Exhibit 10.1.4
EXECUTION COPY
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RECEIVABLES PURCHASE AGREEMENT
Dated as of May 28, 1999
Among
CHARMING SHOPPES STREET, INC.
as Seller
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and
SPIRIT OF AMERICA, INC.
as Servicer
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and
CLIPPER RECEIVABLES CORPORATION
as Purchaser
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and
STATE STREET CAPITAL CORPORATION
as Administrator
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and
STATE STREET BANK & TRUST COMPANY
as Relationship Bank
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TABLE OF CONTENTS
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitments to Purchase; Limits on Purchaser's Obligations 2
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests 2
SECTION 1.03. Reinvestments of Certain Collections; Payment of Remaining Collections 2
SECTION 1.04. Asset Interest 4
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Purchaser's Total Investment 4
SECTION 2.02. Computation of Earned Discount 5
SECTION 2.03. Estimates of Earned Discount Rate, Fees, etc. 5
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures 5
SECTION 3.02. Deemed Collections; Reduction of Purchaser's Total Investment, Etc. 8
SECTION 3.03. Payments and Computations, Etc. 10
SECTION 3.04. Treatment of Collections and Deemed Collections 10
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees 12
SECTION 4.02. Yield Protection 12
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase 14
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments 16
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller 17
SECTION 6.02. Representations and Warranties of Servicer 20
ARTICLE VII
GENERAL COVENANTS OF SELLER AND SERVICER
SECTION 7.01. Affirmative Covenants of Seller and Servicer 22
SECTION 7.02. Reporting Requirements of Seller 23
SECTION 7.03. Negative Covenants of Seller 24
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer 28
SECTION 8.02. Duties of Servicer 29
SECTION 8.03. Rights of the Administrator 30
SECTION 8.04. Responsibilities of Seller 31
SECTION 8.05. Further Action Evidencing Purchases and Reinvestments 31
SECTION 8.06. Application of Collections 32
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest 32
SECTION 9.02. Further Assurances 33
SECTION 9.03. Remedies 33
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events 33
SECTION 10.02. Remedies 35
ARTICLE XI
THE ADMINISTRATOR; RELATIONSHIP BANK
SECTION 11.01. Authorization and Action 36
SECTION 11.02. Administrator's and Relationship Bank's Reliance, Etc. 36
SECTION 11.03. Xxxxx Xxxxxx Xxxxxxx xxx Xxxxx Xxxxxx Xxxx and Affiliates 36
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments 37
SECTION 12.02. Rights of Assignee 38
SECTION 12.03. Evidence of Assignment 38
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SECTION 12.04. Rights of the Banks and Collateral Agent 38
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities by Seller 38
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc. 40
SECTION 14.02. Notices, Etc. 41
SECTION 14.03. No Waiver; Remedies 41
SECTION 14.04. Binding Effect; Survival 41
SECTION 14.05. Costs, Expenses and Taxes 42
SECTION 14.06. No Proceedings 42
SECTION 14.07. Confidentiality of Program Information 42
SECTION 14.08. Confidentiality of Seller Information 44
SECTION 14.09. Captions and Cross References 45
SECTION 14.10. Integration 45
SECTION 14.11. Governing Law 45
SECTION 14.12. Waiver Of Jury Trial 46
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities 46
SECTION 14.14. Execution in Counterparts 46
SECTION 14.15. No Recourse Against Other Parties 46
SECTION 14.16. State Street Business Combination 47
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APPENDICES
APPENDIX A Definitions
SCHEDULES
SCHEDULE 5.01(h) Description of Opinions
SCHEDULE 6.01(j) Description of Litigation
SCHEDULE 6.01(n) List of Offices of Seller where Records Are Kept
SCHEDULE 7.01(g) Description of Credit and Collection Policy
EXHIBITS
EXHIBIT 3.01(a) Information Package to be Provided as of Cut-Off Date
EXHIBIT 14.02 Addresses
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RECEIVABLES PURCHASE AGREEMENT
Dated as of May 28, 1999
THIS IS A RECEIVABLES PURCHASE AGREEMENT, among CHARMING SHOPPES
STREET, INC., a Delaware corporation ("Seller"), SPIRIT OF AMERICA, INC., a
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Delaware corporation as Servicer ("Servicer") CLIPPER RECEIVABLES CORPORATION, a
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Delaware corporation ("Purchaser"), STATE STREET CAPITAL CORPORATION, a
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Massachusetts corporation ("State Street Capital"), as administrator for
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Purchaser under the Program Administration Agreement (in such capacity, the
"Administrator") and STATE STREET BANK & TRUST COMPANY, a national banking
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association, as a referral agent for Purchaser under the Relationship Bank
Agreement (in such capacity, together with any successors thereto in such
capacity, the "Relationship Bank" and in its individual capacity, "State Street
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Bank"). Unless otherwise indicated, capitalized terms used in this Agreement are
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defined in Appendix A.
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Background
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1. Seller is engaged in the business of purchasing receivables
originated by Spirit of America National Bank under Mastercard* and VISA(r)*
cards.
2. Seller has, and expects to have, Pool Receivables in which Seller
intends to sell an undivided interest. Seller has requested Purchaser, and
Purchaser has agreed, subject to the terms and conditions contained in this
Agreement, to purchase such undivided interest, referred to herein as the Asset
Interest, from Seller from time to time during the term of this Agreement.
3. Seller and Purchaser desire that, subject to the terms and
conditions of this Agreement, certain of the daily Collections in respect of the
Asset Interest be reinvested in Pool Receivables, which reinvestment shall
constitute part of the Asset Interest.
4. State Street Capital has been requested, and is willing, to act as
the Administrator.
5. State Street Bank has been requested, and is willing, to act as the
Relationship Bank.
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*Mastercard is a registered trademark of Mastercard International, Incorporated
and VISA is a registered trademark of VISA USA, Inc.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitments to Purchase; Limits on Purchaser's
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Obligations. Upon the terms and subject to the conditions of this Agreement,
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from time to time prior to the Termination Date, Seller may request that
Purchaser purchase from Seller ownership interests in the Pool Assets (each
being a "Purchase") and Purchaser shall make such Purchase; provided that no
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Purchase shall be made by Purchaser to the extent that, after giving effect
thereto, either (a) the then Purchaser's Total Investment would exceed the
lesser of (i) the Utilization Cap Amount, or (ii) $20,000,000 or such larger
amount as may be mutually agreed to in writing by the parties hereto (the
"Purchase Limit"), or (b) the Asset Interest would exceed the Allocation Limit;
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and provided further that each Purchase made pursuant to this Section 1.01 shall
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have a Purchase Price of at least $100,000 and shall be in integral multiples of
$100,000.
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests.
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(a) Notice of Purchase. Each Purchase from Seller by Purchaser shall be
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made on notice from Seller to the Administrator received by the Administrator
not later than 11:00 a.m. (New York City time) on the Business Day before the
date of such proposed Purchase. Each such notice of a proposed Purchase shall
specify the desired amount and date of such Purchase. The "Purchase Price" for
each Purchase shall be the lesser of (i) the amount requested by Seller pursuant
to this Section 1.02(a) and (ii) the amount permitted pursuant to Section 1.01.
(b) Funding of Purchase. On the date of each Purchase, Purchaser shall,
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upon satisfaction of the applicable conditions set forth in Article V, make
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available to the Administrator at the Administrator's Office (or to such account
as designated by the Administrator) the amount of its Purchase in same day
funds, and after receipt by the Administrator of such funds, the Administrator
will make such funds immediately available to Seller at such office or to such
account as Seller shall designate in writing to the Administrator on or prior to
the date hereof (or such other office or account as Seller shall designate from
time to time).
(c) Assignment of Asset Interests. Seller hereby sells, assigns and
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transfers to Purchaser, effective on and as of the date of each Purchase by the
Purchaser hereunder, the Asset Interest in the Pool Assets.
SECTION 1.03. Reinvestments of Certain Collections; Payment of
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Remaining Collections. (a) On the close of business on each Business Day during
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the period from the date
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hereof to the Final Payout Date, Servicer shall, out of all Collections received
on such day from Pool Receivables:
(i) determine the portion of such Collections attributable on
such day to the Asset Interest by multiplying (x) the amount of such
Collections times (y) the Asset Interest (expressed as a percentage of
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Net Pool Balance);
(ii) out of the portion of such Collections allocated to the
Asset Interest pursuant to clause (i), set aside and hold in trust for
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Purchaser an amount at least equal to the sum of the estimated amount
of Earned Discount accrued in respect of the Purchaser's Total
Investment (based on rate information provided by the Administrator
pursuant to Section 2.03), all other amounts due to Purchaser, the
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Administrator or the Relationship Bank hereunder and the Servicer's Fee
(in each case, accrued through such day) and an amount equal to any
Cash Collateral Shortfall and any Spread Account Shortfall not so
previously set aside; provided that unless the Administrator or the
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Relationship Bank shall request it to do so in writing (which writing
shall set forth the reason for such request), Servicer shall not be
required to hold Collections that have been set aside in a separate
deposit account containing only such Collections but shall, to the
extent any amount is set aside for any Cash Collateral Shortfall or any
Spread Account Shortfall deposit such amount in the RPA Cash Collateral
Account or Spread Account, as applicable;
(iii) apply the Collections allocated to the Asset Interest
pursuant to clause (i) and not required to be set aside pursuant to
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clause (ii) to the purchase from Seller of ownership interests in Pool
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Assets (each such purchase being a "Reinvestment"); provided that (A)
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if the then Asset Interest, expressed as a percentage of Net Pool
Balance, would exceed the Allocation Limit, then, Servicer shall not
reinvest, but shall set aside and hold for the benefit of Purchaser, a
portion of such Collections which, together with other Collections
previously set aside and then so held, shall equal the amount necessary
to reduce the Asset Interest to the Allocation Limit; (B) if the
conditions precedent to Reinvestment in Section 5.02 are not satisfied
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then Servicer shall not reinvest, but shall set aside and hold for the
benefit of Purchaser, any of such remaining Collections; and (C) if the
Seller shall have requested a reduction in the Purchaser's Total
Investment, then, during the times specified in Section 3.02(b)(ii),
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Servicer shall not reinvest, but shall set aside and hold for the
benefit of Purchaser, a portion of such Collections until the amount
thereof not so reinvested shall equal the amount of such reduction; and
(iv) pay to Seller (A) the portion of such Collections not
allocated to the Asset Interest pursuant to clause (i) and (B) the
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Collections applied to Reinvestment pursuant to clause (iii).
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(b) Unreinvested Collections. Servicer shall set aside and hold in
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trust for the benefit of Purchaser all Collections which pursuant to clause
(iii) of Section 1.03(a), may not be ------
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reinvested in Pool Assets; provided that unless the Administrator or the
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Relationship Bank shall request it to do so in writing (which writing shall set
forth the reason for such request), Servicer shall not be required to hold
Collections that have been set aside in a separate deposit account containing
only such Collections. If, prior to the date when such Collections are required
to be paid to the Administrator for the benefit of Purchaser pursuant to Section
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3.01, the amount of Collections so set aside exceeds the amount, if any,
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necessary to reduce the Asset Interest to the Allocation Limit, and the
conditions precedent to Reinvestment set forth in Section 5.02 are satisfied,
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then the Servicer shall apply such Collections (or, if less, a portion of such
Collections equal to the amount of such excess) to the making of a Reinvestment.
(c) Reduction of Purchaser's Total Investment. The Purchaser's Total
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Investment shall not be reduced by the amount of Collections set aside pursuant
to this Section unless and until such Collections are actually delivered to the
Administrator pursuant hereto.
SECTION 1.04. Asset Interest.(a) Components of Asset Interest.
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On any date the Asset Interest will represent Purchaser's combined undivided
percentage ownership interest in (i) all then outstanding Pool Receivables, (ii)
related Contracts, (iii) all Related Security with respect to such Pool
Receivables, (iv) the Accounts, (v) all Collections with respect to, and other
proceeds of, such Pool Receivables, Contracts and Related Security as at such
date, (vi) all rights of Seller (directly or as assignee of Parent) under the
First Tier Agreement, the Second Tier Agreement, the ES Agreement and the Cap
Agreements, (vii) all books and records evidencing or related to the foregoing,
and (viii) all proceeds of the foregoing (collectively, the "Pool Assets").
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(b) Computation of Asset Interest. On any date, the Asset Interest
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shall be equal to a fraction (expressed as a percentage), the numerator of which
is the Purchaser's Total Investment and the denominator of which is the Net Pool
Balance, each as of such day; provided, however, that during the Liquidation
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Period, the Asset Interest shall be the Asset Interest computed as of the day
immediately preceding the commencement of the Liquidation Period; provided,
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further, that the Asset Interest shall not exceed 100%.
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(c) Frequency of Computation. The Asset Interest shall be computed as
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of the Cut-Off Date for each Settlement Period. In addition, the Administrator
may require Servicer to provide an Information Package for purposes of computing
the Asset Interest as of any other date, utilizing the then most recently
available information, and the Servicer agrees to do so within three Business
Days of its receipt of the Administrator's written request.
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Purchaser's Total Investment. In making
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any determination of Purchaser's Total Investment, the following rules shall
apply:
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(a) Purchaser's Total Investment shall not be considered reduced by any
allocation, setting aside or distribution of any portion of Collections unless
such Collections shall have been actually delivered to the Administrator
pursuant hereto; and
(b) Purchaser's Total Investment shall not be considered reduced by any
distribution of any portion of Collections if at any time such distribution is
rescinded or otherwise returned for any reason.
SECTION 2.02. Computation of Earned Discount. In making any
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determination of Earned Discount, the following rules shall apply:
(a) the Administrator shall determine the Earned Discount accruing with
respect to the Purchaser's Total Investment, in accordance with the definition
of Earned Discount;
(b) no provision of this Agreement shall require the payment or permit
the collection of Earned Discount in excess of the maximum permitted by
applicable law; and
(c) Earned Discount shall not be considered paid by any distribution if
at any time such distribution is rescinded or otherwise returned for any reason.
SECTION 2.03. Estimates of Earned Discount Rate, Fees, etc. For
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purposes of determining the amounts required to be set aside by Servicer
pursuant to Section 1.03, the Administrator shall notify Servicer from time to
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time of the Earned Discount Rate applicable to the Purchaser's Total Investment
and the rates at which fees and other amounts are accruing hereunder. It is
understood and agreed that (i) the Earned Discount Rate may change from time to
time, (ii) certain rate information provided by the Administrator to Servicer
shall be based upon the Administrator's good faith estimate, (iii) the amount of
Earned Discount actually accrued with respect to any Settlement Period may
exceed, or be less than, the amount set aside with respect thereto by Servicer,
and (iv) the amount of fees or other payables accrued hereunder with respect to
any Settlement Period may exceed, or be less than, the amount set aside with
respect thereto by Servicer. Failure to set aside any amount so accrued shall
not relieve Servicer of its obligation to remit Collections to the Administrator
with respect to such accrued amount, as and to the extent provided in Section
3.01. ------- ---- ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures.
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The parties hereto will take the following actions with respect to each
Settlement Period:
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(a) Information Package. On the seventh Business Day following the
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Cut-Off Date for such Settlement Period or as otherwise may be requested
pursuant to Section 1.04(c), Servicer shall deliver to the Relationship Bank and
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the Administrator a diskette containing the information described in Exhibit
3.01(a) (each, an "Information Package"). -------
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(b) Earned Discount; Other Amounts Due. On the first Business Day
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following such Cut-Off Date, the Administrator shall notify Servicer of (i) the
amount of Earned Discount that will have accrued in respect of the Purchaser's
Total Investment during such Settlement Period, and (ii) all fees and other
amounts accrued and payable by Seller under this Agreement (other than
Purchaser's Total Investment).
(c) Settlement Date Procedure - Reinvestment Period. On the fifteenth
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day of each month, or if such day is not a Business Day, the next succeeding
Business Day (each, a "Settlement Date") prior to the Termination Date, the
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Servicer shall distribute, from Available Funds for such Settlement Date, the
following amounts in the following order:
(1) to the Administrator, an amount equal to the Earned
Discount accrued during such Settlement Period, plus any previously
accrued Earned Discount not paid on a prior Settlement Date, which
amount shall be distributed by the Administrator to the Purchaser for
application to such Earned Discount;
(2) to the Administrator, an amount equal to the Program Fee
and the Commitment Fee accrued during such Settlement Period, plus any
previously accrued Program Fee and Commitment Fee not paid on a prior
Settlement Date;
(3) to the Servicer, if the Servicer is not Seller or one of
its Affiliates, an amount equal to the Servicer's Fee accrued during
such Settlement Period, to the extent that such Servicer's Fee does not
exceed the Servicer's Fee that would have accrued if such Servicer's
Fee had been calculated using a Servicer's Fee Rate of 2%;
(4) to the Administrator, an amount equal to the amount, if
any, necessary to reduce the Asset Interest to the Allocation Limit and
to reduce the Purchaser's Total Investment in accordance with Section
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3.02(b), which amount shall be distributed by the Administrator to the
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Purchaser for application to the Purchaser's Total Investment;
(5) to the Administrator, all other amounts then due under
this Agreement to the Administrator, the Relationship Bank, the
Purchaser, the Affected Parties or the Indemnified Parties;
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(6) to the Servicer, an amount equal to the Servicer's Fee
accrued during such Settlement Period to the extent not paid pursuant
to subparagraph (3) above, plus any previously accrued Servicer's Fee
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not paid on a prior Settlement Date;
(7) to the RPA Cash Collateral Account, to the extent
necessary to cause funds on deposit therein to equal the RPA Required
Cash Collateral Amount;
(8) to the Spread Account, to the extent required under the
terms of the Spread Account Agreement; and
(9) to the Seller, any remaining amounts; provided, however,
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that if the Seller shall so instruct the Administrator, funds that
would otherwise be paid to the Seller under this clause shall be
deposited in the RPA Cash Collateral Account.
(d) Settlement Date Procedure - Liquidation Period. On each Settlement
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Date during the Liquidation Period, the Servicer shall distribute, from
Available Funds for such Settlement Date, the following amounts in the following
order:
(1) to the Administrator, an amount equal to the Earned
Discount accrued during such Settlement Period, plus any previously
accrued Earned Discount not paid on a prior Settlement Date, which
amount shall be distributed by the Administrator to the Purchaser for
application to such Earned Discount;
(2) to the Administrator, an amount equal to the Program Fee
and Commitment Fee accrued during such Settlement Period, plus any
previously accrued Program Fee and Commitment Fee not paid on a prior
Settlement Date;
(3) to the Servicer, if the Servicer is not Seller or one of
its Affiliates, an amount equal to the Servicer's Fee accrued during
such preceding Settlement Period, to the extent that such Servicer's
Fee does not exceed the Servicer's Fee that would have accrued if such
Servicer's Fee had been calculated using a Servicer's Fee Rate of 2%;
(4) to the Administrator, an amount equal to any remaining
Purchaser's Share of Collections until the Purchaser's Total Investment
is reduced to zero, which amount shall be distributed by the
Administrator to the Purchaser for application to the Purchaser's Total
Investment;
(5) to the Administrator, all other amounts then due under
this Agreement to the Administrator, the Relationship Bank, the
Purchaser, the Affected Parties or the Indemnified Parties;
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(6) to the Servicer, an amount equal to the Servicer's Fee
accrued during such Settlement Period, to the extent not paid pursuant
to subparagraph (3) above, plus any previously accrued Servicer's Fee
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not paid on a prior Settlement Date; and
(7) to the Seller, any remaining amounts.
(e) Order of Application of Purchaser's Total Investment. Upon
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receipt by the Administrator of funds distributed pursuant to this Section 3.01
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with respect to any Settlement Period on account of Purchaser's Total
Investment, the Administrator shall apply them to the items specified in the
subclauses below, in the order of priority of such subclauses:
(i) to that portion of the Purchaser's Total Investment funded by
Liquidity Fundings until such portion has been reduced to zero;
(ii) to that portion of the Purchaser's Total Investment funded
by Commercial Paper Notes until such portion has been reduced to zero;
and
(iii) to the remaining portion of the Purchaser's Total
Investment until the Purchaser's Total Investment has been reduced to
zero.
(f) Non-Distribution of Servicer's Fee. Unless the Administrator gives
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written notice to the contrary to Servicer (which notice may be given at any
time), from and after the date on which the amounts (if any) set aside pursuant
to Section 1.03 for any Settlement Period in respect of payments required to be
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made prior to the payment of the Servicer's Fee on the related Settlement Date
are sufficient to make such payments, the amounts (if any) set aside pursuant to
Section 1.03 in respect of the Servicer's Fee may be paid to Servicer, in which
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case no distribution shall be made in respect of Servicer's Fee pursuant to
clause (c) or (d) above.
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(g) Delayed Payment. If on any day described in this Section 3.01
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because Collections during the relevant Settlement Period were less than the
aggregate amounts payable, Servicer shall not make any payment otherwise
required, the next available Collections in respect of the Asset Interest shall
be applied to such payment, and no Reinvestment shall be permitted hereunder
until such amount payable has been paid in full.
SECTION 3.02. Deemed Collections; Reduction of Purchaser's Total
Investment, Etc. --------------------------------------------------
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(a) Deemed Collections. If on any day
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(i) the Unpaid Balance of any Pool Receivable is
(A) reduced as a result of any defective, rejected or returned
merchandise or services, any cash discount, or any incorrect billing
or other adjustment by Seller or any Affiliate of Seller,
(B) reduced or canceled as a result of a setoff in respect of any
claim by the Obligor thereof against Seller or any Affiliate of Seller
or any other Person (whether such claim arises out of the same or a
related or an unrelated transaction), or
(C) reduced on account of the obligation of Seller to pay to the
related Obligor any rebate or refund, or
(D) less than the amount included in calculating the Net Pool
Balance for purposes of any Information Package, or
(ii) any of the representations or warranties of Seller set forth in
Section 6.01(l) or (p) were not true when made with respect to any Pool
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Receivable, or any of the representations or warranties of Seller set forth
in Section 6.01(l) are no longer true with respect to any Pool Receivable,
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then, on such day, Seller shall be deemed to have received a Collection of such
Pool Receivable
(I) in the case of clause (i) above, in the amount of such
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reduction or cancellation or the difference between the actual Unpaid
Balance and the amount included in calculating such Net Pool Balance,
as applicable; and
(II) in the case of clause (ii) above, in the amount of the
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Unpaid Balance of such Pool Receivable.
(b) Seller's Optional Reduction of Purchaser's Total Investment. Seller
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may at any time elect to reduce the Purchaser's Total Investment as follows:
(i) Seller shall give the Administrator at least three Business Days'
prior written notice of such reduction (including the amount of such
proposed reduction and the proposed date on which such reduction will
commence),
(ii) on the proposed date of commencement of such reduction and on each
day thereafter, Servicer shall refrain from reinvesting Collections
pursuant to Section 1.03 until the amount thereof not so reinvested shall
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equal the amount of such reduction, and
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(iii) Servicer shall hold such Collections in trust for Purchaser,
pending payment to the Administrator, as provided in Section 3.01;
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provided that,
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(A) the amount of any such reduction shall be not less than
$100,000 and the Purchaser's Total Investment after giving effect to
such reduction shall be not less than $100,000 (unless such reduction
reduces Purchaser's Total Investment to zero), and
(B) Seller shall use reasonable efforts to attempt to choose
a reduction amount, and the date of commencement thereof, so that such
reduction shall commence and conclude in the same Settlement Period to
the extent possible.
SECTION 3.03. Payments and Computations, Etc.
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(a) Payments. All amounts to be paid or deposited by Seller or Servicer
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to the Administrator or any other Person hereunder (other than amounts payable
under Section 4.02) shall be paid or deposited in accordance with the terms
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hereof no later than 11:00 a.m. (New York City time) on the day when due in
lawful money of the United States of America in same day funds (i) in the case
of amounts to be paid or deposited in respect of accrued and unpaid Earned
Discount or in reduction of Purchaser's Total Investment, to the Collateral
Agent at First National Bank of Chicago, Chicago, Illinois, for credit to such
account as the Administrator shall specify and (ii) in the case of all fees,
expenses and other amounts (other than amounts payable under Section 4.02), to
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the Administrator at Xxxxx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx, for credit to
such account as the Administrator shall specify.
(b) Late Payments. Seller or Servicer, as applicable, shall, to the
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extent permitted by law, pay to Purchaser interest on all amounts not paid or
deposited when due hereunder at 1% per annum above the Alternate Base Rate,
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payable on demand, provided, however, that such interest rate shall not at any
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time exceed the maximum rate permitted by applicable law.
(c) Method of Computation. All computations of interest, Earned
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Discount, any fees payable under Sections 4.01(a) and (b) and any other fees
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payable by Seller to Purchaser, the Administrator or the Relationship Bank in
connection with Purchases or the Asset Interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) elapsed.
SECTION 3.04. Treatment of Collections and Deemed Collections. Seller
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shall forthwith deliver to Servicer all Collections deemed received by Seller
pursuant to Section 3.02(a), and Servicer shall hold or distribute such
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Collections as Earned Discount, accrued Servicer's Fee, repayment of Purchaser's
Total Investment, etc. to the same extent as if such Collections had actually
been received on the date of such delivery to Servicer. If Collections are
8285314.23 50202 1039C 96242151
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then being paid to the Collateral Agent, or lock boxes or accounts directly or
indirectly owned or controlled by the Collateral Agent, Servicer shall forthwith
cause such deemed Collections to be paid to the Collateral Agent or to such lock
boxes or accounts, as applicable, or as the Collateral Agent shall request in
writing. So long as Seller shall hold any Collections or deemed Collections
required to be paid to Servicer, the Administrator or Collateral Agent, it shall
hold such Collections in trust and shall clearly xxxx its records to reflect
such trust; provided that unless the Administrator or the Relationship Bank
shall request it to do so in writing, Seller shall not be required to hold such
Collections in a separate deposit account containing only such Collections.
SECTION 3.05. Establishment of RPA Cash Collateral Account.
--------------------------------------------
(a) The Administrator, for the benefit of the Purchaser and the
Liquidity Banks, shall establish and maintain an account (the "RPA Cash
--------
Collateral Account"). The RPA Cash Collateral Account shall be under the sole
------------------
dominion and control of the Administrator. The Servicer shall from time to time
deposit in the RPA Cash Collateral Account (i) a portion of the proceeds of
fundings under this Agreement, and (ii) funds otherwise payable to the Seller
under Section 3.01(c) (7) and (9).
---------------------------
(b) Funds on deposit in the RPA Cash Collateral Account shall be
invested by the Administrator in Permitted Investments at the direction of
Seller. Such investments made at any time will mature so that funds will be
available for withdrawal no later than the following Settlement Date. All
earnings on such investment during any such Settlement Period shall be deemed
to be Collections for such Settlement Period.
(c) The Administrator shall maintain investments in the RPA Cash
Collateral Account in such manner as will maintain the perfection and priority
of the Administrator's lien thereon.
(d) If on any Settlement Date, a Shortfall shall exist, the
Administrator shall withdraw from the RPA Cash Collateral Account (in an amount
equal to the lesser of such Shortfall or the amount on deposit in the RPA Cash
Collateral Account) and apply such withdrawing funds in the same manner as
Collections pursuant to Section 3.01.
------------
(e) If on any Settlement Date the funds on deposit in the RPA Cash
Collateral Account (exclusive of earnings on the investment of such funds)
shall exceed the RPA Required Cash Collateral Amount, the Administrator shall
withdraw such excess and pay such excess to Seller.
SECTION 3.06. Spread Account. If, on any Settlement Date, a Shortfall
--------------
shall remain after giving effect to any applications from the RPA Cash
Collateral Account pursuant to Section 3.05(d), the Servicer shall cause funds
---------------
to be withdrawn from the Spread Account (to the
-11-
extent available under the terms of the Spread Account Agreement) in the amount
of such remaining Shortfall and applied in the same manner as Collections
pursuant to Section 3.01.
------------
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees.
----
(a) Arrangement Fee. Seller shall pay to the Relationship Bank, an
---------------
arrangement fee ("Arrangement Fee") payable on such dates and in such amounts as
---------------
are set forth in the letter dated the date hereof from the Relationship Bank to
Seller.
(b) Other Fees. Seller shall pay to Purchaser certain fees, payable on
----------
such dates and in such amounts as are set forth in the letter dated the date
hereof from the Relationship Bank to Seller (as amended from time to time, the
"Fee Letter").
----------
SECTION 4.02. Yield Protection.
----------------
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after
the date hereof:
(A) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board, but excluding any reserve included in the determination
of Earned Discount), special deposit or similar requirement against
assets of any Affected Party, deposits or obligations with or for the
account of any Affected Party or with or for the account of any
affiliate (or entity deemed by the Federal Reserve Board to be an
affiliate) of any Affected Party, or credit extended by any Affected
Party; or
(B) shall change the amount of capital maintained or
required or requested or directed to be maintained by any Affected
Party;
(C) shall impose any other condition affecting any Asset
Interest owned or funded in whole or in part by any Affected Party, or
its obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor; or
(D) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or a successor thereto)
assesses, deposit insurance premiums or similar charges;
and the result of any of the foregoing is or would be:
8285314.23 50202 1039C 96242151
-12-
(x) to increase the cost to (or in the case of Regulation D
referred to above, to impose a cost on) an Affected Party funding or
making or maintaining any Purchases or Reinvestments, any purchases,
reinvestments, or loans or other extensions of credit under the
Liquidity Agreement, or any Credit Draw, or any commitment of such
Affected Party with respect to any of the foregoing,
(y) to reduce the amount of any sum received or receivable by
an Affected Party under this Agreement, or under the Liquidity
Agreement or the Credit Agreement with respect thereto, or
(z) in the reasonable determination of such Affected Party, to
reduce the rate of return on the capital of an Affected Party as a
consequence of its obligations hereunder or arising in connection
herewith to a level below that which such Affected Party could
otherwise have achieved but for Regulation D or such Regulatory Change,
then within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis of such demand), Seller
shall pay directly to such Affected Party such additional amount or amounts as
will compensate such Affected Party for such additional or increased cost or
such reduction. This Section 4.02(a) shall not apply to taxes.
---------------
(b) Each Affected Party will promptly notify Seller and the
Administrator of any event of which it has knowledge which will entitle such
Affected Party to compensation pursuant to this Section 4.02; provided, however,
------------ -------- -------
no failure to give or delay in giving such notification shall adversely affect
the rights of any Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this
Section 4.02, an Affected Party may use any reasonable averaging and attribution
------------
methods that it (in its sole discretion) shall deem applicable. Any Affected
Party when making a claim under this Section 4.02 shall submit to Seller a
------------
statement as to such increased cost or reduced return (including calculation
thereof in reasonable detail), which statement shall, in the absence of
demonstrable error, be conclusive and binding upon Seller.
(d) Purchaser agrees that it shall use its reasonable best efforts to
take any action that will avoid the need to pay, or reduce the amount of, any
increased amounts referred to in paragraph (a); provided that Purchaser shall
------------- --------
not be obligated to take any actions that would, in the reasonable opinion of
Purchaser, be disadvantageous to Purchaser.
(e) Subject to Section 4.02(g), any and all payments made under this
---------------
Agreement shall be made free and clear of, and without deduction for, any and
all present or future Taxes. If any amount of Taxes shall be required by law to
be deducted from or in respect of any sum payable hereunder to any Foreign
assignee or participant of Purchaser, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions
-13-
applicable to additional sums payable under this Section 4.02(e)), such Foreign
----------------
assignee or participant of Purchaser, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
Seller shall make such deductions and (iii) Seller shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(f) Each Foreign assignee or participant of Purchaser, on or prior to the
date pursuant to which it becomes an assignee or participant of Purchaser, and
from time to time thereafter if requested in writing by Seller (unless such
Foreign assignee or participant of Purchaser can no longer lawfully do so due to
a change in law subsequent to the date it became an assignee or participant of
Purchaser hereunder), shall provide Seller with Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Foreign assignee or participant of
Purchaser is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest to zero or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States.
(g) For any period with respect to which a Foreign assignee or participant
of Purchaser has failed to provide the Seller with the appropriate form
described in Section 4.02(f) (other than if such failure is due to a change in
---------------
law occurring subsequent to the date on which a form originally was required to
be provided), such Foreign assignee or participant of Purchaser shall not be
entitled to payments of additional amounts under Section 4.02(e).
---------------
SECTION 4.03. Funding Losses. In the event that the Purchaser or any
--------------
Liquidity Bank shall incur any loss or expense (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Purchaser or such Liquidity Bank to make any Purchase or
Liquidity Funding or maintain any Purchase or Liquidity Funding) as a result of
(i) any settlement with respect to any portion of Purchaser's Total Investment
being made on any day other than a Settlement Date, or (ii) any Purchase not
being made in accordance with a request therefore under Section 1.02 (other than
------------
by reason of (a) a default by the Purchaser or such Liquidity Bank, (b)
Purchaser's failure to make available to the Administrator the required funds as
set forth in Section 1.02(b) or (c) the Administrator's failure to make
---------------
available the required funds to Seller as set forth in Section 1.02(b)), then,
----------------
upon written notice from the Administrator to Seller and Servicer, Seller shall
pay to Servicer, and Servicer shall pay to the Administrator for the account of
the Purchaser or such Liquidity Bank, the amount of such loss or expense. Such
written notice (which shall include calculations in reasonable detail) shall, in
the absence of manifest error, be conclusive and binding upon the Seller and
Servicer.
-14-
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase. The initial
----------------------------------------
Purchase hereunder is subject to the condition precedent that the Administrator
shall have received, on or before the Initial Funding Date, the following, each
(unless otherwise indicated) dated such date and in form and substance
satisfactory to the Administrator:
(a) A copy of the resolutions of the Board of Directors of
each Transferor approving the Transaction Documents to be delivered by
it and the transactions contemplated thereby, certified by its
Secretary or Assistant Secretary;
(b) A good standing certificate for each Transferor issued by
the jurisdiction of its formation.
(c) A certificate of the Secretary or Assistant Secretary of
each Transferor certifying the names and true signatures of the
officers authorized on its behalf to sign the Transaction Documents to
be delivered by it (on which certificate the Administrator and
Purchaser may conclusively rely until such time as the Administrator
shall receive from Seller a revised certificate meeting the
requirements of this subsection (c));
---------------
(d) The organizational documents of each Transferor, duly
certified by its Secretary or Assistant Secretary;
(e) Such proper financing statements (Form UCC-1), to be filed
against the Transferors, as may be necessary or, in the opinion of the
Administrator, desirable under the UCC or any comparable law of all
appropriate jurisdictions to perfect Purchaser's interests in the Pool
Assets;
(f) A search report provided in writing to the Administrator,
listing all effective financing statements that name a Transferor as
debtor and that are filed in the jurisdictions in which filings were
made pursuant to subsection (e) above and in such other jurisdictions
--------------
that Administrator shall reasonably request, together with copies of
such financing statements (none of which shall cover any Pool Assets);
(g) A list of the Lock-Box Banks, and duly executed copies of
Lock-Box Agreements with each of the Lock-Box Banks;
(h) Favorable opinions of counsel to the Transferors, in form
and substance reasonably satisfactory to the Administrator and with
respect to such matters as are set forth in Schedule 5.01(h);
-15-
(i) Such powers of attorney as the Administrator shall
reasonably request to enable the Administrator to collect all amounts
due under any and all Pool Receivables;
(j) A pro forma Information Package, prepared in respect of
--- -----
the proposed initial Purchase, assuming a Cut-Off Date of no more than
3 Business Days prior to the Initial Funding Date;
(k) Fully executed copies of the First Tier Agreement, the
Second Tier Agreement, the Spread Account Agreement, the ES Agreement,
the SA Bank Security Agreement and the Specified Supplement, each of
which agreements shall be in form and substance reasonably satisfactory
to the Administrator;
(l) The Liquidity Agreements, each duly executed by Purchaser,
the Liquidity Agent and each Liquidity Bank;
(m) Written approval by the Credit Bank of this Agreement and
the transactions contemplated hereby;
(n) Letters from the rating agencies then rating the
Commercial Paper Notes, confirming in effect that the existing ratings
of the Commercial Paper Notes will remain in effect after giving effect
to the transactions contemplated hereby; and
(o) The Fee Letter, duly executed by Seller.
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments.
-------------------------------------------------------
Each Purchase (including the initial Purchase) and each Reinvestment hereunder
shall be subject to the further conditions precedent that on the date of such
Purchase or Reinvestment the following statements shall be true (and Seller by
accepting the amount of such Purchase or by receiving the proceeds of such
Reinvestment shall be deemed to have certified that):
(a) the representations and warranties contained in Section
-------
6.01 are correct in all material respects on and as of such day as
----
though made on and as of such day and shall be deemed to have been made
on such day,
(b) no event has occurred and is continuing, or would result
from such Purchase or Reinvestment, that constitutes a Liquidation
Event or Unmatured Liquidation Event,
(c) after giving effect to each proposed Purchase or
Reinvestment, (i) Purchaser's Total Investment will not exceed the
Purchase Limit, and (ii) the Asset Interest, expressed as a percentage
of Net Pool Balance, will not exceed the Allocation Limit,
-16-
(d) the Termination Date shall not have occurred,
(e) the aggregate amount on deposit in the RPA Cash Collateral
Account (after giving effect to such Purchase or Reinvestment and any
deposit to the RPA Cash Collateral Account but excluding any earnings
on the investment of such amount), shall not be less than the RPA
Required Cash Collateral Amount; and
(f) the Spread Account Amount (after giving effect to such
Purchase or Reinvestment and any deposit to the Spread Account Amount)
shall not be less than the Required Spread Account Amount,
provided, however, the absence of the occurrence and continuance of an Unmatured
-------- -------
Liquidation Event shall not be a condition precedent to any Reinvestment or any
Purchase which does not cause the Purchaser's Total Investment, after giving
effect to such Reinvestment or Purchase, to exceed the Purchaser's Total
Investment as of the opening of business of the day of such Reinvestment or
Purchase.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller. Seller
----------------------------------------
represents and warrants as follows:
(a) Organization and Good Standing. Seller has been duly
------------------------------
organized and is validly existing as a corporation in good standing
under the laws of Delaware, with power and authority to own its
properties and to conduct its business as such properties are presently
owned and such business is presently conducted, and had at all relevant
times, and now has, all necessary power, authority, and legal right to
acquire and own the Pool Receivables.
(b) Due Qualification. Seller is duly qualified to do business
-----------------
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
failure to so qualify or obtain such licenses or approvals would have a
Material Adverse Effect.
(c) Power and Authority; Due Authorization. Seller (i) has all
--------------------------------------
necessary power, authority and legal right to (A) execute and deliver
the Transaction Documents to which it is a party, (B) carry out the
terms of the Transaction Documents to which it is a party, and (C) sell
and assign the Asset Interest on the terms and conditions herein
provided and (ii) has duly authorized by all necessary corporate action
the execution,
-17-
delivery and performance of the Transaction Documents to which it is a
party and the sale and assignment of the Asset Interest on the terms
and conditions herein provided.
(d) Valid Sale; Binding Obligations. This Agreement
-------------------------------
constitutes a valid sale, transfer, and assignment of the Asset
Interest to Purchaser, enforceable against creditors of, and purchasers
from, Seller; and this Agreement constitutes, and each other
Transaction Document to be executed by Seller when duly executed and
delivered will constitute, a legal, valid and binding obligation of
Seller enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
(e) No Violation. The consummation of the transactions
------------
contemplated by the Transaction Documents and the fulfillment of the
terms thereof will not (i) conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, (A) the articles of
incorporation or bylaws of Seller, or (B) in any material respect, any
indenture, loan agreement, receivables purchase agreement, mortgage,
deed of trust, or other agreement or instrument to which Seller is a
party or by which it or any of its properties is bound, (ii) result in
the creation or imposition of any Lien upon any of Seller's properties
pursuant to the terms of any such indenture, loan agreement,
receivables purchase agreement, mortgage, deed of trust, or other
agreement or instrument, other than the Transaction Documents, or (iii)
violate any law or any order, rule, or regulation applicable to Seller
of any court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending, or, to Seller's knowledge, threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality (i) asserting the invalidity of any
Transaction Document to which Seller is a party, (ii) seeking to
prevent the sale and assignment of any Asset Interest or the
consummation of any of the other transactions contemplated by any
Transaction Document to which Seller is a party, or (iii) seeking any
determination or ruling that might have a Material Adverse Effect.
(g) Bulk Sales Act. No transaction contemplated hereby
--------------
requires compliance with any bulk sales act or similar law.
(h) Government Approvals. No authorization or approval or
--------------------
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by Seller of this Agreement or any other
Transaction Document, except for the filing of the UCC financing
------
statements referred to
-18-
in Article V, all of which, at the time required in Article V, shall
--------- ---------
have been duly made and shall be in full force and effect.
(i) Financial Condition. (x) The pro forma balance sheets of
-------------------
Seller prepared as of the month end prior to the Closing Date, a copy
of which has been furnished to the Administrator, fairly present the
consolidated financial condition of Seller as at such date in
accordance with generally accepted accounting principles.
(j) Litigation. No injunction, decree or other decision has
----------
been issued or made by any court, governmental agency or
instrumentality thereof that prevents, and no threat by any person has
been made to attempt to obtain any such decision that would prevent,
Seller from conducting a material part of its business operations,
except as described in Schedule 6.01(j).
(k) Margin Regulations. The use of all funds obtained by
------------------
Seller under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve System from time to time.
(l) Quality of Title. Each Pool Receivable, together with each
----------------
other Pool Asset, is owned by Seller free and clear of any Lien (other
than any Lien arising solely as the result of any action taken by
Purchaser (or any assignee thereof) or by the Administrator); when
Purchaser makes a Purchase or Reinvestment, it shall have acquired and
shall at all times thereafter continuously maintain a valid and
perfected first priority undivided percentage ownership interest to the
extent of the Asset Interest in each Pool Receivable, and each other
Pool Asset, free and clear of any Lien (other than any Lien arising
solely as the result of any action taken by Purchaser (or any assignee
thereof) or by the Administrator); and no financing statement or other
instrument similar in effect covering any Pool Receivable, or any other
Pool Asset is on file in any recording office except such as may be
filed (i) in favor of Purchaser or the Administrator in accordance with
this Agreement or in connection with any Lien arising solely as the
result of any action taken by Purchaser (or any assignee thereof) or by
the Administrator, or (ii) in favor of the Collateral Agent.
(m) Accurate Reports. No Information Package (if prepared by
----------------
Seller or its Affiliate, or to the extent information therein was
supplied by Seller or its Affiliate) or other information, exhibit,
financial statement, document, book, record or report furnished or to
be furnished by or on behalf of Seller or its Affiliates to the
Administrator, Purchaser or the Relationship Bank in connection with
this Agreement was or will be inaccurate in any material respect as of
the date it was or will be dated or (except as otherwise disclosed to
the Administrator, Purchaser, and the Relationship Bank at such time)
as of the date so furnished, or contained or will contain any material
misstatement of fact or omitted or will omit to state a material fact
or any fact necessary to make the statements contained therein not
materially misleading.
-19-
(n) Offices. The chief place of business and chief executive
-------
office of Seller are located at the address of Seller referred to in
Section 14.02, and the offices where Seller keeps all its books,
-------------
records and documents evidencing Pool Receivables, the related Accounts
and Contracts and all other agreements related to such Pool Receivables
are located at the addresses specified in Schedule 6.01(n) (or at such
----------------
other locations, notified to the Administrator in accordance with
Section 7.01(f), in jurisdictions where all action required by Section
--------------- -------
8.05 has been taken and completed).
----
(o) Lock-Box Accounts. The names and addresses of all the
-----------------
Lock-Box Banks, together with the account numbers of the lock-box
accounts of Seller at such Lock-Box Banks, have been notified to the
Administrator and the Relationship Bank on the Initial Funding Date, or
later, in accordance with Section 7.03(d)).
---------------
(p) Eligible Receivables. Each Receivable included in the Net
--------------------
Pool Balance as an Eligible Receivable on the date of any Purchase,
Reinvestment or other calculation of the Net Pool Balance shall be an
Eligible Receivable on such date.
(q) Servicing Programs. No license or approval is required for
------------------
the Administrator's use of any Software program used by Servicer in the
servicing of the Receivables, other than those which have been obtained
and are in full force and effect.
SECTION 6.02. Representations and Warranties of Servicer. Servicer
------------------------------------------
represents and warrants as follows:
(a) Organization and Good Standing. Servicer has been duly
------------------------------
organized and is validly existing as a corporation in good standing
under the laws of Delaware, with power and authority to own its
properties and to conduct its business as such properties are presently
owned and such business is presently conducted, and had at all relevant
times, and now has, all necessary power, authority, and legal right to
service the Pool Receivables.
(b) Due Qualification. Servicer is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
failure to so qualify or obtain such licenses or approvals would have a
Material Adverse Effect.
(c) Power and Authority; Due Authorization. Servicer (i) has
--------------------------------------
all necessary power, authority and legal right to (A) execute and
deliver the Transaction Documents to which it is a party, and (B) carry
out the terms of the Transaction Documents to which it is a party and
(ii) has duly authorized by all necessary corporate action the
execution, delivery and performance of the Transaction Documents to
which it is a party.
-20-
(d) Valid Sale; Binding Obligations. This Agreement and each
-------------------------------
other Transaction Document to be executed by Servicer when duly
executed and delivered will constitute, a legal, valid and binding
obligation of Servicer enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
(e) No Violation. The consummation of the transactions
------------
contemplated by the Transaction Documents and the fulfillment of the
terms thereof will not (i) conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, (A) the articles of
incorporation or bylaws of Servicer, or (B) in any material respect,
any indenture, loan agreement, receivables purchase agreement,
mortgage, deed of trust, or other agreement or instrument to which
Servicer is a party or by which it or any of its properties is bound,
(ii) result in the creation or imposition of any Lien upon any of
Servicer's properties pursuant to the terms of any such indenture, loan
agreement, receivables purchase agreement, mortgage, deed of trust, or
other agreement or instrument, other than the Transaction Documents, or
(iii) violate any law or any order, rule, or regulation applicable to
Servicer of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over Servicer or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending, or, to Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality (i) asserting the invalidity of any
Transaction Document to which Servicer is a party or (ii) seeking any
determination or ruling that might have a Material Adverse Effect.
(g) Government Approvals. No authorization or approval or
--------------------
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by Servicer of this Agreement or any other
Transaction Document;
(h) Litigation. No injunction, decree or other decision has
----------
been issued or made by any court, governmental agency or
instrumentality thereof that prevents, and no threat by any person has
been made to attempt to obtain any such decision that would prevent,
Servicer from conducting a material part of its business operations,
except as described in Schedule 6.01(j).
----------------
(i) Accurate Reports. No Information Package (if prepared by
----------------
Servicer or its Affiliate, or to the extent information therein was
supplied by Servicer or its Affiliate) or other information, exhibit,
financial statement, document, book, record or report
-21-
furnished or to be furnished by or on behalf of Servicer or its
Affiliates to the Administrator, Purchaser or the Relationship Bank in
connection with this Agreement was or will be inaccurate in any
material respect as of the date it was or will be dated or (except as
otherwise disclosed to the Administrator, Purchaser, and the
Relationship Bank at such time) as of the date so furnished, or
contained or will contain any material misstatement of fact or omitted
or will omit to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
(j) Servicing Programs. No license or approval is required for
------------------
Administrator's use of any software program used by Servicer in the
servicing of the Receivables, other than those which have been obtained
and are in full force and effect.
ARTICLE VII
GENERAL COVENANTS OF SELLER AND SERVICER
SECTION 7.01. Affirmative Covenants of Seller and Servicer. From the
--------------------------------------------
date hereof until the Final Payout Date, Seller and Servicer will, unless the
Administrator shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
-------------------------
with all applicable laws, rules, regulations and orders, including
those with respect to the Pool Receivables and related Accounts and
Contracts.
(b) Preservation of Corporate Existence. Preserve and maintain
-----------------------------------
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would have a Material Adverse Effect.
(c) Audits. (i) At any time and from time to time during
------
regular business hours, permit the Administrator, the Relationship Bank
or any of their agents or representatives, upon at least two Business
Days' prior notice (A) to examine and make copies of and abstracts from
all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of
Seller or of Servicer relating to Pool Receivables, including, without
limitation, the related Accounts and Contracts and other agreements,
and (B) to visit the offices and properties of Seller or of Servicer
for the purpose of examining such materials described in clause (i)(A)
-------------
next above, and to discuss matters relating to Pool Receivables or
Seller's or Servicer's performance hereunder with any of the officers
or employees of Seller or of Servicer having knowledge of such matters;
and (ii) without limiting the provisions of clause (i) next above, from
----------
time to time on request of Administrator or the Relationship Bank,
permit internal auditors or other employees of the Relationship Bank to
conduct a review
-22-
of Seller's or of Servicer's books and records; provided, however,
-------- -------
that, unless a Liquidation Event is continuing, no more than one such
review shall be conducted during each fiscal year of Seller and the
cost thereof payable by Seller and Servicer in connection therewith
shall not exceed $20,000.
(d) Keeping of Records and Books of Account. Maintain and
---------------------------------------
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Pool Receivables
in the event of the destruction of the originals thereof), and keep and
maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Pool Receivables
(including, without limitation, records adequate to permit the daily
identification of each new Pool Receivable and all Collections of and
adjustments to each existing Pool Receivable).
(e) Performance and Compliance with Receivables and Contracts.
---------------------------------------------------------
At its expense timely and fully perform and comply with all provisions,
covenants and other promises required to be observed by it under the
Contracts related to the Pool Receivables and all other agreements
related to such Pool Receivables, except insofar as the failure to
perform and comply would not materially and adversely affect the rights
of Purchaser hereunder or the collectibility of such Pool Receivables.
(f) Location of Records. Keep its chief place of business and
-------------------
chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Accounts and Contracts and
all other agreements related to such Pool Receivables (and all original
documents relating thereto), at the address(es) of Seller referred to
in Section 6.01(n) or, upon 30 days' prior written notice to the
---------------
Administrator, at such other locations in jurisdictions where all
action required by Section 8.05 shall have been taken and completed.
------------
(g) Credit and Collection Policies. Comply in all material
------------------------------
respects with its Credit and Collection Policy in regard to each Pool
Receivable and the related Contract.
(h) Collections. Instruct all Obligors to cause all payments
-----------
with respect to Pool Receivables to be deposited directly with a
Lock-Box Bank. From and after the occurrence of a Liquidation Event,
deposit all collections received in stores of an Affiliate of the
Seller or otherwise received by Seller into an account at a Lock-Box
Bank within two Business Days of receipt.
SECTION 7.02. Reporting Requirements of Seller. From the date hereof
--------------------------------
until the Final Payout Date, Seller shall, unless the Administrator and the
Relationship Bank shall otherwise consent in writing, furnish to the
Administrator and the Relationship Bank:
-23-
(a) Quarterly Financial Statements. As soon as available and
------------------------------
in any event within 75 days after the end of each of the first three
quarters of each fiscal year of Charming Shoppes, copies of the
financial statements of Charming Shoppes and its Subsidiaries, and of
Seller, prepared on a consolidated basis in conformity with generally
accepted accounting principles, duly certified by the chief financial
officer of Charming Shoppes;
(b) Annual Financial Statements. As soon as available and in
---------------------------
any event within 120 days after the end of each fiscal year of Charming
Shoppes, copies of the financial statements (i) of Charming Shoppes and
its Subsidiaries, prepared on a consolidated basis in conformity with
generally accepted accounting principles and duly certified by
independent certified public accountants of recognized standing
selected by Charming Shoppes and (ii) of Seller, prepared in conformity
with generally accepted accounting principles and duly certified by an
officer of the Seller;
(c) Liquidation Events. As soon as possible and in any event
------------------
within three Business Days after the occurrence of each Liquidation
Event and each Unmatured Liquidation Event, a written statement of the
Chairman, President, Treasurer or any Vice President of Seller setting
forth details of such event and the action that Seller proposes to take
with respect thereto;
(d) Litigation. As soon as possible and in any event within
----------
three Business Days of Seller's knowledge thereof, notice of (i) any
litigation, investigation or proceeding which could have a Material
Adverse Effect and (ii) any material adverse development in previously
disclosed litigation;
(e) Change in Credit and Collection Policy. Prior to its
--------------------------------------
effective date, notice of (i) any material change in the character of
Seller's business or (ii) any material change in the Credit and
Collection Policy; and
(f) Other. Promptly, from time to time, such other
-----
information, documents, records or reports respecting the Receivables
or the condition or operations, financial or otherwise, of the
Transferors as the Administrator or the Relationship Bank may from time
to time reasonably request in order to protect the interests of the
Administrator or Purchaser under this Agreement.
SECTION 7.03. Negative Covenants of Seller. From the date hereof until
----------------------------
the Final Payout Date, Seller shall not, without the prior written consent of
the Administrator:
(a) Sales, Liens, Etc. Except as otherwise provided herein,
-----------------
sell, assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist any Lien upon or with respect to, any
Pool Receivable or related Account or Contract or Related Security, or
any interest therein, or any lock-box account to which any
-24-
Collections of any Pool Receivable are sent, or any right to receive
income or proceeds from or in respect of any of the foregoing.
(b) Extension or Amendment of Pool Receivables. Except as
------------------------------------------
otherwise permitted in Section 8.02 or as ordered by a court of
competent jurisdiction, extend, amend or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of
any Contract related thereto.
(c) Change in Business or Credit and Collection Policy. Make
--------------------------------------------------
any change in the character of its business or in the Credit and
Collection Policy, which change would, in either case, materially
impair the collectibility of any Pool Receivable or otherwise
materially and adversely affect the interests or remedies of Purchaser
under this Agreement or any other Transaction Document.
(d) Change in Payment Instructions to Obligors. Add or
------------------------------------------
terminate any bank as a Lock-Box Bank from the list provided to the
Administrator and the Relationship Bank on the Initial Funding Date or
make any change in its instructions to Obligors regarding payments to
be made to Seller or Servicer or payments to be made to any Lock-Box
Bank, unless the Administrator and the Relationship Bank shall have
received notice of such addition, termination or change and duly
executed copies of Lock-Box Agreements with each new Lock-Box Bank and
shall have consented the identity of such Lock-Box Bank (which consent
shall not be unreasonably withheld).
(e) Mergers, Sales, Etc. Be a party to any merger or
--------------------
consolidation, or, except in the ordinary course of its business, sell,
transfer, convey or lease all or substantially all of its assets, or
sell or assign with or without recourse any Pool Receivables or any
interest therein (other than pursuant hereto).
(f) Deposits to Special Accounts. Deposit or otherwise credit,
----------------------------
or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections.
SECTION 7.04. Negative Covenants of the Servicer. From the date hereof
----------------------------------
until the Final Payout Date, Servicer shall not, without the prior written
consent of the Administrator:
(a) Extension or Amendment of Pool Receivables. Except as
------------------------------------------
otherwise permitted in Section 8.02 or as ordered by a court of
------------
competent jurisdiction, extend, amend or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of
any Contract related thereto.
(b) Change in Business or Credit and Collection Policy. Make
--------------------------------------------------
any change in the character of its business or in the Credit and
Collection Policy, which change would, in either case, materially
impair the collectibility of any Pool Receivable or otherwise
-25-
materially and adversely affect the interests or remedies of Purchaser
under this Agreement or any other Transaction Document.
(c) Change in Payment Instructions to Obligors. Add or
------------------------------------------
terminate any bank as a Lock-Box Bank from the list provided to the
Administrator and the Relationship Bank on the Initial Funding Date or
make any change in its instructions to Obligors regarding payments to
be made to Seller or Servicer or payments to be made to any Lock-Box
Bank, unless the Administrator and the Relationship Bank shall have
received notice of such addition, termination or change and duly
executed copies of Lock-Box Agreements with each new Lock-Box Bank and
shall have consented the identity of such Lock-Box Bank (which consent
shall not be unreasonably withheld).
(d) Mergers, Sales, Etc. Be a party to any merger or
-------------------
consolidation, or, except in the ordinary course of its business, sell,
transfer, convey or lease all or substantially all of its assets, or
sell or assign with or without recourse any Pool Receivables or any
interest therein (other than pursuant hereto).
(e) Deposits to Special Accounts. Deposit or otherwise credit,
----------------------------
or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections.
SECTION 7.05. Separate Corporate Existence. Seller hereby acknowledges
----------------------------
that Purchaser, the Liquidity Banks and the Administrator, are entering into the
transactions contemplated by the Transaction Documents in reliance upon Seller's
identity as a legal entity separate from Parent. Therefore, from and after the
date hereof, Seller shall take all steps specifically required by this Agreement
or by the Purchaser or Administrator to continue Seller's identity as a separate
legal entity and to make it apparent to third Persons that Seller is an entity
with assets and liabilities distinct from those of Parent and any other Person,
and is not a division of Parent or any other Person. Without limiting the
generality of the foregoing and in addition to and consistent with the other
covenants set forth herein, Seller shall take such actions as shall be required
in order that:
(a) Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to
purchasing or otherwise acquiring from Parent, and owning, holding,
granting security interests, or selling interests, in Pool Assets,
entering into agreements for the servicing and financing of Pool
Assets, entering into interest rate agreements, spread account
agreements and similar documents and conducting such other activities
as it deems necessary or appropriate to carry out its primary
activities.
(b) Not less than one member of Seller's Board of Directors
(the "Independent Director") shall be an individual who is not a
--------------------
direct, indirect or beneficial stockholder, officer, director,
employee, affiliate, associate, or supplier of Seller or any of its
-26-
Affiliates, except that the Independent Director may be an independent
director on the Board of Directors of a direct or indirect "bankruptcy
remote" subsidiary of Charming Shoppes. The certificate of
incorporation of Seller shall provide that (i) Seller's Board of
Directors shall not approve, or take any other action to cause the
filing of, a voluntary bankruptcy petition with respect to Seller
unless the Independent Director shall approve the taking of such action
in writing prior to the taking of such action and (ii) such provision
cannot be amended without the prior written consent of the Independent
Director.
(c) The Independent Director shall not at any time serve as a
trustee in bankruptcy for Seller, Parent or any Affiliate thereof.
(d) Any employee, consultant or agent of Seller will be
compensated from Seller's funds for services provided to Seller. Seller
will engage no agents other than its attorneys, auditors and other
professionals, and a servicer for Pool Assets, which servicer will be
fully compensated for its services by payment of the Servicer's Fee.
(e) Seller will contract with Servicer to perform for Seller
all operations required on a daily basis to service the Pool Assets.
Seller will pay Servicer the Servicer's Fee pursuant hereto. Seller
will not incur any material indirect or overhead expenses for items
shared between Seller and Parent (or any other Affiliate thereof) which
are not reflected in the Servicer's Fee. To the extent, if any, that
Seller and Parent (or any other Affiliate thereof) share items of
expenses not reflected in the Servicer's Fee, such as legal, auditing
and other professional services, such expenses will be allocated to the
extent practical on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to the actual use
or the value of services rendered, it being understood that Parent
shall pay all expenses relating to the preparation, negotiation,
execution and delivery of the Transaction Documents, including, without
limitation, legal, agency and other fees.
(f) Seller will pay its own operating expenses.
(g) Seller will have its own separate post office box and
stationery.
(h) Seller's books and records will be maintained separately
from those of Parent and any other Affiliate thereof.
(i) All financial statements of Parent or any Affiliate
thereof that are consolidated to include Seller will contain detailed
notes clearly stating that (A) all of Seller's assets are owned by
Seller, and (B) Seller is a separate corporate entity with creditors
who have received security interests in Seller's assets.
-27-
(j) Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of Parent
or any Affiliate thereof.
(k) Seller will strictly observe corporate formalities in its
dealings with Parent or any Affiliate thereof, and funds or other
assets of Seller will not be commingled with those of Parent or any
Affiliate thereof. Seller shall not maintain joint bank accounts or
other depository accounts to which Parent or any Affiliate thereof
(other than Parent in its capacity as Servicer) has independent access.
(l) Seller will maintain arm's-length relationships with
Parent (and any Affiliate thereof). Any Person that renders or
otherwise furnishes services to Seller will be compensated by Seller at
market rates for such services it renders or otherwise furnishes to
Seller. Except as contemplated in the Transaction Documents neither
Seller nor Parent will be or will hold itself out to be responsible for
the debts of the other or the decisions or actions respecting the daily
business and affairs of the other.
SECTION 7.06. Transaction Documents. Neither Seller nor Servicer shall
---------------------
amend, modify, waive or provide consent under the provisions of any agreement
expressly referenced in the definition of "Transaction Document" to which it is
a party unless (x) the Administrator shall have given its prior written consent,
and (y) for any amendment which may reasonably be expected to adversely affect
the interests of the Commercial Paper Holders, the Rating Agency Condition is
satisfied.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.
-----------------------
(a) Appointment of Servicer. The servicing, administering and
-----------------------
collection of the Pool Receivables shall be conducted by the Person designated
as Servicer hereunder ("Servicer") from time to time in accordance with this
--------
Section 8.01. Until the Administrator or the Relationship Bank gives to Seller
------------
and to Servicer a Successor Notice (as defined in Section 8.01(b)), Spirit of
---------------
America, Inc. is hereby designated as, and hereby agrees to perform the duties
and obligations of, Servicer pursuant to the terms hereof.
(b) Successor Notice; Liquidation Events. Upon Servicer's receipt of a
------------------------------------
notice from the Administrator or Relationship Bank of the Administrator's or
Relationship Bank's designation of a new Servicer (a "Successor Notice"),
----------------
Servicer agrees that it will terminate its activities as Servicer hereunder in a
manner that the Administrator reasonably believes will facilitate the transition
of the performance of such activities to the new Servicer, and the Administrator
(or its designee) shall assume each and all of Seller's obligations to service
and administer such Receivables, on the terms and subject to the conditions
herein set forth, and Servicer shall use its
-28-
best efforts to assist the Administrator (or its designee) in assuming such
obligations. The Administrator and Relationship Bank agree not to give Servicer
a Successor Notice until after the occurrence of a Replacement Event, in which
case such Successor Notice may be given at any time in the Administrator's or
the Relationship Bank's discretion. If Servicer disputes the occurrence of a
Liquidation Event, Servicer may take appropriate action to resolve such dispute;
provided that Servicer must terminate its activities hereunder as Servicer and
--------
allow the newly designated Servicer to perform such activities on the date
provided by the Administrator or Relationship Bank as described above,
notwithstanding the commencement or continuation of any proceeding to resolve
the aforementioned dispute; provided, further that in the event that such
-------- -------
dispute is resolved in favor of Servicer and no other Liquidation Event has
occurred and is continuing, at Seller's written request, Servicer shall be
reinstated as Servicer.
(c) Subcontracts. Servicer may, with the prior consent of the
------------
Administrator, subcontract with any other person for servicing, administering or
collecting the Pool Receivables, provided that (i) Servicer shall remain liable
for the performance of the duties and obligations of Servicer pursuant to the
terms hereof and (ii) such subcontract provides for termination upon the
occurrence of a Liquidation Event. The Administrator hereby acknowledges and
consents to the continuation of Total Systems Services, Inc. as the
Administrative Servicer.
(d) Servicer's Fee. Seller shall be responsible for the payment of
--------------
(and, if paid by Purchaser or Administrator, shall on demand reimburse Purchaser
or the Administrator for) Seller's Portion of the Servicing Fee. "Seller's
--------
Portion of the Servicing Fee" for any Settlement Period means an amount equal to
----------------------------
(i) the Servicer's Fee Rate times (ii) (x) the aggregate Unpaid Balance of the
-----
Pool Receivables as of the first day of such Settlement Period minus (y) the
Purchaser's Total Investment on that Settlement Date times (iii) 1/360 times
----- -----
(iv) the number of days in such Settlement Period.
SECTION 8.02. Duties of Servicer.
------------------
(a) Appointment; Duties in General. Each of Seller, Purchaser and the
------------------------------
Administrator hereby appoints as its agent Servicer, as from time to time
designated pursuant to Section 8.01, to enforce its rights and interests in and
------------
under the Pool Receivables, the Related Security and the related Contracts.
Servicer shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Pool Receivable from time to time, all in accordance
with applicable laws, rules and regulations, with reasonable care and diligence,
and in accordance with the Credit and Collection Policy.
(b) Allocation of Collections; Segregation. Servicer shall set aside
-------------------------
for the account of Seller and Purchaser their respective allocable shares of the
Collections of Pool Receivables in accordance with Section 1.03 but shall not be
------------
required (unless otherwise requested by the Administrator or the Relationship
Bank) to segregate the funds constituting such portions of such Collections
prior to the remittance thereof in accordance with said Section. If instructed
by the Administrator or the Relationship Bank, Servicer shall segregate and
deposit with a bank
-29-
designated by the Relationship Bank, with the approval of the Administrator,
Purchaser's Share of Collections of Pool Receivables, set aside for Purchaser on
the first Business Day following receipt by Servicer of such Collections in
immediately available funds.
(c) Modification of Receivables. So long as no Liquidation Event or
---------------------------
Unmatured Liquidation Event shall have occurred and be continuing, Servicer,
may, in accordance with the Credit and Collection Policy, (i) extend the
maturity or adjust the Unpaid Balance of, or defer payment of, or otherwise
modify the terms of any Receivable as Seller may determine to be appropriate to
maximize Collections thereof; provided that, after giving effect to such
-------- ----
extension of maturity or such adjustment, the Asset Interest, expressed as a
percentage of Net Pool Balance, will not exceed the Allocation Limit, and (ii)
adjust the Unpaid Balance of any Receivable to reflect the reductions or
cancellations described in the first sentence of Section 3.02(a).
---------------
(d) Documents and Records. Seller shall deliver to Servicer, and
---------------------
Servicer shall hold in trust for Seller and Purchaser in accordance with their
respective interests, all documents, instruments and records (including, without
limitation, computer tapes or disks) that evidence or relate to Pool
Receivables.
(e) Certain Duties to Seller. Servicer shall, as soon as practicable
------------------------
following receipt, turn over to Seller (i) that portion of Collections of Pool
Receivables representing Seller's undivided interest therein, and (ii) the
Collections of any Receivable which is not a Pool Receivable. Servicer, if other
than Seller, shall, as soon as practicable upon demand, deliver to Seller all
documents, instruments and records in its possession that evidence or relate to
Receivables of Seller other than Pool Receivables, and copies of documents,
instruments and records in its possession that evidence or relate to Pool
Receivables.
(f) Termination. the Final Payout Date. Servicer's authorization under
-----------
this Agreement shall terminate upon
(g) Power of Attorney. Seller hereby grants to Servicer an irrevocable
-----------------
power of attorney, with full power of substitution, coupled with an interest, to
take in the name of Seller all steps which are necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by Seller or transmitted or received by Purchaser
(whether or not from Seller) in connection with any Receivable.
SECTION 8.03. Rights of the Administrator.
---------------------------
(a) Notice to Obligors. At any time during the continuance of a
------------------
Liquidation Event, the Administrator may notify the Obligors of Pool
Receivables, or any of them, of the ownership of Asset Interests by Purchaser.
(b) Notice to Lock-Box Banks. At any time following the earliest to
------------------------
occur of (i) the occurrence of a Liquidation Event, (ii) the commencement of the
Liquidation Period, and (iii) the
-30-
warranty in Section 6.01(i) shall no longer be true, the Administrator is hereby
---------------
authorized to give notice to the Lock-Box Banks, as provided in the Lock-Box
Agreements, of the transfer to the Administrator of dominion and control over
the lock-boxes and related accounts to which the Obligors of Pool Receivables
make payments. Seller hereby transfers to the Administrator, effective when the
Administrator shall give notice to the Lock-Box Banks as provided in the
Lock-Box Agreements, the exclusive dominion and control over such lock-boxes and
accounts, and shall take any further action that the Administrator may
reasonably request to assist with such transfer.
(c) Rights on Liquidation Event. At any time following the designation
---------------------------
of a Servicer other than Seller pursuant to Section 8.01:
------------
(i) The Administrator may direct the Obligors of Pool
Receivables, or any of them, to pay all amounts payable under any Pool
Receivable directly to the Collateral Agent.
(ii) Seller shall, at the Administrator's or Relationship
Bank's request and at Seller's expense, give notice of the ownership of
the Pool Receivables by Purchaser to each said Obligor and direct that
payments be made directly to the Collateral Agent.
(iii) Seller shall, at the Administrator's or Relationship
Bank's request, (A) assemble all of the documents, instruments and
other records (including, without limitation, computer programs, tapes
and disks) which evidence the Pool Receivables, and the related
Accounts and Contracts and Related Security, or which are otherwise
reasonably necessary or desirable to service such Pool Receivables, and
make the same available to the Administrator at a place selected by the
Administrator or the Relationship Bank, and (B) segregate all cash,
checks and other instruments received by it from time to time
constituting Collections of Pool Receivables in a manner reasonably
acceptable to the Administrator and promptly upon receipt, remit all
such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Collateral Agent.
(iv) Each of Seller and Purchaser hereby authorizes the
Administrator, and grants to the Administrator an irrevocable power of
attorney, to take any and all steps in Seller's name and on behalf of
Seller and Purchaser which are reasonably necessary or desirable, in
the determination of the Administrator, to collect all amounts due
under any and all Pool Receivables, including, without limitation,
endorsing Seller's name on checks and other instruments representing
Collections and enforcing such Pool Receivables and the related
Contracts; provided that the Administrator shall not exercise its
--------
rights under such Power of Attorney unless a Liquidation Event shall
have occurred and be continuing.
SECTION 8.04. Responsibilities of Seller. notwithstanding: Anything
--------------------------
herein to the contrary
-31-
(a) Contracts. Seller shall perform all of its obligations under the
---------
Contracts related to the Pool Receivables and under other agreements related
thereto to the same extent as if the Asset Interest had not been sold hereunder,
and the exercise by the Administrator or its designee of its rights hereunder
shall not relieve Seller from such obligations.
(b) Limitation of Liability. The Administrator, the Relationship Bank
-----------------------
and Purchaser shall not have any obligation or liability with respect to any
Pool Receivables, Contracts or Accounts related thereto or any other related
agreements, nor shall any of them be obligated to perform any of the obligations
of Seller thereunder.
SECTION 8.05. Further Action Evidencing Purchases and Reinvestments.
-----------------------------------------------------
(a) Further Assurances. Seller agrees to xxxx its master data
------------------
processing records evidencing such Pool Receivables and the related Contracts
with a legend, acceptable to the Administrator, evidencing that the Asset
Interest has been sold in accordance with this Agreement. Seller agrees that
from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action that the
Administrator or its designee may reasonably request in order to perfect,
protect or more fully evidence the Purchases hereunder and the resulting Asset
Interest, or to enable Purchaser or the Administrator or its designee to
exercise or enforce any of their respective rights hereunder or under any
Transaction Document. Without limiting the generality of the foregoing, Seller
will upon the request of the Administrator or its designee execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate.
(b) Additional Financing Statements; Performance by Administrator.
-------------------------------------------------------------
Seller hereby authorizes the Administrator or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Pool Assets now existing or hereafter
arising in the name of Seller. If Seller fails to perform any of its agreements
or obligations under this Agreement, the Administrator or its designee may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of the Administrator or its
designee incurred in connection therewith shall be payable by Seller as provided
in Section 14.05.
-------------
(c) Continuation Statements; Opinion. Without limiting the generality
--------------------------------
of subsection (a), Seller shall, not earlier than six (6) months and not later
--------------
than three (3) months prior to the fifth anniversary of the date of filing of
the financing statement referred to in Section 5.01(e) or any other financing
---------------
statement filed pursuant to this Agreement or in connection with any Purchase
hereunder, unless the Final Payout Date shall have occurred:
(i) execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to such financing
statement; and
-32-
(ii) deliver or cause to be delivered to the Administrator an
opinion of the counsel for Seller referred to in Section 5.01(h) (or
---------------
other counsel for Seller reasonably satisfactory to the Administrator),
in form and substance reasonably satisfactory to the Administrator,
confirming and updating the opinion delivered pursuant to Section
-------
5.01(h) to the effect that Purchaser's Total Interest hereunder
-------
continues to be a valid and perfected ownership or security interest,
subject to no other Liens of record except as provided herein or
otherwise permitted hereunder.
SECTION 8.06. Application of Collections. Any payment by an Obligor in
--------------------------
respect of any indebtedness owed by it to Seller shall, except as otherwise
specified by such Obligor, as required by the underlying Contract or law or
unless the Administrator instructs otherwise, be applied, first, as a Collection
of any Pool Receivable or Receivables then outstanding of such Obligor in the
order of the age of such Pool Receivables, starting with the oldest of such Pool
Receivable and, second, to any other indebtedness of such Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest. To secure all obligations of
--------------------------
Seller and Servicer arising in connection with this Agreement and each other
Transaction Document to which either of them is a party, whether now or
hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, including, without limitation, all Indemnified Amounts, payments on
account of Collections and fees, in each case pro rata according to the
--- ----
respective amounts thereof, Seller hereby assigns and grants to Purchaser, for
the benefit of the Secured Parties, a security interest in all of Seller's
right, title and interest (including specifically any undivided interest
retained by Seller hereunder) now or hereafter existing in, to and under all the
Pool Assets and proceeds thereof.
SECTION 9.02. Further Assurances. The provisions of Section 8.05 shall
------------------ ------------
apply to the security interest granted under Section 9.01 as well as to the
------------
Purchases, Reinvestments and all the Asset Interests hereunder.
SECTION 9.03. Remedies. Upon the occurrence of a Liquidation Event,
--------
Purchaser shall have, with respect to the collateral granted pursuant to Section
-------
9.01, and in addition to all other rights and remedies available to Purchaser or
----
the Administrator under this Agreement or other applicable law, all the rights
and remedies of a secured party upon default under the UCC.
ARTICLE X
LIQUIDATION EVENTS
-33-
SECTION 10.01. Liquidation Events. The following events shall be
------------------
"Liquidation Events" hereunder:
------------------
(a) (i) Servicer (if Seller or its Affiliate is Servicer)
shall fail to deliver to Administrator an Information Package for any
Settlement Period on or before 12:00, noon (New York City time) of the
related Settlement Date or (ii) Servicer (if Seller or its Affiliate is
Servicer) shall fail to perform or observe in any material respect any
other term, covenant or agreement that is an obligation of Servicer
hereunder (other than as referred to in clause (iii) next following)
------------
and such failure shall remain unremedied for five Business Days after
(1) written notice thereof shall have been given by the Administrator
to Seller or (2) Seller has actual knowledge thereof or (iii) Servicer
(if Seller or its Affiliate is Servicer) shall fail to make any payment
or deposit to be made by it hereunder when due and such failure shall
remain unremedied for more than three Business Days; or
(b) Any representation or warranty made or deemed to be made
by a Transferor or the Servicer, if Seller or its Affiliate is
Servicer, (or any of their officers) under a Transaction Document or
Information Package or other information or report delivered pursuant
hereto shall prove to have been incorrect in any material respect when
made and shall continue to be incorrect for a period of thirty-five
days (or, with respect to Section 6.01(l), fifteen Business Days) after
---------------
(i) written notice thereof shall have been given by the Administrator
to the Seller or the Servicer (if Seller or its Affiliate is Servicer)
or (ii) Seller or the Servicer (if Seller or its Affiliate is Servicer)
has actual knowledge thereof; provided, that with respect to the breach
--------
of the representations or warranties set forth in Section 6.01(l) or
---------------
(p), compliance by Seller with the provisions of Section 3.02 in
--- ------------
respect thereof shall be deemed to cure such breach; or
(c) A Transferor shall fail to perform or observe in any
material respect any other term, covenant or agreement contained in any
of the Transaction Documents to which it is a party on its part to be
performed or observed and any such failure shall remain unremedied for
thirty days after (i) written notice thereof shall have been given by
the Administrator to Seller or (ii) Seller has actual knowledge
thereof; or
(d) (i) A default shall have occurred and be continuing under
any Credit Facility of Charming Shoppes or any of its Affiliates with
respect to a payment of principal of or premium or interest in excess
of $1,000,000 (or $5,000,000, in the case of Charming Shoppes), which
default if unremedied, uncured, or unwaived (with or without the
passage of time or the giving of notice or both) would permit
acceleration of the maturity of such indebtedness and such default
shall have continued unremedied, uncured or unwaived for a period long
enough to permit such acceleration, and (x) any notice of default
required to permit acceleration shall have been given and ten days
shall have passed without such default having been cured or waived or
(y) an acceleration shall have occurred; or (ii) any default under any
agreement or instrument relating to the purchase of
-34-
receivables of Seller or any other Transferor shall occur and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default is to permit the
termination of the commitment of any party to such agreement or
instrument to purchase receivables or the right of Seller to reinvest
in receivables the principal amount paid by any party to such agreement
or instrument for interest in receivables (provided that such default
is not related to failure of the obligors on such purchased receivables
to pay due to credit problems of such obligors or other portfolio tests
with respect to such receivables), and (x) any notice of such event
required to permit such termination shall have been delivered and ten
days shall have passed without such default having been cured or waived
or (y) termination shall have occurred; or
(e) An Event of Bankruptcy shall have occurred and remain
continuing with respect to a Transferor, Servicer, Charming Shoppes or
CSRC; or
(f) (i) Any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by Seller to the Administrator and
Purchaser prior to the date of execution and delivery of this Agreement
is pending against a Transferor, Servicer, Charming Shoppes or CSRC, or
(ii) any material development not so disclosed has occurred in any
litigation (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings so disclosed,
which, in the case of clause (i) or (ii), in the reasonable opinion of
---------- ----
the Administrator, has a reasonable likelihood of having a Material
Adverse Effect; or
(g) The funds on deposit in the RPA Cash Collateral Account
shall be less than the RPA Required Cash Collateral Amount, and such
condition shall continue for ten days; or any amount required to be
deposited in the Spread Account under the terms of the Spread Account
Agreement shall not have been so deposited and such condition shall
continue for ten days;
(h) On any Settlement Date, after giving effect to the
payments made under Section 3.01(c), the Asset Interest exceeds the
---------------
Allocation Limit or the Purchaser's Total Investment exceeds the
Purchase Limit; or
(i) An "Early Amortization Event" has occurred under the
Specified Supplement and is continuing; or
(j) A Transferor, Servicer (if Servicer is Seller or its
Affiliate) or Charming Shoppes is subject to a Change in Control; or
(k) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to
any of the assets of Seller and such lien shall not have been released
within 5 Business Days, or the Pension Benefit Guaranty
-35-
Corporation shall, or shall indicate its intention to, file notice of a
lien pursuant to Section 4068 of ERISA with regard to any of the assets
of Seller or any of its Affiliates; or
(l) Fashion Service Corp. shall fail to perform its
obligations under the Cap Agreements, and such failure shall continue
for three Business Days; or a Termination Event (as defined in the Cap
Agreements) shall occur with respect to Fashion Service Corp.; or
(m) The CB Excess Yield Percentage is less than 0% for three
consecutive Settlement Periods.
SECTION 10.02. Remedies.
--------
(a) Optional Liquidation. Upon the occurrence of a Liquidation Event
--------------------
(other than a Liquidation Event described in subsection (e), (g), (h), (l) or
-------------- --- --- ---
(m) of Section 10.01), the Administrator shall, at the request, or may with the
--- --------------
consent, of Purchaser, by notice to Seller declare the Purchase Termination Date
to have occurred and the Liquidation Period to have commenced.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation Event
---------------------
described in subsection (e), (g), (h), (l) or (m) of Section 10.01, the Purchase
-------------- --- --- --- --- -------------
Termination Date shall occur and the Liquidation Period shall commence
automatically.
(c) Additional Remedies. Upon any Purchase Termination Date pursuant to
-------------------
this Section 10.02, no Purchases or Reinvestments thereafter will be made, and
-------------
the Administrator, Purchaser and the Relationship Bank shall have, in addition
to all other rights and remedies under this Agreement or otherwise, all other
rights and remedies provided under the UCC of each applicable jurisdiction and
other applicable laws, which rights shall be cumulative.
ARTICLE XI
THE ADMINISTRATOR; RELATIONSHIP BANK
SECTION 11.01. Authorization and Action. Pursuant to the Program
------------------------
Administration Agreement and the Relationship Bank Agreement, Purchaser has
appointed and authorized the Administrator and the Relationship Bank (or their
respective designees) to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrator or the
Relationship Bank by the terms hereof, together with such powers as are
reasonably incidental thereto.
SECTION 11.02. Administrator's and Relationship Bank's Reliance, Etc.
-----------------------------------------------------
The Administrator, the Relationship Bank and their directors, officers, agents
or employees shall not
-36-
be liable for any action taken or omitted to be taken by it or them under or in
connection with the Transaction Documents (including, without limitation, the
servicing, administering or collecting of Pool Receivables as Servicer pursuant
to Section 8.01), except for its or their own gross negligence or willful
------------
misconduct. Without limiting the generality of the foregoing, each of the
Administrator and the Relationship Bank: (a) may consult with legal counsel
(including counsel for Seller), independent certified public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to
Purchaser or any other holder of any interest in Pool Receivables and shall not
be responsible to Purchaser or any such other holder for any statements,
warranties or representations made in or in connection with any Transaction
Document; (c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Transaction Document on the part of Seller or to inspect the property (including
the books and records) of Seller; (d) shall not be responsible to Purchaser or
any other holder of any interest in Pool Receivables for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Transaction Document; and (e) shall incur no liability under or in respect of
this Agreement by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by facsimile
or telex) reasonably believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 11.03. Xxxxx Xxxxxx Xxxxxxx xxx Xxxxx Xxxxxx Xxxx and
----------------------------------------------
Affiliates. Xxxxx Xxxxxx Xxxxxxx xxx Xxxxx Xxxxxx Xxxx and any of their
----------
respective Affiliates may generally engage in any kind of business with Seller
or any Obligor, any of their respective Affiliates and any Person who may do
business with or own securities of Seller or any Obligor or any of their
respective Affiliates, all as if Xxxxx Xxxxxx Xxxxxxx xxx Xxxxx Xxxxxx Xxxx were
not the Administrator and the Relationship Bank, respectively, and without any
duty to account therefor to Purchaser or any other holder of an interest in Pool
Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments.
---------------------------
(a) Except as provided in the next sentence, none of Seller, Servicer
or State Street Bank, individually or as the Relationship Bank (except as
otherwise provided in the Relationship Bank Agreement), may assign its rights,
or delegate its duties hereunder or any interest herein without the prior
written consent of the Administrator. Servicer may assign its rights as Servicer
under this Agreement to any of its Affiliates without prior written consent of
the Administrator, provided that Servicer shall have given the Administrator ten
--------
days' prior written notice thereof. Purchaser may not assign its rights
hereunder (although it may delegate its duties hereunder as expressly indicated
herein) or the Asset Interest (or any portion thereof) to any Person without
-37-
the prior written consent of Seller, which shall not be unreasonably withheld
(it being recognized and understood by all parties hereto that all parties
hereto shall deem it reasonable for Seller to withhold such consent if any such
proposed assignment would, in the reasonable determination of Seller, cause
Seller to be required to pay to any Affected Party any of the amounts referred
to in Section 4.02); provided, however, that
------------ -------- -------
(i) Purchaser may assign all of its rights and interests in
the Transaction Documents, together with all its interest in the Asset
Interest, to State Street Capital or State Street Bank, or both, or any
Affiliate of either of them, or to any "bankruptcy remote" special
purpose entity, the business of which is administered by State Street
Capital or any Affiliate of State Street Capital provided, that such
--------
assignment shall not cause a material increase in the Earned Discount
Rate; and
(ii) Purchaser may assign and grant a security interest in all
of its rights in the Transaction Documents, together with all of its
rights and interest in the Asset Interest, to the Collateral Agent, to
secure Purchaser's obligations under or in connection with the
Commercial Paper Notes, the Liquidity Agreement, the Credit Agreement
and any letter of credit issued thereunder, and certain other
obligations of Purchaser incurred in connection with the funding of the
Purchases and Reinvestments hereunder, which assignment and grant of a
security interest (and any subsequent assignment by the Collateral
Agent) shall not be considered an "assignment" for purposes of this
Section 12.01 or, prior to the enforcement of such security interest,
-------------
for purposes of any other provision of this Agreement.
(b) Seller agrees to advise the Administrator within five Business Days
after notice to Seller of any proposed assignment by Purchaser of the Asset
Interest (or any portion thereof), not otherwise permitted under subsection (a),
--------------
of Seller's consent or non-consent to such assignment and, if it does not
consent, the reasons therefor. If Seller does not consent to such assignment,
Purchaser may immediately assign such Asset Interest (or portion thereof) to
Xxxxx Xxxxxx Xxxxxxx, Xxxxx Xxxxxx Bank or any Affiliate of Xxxxx Xxxxxx Xxxxxxx
xx Xxxxx Xxxxxx Xxxx. All of the aforementioned assignments shall be upon such
terms and conditions as Purchaser and the assignee may mutually agree.
SECTION 12.02. Rights of Assignee. Upon the assignment by Purchaser in
------------------
accordance with this Article XII, the assignee receiving such assignment shall
-----------
have all of the rights of Purchaser with respect to the Transaction Documents
and the Asset Interest (or such portion thereof as has been assigned).
SECTION 12.03. Evidence of Assignment. Any assignment of the Asset
----------------------
Interest (or any portion thereof) to any Person may be evidenced by such
instrument(s) or document(s) as may be reasonably satisfactory to Purchaser, the
Administrator and the assignee.
-38-
SECTION 12.04. Rights of the Banks and Collateral Agent. Seller hereby
----------------------------------------
agrees that, upon notice to Seller, the Collateral Agent may exercise all the
rights of the Administrator hereunder, with respect to the Asset Interest (or
any portions thereof), and Collections with respect thereto, which are owned by
Purchaser, and all other rights and interests of Purchaser in, to or under this
Agreement or any other Transaction Document. Without limiting the foregoing,
upon such notice Collateral Agent may request Servicer to segregate Purchaser's
allocable shares of Collections from Seller's allocable share, may give a
Successor Notice pursuant to Section 8.01(a), may give or require the
---------------
Administrator or Relationship Bank to give notice to the Lock-Box Banks as
referred to in Section 8.03(b) and may direct the Obligors of Pool Receivables
---------------
to make payments in respect thereof directly to an account designated by them,
in each case, to the same extent as the Administrator might have done.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities by Seller.
---------------------
(a) General Indemnity. Without limiting any other rights which any such
-----------------
Person may have hereunder or under applicable law, Seller hereby agrees to
indemnify each of the Administrator, Purchaser, the Liquidity Banks, the Credit
Bank, the Relationship Bank, the Liquidity Agent, each of their respective
Affiliates, and all successors, transferees, participants and assigns and all
officers, directors, shareholders, controlling persons, employees and agents of
any of the foregoing (each an "Indemnified Party"), forthwith on demand, from
-----------------
and against any and all damages, losses, claims, liabilities and related costs
and expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
-------------------
against or incurred by any of them arising out of or relating to the Transaction
Documents or the ownership or funding of the Asset Interest or in respect of any
Receivable or Account or any Contract, excluding, however, (a) Indemnified
--------- -------
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of any such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for any Receivable that is not paid as
a result of credit related issues and (c) any tax based upon or measured by net
income. Without limiting the foregoing, Seller shall indemnify each Indemnified
Party for Indemnified Amounts arising out of or relating to:
(i) the transfer by Seller of any interest in any Receivable
other than the transfer of an Asset Interest to Purchaser pursuant to
this Agreement and the grant of a security interest to Purchaser
pursuant to Section 9.01;
------------
(ii) any representation or warranty made by Seller or Servicer
(or any of its officers) under or in connection with any Transaction
Document, any Information Package or any other information or report
delivered by or on behalf of Seller pursuant
-39-
hereto, which shall have been false, incorrect or misleading in any material
respect when made or deemed made;
(iii) the failure by Seller or Servicer to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the related
Account or Contract, or the nonconformity of any Pool Receivable or the related
Contract with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in Purchaser an undivided
percentage ownership interest, to the extent of the Asset Interest, in the
Receivables in, or purporting to be in, the Receivables Pool, free and clear of
any Lien, other than a Lien arising solely as a result of an act of Purchaser,
the Administrator or the Relationship Bank, whether existing at the time of any
Purchase or Reinvestment of such Asset Interest or at any time thereafter,
unless such failure is the result of the failure of Purchaser to execute any
necessary financing statements;
(v) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables in, or
purporting to be in, the Receivables Pool, whether at the time of any Purchase
or Reinvestment or at any time thereafter;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable in,
or purporting to be in, the Receivables Pool (including, without limitation, a
defense based on such Receivable's or the related Contract's not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of the
merchandise or services related to such Receivable or the furnishing or failure
to furnish such merchandise or services;
(vii) any failure of Seller or Servicer to perform its duties or
obligations in accordance with the provisions of Article VIII;
------------
(viii) any products liability claim arising out of or in connection
with merchandise or services that are the subject of any Pool Receivable; or
(ix) any tax or governmental fee or charge (but not including taxes
upon or measured by net income), all interest and penalties thereon or with
respect thereto, and all out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending against the same, which
may arise by reason of the purchase or ownership of any Asset Interest, or any
other interest in the Pool Receivables or in any goods which secure any such
Pool Receivables.
-40-
(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party
-------------------------------------
shall have notice of any attempt to impose or collect any tax or governmental
fee or charge for which indemnification will be sought from Seller under Section
-------
13.01(a)(ix), such Indemnified Party shall give prompt and timely notice of such
------------
attempt to Seller and Seller shall have the right, at its expense, to
participate in any proceedings resisting or objecting to the imposition or
collection of any such tax, governmental fee or charge. Indemnification
hereunder shall be in an amount necessary to make the Indemnified Party whole
after taking into account any tax consequences to the Indemnified Party of the
payment of any of the aforesaid taxes and the receipt of the indemnity provided
hereunder or of any refund of any such tax previously indemnified hereunder,
including the effect of such tax or refund on the amount of tax measured by net
income or profits which is or was payable by the Indemnified Party.
(c) Contribution. If for any reason the indemnification provided above
------------
in this Section 13.01 is unavailable to an Indemnified Party or is insufficient
-------------
to hold an Indemnified Party harmless, then Seller shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by such Indemnified Party on the one hand
and Seller on the other hand but also the relative fault of such Indemnified
Party as well as any other relevant equitable considerations.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement nor consent to any departure by Seller therefrom shall in any
event be effective unless the same shall be in writing and signed by (a) Seller,
the Administrator and Purchaser (with respect to an amendment), provided that no
--------
amendment shall become effective without the signature of the Relationship Bank,
if such amendment materially increases the obligations or liabilities of the
Relationship Bank, in either its individual or agent capacity hereunder, or
materially reduces any amount payable to it hereunder or (b) the Administrator
and Purchaser (with respect to a waiver or consent by them) or Seller (with
respect to a waiver or consent by it), as the case may be, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. The parties acknowledge that, before entering into such
an amendment or granting such a waiver or consent, Purchaser may also be
required to obtain the approval of some or all of the Liquidity Banks or the
Credit Bank or to satisfy the Rating Agency Condition with respect to such
amendment, waiver or consent. The parties acknowledge that the effect of any
waiver of a Liquidation Event hereunder shall be to negate any effect of the
continuation of such Liquidation Event under the Spread Account Agreement.
-41-
SECTION 14.02. Notices, Etc. All notices and other communications
------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
in Exhibit 14.02 or at such other address or facsimile number as shall be
-------------
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, (a) if personally delivered
or sent by express mail or courier or if sent by certified mail, when received,
and (b) if transmitted by facsimile, when sent, receipt confirmed by telephone
or electronic means.
SECTION 14.03. No Waiver; Remedies. No failure on the part of the
-------------------
Administrator, the Relationship Bank, any Affected Party, any Indemnified Party,
Purchaser or any other holder of the Asset Interest (or any portion thereof) to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Without limiting the foregoing, each of State Street
Capital, individually and as Administrator, State Street Bank, individually and
as Relationship Bank, the Collateral Agent, the Credit Bank and each Liquidity
Bank is hereby authorized by Seller at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by State Street Capital, the Collateral
Agent and such Liquidity Bank to or for the credit or the account of Seller, now
or hereafter existing under this Agreement, to the Administrator, any Affected
Party, any Indemnified Party or Purchaser, or their respective successors and
assigns.
SECTION 14.04. Binding Effect; Survival. This Agreement shall be binding
------------------------
upon and inure to the benefit of Seller, the Administrator, the Relationship
Bank, Purchaser and their respective successors and assigns, and the provisions
of Section 4.02 and Article XIII shall inure to the benefit of the Affected
------------ ------------
Parties and the Indemnified Parties, respectively, and their respective
successors and assigns; provided, however, nothing in the foregoing shall be
-------- -------
deemed to authorize any assignment not permitted by Section 12.01. This
-------------
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until the Final Payout Date. The rights and remedies with respect to any breach
of any representation and warranty made by Seller pursuant to Article VI and the
----------
indemnification and payment provisions of Article XIII and Sections 4.02, 14.05,
------------ ------------- -----
14.06, 14.07, 14.08 and 14.15 shall be continuing and shall survive any
----- ----- ----- -----
termination of this Agreement.
SECTION 14.05. Costs, Expenses and Taxes. In addition to its
-------------------------
obligations under Article XIII, Seller agrees to pay on demand:
------------
(a) all reasonable costs and expenses incurred by the
Administrator, the Relationship Bank, the Credit Bank, the Collateral
Agent and the Purchaser and their
-42-
respective Affiliates in connection with the negotiation, preparation, execution
and delivery, the administration (including periodic auditing) or the
enforcement of, or any actual or claimed breach of, this Agreement and the other
Transaction Documents, including, without limitation (i) the reasonable fees and
expenses of counsel to any of such Persons incurred in connection with any of
the foregoing or in advising such Persons as to their respective rights and
remedies under any of the Transaction Documents, and (ii) all reasonable
out-of-pocket expenses (including reasonable fees and expenses of independent
accountants), incurred in connection with any review of Seller's books and
records either prior to the execution and delivery hereof or pursuant to Section
-------
7.01(c); and
-------
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of
this Agreement or the other Transaction Documents, and agrees to indemnify each
Indemnified Party against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION 14.06. No Proceedings. Seller, Servicer, State Street Capital
--------------
(individually and as Administrator) and State Street Bank (individually and as
Relationship Bank) each hereby agrees that it will not institute against
Purchaser, or join any other Person in instituting against Purchaser, any
insolvency proceeding (namely, any proceeding of the type referred to in the
definition of Event of Bankruptcy) so long as any Commercial Paper Notes issued
by Purchaser shall be outstanding or there shall not have elapsed one year plus
one day since the last day on which any such Commercial Paper Notes shall have
been outstanding. The foregoing shall not limit Seller's right to file any claim
in or otherwise take any action with respect to any insolvency proceeding that
was instituted by any Person other than Seller.
SECTION 14.07. Confidentiality of Program Information.
--------------------------------------
(a) Confidential Information. Each party hereto acknowledges
------------------------
that State Street Capital regards the structure of the transactions
contemplated by this Agreement to be proprietary, and each such party
severally agrees that:
(i) it will not disclose without the prior written consent of
State Street Capital (other than to the directors, employees, auditors,
counsel or affiliates (collectively, "representatives" of such party,
each of whom shall be informed by such party of the confidential nature
of the Program Information (as defined below) and of the terms of this
Section 14.07), (A) any information regarding the pricing in, or copies
-------------
of, this Agreement or any transaction contemplated hereby, (B) any
information regarding the organization, business or operations of
Purchaser generally or the services performed by the Administrator or
the Relationship Bank for Purchaser, or (C) any information which is
furnished by State Street Capital to such party and which is designated
by State Street Capital to such party as confidential or not otherwise
available to the general public (the
-43-
information referred to in clauses (A), (B) and (C) is collectively
---------------- ---
referred to as the "Program Information"); provided, however, that such
------------------- -------- -------
party may disclose any such Program Information (I) to any other party
to this Agreement for the purposes contemplated hereby, (II) as may be
required by any municipal, state, federal or other regulatory body
having or claiming to have jurisdiction over such party, (III) in order
to comply with any law, order, regulation, regulatory request or ruling
applicable to such party, (IV) subject to subsection (c), in the event
--------------
such party is legally compelled (by interrogatories, requests for
information or copies, subpoena, civil investigative demand or similar
process) to disclose any such Program Information; or (V) specifically,
Seller or one of its affiliates may file this executed agreement as an
exhibit to any annual or quarterly report it files with the United
States Securities and Exchange Commission; and
(ii) it will use the Program Information solely for the purposes of
evaluating, administering and enforcing the transactions contemplated by
this Agreement and making any necessary business judgments with respect
thereto;
(b) Availability of Confidential Information. This Section 14.07 shall
---------------------------------------- -------------
be inoperative as to such portions of the Program Information which are or
become generally available to the public or such party on a nonconfidential
basis from a source other than State Street Capital or were known to such party
on a nonconfidential basis prior to its disclosure by State Street Capital.
(c) Legal Compulsion to Disclose. In the event that any party or anyone
----------------------------
to whom such party or its representatives transmits the Program Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any of the Program Information, such party will:
(i) provide State Street Capital with prompt written notice so
that State Street Capital may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this
Section 14.07; and
-------------
(ii) unless State Street Capital waives compliance by such
party with the provisions of this Section 14.07, make a timely
-------------
objection to the request or confirmation to provide such Program
Information on the basis that such Program Information is confidential
and subject to the agreements contained in this Section 14.07.
-------------
In the event that such protective order or other remedy is not obtained, or
State Street Capital waives compliance with the provisions of this Section
-------
14.07, such party will furnish only that portion of the Program Information
-----
which (in such party's good faith judgment) is legally required to be furnished
and will exercise reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded the Program Information.
-44-
(d) Survival. This Section 14.07 shall survive termination of this
-------- -------------
Agreement.
SECTION 14.08. Confidentiality of Seller Information.
-------------------------------------
(a) Confidential Information. Each party hereto acknowledges that
------------------------
Seller regards certain financial and portfolio information to be confidential,
and each such party severally agrees that:
(i) it will not disclose without the prior written consent of
Seller (other than to the directors, employees, auditors, counsel or
affiliates (collectively, "representatives" of such party, each of whom
shall be informed by such party of the confidential nature of the
Seller Information (as defined below) and of the terms of this Section
-------
14.08), (A) any financial information regarding Seller, (B) any pricing
-----
information of Seller, or (C) any information which is furnished by
Seller to such party and which is designated by Seller to such party as
confidential or not otherwise available to the general public (the
information referred to in clauses (A), (B) and (C) is collectively
---------------- ---
referred to as the "Seller Information"); provided, however, that such
------------------ -------- -------
party may disclose any such Seller Information (I) to any other party
to this Agreement for the purposes contemplated hereby, (II) as may be
required by any municipal, state, federal or other regulatory body
having or claiming to have jurisdiction over such party, (III) in order
to comply with any law, order, regulation, regulatory request or ruling
applicable to such party, (IV) subject to subsection (c), in the event
--------------
such party is legally compelled (by interrogatories, requests for
information or copies, subpoena, civil investigative demand or similar
process) to disclose any such Seller Information, and (V) to the Credit
Bank, the Liquidity Banks, any assignee or participant or potential
assignee or participant of the Credit Bank or any Liquidity Bank, the
rating agencies rating the Commercial Paper Notes, and the investors in
and dealers of the Commercial Paper Notes; and
(ii) it will use the Seller Information solely for the
purposes of evaluating, administering and enforcing the transactions
contemplated by this Agreement and making any necessary business
judgments with respect thereto.
(b) Availability of Confidential Information. This Section 14.08 shall
---------------------------------------- -------------
be inoperative as to such portions of the Seller Information which are or become
generally available to the public or such party on a nonconfidential basis from
a source other than Seller or were known to such party on a nonconfidential
basis prior to its disclosure by Seller.
(c) Legal Compulsion to Disclose. In the event that any party or anyone
----------------------------
to whom such party or its representatives transmits the Seller Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any of the Seller Information, such party will
(i) provide Seller with prompt written notice so that Seller
may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 14.08; and
-------------
-45-
(ii) unless Seller waives compliance by such party with the
provisions of this Section 14.08, make a timely objection to the
-------------
request or confirmation to provide such Seller Information on the basis
that such Seller Information is confidential and subject to the
agreements contained in this Section 14.08.
-------------
In the event that such protective order or other remedy is not obtained, or
Seller waives compliance with the provisions of this Section 14.08, such party
-------------
will furnish only that portion of the Seller Information which (in such party's
good faith judgment) is legally required to be furnished and will exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Seller Information.
(d) Survival. This Section 14.08 shall survive termination of this
-------- -------------
Agreement.
SECTION 14.09. Captions and Cross References. The various captions
-----------------------------
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 14.10. Integration. This Agreement, together with the letter
-----------
referenced in Section 4.01(a), contains a final and complete integration of all
---------------
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire understanding among the parties hereto
with respect to the subject matter hereof, superseding all prior oral or
written understandings.
SECTION 14.11. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND
-------------
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE INTERESTS OF PURCHASER IN THE RECEIVABLES IS GOVERNED BY THE
LAWS OF THE JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14.12. Waiver Of Jury Trial. EACH OF THE PARTIES HERETO
--------------------
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT A JURY TRIAL.
-46-
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities. EACH OF THE
---------------------------------------------
PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IT IRREVOCABLY (i) SUBMITS TO THE
JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL
JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE
SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR
FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING.
SECTION 14.14. Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts and by the 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.
SECTION 14.15. No Recourse Against Other Parties. No recourse under any
---------------------------------
obligation, covenant or agreement of any of the Securitization Entities
contained in this Agreement shall be had against any incorporator, stockholder,
officer, director or employee of such Securitization Entity, by the enforcement
of any assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise; it being expressly agreed and understood that this
Agreement is solely a corporate obligation of Purchaser, and that no personal
liability whatever shall attach to or be incurred by the incorporators,
stockholders, officers, directors or employees of such Securitization Entity, or
any of them under or by reason of any of the obligations, covenants or
agreements of such Securitization Entity contained in this Agreement, or implied
therefrom, and that any and all personal liability for breaches by such
Securitization Entity of any of such obligations, covenants or agreements either
at common law or at equity, or by statute or constitution, of every such
incorporator, stockholder, officer, director or employee is hereby expressly
waived as a condition of and in consideration for the execution of this
Agreement; provided, however, that nothing in this Section 14.15 shall relieve
-------- -------
any of the foregoing persons or entities from any liability arising from his,
her or its willful misconduct or intentional misrepresentations.
SECTION 14.16. State Street Business Combination. The parties hereto
---------------------------------
recognize that State Street Capital is contemplating a business combination
whereby State Street Capital is to be combined with State Street Capital
Markets, L.L.C. ("SSCM"). Upon consummation of the transaction, SSCM shall
automatically become a party hereto, effective immediately upon such
combination. References herein to State Street Capital shall be deemed to
include references to SSCM.
-47-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CHARMING SHOPPES STREET, INC.
as Seller
By:__________________________________________
Name:________________________________________
Title:_______________________________________
SPIRIT OF AMERICA, INC., as Servicer
By:__________________________________________
Name:________________________________________
Title:_______________________________________
CLIPPER RECEIVABLES CORPORATION, as Purchaser
By:__________________________________________
Name:________________________________________
Title:_______________________________________
STATE STREET CAPITAL CORPORATION,
as Administrator
By:__________________________________________
Name:________________________________________
Title:_______________________________________
S-1
X-0
XXXXX XXXXXX XXXX & TRUST COMPANY,
as Relationship Bank
By:_______________________________
Name:_____________________________
Title:____________________________
S-3
Schedule 5.01(h)
to Receivables Purchase Agreement
Opinions to be Delivered Prior to Initial Funding
1. Opinions of Xxxxx, Xxxxx & Xxxxx ("MBP"), as special counsel to the
Transferors, substantially in the form attached to this Schedule.
2. Opinion of Xxxxx Xxxxx, Executive Vice President and General Counsel
of Charming Shoppes, with respect to (i) the organization of the Transferors,
(ii) the authorization by the Transferors of the Transaction Documents, (iii)
the absence of conflict with each Transferor's organizational documents,
material agreements and orders of courts and regulatory bodies having
jurisdiction over the Transferors, and (iv) litigation matters. Such opinion
shall be subject to such exceptions and qualifications as are set forth in the
opinion delivered by Xx. Xxxxx on November 25, 1997 in connection with the
issuance of Series 1997-1.
Sched-1
Schedule 6.01(j)
to Receivables Purchase Agreement
Description of Litigation
NONE
Sched-2
Schedule 6.01(n)
to Receivables Purchase Agreement
List of Offices Where Seller Records are Kept
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Sched-3
Schedule 7.01(g)
to Receivables Purchase Agreement
Description of Credit and Collection Policy
To be delivered by Servicer prior to the initial funding.
Sched-4
EXHIBIT 3.01(a)
Information Package
Exh-1
Exhibit 14.02
Addresses for Notices
Clipper Receivables Corporation
c/o State Street Capital Corporation,
as Administrator
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 02110
State Street Capital Corporation,
as Administrator
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 02110
State Street Bank & Trust Company,
as Relationship Bank
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Spirit of America, Inc.
c/o Spirit of American National Bank
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxx 00000
Charming Shoppes Street, Inc.
c/o Fashion Service Corp.
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Exh-2
