the
following distributions on each Distribution Date in the following priority:
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(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over (ii) the
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
to Series 1999-1 with respect to the related Due Period, shall be applied in
accordance with, and in the priority set forth in, subsections 4.9(a)(i), (ii),
(iii) and (iv);
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over (ii) the
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available to the Class B Certificates pursuant to subsection 4.11(c) on such
Distribution Date shall be applied first in accordance with, and in the priority
set forth in subsections 4.9(b)(i) and (ii) and then pursuant to and in the
priority set forth in subsection 4.11(c)(II); and
(c) an amount equal to the excess, if any, of (i) the Class C
Required Amount, if any, with respect to such Distribution Date over (ii) the
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available to the Class C Investor Interest pursuant to subsections 4.11(e),
4.11(f), 4.11(g) and 4.11(h) on such Distribution Date shall be applied first
pursuant to subsection 4.9(c)(i), and then pursuant to and in the priority set
forth in subsections 4.11(f), 4.11(g) and 4.11(h).
On each Distribution Date, the Class D Investor Interest shall
be reduced by the amount of Reallocated Class D Principal Collections for such
Distribution Date, the Class C Investor Interest shall be reduced by the amount
of Reallocated Class C Principal Collections for such Distribution Date, and the
Class B Investor Interest shall be reduced by the amount of Reallocated Class B
Principal Collections for such Distribution Date.
SECTION 4.13. Seller's or Servicer's Failure to Make a Deposit
or Payment. If the Servicer or the Seller fails to make, or give instructions to
make, any payment or deposit required to be made or given by the Servicer or
Seller, respectively, at the time specified in the Agreement (including
applicable grace periods), the Trustee shall make such payment or deposit from
the applicable account without instruction from the Servicer or Seller. The
Trustee shall be required to make any such payment, deposit or withdrawal
hereunder only to the extent that the Trustee has sufficient information to
allow it to determine the amount thereof; provided, however, that the Trustee
shall in all cases be deemed to have sufficient information to determine the
amount of interest payable to the Series 1999-1 Certificateholders on each
Distribution Date. The Servicer shall, upon request of the Trustee, promptly
provide the Trustee with all information necessary to allow the Trustee to make
such payment, deposit or withdrawal. Such funds or the proceeds of such
withdrawal shall be applied by the Trustee in the manner in which such payment
or deposit should have been made by the Seller or the Servicer, as the case may
be.
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SECTION 4.14. Shared Excess Finance Charge Collections.
(a) The balance of any Available Funds on deposit in the
Collection Account after giving effect to subsections 4.11(a) through (o) will
constitute a portion of Shared Excess Finance Charge Collections and will be
available for allocation to other Series in Group One or to the Holder of the
Exchangeable Seller Certificate as described in Section 4.3(g).
(b) Series 1999-1 shall be included in Group One. Subject to
subsection 4.3(g) of the Agreement, Shared Excess Finance Charge Collections
with respect to the Series in Group One for any Distribution Date will be
allocated to Series 1999-1 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 1999-1 for such Distribution
Date and the denominator of which is the aggregate amount of Finance Charge
Shortfalls for all Series in Group One for such Distribution Date. The "Finance
Charge Shortfall" for Series 1999-1 for any Distribution Date will be equal to
the excess, if any, of (a) the full amount required to be paid, without
duplication, pursuant to subsections 4.11(a) through (o) on such Distribution
Date over (b) the Available Funds for such Distribution Date.
SECTION 4.15. Shared Principal Collections. Subject to
subsection 4.3(f) of the Agreement, Shared Principal Collections for any
Distribution Date will be allocated to Series 1999-1 in an amount equal to the
product of (x) the aggregate amount of Shared Principal Collections with respect
to all Series in Group One that are Principal Sharing Series for such
Distribution Date and (y) a fraction, the numerator of which is the Principal
Shortfall for Series 1999-1 for such Distribution Date and the denominator of
which is the Cumulative Principal Shortfall for such Distribution Date.
SECTION 4.16. Purchase and Cancellation of Certificates. The
Seller may on any Distribution Date, upon five Business Days' prior written
notice to the Trustee, purchase Series 1999-1 Certificates on the secondary
market and request the Trustee to cancel such Series 1999-1 Certificates
purchased by the Seller on such Distribution Date and reduce the Class A, Class
B, Class C and/or Class D Investor Interest, as applicable, by a corresponding
amount; provided that after giving to any cancellation of Class B Certificates,
Class C Certificates and/or Class D Certificates resulting in a reduction of the
Class B, Class C and/or Class D Investor Interest, the Investor Interest of such
Class shall not be lower than (x) ___% of the Series 1999-1 Investor Interest
(calculated after giving effect to such cancellation), in the case of Class B,
(y) ___% of the Series 1999-1 Investor Interest (calculated after giving affect
to such cancellation), in the case of Class C, and (z) ___% of the Series 1999-1
Investor Interest (calculated after giving effect to such cancellations), in the
case of Class D. No Certificateholder shall be required to sell its Certificates
to the Seller pursuant to this Section 4.16.
SECTION 4.17. Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee will
determine LIBOR on the basis of the rate for deposits in United States dollars
for a one-month period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such date. If such rate does not
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<PAGE> 39
appear on Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a one-month period.
The Trustee will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that LIBOR Determination Date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that LIBOR Determination Date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
(b) The Class A Certificate Rate and the Class B Certificate
Rate applicable to the then current and the immediately preceding Interest
Periods may be obtained by any Series 1999-1 Certificateholder by telephoning
the Trustee at its Corporate Trust Office at (215) 985-7321.
(c) On each LIBOR Determination Date prior to 12:00 noon New
York City time, the Trustee shall send to the Servicer by facsimile,
notification of LIBOR for the following Interest Period.
SECTION 4.18. Interest Rate Cap Agreements.
(a) The Servicer hereby represents that Fashion Service Corp
has obtained and assigned to the Trust (i) the Class A Cap Agreement in favor of
the Trust for the benefit of the Class A Certificateholders and (ii) the Class B
Cap Agreement in favor of the Trust for the benefit of the Class B
Certificateholders, the Class C Certificateholders and the Class D
Certificateholders. The Class A Cap Agreement shall entitle the Trust to receive
monthly the Class A Cap Payment, if any, as set forth in the Class A Cap
Agreement. The Class B Cap Agreement shall entitle the Trust to receive monthly
the Class B Cap Payment, if any, as set forth in the Class B Cap Agreement. Each
Interest Rate Cap Agreement provides that the Trust shall not be required to
make any payment thereunder.
(b) Upon the effectiveness of any Replacement Interest Rate
Cap Agreement, the Interest Rate Cap Agreement being replaced shall terminate
and the applicable Interest Rate Cap Provider shall be released of all future
obligations thereunder, provided that such replaced Interest Rate Cap Provider
shall not be released from any obligations which have previously accrued
thereunder and shall continue to be obligated to perform such obligations.
(c) The Trustee hereby appoints the Servicer to act as
calculation agent under the Interest Rate Cap Agreements and the Servicer
accepts such appointment.
SECTION 4.19. Paired Series. Any other Series in Group One may
be designated (but only with the consent of the Class C Certificateholders) as a
Paired Series for Series 1999-1. Such Paired Series either shall be prefunded
with an initial deposit to a prefunding account in an amount up to the initial
principal balance of such Paired Series and primarily from the sale of such
Paired Series or shall have a variable principal amount. Any
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<PAGE> 40
such prefunding account shall be held for the benefit of such Paired Series and
not for the benefit of the Series 1999-1 Certificateholders. As funds in the
Collection Account are allocated for distribution as Available Principal
Collections during the Early Amortization Period or Controlled Amortization
Period, either (i) in the case of a prefunded Paired Series, an equal amount of
funds in any prefunding account for such Paired Series shall be released and
distributed pursuant to the terms of such Paired Series or (ii) in the case of a
Paired Series having a variable principal amount, an interest in such variable
Paired Series in an equal or lesser amount may be sold by the Trust and the
proceeds thereof will be distributed pursuant to the terms of such Paired
Series, and, in either case, the Series Investor Interest of such Paired Series
will increase by up to a corresponding amount. Upon payment in full of the
Series 1999-1 Certificates and payment of all amounts due to the Class C
Certificateholders, assuming that there have been no unreimbursed Loss Amounts
with respect to any related Paired Series, the aggregate amount of such Paired
Series shall have been increased by an amount up to an aggregate amount equal to
the Series Investor Interest paid to the Series 1999-1 Certificateholders and
the Class C Certificateholders (or such other amount as the holders of such
Paired Series shall agree).
SECTION 8. Article V of the Agreement. Article V of the
Agreement shall read in its entirety as follows and shall be applicable only to
the Series 1999-1 Certificates:
ARTICLE V.
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS; NOTIFICATION OF CAP PAYMENTS
SECTION 5.1. Distributions.
(a) On each Distribution Date, the Trustee shall distribute
(in accordance with the certificate delivered by the Servicer to the Trustee
pursuant to subsection 3.4(b)) to each Class A Certificateholder of record on
the immediately preceding Record Date (other than as provided in Section 12.3
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate Undivided Trust Interests represented by Class A Certificates
held by such Certificateholder) of amounts on deposit in the Collection Account
as are payable to the Class A Certificateholders pursuant to Section 4.9 by
check mailed to each Class A Certificateholder (at such Certificateholder's
address as it appears in the Certificate Register), except that with respect to
Class A Certificates registered in the name of the nominee of a Clearing Agency,
such distribution shall be made in immediately available funds.
(b) On each Distribution Date, the Trustee shall distribute
(in accordance with the certificate delivered by the Servicer to the Trustee
pursuant to subsection 3.4(b)) to each Class B Certificateholder of record on
the immediately preceding Record Date (other than as provided in Section 12.3
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate Undivided Trust Interests represented by Class B Certificates
held by such Certificateholder) of amounts on deposit in the Collection Account
as are payable to the Class B Certificateholders pursuant to Section 4.9 by
check mailed to each Class B Certificateholder (at such Certificateholder's
address as it appears in the Certificate Register),
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<PAGE> 41
except that with respect to Class B Certificates registered in the name of the
nominee of a Clearing Agency, such distribution shall be made in immediately
available funds.
(c) On each Distribution Date, the Trustee shall distribute
(in accordance with the Class C Purchase Agreement) to each Class C
Certificateholder of record on the immediately preceding Record Date (other than
as provided in Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided Trust
Interests represented by Class C Certificates held by such Certificateholder) of
amounts on deposit in the Collection Account as are payable to the Class C
Certificateholders pursuant to the Class C Purchase Agreement by check mailed to
each Class C Certificateholder (at such Certificateholder's address as it
appears in the Certificate Register) or by wire transfer of immediately
available funds to such account designated in writing by such Certificateholder
to the Trustee not later than the Determination Date preceding such Distribution
Date.
(d) On each Distribution Date, the Trustee shall distribute
(in accordance with the certificate delivered by the Servicer to the Trustee
pursuant to subsection 3.4(b)) to each Class D Certificateholder of record on
the immediately preceding Record Date (other than as provided in Section 12.3
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate Undivided Trust Interests represented by Class D Certificates
held by such Certificateholder) of amounts on deposit in the Collection Account
as are payable to the Class D Certificateholders pursuant to Section 4.11 by
check mailed to each Class D Certificateholder (at such Certificateholder's
address as it appears in the Certificate Register) or by wire transfer of
immediately available funds to such account designated in writing by such
Certificateholder to the Trustee not later than the Determination Date preceding
such Distribution Date.
(e) The Trustee shall promptly notify the Seller and the
Servicer if it does not receive a payment under any Interest Rate Cap on the
date on which such payment is due pursuant to the terms of such Interest Rate
Cap.
SECTION 5.2. Monthly Certificateholders' Statement.
(a) On or before each Distribution Date, the Paying Agent
shall forward to each Series 1999-1 Certificateholder, each Rating Agency and
the Class C Certificateholders a statement substantially in the form of Exhibit
C to this Supplement prepared by the Servicer setting forth, among other things,
the following information (which, in the case of subclauses (i) and (ii) below,
shall be stated on the basis of an original principal amount of $1,000 per
Series 1999-1 Certificate and, in the case of subclauses (viii) and (ix) shall
be stated on an aggregate basis and on the basis of an original principal amount
of $1,000 per Series 1999-1 Certificate):
(i) the amount of the current distribution allocable to Class
A Monthly Principal, Class B Monthly Principal, Class C Monthly
Principal and Class D Monthly Principal, respectively;
(ii) the amount of the current distribution allocable to Class
A Monthly Interest, Class A Deficiency Amounts, Class A Additional
Interest, Class B Monthly
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<PAGE> 42
Interest, Class B Deficiency Amounts, Class B Additional Interest,
Class C Monthly Interest, Class C Deficiency Amounts, Class D Monthly
Interest and any accrued and unpaid Class D Monthly Interest,
respectively;
(iii) the amount of Collections of Principal Receivables
processed during the related Due Period and allocated in respect of the
Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively;
(iv) the amount of Collections of Finance Charge Receivables
processed during the related Due Period and allocated in respect of the
Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively;
(v) the aggregate amount of Principal Receivables, the Series
Investor Interest, the Class A Investor Interest, the Class B Investor
Interest, the Class C Investor Interest, the Class D Investor Interest,
the Floating Allocation Percentage, the Class A Floating Allocation,
the Class B Floating Allocation, the Class C Floating Allocation, the
Class D Floating Allocation and the Principal Allocation Percentage,
the Class A Fixed Allocation, the Class B Fixed Allocation, the Class C
Fixed Allocation and the Class D Fixed Allocation with respect to the
Principal Receivables in the Trust as of the end of the day on the
Record Date;
(vi) the aggregate outstanding balance of Accounts which were
30 to 59, 60 to 89, 90 to 119 and 120 or more days delinquent as of the
end of the day on the Record Date;
(vii) the Loss Amount, the Investor Loss Amount, the Class A
Investor Loss Amount, the Class B Investor Loss Amount, the Class C
Investor Loss Amount and the Class D Investor Loss Amount for the
related Due Period;
(viii) the Dilution Amount, the Investor Dilution Amount, the
Class A Investor Dilution Amount, the Class B Investor Dilution Amount,
the Class C Investor Dilution Amount and the Class D Investor Dilution
Amount;
(ix) the aggregate amount of Class A Investor Charge-Offs,
Class B Investor Charge-Offs, Class C Investor Charge-Offs and Class D
Investor Charge-Offs for the related Due Period;
(x) the aggregate amount of Class A Investor Charge-Offs,
Class B Investor Charge-Offs, Class C Investor Charge-Offs and Class D
Investor Charge-Offs reimbursed on the Distribution Date immediately
preceding such Distribution Date;
(xi) the amount of the Class A Servicing Fee, the Class B
Servicing Fee, the Class C Servicing Fee and the Class D Servicing Fee
for the related Due Period;
(xii) the Portfolio Yield and Base Rate for the preceding Due
Period;
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<PAGE> 43
(xiii) the amount of Reallocated Class D Principal Collections,
Reallocated Class C Principal Collections and Reallocated Class B
Principal Collections with respect to such Distribution Date;
(xiv) the Class A Investor Interest, the Class B Investor
Interest, the Class C Investor Interest and the Class D Investor
Interest as of the close of business on such Distribution Date;
(xv) LIBOR on such Distribution Date;
(xvi) the Principal Shortfall and Finance Charge Shortfall;
(xvii) the amount of Class A Available Funds, Class B Available
Funds, Class C Available Funds and Class D Available Funds on deposit
in the Collection Account on the related Distribution Date;
(xviii) the Excess Spread, Shared Excess Finance Charge
Collections, Shared Principal Collections, in each case allocated to
allocated to Series 1999-1, and the amount on deposit in the Excess
Funding Account;
(xix) such other items as are set forth in Exhibit C to this
Supplement.
(b) Annual Certificateholders' Tax Statement. On or before
January 31 of each calendar year, beginning with calendar year 1999, the Trustee
shall distribute to each Person who at any time during the preceding calendar
year was a Series 1999-1 Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in the regular monthly
report to Series 1999-1 Certificateholders, as set forth in subclauses (i) and
(ii) above, aggregated for such calendar year or the applicable portion thereof
during which such Person was a Series 1999-1 Certificateholder, together with
such other customary information (consistent with the treatment of the Class A
Certificates and the Class B Certificates as debt) as the Servicer deems
necessary or desirable to enable the Series 1999-1 Certificateholders to prepare
their tax returns. The Servicer will provide such information to the Trustee as
soon as possible after January 1 of each calendar year. Such obligations of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
SECTION 9. Series 1999-1 Early Amortization Events. If any one
of the following events shall occur with respect to the Series 1999-1
Certificates:
(a) failure on the part of the Seller or the Originator (i) to
make any payment or deposit required by the terms of (A) the Agreement, (B) this
Supplement or (C) the Purchase Agreement, on or before the date occurring five
days after the date such payment or deposit is required to be made herein or
(ii) duly to observe or perform in any material respect any of its covenants or
agreements set forth in the Agreement, this Supplement (including, without
limitation, the covenant of the Seller contained in Section 11 of this
Supplement) or the Purchase
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Agreement, which failure has a material adverse effect on the Series 1999-1
Certificateholders (which determination shall be made without reference to the
amount of the Class C Investor Interest or the Class D Investor Interest for
such period) and which continues unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Seller by the Trustee, or to the Seller and the
Trustee by the Controlling Certificateholders, and continues to affect
materially and adversely the interests of the Series 1999-1 Certificateholders
for such period (which determination shall be made without reference to the
amount of the Class C Investor Interest or the Class D Investor Interest for
such period);
(b) any representation or warranty made by the Seller or the
Originator in the Agreement, this Supplement or the Purchase Agreement, or any
information contained in a computer file or microfiche or written list required
to be delivered by the Seller pursuant to Section 2.1 or 2.6 or by the
Originator pursuant to Section 1.1 or 2.4(e) of the Purchase Agreement, (i)
shall prove to have been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material respect for a period
of 60 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Seller by the Trustee, or to
the Seller and the Trustee by the Controlling Certificateholders, and (ii) as a
result of which the interests of the Series 1999-1 Certificateholders are
materially and adversely affected (which determination shall be made without
reference to the amount of the Class C Investor Interest or the Class D Investor
Interest) and continue to be materially and adversely affected for such period;
provided, however, that a Series 1999-1 Early Amortization Event pursuant to
this subsection 9(b) shall not be deemed to have occurred hereunder if the
Seller has accepted reassignment of the related Receivable, or all of such
Receivables, if applicable, during such period in accordance with the provisions
of the Agreement;
(c) the average Portfolio Yield for any three consecutive Due
Periods is reduced to a rate which is less than the average Base Rate for such
period;
(d) the Seller shall fail to convey Receivables arising under
Additional Accounts to the Trust, as required by subsection 2.6(a);
(e) any Servicer Default shall occur which would have a
material adverse effect on the Class A or Class B Certificateholders;
(f) the Class A Investor Interest shall not be paid in full on
the Class A Expected Final Payment Date or the Class B Investor Interest shall
not be paid in full on the Class B Expected Final Payment Date;
(g) the failure on the part of an Interest Rate Cap Provider
to make a Class A Cap Payment or a Class B Cap Payment, as applicable, in full
within five calendar days of the date on which such Class A Cap Payment or Class
B Cap Payment was due; or
(h) the failure on the part of the Servicer (and the
applicable Interest Rate Cap Provider pursuant to its obligations under the
related Interest Rate Cap Agreement), within 30
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days of the withdrawal or reduction below A-1 in the unsecured, unguaranteed,
short-term debt rating of an Interest Rate Cap Provider by Standard & Poor's or
a withdrawal of or reduction below P-1 in the unsecured, unguaranteed,
short-term debt rating of an Interest Rate Cap Provider by Moody's to (i) obtain
a Replacement Interest Rate Cap with a replacement cap provider having terms
substantially the same as the replaced Interest Rate Cap or (ii) enter into any
other arrangement satisfactory to the applicable Rating Agency, such that the
rating of Class A Certificates or Class B Certificates by the applicable Rating
Agency will not be withdrawn or reduced;
then, in the case of any event described in subparagraph (a), (b), (e), (g) or
(h) after the applicable grace period set forth in such subparagraphs, either
the Trustee or the Controlling Certificateholders by notice then given in
writing to the Seller and the Servicer (and to the Trustee if given by the
Certificateholders) may declare that an early amortization event (a "Series
1999-1 Early Amortization Event") has occurred as of the date of such notice,
and in the case of any event described in subparagraphs (c), (d) or (f), a
Series 1999-1 Early Amortization Event shall occur without any notice or other
action on the part of the Trustee or the Series 1999-1 Certificateholders
immediately upon the occurrence of such event.
SECTION 10. Series 1999-1 Termination. The right of the Series
1999-1 Certificateholders to receive payments from the Trust will terminate on
the first Business Day following the Series 1999-1 Termination Date.
SECTION 11. Limitations on Addition of Accounts. The Seller
agrees that it shall not designate any Additional Accounts pursuant to
subsection 2.6(b) unless on or prior to the related Addition Date, the Seller
shall have provided the Class C Certificateholders with an Officer's Certificate
certifying that such designation of such Additional Accounts will not, as of the
related Addition Date, (x) be reasonably expected by the Seller to result in a
reduction or withdrawal by either Rating Agency of its rating for the Series
1999-1 Certificates, (y) cause a Series 1999-1 Early Amortization Event, or (z)
be reasonably expected by the Seller to materially adversely affect in any
manner the timing or amount of payments to the Class C Certificateholders.
SECTION 12. Ratification of Agreement. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken, and
construed as one and the same instrument.
SECTION 13. Counterparts. This Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 14. Governing Law. THIS 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.
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SECTION 15. No Petition.
(a) The Seller, the Servicer and the Trustee, by entering into
this Supplement and each Series 1999-1 Certificateholder, by accepting a Series
1999-1 Certificate, hereby covenant and agree that they will not at any time
institute against the Trust, or join in any institution against the Trust of,
any bankruptcy proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Series 1999-1
Certificates, the Agreement or this Supplement.
(b) The Servicer and the Trustee, by entering into this
Supplement and each Series 1999-1 Certificateholder, by accepting a Series
1999-1 Certificate, hereby covenant and agree that they will not at any time
institute against the Seller, or join in any institution against the Seller of,
any bankruptcy proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Series 1999-1
Certificates, the Agreement or this Supplement.
SECTION 16. Tax Representation and Covenant. Notwithstanding
Section 6.3 of the Pooling and Servicing Agreement, Seller shall not execute,
and the Transfer Agent and Registrar shall not register the transfer of, (i) any
Class C Certificate, if after giving effect to the execution or transfer of such
Class Certificate, there would be more than 5 Private Holders of Class C
Certificates or (ii) any Class D Certificate, if after giving effect to the
execution or transfer of such Class D Certificate, there would be more than 3
Private Holders of Class D Certificates. For purposes of this Supplement and the
Pooling Agreement, each Holder of a Class C Certificate or a Class D Certificate
shall be a "Private Holder."
SECTION 17. Certain Tax Related and Other Amendments. In
addition to any other provisions relating to amendments in either the Agreement
or this Supplement, this Supplement may be amended by the Seller without the
consent of the Servicer, Trustee or any Series 1999-1 Certificateholder if (a)
the Seller provides the Trustee with (i) an Opinion of Counsel to the effect
that such amendment or modification would reduce the risk the Trust would be
treated as taxable as a publicly traded partnership pursuant to Code section
7704 and (ii) a certificate that such amendment or modification would not
materially and adversely affect any Series 1991-1 Certificateholder or (b) such
amendment is to the Series 1999-1 Supplement and is made to conform the terms of
such Supplement to the terms described in the Prospectus Supplement dated
____________ __, 1999, relating to the offer and sale of the Class A
Certificates and the Class B Certificates; provided, however, that no such
amendment shall be deemed effective without the Trustee's consent, if the
Trustee's rights, duties and obligations hereunder are thereby modified.
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee
have caused this Series 1999-1 Supplement to be duly executed by their
respective officers as of the day and year first above written.
CHARMING SHOPPES RECEIVABLES
CORP.,
Seller
By:
----------------------------------------
Name:
Title:
SPIRIT OF AMERICA, INC.
Servicer
By:
----------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
Trustee
By:
----------------------------------------
Name:
Title:
44
<PAGE> 48
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE, OR AN INTEREST HEREIN, MAY NOT BE ACQUIRED
BY OR FOR THE ACCOUNT OF ANY EMPLOYEE BENEFIT PLAN WITHIN THE MEANING
OF SECTION 3(3) OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), WHETHER OR NOT SUBJECT TO ERISA, OR A PLAN THAT IS
DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT (EACH, A "BENEFIT PLAN"), OR
BY OR FOR THE ACCOUNT OF ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE ANY
BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN SUCH
ENTITY. BY ACQUIRING THIS CERTIFICATE OR AN INTEREST HEREIN, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT
EITHER (I) IT IS NOT A BENEFIT PLAN, AND THAT ITS ACQUISITION OF THIS
CERTIFICATE OR AN INTEREST HEREIN IS IN COMPLIANCE WITH THE FOREGOING
RESTRICTIONS ON BENEFIT PLAN ASSETS OR (II) IT IS AN INSURANCE COMPANY
PURCHASING THIS CERTIFICATE OR INTEREST HEREIN WITH ASSETS OF ITS
GENERAL ACCOUNT, AND AT THE TIME OF ACQUISITION AND THROUGHOUT THE
PERIOD OF HOLDING, (A) IT MEETS ALL OF THE REQUIREMENTS OF AND IS
ELIGIBLE FOR EXEMPTIVE RELIEF UNDER PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 AND (B) LESS THAN 25% OF THE ASSETS OF SUCH ACCOUNT ARE
BENEFIT PLAN ASSETS
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to Charming Shoppes Receivables Corp. or its agent for
registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No. __ $__________
<PAGE> 49
CUSIP No.
[ISIN No. _]
CHARMING SHOPPES MASTER TRUST
FLOATING RATE ASSET BACKED CERTIFICATE, SERIES 1999-1, CLASS A
Each $1,000 minimum denomination represents
a [ ] Undivided Interest in the
Charming Shoppes Master Trust Series 1999-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of credit card receivables acquired by Charming Shoppes Receivables
Corp. and other assets and interests constituting the Trust under the Pooling
and Servicing Agreement described below.
(Not an interest in or obligation of,
Charming Shoppes Receivables Corp., Spirit of America National Bank,
Spirit of America, Inc. Charming Shoppes, Inc. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A
Certificateholder") is the registered owner of the Undivided Interest in a trust
(the "Trust"), the corpus of which consists of a portfolio of receivables (the
"Receivables") now existing or hereafter created under credit card accounts (the
"Accounts") of Spirit of America National Bank, a national banking association
organized under the laws of the United States, all monies due or to become due
in payment of the Receivables (including all Finance Charge Receivables), the
benefits of the subordination of the Class B Certificates, the Class C
Certificates and Class D Certificates and the other assets and interests
constituting the Trust pursuant to a Second Amended and Restated Pooling and
Servicing Agreement dated as of November 25, 1997, as amended on _________ __,
1999 (as further amended or otherwise modified from time to time, the "Pooling
and Servicing Agreement"), by and among Charming Shoppes Receivables Corp., as
Seller, Spirit of America, Inc., as Servicer, and First Union National Bank, as
Trustee (the "Trustee"). To the extent not defined herein, capitalized terms
used herein have the meanings assigned in the Pooling and Servicing Agreement.
The Series 1999-1 Certificates are issued in four classes, the
Class A Certificates (of which this certificate is one), the Class B
Certificates, which are subordinated to the Class A Certificates in certain
rights of payment as described herein and in the Pooling and Servicing
Agreement, the Class C Certificates, which are subordinated to the Class A
Certificates and the Class B Certificates in certain rights of payment as
described herein and in the Pooling and Servicing Agreement, and the Class D
Certificates, which are subordinated to the Class A Certificates, the Class B
Certificates and the Class C Certificates in certain rights of payments as
described herein and in the Pooling and Servicing Agreement.
The Seller has structured the Pooling and Servicing Agreement
and the Class A Certificates with the intention that the Class A Certificates
will qualify under applicable tax law as indebtedness, and the Seller, the
Holder of the Exchangeable Seller Certificate, the Servicer and each Class A
Certificateholder (or Certificate Owner with respect to a Class A Certificate (a
A-1-2
<PAGE> 50
"Class A Certificate Owner")) by acceptance of its Class A Certificate (or in
the case of a Class A Certificate Owner, by virtue of such Class A Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Class A Certificates (or
beneficial interest therein) for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by income, as
indebtedness. Each Class A Certificateholder agrees that it will cause any Class
A Certificate Owner acquiring an interest in a Class A Certificate through it to
comply with the Pooling and Servicing Agreement as to treatment as indebtedness
for certain tax purposes.
This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the Class A
Certificateholder by virtue of the acceptance hereof assents and by which the
Class A Certificateholder is bound.
The Receivables consist of Principal Receivables which arise
from the purchase of goods and services and of Finance Charge Receivables which
arise generally from periodic rate finance charges and other fees and charges,
as more fully specified in the Pooling and Servicing Agreement. The Trust corpus
consists of the Receivables now existing in the Accounts or hereafter created in
the Accounts, all monies due or to become due with respect thereto (including
all Finance Charge Receivables), all proceeds of the Receivables and Recoveries
and Insurance Proceeds relating thereto, and such funds as from time to time are
deposited in the Collection Account. This Certificate is one of a series of
Certificates entitled "Charming Shoppes Master Trust, Floating Rate Asset Backed
Certificates, Series 1999-1, Class A" (the "Class A Certificates"), each of
which represents an Undivided Interest in the Trust, including the right to
receive the Collections and other amounts at the times and in the amounts
specified in the Pooling and Servicing Agreement to be deposited in the
Collection Account or paid to the Class A Certificateholders. The aggregate
interest represented by the Class A Certificates at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class A
Investor Interest at such time. In addition to the Series 1999-1 Certificates,
an Exchangeable Seller Certificate will be reissued to the Seller pursuant to
the Pooling and Servicing Agreement, which will represent an undivided interest
in the Trust. The Exchangeable Seller Certificate will represent the interest in
the Principal Receivables not represented by all of the Series of Investor
Certificates issued by the Trust or Series of Receivables Purchase Interests
sold by the Trust. The Exchangeable Seller Certificate may be exchanged by the
Seller pursuant to the Pooling and Servicing Agreement for a newly issued Series
of Investor Certificates and a reissued Exchangeable Seller Certificate upon the
conditions set forth in the Pooling and Servicing Agreement.
This Class A Certificate does not represent an obligation of,
or an interest in, the Seller, the Originator or the Servicer, and neither the
Class A Certificates nor the Accounts or Receivables are insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency.
This Class A Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth in the Pooling
and Servicing Agreement.
A-1-3
<PAGE> 51
The transfer of this Class A Certificate shall be registered
in the Certificate Register upon surrender of this Class A Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class A Certificateholder or such Class A Certificateholder's
attorney-in-fact duly authorized in writing, and thereupon one or more new Class
A Certificates of authorized denominations and for the same aggregate Undivided
Interests will be issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth, Class A Certificates are exchangeable
for new Class A Certificates evidencing like aggregate Undivided Interests, as
requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar, and any agent of any of them, may treat the person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither the Servicer, the Trustee, the Paying Agent, the Transfer
Agent and Registrar, nor any agent of any of them or of any such agent shall be
affected by notice to the contrary except in certain circumstances described in
the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Class A
Certificate shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
A-1-4
<PAGE> 52
IN WITNESS WHEREOF, Charming Shoppes Receivables Corp. has
caused this Class A Certificate to be duly executed under its official seal.
CHARMING SHOPPES RECEIVABLES CORP.
By:
------------------------------
Authorized Officer
Attested to:
By:
-------------------------
Assistant Secretary
Date: , 1999
-------- --
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
FIRST UNION NATIONAL BANK,
Trustee
By:
------------------------------
Authorized Officer
A-1-5
<PAGE> 53
EXHIBIT A-2
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE, OR AN INTEREST HEREIN, MAY NOT BE ACQUIRED
BY OR FOR THE ACCOUNT OF ANY EMPLOYEE BENEFIT PLAN WITHIN THE MEANING
OF SECTION 3(3) OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), WHETHER OR NOT SUBJECT TO ERISA, OR A PLAN THAT IS
DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT (EACH, A "BENEFIT PLAN"), OR
BY OR FOR THE ACCOUNT OF ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE ANY
BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN SUCH
ENTITY. BY ACQUIRING THIS CERTIFICATE OR AN INTEREST HEREIN, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT
EITHER (I) IT IS NOT A BENEFIT PLAN, AND THAT ITS ACQUISITION OF THIS
CERTIFICATE OR AN INTEREST HEREIN IS IN COMPLIANCE WITH THE FOREGOING
RESTRICTIONS ON BENEFIT PLAN ASSETS OR (II) IT IS AN INSURANCE COMPANY
PURCHASING THIS CERTIFICATE OR INTEREST HEREIN WITH ASSETS OF ITS
GENERAL ACCOUNT, AND AT THE TIME OF ACQUISITION AND THROUGHOUT THE
PERIOD OF HOLDING, (A) IT MEETS ALL OF THE REQUIREMENTS OF AND IS
ELIGIBLE FOR EXEMPTIVE RELIEF UNDER PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 AND (B) LESS THAN 25% OF THE ASSETS OF SUCH ACCOUNT ARE
BENEFIT PLAN ASSETS.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to Charming Shoppes Receivables Corp. or its agent for
registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No. __ $__________
<PAGE> 54
CUSIP No.
[ISIN No. __]
CHARMING SHOPPES MASTER TRUST
FLOATING RATE ASSET BACKED CERTIFICATE, SERIES 1999-1, CLASS B
Each $1,000 minimum denomination represents
a [ ] Undivided Interest in the
Charming Shoppes Master Trust Series 1999-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of credit card receivables acquired by Charming Shoppes Receivables
Corp. and other assets and interests constituting the Trust under the Pooling
and Servicing Agreement described below.
(Not an interest in or obligation of,
Charming Shoppes Receivables Corp., Spirit of America National Bank,
Spirit of America, Inc. Charming Shoppes, Inc. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class B
Certificateholder") is the registered owner of the Undivided Interest in a trust
(the "Trust"), the corpus of which consists of a portfolio of receivables (the
"Receivables") now existing or hereafter created under credit card accounts (the
"Accounts") of Spirit of America National Bank, a national banking association
organized under the laws of the United States, all monies due or to become due
in payment of the Receivables (including all Finance Charge Receivables), the
benefits of the subordination of the Class C Certificates and the Class D
Certificate and the other assets and interests constituting the Trust pursuant
to a Second Amended and Restated Pooling and Servicing Agreement dated as of
November 25, 1997, as amended on __________ __, 1999 (as further amended or
otherwise modified from time to time, the "Pooling and Servicing Agreement"), by
and among Charming Shoppes Receivables Corp., as Seller, Spirit of America,
Inc., as Servicer, and First Union National Bank, as Trustee (the "Trustee"). To
the extent not defined herein, capitalized terms used herein have the meanings
assigned in the Pooling and Servicing Agreement.
The Series 1999-1 Certificates are issued in four classes, the
Class A Certificates , the Class B Certificates (of which this certificate is
one), which are subordinated to the Class A Certificates in certain rights of
payment as described herein and in the Pooling and Servicing Agreement, the
Class C Certificates, which are subordinated to the Class A Certificates and the
Class B Certificates in certain rights of payment as described herein and in the
Pooling and Servicing Agreement, and the Class D Certificates, which are
subordinated to the Class A Certificates, the Class B Certificates and the Class
C Certificates in certain rights of payments as described herein and in the
Pooling and Servicing Agreement.
The Seller has structured the Pooling and Servicing Agreement
and the Class B Certificates with the intention that the Class B Certificates
will qualify under applicable tax law as indebtedness, and the Seller, the
Holder of the Exchangeable Seller Certificate, the Servicer and each Class B
Certificateholder (or Certificate Owner with respect to a Class B Certificate (a
A-2-2
<PAGE> 55
"Class B Certificate Owner")) by acceptance of its Class B Certificate (or in
the case of a Class B Certificate Owner, by virtue of such Class B Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Class B Certificates (or
beneficial interest therein) for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by income, as
indebtedness. Each Class B Certificateholder agrees that it will cause any Class
B Certificate Owner acquiring an interest in a Class B Certificate through it to
comply with the Pooling and Servicing Agreement as to treatment as indebtedness
for certain tax purposes.
This Class B Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the Class B
Certificateholder by virtue of the acceptance hereof assents and by which the
Class B Certificateholder is bound.
The Receivables consist of Principal Receivables which arise
from the purchase of goods and services and of Finance Charge Receivables which
arise generally from periodic rate finance charges and other fees and charges,
as more fully specified in the Pooling and Servicing Agreement. The Trust corpus
consists of the Receivables now existing in the Accounts or hereafter created in
the Accounts, all monies due or to become due with respect thereto (including
all Finance Charge Receivables), all proceeds of the Receivables and Recoveries
and Insurance Proceeds relating thereto, and such funds as from time to time are
deposited in the Collection Account. This Certificate is one of a series of
Certificates entitled "Charming Shoppes Master Trust, Floating Rate Asset Backed
Certificates, Series 1999-1, Class B" (the "Class B Certificates"), each of
which represents an Undivided Interest in the Trust, including the right to
receive the Collections and other amounts at the times and in the amounts
specified in the Pooling and Servicing Agreement to be deposited in the
Collection Account or paid to the Class B Certificateholders. The aggregate
interest represented by the Class B Certificates at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class B
Investor Interest at such time. In addition to the Series 1999-1 Certificates,
an Exchangeable Seller Certificate will be reissued to the Seller pursuant to
the Pooling and Servicing Agreement, which will represent an undivided interest
in the Trust. The Exchangeable Seller Certificate will represent the interest in
the Principal Receivables not represented by all of the Series of Investor
Certificates issued by the Trust or Series of Receivables Purchase Interests
sold by the Trust. The Exchangeable Seller Certificate may be exchanged by the
Seller pursuant to the Pooling and Servicing Agreement for a newly issued Series
of Investor Certificates and a reissued Exchangeable Seller Certificate upon the
conditions set forth in the Pooling and Servicing Agreement.
This Class B Certificate does not represent an obligation of,
or an interest in, the Seller, the Originator or the Servicer, and neither the
Class B Certificates nor the Accounts or Receivables are insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency.
This Class B Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth in the Pooling
and Servicing Agreement.
A-2-3
<PAGE> 56
The transfer of this Class B Certificate shall be registered
in the Certificate Register upon surrender of this Class B Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class B Certificateholder or such Class B Certificateholder's
attorney-in-fact duly authorized in writing, and thereupon one or more new Class
B Certificates of authorized denominations and for the same aggregate Undivided
Interests will be issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth, Class B Certificates are exchangeable
for new Class B Certificates evidencing like aggregate Undivided Interests, as
requested by the Class B Certificateholder surrendering such Class B
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar, and any agent of any of them, may treat the person in whose
name this Class B Certificate is registered as the owner hereof for all
purposes, and neither the Servicer, the Trustee, the Paying Agent, the Transfer
Agent and Registrar, nor any agent of any of them or of any such agent shall be
affected by notice to the contrary except in certain circumstances described in
the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Class B
Certificate shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
A-2-4
<PAGE> 57
IN WITNESS WHEREOF, Charming Shoppes Receivables Corp. has
caused this Class B Certificate to be duly executed under its official seal.
CHARMING SHOPPES RECEIVABLES CORP.
By:
-------------------------------
Authorized Officer
Attested to:
By:
-------------------------
Assistant Secretary
Date: , 1999
------- --
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
FIRST UNION NATIONAL BANK,
Trustee
By:
-------------------------------
Authorized Officer
A-2-5
<PAGE> 58
EXHIBIT A-3
FORM OF CLASS C CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS
OF ANY STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE, OR AN INTEREST HEREIN, MAY NOT BE ACQUIRED
BY OR FOR THE ACCOUNT OF ANY EMPLOYEE BENEFIT PLAN WITHIN THE MEANING
OF SECTION 3(3) OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), WHETHER OR NOT SUBJECT TO ERISA, OR A PLAN THAT IS
DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT (EACH, A "BENEFIT PLAN"), OR
BY OR FOR THE ACCOUNT OF ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE ANY
BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN SUCH
ENTITY. BY ACQUIRING THIS CERTIFICATE OR AN INTEREST HEREIN, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT
EITHER (I) IT IS NOT A BENEFIT PLAN, AND THAT ITS ACQUISITION OF THIS
CERTIFICATE OR AN INTEREST HEREIN IS IN COMPLIANCE WITH THE FOREGOING
RESTRICTIONS ON BENEFIT PLAN ASSETS OR (II) IT IS AN INSURANCE COMPANY
PURCHASING THIS CERTIFICATE OR INTEREST HEREIN WITH ASSETS OF ITS
GENERAL ACCOUNT, AND AT THE TIME OF ACQUISITION AND THROUGHOUT THE
PERIOD OF HOLDING, (A) IT MEETS ALL OF THE REQUIREMENTS OF AND IS
ELIGIBLE FOR EXEMPTIVE RELIEF UNDER PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 AND (B) LESS THAN 25% OF THE ASSETS OF SUCH ACCOUNT ARE
BENEFIT PLAN ASSETS.
NEITHER THIS CERTIFICATE, NOR ANY PORTION OF THIS CERTIFICATE,
MAY BE TRANSFERRED (X) IF AFTER GIVING EFFECT TO THE EXECUTION OR
TRANSFER OF SUCH CERTIFICATE, THERE WOULD BE MORE THAN (I) 5 PRIVATE
HOLDERS OF CLASS C CERTIFICATES OR (II) 100 PRIVATE HOLDERS, OR (Y) ON
OR THROUGH (I) AN "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF
SECTION 7704(b)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER,
<PAGE> 59
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET OR AN
INTERDEALER QUOTATIONS SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR
SELL QUOTATIONS OR (II) "SECONDARY MARKET" OR "SUBSTANTIAL EQUIVALENT
THEREOF" WITHIN THE MEANING OF SECTION 7704(b)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, AND ANY PROPOSED, TEMPORARY OR FINAL
TREASURY REGULATIONS THEREUNDER, INCLUDING A MARKET WHEREIN INTERESTS
IN THE TRUST ARE REGULARLY QUOTED BY ANY PERSON MAKING A MARKET IN SUCH
INTERESTS AND A MARKET WHEREIN ANY PERSON REGULARLY MAKES AVAILABLE BID
OR OFFER QUOTES WITH RESPECT TO INTERESTS IN THE TRUST AND STANDS READY
TO EFFECT BUY OR SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR
ON BEHALF OF OTHERS. ANY ATTEMPTED TRANSFER, ASSIGNMENT, CONVEYANCE,
PARTICIPATION OR SUBDIVISION IN CONTRAVENTION OF THE PRECEDING
RESTRICTIONS, AS REASONABLY DETERMINED BY THE SELLER, SHALL BE VOID AB
INITIO AND THE PURPORTED TRANSFEROR, SELLER OR SUBDIVIDER OF SUCH
CERTIFICATE SHALL BE CONSTRUED TO BE TREATED AS THE CERTIFICATEHOLDER
OF ANY SUCH CERTIFICATE FOR ALL PURPOSES OF THE POOLING AND SERVICING
AGREEMENT (DEFINED BELOW).
A-3-2
<PAGE> 60
CUSIP No.
CHARMING SHOPPES MASTER TRUST
FLOATING RATE ASSET BACKED CERTIFICATE, SERIES 1999-1, CLASS C
Each $1,000 minimum denomination represents
a [ ] Undivided Interest in the
Charming Shoppes Master Trust Series 1999-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of credit card receivables acquired by Charming Shoppes Receivables
Corp. and other assets and interests constituting the Trust under the Pooling
and Servicing Agreement described below.
(Not an interest in or obligation of, Charming Shoppes
Receivables Corp., Spirit of America National Bank, Spirit of America, Inc.
Charming Shoppes, Inc. or any Affiliate thereof.)
This certifies that ______________ (the "Class C
Certificateholder") is the registered owner of the Undivided Interest in a trust
(the "Trust"), the corpus of which consists of a portfolio of receivables (the
"Receivables") now existing or hereafter created under credit card accounts (the
"Accounts") of Spirit of America National Bank, a national banking association
organized under the laws of the United States, all monies due or to become due
in payment of the Receivables (including all Finance Charge Receivables), the
subordination of the Class D Certificate and the other assets and interests
constituting the Trust pursuant to a Second Amended and Restated Pooling and
Servicing Agreement dated as of November 25, 1997, as amended on _________ __
1999 (as further amended or otherwise modified from time to time, the "Pooling
and Servicing Agreement"), by and among Charming Shoppes Receivables Corp., as
Seller, Spirit of America, Inc. as Servicer, and First Union National Bank, as
Trustee (the "Trustee"). To the extent not defined herein, capitalized terms
used herein have the meanings assigned in the Pooling and Servicing Agreement.
The Series 1999-1 Certificates are issued in four classes, the
Class A Certificates, the Class B Certificates, which are subordinated to the
Class A Certificates in certain rights of payment as described herein and in the
Pooling and Servicing Agreement, the Class C Certificates (of which this
certificate is one), which are subordinated to the Class A Certificates and the
Class B Certificates in certain rights of payment as described herein and in the
Pooling and Servicing Agreement, and the Class D Certificates, which are
subordinated to the Class A Certificates, the Class B Certificates and the Class
C Certificates in certain rights of payments as described herein and in the
Pooling and Servicing Agreement.
This Class C Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the Class C
Certificateholder by virtue of the acceptance hereof assents and by which the
Class C Certificateholder is bound.
A-3-3
<PAGE> 61
The Receivables consist of Principal Receivables which arise
from the purchase of goods and services and of Finance Charge Receivables which
arise generally from periodic rate finance charges and other fees and charges,
as more fully specified in the Pooling and Servicing Agreement. The Trust corpus
consists of the Receivables now existing in the Accounts or hereafter created in
the Accounts, all monies due or to become due with respect thereto (including
all Finance Charge Receivables), all proceeds of the Receivables and Recoveries
and Insurance Proceeds relating thereto, and such funds as from time to time are
deposited in the Collection Account. This Certificate is one of a series of
Certificates entitled "Charming Shoppes Master Trust, Floating Rate Asset Backed
Certificates, Series 1999-1, Class C" (the "Class C Certificates"), each of
which represents an Undivided Interest in the Trust, including the right to
receive the Collections and other amounts at the times and in the amounts
specified in the Pooling and Servicing Agreement to be deposited in the
Collection Account or paid to the Class C Certificateholders. The aggregate
interest represented by the Class C Certificates at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class C
Investor Interest at such time. In addition to the Series 1999-1 Certificates,
an Exchangeable Seller Certificate will be reissued to the Seller pursuant to
the Pooling and Servicing Agreement, which will represent an undivided interest
in the Trust. The Exchangeable Seller Certificate will represent the interest in
the Principal Receivables not represented by all of the Series of Investor
Certificates issued by the Trust or Series of Receivables Purchase Interests
sold by the Trust. The Exchangeable Seller Certificate may be exchanged by the
Seller pursuant to the Pooling and Servicing Agreement for a newly issued Series
of Investor Certificates and a reissued Exchangeable Seller Certificate upon the
conditions set forth in the Pooling and Servicing Agreement.
This Class C Certificate does not represent an obligation of,
or an interest in, the Seller, the Originator or the Servicer, and neither the
Class C Certificates nor the Accounts or Receivables are insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency.
This Class C Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth in the Pooling
and Servicing Agreement.
The transfer of this Class C Certificate shall be registered
in the Certificate Register upon surrender of this Class C Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class C Certificateholder or such Class C Certificateholder's
attorney-in-fact duly authorized in writing, and thereupon one or more new Class
C Certificates of authorized denominations and for the same aggregate Undivided
Interests will be issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and in the Class C Purchase Agreement,
Class C Certificates are exchangeable for new Class C Certificates evidencing
like aggregate Undivided Interests, as requested by the Class C
Certificateholder surrendering such Class C Certificates. No service charge may
be imposed for any such exchange but the Servicer or Transfer Agent and
Registrar
A-3-4
<PAGE> 62
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar, and any agent of any of them, may treat the person in whose
name this Class C Certificate is registered as the owner hereof for all
purposes, and neither the Servicer, the Trustee, the Paying Agent, the Transfer
Agent and Registrar, nor any agent of any of them or of any such agent shall be
affected by notice to the contrary except in certain circumstances described in
the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Class C
Certificate shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, Charming Shoppes Receivables Corp. has
caused this Class C Certificate to be duly executed under its official seal.
CHARMING SHOPPES RECEIVABLES CORP.
By:
---------------------------------
Authorized Officer
Attested to:
By:
--------------------------
Assistant Secretary
Date: , 1999
------------ --
A-3-5
<PAGE> 63
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
FIRST UNION NATIONAL BANK,
Trustee
By:
---------------------------------
Authorized Officer
A-3-6
<PAGE> 64
EXHIBIT A-4
FORM OF CLASS D CERTIFICATE
No. __ $__________
CHARMING SHOPPES MASTER TRUST
FLOATING RATE ASSET BACKED CERTIFICATE, SERIES 1999-1,
CLASS D CERTIFICATE
THIS CERTIFICATE WAS ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY BE SOLD ONLY PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE
UNDER THE ACT OR AN EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
ACT. IN ADDITION, THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN. A COPY OF THE POOLING AND SERVICING AGREEMENT WILL BE
FURNISHED TO THE HOLDER OF THIS CERTIFICATE BY THE TRUSTEE UPON WRITTEN
REQUEST.
THIS CERTIFICATE, OR AN INTEREST HEREIN, MAY NOT BE ACQUIRED
BY OR FOR THE ACCOUNT OF ANY EMPLOYEE BENEFIT PLAN WITHIN THE MEANING
OF SECTION 3(3) OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), WHETHER OR NOT SUBJECT TO ERISA, OR A PLAN THAT IS
DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT (EACH, A "BENEFIT PLAN"), OR
BY OR FOR THE ACCOUNT OF ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE ANY
BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN SUCH
ENTITY. BY ACQUIRING THIS CERTIFICATE OR AN INTEREST HEREIN, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT
EITHER (I) IT IS NOT A BENEFIT PLAN, AND THAT ITS ACQUISITION OF THIS
CERTIFICATE OR AN INTEREST HEREIN IS IN COMPLIANCE WITH THE FOREGOING
RESTRICTIONS ON BENEFIT PLAN ASSETS OR (II) IT IS AN INSURANCE COMPANY
PURCHASING THIS CERTIFICATE OR INTEREST HEREIN WITH ASSETS OF ITS
GENERAL ACCOUNT, AND AT THE TIME OF ACQUISITION AND THROUGHOUT THE
PERIOD OF HOLDING, (A) IT MEETS ALL OF THE REQUIREMENTS OF AND IS
ELIGIBLE FOR EXEMPTIVE RELIEF UNDER PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 AND (B) LESS THAN 25% OF THE ASSETS OF SUCH ACCOUNT ARE
BENEFIT PLAN ASSETS.
NEITHER THIS CERTIFICATE, NOR ANY PORTION OF THIS CERTIFICATE,
MAY BE TRANSFERRED (X) IF AFTER GIVING EFFECT TO THE
<PAGE> 65
EXECUTOR OR TRANSFER OF SUCH CERTIFICATE, THERE WOULD BE MORE THAN (I)
3 PRIVATE HOLDERS OF CLASS D CERTIFICATES OR (II) 100 PRIVATE HOLDERS,
OR (Y) ON OR THROUGH (I) AN "ESTABLISHED SECURITIES MARKET" WITHIN THE
MEANING OF SECTION 7704(b)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET
OR AN INTERDEALER QUOTATIONS SYSTEM THAT REGULARLY DISSEMINATES FIRM
BUY OR SELL QUOTATIONS OR (II) "SECONDARY MARKET" OR "SUBSTANTIAL
EQUIVALENT THEREOF" WITHIN THE MEANING OF SECTION 7704(b)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND ANY PROPOSED, TEMPORARY
OR FINAL TREASURY REGULATION THEREUNDER, INCLUDING A MARKET WHEREIN
INTERESTS IN THE TRUST ARE REGULARLY QUOTED BY ANY PERSON MAKING A
MARKET IN SUCH INTERESTS AND A MARKET WHEREIN ANY PERSON REGULARLY
MAKES AVAILABLE BID OR OFFER QUOTES WITH RESPECT TO INTEREST IN THE
TRUST AND STANDS READY TO EFFECT BUY OR SELL TRANSACTIONS AT THE QUOTED
PRICES FOR ITSELF OR ON BEHALF OF OTHERS. ANY ATTEMPTED TRANSFER,
ASSIGNMENT, CONVEYANCE, PARTICIPATION OR SUBDIVISION IN CONTRAVENTION
OF THE PRECEDING RESTRICTIONS, AS REASONABLY DETERMINED BY THE SELLER,
SHALL BE VOID AB INITIO AND THE PURPORTED TRANSFEROR, SELLER, OR
SUBDIVIDER OF SUCH CERTIFICATE SHALL BE CONSTRUED TO BE TREATED AS THE
CERTIFICATEHOLDER OF ANY SUCH CERTIFICATE FOR ALL PURPOSES OF THE
POOLING AND SERVICING AGREEMENT (DEFINED BELOW).
Each $1,000 minimum denomination represents
a [ ] Undivided Interest in the
Charming Shoppes Master Trust Series 1999-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of credit card receivables acquired by Charming Shoppes Receivables
Corp. and other assets and interests constituting the Trust under the Pooling
and Servicing Agreement described below.
(Not an interest in or obligation of,
Charming Shoppes Receivables Corp., Spirit of America National Bank, Spirit of
America, Inc. Charming Shoppes, Inc. or any Affiliate thereof.)
This certifies that ____________ (the "Class D
Certificateholder") is the registered owner of the Undivided Interest in a trust
(the "Trust"), the corpus of which consists of a portfolio of credit card
receivables (the "Receivables") now existing or hereafter created under credit
card accounts (the "Accounts") of Spirit of America National Bank, a national
banking association organized under the laws of the United States, all monies
due or to become due in payment of the Receivables (including all Finance Charge
Receivables), and the other assets and interests constituting the Trust pursuant
to a Second Amended and Restated Pooling
A-4-2
<PAGE> 66
and Servicing Agreement dated as of November 25, 1997, as amended on _________
__, 1999 (as further amended or otherwise modified from time to time, the
"Pooling and Servicing Agreement"), by and among Charming Shoppes Receivables
Corp., as Seller, Spirit of America, Inc., as Servicer, and First Union National
Bank, as Trustee (the "Trustee"). To the extent not defined herein, capitalized
terms used herein have the meanings assigned in the Pooling and Servicing
Agreement.
The Series 1999-1 Certificates are issued in four classes, the
Class A Certificates, the Class B Certificates, which are subordinated to the
Class A Certificates in certain rights of payment as described herein and in the
Pooling and Servicing Agreement, the Class C Certificates, which are
subordinated to the Class A Certificates and the Class B Certificates in certain
rights of payment as described herein, and in the Pooling and Servicing
Agreement, and the Class D Certificates (of which this certificate is one),
which are subordinated to the Class A Certificates, the Class B Certificates and
the Class C Certificates in certain rights of payments as described herein, and
in the Pooling and Servicing Agreement.
This Class D Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the Class D
Certificateholder by virtue of the acceptance hereof assents and by which the
Class D Certificateholder is bound.
The Receivables consist of Principal Receivables which arise
from the purchase of goods and services and of Finance Charge Receivables which
arise generally from periodic rate finance charges and other fees and charges,
as more fully specified in the Pooling and Servicing Agreement. The Trust corpus
consists of the Receivables now existing in the Accounts or hereafter created in
the Accounts, all monies due or to become due with respect thereto (including
all Finance Charge Receivables), all proceeds of the Receivables and Recoveries
and Insurance Proceeds relating thereto, and such funds as from time to time are
deposited in the Collection Account. This Certificate is one of a series of
Certificates entitled "Charming Shoppes Master Trust, Floating Rate Asset Backed
Certificates, Series 1999-1, Class D Certificates" (the "Class D Certificates"),
each of which represents an Undivided Interest in the Trust, including the right
to receive the Collections and other amounts at the times and in the amounts
specified in the Pooling and Servicing Agreement to be deposited in the
Collection Account or paid to the Class D Certificateholders. The aggregate
interest represented by the Class D Certificates at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class D
Investor Interest at such time. In addition to the Series 1999-1 Certificates,
an Exchangeable Seller Certificate will be reissued to the Seller pursuant to
the Pooling and Servicing Agreement, which will represent an undivided interest
in the Trust. The Exchangeable Seller Certificate will represent the interest in
the Principal Receivables not represented by all of the Series of Investor
Certificates issued by the Trust or Series of Receivables Purchase Interests
sold by the Trust. The Exchangeable Seller Certificate may be exchanged by the
Seller pursuant to the Pooling and Servicing Agreement for a newly issued Series
of Investor Certificates and a reissued Exchangeable Seller Certificate upon the
conditions set forth in the Pooling and Servicing Agreement.
A-4-3
<PAGE> 67
This Class D Certificate does not represent an obligation of,
or an interest in, the Seller, the Originator or the Servicer, and neither the
Class D Certificates nor the Accounts or Receivables are insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency.
This Class D Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth in the Pooling
and Servicing Agreement.
The transfer of this Class D Certificate shall be registered
in the Certificate Register upon surrender of this Class D Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class D Certificateholder or such Class D Certificateholder's
attorney-in-fact duly authorized in writing, and thereupon one or more new Class
D Certificates of authorized denominations and for the same aggregate Undivided
Interests will be issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth, Class D Certificates are exchangeable
for new Class D Certificates evidencing like aggregate Undivided Interests, as
requested by the Class D Certificateholder surrendering such Class D
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar, and any agent of any of them, may treat the person in whose
name this Class D Certificate is registered as the owner hereof for all
purposes, and neither the Servicer, the Trustee, the Paying Agent, the Transfer
Agent and Registrar, nor any agent of any of them or of any such agent shall be
affected by notice to the contrary except in certain circumstances described in
the Pooling and Servicing Agreement.
A-4-4
<PAGE> 68
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Class D
Certificate shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, Charming Shoppes Receivables Corp. has
caused this Class D Certificate to be duly executed under its official seal.
CHARMING SHOPPES RECEIVABLES CORP.
By:
-------------------------------
Authorized Officer
Attested to:
By:
----------------------------
Assistant Secretary
Date: , 1999
------------ --
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
FIRST UNION NATIONAL BANK,
Trustee
By:
-------------------------------------
Authorized Officer
A-4-5
<PAGE> 69
EXHIBIT B
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO THE TRUSTEE
SPIRIT OF AMERICA, INC.
CHARMING SHOPPES MASTER TRUST
SERIES 1999-1
The undersigned, a duly authorized representative of Spirit of America,
Inc. ("Spirit"), as Servicer pursuant to the Second Amended and Restated Pooling
and Servicing Agreement dated as of November 25, 1997, as amended on ________
__, 1999 (as further amended or otherwise modified from time to time, the
"Pooling and Servicing Agreement") by and among Charming Shoppes Receivables
Corp., as Seller, Spirit and First Union National Bank, as trustee (the
"Trustee"), does hereby certify as follows:
A) Capitalized terms used in this notice have their
respective meanings set forth in the Pooling and Servicing Agreement;
provided, that the "preceding Due Period" shall mean the Due Period
immediately preceding the calendar month in which this notice is
delivered. References herein to certain sections and subsections are
references to the respective sections and subsections of the Pooling
and Servicing Agreement. This notice is delivered pursuant to Section
4.9 of the Pooling and Servicing Agreement.
B) Spirit is the Servicer under the Pooling and
Servicing Agreement.
C) The undersigned is a Servicing Officer.
D) The date of this notice is a Determination Date
under the Pooling and Servicing Agreement.
I. INSTRUCTION TO MAKE A WITHDRAWAL
The Servicer does hereby instruct the Trustee (i) to make withdrawals
from the Collection Account on ______________ __, _____, which date is a
Distribution Date under the Pooling and Servicing Agreement, in aggregate
amounts set forth below in respect of the following amounts and (ii) to apply
the proceeds of such withdrawals in accordance with
<PAGE> 70
Section 3 of the Series 1999-1 Supplement, as applicable and Section 4.9 of the
Pooling and Servicing Agreement, as applicable:
A) Pursuant to subsection 4.9(a)(i):
(1) Class A Monthly Interest at
the Class A Certificate Rate
on the Class A Investor Interest $________
(2) Class A Deficiency Amount $________
(3) Class A Additional Interest $________
B) Pursuant to subsection 4.9(a)(ii):
(1) Class A Servicing Fee $________
(2) Accrued and unpaid Class A
Servicing Fee $________
C) Pursuant to subsection 4.9(a)(iii):
(1) Class A Investor Loss Amount $________
D) Pursuant to subsection 4.9(a)(iv):
(1) Class A Investor Dilution Amount $________
E) Pursuant to subsection 4.9(a)(v):
(1) Portion of Excess Spread from
Class A Available Funds to be
allocated and distributed as
provided in Section 4.11 $________
F) Pursuant to subsection 4.9(b)(i):
(1) Class B Monthly Interest at the
Class B Certificate Rate on the
Class B Investor Interest $________
(2) Class B Deficiency Amount $________
(3) Class B Additional Interest $________
B-2
<PAGE> 71
G) Pursuant to subsection 4.9(b)(ii):
(1) Class B Servicing Fee $
--------
(2) Accrued and unpaid Class B
Servicing Fee $
--------
H) Pursuant to subsection 4.9(b)(iii):
(1) Portion of Excess Spread from
Class B Available Funds to be
allocated and distributed as
provided in Section 4.11 $
--------
I) Pursuant to subsection 4.9(c)(i):
(1) Class C Servicing
Fee $
--------
(2) Accrued and unpaid Class C
Servicing Fee, if applicable $
--------
J) Pursuant to subsection 4.9(c)(ii):
(1) Portion of Excess Spread from
Class C Available Funds to
be allocated and distributed as
provided in Section 4.11 $
--------
K) Pursuant to subsection 4.9(d)(i):
(1) Class D Servicing
Fee $
--------
(2) Accrued and unpaid Class D
Servicing Fee, if applicable $
--------
L) Pursuant to subsection 4.9(d)(ii):
(1) Portion of Excess Spread from
Class D Available Funds to be
allocated and distributed as
provided in Section 4.11 $
--------
Total $
========
B-3
<PAGE> 72
M) Pursuant to subsection 4.9(e)(i):
(1) Amount to be applied pursuant
to Class C Purchase Agreement $
--------
N) Pursuant to subsection 4.9(e)(ii):
(1) Amount to be treated as Shared
Excess Principal Collections $
--------
O) Pursuant to subsection 4.9(e)(iii):
(1) Amount to be paid to the Holder
of the Exchangeable Seller's
Certificate $
--------
P) Pursuant to subsection 4.9(f)(i):
(1) Class A Monthly Principal $
--------
Q) Pursuant to subsection 4.9(f)(ii):
(1) Class B Monthly Principal $
--------
R) Pursuant to subsection 4.9(f)(iii):
(1) Class C Monthly Principal to be
applied in accordance with the
Class C Purchase Agreement $
--------
S) Pursuant to subsection 4.9(f)(iv):
(1) Class D Monthly Principal $
--------
T) Pursuant to subsection 4.9(f)(v):
(1) Amount to be applied pursuant
to Class C Purchase Agreement $
--------
U) Pursuant to subsection 4.9(f)(vi):
(1) Amount to be treated as Shared
Excess Principal Collections $
--------
V) Pursuant to subsection 4.9(f)(vii):
B-4
<PAGE> 73
(1) Amount to be paid to the Holder
of the Exchangeable Seller's
Certificate $
--------
Total $
========
W) Pursuant to Section 4.14:
(1) Amount of Shared Excess Finance Charge
Collections to be withdrawn from the
Collection Account to be allocated to Series
1999-1 and distributed as provided in
Section 4.11. $
--------
II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 4.9 of the Pooling and Servicing Agreement, the
Servicer does hereby instruct the Trustee to pay in accordance with Section 5.1
from the Collection Account on , , which date is a Distribution
---------- -- ----
Date under the Pooling and Servicing Agreement:
1. Amount to be distributed to
Class A Certificateholders $
---------
2. Amount to be distributed to
Class B Certificateholders $
---------
3. Amount to be distributed to the
Class D Certificateholders $
---------
III. APPLICATION OF EXCESS SPREAD
Pursuant to Section 4.11, the Servicer does hereby instruct the Trustee
to apply the Excess Spread with respect to the related Due Period and to make
the following distributions in the following priority:
B-5
<PAGE> 74
A. The amount equal to the Class A
Required Amount, if any, which
will be used to fund the Class A
Required Amount and be applied in
accordance with, and in the priority
set forth in subsection 4.9(a) $
----------------
B. The amount equal to the aggregate
amount of Class A Investor
Charge-Offs which have not been
previously reimbursed (after
giving effect to the allocation
on such Distribution Date of
certain other amounts applied for
that purpose) which will be treated
as a portion of Available Principal
Collections $
----------------
C. The amount equal to the Class B
Required Amount, if any, which
will be used to fund the Class B
Required Amount and be applied
first in accordance with, and in
the priority set forth in, sub-
section 4.9(b) and then in accordance
with, and in the priority set forth in,
subsection 4.11(c)(II) $
----------------
D. The amount equal to the aggregate
amount by which the Class B
Investor Interest has been
reduced below the initial Class B
Series Investor Interest for reasons
other than the payment of
principal to the Class B
Certificateholders (but not in
excess of the unreimbursed amount of
such reductions) which will be
treated as a portion of Available
Principal Collection $
----------------
B-6
<PAGE> 75
E. The amount equal to the aggregate
amount of accrued but unpaid
Class C Servicing Fee (after
giving affect to the application
of Class C Available Funds
thereto pursuant to Section 4.9) $
----------------
F. The amount equal to the
Class C Monthly Interest plus
the amount of any past due
Class C Monthly Interest which
will be paid to the Class C
Holder for application
in accordance with the Class C
Purchase Agreement $
----------------
G. The amount equal to the
Class C Investor Loss Amount,
if any, for the prior Due Period
which will be treated as a
portion of Available Principal
Collections $
----------------
H. The amount equal to the Class C
Investor Dilution Amount, if any for
the prior Due Period which will be
treated as a portion of Available
Principal Collections $
----------------
I. The amount equal to the aggregate
amount by which the Class C
Investor Interest has been reduced
below the initial Class C
Investor Interest for reasons other
than the payment of principal to the
Class C Investor Holder (but
not in excess of the unreimbursed
amount of such reductions) which
will be treated as a portion of Available
Principal Collections $
----------------
J. The amount equal to the aggregate
amount of any other amounts then
due to the Class C Certificateholders out of
Excess Spread and Shared Excess
Finance Charge Collections allocated
B-7
<PAGE> 76
to Series 1999-1 to be distributed to
the Class C Certificateholders for
application in accordance with the
Class C Purchase Agreement $
----------------
K. The amount equal to the aggregate
amount of accrued but unpaid
Class D Servicing Fees which
will be paid to the Servicer
(after giving effect to the
application of Class D Available
Funds thereto pursuant to Section 4.9) $
----------------
L. The amount equal to the
Class D Monthly Interest plus the
amount of any past due Class D
Monthly Interest which will be paid to
the Class D Certificateholders $
----------------
M. The amount equal to the
Class D Investor Loss
Amount, if any, for the prior
Due Period which will be treated
as a portion of Available
Principal Collections $
----------------
N. The amount equal to the Class D
Investor Dilution Amount, if any
for the prior Due Period which will
be treated as a portion of Available
Principal Collections $
----------------
O. The amount equal to the aggregate
amount by which the Class D
Investor Interest has been
reduced below the initial
Class D Investor Interest
for reasons other than the
payment of principal to the
Class D Certificateholders (but
not in excess of the unreimbursed
amount of such reductions)
which will be treated as a
portion of Available Principal
Collections $
----------------
B-8
<PAGE> 77
Q. The balance, if any, after
giving effect to the payments made
pursuant to subparagraphs (A) through
(O) above to be applied
as Shared Excess Finance Charge
Collections for such Distribution Date $
----------------
IV. REALLOCATED PRINCIPAL COLLECTIONS
Pursuant to Section 4.12, the Servicer does hereby instruct the Trustee
to withdraw from the Collection Account and apply Reallocated Principal
Collections pursuant to Section 4.12 with respect to the related Due Period in
the following amounts:
A. Reallocated Class D
Principal Collections $
----------------
B. Reallocated Class C
Principal Collections $
----------------
C. Reallocated Class B
Principal Collections $
----------------
V. ACCRUED AND UNPAID AMOUNTS
After giving effect to the withdrawals and transfers to be made in
accordance with this notice, the following amounts will be accrued and unpaid
with respect to all Due Periods preceding the current calendar month
A. Subsections 4.9(a)(i) and (b)(i):
(1) The aggregate amount of the
Class A Deficiency Amount $
----------------
(2) The aggregate amount of
Class B Deficiency Amount $
----------------
B. Subsections 4.9(a)(ii) and (b)(ii):
(1) The aggregate amount of all
accrued and unpaid Class A
Servicing Fee $
----------------
(2) The aggregate amount of all
B-9
<PAGE> 78
accrued and unpaid Class B
Servicing Fee $
----------------
C. Section 4.10:
(1) The aggregate amount of all
unreimbursed Class A Investor
Charge-Offs $
----------------
(2) The aggregate amount of all
unreimbursed Class B Investor
Charge-Offs $
----------------
(3) The aggregate amount of all
unreimbursed Class C Investor
Charge-Offs $
----------------
(4) The aggregate amount of all
unreimbursed Class D Investor
Charge-Offs $
----------------
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this day of , .
-- --------- ----
SPIRIT OF AMERICA, INC.
Servicer
By:
-------------------------------
Name:
Title:
B-10
<PAGE> 79
EXHIBIT C
FORM OF MONTHLY CERTIFICATEHOLDERS' STATEMENT
Series 1999-1
SPIRIT OF AMERICA, INC.
CHARMING SHOPPES MASTER TRUST
Under Section 5.2 of the Series 1999-1 Supplement dated as of
__________ __, 1999 (the "Series 1999-1 Supplement", and together with the
Second Amended and Restated Pooling and Servicing Agreement dated as of November
25, 1997, as amended or otherwise modified from time to time, the "Pooling and
Servicing Agreement") by and among Charming Shoppes Receivables Corp., as
Seller, Spirit of America, Inc., (Spirit"), as Servicer, and First Union
National Bank, as Trustee, Spirit, as Servicer, is required to prepare certain
information each month regarding current distributions to Series 1999-1
Certificateholders and the performance of the Charming Shoppes Master Trust (the
"Trust") during the previous month. The information which is required to be
prepared with respect to the Distribution Date of _______, ______ and with
respect to the performance of the Trust during the month of _________, ______ is
set forth below. Certain of the information is presented on the basis of an
original principal amount of $1,000 per Series 1999-1 Certificate (a
"Certificate"). Certain other information is presented based on the aggregate
amounts for the Trust as a whole. Capitalized terms used in this Statement have
their respective meanings set forth in the Pooling and Servicing Agreement.
A. Information Regarding the Current Monthly Distribution (Stated on the
Basis of $1,000 Original Certificate Principal Amount)
1. The amount of the current monthly
distribution in respect of Class A
Monthly Principal............................. $________
2. The amount of the current monthly
distribution in respect of Class B
Monthly Principal............................. $________
3. The amount of the current monthly
distribution in respect of
Class C Monthly Principal..................... $________
<PAGE> 80
4. The amount of the current monthly
distribution in respect of
Class D Monthly
Principal....................................... $________
5. The amount of the current monthly
distribution in respect of Class A
Monthly Interest................................ $________
6. The amount of the current monthly
distribution in respect of Class A
Deficiency Amounts.............................. $________
7. The amount of the current monthly
distribution in respect of Class A
Additional Interest............................. $________
8. The amount of the current monthly
distribution in respect of Class B
Monthly Interest................................ $________
9. The amount of the current monthly
distribution in respect of Class B
Deficiency Amounts.............................. $________
10. The amount of the current monthly
distribution in respect of Class B
Additional Interest............................. $________
11. The amount of the current monthly
distribution in respect of
Class C Monthly Interest........................ $________
12. The amount of the current monthly
distribution in respect of any
accrued and unpaid Class C
Deficiency Amounts.............................. $________
13. The amount of the current monthly
distribution in respect of
Class D Monthly Interest........................ $________
C-2
<PAGE> 81
B. Information Regarding the Performance of the Trust
1. Collection of Principal Receivables
(a) The aggregate amount of
Collections of Principal
Receivables processed during
the related Due Period
which were allocated in respect
of the Class A Certificates............. $________
(b) The aggregate amount of
Collections of Principal
Receivables processed
during the related Due Period
which were allocated in
respect of the Class B Certificates..... $________
(c) The aggregate amount of
Collections of Principal
Receivables processed during
the related Due Period
which were allocated in
respect of the Class C Certificates...... $________
(d) The aggregate amount of
Collections of Principal
Receivables during the related
Due Period which were
allocated in respect
of the Class D Certificates.............. $________
2. Principal Receivables in the Trust
(a) The aggregate amount of Principal
Receivables in the Trust as of
the end of the day on the last
day of the preceding Due
Period.................................. $________
C-3
<PAGE> 82
(b) The Excess Funding Amount
(the aggregate amount on
deposit in the Excess Funding
Account) as of the end
of the day on the last day of the
preceding Due Period..................... $________
(c) The Series Investor Interest as of
the last day of the preceding
Due Period............................... $________
(d) The Floating Allocation
Percentage with respect
to the related Due
Period................................... ______%
(e) The Class A Floating
Allocation with respect
to the related Due
Period.................................... ______%
(f) The Class B Floating
Allocation with respect
to the related Due
Period.................................... ______%
(g) The Class C Floating
Allocation with respect to
the related Due
Period.................................... ______%
(h) The Class D Floating
Allocation with respect
to the related Due Period................. ______%
(i) The Principal Allocation
Percentage with respect to
the related Due Period.................... ______%
(j) The Class A Fixed Allocation
with respect to the related
Due Period................................ ______%
(k) The Class B Fixed Allocation
with respect to the related
Due Period................................ ______%
C-4
<PAGE> 83
(l) The Class C Fixed
Allocation with respect
to the related Due
Period.................................... ______%
(m) The Class D Fixed
Allocation with respect
to the related Due Period................. ______%
3. Delinquent Balances
The aggregate amount of outstanding balances in the Accounts
which were delinquent as of the day on the last day of the
preceding Due Period:
Aggregate
Account
Balance
(a) 30-59 days ........................ $_______
(b) 60-89 days ........................ $_______
(c) 90-119 days ........................ $_______
(d) 120 or more days ........................ $_______
Total: $_______
4. Investor Loss Amount
(a) The Investor Loss
Amount for the related
Due Period................................. $_________
(b) The Class A Investor
Loss Amount for the
related Due Period......................... $_________
(c) The Class B Investor
Loss Amount for the
related Due Period......................... $_________
(d) The Class C Investor Loss
Amount for the related
Due Period................................. $________
(e) The Class D Investor
Loss Amount for the related
Due Period................................. $_________
C-5
<PAGE> 84
5. Series 1999-1 Dilution Amount
(a) The Series 1999-1 Dilution Amount
for the related Due Period................ $
----------
(b) The Class A Investor
Dilution Amount for the
related Due Period........................ $
----------
(c) The Class B Investor
Dilution Amount for the
related Due Period........................ $
----------
(d) The Class C Investor Dilution
Amount for the related
Due Period................................ $
----------
(e) The Class D Investor
Dilution Amount for the related
Due Period................................ $
----------
(f) The Series Unfunded Dilution
Amount for the related
Due Period................................ $
----------
6. Investor Charge Offs
(a) The aggregate amount of
Class A Investor Charge
Offs for the related
Due Period................................ $
----------
(b) The aggregate amount of Class A
Investor Charge Offs
set forth in 6(a) above
per $1,000 of original
certificate principal amount.............. $
----------
(c) The aggregate amount of
Class B Investor Charge
Offs for the related
Due Period................................ $
----------
(d) The aggregate amount of Class B
Investor Charge
C-6
<PAGE> 85
Offs set forth in 6(c) above per
$1,000 of original certificate principal
amount.................................... $
----------
(e) The aggregate amount of Class C
Investor Charge Offs
for the related Due Period................ $
----------
(f) The aggregate amount of Class C
Investor Charge Offs
set forth in 6(e) above per
$1,000 of original
certificate principal amount.............. $
----------
(g) The aggregate amount of
Class D Investor
Charge Offs for the
related Due Period........................ $
----------
(h) The aggregate amount of Class D
Investor Charge Offs
set forth in 6(g) above per
$1,000 of original certificate
principal amount.......................... $
----------
(i) The aggregate amount of Class A
Investor Charge Offs
reimbursed on this
Distribution Date......................... $
----------
(j) The aggregate amount of Class A
Investor Charge Offs set forth in 6(i)
above per $1,000 original
certificate principal
amount reimbursed on this
Distribution Date......................... $
----------
(k) The aggregate amount of Class B
Investor Charge Offs
reimbursed on this
Distribution Date......................... $
----------
C-7
<PAGE> 86
(l) The aggregate amount of Class B
Investor Charge Offs
set forth in 6(k) above per
$1,000 original certificate principal
amount reimbursed on this Distribution
Date...................................... $
----------
(m) The aggregate amount of Class C
Investor Charge Offs reimbursed
on this Distribution Date................. $
----------
(n) The aggregate amount of Class C
Investor Charge Offs set forth in
6(m) above per $1,000 original
certificate principal amount reimbursed
on this Distribution Date................. $
----------
(o) The aggregate amount of
Class D Investor Charge
Offs reimbursed on
this Distribution Date.................... $
----------
(p) The aggregate amount of Class D
Investor Charge Offs set forth in
6(o) above per $1,000 original
certificate principal amount reimbursed
on this Distribution Date................. $
----------
7. Series 1999-1 Investor Monthly Servicing Fee
(a) The amount of the Class A
Servicing Fee payable by the
Trust to the Servicer for the
related Due Period........................ $
----------
(b) The amount of the Class B
Servicing Fee payable by the
Trust to the Servicer for the
related Due Period........................ $
----------
C-8
<PAGE> 87
(c) The amount of the Class C Servicing
Fee payable by the Trust to the
Servicer for the
related Due Period......................... $
----------
(d) The amount of the Class D Servicing
Fee payable by the Trust to the
Servicer for the related Due Period........ $
----------
8. Reallocations
(a) The amount of Reallocated
Class D Principal
Collections with respect to
this Distribution Date.................... $
----------
(b) The amount of Reallocated
Class C Principal
Collections with respect to
this Distribution Date.................... $
----------
(c) The amount of Reallocated
Class B Principal Collections
with respect to this
Distribution Date......................... $
----------
(d) The Class D Investor Interest as of
the close of business on this
Distribution Date......................... $
----------
(e) The Class C Investor Interest
as of the close of business on
this Distribution Date.................... $
----------
(f) The Class B Investor Interest
as of the close of business on
this Distribution Date.................... $
----------
(g) The Class A Investor Interest
as of the close of business on
this Distribution Date.................... $
----------
C-9
<PAGE> 88
9. Collection of Finance Charge Receivables
(a) The aggregate amount of
Collections of Finance Charge
Receivables received during
the related Due Period
which were allocated in respect
of Class A Certificates.................. $
----------
(b) The aggregate amount of
Collections of Finance Charge
Receivables received during the
related Due Period
which were allocated in respect
of the Class B Certificates.............. $
----------
(c) The aggregate amount of Collections
of Finance Charge Receivables
received during the related Due Period
which were allocated in respect
of the Class C Certificates.............. $
----------
(d) The aggregate amount of Collections
of Finance Charge Receivables
received during the related Due Period
which were allocated in respect
of the Class D Certificates.............. $
----------
10. Available Funds
(a) The amount of Class A
Available Funds on deposit
in the Collection Account
on this Distribution Date................. $
----------
(b) The amount of Class B
Available Funds on deposit
in the Collection Account
on this Distribution Date................. $
----------
C-10
<PAGE> 89
(c) The amount of Class C Available Funds
on deposit in the Collection
Account on this Distribution Date........... $
----------
(d) The amount of Class D Available
Funds on deposit in the Collection
Account on this Distribution Date......... $
----------
11. Portfolio Yield
The Portfolio Yield for the
related Due Period.............................. %
----------
12. Shared Principal Collections
(a) The Cumulative Principal
Shortfall with respect to such
Distribution Date......................... $
----------
(b) The Shared Principal
Collections allocable to
the Certificates on such
Distribution Date......................... $
----------
13. Shared Excess Finance Charge Collections
(a) The Finance Charge Shortfall
with respect to such
Distribution Date.......................... $
----------
(b) The Shared Excess Finance
Charge Collections allocable
to the Certificates on such
Distribution Date.......................... $
----------
C. Floating-Rate Determinations
1. LIBOR for the Interest
Period ending on this
Distribution Date................................ %
----------
C-11
<PAGE> 90
SPIRIT OF AMERICA, INC.
Servicer
By:
-----------------------
Name:
Title:
C-12
<PAGE> 91
EXHIBIT D-1
CLASS A INTEREST RATE CAP AGREEMENT
D-1-1
<PAGE> 92
EXHIBIT D-2
CLASS B INTEREST RATE CAP AGREEMENT
D-2-1
<PAGE> 1
EXHIBIT 5.1
April 14, 1999
Charming Shoppes Receivables Corp.
3411 Silverside Road
Wilmington, DE 19810
RE: Registration Statement on Form S-1 (No. 333-71757)
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
above-referenced registration statement (together with the exhibits and any
amendments thereto, the "Registration Statement"), filed with the Securities and
Exchange Commission in connection with the registration of the Series 1999-1
Class A Asset-Backed Certificates and Class B Asset-Backed Certificates
(collectively, the "Certificates") to be issued by the Charming Shoppes Master
Trust (the "Trust").
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Certificates, and in order to express our
opinion hereinafter stated: (a) we have examined copies of the forms of the
Underwriting Agreement, Second Amended and Restated Pooling and Servicing
Agreement, as amended, the Series 1999-1 Supplement and the Certificates filed
as exhibits to the Registration Statement (collectively the "Operative
Documents"), (b) we have examined the Registration Statement and the prospectus
contained therein (the "Prospectus"), and (c) we have examined such other
records and documents and such matters of law, and we have satisfied ourselves
as to such matters of fact, as we have considered relevant for purposes of this
opinion.
On the basis of the foregoing, it is our opinion that, the
Certificates, when, as and if (i) the Registration Statement becomes effective
pursuant to the provisions of the Securities Act of 1933, as amended, (ii) the
Operative Documents relating thereto have each been duly completed, authorized,
executed and delivered by the parties thereto substantially in the form we have
examined, duly reflecting the terms established as described above, and (iii)
the Certificates have been duly authorized and executed by Charming Shoppes
Receivables Corp. and duly authenticated by the Trustee all in accordance with
the terms and conditions of the Operative Documents and sold by in the manner
described in the Registration Statement, such Certificates will have been
legally issued and will be enforceable in accordance with their terms and
entitled to the benefits of the Operative Documents except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws
(including any such laws relating to the
<PAGE> 2
Charming Shoppes Receivables Corp.
April 14, 1999
Page 2
solvency of banks) affecting the enforcement of creditors' rights generally or
the relief of debtors, as may be in effect from time to time, or by general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing).
We wish to advise you that we are members of the bar of the State of
New York and the opinions expressed herein are limited to the laws of the State
of New York and the Federal laws of the United States.
Very truly yours,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
<PAGE> 1
EXHIBIT 8.1
April 14, 1999
Charming Shoppes Receivables Corp.
3411 Silverside Road
Wilmington, DE 19810
RE: Registration Statement on Form S-1 (No. 333-71757)
Ladies and Gentlemen:
We have acted as your special Federal tax counsel in connection with
the above-referenced registration statement (together with the exhibits and any
amendments thereto, the "Registration Statement"), filed with the Securities and
Exchange Commission in connection with the registration of the Series 1999-1
Class A Asset-Backed Certificates and Class B Asset-Backed Certificates
(collectively, the "Certificates") to be issued by the Charming Shoppes Master
Trust (the "Trust").
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Certificates, and in order to express our
opinion hereinafter stated: (a) we have examined copies of the forms of the
Second Amended and Restated Pooling and Servicing Agreement, as amended, the
Series 1999-1 Supplement and the Certificates filed as exhibits to the
Registration Statement (collectively the "Operative Documents"), (b) we have
examined the Registration Statement and the prospectus contained therein (the
"Prospectus"), and (c) we have examined such other records and documents and
such matters of law, and we have satisfied ourselves as to such matters of fact,
as we have considered relevant for purposes of this opinion.
The opinion set forth in this letter is based upon the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated and proposed thereunder, current positions of the
Internal Revenue Service (the "IRS") contained in published Revenue Rulings and
Revenue Procedures, current administrative positions of the IRS and existing
judicial decisions, all of which are subject to change, possibly retroactively.
No tax rulings will be sought from the IRS with respect to any of the matters
discussed herein.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form we have examined, we hereby
adopt and confirm as our opinion those statements described as such in the
Prospectus under the heading "U.S. Federal Income Tax Consequences", namely that
(1) the Certificates will be treated as debt for federal
<PAGE> 2
Charming Shoppes Receivables Corporation
April 14, 1999
Page 2
income tax purposes, and (2) the Trust will not be classified as an association
or publicly traded partnership taxable as a corporation for federal income tax
purposes, and because the Trust has not elected under Treasury Regulation
301.7701-3 to be classified as an association, the Trust will not be so
classified for federal income tax purposes.
There can be no assurance, however, that the tax conclusions presented
in the sections of the Prospectus referenced above will not be successfully
challenged by the IRS, or significantly altered by new legislation, changes in
IRS positions or judicial decisions, any of which challenges or alterations may
be applied retroactively with respect to completed transactions.
We hereby consent to the filing of this opinion and our related opinion
with respect to the validity of the Certificates as Exhibits 8.1 and 5.1,
respectively, to the Registration Statement and to the reference to our firm in
the Prospectus under the captions "Structural Summary -- Federal Tax Status of
the Offered Certificates and the Trust," "U.S. Federal Income Tax Consequences"
and "Legal Matters". In giving such consent, we do not admit that we are
"experts" within the meaning of the term used in the Act or the rules and
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very truly yours,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
<PAGE> 1
EXHIBIT 8.2
[Squire, Sanders & Dempsey L.L.P. Letterhead]
April 14, 1999
Charming Shoppes Receivables Corp.
3411 Silverside Road
Wilmington, DE 19810
Re: REGISTRATION STATEMENT ON FORM S-1 (NO. 333-71757)
Ladies and Gentlemen:
We have acted as special Ohio tax counsel to you in connection with the
above-referenced registration statement (together with the exhibits and any
amendments thereto, the "Registration Statement"), filed with the Securities and
Exchange Commission in connection with the registration of the Series 1999-1
Floating Rate Class A Asset Backed Certificates and Floating Rate Class B Asset
Backed Certificates (collectively, the "Certificates") to be issued by the
Charming Shoppes Master Trust (the "Trust") (the "Transaction").
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Certificates, and in order to express the
opinion contained herein, we have examined copies of forms of the Pooling and
Servicing Agreement, as amended, and the Series 1999-1 Supplement to the Pooling
and Servicing Agreement (the "Transaction Documents"); we have examined the
Registration Statement and the prospectus contained therein; and we have
examined such other records and documents as we have deemed necessary or
appropriate in rendering the opinion set forth below.
In rendering this opinion, we have relied upon the foregoing
understandings and assumptions and the legal opinion of Mayer, Brown & Platt
with respect to certain federal tax matters delivered in connection with the
Transaction. We have expressly assumed that the Trust (i) has not filed a report
with the Ohio Secretary of State as a business trust under Section 1746,04 of
the Ohio Revised Code and (ii) does not maintain an office or place of business
in the State of Ohio, employ any person who is engaged in business on behalf of
the Trust in the State of Ohio, or own or use capital or real or personal
property located in the State of Ohio.
<PAGE> 2
Charming Shoppes Receivables Corp.
April 14, 1999
Page 2
Although no transaction comparable to the Transaction has been
interpreted by courts applying Ohio law or by the Ohio Department of Taxation,
based upon the foregoing and subject to the qualifications expressed herein and
execution of the Transaction Documents in substantially the form that we have
examined, we are of the opinion that (i) the Trust as an entity will not be
subject to the Ohio personal income tax imposed by Chapter 5747 of the Ohio
Revised Code, the Ohio corporation franchise tax imposed by Chapter 5733 of the
Ohio Revised Code or the dealer in intangibles tax imposed by Chapter 5725 of
the Ohio Revised Code, and (ii) for purposes of the personal income tax, the
corporation franchise tax and the dealer in intangibles tax described above, the
Certificates will be treated as indebtedness.
We note that this opinion represents our conclusions as to the
application of existing Ohio law to the Transaction, and there can be no
assurances that the Ohio Department of Taxation will not take a contrary
position or that new legislation will not alter some or all of these
conclusions.
We hereby consent to the filing of this opinion as Exhibit 8.2 to the
Registration Statement and to the reference to our firm in the Prospectus under
the captions "Structural Summary -- Ohio Tax Status of the Offered Certificates
and the Trust," "Ohio State Tax Consequences" and "Legal Matters". In giving
such consent, we do not admit that we are "experts" within the meaning of the
term used in the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission issued thereunder, with respect to any part
of the Registration Statement, including this opinion as an exhibit or
otherwise.
Respectfully submitted,
/s/ SQUIRE, SANDERS & DEMPSEY, L.L.P.
<PAGE> 1
EXHIBIT 10.1(a)
PURCHASE AND SALE AGREEMENT
DATED AS OF NOVEMBER 25, 1997
AMONG
SPIRIT OF AMERICA NATIONAL BANK,
AS SELLER,
AND
CHARMING SHOPPES RECEIVABLES CORP.,
AS PURCHASER
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
AGREEMENT TO PURCHASE AND SELL;
THE PURCHASER AGREEMENT TO LEND
Section 1.1 Agreement To Purchase and Sell.................................................................1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 2.1 Representations and Warranties of the Seller...................................................3
Section 2.2 Representations and Warranties of the Seller Relating to the
Receivables; Notice of Breach...............................................................4
Section 2.3 Covenants of the Seller........................................................................8
Section 2.4 Addition of Accounts..........................................................................10
Section 2.5 Removal of Accounts...........................................................................12
Section 2.6 Purchaser May Perform.........................................................................13
Section 2.7 No Assumption of Liability....................................................................13
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Calculation of Purchase Price.................................................................14
Section 3.2 Adjustments for Miscellaneous Credits and Fraudulent Charges..................................15
Section 3.3 Loans by the Purchaser to the Seller..........................................................16
ARTICLE IV
OTHER MATTERS RELATING
TO THE SELLER
Section 4.1 Liability of the Seller.......................................................................16
Section 4.2 Merger or Consolidation of, or Assumption of the Obligations of, the Seller...................16
Section 4.3 Limitation on Liability.......................................................................17
Section 4.4 Indemnification...............................................................................17
ARTICLE V
CONDITIONS TO PURCHASE
Section 5.1 Conditions to Purchase........................................................................18
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VI
TERMINATION
Section 6.1 Termination by the Seller.....................................................................18
Section 6.2 Automatic Termination.........................................................................18
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, etc...............................................................................18
Section 7.2 Protection of Right, Title and Interest to the Purchaser......................................19
Section 7.3 GOVERNING LAW.................................................................................19
Section 7.4 Notices.......................................................................................20
Section 7.5 Severability of Provisions....................................................................20
Section 7.6 Assignment....................................................................................20
Section 7.7 Further Assurances............................................................................20
Section 7.8 Non-petition Covenant.........................................................................20
Section 7.9 No Waiver; Cumulative Remedies................................................................21
Section 7.10 Counterparts..................................................................................21
Section 7.11 Third-Party Beneficiaries.....................................................................21
Section 7.12 Merger and Integration........................................................................21
Section 7.13 Headings......................................................................................21
Section 7.14 Acknowledgment and Consent....................................................................21
</TABLE>
APPENDIX A Definitions
EXHIBIT A Form of Reassignment of Ineligible Receivables
EXHIBIT B Form of Additional Assignment
EXHIBIT C Form of Reassignment of Removed Accounts
-ii-
<PAGE> 4
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of
November 25, 1997, is between Spirit of America National Bank, a national
banking association ("Spirit"), as Seller, and Charming Shoppes Receivables
Corp., a Delaware corporation, as Purchaser.
DEFINITIONS
Unless otherwise indicated, certain terms that are capitalized and used
throughout this Agreement are defined in Appendix A. All references herein to
months are to calendar months unless otherwise expressly indicated.
RECITALS
1. Seller, in order to finance its business, wishes to sell Receivables
to the Purchaser, and the Purchaser is willing, on the terms and subject to the
conditions set forth herein, to purchase Receivables from the Seller.
2. In order to fund such purchases, the Purchaser will (subject to
certain exceptions) transfer the Receivables to the Trustee under the Pooling
and Servicing Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL;
THE PURCHASER AGREEMENT TO LEND
Section 1.1 Agreement To Purchase and Sell.
(a) The Seller hereby Conveys to the Purchaser, and the Purchaser
hereby purchases, the Existing Assets, subject in each case to any rights in the
Existing Assets Conveyed prior to the date hereof to the Trustee pursuant to the
Prior PSA. The Purchaser hereby agrees to assume all of the Seller's obligations
under the Prior PSA (as specified in the Pooling and Servicing Agreement),
except to the extent the Seller has retained such obligations in its capacity as
Servicer under the Pooling and Servicing Agreement. It is understood and agreed
that the obligations of the Seller specified herein with respect to the
Receivables shall apply to all Receivables, whether originated before, on or
after the Effective Date.
-1-
<PAGE> 5
(b) Seller Conveys to the Purchaser without recourse (except as
expressly provided herein), and the Purchaser purchases from Seller, all of
Seller's right, title and interest in and to the Receivables now existing and
arising from time to time from the Accounts and Related Assets with respect
thereto (other than the Existing Assets); provided, however, that Principal
Receivables originated after the occurrence of an Insolvency Event with respect
to the Seller shall not be conveyed hereunder.
(c) In connection with such Conveyance, the Seller agrees to record and
file, at its own expense, a financing statement or financing statements
(including any continuation statements with respect to each such financing
statement when applicable) with respect to the Receivables now existing and
hereafter created meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect the Conveyance of
the Receivables to the Purchaser and the first priority nature of the
Purchaser's interest in the Receivables, and to deliver a file-stamped copy of
each such financing statement and continuation statement or other evidence of
such filing (which may, for purposes of this Section 1.1, consist of telephone
confirmation of such filing followed by delivery of a file-stamped copy as soon
as practicable) to the Purchaser on or prior to the Effective Date, and in the
case of any continuation statements filed pursuant to this Section 1.1, as soon
as practicable after receipt thereof by the Seller.
(d) In connection with such Conveyance, the Seller agrees, at its own
expense, on or prior to the Effective Date, (i) to indicate in the Pool Index
File maintained in its computer files that Receivables created in connection
with the Accounts have been Conveyed to the Purchaser pursuant to this Agreement
and Conveyed by the Purchaser to the Trustee pursuant to the Pooling and
Servicing Agreement, and (ii) to deliver to the Purchaser and the Trustee a
computer file or microfiche or written list containing a true and complete list
of all such Accounts, identified by account number, Obligor name and Obligor
address and setting forth the Receivable balance as of November 15, 1997. Such
file or list shall be marked as Schedule 1 to this Agreement, delivered to the
Purchaser and the Trustee as confidential and proprietary, and is hereby
incorporated into and made a part of this Agreement. The Seller further agrees
not to alter the file designation referenced in clause (i) of this paragraph
with respect to any Account during the term of this Agreement unless and until
such Account becomes a Removed Account.
The parties intend that if, and to the extent that, such Conveyance is
not deemed to be a sale, the Seller shall be deemed hereunder to have granted to
the Purchaser (as security for the Secured Obligations) a first priority
perfected security interest in all of the Seller's right, title and interest in,
to and under the Receivables now existing and hereafter created and arising from
time to time in connection with the Accounts, all monies due or to become due
with respect thereto, all Collections, all Recoveries, all rights, remedies,
powers and privileges with respect to the Receivables, and all proceeds of the
foregoing, and that this Agreement shall constitute a security agreement under
applicable law.
-2-
<PAGE> 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 2.1 Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Purchaser as of the Initial Closing Date
and the Effective Date:
(a) Organization and Good Standing. The Seller is a national banking
association duly organized and validly existing under the laws of the United
States of America and has full corporate power, authority and legal right to own
its properties and conduct its business as such properties are presently owned
and such business is presently conducted, and to execute, deliver and perform
its obligations under this Agreement and each other Transaction Document to
which it is a party.
(b) Due Qualification. The Seller is duly qualified to do business and
is in good standing (or is exempt from such requirement) in any state required
in order to conduct its business, and has obtained all necessary licenses and
approvals with respect to the Seller required under applicable law.
(c) Due Authorization. The execution and delivery by the Seller of this
Agreement and each other Transaction Document to which it is a party and the
consummation of the transactions provided for hereunder and thereunder have been
duly authorized by the Seller by all necessary corporate action on its part and
this Agreement and each other Transaction Document to which it is a party will
remain, from the time of its execution, an official record of the Seller.
(d) Enforceability. Each of this Agreement and each other Transaction
Document to which the Seller is a party constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by Debtor Relief Laws.
(e) No Conflict. The execution and delivery of this Agreement and each
other Transaction Document to which the Seller is a party, the performance of
the transactions contemplated hereunder and thereunder and the fulfillment of
the terms hereof and thereof will not conflict with, result in any breach of any
of the material terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Seller is a party or
by which it or any of its properties are bound.
(f) No Violation. The execution and delivery of this Agreement and each
other Transaction Document to which the Seller is a party, the performance of
the transactions contemplated hereunder and thereunder and the fulfillment of
the terms hereof and thereof will not conflict with or violate in any material
respect any Requirements of Law applicable to the Seller.
-3-
<PAGE> 7
(g) No Proceedings. There are no proceedings pending or, to the best
knowledge of the Seller, threatened against the Seller before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Agreement or any other
Transaction Document to which it is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or any
other Transaction Document, (iii) seeking any determination or ruling that, in
the reasonable judgment of the Seller, would materially and adversely affect the
performance by the Seller of its obligations under this Agreement or any other
Transaction Document to which it is a party, (iv) seeking any determination or
ruling that would materially and adversely affect the validity or enforceability
of this Agreement or any other Transaction Document or (v) seeking to affect
adversely the income tax attributes of the Trust.
(h) All Consents Required. All appraisals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery by the Seller of this
Agreement and each other Transaction Document to which it is a party, the
performance of the transactions contemplated hereunder and thereunder and the
fulfillment of the terms hereof, have been obtained.
(i) Eligibility of Accounts. As of the Initial Cut Off Date (or in the
case of an Additional Account, the applicable Addition Cut Off Date), each
Account was an Eligible Account and no selection procedures adverse to the
Purchaser, Investor Certificateholders or Receivables Purchasers have been
employed by the Seller in selecting the Accounts from among the Eligible
Accounts in the Bank Portfolio.
(j) Seller's Deposit Accounts. As of the Initial Closing Date and as of
the Effective Date, deposits in the Seller's deposit accounts were or are
insured to the limits provided by law by BIF.
(k) Solvency. Seller is not insolvent and no Insolvency Event with
respect to Seller has occurred, and the transfer of the Receivables by the
Seller has not been made in anticipation of any such insolvency or Insolvency
Event.
The representations and warranties set forth in this Section 2.1 shall
survive the transfer and assignment of the respective Receivables to the
Purchaser. The Seller hereby represents and warrants to the Purchaser, with
respect to any Series, as of its Closing Date, unless otherwise specified in the
related Supplement or Receivables Purchase Agreement, that the representations
and warranties of the Seller set forth in this Section 2.1 are true and correct
as of such date.
-4-
<PAGE> 8
Section 2.2 Representations and Warranties of the Seller Relating to
the Receivables; Notice of Breach.
(a) Valid Conveyance and Assignment; Eligibility of Receivables.
The Seller hereby represents and warrants to the Purchaser as of the
Initial Closing Date and as of the Effective Date, and with respect to any
Additional Accounts, as of the related Addition Date:
(i) This Agreement constitutes either (A) a valid sale to the
Purchaser of all right, title and interest of the Seller in and to the
Receivables now existing and hereafter created and arising from time to
time in connection with the Accounts, all monies due or to become due
with respect thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the Receivables, and
all proceeds of the foregoing, and such property will be held by the
Purchaser free and clear of any Lien of any Person claiming through or
under the Seller or any of its Affiliates, or (B) a grant of a security
interest (as defined in the UCC as in effect in any applicable
jurisdiction) in such property to the Purchaser, which is enforceable
with respect to the Receivables now existing and hereafter created and
arising from time to time in connection with the Accounts, all monies
due or to become due with respect thereto, all Collections, all
Recoveries, all rights, remedies, powers and privileges with respect to
the Receivables, and all proceeds of the foregoing, upon such creation.
To the extent that this Agreement constitutes the grant of a security
interest to the Purchaser in such property, upon the filing of the
financing statements described in Section 1.1 and in the case of the
Receivables hereafter created, all monies due or to become due with
respect thereto, all Collections, all Recoveries, all rights, remedies,
powers and privileges with respect to the Receivables, and the proceeds
of the foregoing, upon such creation, the Purchaser shall have a first
priority perfected security interest in such property (subject to
Section 9-306 of the UCC as in effect in any applicable jurisdiction).
(ii) Each Receivable then existing has been Conveyed to the
Purchaser free and clear of any Lien of any Person claiming through or
under the Seller or any of its Affiliates and in compliance, in all
material respects, with all Requirements of Law applicable to the
Seller.
(iii) With respect to each Receivable, all consents, licenses,
approvals or authorizations of or registrations or declarations with
any Governmental Authority required to be obtained, effected or given
by the Seller in connection with the Conveyance of such Receivable to
the Purchaser have been duly obtained, effected or given and are in
full force and effect.
(iv) On each day on which any new Receivable is created, the
Seller shall be deemed to represent and warrant to the Purchaser that
(A) each Receivable created on such day is an Eligible Receivable, (B)
each Receivable created on such day has been
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Conveyed to the Purchaser in compliance, in all material respects, with
all Requirements of Law applicable to the Seller, (C) with respect to
each such Receivable, all consents, licenses, approvals or
authorizations of or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given by
the Seller in connection with the Conveyance of such Receivable to the
Purchaser have been duly obtained, effected or given and are in full
force and effect and (D) the representations and warranties set forth
in subsection 2.2(a)(i) are true and correct with respect to each
Receivable created on such day as if made on such day.
(v) As of the Initial Cut Off Date, and, with respect to
Additional Accounts, as of the related Addition Cut Off Date, Schedule
1 to this Agreement and the related computer file or microfiche or
written list referred to in subsection 2.4(e), is an accurate and
complete listing in all material respects of all the Accounts, and the
information contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is true and correct in
all material respects as of the Initial Cut Off Date or such applicable
Addition Cut Off Date.
(b) Survival. The representations and warranties set forth in this
Section 2.2 shall survive the Conveyance of any of the respective Receivables to
the Purchaser.
(c) Notice of Breach. Upon discovery by the Seller or the Purchaser of
a breach of any of the representations and warranties set forth in Section 2.1
or 2.2, the party discovering such breach shall give prompt written notice to
the other parties hereto, the Servicer, the Trustee, each Purchaser
Representative and each Enhancement Provider as soon as practicable and in any
event within three Business Days following such discovery.
(d) Transfer of Ineligible Receivables.
(i) Automatic Removal. In the event of a breach with respect
to a Receivable of any representations and warranties set forth in
subsection 2.2(a)(ii), or in the event that a Receivable is not an
Eligible Receivable as a result of the failure to satisfy the
conditions set forth in clause (d) of the definition of Eligible
Receivable, and any of the following three conditions is met: (A) as a
result of such breach or event such Receivable is charged off as
uncollectible or the rights of the Purchaser (or its assignee) in, to
or under such Receivable or its proceeds are impaired or the proceeds
of such Receivable are not available for any reason to the Purchaser
(or its assignee) free and clear of any Lien; (B) the Lien upon the
subject Receivable (1) arises in favor of the United States of America
or any State or any agency or instrumentality thereof and involves
taxes or liens arising under Title IV of ERISA or (2) has been
consented to by the Seller; or (C) the unsecured short-term debt rating
of the Seller is not at least P-1 by Moody's and the Lien upon the
subject Receivable ranks prior to the Lien created pursuant to this
Agreement; then, upon the earlier to occur of the discovery of such
breach or event by the Seller or the Purchaser or receipt by the Seller
of written notice of such breach or event given by the Purchaser, the
Trustee or any Purchaser Representative, each such Receivable shall
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be automatically reassigned to a Person designated by the Seller on the
terms and conditions set forth in subsection 2.2(d)(iii) and shall no
longer be treated as a Receivable; provided, that if such Lien does not
have a material adverse effect on the collectibility of the Receivables
or on the interests of the Purchaser, the Certificateholders or
Receivables Purchasers of any Series or the Enhancement Provider, the
Seller shall have 10 days within which to remove any such Lien.
(ii) Removal After Cure Period. In the event of a breach of
any of the representations and warranties set forth in subsection
2.2(a)(ii)-(v), other than a breach or event as set forth in clause
(d)(i) above, and as a result of such breach the Receivable becomes
charged off or the rights of the Purchaser (or its assignee) in, to or
under the Receivable or its proceeds are impaired or the proceeds of
such Receivable are not available for any reason to the Purchaser (or
its assignee) free and clear of any Lien, then, upon the expiration of
60 days from the earlier to occur of the discovery of any such event by
either the Seller or the Purchaser, or receipt by the Seller of written
notice of any such event given by the Servicer, the Trustee or any
Purchaser Representative, the Purchaser may direct a Person designated
by the Seller to accept an assignment of such Receivable and such
Person shall be obligated to accept such assignment on the terms and
conditions set forth in subsection 2.2(d)(iii) and such Receivable
shall no longer be treated as a Receivable; provided, however, that no
such reassignment shall be required to be made if, on any day within
such applicable period, such representations and warranties with
respect to such Receivable shall then be true and correct in all
material respects as if such Receivable had been created on such day.
(iii) Price of Reassignment. When the provisions of subsection
2.2(d)(i) or (ii) above require the Seller to designate a Person to
accept reassignment of Receivables, the Seller shall pay to the
Purchaser a reassignment price equal to the then Outstanding Balance
for any such Ineligible Receivable. Seller shall pay such reassignment
price (i) in cash, if the Purchaser is required, pursuant to the terms
of the Pooling and Servicing Agreement, to pay the Trust for such
Ineligible Receivable in cash, or (ii) otherwise, by reducing the
Purchase Price to be paid by the Purchaser to the Seller for new
Receivables or the amount then owing with respect to any deferred
Purchase Price, in either case, by an amount equal to such reassignment
price; provided, however, that if such amount is paid in cash Seller
shall deposit such amount to the Collection Account in immediately
available funds no later than the date on which the Purchaser is
required to make a cash payment with respect to such Ineligible
Receivables pursuant to the Pooling and Servicing Agreement.
(e) Reassignment of Trust Portfolio. In the event of a breach of the
representations and warranties set forth in subsection 2.1(d) or 2.2(a)(i), or
in the event that the Purchaser is required to repurchase Principal Receivables
pursuant to Section 2.4(e) of the Pooling and Servicing Agreement, the Purchaser
may direct a Person designated by the Seller to accept reassignment of an amount
of Principal Receivables on the Reassignment Date and such Person shall be
obligated to accept reassignment of such Principal Receivables on the terms and
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conditions set forth below; provided, however, that no such reassignment shall
be required to be made if, at any time during such applicable period, the
representations and warranties contained in subsection 2.1(d) or 2.2(a)(i) shall
then be true and correct in all material respects or in the event that the
Purchaser is no longer required to repurchase Receivables pursuant to Section
2.4(e) of the Pooling and Servicing Agreement.
On the Reassignment Date, the Seller shall deposit in the Collection
Account (for distribution to the applicable Series Account as required pursuant
to Section 2.4(e) of the Pooling and Servicing Agreement) in immediately
available funds an amount equal to the Outstanding Balance of the Receivables
being reassigned in payment for such reassignment.
Upon the deposit, if any, required to be made to the Collection Account
as provided in this Section 2.2 and the reassignment of the applicable
Receivables, the Purchaser shall automatically and without further action be
deemed to transfer, assign, set over and otherwise convey to the Person
designated by the Seller without recourse, representation or warranty, all the
right, title and interest of the Purchaser in and to such Receivables, all
monies due or to become due with respect thereto, all Collections, all
Recoveries, rights, remedies, powers and privileges with respect to such
Receivables, and all proceeds of the foregoing. The Purchaser shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by the Seller to effect the conveyance of such
Receivables pursuant to this Section 2.2, including a reconveyance substantially
in the form of Exhibit A. The obligation of the Seller to accept reassignment of
any Receivables, and to make the deposits, if any, required to be made to the
Collection Account as provided in this Section 2.2, shall constitute the sole
remedy respecting the event giving rise to such obligation available to the
Purchaser and its assigns.
Section 2.3 Covenants of the Seller. The Seller hereby covenants that:
(a) Receivables to be Accounts. The Seller will take no action to cause
any Receivable to be evidenced by any instrument (as defined in the UCC as in
effect in any applicable jurisdiction). Each Receivable shall be payable
pursuant to a contract which does not create a Lien on any goods purchased
thereunder. The Seller will take no action to cause any Receivable to be
anything other than an "account," or a "general intangible" or the "proceeds" of
either for purposes of the UCC as in effect in any applicable jurisdiction.
(b) Security Interests. Except for the Conveyances contemplated
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
Receivable, whether now existing or hereafter created, or any interest therein;
the Seller will promptly notify the Purchaser of the existence of any Lien on
any Receivable; and the Seller shall defend the right, title and interest of the
Purchaser in, to and under the Receivables, whether now existing or hereafter
created, against all claims of third parties claiming through or under the
Seller; provided, however, that nothing in this subsection 2.3(b) shall prevent
or be deemed to prohibit the Seller from suffering to exist upon any of the
Receivables any Liens for municipal and other local taxes if such taxes shall
not at the time be
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due and payable or if the Seller shall currently be contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.
(c) Cardholder Agreements and Cardholder Guidelines. The Seller shall
comply with and perform its obligations under the Cardholder Agreements relating
to the Accounts and the Cardholder Guidelines except insofar as any failure to
comply or perform would not materially and adversely affect the rights of the
Purchaser, Trust, the Certificateholders, any Enhancement Provider or any
Receivables Purchasers. The Seller may change the terms and provisions of the
Cardholder Agreements or the Cardholder Guidelines in any respect (including,
without limitation, the reduction of the required minimum monthly payment, the
calculation of the amount, or the timing, of charge-offs and the periodic
finance charges and other fees to be assessed thereon), unless such change would
have a material adverse effect on the collectibility of the Receivables;
provided, however, that the Seller may not change the required minimum monthly
payment or periodic finance charge (collectively, a "Yield Change") unless,
after five Business Days' prior written notice to the Rating Agency of a Yield
Change, the Rating Agency shall have provided written notice to the Seller that
the Rating Agency Condition shall be satisfied or unless such Yield Change is
mandated by applicable law.
(d) Account Allocations. In the event that the Seller is unable for any
reason to transfer Receivables to the Purchaser in accordance with the
provisions of this Agreement (including, without limitation, by reason of an
order by any federal or state governmental agency having regulatory authority
over the Seller or any court of competent jurisdiction that the Seller not
transfer any additional Principal Receivables to the Trust) then, in any such
event, (A) the Seller agrees to allocate and pay to the Purchaser, after the
date of such inability, all Collections with respect to Principal Receivables,
and all amounts which would have constituted Collections with respect to
Principal Receivables but for the Seller's inability to transfer such
Receivables (up to an aggregate amount equal to the amount of Principal
Receivables in the Trust on such date); and (B) the Seller agrees to have such
amounts applied as Collections in accordance with Article IV of the Pooling and
Servicing Agreement. If the Seller is unable pursuant to any Requirement of Law
to allocate Collections as described above, Seller agrees that payments on each
Account with respect to the principal balance of such Account shall be allocated
first to the oldest principal balance of such Account. The parties hereto agree
that Finance Charge Receivables, whenever created or accrued in respect of
Principal Receivables which have been conveyed to the Purchaser (and by the
Purchaser to the Trust) shall continue to be a part of the Trust notwithstanding
any cessation of the transfer of additional Principal Receivables to the
Purchaser and Collections with respect thereto shall continue to be allocated
and paid in accordance with Article IV of the Pooling and Servicing Agreement.
(e) Delivery of Collections. The Seller agrees to pay to the Servicer
all payments received by the Seller in respect of the Receivables as soon as
practicable after receipt thereof by the Seller.
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(f) Conveyance of Accounts. The Seller covenants and agrees that it
will not Convey the Accounts to any Person prior to the termination of this
Agreement and the Pooling and Servicing Agreement.
(g) Notice of Adverse Claims. The Seller shall notify the Purchaser and
the Trustee after becoming aware of any Lien on any Receivable.
(h) Information Provided to Rating Agencies. The Seller will use its
best efforts to cause all information provided to any Rating Agency pursuant to
this Agreement or in connection with any action required or permitted to be
taken under this Agreement to be complete and accurate in all material respects.
(i) Notice to Purchaser. The Seller shall notify the Purchaser and the
Trustee of any Early Amortization Event or Servicer Default of which it has
knowledge, promptly upon obtaining such knowledge.
(j) Offices, Records and Books of Account. The Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Receivables at the address of the Seller set
forth under its name on the signature page to the Agreement or, upon 30 days'
prior written notice to the Purchaser, the Trustee and each Purchaser
Representative, at any other locations in jurisdictions where all actions
reasonably requested by the Purchaser or the Trustee to protect and perfect the
interest in the Receivables have been taken and completed. The Seller also will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables and
related Cardholder Agreements in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
existing Receivable).
(k) Separate Corporate Existence. The Seller hereby acknowledges that
Trustee and the Investor Certificateholders are, and will be, entering into the
transactions contemplated by the Transaction Documents in reliance upon
Purchaser's identity as a legal entity separate from the Seller, Servicer and
any other Person. Therefore, Seller shall take all reasonable steps to maintain
its existence as a corporation separate and apart from the Purchaser and to make
it apparent to third Persons that the Seller is an entity with assets and
liabilities distinct from those of the Purchaser and that the Purchaser is not a
division of the Seller.
Section 2.4 Addition of Accounts.
(a) Required Additions. In the event the Purchaser is required,
pursuant to Section 2.6(a) of the Pooling and Servicing Agreement, to designate
additional Eligible Accounts as Additional Accounts, the Purchaser shall so
notify the Seller. The Seller (if it so elects) shall designate such Eligible
Accounts as Additional Accounts and shall convey to the Purchaser
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Receivables in such Additional Accounts subject to the same qualifications and
restrictions as are set forth in Section 2.6 of the Pooling and Servicing
Agreement with respect to the Purchaser; provided, however, that the failure of
the Seller to transfer Receivables to the Purchaser as provided in this
paragraph solely as a result of the unavailability of a sufficient amount of
Eligible Receivables shall not constitute a breach of this Agreement; provided
further, that any such failure which has not been timely cured will nevertheless
result in the occurrence of a Series Early Amortization Event with respect to
each Series for which, pursuant to the Supplement therefor, a failure by the
Purchaser to convey Receivables in Additional Accounts to the Trust by the day
on which it is required to convey such Receivables constitutes a "Series Early
Amortization Event" (as defined in such Supplement).
(b) Subject to the restrictions and qualifications set forth in Section
2.6 of the Pooling and Servicing Agreement, the Purchaser shall exercise its
rights to designate additional Eligible Accounts as Additional Accounts or
Automatic Additional Accounts pursuant to Sections 2.6(b) and (c) of the Pooling
and Servicing Agreement when requested to do so by the Seller.
(c) Seller agrees to provide to the Purchaser such information,
certificates, financing statements, opinions and other materials as are
reasonably necessary to enable the Purchaser to satisfy its obligations under
Section 2.6 of the Pooling and Servicing Agreement with respect to Additional
Accounts or Automatic Additional Accounts of the Seller.
(d) In connection with the designation of any Eligible Account
attributable to a Seller as an Additional Account or Automatic Additional
Account, Seller shall represent and warrant that, as of the Addition Date:
(i) no selection procedures believed by the Seller to
be materially adverse to the interests of the Purchaser, the
Investor Certificateholders or any Receivables Purchasers were
utilized in selecting the Additional Accounts from the
available Eligible Accounts from the Bank Portfolio and that
as of the Addition Date, the Seller is not insolvent;
(ii) the Additional Assignment constitutes either (x)
a valid sale to the Purchaser of all right, title and interest
of the Seller in and to the Receivables then existing and
thereafter created from time to time in the Additional
Accounts, all monies due or to become due with respect
thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the
Receivables, and all proceeds of the foregoing and such
property will be held by the Purchaser free and clear of any
Lien of any Person claiming through or under the Seller or any
of its Affiliates, or (y) a grant of a security interest (as
defined in the UCC as in effect in any applicable
jurisdiction) in such property to the Purchaser, which is
enforceable with respect to then existing Receivables in the
Additional Accounts, all monies due or to become due with
respect thereto, all Collections, all Recoveries, and all
proceeds of the foregoing, upon the Conveyance of such
Receivables to the Purchaser, and which will be enforceable
with respect to the
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Receivables thereafter created from time to time in respect of
Additional Accounts conveyed on such Addition Date until the
termination of the Trust, all monies due or to become due with
respect thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the
Receivables, and all proceeds of the foregoing upon such
creation; and (z) if the Assignment constitutes the grant of a
security interest to the Purchaser in such property, upon the
filing of financing statements as described in Section 1.1
with respect to such Additional Accounts and the Receivables
thereafter created from time to time in such Additional
Accounts, all monies due or to become due with respect
thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the
Receivables, and proceeds of the foregoing, upon the creation
of such property, the Purchaser shall have a first priority
perfected security interest in such property (subject to
Section 9-306 of the UCC as in effect in any applicable
jurisdiction), free and clear of any Lien of any Person
claiming through or under the Seller or any of its Affiliates;
and
(iii) each Additional Account is an Eligible Account,
and each Receivable in such Additional Account is an Eligible
Receivable.
(e) Delivery of Documents. In the case of the designation of Additional
Accounts or Automatic Additional Accounts, the Seller shall deliver to the
Purchaser on the date designated by the Purchaser (i) the computer file,
microfiche list or written list required to be delivered pursuant to Section 1.1
with respect to such Additional Accounts or Automatic Additional Accounts and
(ii) a duly executed, written Assignment, substantially in the form of Exhibit A
(the "Additional Assignment").
Section 2.5 Removal of Accounts. (a) On any day of any Due Period, if
so requested by Seller, and if such request is permitted under Section 2.7 of
the Pooling and Servicing Agreement, the Purchaser shall require the
reassignment to it, which the Purchaser shall reassign to a Person designated by
the Seller, of all the Purchaser's and the Trustee's right, title and interest
in, to and under the Receivables then existing and thereafter created, all
monies due or to become due with respect thereto, all Collections, all
Recoveries, rights, remedies, powers and privileges with respect to such
Receivables, and all proceeds of the foregoing with respect to the Accounts
designated by the Purchaser (the "Removed Accounts"), upon satisfaction of the
following conditions:
(i) the removal of any Receivables of any Removed Accounts on
any Removal Date shall not, in the reasonable belief of the Seller, (A)
cause an Early Amortization Event to occur; or (B) result in the
failure of the Purchaser to make any payment specified in the related
Supplement or Receivables Purchase Agreement with respect to any
Series;
(ii) on or prior to the Removal Date, the Seller shall have
delivered to the Purchaser and the Trustee (with a copy to each
Purchaser Representative) (A) for
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execution, a written assignment in substantially the form of Exhibit C
(the "Reassignment"), and (B) a computer file or microfiche or written
list containing a true and complete list of all Removed Accounts
identified by account number and the aggregate amount of the
Receivables in such Removed Accounts as of the Removal Cut Off Date
specified therein, which computer file or microfiche or written list
shall as of the Removal Date modify and amend and be made a part of
this Agreement;
(iii) the Seller shall represent and warrant that no selection
procedures believed by the Seller to be materially adverse to the
interests of the Investor Certificateholders or any Receivables
Purchasers or any Enhancement Provider were utilized in selecting the
Removed Accounts;
(iv) the Seller shall have provided to the Purchaser such
information, certificates, opinions and other materials as are
reasonably necessary to enable the Purchaser to satisfy its obligations
under Section 2.7 of the Pooling and Servicing Agreement with respect
to such Removed Accounts;
(v) the Seller shall have delivered to the Purchaser, the
Trustee, each Purchaser Representative and each Enhancement Provider an
Officer's Certificate confirming the items set forth in clauses (i)
through (iii) above. The Trustee may conclusively rely on such
Officer's Certificate, shall have no duty to make inquiries with regard
to the matters set forth therein and shall incur no liability in so
relying; and
(vi) no Early Amortization Event shall have occurred with
respect to any Series.
Upon satisfaction of the above conditions, the Purchaser shall execute
and deliver the Reassignment to the Person designated by the Seller, and the
Receivables from the Removed Accounts shall no longer be considered Receivables
hereunder.
Seller shall pay the Purchaser, for each Receivable arising in the
Removed Accounts, a reassignment price equal to the Outstanding Balance of such
Receivable. Such payment shall be made in cash in immediately available funds
and shall be made by Seller's deposit to the Collection Account no later than
the effectiveness of such Reassignments.
(b) No Account shall be reassigned hereunder if such removal would be
prohibited by or inconsistent with the terms of any Supplement or Receivables
Purchase Agreement.
Section 2.6 Purchaser May Perform. If the Seller fails to perform any
of its agreements or obligations under this Agreement, the Purchaser may (but
shall not be obligated to) itself perform, or cause performance of, such
agreement or obligation.
Section 2.7 No Assumption of Liability. Nothing in this Agreement shall
constitute or is intended to result in the creation or assumption by the
Purchaser, the Trust, the Trustee, or any Purchaser Representative,
Certificateholder, Certificate Owner, Receivables Purchaser or
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Enhancement Provider of any obligation of the Seller or any other Person to any
Obligor in connection with the Receivables, the Accounts, the Cardholder
Agreements or other agreement or instrument relating thereto.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Calculation of Purchase Price.
(a) The purchase price payable by the Purchaser for the
Existing Assets shall be $5,935,000, and the Purchaser shall pay such
amount to the Seller in cash on the date hereof.
(b) The purchase price (the "the Purchase Price") for each
Receivable (and the Related Assets with respect thereto) Conveyed to
the Purchaser after the Effective Date shall equal the Outstanding
Balance of such Receivable. In addition, as further consideration for
the Seller's agreement to sell Receivables hereunder, the Seller shall
be entitled to receive Deferred Originator Payments as specified in
subsection 4.3(h) of the Pooling and Servicing Agreement. On each
Distribution Date after the Effective Date, the Purchaser and the
Seller shall settle as to the Purchase Price for Receivables and
Related Assets (other than Existing Assets) Conveyed during the related
Due Period. Prior to each Distribution Date, the Purchaser and the
Seller shall determine the aggregate amount of conveyances made during
the related Due Period and the aggregate Purchase Price for Receivables
and Related Assets Conveyed during that Due Period. Amounts paid to the
Purchaser on such Distribution Date pursuant to the Pooling and
Servicing Agreement shall be applied as follows:
first, as a payment of interest on outstanding
deferred Purchase Price, calculated as provided in subsection
(c), with respect to the related (or any earlier) Due Period;
second, as a payment of the remaining Purchase Price
for Receivables Conveyed during the related Due Period and
their Related Assets;
third, as a payment of deferred Purchase Price for
Receivables (other than Existing Assets) Conveyed during any
earlier Due Period and their Related Assets; and
fourth, if the Seller and the Purchaser so agree, as
a loan by the Purchaser to the Seller, on the terms described
in Section 3.3.
Any funds remaining after such application shall be retained
by the Purchaser.
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(c) Any portion of the Purchase Price for Receivables and
Related Assets Conveyed during any Due Period that is not paid under
priority second above on the related Distribution Date shall be treated
as deferred Purchase Price and shall be payable from time to time as
provided in subsection (b). The Purchaser shall pay interest on the
deferred Purchase Price outstanding from time to time under this
Agreement at a variable rate per annum equal to the rate of interest
published in the Wall Street Journal as the "prime rate" as of the last
Business Day of the most recent Due Period. Such interest shall be
computed on the basis of the actual number of days elapsed and a
365-day year and shall be paid as provided in subsection (b).
For administrative convenience, interest on such deferred
Purchase Price and on any loans described in Section 3.3 shall be
calculated on the following basis. On each Distribution Date, the
Purchaser and the Seller shall determine whether, after giving effect
to subsection (b), any deferred Purchase Price is outstanding with
respect to Receivables Conveyed during the related (or any earlier) Due
Period and their Related Assets and whether there is any loan
outstanding from the Purchaser to the Seller. Any such outstanding
deferred Purchase Price or outstanding loan is referred to below as an
"Intercompany Balance". The Purchaser and Seller will then determine
the arithmetic mean of the Intercompany Balances on that and the
immediately preceding Distribution Date (or on such Distribution Date
and the Effective Date, in the case of the first Distribution Date),
treating any deferred Purchase Price as a positive number and any loan
as a negative number for purposes of this calculation. If such
arithmetic mean is a positive number, then the amount of deferred
Purchase Price outstanding on each day during the related Due Period
shall be deemed (solely for purposes of calculating interest) to have
equaled such positive number (and the amount of loans outstanding on
each day during such Due Period shall be deemed to have been zero).
Conversely, if such arithmetic mean is a negative number, then the
principal amount of the loan outstanding on each day during the related
Due Period shall be deemed (solely for purposes of calculating
interest) to have equaled the absolute value of such negative number
(and the amount of deferred Purchase Price outstanding on each day
during such Due Period shall be deemed to have been zero).
Section 3.2 Adjustments for Miscellaneous Credits and Fraudulent
Charges. (a) With respect to each Due Period, the aggregate amount of Principal
Receivables (i) which were created in respect of merchandise refused or returned
by the Obligor thereunder or as to which the Obligor thereunder has asserted a
counterclaim or defense, (ii) which were reduced by the Servicer by any rebate,
refund, charge-back or adjustment (including Servicer errors) or (iii) which
were created as a result of a fraudulent or counterfeit charge (with respect to
such Due Period, the "Dilution Amount") then subject to subsection (b) below,
Purchase Price and Deferred Originator Payments that otherwise would be paid to
the Seller with respect to Receivables subsequently generated by Seller shall be
decreased by an amount equal to the Dilution Amount.
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(b) If any decrease is required in the Purchase Price and Deferred
Originator Payments with respect to subsequently generated Receivables pursuant
to subsection (a) above at any time (i) when an Early Amortization Event exists
or (ii) on or after the Purchase Termination Date, then, in lieu of such
reduction, the amount by which the Purchase Price and Deferred Originator
Payments due to Seller should have been so reduced shall be deposited by Seller
in same day funds into the Collection Account for application by the Servicer to
the same extent as if Collections of the applicable Receivable in such amount
had actually been received on such date.
Section 3.3 Loans by the Purchaser to the Seller. The Purchaser may
make loans to the Seller from time to time if so agreed between such parties and
to the extent that the Purchaser has funds available for that purpose after
satisfying its obligations under this Agreement and the Pooling and Servicing
Agreement. Any such loan shall be payable upon demand (and may be prepaid with
penalty or premium) and shall bear interest on the same basis (and payable at
the same time) as is specified in Section 3.1 with respect to deferred Purchase
Price.
ARTICLE IV
OTHER MATTERS RELATING
TO THE SELLER
Section 4.1 Liability of the Seller. The Seller shall be liable
hereunder only to the extent of the obligations specifically undertaken by it in
its capacity as the Seller.
Section 4.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller.
(a) The Seller shall not consolidate with or merge into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) the Person formed by such consolidation or into which the
Seller is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Seller substantially as an entirety
shall be, if the Seller is not the surviving entity, organized and
existing under the laws of the United States of America or any State or
the District of Columbia, and shall be a national banking association,
state banking corporation or other entity which is not subject to the
bankruptcy laws of the United States of America and shall expressly
assume, by an agreement supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Purchaser and the Trustee, the
performance of every covenant and obligation of the Seller, as
applicable hereunder and shall benefit from all the rights granted to
the Seller, as applicable hereunder. To the extent that any right,
covenant or obligation of the Seller, as applicable hereunder, is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity. In
furtherance hereof, in applying this Section 4.2 to a successor entity,
the term "Insolvency Event" shall be applied by reference to events
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of involuntary liquidation, receivership or conservatorship applicable
to such successor entity as shall be set forth in the officer's
certificate described in subsection 4.2(a)(ii); and
(ii) the Seller shall have delivered to the Purchaser and the
Trustee an Officer's Certificate signed by a Vice President (or any
more senior officer) of the Seller stating that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply
with this Section 4.2 and that all conditions precedent herein provided
for relating to such transaction have been complied with and an Opinion
of Counsel that such supplemental agreement is legal, valid and
binding.
(b) The obligations of the Seller hereunder shall not be assignable nor
shall any Person succeed to the obligations of the Seller hereunder except for
mergers, consolidations, assumptions, conveyances or transfers in accordance
with the provisions of the foregoing paragraph.
Section 4.3 Limitation on Liability. The directors, officers, employees
or agents of the Seller shall not be under any liability to the Purchaser, the
Trust, the Trustee, the Certificateholders, the Certificate Owners, the
Receivables Purchasers, any Purchaser Representative, any Enhancement Provider
or any other Person hereunder or pursuant to any document delivered hereunder,
it being expressly understood that all such liability is expressly waived and
released as a condition of, and as consideration for, the execution of this
Agreement; provided, however, that this provision shall not protect the
officers, directors, employees, or agents of the Seller against any liability
which would otherwise be imposed by reason of willful misconduct, bad faith or
gross negligence in the performance of their duties. The Seller and any
director, officer, employee or agent may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder.
Section 4.4 Indemnification. The Seller shall indemnify and hold
harmless the Purchaser, the Trust and the Trustee, its officers, directors,
employees and agents from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of or based upon the arrangement created by this
Agreement, the Pooling and Servicing Agreement, any Supplement or any
Receivables Purchase Agreement arising out of any third-party action, claim,
suit or proceeding, including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim, as though this Agreement, such Supplement or such Receivables Purchase
Agreement created a partnership under the New York Uniform Partnership Act in
which the Seller is a general partner; provided, however, that the Seller shall
not indemnify the Purchaser or the Trustee if such acts, omissions or alleged
acts or omissions constitute or are caused by fraud, gross negligence, or
willful misconduct by the Purchaser or the Trustee; provided, further, that the
Seller shall not indemnify the Trust or the Trustee for any liabilities, costs
or expenses with respect to any action taken by the Trustee at the request of
the Investor Certificateholders or Receivables Purchasers; and provided,
further, that the Seller shall not indemnify the Trust or the Trustee for any
liabilities, costs or expenses of the Trust or the Trustee arising under any tax
law,
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including without limitation any federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by the Trust in connection herewith to any taxing
authority. Any such indemnification shall not be payable from the assets of the
Trust. The provisions of this indemnity shall run directly to and be enforceable
by an injured party subject to the limitations hereof.
ARTICLE V
CONDITIONS TO PURCHASE
Section 5.1 Conditions to Purchase. The obligations of the Purchaser to
make its initial purchase of Receivables hereunder shall be subject to Seller
delivering to the Purchaser on or before the Effective Date such documents,
certificates and resolutions that the Purchaser is required to deliver to the
Trustee, any Purchaser Representative, Enhancement Provider or Rating Agency in
connection with the amendment and restatement of the Pooling and Servicing
Agreement as of the date of this Agreement.
ARTICLE VI
TERMINATION
Section 6.1 Termination by the Seller. So long as no Series is
outstanding, the Seller may terminate all of its agreements to sell Receivables
hereunder to Purchaser by giving Purchaser and the Trustee not less than 15
days' prior written notice (or such shorter time as is acceptable to the
Trustee) of its election not to continue to sell Receivables to Purchaser;
provided that such notice shall specify the effective date of such termination.
Section 6.2 Automatic Termination. Unless otherwise agreed to by the
Seller and Purchaser in writing, the agreement of Seller to sell Receivables
hereunder, and the agreement of the Purchaser to purchase Receivables from
Seller hereunder, shall terminate automatically upon the termination of the
Trust as provided in Article XII of the Pooling and Servicing Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, etc. (a) The provisions of this Agreement may
from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the Purchaser and the
Seller (with respect to an amendment) or by the Purchaser (with respect to a
waiver or consent by it); provided, that such action shall not, as evidenced by
an Opinion of Counsel for the Seller addressed and delivered to the Trustee and
each Purchaser Representative, adversely affect in any material respect the
interests of any Investor Certificateholder, any Receivables Purchaser or any
Enhancement Provider without the prior written consent of such Person; provided,
further, that the Rating Agency Condition shall have been satisfied with respect
to such amendment.
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(b) No failure or delay on the part of the Purchaser, the Seller or any
third party beneficiary in exercising any right, power or privilege hereunder or
under any other Transaction Document shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 7.2 Protection of Right, Title and Interest to the Purchaser.
(a) The Seller shall cause this Agreement, all certificates of
assignment, agreements and documents, and all amendments hereto and thereto
and/or all financing statements and continuation statements and any other
necessary documents covering the Purchaser's right, title and interest in the
Receivables to be promptly recorded, registered and filed, and at all times to
be kept recorded, registered and filed, all in such manner and in such places as
may be required by law fully to preserve and protect the right, title and
interest of the Purchaser hereunder in the Receivables. The Seller shall deliver
to the Purchaser and the Trustee file-stamped copies of, or filing receipts for,
any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Seller shall
cooperate fully with the Purchaser in connection with the obligations set forth
above and shall execute any and all documents reasonably required to fulfill the
intent of this subsection 7.2(a).
(b) Within 30 days after the Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) above materially
misleading within the meaning of Section 9-402(7) of the UCC, the Seller shall
give the Purchaser and the Trustee notice of any such change and shall file such
financing statements or amendments as may be necessary to continue the
perfection of the Purchaser's interest in the Receivables and related property
conveyed hereunder and the perfection of the Purchaser's interest in the
Receivables and the proceeds thereof as contemplated by Section 1.1 hereof.
(c) The Seller shall give the Purchaser, the Trustee and each Purchaser
Representative prompt written notice of any relocation of any office from which
it services Receivables or keeps records concerning the Receivables or of its
principal executive office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the interests in the Receivables and the
proceeds thereof. The Seller shall at all times maintain each office from which
it services Receivables and its principal executive office within the United
States of America.
Section 7.3 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
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RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 7.4 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at, sent by facsimile to, sent by courier at or mailed by registered
mail, return receipt requested, (a) in the case of the Seller and the Servicer,
to Spirit of America National Bank, c/o Charming Shoppes, Inc., 450 Winks Lane,
Bensalem, Pennsylvania 19020, Attention: General Counsel, (b) in the case of the
Purchaser, to c/o Charming Shoppes, Inc., 450 Winks Lane, Bensalem, Pennsylvania
19020, Attention: General Counsel, (c) in the case of the Trustee, to the
Corporate Trust Office, (d) in the case of the Enhancement Provider for a
particular Series, to the address, if any, specified in the related Supplement
or Receivables Purchase Agreement, or (e) in the case of the Purchaser
Representative for a particular Receivables Purchase Series, to the address, if
any, specified in the related Receivables Purchase Agreement.
Section 7.5 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 7.6 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.2, this Agreement may not be
assigned by the Seller without the prior written consent of the Purchaser, each
Purchaser Representative and the Holders of Investor Certificates evidencing
Undivided Trust Interests aggregating not less than 66 2/3% of the Investor
Interest of each Certificate Series on a Series by Series basis.
Section 7.7 Further Assurances. The Seller agrees to do and perform,
from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Purchaser more fully to
effect the purposes of this Agreement, including, without limitation, the
execution of any financing statements or continuation statements relating to the
Receivables for filing under the provisions of the UCC of any applicable
jurisdiction.
Section 7.8 Non-petition Covenant. Notwithstanding any prior
termination of this Agreement, the Seller shall not, prior to the date which is
one year and one day after the last day on which any Investor Certificate shall
have been outstanding, acquiesce, petition or otherwise invoke or cause the
Trust or the Purchaser to invoke the process of any Governmental Authority for
the purpose of commencing or sustaining a case against the Trust or the
Purchaser under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Trust or the Purchaser or any substantial part of
its property or ordering the winding up or liquidation of the affairs of the
Purchaser or the Trust.
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Section 7.9 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Purchaser or the Trustee, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, and privileges provided by law.
Section 7.10 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 7.11 Third-Party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, the Trustee, the
Certificateholders, the Receivables Purchasers, the Purchaser Representatives
and, to the extent provided in the related Supplement or Receivables Purchase
Agreement, any Enhancement Provider named therein, and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, no other Person shall have any right or obligation hereunder.
Section 7.12 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 7.13 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 7.14 Acknowledgment and Consent. (a) The Seller acknowledges
that, contemporaneously herewith, Purchaser is Conveying to the Trust all of
Purchaser's right, title and interest in, to and under the Receivables and the
related property conveyed pursuant hereto, pursuant to Section 2.1 of the
Pooling and Servicing Agreement. The Seller hereby consents to the Conveyance to
the Trust by Purchaser of all right, title and interest of Purchaser in, to and
under this Agreement, the Receivables and the related assets, including (i) the
right of Purchaser, at any time, to enforce this Agreement against the Seller
and the obligations of the Seller hereunder, (ii) the right to appoint a
successor to the Servicer at the times and upon the conditions set forth in the
Pooling and Servicing Agreement, and (iii) the right, at any time, to give or
withhold any and all consents, requests, notices, directions, approvals,
demands, extensions or waivers under or with respect to this Agreement, or the
obligations in respect of the Seller thereunder to the same extent as Purchaser
may do. Each of the Seller and the Purchaser acknowledges and agrees that (i)
under the terms of the Pooling and Servicing Agreement, the Purchaser
Representatives and Holders of Investor Certificates may direct the manner in
which the Trustee exercises its rights with respect to this Agreement or may
exercise such rights themselves, and (ii) the Trustee, the Certificateholders,
the Receivables Purchasers, the Purchaser Representatives and, to the extent
provided in the related Supplement or
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Receivables Purchase Agreement, to any Enhancement Provider named therein, are
express third party beneficiaries of the rights of the Purchaser arising
hereunder and under the other Transaction Documents to which the Seller is a
party. The Seller hereby acknowledges and agrees that it has no claim to or
interest in either of the Collection Account or any Series Account, except to
the extent it is entitled to receive Deferred Originator Payments as provided in
the Pooling and Servicing Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SPIRIT OF AMERICA NATIONAL BANK, as Seller
By: /s/
---------------------------------
Name: Kirk R. Simme
Title: President
Address: c/o Charming Shoppes
450 Winks Lane
Bensalem, PA 19022
Attention: Legal Department
Facsimile: (215) 638-6919
Confirmation: (215) 6389-6954
CHARMING SHOPPES RECEIVABLES CORP., as
Purchaser
By: /s/
---------------------------------
Name: Eric M. Specter
Title: President
Address: c/o Charming Shoppes
450 Winks Lane
Bensalem, PA 19022
Attention: Legal Department
Facsimile: (215) 638-6919
Confirmation: (215) 6389-6954
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APPENDIX A
DEFINITIONS
This is Appendix A to the Purchase and Sale Agreement dated as of
November 25, 1997, between Spirit of America National Bank, as Seller, and
Charming Shoppes Receivables Corp., as Purchaser (as amended, supplemented or
otherwise modified from time to time, the "Purchase Agreement").
1.1. Definitions. As used in the Purchase Agreement, the following
terms have the meanings as indicated:
"Additional Assignment" has the meaning set forth in Section 2.4(e) of
the Purchase Agreement.
"Dilution Amount" has the meaning specified in Section 3.2 of the
Purchase Agreement.
"Existing Assets" means (i) the Exchangeable Seller Certificate, (ii)
the Receivables existing on the Effective Date and arising from the Accounts,
(iii) all Related Assets with respect to such Receivables, and (iv) all right,
title and interest of the Seller (in its capacity as seller but not as servicer)
under the Prior PSA.
"Intercompany Balance" has the meaning set forth in Section 3.1(c) of
the Purchase Agreement.
"Outstanding Balance" means, at any time with respect to a Receivable,
the unpaid amount owed in respect thereof.
"Pooling and Servicing Agreement" means the Second Amended and Restated
Pooling and Servicing Agreement dated as of November 25, 1997, among the
Purchaser, Spirit of America National Bank, as Servicer, and First Union
National Bank, as Trustee, as amended, supplemented or otherwise modified from
time to time.
"Purchase Price" has the meaning set forth in Section 3.1 of the
Purchase Agreement.
"Purchase Termination Date" means the earlier to occur of (a) the date
specified by the Seller pursuant to Section 6.1 of the Purchase Agreement and
(b) any event referred to in Section 6.2 of the Purchase Agreement.
"Purchaser" has the meaning set forth in the preamble to the Purchase
Agreement.
"Reassignment" has the meaning specified in Section 2.5 of the Purchase
Agreement.
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"Related Assets" means, with respect to any Receivable, all monies due
or to become due with respect thereto, all Collections, all Recoveries, all
rights, remedies, powers, and privileges with respect to such Receivable, and
all proceeds of the foregoing.
"Removed Accounts" has the meaning specified in Section 2.5 of the
Purchase Agreement.
"Seller" has the meaning set forth in the preamble to the Purchase
Agreement.
"Spirit" has the meaning set forth in the preamble to the Purchase
Agreement.
1.2. Other Terms. All capitalized terms used but not otherwise defined
in the Purchase Agreement shall have the meanings assigned thereto in the
Pooling and Servicing Agreement. In addition, the interpretive conventions set
forth in Sections 1.2.1, 1.2.2 and 1.2.3 of the Pooling and Servicing Agreement
shall apply to the interpretation of the Purchase Agreement.
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EXHIBIT A
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
ASSIGNMENT No. __ OF RECEIVABLES IN ADDITIONAL ACCOUNTS, dated as of
___________ ___, _____ (this "Assignment") by and between SPIRIT OF AMERICA
NATIONAL BANK, a national banking association (the "Seller"), and Charming
Shoppes Receivables Corp., as Purchaser, pursuant to the Purchase Agreement
referred to below.
W I T N E S S E T H:
WHEREAS, the Seller and the Purchaser are parties to the Purchase and
Sale Agreement, dated as of November 25, 1997 (hereinafter as such agreement may
have been, or may from time to time be, amended, supplemented or otherwise
modified, the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Seller wishes to
designate Additional Accounts of the Seller to be included as Accounts and to
Convey the Receivables of such Additional Accounts, whether now existing or
hereafter created, to the Purchaser; and
WHEREAS, the Purchaser is willing to accept such designation and
Conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Seller and the Purchaser hereby agree as follows:
1. Defined Terms. All terms defined in the Purchase Agreement
and used herein shall have such defined meanings when used herein, unless
otherwise defined herein.
"Addition Cut Off Date" shall mean, with respect to the Additional
Accounts designated hereby, _______________ ___, ____.
"Addition Date" shall mean, with respect to the Additional Accounts
designated hereby, ____________ _______, ________.
"Addition Notice Date" shall mean, with respect to the Additional
Accounts designated hereby, ______________ ___, ____.
"Additional Accounts" shall mean the Additional Accounts designated
hereby.
2. Designation of Additional Accounts. The Seller shall
deliver, at its own expense, to the Purchaser not later than five Business Days
after the Addition Date, a computer file, microfiche or written list containing
a true and complete list of Accounts which as of the
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Addition Date shall be deemed to be Additional Accounts, such accounts being
identified by account number, Obligor name, Obligor address, and by the
aggregate amount of Receivables in such accounts as of the close of business on
the Addition Cut Off Date. Such file or list shall be delivered to the Purchaser
as confidential and proprietary, shall be marked as Schedule 1 to this
Assignment and, as of the Addition Date, shall be incorporated into and made a
part of this Assignment.
3. Conveyance of Receivables in Additional Accounts. The
Seller does hereby Convey to the Purchaser without recourse (except as expressly
provided herein and in the Purchase Agreement), all of its right, title and
interest in and to the Receivables now existing and hereafter created and
arising from time to time in connection with the Additional Accounts until the
Purchase Termination Date, all monies due or to become due with respect thereto,
all Collections, all Recoveries, all rights, remedies, powers and privileges
with respect to the Receivables in Additional Accounts, and all proceeds of the
foregoing.
In connection with such Conveyance, the Seller agrees to
record and file, at its own expense, a financing statement or financing
statements (or an amendment to such financing statement or financing statements)
(including any continuation statements with respect to such financing statements
when applicable) with respect to the Receivables now existing and hereafter
created in the Additional Accounts meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect the
Conveyance of the Receivables in Additional Accounts to the Purchaser and the
first priority nature of the Purchaser's interest in the Receivables in
Additional Accounts, and to deliver a file-stamped copy of such financing
statement or continuation statement (or an amendment to such financing statement
or financing statements) or other evidence of such filing (which may, for
purposes of this Section 3, consist of telephone confirmation of such filing
followed by delivery of a file-stamped copy as soon as practicable) to the
Purchaser on or prior to the Addition Date, and in the case of any continuation
statements filed pursuant to this Section 3, as soon as practicable after
receipt thereof by the Seller.
In connection with such Conveyance, the Seller agrees, at its
own expense on or prior to the Addition Date, to indicate in the Pool Index File
maintained in its computer files that Receivables created in connection with the
Additional Accounts have been Conveyed to the Purchaser pursuant to this
Assignment. The Seller further agrees not to alter the file designation
referenced in this paragraph with respect to any Additional Account during the
term of this Assignment unless and until such Additional Account becomes a
Removed Account.
The parties intend that if, and to the extent that, such
Conveyance is not deemed to be a sale, the Seller shall be deemed hereunder to
have granted to the Purchaser a first priority perfected security interest in
all of the Seller's right, title and interest in, to and under the Receivables
now existing and hereafter created and arising from time to time in connection
with the Additional Accounts until the Purchase Termination Date, all monies due
or to become due with respect thereto, all Collections, all Recoveries, all
rights, remedies, powers and privileges
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with respect to the Receivables in Additional Accounts, and all proceeds of the
foregoing, and that this Assignment shall constitute a security agreement under
applicable law.
4. Acceptance by Purchaser.
The Purchaser hereby acknowledges its acceptance of all right,
title and interest previously held by the Seller in and to the Receivables now
existing and hereafter created from time to time and arising in connection with
the Additional Accounts until the Purchase Termination Date, all monies due or
to become due with respect thereto, all Collections, all Recoveries, all rights,
remedies, powers and privileges with respect to the Receivables in Additional
Accounts, and all proceeds of the foregoing.
5. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Purchaser as of the Addition Date:
(a) Organization and Good Standing. The Seller is a national
banking association duly organized and validly existing under the laws of the
United States of America and has full corporate power, authority and legal right
to own its properties and conduct its business as such properties are presently
owned and such business is presently conducted, and to execute, deliver and
perform its obligations under this Assignment.
(b) Due Qualification. The Seller is duly qualified to do
business and is in good standing (or is exempt from such requirement) in any
state required in order to conduct its business, and has obtained all necessary
licenses and approvals with respect to the Seller required under applicable law.
(c) Due Authorization. The execution and delivery of this
Assignment by the Seller and the consummation of the transactions provided for
in this Assignment have been duly authorized by the Seller by all necessary
corporate action on its part.
(d) Enforceability. This Assignment constitutes a legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws.
(e) No Conflict. The execution and delivery of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which the
Seller is a party or by which it or any of its properties are bound.
(f) No Violation. The execution and delivery of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms
A-3
<PAGE> 32
hereof will not conflict with or violate in any material respect any
Requirements of Law applicable to the Seller.
(g) No Proceedings. There are no proceedings pending or, to
the best knowledge of the Seller, threatened against the Seller before any
court, regulatory body, administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Assignment, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Assignment, (iii) seeking any determination or ruling that, in the reasonable
judgment of the Seller, would materially and adversely affect the performance by
the Seller of its obligations under this Assignment, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Assignment, or (v) seeking to affect adversely the
income tax attributes of the Trust.
(h) All Consents Required. All appraisals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof, have been obtained.
(i) Solvency. No Insolvency Event with respect to the Seller
has occurred and the Conveyance by the Seller to the Purchaser of the
Receivables in the Additional Accounts has not been made in contemplation of the
occurrence thereof.
The representations and warranties set forth in this Section 5
shall survive the transfer and assignment of the respective Receivables in
Additional Accounts to the Purchaser.
6. Representations and Warranties of the Seller Relating to
the Receivables.
(a) The Seller hereby represents and warrants to the Purchaser
as of the date hereof:
(i) This Assignment constitutes either (A) a valid sale to the
Purchaser of all right, title and interest of the Seller in and to the
Receivables now existing and hereafter created and arising from time to
time in connection with the Additional Accounts until the Purchase
Termination Date, all monies due or to become due with respect thereto,
all Collections, all Recoveries, all rights, remedies, powers and
privileges with respect to the Receivables, and all proceeds of the
foregoing, and such property will be held by the Purchaser free and
clear of any Lien of any Person claiming through or under the Seller or
any of its Affiliates, or (B) a grant of a security interest (as
defined in the UCC as in effect in any applicable jurisdiction) in such
property to the Purchaser, which is enforceable with respect to the
Receivables now existing and hereafter created and arising from time to
time in connection with the Additional Accounts until the Purchase
Termination Date, all monies due or to become due with respect thereto,
all Collections, all Recoveries, all rights, remedies, powers and
privileges with respect to the Receivables, and all proceeds of the
foregoing, upon such creation. To the extent that
A-4
<PAGE> 33
this Assignment constitutes the grant of a security interest to the
Purchaser in such property, upon the filing of the financing statements
described in Section 3 and in the case of the Receivables hereafter
created, all monies due or to become due with respect thereto, all
Collections, all Recoveries, and the proceeds of the foregoing, upon
such creation, the Purchaser shall have a first priority perfected
security interest in such property (subject to Section 9-306 of the UCC
as in effect in any applicable jurisdiction).
(ii) Each Additional Account is an Eligible Account and each
Receivable in each such Additional Account is an Eligible Receivable.
(iii) Each Receivable in the Additional Accounts has been
Conveyed to the Purchaser in compliance, in all material respects, with
all Requirements of Law applicable to the Seller.
(iv) With respect to each Receivable in the Additional
Accounts, all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by the Seller in connection with the
Conveyance of such Receivable to the Purchaser have been duly obtained,
effected or given and are in full force and effect.
(v) As of the Addition Date, Schedule 1 to this Assignment and
the related computer file or microfiche or written list referred to in
Section 3 of this Assignment is an accurate and complete listing in all
material respects of all the Additional Accounts, and the information
contained therein with respect to the identity of such Additional
Accounts and the Receivables existing thereunder is true and correct in
all material respects as of the Addition Date, and as of the Addition
Date, the aggregate amount of Receivables in all the Additional
Accounts was $____________________.
(vi) No selection procedures believed by the Seller to be
materially adverse to the interests of the Purchaser, the Investor
Certificateholders or any Receivables Purchasers were utilized in
selecting the Additional Accounts from the available Eligible Accounts
from the Bank Portfolio.
(b) The representations and warranties set forth in this
Section 6 shall survive the Conveyance of any of the respective Receivables to
the Purchaser.
7. Conditions Precedent. The acceptance by the Purchaser set
forth in Section 4 and the amendment of the Purchase Agreement set forth in
Section 8 are subject to the satisfaction, on or prior to the Addition Date, of
each of the conditions precedent set forth in the Pooling and Servicing
Agreement, any Supplement or any Receivables Purchase Agreement.
8. Amendment of the Purchase Agreement. The Purchase Agreement
is hereby amended to provide that all references therein to the "Purchase
Agreement," to "this Agreement" and "herein" shall be deemed from and after the
Addition Date to be a dual
A-5
<PAGE> 34
reference to the Purchase Agreement as supplemented by this Assignment. Except
as expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Purchase Agreement shall remain unamended and
shall continue to be, and shall remain, in full force and effect in accordance
with its terms and except as expressly provided herein shall not constitute or
be deemed to constitute a waiver of compliance with or a consent to
noncompliance with any term or provision of the Purchase Agreement.
9. Counterparts. This Assignment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
10. Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
IN WITNESS WHEREOF, the undersigned have caused this
Assignment of Receivables in Additional Accounts to be duly executed and
delivered by their respective duly authorized officers on the day and year first
above written.
SPIRIT OF AMERICA NATIONAL BANK
By: ______________________________________
Name:
Title:
CHARMING SHOPPES RECEIVABLES
CORP.
By: ______________________________________
Name:
Title:
A-6
<PAGE> 35
Schedule 1
to Assignment of
Receivables in
Additional Accounts
ADDITIONAL ACCOUNTS
<PAGE> 36
Schedule 2
to Assignment of
Receivables in
Additional Accounts
Officer's Certificate of an Officer
of Spirit of America National Bank
_______________________, a duly authorized officer of Spirit
of America National Bank (the "Seller"), hereby certifies and acknowledges on
behalf of the Seller that to the best of such officer's knowledge, the following
statements are true on _________________ ______, ______ (the "Addition Date"):
(a) The Seller has delivered to the Purchaser a written
assignment in substantially the form of Exhibit A to the Purchase and Sale
Agreement dated as of November 25, 1997 (the "Purchase Agreement"; any
capitalized term used but not otherwise defined herein shall have the meaning
specified in the Purchase Agreement) between Spirit of America National Bank,
Seller, and Charming Shoppes Receivables Corp., Purchaser, and has indicated in
its computer files that the Receivables created in connection with the
Additional Accounts have been Conveyed to the Purchaser.
(b) Each Additional Account is an Eligible Account and each
Receivable in each such Additional Account is an Eligible Receivable.
(c) No selection procedures believed by the Seller to be
materially adverse to the interests of the Purchaser, Investor
Certificateholders or any Receivables Purchasers were utilized in selecting the
Additional Accounts from the available Eligible Accounts from the Bank
Portfolio.
IN WITNESS WHEREOF, I have hereunto set my hand this
___________ day of ___________________, ___________.
SPIRIT OF AMERICA NATIONAL
BANK
By: ______________________________
Name:
Title:
<PAGE> 37
EXHIBIT B
FORM OF REASSIGNMENT OF INELIGIBLE RECEIVABLES
REASSIGNMENT NO. OF INELIGIBLE RECEIVABLES, dated as of______
_______, ____ (this "Reassignment") by and among CHARMING SHOPPES RECEIVABLES
CORP., a Delaware corporation ("CSRC"),_____ , a __________ (the "Assignee"),
and SPIRIT OF AMERICA NATIONAL BANK, a national banking association (the
"Seller"), pursuant to the Purchase Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Seller and CSRC are parties to the Purchase and
Sale Agreement, dated as of November 25, 1997 (hereinafter as such agreement may
have been, or may from time to time be, amended, supplemented or otherwise
modified, the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, CSRC wishes to
reassign certain Receivables (the "Ineligible Receivables") whether now existing
or hereafter created, from CSRC to the Assignee; and
WHEREAS, CSRC is willing to reconvey the Ineligible
Receivables, and the Assignee is willing to accept such reconveyance of
Ineligible Receivables, subject to the terms and conditions hereof.
NOW, THEREFORE, CSRC, the Assignee and the Seller hereby agree
as follows:
1. Defined Terms. All terms defined in the Purchase Agreement
and used herein shall have such defined meanings when used herein, unless
otherwise defined herein.
"Removal Cut Off Date" shall mean, with respect to the
Ineligible Receivables designated hereby,_______ ,_______ .
"Removal Date" shall mean, with respect to the Ineligible
Receivables designated hereby,_________ ,________ .
"Removal Notice Date" shall mean, with respect to the
Ineligible Receivables designated hereby,_______ ,_______ .
B-1
<PAGE> 38
"Ineligible Receivables" shall mean the Ineligible Receivables
designated hereby.
2. Designation of Ineligible Receivables. The Seller shall
have delivered to CSRC on or prior to the Removal Date, a computer file,
microfiche list or written list containing a true and complete list of
Receivables which as of the Removal Date shall be deemed to be Ineligible
Receivables, such Ineligible Receivables being identified by the related account
number and by the aggregate amount of Ineligible Receivables in each such
Account as of the close of business on the Removal Cut Off Date, and, if less
than all of the Receivables in an Account are to be Conveyed by CSRC hereunder,
such other means of identification which shall be adequate to distinguish the
Ineligible Receivables from the other Receivables in such Account. Such list
shall be marked as Schedule 1 to this Reassignment and, as of the Removal Date,
shall be incorporated into and made a part of this Reassignment.
3. Conveyance of Ineligible Receivables.
(a) CSRC does hereby Convey to the Assignee without recourse,
all of its right, title and interest in and to the Ineligible Receivables (and,
in the event that all the Receivables of an account are Ineligible Receivables,
all Receivables now existing and hereafter created and arising from time to time
in connection with such account until the Purchase Termination Date, all monies
due or to become due with respect thereto, all Collections, all Recoveries, all
rights, remedies, powers and privileges with respect to such Ineligible
Receivables, and all proceeds of the foregoing.
(b) In connection with such transfer, CSRC agrees to execute
and deliver to the Assignee on or prior to the date of this Reassignment, a
termination statement with respect to the Ineligible Receivables (and, in the
event that all the Receivables of an account are Ineligible Receivables, all
Receivables now existing and hereafter created in such accounts) designated
hereby (which may be a single termination statement with respect to all such
Ineligible Receivables) evidencing the release by CSRC of its Lien on the
Ineligible Receivables, and meeting the requirements of applicable state law, in
such manner and such jurisdictions as are necessary to remove such Lien.
4. Representations and Warranties of the Seller. The Seller
(and the Assignee, but only with respect to subsection 4(a)) hereby represent
and warrant to the Purchaser as of the Removal Date:
(a) Enforceability. This Reassignment constitutes a legal,
valid and binding obligation of the Seller (or the Assignee, as applicable),
enforceable against the Seller (or the Assignee, as applicable) in accordance
with its terms, except as such enforceability may be limited by Debtor Relief
Laws.
(b) Selection Procedures. No selection procedures believed by
the Seller to be materially adverse to the interests of the Purchaser, the
Investor Certificateholders, the
B-2
<PAGE> 39
Receivables Purchasers or any Enhancement Provider were utilized in selecting
the Ineligible Receivables designated hereby.
(c) Schedule 1 Information. Schedule 1 to this Reassignment is
an accurate and complete listing in all material respects of all the Ineligible
Receivables as of the Removal Cut Off Date, and the information contained
therein with respect to the identity of such Ineligible Receivables and, if
applicable, the related accounts, is true and correct in all material respects
as of the Removal Cut Off Date, and as of the Removal Cut Off Date, the
aggregate amount of Ineligible Receivables was $ _____________ .
5. Conditions Precedent. The Conveyance of Ineligible
Receivables set forth in Section 3 and the amendment of the Purchase Agreement
set forth in Section 6 are subject to the satisfaction, on or prior to the
Removal Date, of each of the conditions precedent to such removal set forth in
the Purchase Agreement.
6. Amendment of the Purchase Agreement. The Purchase Agreement
is hereby amended to provide that all references therein to the "Purchase
Agreement," to "this Agreement" and "herein" shall be deemed from and after the
Removal Date to be a dual reference to the Purchase Agreement as supplemented by
this Reassignment. Except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Purchase
Agreement shall remain unamended and shall continue to be, and shall remain, in
full force and effect in accordance with its terms and except as expressly
provided herein shall not constitute or be deemed to constitute a waiver of
compliance with or a consent to noncompliance with any term or provision of the
Purchase Agreement.
7. Counterparts. This Reassignment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
8. Governing Law. This Reassignment shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
B-3
<PAGE> 40
IN WITNESS WHEREOF, the undersigned have caused this
Reassignment of Ineligible Receivables to be duly executed and delivered by
their respective duly authorized officers on the day and year first above
written.
SPIRIT OF AMERICA NATIONAL BANK
By: ___________________________________
Name:
Title:
CHARMING SHOPPES RECEIVABLES CORP.
By: ___________________________________
Name:
Title:
[Assignee]
By: ___________________________________
Name:
Title:
B-4
<PAGE> 41
Schedule 1
to Reassignment of
Ineligible Receivables
INELIGIBLE RECEIVABLES
<PAGE> 42
EXHIBIT C
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
REASSIGNMENT NO. ___ OF RECEIVABLES IN REMOVED ACCOUNTS, dated as of
____________ (this "Reassignment") by and among CHARMING SHOPPES RECEIVABLES
CORP., a Delaware corporation ("CSRC"),_______ , a _________ (the "Assignee"),
and SPIRIT OF AMERICA NATIONAL BANK, a national banking association (the
"Seller"), pursuant to the Purchase Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Seller and CSRC are parties to the Purchase and Sale
Agreement, dated as of November 25, 1997 (hereinafter as such agreement may have
been, or may from time to time be, amended, supplemented or otherwise modified,
the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Seller wishes to
remove all Receivables from certain designated Accounts of the Seller (the
"Removed Accounts") and to cause CSRC to reconvey the Receivables of such
Removed Accounts, whether now existing or hereafter created, from CSRC to the
Assignee; and
WHEREAS, CSRC is willing to accept such designation and to reconvey the
Receivables in the Removed Accounts, and the Assignee is willing to accept the
reconveyance of such Receivables, subject to the terms and conditions hereof.
NOW, THEREFORE, CSRC, the Assignee and the Seller hereby agree as
follows:
1. Defined Terms. All terms defined in the Purchase Agreement
and used herein shall have such defined meanings when used herein, unless
otherwise defined herein.
"Removal Cut Off Date" shall mean, with respect to the Removed
Accounts designated hereby, ___________ __, ____.
"Removal Date" shall mean, with respect to the Removed
Accounts designated hereby, ___________ __, ____.
C-1
<PAGE> 43
"Removal Notice Date" shall mean, with respect to the removed
Accounts designated hereby, ___________ __, ____.
"Removed Accounts" shall mean the Removed Accounts designated
hereby.
2. Designation of Removed Accounts. The Seller shall have
delivered to CSRC on or prior to the Removal Date, a computer file, microfiche
list, or written list containing a true and complete list of Accounts which as
of the Removal Date shall be deemed to be Removed Accounts, such accounts being
identified by account number and by the aggregate amount of Receivables in such
accounts as of the close of business on the Removal Cut Off Date. Such list
shall be marked as Schedule 1 to this Reassignment and, as of the Removal Date,
shall be incorporated into and made a part of this Reassignment.
3. Conveyance of Receivables in Removed Accounts.
(a) CSRC does hereby Convey to the Assignee without recourse,
all of its right, title and interest in and to the Receivables now existing and
hereafter created and arising from time to time in connection with the Removed
Accounts until the Purchase Termination Date, all monies due or to become due
with respect thereto, all Collections, all Recoveries, all rights, remedies,
powers and privileges with respect to the Receivables in Removed Accounts, and
all proceeds of the foregoing.
(b) In connection with such transfer, CSRC agrees to execute
and deliver to the Assignee on or prior to the date of this Reassignment, a
termination statement with respect to the Receivables now existing and hereafter
created in the Removed Accounts designated hereby (which may be a single
termination statement with respect to all such Receivables) evidencing the
release by CSRC of its Lien on the Receivables in the Removed Accounts, and
meeting the requirements of applicable state law, in such manner and such
jurisdictions as are necessary to remove such Lien.
4. Representations and Warranties of the Seller and the
Assignee. The Seller (and the Assignee, but only with respect to subsection
4(a)) hereby represent and warrant to CSRC as of the Removal Date:
(a) Enforceability. This Reassignment constitutes a legal,
valid and binding obligation of the Seller (or the Assignee, as applicable),
enforceable against the Seller (or the Assignee, as applicable) in accordance
with its terms, except as such enforceability may be limited by Debtor Relief
Laws.
(b) Selection Procedures. No selection procedures believed by
the Seller to be materially adverse to the interests of CSRC, the Investor
Certificateholders, the Receivables Purchasers or any Enhancement Provider were
utilized in selecting the Removed Accounts designated hereby.
C-2
<PAGE> 44
(c) Schedule 1 Information. Schedule 1 to this Reassignment is
an accurate and complete listing in all material respects of all the Removed
Accounts as of the Removal Cut Off Date, and the information contained therein
with respect to the identity of such Removed Accounts and the Receivables
existing thereunder is true and correct in all material respects as of the
Removal Cut Off Date, and as of the Removal Cut Off Date, the aggregate amount
of Receivables in all the Removed Accounts was $______________.
5. Conditions Precedent. The Conveyance of Receivables set
forth in Section 3 and the amendment of the Purchase Agreement set forth in
Section 6 are subject to the satisfaction, on or prior to the Removal Date, of
each of the conditions precedent to such removal set forth in the Purchase
Agreement.
6. Amendment of the Purchase Agreement. The Purchase Agreement
is hereby amended to provide that all references therein to the "Purchase
Agreement," to "this Agreement" and "herein" shall be deemed from and after the
Removal Date to be a dual reference to the Purchase Agreement as supplemented by
this Reassignment. Except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Purchase
Agreement shall remain unamended and shall continue to be, and shall remain, in
full force and effect in accordance with its terms and except as expressly
provided herein shall not constitute or be deemed to constitute a waiver of
compliance with or a consent to noncompliance with any term or provision of the
Purchase Agreement.
7. Counterparts. This Reassignment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
8. Governing Law. This Reassignment shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
C-3
<PAGE> 45
IN WITNESS WHEREOF, the undersigned have caused this
Reassignment of Receivables in Removed Accounts to be duly executed and
delivered by their respective duly authorized officers on the day and year first
above written.
SPIRIT OF AMERICA NATIONAL BANK
By: __________________________________
Name:
Title:
CHARMING SHOPPES RECEIVABLES CORP.
By: __________________________________
Name:
Title:
[Assignee]
By: __________________________________
Name:
Title:
C-4
<PAGE> 46
Schedule 1
to Assignment of
Receivables in
Removed Accounts
REMOVED ACCOUNTS
<PAGE> 1
EXHIBIT 10.1(b)
FORM OF FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") dated as of ________, 1999, is
to the Purchase and Sale Agreement, dated as of November 25, 1997 (the "Purchase
Agreement") between SPIRIT OF AMERICA NATIONAL BANK., a national banking
association ("Spirit"), as Seller, and CHARMING SHOPPES RECEIVABLES CORP.
("CSRC"), as Purchaser. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings assigned in the Purchase Agreement.
W I T N E S S E T H:
WHEREAS, Spirit and CSRC have entered into the Purchase Agreement
pursuant to which Spirit transfers Receivables to CSRC from time to time;
WHEREAS, CSRC is a party to the Pooling and Servicing Agreement
pursuant to which CSRC transfers Receivables to the Trust from time to time and
Spirit acts as Servicer; and
WHEREAS, Spirit and CSRC desire to amend the Purchase Agreement to
modify the calculation of the purchase price paid by CSRC for the Receivables
transferred thereunder and to make certain other changes to reflect the
assignment of the servicing duties under the Pooling and Servicing Agreement by
Spirit to Spirit of America, Inc. ("Spirit, Inc.").
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Amendments. (a) Section 3.1(b) of the Purchase Agreement is
hereby amended and restated in its entirety to read as follows::
"(b) The purchase price (the "the Purchase Price") for each
Receivable (and the Related Assets with respect thereto) Conveyed to
the Purchaser after the Effective Date shall equal a specified
percentage (the "Specified Percentage") of the Outstanding Balance of
such Receivable. Initially, the Specified Percentage will equal 102%.
Periodically, the Purchaser and the Seller may change the Specified
Percentage to any percentage upon which they agree in writing; provided
that (i) any such change to the Specified Percentage shall be based
upon changes in historical losses on the Receivables and the
Purchaser's costs of funds, and (ii) the Specified Percentage shall
never be less than 100%. The Purchaser shall remit the Purchase Price
for Receivables (and their Related Assets) Conveyed on each day, plus
any deferred Purchase Price for Receivables (other than Existing
Assets) Conveyed on any prior day and their Related Assets, to the
Seller on a daily basis, to the extent the Purchaser has cash available
therefor. The Purchaser will draw on all resources available to it,
including Collections allocable to it and amounts available to be drawn
under any liquidity facilities, to remit the Purchase Price in full on
each day. On each Distribution Date after the Effective
<PAGE> 2
Date, the Purchaser and the Seller shall settle as to any remaining
Purchase Price or adjustments thereto for Receivables and Related
Assets (other than Existing Assets) Conveyed during the related Due
Period. Prior to each Distribution Date, the Purchaser and the Seller
shall determine (x) the aggregate amount of conveyances made during the
related Due Period, (y) the aggregate Purchase Price for Receivables
and Related Assets Conveyed during that Due Period, and (z) the
aggregate amount of payments in respect of such Purchase Price that
have been previously made by the Purchaser.
(c) Any portion of the Purchase Price for Receivables and
Related Assets Conveyed during any Due Period that is not paid under
subsection (b) above on the day on which such Receivables are Conveyed
shall be treated as deferred Purchase Price and shall be payable from
time to time as provided in subsection (b). The Purchaser shall pay
interest on the deferred Purchase Price outstanding from time to time
under this Agreement at a variable rate per annum equal to the rate of
interest published in the Wall Street Journal as the "prime rate" as of
the last Business Day of the most recent Due Period. Such interest
shall be computed on the basis of the actual number of days elapsed and
a 365-day year and shall be paid as provided in subsection (b).
For administrative convenience, interest on such deferred
Purchase Price and on any loans described in Section 3.3 shall be
calculated on the following basis. On each Distribution Date, the
Purchaser and the Seller shall determine whether, after giving effect
to subsection (b), any deferred Purchase Price is outstanding with
respect to Receivables Conveyed during the related (or any earlier) Due
Period and their Related Assets and whether there is any loan
outstanding from the Purchaser to the Seller. Any such outstanding
deferred Purchase Price or outstanding loan is referred to below as an
"Intercompany Balance". The Purchaser and Seller will then determine
the arithmetic mean of the Intercompany Balances on that and the
immediately preceding Distribution Date (or on such Distribution Date
and the Effective Date, in the case of the first Distribution Date),
treating any deferred Purchase Price as a positive number and any loan
as a negative number for purposes of this calculation. If such
arithmetic mean is a positive number, then the amount of deferred
Purchase Price outstanding on each day during the related Due Period
shall be deemed (solely for purposes of calculating interest) to have
equaled such positive number (and the amount of loans outstanding on
each day during such Due Period shall be deemed to have been zero).
Conversely, if such arithmetic mean is a negative number, then the
principal amount of the loan outstanding on each day during the related
Due Period shall be deemed (solely for purposes of calculating
interest) to have equaled the absolute value of such negative number
(and the amount of deferred Purchase Price outstanding on each day
during such Due Period shall be deemed to have been zero)."
(d) Section 3.2 of the Purchase Agreement is hereby amended by deleting
each reference to the phrase "and Deferred Originator Payments" from paragraphs
(a) and (b) thereof.
(e) Section 7.14 of the Purchase Agreement is hereby amended by
deleting the last sentence thereof in its entirety and substituting the
following therefor:
2
<PAGE> 3
"The Seller hereby acknowledges and agrees that it has no claim to or
interest in either of the Collection Account or any Series Account."
SECTION 2. Acknowledgment. Each of Spirit and CSRC hereby acknowledge
and agree that from and after the Amendment Date (defined below) (x) Spirit Inc.
shall be the Servicer under the Pooling and Servicing Agreement and (y)
notwithstanding anything to the contrary set forth in Section 7.4 of the
Purchase Agreement, all notices required to be given to the Servicer under the
Purchase Agreement shall be sent to Spirit of America, Inc., c/o Charming
Shoppes, Inc., 450 Winks Lane, Bensalem, Pennsylvania 19020, Attention: General
Counsel.
SECTION 3. Amendment Date. This Amendment shall become effective upon
the date (the "Amendment Date") on which (x) Spirit shall have received executed
counterpart signatures pages of this Amendment from each of the parties hereto,
(y) all conditions to the effectiveness of this Amendment pursuant to Section
7.1 of the Purchase Agreement shall have been satisfied and (z) the First
Amendment dated as of the date hereof to the Pooling and Servicing Agreement
shall have become effective.
SECTION 4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 5. Severability. Each provision of this Amendment shall be
severable from every other provision of this Amendment for the purpose of
determining the legal enforceability of any provision hereof, and the
unenforceability of any provision hereof, and the unenforceability of one or
more provisions of this Amendment in one jurisdiction shall not have the effect
of rendering such provision or provisions unenforceable in any other
jurisdiction.
SECTION 6. Reference to the Purchase Agreement. Each reference in the
Purchase Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import, and references to the Purchase Agreement in any other document,
instrument or agreement executed and/or delivered in connection therewith,
shall, in each case, mean and be a reference to the Purchase Agreement as
amended hereby. Except as otherwise amended by this Amendment, the Purchase
Agreement shall continue in full force and effect and is hereby ratified and
confirmed.
SECTION 7. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.
SPIRIT OF AMERICA NATIONAL BANK
By:
------------------------------------------
Name:
Title:
CHARMING SHOPPES RECEIVABLES CORP.
By:
------------------------------------------
Name:
Title:
S-1
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kirk R. Simme and Colin D. Stern and each
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
Spirit of America, Inc.), to sign and file any and all amendments (including
post-effective amendments) to this registration statement or any registration
statement relating to this offering that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters as he might or could do
in person and hereby ratifying and confirming all that each such
attorney-in-fact and agent or their or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ERIC M. SPECTER Director and President April 14, 1999
--------------------------
Eric M. Specter
/s/ KIRK R. SIMME Director, Vice President, April 14, 1999
-------------------------- Treasurer and Secretary
Kirk R. Simme
/s/ KATHLEEN H. LIEBERMAN Director, Vice President April 14, 1999
--------------------- and Assistant Secretary
Kathleen H. Lieberman
</TABLE>
<PAGE> 1
Exhibit 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Spirit of America National Bank
constitutes, delegates and appoints Spirit of America, Inc. its true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for it and in its place and stead, in any and all capacities (including its
capacity as Servicer for the Charming Shoppes Master Trust), to sign and file
any and all amendments (including post-effective amendments) to this
registration statement or any registration statement relating to this offering
that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary in connection with
such matters as it might or could do itself and hereby ratifying and confirming
all that such attorney-in-fact and agent or its substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
SPIRIT OF AMERICA NATIONAL BANK
By: /s/ KIRK R. SIMME
--------------------------
Name: Kirk R. Simme
Title: President
Date: April 6, 1999
