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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A1
(Amendment No. 1)
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended January 29, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
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Commission file number 0-7258
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CHARMING SHOPPES, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
PENNSYLVANIA 23-1721355
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
450 Winks Lane, Bensalem, Pennsylvania 19020
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (215) 245-9100
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock (par value $.10 per share)
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. (X) YES ( ) NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. (X)
As of February 28, 1994, 102,713,582 common shares were outstanding. The
aggregate market value of the common shares (based upon the closing price on
February 28, 1994) held by non-affiliates was approximately $1.237
billion.
DOCUMENTS INCORPORATED BY REFERENCE: As stated in Part III of this annual
report, portions of the following document are incorporated herein by
reference:
Definitive proxy statement for annual shareholders meeting to be filed within
120 days after the end of the fiscal year covered by this annual report.
<PAGE> 2
This amendment to the Registrant's Form 10-K for the year ended January
29, 1994 (the "Original 1994 Form 10-K") amends and modifies the Original 1994
Form 10-K only to reflect the re-filing of Exhibits 10.1.10 and 10.1.12 to the
Form 10-K in connection with submission of a supplement to the Registrant's
request for confidential treatement filed with the Commission.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CHARMING SHOPPES, INC.
Date: 6/3/94 By: /S/ DAVID V. WACHS
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David V. Wachs
Chairman of the Board
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EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
+10.1.10 Amendment Agreement, dated September 20, 1993 to
Receivables Purchase Agreement dated December 24, 1992
(Referenced in Exhibit 10.1.8)
+10.1.12 Sale and Purchase Agreement between National City Bank,
Columbus, N.A. and Fashion Service Corp., dated September
30, 1993
- ---------
+Portions of these exhibits have been omitted and filed separately with
Secretary of the Commission pursuant to the Registrant's Application Requesting
Confidential Treatment. This amendment to the Registrant's Form 10-K for the
year ended January 29, 1994 (the "Original 1994 Form 10-K") amends and modifies
the Original 1994 Form 10-K only to reflect the re-filing of these exhibits in
connection with submission of a supplement to the Registrant's request for
confidential treatment filed with the Commission.
<PAGE> 1
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF CERTAIN PORTIONS OF THIS
EXHIBIT FROM THE SECURITIES AND EXCHANGE COMMISSION, WHICH HAVE BEEN DELETED
AND REPLACED WITH BRACKETED BLANK SPACES.
EXECUTION COPY
AMENDMENT NO. 1
AMENDMENT AGREEMENT dated as of September 20, 1993 among FIRST
FIDELITY BANK, N.A., PENNSYLVANIA (formerly known as Fidelity Bank, National
Association), a national banking association, solely in its capacity as the
trustee for SPIRIT OF AMERICA MASTER TRUST (the "Seller"), FASHION SPC, INC., a
Delaware corporation (the "Subordinated Purchaser"), SPIRIT OF AMERICA NATIONAL
BANK, a national banking association ("Spirit"), as the owner (in such
capacity, the "Owner") and the servicer (in such capacity, the "Servicer"), and
CIESCO L.P., a New York limited partnership ("Ciesco"), CORPORATE ASSET FUNDING
COMPANY, INC., a Delaware corporation ("CAFCO") and CORPORATE RECEIVABLES
CORPORATION, a California corporation ("CRC"; Ciesco, CAFCO and CRC being
collectively referred to as the "Purchasers"), CITICORP NORTH AMERICA, INC., a
Delaware corporation ("CNAI"), as agent for the Purchasers (the "Agent") and,
as to Sections 2 and 4(b) hereof only, CHARMING SHOPPES, INC., a Pennsylvania
corporation ("Charming Shoppes"), and FASHION SERVICE CORP., a Delaware
corporation ("FSC").
Preliminary Statements. (1) The Seller, the Subordinated
Purchaser, the Owner, the Servicer, the Purchasers and CNAI as Agent, are
parties to a Receivables Purchase Agreement dated as of December 24, 1992 (the
"RPA"; capitalized terms not otherwise defined herein shall have the meanings
attributed to them in the RPA), pursuant to which a Purchaser may, in its sole
discretion, purchase Receivable Interests from the Seller;
(2) Charming Shoppes and FSC are parties to a Company
Agreement dated as of December 24, 1992 (the "Company Agreement") in favor of
the Agent, pursuant to which Charming Shoppes and FSC agree, among other
things, to cause the performance and observance by each of the Servicer and the
Seller and their respective successors and assigns of all of the terms,
covenants, conditions, agreements and undertakings on the part of the Servicer
and the Seller, respectively, to be performed or observed under the RPA;
(3) The Seller, the Subordinated Purchaser, the Owner, the
Servicer, the Purchasers and the Agent desire to amend the RPA to increase the
Purchase Limit, extend the Facility Termination Date and make certain other
changes as set forth in Section 1 hereof; and
(4) Charming Shoppes, FSC and the Agent desire to amend the
Company Agreement and confirm that the Company Agreement continues to apply to
the RPA, as amended hereby;
NOW, THEREFORE, the parties agree as follows:
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SECTION 1. Amendments to RPA. The RPA shall be amended as follows, the
amendments set forth in paragraphs (b), (f)(ii), (f)(ix), (f)(xii), (f)(xviii)
(clause (x) only), (f)(xxii), (i), (k) and (l) below to be effective on the
date hereof and the balance of such amendments to be effective as of the date
on which all of the conditions precedent set forth in Section 3 shall be
satisfied (the "Effective Date"):
(a) the second sentence of Section 1.01(a) of the RPA is
amended in its entirety to read as follows:
Under no circumstances shall any Purchaser make any such
purchase [ ] if after giving effect to such purchase the
aggregate outstanding Purchaser Capital, together with the
aggregate outstanding "Purchaser Capital" of "Purchaser Receivable
Interests" under the Parallel Purchase Commitment, would exceed the
Purchase Limit [ ].
(b) Section 1.04 of the RPA is amended by inserting the phrase
[ ] following the
words "and the Agent" in the third line thereof.
(c) Section 2.06(a) of the RPA is amended by adding the
following phrase at the end of the second sentence thereof:
[
]
(d) Section 2.06(b) of the RPA is amended in its entirety to
read as follows:
(b) On each Distribution Date with respect to the
Amortization Period, the portion of the Total Principal
Collections received by the Servicer during the preceding Due
Period not used to fund any portion of the Required Amount pursuant
to Section 2.05(c) hereof (the "Available Principal Collections")
will be allocated and distributed by the Servicer in the following
priority:
[
]
- 2 -
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[
]
(e) Section 4.03(b) of the RPA is amended by deleting the phrase
"Purchase Limit" in lines 7 and 8 thereof and inserting in
place thereof the phrase [
]
-3-
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(f) Exhibit I to the RPA is amended as follows:
(i) The definition of Amortization
Period is amended in its entirety to read as follows:
"Amortization Period" means (a) the period
(if any) beginning at the close of business of the Agent on
the Business Day immediately preceding the Partial
Amortization Date and ending on the Partial Amortization
Ending Date or (if the Termination Date shall occur prior to
the Partial Amortization Ending Date) the Final Distribution
Date, and (b) the period beginning at the close of business of
the Agent on the Business Day immediately preceding the
Termination Date and ending on the Final Distribution Date.
(ii) The definition of "BancOhio Portfolio" is
amended by deleting the word "in" which appears in
line 3 thereof.
(iii) The definition of "Collection" is amended
by adding the following two sentences at the end
thereof:
The term "Collection" shall also include all benefits of the
Owner or FSC or any other Owner Affiliate under and all monies
due or to become due to the Owner or FSC or any other Owner
Affiliate under the Interest Rate Agreements, and any such
monies received shall be deemed a Collection of Finance Charge
Receivables and shall be considered a Collection with respect
to Pool Receivables. Notwithstanding any other provision of
the Agreement to the contrary, Collections constituting
payments in respect of the Interest Rate Agreements shall be
allocated entirely to the Purchase Interests under the
Agreement.
(iv) Clause (viii) of the definition of
"Eligible Receivable" is amended in its entirety to
read as follows: "(viii) which satisfies all
applicable requirements of the Cardholder
Guidelines;".
(v) The definition of "Eligible State" is
amended by inserting a period following the word
"Agreement" in the third line of clause (b) thereof
and deleting the remainder of such definition.
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(vi) A new definition entitled "Facility
Reduction Date" is added which shall read as follows:
"Facility Reduction Date" means September 15,
1994 (or such later date as the Seller, the Subordinated
Purchaser, the Owner, the Servicer and the Agent may mutually
agree in writing).
(vii) The definition of "Facility
Termination Date" in Exhibit I is amended by (x)
replacing the date "December 1, 1995" in the second
line thereof with the date "September 15, 1996 and
(y) adding a new clause at the end thereof which
shall read as follows: "or (iv) September 10, 1995,
if on or prior to September 15, 1994 the Owner shall
not have obtained extensions to or replacements for
such of the Interest Rate Agreements as may be
necessary so as to be in compliance with clause
(iii)(y) of the first sentence of the definition of
Interest Rate Agreements."
(viii) The definition of "Fixed Allocation
Percentage" is amended in its entirety to read as
follows:
"Fixed Allocation Percentage" means, for each
Due Period with respect to the Amortization Period, the ratio
(expressed as a percentage) (which shall not be in excess of
100%) computed as at the close of business of the Agent on the
Business Day immediately preceding the Partial Amortization
Date or the Termination Date (whichever triggered the
beginning of such Amortization Period), by dividing (a) the
sum of the Purchaser Capital and the Subordinated Purchaser
Capital on such Business Day by (b) the product of (i) the
Allocation Percentage for such Due Period and (ii) the total
amount of Principal Receivables on such Business Day.
(ix) The definition of "Funding Rate" is
amended in its entirety to read as follows:
"Funding Rate" for any Settlement Period
means (a) the published yield per annum for one-month
commercial paper issued by firms whose bonds are rated AA by
S&P (or the equivalent), which is reported for the date two
Business Days prior to the Distribution Date immediately
following such Settlement Period in "Selected Interest Rates"
(Publication H.15(519), Federal Reserve Statistical Release,
published by the Board of Governors of the Federal Reserve
System (or successor publication) (or, if such yield is not
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published, such other rate as the Agent and the Servicer
shall agree to in writing) or (b) such other rate as the Agent
and the Servicer shall agree to in writing.
(x) The definition of "Hedge Agreement" is
deleted in its entirety.
(xi) A new definition entitled "Interest
Rate Agreements" is added which shall read as follows:
"Interest Rate Agreements" mean one or more
interest rate cap or interest rate swap agreements which shall
(i) in the case of a cap agreement, provide for payments to
the Owner or an Owner Affiliate or the Seller in the event the
Funding Rate shall exceed 9% per annum, (ii) in the case of a
swap agreement, provide for payments to the Owner or an Owner
Affiliate at the Funding Rate in exchange for payments by the
Owner or such Owner Affiliate at a fixed interest rate not in
excess of 9.0% per annum, (iii) cover in the aggregate (x) a
notional balance of at least $150,000,000 through the Facility
Reduction Date, which notional balance shall either (A) remain
at least at $150,000,000 during the ten months immediately
following the Facility Reduction Date or (B) amortize on a
straight-line basis to zero over not less than 10 months
commencing with the Facility Reduction Date and (y) an
additional notional balance of at least $100,000,000 through
the Facility Termination Date, which notional balance shall
either (A) remain at least at $100,000,000 during the ten
months immediately following the Facility Termination Date or
(B) amortize on a straight-line basis to zero over not less
than 10 months immediately following the Facility Termination
Date (provided that prior to September 15, 1994, such
additional notional balance of at least $100,000,000 may have
a termination date no earlier than July 10, 1996), (iv) if
entered into after September 20, 1993, comply with the
provisions of Sections 8(e) (to the extent there is, at the
time entered into, an existing swap or cap transaction with
any of the counterparties to any of the Interest Rate
Agreements) and 8(f) of the Company Agreement, as amended, and
(v) be with such counterparties and contain such other terms
and provisions as shall be satisfactory to the Agent. The
Interest Rate Agreements, which are limited to those
agreements specified in the Owner's officer's certificate in
the form of Annex G delivered from time to time in accordance
with the Agreement, are the "Enhancement" referred to in the
Pooling and Servicing Agreement.
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(xii) The definition of "Mellon Cut-Off
Date" is deleted and a new definition entitled
"Separate Account Notice Date" is added, in proper
alphabetical order, which shall read as follows:
"Separate Account Notice Date" means the date
on which the Agent instructs the Owner, at least 10 Business
Days in advance and during the existence of an Early
Amortization Event or an event which, with notice or lapse of
time or both, would constitute an Early Amortization Event, to
establish a separate account to which only cash or cash
proceeds constituting Collections of the Pool Receivables are
to be sent.
(xiii) The definition of "Minimum Seller
Capital" is amended by deleting the phrase "on the
Termination Date" in line 7 thereof and inserting in
place thereof the phrase "at the close of business of
the Agent on the Business Day immediately preceding
the Partial Amortization Date or the Termination Date
(whichever triggered the beginning of such
Amortization Period)."
(xiv) A new definition entitled "Owner
Affiliate" is added which shall read as follows:
"Owner Affiliate" means Charming Shoppes, FSC
or any other wholly owned direct or indirect subsidiary of
Charming Shoppes which is approved by the Agent.
(xv) A new definition entitled "Partial
Amortization Date" is added which shall read as
follows:
"Partial Amortization Date" means the
Facility Reduction Date if on such date the Purchaser Capital
exceeds $100,000,000.
(xvi) A new definition entitled "Partial
Amortization Ending Date" is added which shall read
as follows:
"Partial Amortization Ending Date" means the
first date, following the occurrence of the Partial
Amortization Date, on which Purchaser Capital shall have been
reduced to $100,000,000 and Subordinated Purchaser Capital
shall have been reduced to $9,890,110.
(xvii) The first sentence of the definition
of "Purchase Limit" is amended in its entirety to
read as follows:
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"Purchase Limit" means (a) from the date of
the Agreement to October 5, 1993, $100,000,000, (b) from
October 6, 1993 to the Facility Reduction Date, $250,000,000,
and (c) following the Facility Reduction Date, $100,000,000,
in each case as such amounts may be reduced pursuant to
Section 1.01(c).
(xviii) The definition of "Purchaser Receivable
Interest" is amended by (x) deleting the phrase "the
Purchasers" in lines 2 and 3 thereof and inserting in
place thereof the phrase "Ciesco, CAFCO, CRC or their
respective successors and assigns," and (y) adding
the phrase "and payments in respect of the Interest
Rate Agreements" immediately after the phrase "Pool
Receivables" in the last line thereof.
(xix) The definition of "Revolving Period"
is amended in its entirety to read as follows:
"Revolving Period" means (a) the period
beginning on the date of the Agreement and ending at the close
of business of the Agent on the Business Day immediately
preceding the earlier of the Partial Amortization Date and the
Termination Date, and (b) the period (if any) beginning on the
date the Partial Amortization Ending Date occurs and ending at
the close of business of the Agent on the Business Day
immediately preceding the Termination Date.
(xx) The definition of Seller Interest is
amended by adding the phrase "and payments in respect
of the Interest Rate Agreements" after the phrase
"Pool Receivable" in the fifth line thereof.
(xxi) The definition of "Subordinated
Receivable Interest" is amended by adding the phrase
"and payments in respect of the Interest Rate
Agreements" immediately after the phrase "Pool
Receivables" in the last line thereof.
(xxii) The definition of "Yield" is amended
by deleting the phrase "Settlement Period" in the
third line of the definition of "AR" contained
therein and inserting the phrase "Fixed Period" in
place thereof.
(g) Paragraph 1(a) of Exhibit II to the RPA is
amended by deleting the phrase "Attribute 300/400" in line 6 thereof and
inserting in place thereof the phrase "Attribute 300, 400, 700 or 800."
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(h) A new paragraph 1(d) is added to Exhibit IV
to the RPA which shall read as follows:
(d) Interest Rate Agreements. The
Trustee shall not consent to any modification or
amendment of the Interest Rate Agreements without the
prior written consent of the Agent in each instance,
which consent shall not be unreasonably withheld by
the Agent.
(i) Each reference to the "Mellon Cut-Off Date"
in paragraph 2(d) of Exhibit IV to the RPA and paragraph 1(c) of
Exhibit V to the RPA shall be replaced by the term "Separate Account
Notice Date."
(j) Paragraph 2(e) of Exhibit IV to the RPA is
amended in its entirety to read as follows:
(e) Interest Rate Hedging. The Owner shall
maintain, or cause to be maintained, the Interest
Rate Agreements in full force and effect and shall
obtain, or cause to be obtained, extensions to or
replacements for the Interest Rate Agreements from
time to time so that the then effective Interest Rate
Agreements are at all times in compliance with the
first sentence of the definition of "Interest Rate
Agreements";provided, however, that the failure of
the Owner to obtain, prior to September 15, 1994,
extensions to or replacements for those Interest Rate
Agreements having a termination date of July 10, 1996
shall not constitute an Early Amortization Event, so
long as such Interest Rate Agreements are otherwise
then in compliance with the first sentence of the
definition of "Interest Rate Agreements." Whenever
the Owner shall obtain, or cause to be obtained, an
extension to or replacement for any Interest Rate
Agreement, the Owner shall immediately furnish the
Agent with an updated Annex G incorporating such
extension or replacement and a copy of such extension
or replacement, in each case certified by a
Responsible Officer of the Owner as being complete
and correct. With respect to each Interest Rate
Agreement to which the Seller is not a party, the
Owner shall cause all monies due or to become due to
the Owner (or, if applicable, an Owner Affiliate)
under such Interest Rate Agreement to be assigned to
the Seller.
(k) Paragraph 1(c) of Exhibit V to the RPA is
amended by deleting the word "designed" in line 2 of
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clause (iv) thereof and inserting in place thereof the word
"designated."
(l) Paragraph (e)(iii) of Exhibit VI to the RPA
is amended by inserting the phrase "or a Trust Early Amortization
Event" following each appearance of the phrase "Amortization Event" in
lines 4 and 5 thereof.
(m) A new Annex G is added to the Agreement in
the form of Annex G attached hereto.
SECTION 2. Amendments to Company Agreement. (a) The Company
Agreement shall be amended, effective as of the Effective Date, by adding the
following new subsections (e) and (f) to Section 8 thereof:
(e) Future Swap Transactions. With respect to
each Interest Rate Agreement other than a
rate cap agreement to which the Seller is a
party, not enter into or guarantee any
additional rate swap transaction with the
counterparty to any such Interest Rate
Agreement, and not permit the Owner or any
Owner Affiliate to do so, unless it shall
have obtained in each case an agreement that
such counterparty will not net or offset
payment obligations under such rate swap
transaction or guarantee against payment
obligations under such Interest Rate
Agreement; and
(f) Redocumentation of Interest Rate Agreements.
On or prior to September 15, 1994 amend or
replace all Interest Rate Agreements to which
it is a party to provide for payments to
either the defaulting or the nondefaulting
party on an early termination, to the extent
such Interest Rate Agreements do not so
provide (without limiting the form of
documentation which may be utilized, an
Interest Rate Agreement which uses the 1992
ISDA Master Agreement form and election of
the "Second Method" shall comply with this
subsection (f)).
(b) Each of Charming Shoppes and FSC agrees that
the Company Agreement (i) applies to the RPA as amended by this Amendment
Agreement and (ii) ratifies and confirms the Company Agreement in all respects
(subject, in the case of representations and warranties, to Section 4(b) of
this Amendment Agreement) and agrees that the Company Agreement, as amended
hereby, shall remain in full force and effect in accordance with its terms,
except that on and after the date hereof, each reference
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in the Company Agreement to "the RPA", "thereunder", "thereof" or words of like
import referring to the RPA shall mean and be a reference to the RPA as amended
by this Amendment Agreement.
SECTION 3. Conditions Precedent. The effectiveness of the
amendments set forth in Section 1 which are stated to be effective on the
Effective Date is subject to the conditions precedent that the Agent shall have
received each of the following, in form and substance satisfactory to the
Agent, on or prior to October 15, 1993:
(a) Certified copies of any necessary corporate
action of the Trustee approving this Amendment Agreement and certified
copies of all documents evidencing other necessary government
approvals, if any, with respect to this Amendment Agreement and
certification of the names and true signatures of the officers of the
Trustee authorized to sign this Amendment Agreement on behalf of the
Seller and the other documents to be delivered by the Seller
hereunder;
(b) Certified copies of the resolutions of the
Board of Directors of the Subordinated Purchaser approving this
Amendment Agreement, and certified copies of all documents evidencing
other necessary corporate action and governmental approvals, if any,
with respect to this Amendment Agreement, and certification of the
names and true signatures of the officers of the Subordinated
Purchaser authorized to sign this Amendment Agreement and the other
documents to be delivered by the Subordinated Purchaser hereunder;
(c) Certified copies of the resolutions of the
Board of Directors of the Servicer and the Owner approving this
Amendment Agreement, and certified copies of all documents evidencing
other necessary corporate action and governmental approvals, if any,
with respect to this Amendment Agreement, and certification of the
names and true signatures of the officers of the Servicer and the
Owner authorized to sign this Amendment Agreement and the other
documents to be delivered by the Servicer and the Owner hereunder;
(d) Certified copies of the resolutions of the
Board of Directors of FSC approving this Amendment Agreement, and
certified copies of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to
this Amendment Agreement, and certification of the names and true
signatures of the officers of FSC authorized to sign this Amendment
Agreement;
(e) Certified copies of the resolutions of the
Board of Directors of Charming Shoppes approving this Amendment
Agreement, and certified copies of all documents
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evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Amendment Agreement, and
certification of the names and true signatures of the officers of
Charming Shoppes authorized to sign this Amendment Agreement;
(f) Favorable opinions of counsel for the
Trustee, the Owner, the Servicer, the Subordinated Purchaser, FSC and
Charming Shoppes as to such matters as the Agent may reasonably
request;
(g) An amendment and restatement of the Fee Letter
and payment of all fees due thereunder;
(h) The documentation relating to the assignment
of the BancOhio Portfolio to the Owner;
(i) With respect to Additional Accounts arising
in respect of the BancOhio Portfolio, copies of the "Addition Notice,"
"Assignment" and Owner's Officer's Certificate required to be
delivered pursuant to Section 2.6(c) of the Pooling and Servicing
Agreement;
(j) An officer's certificate of the Owner meeting
the requirements of Section 1.02(a)(iii) of the RPA;
(k) Evidence that the Owner shall have duly given
the notice to Mellon Bank, N.A. contemplated under Section 3 of the
Agreement dated as of December 24, 1992 among the Owner, the Agent and
Mellon Bank, N.A. relating to certain intercreditor arrangements;
(l) Assignments to the Seller of the benefits
under each of the Interest Rate Agreements in effect on the Effective
Date, together with any necessary consents by the counterparties to
such Interest Rate Agreements;
(m) Copies of each of the Interest Rate
Agreements in effect on the Effective Date, together with a summary
thereof in the form of Annex G attached hereto, in each case certified
by a Responsible Officer of the Owner as being complete and correct;
(n) UCC financing statements relating to the
Interest Rate Agreements naming the Owner (or, if applicable, an
Owner Affiliate) as debtor and the Seller as secured party and UCC
financing statement amendments relating to the Interest Rate
Agreements with respect to each UCC financing statement filed
pursuant to the RPA;
(o) An officer's certificate of Charming Shoppes
stating that on the Effective Date none of Charming Shoppes, FSC or
the Owner is a party to or guarantor of any rate swap
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transaction (other than the Interest Rate Agreements) with any of the
counterparties to any of the Interest Rate Agreements in effect on the
Effective Date; and
(p) Such other approvals, opinions or documents
as the Agent may reasonably request.
SECTION 4. Representations and Warranties. (a) Each of the
Trustee, the Owner, the Servicer and the Subordinated Purchaser confirms that
each of the representations and warranties made by it contained in Exhibit III
to the RPA, as amended by this Amendment Agreement, is correct on and as of the
date hereof as though made on and as of this date.
(b) Each of Charming Shoppes and FSC confirms that each of
the representations and warranties made by it contained in Section 5 of the
Company Agreement, after giving effect to this Amendment Agreement, is correct
on and as of the date hereof as though made on and as of this date.
SECTION 5. Costs and Expenses. The Owner agrees to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution and delivery of this Amendment Agreement and the other documents to
be delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent.
SECTION 6. Confirmation of RPA. Except as herein expressly
amended, the RPA is ratified and confirmed in all respects and shall remain in
full force and effect in accordance with its terms. Each reference in the RPA
to "this Agreement" shall mean the RPA as amended by this Amendment Agreement,
and as hereinafter amended or restated.
SECTION 7. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 8. Execution in Counterparts. This Amendment
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same Agreement. Delivery of an executed counterpart of
a signature
13
<PAGE> 14
page to this Amendment Agreement by telecopier shall be effective as delivery
of a manually executed counterpart of this Amendment Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
SELLER: FIRST FIDELITY BANK, N.A., PENNSYLVANIA
(formerly known as Fidelity Bank,
National Association),
not in its individual capacity but
solely as the Trustee for
SPIRIT OF AMERICA MASTER TRUST
By:
------------------------------
Title: Vice President
SUBORDINATED
PURCHASER: FASHION SPC, INC.
By:
------------------------------
Title:
----------------------
OWNER/SERVICER: SPIRIT OF AMERICA NATIONAL BANK,
as the Owner and the Servicer
By:
------------------------------
Title:
----------------------
AGENT: CITICORP NORTH AMERICA, INC.,
as Agent
By:
------------------------------
Vice President
14
<PAGE> 15
ACKNOWLEDGED AND AGREED AS TO
SECTIONS 2 AND 4(b) ONLY:
CHARMING SHOPPES: CHARMING SHOPPES, INC.
By:
------------------------------
Title:
------------------------
FSC: FASHION SERVICE CORP.
By:
------------------------------
Title:
------------------------
15
<PAGE> 16
ANNEX G
Summary of Interest Rate Agreements as of (Date)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Reference Date Amorti-
No. or zation of
Date of Type Fixed Rate Notional
Confir- (Swap Notional or Cap Effective Amount Termination
Counterparty mation or Cap) Amount Rate Date Begins Date
- ------------ ------ ------- -------- ------ --------- ------ ----
</TABLE>
The Owner Affiliate party to each of the above Agreements is [FSC].
The Index for floating rate payments for each of the above Agreements
is ["USD-CP-H.15"] for one month maturities.
<PAGE> 1
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF CERTAIN PORTIONS OF THIS
EXHIBIT FROM THE SECURITIES AND EXCHANGE COMMISSION, WHICH HAVE BEEN DELETED AND
REPLACED WITH BRACKETED BLANK SPACES.
SALE AND PURCHASE AGREEMENT
This Sale and Purchase Agreement is made as of the -------- day of
- ----------------, 1993 between NATIONAL CITY BANK, COLUMBUS, a national banking
association (the "Bank") and FASHION SERVICE CORP., a Delaware corporation
("Fashion").
PRELIMINARY STATEMENT
The Bank, Fashion and certain other corporations affiliated with Fashion are
parties to a Credit Card Plan Agreement dated October 24, 1984, as amended from
time to time (the "Plan Agreement"). Pursuant to the Plan Agreement the Bank
is operating a consumer credit program (the "Charge Plan") in the form of
revolving lines of credit used by customers of retail stores affiliated with
Fashion to purchase goods and services from such retail stores. The Bank
wishes to sell and Fashion wishes to purchase all obligations outstanding under
the Charge Plan incurred by Customers of retail stores affiliated with Fashion,
as further set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual promises hereinafter set forth,
and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
GENERAL & DEFINITIONS
Section 1.01 Mutual Cooperation. It is an objective of the parties
that the sale and purchase of Account Debt and Accounts
provided for in this agreement be planned and carried out
in an effective, efficient and smooth manner and without
interruption in credit card account service to Charge
Customers. It is a further objective that the Charge Plan
and any other similar consumer credit program(s) operated
by Fashion or by a third party contractor ("Contractor")
for customers of retail stores operated by or affiliated
with Fashion (each an "Other Charge Plan") operate
concurrently in all retail stores operated by or
affiliated with Fashion without conflict or confusion
(such as the mishandling of applications for credit,
requests for authorizations, records of credit sales,
credits, allowances, payments, customer complaints,
inquiries and collection measures). Without limiting the
generality of the foregoing, the parties agree to
cooperate with, consult with and assist each other to
accomplish this objective, and to avoid practices,
procedures or statements that might result in such
confusion or impair the collectibility of any customer
obligations or damage the business and reputation of
either party, and to alert each other to potential
problems as soon as they are recognized. Fashion will use
its best efforts to obtain the cooperation of any operator
of any Other Charge Plan whenever necessary or useful to
accomplish these objectives.
Section 1.02 Definitions and Index of Definitions. As used herein, the
following terms shall have the following respective
meanings:
<PAGE> 2
"Accounts" shall mean the individual revolving lines of
credit provided by the Bank to Charge Customers for use in
retail stores operated by Fashion or one of its
affiliates.
"Account Debt" shall mean all outstanding obligations of a
Charge Customer due under an Account, including unbilled
purchases but not including unbilled finance charges.
"Account Records" shall mean information relating to
Accounts which shall include the Cardholder Master File,
the collection status of each Account and information
concerning interim transactions, if any, that occur during
the time period after the Bank stops processing
transactions under the Plan for the Accounts being
transferred and before Fashion or a Contractor starts
processing credit card transactions under the Other Charge
Plan for the transferred accounts.
"Adjusted Weighted Pricing Percentage" shall mean a
percentage calculated in the manner prescribed in Annex I.
"Aging Category" shall mean any one of the seven
categories specified in Annex I attached hereto which is
used to classify the delinquency status of Accounts.
"Applicable Interest Rate" shall mean the One Month Libor
Rate plus three-eights of one percent (3/8%) per annum.
"Cardholder Master File" shall mean a computer usable tape
containing the Bank's records used to operate the Charge
Plan, including the following information for each account
to be transferred: the names of Customers, addresses,
credit and transaction history, current balances and
Account aging.
"Charge Customers" shall mean customers of retail stores
affiliated with Fashion for whom an Account has been
opened under the Charge Plan.
"Charge Plan" shall have the meaning set forth in the
Preliminary Statement. "Contractor" shall mean the
meaning set forth in Section 1.01.
"Contractor" shall mean the meaning set forth in
Section 1.01.
"Final Settlement Date" shall mean November 2, 1993.
"Net Outstandings" shall have the meaning set forth in
Section 2.02.
"One Month LIBOR Rate" shall mean the One Month London
Interbank Offered Rate published in the Wall Street
Journal on the Record Date or, if not available on the
Record Date, on the most recent date prior to the Record
Date that such rate is published in the Wall Street
Journal.
"Other Charge Plan" shall have the meaning set forth in
Section 1.01.
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<PAGE> 3
"Plan Agreement" shall have the meaning set forth in the
Preliminary Statement.
"Preliminary Settlement Date" shall mean October 6, 1993.
"Record Date" shall mean October 3, 1993.
Reference should also be made to the Annexes hereto for further definitions.
ARTICLE II
SALE AND PURCHASE
Section 2.01 Transfer of Title to Accounts. (a) As of the close of
business on the Preliminary Settlement Date, the Bank will
transfer to Fashion without recourse, except as otherwise
provided for herein, the Bank's right, title and interest
in: (i) the Account Debts, including all unbilled finance
charges relating thereto, of all Charge Customers as of
the close of business on the Record Date, together with
(ii) the Accounts of such Charge Customers (including
Charge Customers having credit or zero balances in their
Accounts, but excluding Charge Customers whose Account
Debt has been written off by the Bank). Such transfer
shall be evidenced by delivery of a bill of sale or
assignment executed by the Bank in such form as Fashion
may reasonably request. Within two days after the Record
Date, Bank shall deliver to Fashion complete and correct
copies of the Cardholder Master File and all other Account
Records with respect to the Accounts being transferred,
accompanied by the certificate signed by the Chief
Financial Officer or Chief Operations Officer of the Bank
certifying that the information contained thereon is
complete and correct to the best of Bank's knowledge as of
the Record Date.
Section 2.02 Purchase Price. (a) On the Preliminary Settlement Date,
Fashion shall pay the Bank a purchase price for the
Account Debts, including all accrued unbilled finance
charges, and Accounts transferred to Fashion on such date,
as of the Record Date, which purchase price is equal to
(i) the Net Outstandings of such Accounts as reflected in
the Cardholder Master File multiplied by the Adjusted
Weighted Pricing Percentage, (ii) plus the Preliminary
Settlement Date Finance Charge Payment, as determined in
accordance with the formula set forth in Annex II attached
hereto (the "Preliminary Settlement Date Finance Charge
Payment"); (iii) plus interest at the Applicable Interest
Rate on the amount determined in (i) above from the Record
Date until the Preliminary Settlement Date as described in
Annex I attached hereto. Fashion shall pay such purchase
price to Bank by wire transfer of immediately available
funds to an account designated by the Bank. If Bank
receives such amount up to 12:00 noon on the Preliminary
Statement Date, no interest shall accrue. If Bank
receives such amount at any time after 12:00 noon on the
Preliminary Settlement Date, interest shall accrue from
and including the Preliminary
-3-
<PAGE> 4
Statement Date until and including the date Bank receives
such amount. "Net Outstandings" means (i) the aggregate
amount of Account Debt as of the close of business on the
Record Date less (ii) all credit balances as of the close
of business on such Record Date. As part of the purchase
price Fashion shall assume all liability to Charge
Customers for credit balances that may exist in any
purchased Accounts.
(b) Upon the completion of the billing cycles during
which the Record Date occurs for each Account
transferred to Fashion, Fashion shall calculate
the Unbillable Finance Charge Rebate Payment due
to Fashion in accordance with the formula set
forth in Annex III attached hereto (the
"Unbillable Finance Charge Rebate Payment"). On
the Final Settlement Date, Bank shall pay Fashion
the Unbillable Finance Charge Rebate Payment,
including interest on the Unbillable Finance
Charges, at the Applicable Interest Rate from the
Record Date to the Final Settlement Date as
determined in Annex III. Before the Final
Settlement Date, Fashion shall deliver to the
Bank a statement and documentation showing the
calculation of the Unbillable Finance Charge
Rebate Payment according to Annex III attached
hereto, accompanied by a certificate signed by a
Vice President of Fashion certifying that the
calculation and information is complete and
correct to the best of Fashion's knowledge. The
Bank shall take a reasonable opportunity to
verify the accuracy of such statement and
documentation. Payment by the Bank to Fashion
shall be made by wire transfer of immediately
available funds to an account designated by
Fashion. If Fashion receives such amount before
12:00 noon on the Final Settlement Date, interest
shall accrue from the Preliminary Settlement Date
through and including the calendar day before the
Final Settlement Date. If Fashion receives such
amount at any time after 12:00 noon on the Final
Settlement Date, interest shall accrue through
and including the Final Settlement Date.
Section 2.03 Right to Audit. The Bank will assist Fashion and
Contractor in understanding the Conversion Plan described
in Section 4.03 and, after written notice by Fashion to
Bank of Fashion's intent to audit and the purpose of such
audit, will allow Fashion to perform audit tests with
respect to the Accounts to be transferred on the
Preliminary Settlement Date to ascertain the accuracy of
the records and information to be transferred. These
tests will be conducted according to generally accepted
auditing practices and standards and will include, but not
be limited to: testing the methods used to determine the
Aging Category of the Accounts (as defined in Annex I
attached hereto) to be transferred, reviewing the
Cardholder Master File for data inaccuracies, reviewing
for reaging, evaluating write-off policies and conduct
other audit tests to substantiate that processing controls
can be relied upon as a basis for determining the Net
Outstandings as of the Record Date. The conclusion of an
audit shall not constitute a waiver of any
-4-
<PAGE> 5
right of either Fashion or the Bank under Section 5.02 or
otherwise to assert an adjustment to any amount payable or
paid under this Agreement.
Section 2.04 Closing. Bank agrees that if Fashion requests the Bank to
attend a loan closing or to confirm the assignment of the
Accounts being transferred in order for Fashion to secure
its loan to purchase such Accounts, unbilled finance
charges and Account Debt, Bank shall cooperate to provide
Fashion with such documents and/or assistance that Fashion
may reasonably request.
ARTICLE III
CONDITIONS TO TRANSFER
Section 3.01 Conditions to Transfer. The obligation of Fashion to
acquire title to the Account Debt, the accrued unbilled
finance charges related thereto, and the related Accounts
on the Preliminary Settlement Date is conditioned upon
satisfaction of the following conditions:
(a) Each of the representations and warranties of the
Bank set forth in this Agreement is true as of
the Record Date and the Preliminary Settlement
Date, and the Bank has performed each of its
obligations under this Agreement which is
required to be performed on or before the Record
Date and the Preliminary Settlement Date.
(b) The Bank shall have executed and delivered to
Fashion such Uniform Commercial Code financing
statements and change statements as Fashion may
reasonably request to reflect the transactions
contemplated by this Agreement.
ARTICLE IV
ACTIONS PRIOR TO TRANSFER
From and after the date hereof the Bank will continue to operate the Charge
Plan in accordance with the terms of the Plan Agreement, except that in
connection with the transfer of Accounts to be made on the Preliminary
Settlement Date, the following special procedures shall apply:
Section 4.01 Applications and Credit Standards. (a) Effective July 8,
1993, the Bank will no longer enter into new arrangements
with delinquent Charge Customers in order to reage their
Accounts if they make three (3) consecutive minimum
payments ("Hardship Reages") or reage their accounts for
any other reason whatsoever except as provided below. The
Bank, however, will continue to fulfill its commitments
with respect to arrangements for Hardship Reages that have
already been made with delinquent Charge Customers before
July 8, 1993 and will reage the accounts subject to such
arrangements if the delinquent Charge Customer meets the
requirements for a
-5-
<PAGE> 6
Hardship Reage by October 3, 1993. Notwithstanding the
foregoing, the Bank will continue to reage delinquent
Charge Customers who: (i) have entered into a CCCS
arrangement; or (ii) are delinquent as a result of missing
or misposted payments, billing disputes, unintentional
shortage of minimum due payments, other customer service
determined valid reason for established Charge Customers
who are no more than one (1) cycle past due, or any reage
which must be done to comply with applicable law, rule or
regulation.
(b) On July 19, 1993 with respect to Quick Credit
Applications and on July 31, 1993 with respect to
Mail Applications, Fashion will or its Contractor
will assume responsibility for accepting and
processing all new credit applications. Fashion
or its Contractor will only process Quick Credit
Applications taken on or after July 31, 1993
using application forms containing the name of
Fashion or its designee ("Fashion Applications").
Further, Fashion or its Contractor shall replace
all Applications containing the name of Bank
("Bank Applications") with Fashion Applications
in Fashion Bug Stores on or before July 31, 1993.
In the event that the Bank receives any Fashion
applications after July 31, 1993, Bank shall
forward such applications to Fashion for
processing.
(c) The Bank will indemnify Fashion or its Contractor
for any Loss (as defined in Section 6.1 of the
Charge Plan Agreement) arising out of any
violation of law resulting from Fashion or its
designee issuing credit cards under new terms and
conditions to Fashion Bug customers who have
applied for a Fashion Bug charge on a Bank
Application when such application is received by
Fashion or its designee: (i) on or after July
31, 1993 in the case of a Mail Application; or
(ii) after July 19, 1993 and on or before July
31, 1993, in the case of a Quick Credit
application. The foregoing indemnification shall
be limited solely to Losses arising out of any
violation of law resulting from the situation
that the application reflects one creditor (the
Bank) and one set of terms and that the card will
be issued in the name of a different creditor and
under a different set of terms. The foregoing
indemnification may only be invoked if the
following conditions are met: (i) Fashion or its
Contractor shall have complied with Section
4.01(b) above; (ii) Fashion or its Contractor
shall, in compliance with all applicable law,
notify such customers of the change in issuer and
any changes in terms between the Bank cardholder
agreement and the Fashion cardholder agreement
(using a disclosure in the form of Exhibit A
attached hereto). This Section 4.01 replaces the
letter agreement dated July 21, 1993 between the
parties signed by Kirk Simme and Brent Bostick.
Section 4.02 Preparation for Conversion. The Bank and Fashion will
cooperate to provide each other with all information and
data
-6-
<PAGE> 7
reasonably necessary to ensure a timely conversion carried
out in an effective and efficient manner without
interruption of credit card account services to Charge
Customers, but without unduly burdening the Bank with
unreasonable and unnecessary requests for information.
Without limiting the generality of the foregoing, the Bank
will, upon Fashion's request, provide three Cardholder
Master Files to Fashion for the Accounts transferred, one
of which will be provided on the day after the Record
Date. Such data shall be provided in printed or magnetic
form, as requested by Fashion. The Bank will provide a
retrieval service for a period of five years after the
Preliminary Settlement Date to provide Fashion, upon its
request, with copies of applications (to the extent that
such applications are available) relating to the
particular Accounts that were transferred to Fashion on
such date. The Bank shall provide copies of such
applications to Fashion as Fashion may reasonably request
(i) within five (5) days of Fashion's request in order to
respond to a specific customer inquiry, dispute or
complaint and (ii) within normal retrieval periods after
Fashion's request in connection with a specific endeavor
on the part of Fashion that may require such information
but not in excess of 10,000 applications annually. In
addition, Bank shall provide to Fashion information about
billing inquiries and collections concerning an Account
upon Fashion's request to the extent that it is available.
Section 4.03 Test Conversion. The Bank will cooperate with Fashion and
the Contractor in reviewing any plan to test the
Contractor's computer program for converting the
processing of Accounts from the Bank to the Contractor and
will cooperate with the implementation of such plan.
Without limiting the generality of the foregoing the Bank
shall, among other things, provide sample data for entry
by the Contractor in its system, assist the Contractor in
understanding the file layout and explain the Cardholder
Master File, all finance charge calculations, and the
Bank's method of payments used by the Bank in processing
the Accounts. The Bank shall bear its own internal costs
associated with such conversion efforts and reasonable
travel and out-of-pocket expenses incurred with respect to
such conversion effort.
Section 4.04 Notices. Fashion shall be responsible at its own expense
for mailing such notices that it may desire to inform
Charge Customers of the transfer and of any change in the
terms of the Charge Customer's credit card agreement. All
notices of either party described in this section shall be
submitted to the other party for approval prior to
mailing, provided that such approval shall not be
unreasonably withheld.
Section 4.05 Termination of Services. (a) Except as otherwise provided
in subsections (b) and (c), at the close of business on
the Record Date, all obligations of the Bank to provide
authorization service, customer service, collection
activities and other support services shall terminate,
except that following such date, the Bank shall refer all
customer service calls and inquiries to a new third party
customer service telephone
-7-
<PAGE> 8
number or address designated by Fashion. The Bank also
shall make available to such third party, upon the third
party's request with respect to particular accounts, all
available records that may be reasonably necessary to
respond to such inquiries.
(b) The Bank will provide authorization service to
Fashion's stores through and including one day
after the Record Date in substantially the same
manner in which authorization service has been
heretofore provided under the Plan Agreement.
Any credit extended through the Record Date shall
constitute Account Debt. Any credit extended by
Fashion after the Record Date on the basis of
such authorization service shall not constitute
Account Debt. The Bank's sole responsibility
with respect to such authorization service will
be to deliver to Fashion or the Contractor the
information normally accumulated by the Bank in
providing such service, including the account
number and amount of each approved transaction.
The Bank will use its best efforts to provide to
the authorization network a response of "Account
No. Error" (or other similar response indicating
that the Account is no longer in the Bank's file)
for all converted accounts attempted to be
authorized using Bank's authorization service for
a period of six months from the Record Date.
Bank will provide authorization service to
Fashion's stores after the Record Date and until
Fashion or the Contractor can take over
authorization, but Fashion shall pay the Bank a
daily fee of $1,000.00 for each day that the Bank
provides such authorization after the Record
Date. Such fee shall be paid to the Bank on the
Preliminary Settlement Date along with all other
amounts owed on such date.
(c) After September 27, 1993, all requests for
non-monetary changes from Charge Customers, such
as changes to Charge Customers' addresses, credit
limits, and all other non-monetary changes will
not be processed but instead such requests will
be bundled and sent to Contractor.
(d) Consistent with current practices, but not later
than 5:00 p.m. Columbus, Ohio time on the date
after the Record Date, Fashion shall transmit to
the Bank tape records of all remaining Account
Debt created through the close of business on the
Record Date.
Section 4.06 Handling of Payments. (a) By 5:00 p.m. Columbus, Ohio
time on the date after the Record Date, Fashion shall
deliver to the Bank tape records of all in-store payments
received by Fashion through the close of business on the
Record Date with respect to all Accounts.
(b) All payments received by the Bank on or before
the Record Date and all payments reported by
Fashion pursuant to subsection (a) above with
respect to Accounts shall be
-8-
<PAGE> 9
posted by the Bank no later than one day after
delivery of the last tape described in Section
4.06(a) above.
(c) All payments received by the Bank after the
Record Date will be forwarded to Fashion or its
designee.
(d) The Bank shall make arrangements for all
transactions which occur after the Record Date to
be automatically forwarded or delivered to the
Contractor, without handling or processing by the
Bank. In the event that any such correspondence
is nonetheless received by the Bank, the Bank
shall forward it to Fashion or its designee after
receipt by the Bank.
ARTICLE V
PRICING INFORMATION AND RECONCILIATION
Section 5.01 Statements of Net Outstandings, Etc. Within two (2)
business days after the Record Date, the Bank will deliver
to Fashion: (i) a statement of the Net Outstandings with
respect to the Accounts being transferred (which shall
separately state by aging category the Account Debt less
credit balances), and (ii) a statement showing
calculations of the Adjusted Weighted Pricing Percentage
and the purchase price, all in reasonable detail, prepared
from the books and records maintained by Bank in the
ordinary course of servicing the Accounts, setting forth
all adjustments of such book figures as may be necessary.
Such statement of Net Outstandings shall be certified by a
Vice President of Bank to be complete and correct to the
best of Bank's knowledge based on the Bank's books and
records. Such statement shall also include the
calculation of the Preliminary Settlement Finance Charge
Payment due Bank in reasonable detail as set forth in
Annex II. The statements and documentation relating to
the Unbillable Finance Charge Rebate Payment due Fashion
as calculated in accordance with Annex III shall be
provided by Fashion to Bank before the Final Settlement
Date as described in Sections 2.02(b) hereof.
Section 5.02 Reconciliation and Adjustment. Fashion and the Contractor
will use the Cardholder Master File tape, the payment tape
described in Section 4.06 hereof, and the tape of all
remaining Account Debt recorded by Fashion and delivered
to Bank on the date after the Record Date described in
Section 4.05(d), to verify the accuracy of the statements
described in Sections 2.02 and 5.01 and the calculation of
the purchase price as described in Section 2.02(a) and in
Annex I and Annex II. The Bank will cooperate with
Fashion and the Contractor prior to the Preliminary
Statement Date in the balancing and reconciling of the
Cardholder Master File and the balancing and reconciling
of the payment and adjustment tape and the sales and
payment information recorded by Fashion so as to verify
such statements and the purchase price calculation. Prior
to the Preliminary Settlement Date the Bank and Fashion
will use their best efforts to reconcile any
discrepancies, including, but not
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<PAGE> 10
limited to, any adjustments arising prior to but not
posted on or before the Record Date, but in any event, all
known discrepancies shall be reconciled by the Final
Settlement Date. If at any time between the Record Date
and the date six months after the Final Settlement Date
either party discovers an error or adjustment in the
aggregate Account Debt stated in the Cardholder Master
File or in the computations set forth in any statement
delivered as described in Section 2.02 or 5.01 hereof,
including items of adjustment related to events prior to
the Record Date, the parties will adjust the Purchase
Price or the accrued unbilled finance charges, as the case
may be, and the appropriate party shall promptly pay any
deficiency or refund any excess (including the effect of
any discount fees to be paid or refunded), plus interest
at the Applicable Interest Rate from the date the amount
to be adjusted was first paid through the date of
adjustment.
ARTICLE VI
OBLIGATIONS AFTER TRANSFER
Section 6.01 Records. As needed and subject to the limitations set
forth in Section 4.02 hereof, Bank will provide to Fashion
copies of such information as is available relating to the
Accounts sold to Fashion that Fashion may reasonably
request. Bank agrees that it shall retain all available
Account information for each Account for a period of five
years from the date that such Account is transferred to
Fashion. Whenever requested by the Bank, Fashion will
make available to the Bank any information or records
needed to resolve any disputes or litigation or to satisfy
any regulatory inquiries or requirements; and whenever
requested by Fashion, and subject to the limitations set
forth in this Section 6.01 and Section 4.02 hereof, the
Bank will make available to Fashion and the Contractor any
information or records needed to resolve any disputes or
litigation or to satisfy any regulatory inquiries or
requirements. In order to assist in the prompt and
efficient handling of such inquiries, each party will
designate a person who shall be available by telephone to
provide information as to the availability or location of
such records and also to supply by telephone information
which is readily available.
Section 6.02 Use of Cards. For a period of at least six months after
the Record Date, Fashion may continue to permit Charge
Customers whose Accounts were transferred on the
Preliminary Settlement Date to use any credit cards which
bear the name or trademark of the Bank, however, Bank will
use its best efforts not to authorize any such
transactions. After such period, Fashion will take all
reasonable action to cause Charge Customers to abandon use
of such cards.
Section 6.03 Repurchase of Certain Account Debt. (a) At the request of
Fashion, the Bank will repurchase from time to time any
Account Debt purchased by Fashion, plus any accrued
unbilled finance changes thereon, pursuant to this
Agreement, which Fashion or
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<PAGE> 11
the Contractor is unable to collect as a result of a
breach of any representation or warranty of the Bank set
forth in Section 7.01.
(b) The price to be paid by the Bank for such Account
Debt repurchased under this Section 6.03 shall be
equal to the price paid by Fashion to Bank on the
Preliminary Settlement Date (which includes any
Preliminary Settlement Date Finance Charge Payment
and Interest at the Applicable Interest Rate from
the Record Date to the Preliminary Settlement Date
which was previously paid) less any Unbillable
Finance Charge Rebate Payment reimbursed by Bank
to Fashion on the Final Settlement Date.
(c) Against payment of such price, Fashion and the
Contractor will assign such Account Debt as of the
Record Date to the Bank, without recourse and
without representation or warranty except that the
Account Debt is free and clear of all liens
arising through Fashion or the Contractor, and
that there are no claims or defenses arising out
of Fashion's or the Contractor's ownership or
administration of the Account.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 Representations and Warranties of Bank. The Bank
represents and warrants to Fashion as follows:
(a) The making and performance of this Agreement by
the Bank have been duly authorized by all
necessary corporate action and will not; (i)
violate or conflict with any provision of any
law, rule, regulation, order, writ, judgment,
decree, determination or award presently in
effect which is applicable to the Bank or any
provision of its charter, or bylaws; or (ii)
result in a breach of or constitute a default
under any material indenture or loan or credit
agreement or any other material written agreement
or instrument to which the Bank is a party or by
which the Bank is bound or affected, which breach
or default would have a material adverse effect
on Bank's ability to perform its obligations
under this Agreement; or (iii) require the
approval of or any exemption from any court,
governmental body or regulatory authority
(Federal, state or local).
(b) The Bank has previously issued to each Charge
Customer a credit card in full compliance with
all applicable Federal and state laws and
regulations relating to the issuance of credit
cards or requests therefor.
(c) Each Credit Agreement entered into by the Bank
and each periodic billing statement rendered by
Bank with respect
-11-
<PAGE> 12
to the Accounts was in full compliance with all
applicable Federal and state laws and regulations
relating to consumer credit and Truth-in-Lending,
and the amount, computation and disclosure, of
all finance charges and other charges and fees
imposed by the Bank with respect to the Accounts
was in full compliance with all applicable
Federal and state laws and regulations.
(d) The Account Debt and the Accounts are not subject
to any lien, claim or security interest or
encumbrance in favor of any third party except as
may exist by or through a party other than the
Bank.
(e) In performing its obligations under the Plan
Agreement, Bank has complied with all applicable
laws and regulations governing the relationship
between creditor and debtor.
(f) The information to be delivered to Fashion
pursuant to this Agreement will contain the
information as described herein with respect to
the Account Debts and the Accounts which the Bank
customarily retains in the ordinary course of its
business for the purpose of billing and collecting
such Account Debts and servicing the Accounts of
Charge Customers.
(g) The Bank's files contain a signed credit card
application for each Account except with respect
to: (i) Accounts opened under prior programs
acquired by Bank for which no signed application
was received by the Bank and (ii) all "Quick
Credit" Applications made by applicants pursuant
to Section 2.2b of the Plan Agreement.
(h) The Account Debts represent transactions reported
to the Bank by Fashion or its affiliated
corporations plus interest and fees billed to
Charge Customers according to the terms of the
Accounts. To the extent that such transactions
reflect valid sales, the Account Debts are valid
and enforceable obligations of such Charge
Customers.
Provided, however, that notwithstanding the
representations and warranties contained in
paragraphs (b), (c), (d) (e) and (h) of this
Section 7.01, the Bank expressly makes no
representation or warranty with respect to: (i)
any Accounts or Account Debts for the period of
time prior to the acquisition of such Accounts by
Bank that were originally owned by Fashion or an
affiliate and or subsidiary of Fashion (all of
which shall be collectively referred to as
"Affiliate") or a processor of Fashion and
subsequently transferred to Bank; (ii) any
Accounts or Account
-12-
<PAGE> 13
Debts to the extent that any action or inaction by
Fashion, an Affiliate, or any Contractor adversely
affects the enforceability, validity and/or
collectibility of the Accounts and/or the Account
Debts thereunder; (iii) any Accounts or Account
Debts to the extent that the Bank not having
received a completed or signed application for a
Charge Customer in either of the situations
described in Section 7.001(g) adversely affects
the enforceability, validity and/or collectibility
of the Accounts and/or the Account Debts; (iv) any
Accounts on which credit cards have been issued
where there has been a violation of law or an act
or omission in contravention of the Plan Agreement
by Fashion and/or an Affiliate; (v) how the fact
that Fashion is not a national bank located in
Ohio may affect the ability of the manner in which
Fashion, an Affiliate or any Contractor may
operate and collect the Accounts, Accounts Debts,
and consumer credit agreements as open-end
accounts following transfer pursuant to this
Agreement; and (vi) the compliance of the Credit
Agreement, Credit Cards, Charge Plan, and the
annual percentage rate and fees charged thereunder
with the requirements of Title A, Section 8-303(7)
of Maine law.
The representations and warranties set forth in this
Section 7.01 shall survive the expiration or termination
of this Agreement and the Plan Agreement.
Section 7.02 Representations and Warranties of Fashion. Fashion
represents and warrants to Bank as follows:
The making and performance of this Agreement by Fashion
have been duly authorized by all necessary corporate
action and will not, (i) violate or conflict with any
provision of any law, rule, regulation, order, writ,
judgment, decree, determination or award presently in
effect which is applicable to Fashion or any provision of
its charter, or bylaws; (ii) result in a breach or
constitute a default under any material indenture or loan
or credit agreement or any other material written
agreement or instrument to which Fashion is a party or by
which Fashion is bound or affected, which breach or
default would have a material adverse effect on Fashion's
ability to perform its obligations under this Agreement;
or (iii) require the approval of or any exemption from any
court, governmental body or regulatory authority (Federal,
state or local).
The representations and warranties set forth in this
Section 7.02 shall survive the expiration or termination
of this Agreement and the Plan Agreement.
ARTICLE VIII
COVENANT OF BANK
Section 8.01 Use of Information. The Bank agrees that it will keep,
preserve and maintain the confidentiality of all nonpublic
information about and knowledge of the Charge Customers
and the policies, plans and operations of Fashion with
respect to Fashion's Charge Plan and business, generally.
-13-
<PAGE> 14
Section 8.02 Preservation of Policies, Practices and Procedures.
Fashion performed a review of the Bank's aging, adjustment
and collection policies, practices and procedures (Bank's
Procedures) with respect to the Accounts effective
September 17, 1993 (the "Audit Date") and concluded that
the Bank's Procedures are consistent with the Bank's
Procedures in the past and with Fashion's expectations.
In reliance on Fashion's conclusions, Bank agrees to
administer and operate the Accounts through the
Preliminary Settlement Date in accordance with Bank's
Procedures in effect on the Audit Date. Notwithstanding
the foregoing, the audit of Accounts and Account records
relating to the Accounts to be transferred to Fashion
commencing September 27, 1993 shall occur.
ARTICLE IX
COVENANT OF FASHION
Section 9.01 Use of Information. Fashion agrees that it will keep,
preserve and maintain the confidentiality of all nonpublic
information about and knowledge of Charge Customers and
the policies, plans and operations of the Bank with
respect to the Bank's Charge Plan and the Bank's business
in general.
ARTICLE X
Section 10.01 Indemnification. Each party shall indemnify and hold
harmless the other party and their respective present,
future and former officers, directors, employees, agents,
successors and assigns from and against any and all loss
(including, without limit, lost profits), liability,
claim, damage and expense (including, without limit,
attorney fees and expenses) arising out of or resulting
from or in connection with any breach of this Agreement by
the indemnifying party or any misrepresentation made by
the indemnifying party in this Agreement or in any
agreement, document, instrument or exhibit delivered by
the indemnifying party in connection herewith.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Entire Agreement. This Agreement, together with Annex I,
Annex II and Annex III, constitutes the entire Agreement
and supersede all prior agreements and understandings,
whether oral or written, (between Bank and Fashion) with
respect to the subject matter hereof.
Section 11.02 Amendment. This Agreement can be modified only by a
written instrument signed by the Bank and Fashion
referring specifically to this Agreement and the parties'
intent to amend it.
-14-
<PAGE> 15
Section 11.03 Successors and Assigns. Neither Bank nor Fashion shall
assign this Agreement except with the prior written
consent of the other party, which consent shall not
unreasonably be withheld. Bank consents to the assignment
of all of Fashion's rights and obligations under this
Agreement to Spirit of America National Bank. This
Agreement and all obligations and rights arising hereunder
shall be binding upon and inure to the benefit of the
parties hereto and their respective successors,
transferees and assigns.
Section 11.04 Governing Law. This Agreement shall be a contract made
under and governed by the internal laws of the State of
Ohio.
Section 11.05 Approvals. When approvals or consents are required in
context under this Agreement, such approvals or consents
shall not be unreasonably withheld, unless the text
provides that such approvals or consents shall be in the
discretion of the party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers or
representatives as of the date first above written.
FASHION SERVICE CORP.
By:
------------------------------
Its:
------------------------------
NATIONAL CITY BANK, COLUMBUS
By:
------------------------------
Its:
------------------------------
-15-
<PAGE> 16
ANNEX I
CALCULATION OF THE
ADJUSTED WEIGHTED PRICING PERCENTAGE
AND EXAMPLE OF PURCHASE PRICE CALCULATION
[
<PAGE> 17
]
-2-
<PAGE> 18
ANNEX II
METHODOLOGY TO CALCULATE THE PRELIMINARY
SETTLEMENT DATE FINANCE CHARGE PAYMENT DUE BANK
1. Bank will calculate an amount representing an estimate of the Bank's
portion of accrued unbilled finance charges from the last statement
cycle date up through the Record Date ("Estimated Unbilled Finance
Charges") with respect to the Accounts to be transferred to Fashion on
the Preliminary Settlement Date.
2. The Estimated Unbilled Finance Charges calculated by Bank shall be for
each Account transferred the product of a. the average daily balance
of each Account as of the Record Date, b. the Annual Percentage Rate
("APR") as of the Accounts last statement cycle date expressed as a
daily rate, and c. the number of days between the last statement cycle
date through and including the Record Date.
3. Bank will provide to Fashion at the Preliminary Settlement Date a
computer tape and report for all Accounts being transferred. Such
computer tape and report shall have the Account data sorted and
identified by the last statement cycle of the Bank prior to the Record
Date. The computer tape shall include for each Account:
Bank's Account Number
The APR, expressed as a daily rate x number of days from last
statement cycle date through and including the Record Date
The average daily balance of each Account as of the Record
Date for each Account transferred
The amount to avoid finance charges as calculated by the Bank
based on the last statement immediately prior to the Record
Date
The calculated Estimated Unbilled Finance Charges
4. Bank shall calculate the "Preliminary Settlement Date Finance Charge
Payment" using the following formula:
Preliminary = Estimated X Adjusted + Interest
Settlement Unbilled Weighted
Date Finance Pricing
Finance Charges Percentage
Charge
Payment
The following is a hypothetical example showing the calculation of the
Preliminary Settlement Date Finance Charge Payment, assuming payment
will be made by 12:00 Noon on the Preliminary Settlement Date:
<TABLE>
<S> <C>
Applicable Interest Rate 4%
Estimated Unbilled Finance Charge: $470,000.00
Adjusted Weighted Pricing Percentage: 93.01%
Record Date: 10/3/93
Preliminary Settlement Date: 10/6/93
Number of Days Between Record Date and
Preliminary Settlement Date: 2
Preliminary = $470,000 X .9301 + Interest
Settlement
Date
Finance
Charge
Payment = $437,147.00 + (437,147.00 X 2 X 4%)
-
365
= $437,147.00 + $95.81
= $437,242.81
</TABLE>
5. Fashion shall pay Bank the Preliminary Settlement Date Finance Charge
Payment on the Preliminary Settlement Date as required by Section
2.02.
<PAGE> 19
ANNEX III
METHODOLOGY TO CALCULATE UNBILLABLE FINANCE
CHARGE REBATE PAYMENT DUE FASHION
1. On or before the Final Settlement Date, Fashion will provide
to Bank a computer tape which will include the following data
for each transferred Account where the payments made between
the Record Date and the first statement cycle date after the
transfer, equal or exceed the amount to be paid to avoid
finance charges as calculated by the Bank and provided to
Fashion at the Preliminary Settlement Date:
Bank's Account Number
Total Payments, Credits, or Adjustments received
since the last statement date immediately prior to
the Record Date through the first statement cycle
date immediately after the Record Date
Total Amount of Estimated Unbilled Finance Charges to
be rebated ("Unbillable Finance Charges") subject to
paragraph 2 below
Total Amount to be paid to avoid finance charges
Date of last payment received
New Cycle Date
Fashion will provide a summary report to the Bank of the above
information which will summarize the data contained in the
computer tape.
2. On the Final Settlement Date, and based on the information
contained in the report described in 1 above, Bank shall pay
to Fashion an amount (the "Unbillable Finance Charge Rebate
Payment") as specified in Section 2.02 of the Agreement and as
computed in accordance with the methodology used in the
following hypothetical example of the calculation of
Unbillable Finance Charge Rebate Payment due Fashion:
<TABLE>
<S> <C>
Record Date: 10/3/93
Final Settlement Date: 11/2/93
Number of Days from the Record Date
up to the Final Settlement Date,
Assuming such payment will be made
by 12 Noon to Fashion on the Final
Settlement Date: 29
Applicable Interest Rate: 4%
Adjusted Weighted Pricing Percentage: 93.01%
Unbillable Finance Charges (obtained
from the Fashion Report): $190,000
Unbillable Finance Charge Rebate Payment, where:
Unbillable = Unbillable X Adjusted + Interest
Finance Finance Weighted
Charge Charges Pricing
Rebate Percentage
Payment
</TABLE>
3. Bank shall pay Fashion amount calculated above on the Final
Settlement Date as specified in Section 2.02 of the Agreement.
<TABLE>
<S> <C> <C> <C>
Unbilled = $190,000 X .9301 + Interest
Finance = $176,719 + ($176,719) X (29/365) X 4%)
Charge = $176,719 + ($561.63)
Rebate = $177,280.63
Payment
</TABLE>
<PAGE> 20
EXHIBIT A
Your Rights and Our Responsibilities After We Receive Your Written Notice.
We must acknowledge your letter within 30 days, unless we have corrected the
error by then. Within 90 days, we must either correct the error or explain why
we believe the bill was correct.
After we receive your letter, we cannot try to collect any amount you question,
or report you as delinquent. We can continue to bill you for the amount you
question, including finance charges, and we apply any unpaid amount against
your credit limit. You do not have to pay any questioned amount while we are
investigating, but you are still obligated to pay the parts of your bill that
are not in question.
If we find that we made a mistake on your bill, you will not have to pay any
finance charges related to any questioned amount. If we didn't make a mistake,
you may have to pay finance charges, and you will have to make up any missed
payments on the questioned amount. In either case, we will send you a
statement of the amount you owe and the date that it is due.
If you fail to pay the amount that we think you owe, we may report you as
delinquent. However, if our explanation does not satisfy you and you write to
us within 10 days telling us that you still refuse to pay, we must tell anyone
we report you to that you have a question about your bill. And, we must tell
you the name of anyone we reported you to. We must tell anyone we report you
to that the matter has been settled between us when it finally is.
If we don't follow these rules, we can't collect the first $50 of the
questioned amount, even if your bill was correct.
Special Rules for Credit Card Purchases
If you have a problem with the quality of property or services that you
purchased with a credit card, and you have tried in good faith to correct the
problem with the merchant, you may have the right to pay the remaining amount
due on the property or services. There are two limitations on this right:
(a) You must have made the purchase in your home state or, if not within
your home state, within 100 miles of your current mailing address; and
(b) The purchase price must have been more than $50.
These limitations do not apply if we own or operate the merchant, or if we
mailed you the advertisement of the property or services.
[SPIRIT OF AMERICA NATIONAL BANK LOGO]
Dear Valued Customer:
It is with great pleasure that we announce that effective as soon as you use
your new Fashion Bug Charge, your account will be transferred and serviced by
Spirit of America National Bank.
Spirit of America prides itself on being a leading credit servicing
organization who provides premium customer service and detailed attention to
the concerns of its credit customers throughout the country. With this change
you will find an improvement in our ability to service your account.
A new Spirit of America credit card is enclosed, along with a money saving
$5.00 discount coupon (on any purchase of $20 or more).
Thank you again for your loyal support and we look forward to seeing you at
our local Fashion Bug store soon!
Very Sincerely Yours,
/s/PHILIP WACHS
------------
Philip Wachs
President
[FASHION BUG FITS YOUR LIFE LOGO]
<PAGE> 21
NOTICE OF CHANGE IN TERMS
Effective on the first day of the first billing cycle that begins on or after
October 4, 1993 (referred to in this Notice as the "Effective Date"), the
current credit card program in which credit is extended to Fashion Bug charge
customers by BancOhio National Bank will be replaced with a new program in
which the new creditor will be Spirit of America National Bank ("Spirit of
America"). Spirit of America will extend credit to you with respect to any
outstanding balance in your existing account beginning on the Effective Date as
well as with respect to any new purchases made on or after the Effective Date.
A new Spirit of America credit card will be sent to you as a replacement for
your current card. Once the new credit card is received, you should destroy
your current card, as it will not be valid for use.
The new terms and conditions which will apply to your Spirit of America Credit
Card Account are set forth below in the Spirit of America Credit Card Agreement
(referred to in this Notice as the "New Program"). The key differences between
the New Program and the current BancOhio National Bank Credit Card Agreement
(referred to in this Notice as the "Current Program") are explained below:
1. Identity of Creditor: Under the New Program credit will be extended by
the Spirit of America National Bank, P.O. Box 5000, Milford, Ohio 45150.
Under the Current Program credit is extended by BancOhio National Bank,
4661 East Main Street, Columbus, Ohio 43251. Your new Account and the
Spirit of America Credit Card Agreement will continue to be governed
by Ohio and applicable federal law.
2. Balance-Computation Method: Under the New Program in all states, if a
finance charge is imposed, current purchases and unpaid finance charges
will be included in the balance on which finance charges are imposed.
For a full explanation of the balance-computation method under the New
Program, see paragraph 7 of the Spirit of America Credt Card Agreement
that appears below. Under the Current Program: (1) current purchases
are not included in the balance on which finance charges are imposed in
Massachusetts, Maine and Vermont, and (2) in all states unpaid finance
charges are not included in the balance on which finance charges are
imposed. As under the Current Program, under the New Program no finance
charge is imposed in any billing cycle in which there is no previous
balance or the New Balance is paid in full by the due date shown on your
billing statement.
3. Imposition of Late Fee: Under the New Program in all states if your
minimum payment is not received within 10 days after it is due, a Late
Fee of $5.00 will be added to your Account. Under the Current Program
this Late Fee is not imposed in Iowa, Massachusetts, and South Carolina.
4. Imposition of Returned Check Fee: Under the New Program in all states
if any check sent in partial or full payment on your Account is returned
unpaid, a Returned Check Fee of $10.00 will be imposed to cover
collection costs. Under the Current Program this Returned Check Fee is
not imposed in Iowa, Massachusetts and South Carolina.
* * *
ACCEPTANCE OF THESE CHANGES:
YOUR AGREEMENT UNDER THE CURRENT PROGRAM PROVIDES FOR THE POSSIBILITY OF A
CHANGE IN TERMS. IF YOU OR SOMEONE AUTHORIZED BY YOU MAKE A PURCHASE ON CREDIT
ON OR AFTER THE EFFECTIVE DATE, SUCH PURCHASE WILL CONSTITUTE YOUR AGREEMENT TO
THE NEW PROGRAM, INCLUDUNG THE NEW TERMS DESCRIBED IN THIS NOTICE. IN THAT
EVENT, THE TERMS OF THE NEW SPIRIT OF AMERICA CREDIT CARD AGREEMENT WILL BE
APPLIED TO THE ENTIRE OUTSTANDING BALANCE IN YOUR ACCOUNT, INCLUDING ANY
INDEBTEDNESS ARISING OUT OF THE PURCHASES MADE BEFORE THE EFFECTIVE DATE. IF
YOU DO NOT MAKE A PURCHASE ON CREDIT ON OR AFTER THE EFFECTIVE DATE, THE TERMS
OF THE CURRENT PROGRAM WILL CONTINUE TO BE APPLIED.
ADDITIONAL NOTICE TO SOUTH CAROLINA RESIDENTS: IF YOU DO NOT WANT TO CONTINUE
THE REVOLVING ACCOUNT UNDER THE NEW TERMS, WE WILL TERMINATE THE ACCOUNT AND
PERMIT YOU TO PAY THE EXISTING BALANCE UNDER THE TERMS IN EFFECT BEFORE THE
CHANGE IN TERMS. WHILE YOU MAY REQUEST THIS IN WRITING AT P.O. BOX 5000,
MILFORD, OHIO 45150, THIS WILL OCCUR AUTOMATICALLY IF YOU DO NOT USE THE
ACCOUNT ON OR AFTER THE ABOVE EFFECTIVE DATE. YOU MAY APPLY FOR A SEPARATE
REVOLVING ACCOUNT ON THE NEW TERMS.
<PAGE> 22
SPIRIT OF AMERICA CREDIT CARD AGREEMENT
1. Agreement Terms. In this Agreement, the words "you" and "your" mean
each person who signs this Spirit of America Credit Card Agreement
("Agreement"), receives the Spirit of America Credit Card ("Credit Card"),
or is permitted to use the Spirit of America Credit Card Account
("Account") that we open for you. The words "we," "us" and "our" mean
Spirit of America National Bank and any person to whom this Agreement may
be assigned.
2. Promise to Pay. In return for extending credit to you on this Account from
time to time, you promise to pay for all purchases you charge to
your Account, any Finance Charge, and all other charges mentioned below, in
U.S. dollars, according to the terms of this Agreement. You may pay your
Account by sending a banker's check, money order or your personal check.
We will not accept payment with insufficient postage or payment in cash or
stamps.
3. Use of your Account and the Card. You may use the Credit Card at any
Fashion Bug, Fashion Bug Plus or other merchants with which we are
affiliated with.
4. Line of Credit. We will establish an initial credit limit for you (called
"line of credit" in this Agreement) and we will tell you the amount
of your line of credit on the folder that contains your credit card and on
each monthly statement. We may increase or decrease your line of credit
from time to time. You agree not to exceed your line of credit, but, if you
do, you agree to immediately pay us any amount that exceeds your line of
credit.
5. Payments. You may pay all of your Account balance (the "New Balance") at
any time, but each month you must pay at least the Minimum Payment Due
within 25 days of the Billing Date shown on your monthly statement. The
Minimum Payment Due is any amount past due from prior months, any amount
that exceeds your line of credit, any Late Fee and Returned Check Charge,
plus the larger of $10 or 1/20th of the New Balance, rounded to the nearest
dollar. If your New Balance is less than $10, the entire New Balance is
due. For your convenience, you may pay your Account at any of our merchant
locations where the card is accepted and your payment will be posted to
your Account the next business day. Otherwise all payments must be mailed
to us at the address shown on your monthly statement. We can accept late
payments or partial payments or checks or money orders marked "payment in
full" without losing any of our rights under this Agreement. If you pay
more than the Minimum Payment Due, but less than the New Balance, the
excess amount is not applied to reduce the Minimum Payment Due in future
months. Unless otherwise required by law, we will apply your payments in
the following order: any Late Fees, Returned Check Fee, Finance Charge, and
the remainder to your balance for purchases, oldest purchases first.
6. Cost of Credit: There is no Finance Charge in any monthly billing period
(a) in which there is no balance at the beginning of the billing
period (the "Previous Balance" shown on your monthly statement) or (b) in
which payments received and credits issued, within 25 days after the
Billing Date shown on your statement, equal or exceed the balance at the
beginning of the billing period. If we do not receive the full amount due
(the "New Balance") within 25 days after the Billing Date, a Finance Charge
will be computed by applying a monthly periodic rate of 1.908% (ANNUAL
PERCENTAGE RATE 22.9%) to the Average Daily Balance. If the Finance Charge
computed by using the above-stated monthly periodic rate is less than $.50,
there is a minimum FINANCE CHARGE of $.50. Under Ohio Law we are permitted
to impose a Finance Charge at the rate of 25% per year.
7. Method of Computing Finance Charge: We figure the Finance Charge on your
Account by applying the above-stated monthly periodic rate to the "Average
Daily Balance" of your Account. To get the "Average Daily Balance" we take
the beginning balance of your Account each day, add any new purchases and
subtract any payments and credits. We do not add in Late Fee or Returned
Check Fee. This give us the daily balance. Then, we add up all the daily
balances for the billing cycle and divide the total by the number of days
in the billing cycle. This gives us the "Average Daily Balance."
8. Returned Check Fee. To the extent permitted by law, if the check sent to us
in partial or full payment on your Account is returned to us unpaid by
your bank, we may charge you a reasonable processing fee of $10.00 to cover
our collection costs. We will add such fee to your Account and to your next
Minimum Payment Due. We do not attempt to collect any check more than once,
or impose this fee for the same returned check more than once.
9. Late Fee. If your Minimum Payment Due is not received by us within 10 days
after it is due, we will impose a Late Fee not to exceed $5.00. We will add
this Late Fee to your Account and to your next Minimum Payment Due.
10. Canceling or Limiting Credit. We may limit or cancel your credit privileges
at any time for any reason not prohibited by law and with only such notice
as is required by law. We are
<PAGE> 23
not responsible for the refusal of anyone to accept or honor the Credit
Card.
11. Default and Collection. If you fail to pay any Minimum Payment when
due, if you declare bankruptcy, if you die or if you exceed your line of
credit, it will be a default, and, subject to any right you may have
under state law to receive notice of your default and to cure such
default, we may declare the entire unpaid balance in the Account due and
payable. If the Account is referred to an outside attorney and we prevail
in a suit against you, in addition to the full amount owed and any court
costs, you agree to pay our reasonable attorney's fees not to exceed 20%
of the amount due, or such lesser amount as may be permitted by
applicable law.
12. Credit Cards. Any Credit Card issued for your Account is our property.
You must sign the Credit Card before you first use it. You agree to
return our Credit Cards to us or our agent upon request. If you want to
cancel the authorized use of your Account or the Credit Card by another
person, you agree to notify us in writing and recover, cut in half, and
return to us any Credit Card in such person's possession. You may be
liable for unauthorized use that occurs after you notify us at P.O. Box
3000, Voorhees, NJ 08043, telephone number 1-800-634-1202, orally or in
writing, of the loss, theft, or possible unauthorized use. In any case,
your liability for unauthorized charges will not exceed $60.
13. Obtaining and Furnishing Credit Information. You give us permission to
investigate your credit standing by obtaining a credit report or by
directly contacting others who have information about you, including your
employer, in connection with your application for credit under this
Agreement and later in connection with an update, renewal, or extension
of credit under this Agreement. Upon your request, we will tell you if a
credit report was requested and, if it was, we will give you the name and
address of the credit bureau that furnished the report. You agree that we
may furnish information about your Account to credit bureaus and others
who in our discretion may properly receive such information.
14. Changes in this Agreement. We may change any term of this Agreement,
including the rate of Finance Charge, by furnishing you notice of the
change in the manner prescribed by law. To the extent permitted by
applicable law, any new terms may at our option be applied to any balance
existing in the Account at the time of the change, as well as to any
subsequent transactions.
15. Agreement Binding, Termination. You will be legally bound by this
Agreement if you sign the application to obtain credit from us or if you
use or permit someone else to use the credit provided. You may
terminate this Agreement by paying all amounts owed on your Account,
cutting the Credit Card(s) issued to you in half and returning the cut up
card(s) to us with a letter requesting termination of your Account.
16. Change of Address and Governing Law. You agree to notify us promptly in
writing if you move. Until we receive written notice of your new
address, we will continue to send monthly statements and other notices to
the address you gave on the application for this Account. You understand
that this Agreement is not binding until it is accepted by us in the
State of Ohio. The laws of the State of Ohio and federal laws govern this
Agreement.
Spirit of America National Bank
P.O. Box 5000
Milford, Ohio 45150
/s/ Kirk R. Simme
- ------------------------------
Kirk R. Simme
Vice President - Credit
YOUR BILLING RIGHTS - KEEP THIS NOTICE
FOR FUTURE USE
This notice contains important information about your rights and our
responsibilities under the Fair Credit Billing Act.
Notify us in Case of Errors or Questions About your Bill.
If you think your bill is wrong, or if you need more information about a
transaction on your bill, write us on a separate sheet at the address listed on
your bill. Write to us as soon as possible. We must hear from you no later than
60 days after we sent you the first bill on which the error or problem
appeared. You can telephone us, but doing so will not preserve your rights.
In your letter, give us the following information:
- Your name and account number.
- The dollar amount of the suspected error.
- Describe the error and explain, if you can, why you believe there is
an error. If you need more information, describe the item you are not
sure about.
