EXHIBIT 10.7
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CERTIFICATE PURCHASE AGREEMENT
among
WACHOVIA BANK, NATIONAL ASSOCIATION
as Trustee
CHARMING SHOPPES RECEIVABLES CORP.,
as Seller
SPIRIT OF AMERICA, INC.,
as Servicer
and
THE CLASS C HOLDER DESCRIBED HEREIN
dated as of August 5, 2004
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Table of Contents
Page
ARTICLE I
Definitions
SECTION 1.1 Defined Terms..............................................................................1
SECTION 1.2 Other Definitional Provisions..............................................................7
ARTICLE II
Amount and Terms of Class C Certificates
SECTION 2.1 Purchase...................................................................................8
SECTION 2.2 Distributions..............................................................................8
SECTION 2.3 Interest Rate; Payment Dates...............................................................9
SECTION 2.4 Payments...................................................................................9
SECTION 2.5 Class C Spread Account....................................................................10
SECTION 2.6 Nonrecourse and Recourse Obligations; Obligations
Absolute.............................................................................11
SECTION 2.7 Indemnification...........................................................................11
SECTION 2.8 Increased Cost, Reduced Return and Taxes..................................................13
ARTICLE III
Representations and Warranties of Seller and Servicer
SECTION 3.1 Representations and Warranties of the Servicer............................................15
SECTION 3.2 Representations and Warranties of the Seller..............................................17
ARTICLE IV
Conditions Precedent
SECTION 4.1 Representations and Warranties............................................................19
SECTION 4.2 Documents.................................................................................19
SECTION 4.3 Related Agreements........................................................................19
SECTION 4.4 Accountants' Letter.......................................................................19
SECTION 4.5 Certificate Issuance......................................................................19
SECTION 4.6 Officer's Certificates....................................................................19
SECTION 4.7 Spread Account............................................................................20
SECTION 4.8 Certificate Rating........................................................................20
SECTION 4.9 The Trustee...............................................................................20
SECTION 4.10 Additional Documents......................................................................20
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Table of Contents
(Continued)
Page
ARTICLE V
Covenants of the Seller and Servicer
SECTION 5.1 Certificates..............................................................................20
SECTION 5.2 Monthly Status Reports....................................................................20
SECTION 5.3 Servicer Default..........................................................................20
SECTION 5.4 Reassignment of Certificates..............................................................21
SECTION 5.5 Rule 144A Information.....................................................................21
SECTION 5.6 Seller Financial Information; Other Information;
Confidentiality......................................................................21
SECTION 5.7 Class C Holders' Identities...............................................................21
SECTION 5.8 Amendments and Modifications..............................................................21
SECTION 5.9 Trigger Increase Event....................................................................22
SECTION 5.10 Liens.....................................................................................22
SECTION 5.11 Discount Option Receivables...............................................................23
SECTION 5.12 Access....................................................................................23
SECTION 5.13 Performance of Agreements.................................................................23
SECTION 5.14 Payments..................................................................................23
SECTION 5.15 Further Actions...........................................................................23
SECTION 5.16 Class D Cancellation......................................................................23
ARTICLE VI
Representations, Warranties and Covenants of the Initial Class C Holder and the Trustee
SECTION 6.1 Representations, Warranties and Covenants of the Class C Holder...........................23
SECTION 6.2 Representations, Warranties and Covenants of the Trustee..................................25
ARTICLE VII
Miscellaneous
SECTION 7.1 Amendments and Waivers....................................................................25
SECTION 7.2 Servicer Transfer.........................................................................25
SECTION 7.3 Fees and Expenses.........................................................................26
SECTION 7.5 No Waiver.................................................................................26
SECTION 7.6 Severability..............................................................................26
SECTION 7.7 Termination...............................................................................26
SECTION 7.8 Transfer Restrictions.....................................................................26
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Table of Contents
(Continued)
Page
SECTION 7.9 Notices...................................................................................28
SECTION 7.10 Survival of Representations and Warranties................................................28
SECTION 7.11 Exclusive Benefit.........................................................................28
SECTION 7.12 Limitation of Remedies....................................................................28
SECTION 7.13 Counterparts..............................................................................29
SECTION 7.14 Entire Agreement..........................................................................29
SECTION 7.15 Headings..................................................................................29
SECTION 7.16 Nonpetition Agreement.....................................................................29
SECTION 7.17 Waiver of Jury Trial......................................................................29
SCHEDULE I Initial Class X. Xxxxxx
EXHIBIT A Form of Monthly Report
EXHIBIT B Form of Purchaser Representation Letter
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CERTIFICATE PURCHASE AGREEMENT, dated as of August 5, 2004, among
WACHOVIA BANK, NATIONAL ASSOCIATION, as trustee (together with its successors
and assigns, the "Trustee") for the Charming Shoppes Master Trust (the "Trust"),
SPIRIT OF AMERICA, INC., a Delaware corporation ("Spirit, Inc."), as Servicer,
CHARMING SHOPPES RECEIVABLES CORP., a Delaware corporation ("CSRC"), as Seller,
and the purchaser of the Class C Certificates named on the signature pages of
this Agreement (the "Initial Class C Holder"; and together with its permitted
transferees, the "Class C Holders").
WHEREAS the Seller, the Servicer and the Trustee have entered into a
Second Amended and Restated Pooling and Servicing Agreement, dated as of
November 25, 1997 (as amended by Amendments thereto, dated as of July 22, 1999,
May 8, 2001 and August 5, 2004, and as the same may from time to time be further
amended, modified or otherwise supplemented, the "Pooling and Servicing
Agreement"), for the Trust and the Series 2004-1 Supplement, dated as of August
5, 2004 to the Pooling and Servicing Agreement (as the same may from time to
time be amended, modified or otherwise supplemented, the "Supplement"); and
WHEREAS the Initial Class C Holder has agreed to purchase the Class C
Certificates provided for herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby expressly acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. Unless otherwise defined herein, all terms
used herein which are defined in the Pooling and Servicing Agreement or the
Supplement shall have the meanings assigned thereto in the Pooling and Servicing
Agreement or the Supplement, as the case may be, and the following terms shall
have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Administrator" shall mean State Street Global Markets, LLC and its
successors and assigns.
"Agreement" shall mean this Certificate Purchase Agreement, as amended,
supplemented or otherwise modified from time to time.
"Available Amounts" shall mean, with respect to each Distribution Date,
sum of Available Interest Amounts and Available Principal Amounts, in each case,
as of such Distribution Date.
"Available Interest Amounts" shall mean, with respect to each
Distribution Date, the sum of (a) the amounts distributed by the Servicer or the
Trustee (acting in accordance with instructions of the Servicer) for application
under this Agreement pursuant to Section 4.11(h) and 4.11(l) of Article IV under
Section 8 of the Supplement plus (b) Investment Earnings, if any,
available to be paid from the Class C Spread Account pursuant to Section 2.5
plus (c) amounts paid to the Trust pursuant to the Class C Swap.
"Available Principal Amounts" shall mean, with respect to each
Distribution Date, an amount equal to the amount distributed by the Servicer or
the Trustee (acting in accordance with instructions of the Servicer) for
application under this Agreement pursuant to Section 4.9(f)(i) of Article IV
under Section 8 of the Supplement.
"Class C Additional Interest" shall mean, on any Distribution Date, an
amount equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the related Interest Period and the denominator of
which is 360, times (B) the sum of the Class C Certificate Rate and 1% times
(ii) any Class C Deficiency Amounts from the prior Distribution Date (or the
portion thereof which has not theretofore been paid to the Class C Holders).
"Class C Certificate Rate" shall mean LIBOR plus the "Applicable
Spread" as defined in the Fee Letter.
"Class C Expected Final Payment Date" shall mean the February 2010
Distribution Date.
"Class C Holders" shall have the meaning assigned thereto to in the
preamble to this Agreement.
"Class C Reduction Amount" shall mean, on any day, the aggregate
unreimbursed amount by which the Class C Investor Interest has been reduced
below the Class C Initial Investor Interest for reasons other than the payment
of principal to the Class C Certificateholders.
"Class C Reduction Rate" shall mean, on any day, the Class C
Certificate Rate in effect on such Distribution Date plus the "Reduction Spread"
as defined in the Fee Letter.
"Class D-1 Purchase Agreement" shall mean the Certificate Purchase
Agreement, if any, among CSRC, the Servicer, the Trustee and the Initial Class C
Holder named therein, as amended, modified or otherwise supplemented from time
to time.
"Closing Date" shall mean August 5, 2004.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commercial Paper" shall mean the commercial paper promissory notes
issued by a Structured Holder in the commercial paper market.
"Commission" shall mean the Securities and Exchange Commission.
"Covered Class D-1 Certificates" shall have the meaning assigned
thereto in the Class D-1 Purchase Agreement.
"Covered Class D-1 Holder" shall mean each "Covered Class D-1 Holder"
as defined in the Class D-1 Purchase Agreement.
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"Credit Agreement" shall mean any agreement (other than the Liquidity
Agreement) now or hereafter entered into by a Structured Holder providing for
the issuance of one or more letters of credit for the account of such Structured
Holder, the making of loans to such Structured Holder or any other extensions of
credit to or for the account of such Structured Holder to support all or any
part of such Structured Holder's payment obligations under its Commercial Paper
or to provide an alternate means of funding such Structured Holder's investments
in accounts receivable or other financial assets, in each case as amended,
supplemented or otherwise modified from time to time.
"CSRC" has the meaning assigned thereto in the preamble.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Excess Yield Percentage" shall mean, with respect to any Distribution
Date, the result (expressed as a percentage) of a fraction, the numerator of
which is the product of (a) the Excess Spread for such Distribution Date, minus
(i) the Shared Excess Finance Charge Collections from Series other than Series
2004-1 included in the calculation of Excess Spread for such Distribution Date
and (ii) the sum of (A) amounts required to be applied pursuant to Sections
4.11(a) through (q) of the Supplement (other than Section 4.11(l)) plus (B) the
amounts required to be applied pursuant to Section 2.2(c)(i) through 2.2(c)(iii)
thereof of the Class D-1 Purchase Agreement plus (C) the amounts required to be
applied pursuant to Sections 2.2(b)(ii) through (2.2(b)(iv) of this Agreement
times (b) twelve, and the denominator of which is the Series Investor Interest
for such Distribution Date.
"Fee Letter" shall mean the letter agreement, dated as of the date
hereof, among the Seller, the Servicer and the Initial Class C Holder, as
amended or otherwise modified from time to time.
"Foreign" shall mean, with respect to any Funding Source that is an
assignee or participant of a Structured Holder, any Person not organized under
the laws of the United States, one of the states thereof, or the District of
Columbia.
"Funding Agreement" shall mean any agreement or instrument executed by
any Funding Source with or for the benefit of a Structured Holder.
"Funding Source" shall mean any insurance company, bank or other
financial institution providing liquidity, credit enhancement or back-up
purchase support or facilities to a Structured Holder in respect of commercial
paper issued by such Structured Holder, the proceeds of which were used to fund
the Class C Investor Interest.
"GAAP" shall mean United States generally accepted accounting
principles.
"Indemnifying Party" shall have the meaning assigned thereto in Section
2.7(b) of this Agreement.
"Indemnitee" shall have the meaning assigned thereto in Section 2.7(a)
of this Agreement.
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"Initial Class C Holder" shall have the meaning assigned thereto in the
preamble of this Agreement.
"Insolvency Event" shall mean, with respect to any Person, that any
proceeding shall be instituted by or against such Person seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, conservatorship or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian, conservator, sequestrator
or other similar official for it or for any substantial part of its property.
"Investment Earnings" shall mean, with respect to any Distribution
Date, all earnings on Class C Spread Account investments (net of losses and
investment expenses) during the Interest Period ending on such Distribution
Date.
"Liquidity Agreement" shall mean that certain Liquidity Asset Purchase
Agreement, dated as of August 5, 2004, among Clipper Receivables Company LLC,
State Street Bank and Trust Company, as Liquidity Agent, the Administrator and
each of the purchasers thereto, as amended from time to time.
"Monthly Payment Percentage" shall mean, for any Due Period, the
percentage equivalent of a fraction, the numerator of which is an amount equal
to the aggregate Collections received during such Due Period and the denominator
of which is the aggregate Outstanding Balance of all Receivables as of the close
of business on the last day of the immediately preceding Due Period.
"Proposed Transfer" shall have the meaning assigned thereto in Section
7.8(c).
"Regulation D" shall mean Regulation D of the Federal Reserve Board, or
any other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulatory Change" shall mean, relative to any Funding Source:
(a) any change in (or the adoption, implementation, phase-in
or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Funding Source;
(ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of
law) applicable to such Funding Source of (A) any court,
government authority charged with the interpretation or
administration of any law referred to in clause (a)(i) or (B)
any fiscal, monetary or other authority having jurisdiction
over such Funding Source; or
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(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Funding
Source and affecting the application to such Funding Source of
any law, regulation, interpretation, directive, requirement or
request referred to in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Funding Source of
any existing law, regulation, interpretation, directive, requirement,
request or accounting principles referred to in clause (a)(i), (a)(ii)
or (a)(iii) above.
"Repayment Amount" shall mean, as of any date, amounts owed to the
Class C Holders hereunder or under the Supplement.
"Required Class C Holders" shall mean Holders of Class C Certificates
representing more than 50% of the Class C Investor Interest.
"Required Class C Spread Amount" shall mean, with respect to any
Distribution Date, the product of (1) the sum of the Required EY Percentage plus
the Required MPR Percentage times (2) the Initial Investor Interest.
"Required EY Percentage" shall mean, with respect to any Distribution
Date, the "Required EY Percentage" set forth in the right column of the table
set forth below that corresponds to the applicable range for the Three Month
Excess Yield Percentage in effect for such Distribution Date:
Three Month Excess Yield Percentage Required EY Percentage*
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greater than or equal to 5.0% 0.0%
greater than or equal to 4.0% but less than 5.0% 1.0%
greater than or equal to than 2.0% but less than 4.0% 3.0%
less than 2.0% the Specified Percentage
*If the "Required EY Percentage" is increased for any Distribution
Date, the "Required EY Percentage" for any succeeding Distribution Date shall
not be decreased until the Three Month Excess Yield Percentage falls within the
range specified for a lower "Required EY Percentage" for three consecutive Due
Periods. Notwithstanding the foregoing, during the continuation of a Trigger
Increase Event, the "Required EY Percentage" shall be the Specified Percentage.
"Required MPR Percentage" shall mean, with respect to any Distribution
Date, the "Required MPR Percentage" set forth in the right column of the table
set forth below that corresponds to the applicable range for the Three Month MPR
Percentage in effect for such Distribution Date; provided, however, that the
"Required MPR Percentage" for any Distribution Date on which the Required EY
Percentage is the Specified Percentage shall be 0%:
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Three Month MPR Percentage Required MPR Percentage*
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greater than 7.0% 0.0%
greater than 5.0% but less than or equal to 7.0% 1.0%
equal to or less than 5.0% 2.0%
*If the "Required MPR Percentage" is increased for any Distribution
Date, the "Required MPR Percentage" for any succeeding Distribution Date shall
not be decreased until the Three Month MPR Percentage falls within the range
specified for a lower "Required MPR Percentage" for three consecutive
Distribution Periods.
"Senior Certificate Purchase Agreement" shall mean the Certificate
Purchase Agreement dated as of July 21, 2004, among the Seller, the Servicer,
Fashion Service Corp., Barclays Capital Inc. and Bear, Xxxxxxx & Company Inc.,
relating to offer and sale of the Class A Certificates, Class M Certificates and
the Class B Certificates.
"Specified Percentage" shall mean the sum of (x) 9% plus (y) if the
Class D-1 Purchase Agreement has been executed and delivered by the parties
thereto, such percentage as is specified in such agreement to be included in
this definition.
"Spirit, Inc." has the meaning assigned thereto in the preamble.
"State Street Related Party" shall mean State Street Bank and Trust
Company, the Initial Class C Holder and any other Structured Holder owned or
administered by State Street Bank and Trust Company or the Administrator.
"Structured Holder" shall mean the Initial Class C Holder and any other
Class C Holder the principal business of which consists of issuing commercial
paper promissory notes to fund its acquisition and maintenance of receivables,
accounts, instruments, chattel paper, general intangibles and other similar
assets or interests therein and which is required by any nationally recognized
rating agency which is rating such Commercial Paper to obtain from its principal
debtors an agreement such as that set forth in Section 7.16(b) of this Agreement
in order to maintain such rating.
"Taxes" shall mean, in the case of any Funding Source that is an
assignee or participant of a Structured Holder, taxes, levies, imposts,
deductions, charges, withholdings and liabilities, now or hereafter imposed,
levied, collected, withheld or assessed by any country (or any political
subdivision thereof), excluding income or franchise taxes imposed on it by (i)
the jurisdiction under the laws of which such Funding Source is organized (or by
any political subdivision thereof), (ii) any jurisdiction in which an office of
such Funding Source funding the Class C Investor Interest is located (or any
political subdivision thereof), or (iii) any jurisdiction in which such Funding
Source is already subject to tax.
"Three Month Excess Yield Percentage" shall mean, with respect to any
Distribution Date, the average of the Excess Yield Percentages for the most
recent three Distribution Dates,
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including such Distribution Date (or, if less than three Distribution Dates have
occurred since the Closing Date, for such Distribution Dates as shall have
occurred).
"Three Month MPR Percentage" shall mean, with respect to any
Distribution Date, the average of the Monthly Payment Percentages for the most
recent three Distribution Dates, including such Distribution Date (or, if less
than three Distribution Dates have occurred since the closing Date, for such
Distribution Dates as shall have occurred).
"Trigger Increase Event" shall mean any of the following events: (a)
the occurrence of an Early Amortization Event with respect to the Series 2004-1
Certificates (whether or not waived by the holders of the Series 2004-1
Certificates or declared by the Trustee) or an Appointment Day, unless, in
either case, waived by the Required Class C Holders, (b) notice by the Class C
Holders to the Servicer of a failure by the Seller or the Servicer of its
obligation to make or to give instructions to the Trustee for the making of, any
payment, transfer or deposit required by the terms of the Pooling and Servicing
Agreement, the Supplement or this Agreement (unless, in any case, waived by the
Required Class C Holders or cured on or before the applicable Distribution Date
after the Seller or the Servicer receives notice of the failure to make or give
instructions for the making of such payment, transfer or deposit), (c) notice by
the Required Class C Holders of a breach by the Seller or the Servicer of a
representation, warranty or covenant under this Agreement (unless waived by the
Required Class C Holders or cured within 30 days after the Seller or the
Servicer receives notice of such breach), (d) on or after any date on which the
Seller has reduced any designated percentage of Principal Receivables to be
treated as Finance Charge Receivables, the average of the Excess Yield
Percentages for the current and two preceding Distribution Dates (calculated as
if the amount of such designated percentage is zero) is less than 0%, unless
waived by the Class C Holders or on any subsequent Distribution Date, such
average is greater than 0% or (e) the swap counterparty under the Class C Swap
shall fail to make any payment required to be made by it pursuant to the Class C
Swap and such failure shall continue for five Business Days after written notice
thereof to such counterparty from the Trustee; or a Termination Event (as
defined in the Class C Swap), shall occur with respect to the swap counterparty
under the Class C Swap.
"Trust" has the meaning assigned thereto in the preamble.
"Trustee" has the meaning assigned thereto in the preamble.
SECTION 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular
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provision of this Agreement; and Section, subsection, Schedule, Attachment and
Exhibit references are to this Agreement, unless otherwise specified. The words
"including" and "include" shall be deemed to be followed by the words "without
limitation."
(d) References herein to the Class D-1 Purchase Agreement and terms
defined therein shall apply hereunder only when and if the Class D-1 Purchase
Agreement has been executed and delivered by the parties hereto and remains in
effect.
ARTICLE II
Amount and Terms of Class C Certificates
SECTION 2.1 Purchase. (a) Subject to terms and conditions hereof, the
Initial Class C Holder hereby agrees to purchase on the Closing Date a Class C
Certificate in a principal amount equal to the amount set forth opposite its
name in Schedule I hereto for a purchase price equal to 100% of such principal
amount.
(b) Except as otherwise set forth herein, all rights of any Class C
Holder with respect to any Class C Certificate shall be governed by the Pooling
and Servicing Agreement and the Supplement.
SECTION 2.2 Distributions. On each Distribution Date, the Trustee (at
the direction of the Servicer and upon receipt of the report substantially in
the form of Exhibit A hereto to be delivered to each Class C Holder on the
related Determination Date) shall distribute Available Amounts with respect to
such date to the following Persons in the order of priority listed below:
(a) Available Principal Amounts, if any, shall be distributed to the
Class C Holders to pay Class C Monthly Principal, if any, on such Distribution
Date.
(b) Available Interest Amounts shall be distributed as follows:
(i) an amount equal to Class C Monthly Interest for such
Distribution Date shall be distributed to the Class C Holders;
(ii) an amount equal to the lesser of (A) any amounts
remaining after the payment made pursuant to clause (i) above and
(B)(I) any Class C Deficiency Amount for such Distribution Date plus
(II) any Class C Additional Interest for such Distribution Date (and
any Class C Additional Interest previously payable pursuant to this
clause (ii) but not paid on a prior Distribution Date) shall be
distributed to the Class C Holders;
(iii) an amount equal to the lesser of (A) any amounts
remaining after the payments made pursuant to clauses (i) and (ii)
above and (B) an amount equal to the sum of any amounts owed to the
Class C Holders or any Funding Source pursuant to the Fee Letter or
Section 2.7, 2.8 or 7.3 hereof shall be distributed to the Class C
Holders;
(iv) an amount equal to the lesser of (A) any amounts
remaining after the payments made pursuant to clauses (i) through (iii)
above and (B) an amount equal to the sum of (1) the product of (x) the
Class C Reduction Amount as of the most recently
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preceding Distribution Date times (y) the Class C Reduction Rate, times
(z) a fraction, the numerator of which is the actual number of days in
the related Interest Period and the denominator of which is 360 and (2)
any amounts payable pursuant to this subclause (iv) on a prior
Distribution Date and not so paid;
(v) an amount equal to the lesser of (A) any amounts remaining
after the payments made pursuant to clauses (i) through (iv) above and
(B) on any Distribution Date occurring during the Early Amortization
Period, an amount equal to the outstanding Class C Reduction Amount on
such Distribution Date, if any, shall be distributed to the Class C
Holders, it being understood that the aggregate amount distributed to
the Class C Holders pursuant to Section 2.2(a) and this subclause (v)
shall not exceed the Class C Initial Investor Interest;
(vi) an amount equal to the lesser of (A) any amounts
remaining after the payments made pursuant to clauses (i) through (v)
above and (B) an amount equal to the excess, if any, of the Required
Class C Spread Amount over the amount on deposit in the Class C Spread
Account shall be transferred to the Class C Spread Account; and
(vii) an amount equal to the amounts remaining after the
payments made pursuant to clauses (i) through (vi) above shall be (A)
applied as "Available Interest Amounts" as defined in the Class D-1
Purchase Agreement if the Class D-1 Purchase Agreement is in effect, or
(B) otherwise, paid to the holder of the Exchangeable Seller
Certificate.
(c) In order to effect the distributions required to be made under this
Section 2.2, this Agreement hereby requires that amounts be paid pursuant to
Section 4.11(s) of Article IV under Section 8 of the Supplement, in each case to
the extent funds are available for such payment under the terms of the
Supplement, to be used to fund amounts described in Section 2.2(b).
SECTION 2.3 Interest Rate; Payment Dates.
(a) The Class C Investor Interest shall bear interest at the Class C
Certificate Rate.
(b) The Class C Reduction Amount shall bear interest at the Class C
Reduction Rate.
(c) Class C Monthly Interest, Class C Deficiency Amounts, Class C
Additional Interest and Class C Monthly Principal shall be payable on each
Distribution Date, as provided in Section 2.2 hereof and the Supplement.
SECTION 2.4 Payments. On or prior to 10:00 a.m., New York City time, on
each Distribution Date, the Servicer shall deliver instructions to the Trustee
regarding all payments to be made hereunder on such Distribution Date. All
payments to be made on behalf of the Trust hereunder, whether on account of
principal, interest, or otherwise, shall be made without setoff or counterclaim
and shall be made prior to 2:30 p.m., New York City time, on the due date
thereof, to each Class C Holder in accordance with the terms of the Pooling and
Servicing Agreement and the Supplement.
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SECTION 2.5 Class C Spread Account. (a) The Servicer, for the benefit
of the Class C Holders, shall establish and maintain or cause to be established
and maintained, a spread account (the "Class C Spread Account") for the sole and
exclusive benefit of the Class C Holders and the Covered Class D-1 Holders and,
after payment in full of the Class C Investor Interest and Class D-1 Investor
Interest, the Holder of the Exchangeable Seller Certificate. The Class C Spread
Account shall be established and maintained with the Trustee, bearing a
designation clearly indicating that the funds deposited therein are held
exclusively for the benefit of the Class C Holders and the Covered Class D-1
Holders and, after payment in full of the Class C Investor Interest and Class
D-1 Investor Interest, the Holder of the Exchangeable Seller Certificate. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Class C Spread Account and in all proceeds thereof for the
benefit of the Class C Holders and the Covered Class D-1 Holders and upon
payment in full of the Class C Investor Interest and Class D-1 Investor
Interest, the Holder of the Exchangeable Seller Certificate. The Class C Spread
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Class C Holders and the Covered Class D-1 Holders and upon
payment in full of the Class C Investor Interest and Class D-1 Investor
Interest, the Holder of the Exchangeable Seller Certificate. If, at any time,
the Class C Spread Account ceases to be established and maintained with the
Trustee, the Trustee (or the Servicer on its behalf) shall on or before the next
Distribution Date (or if such Distribution Date is not more than five Business
Days from such date, the following Distribution Date) establish a new deposit
account for the Class C Spread Account which shall be established and maintained
with a Qualified Depository Institution and shall transfer any cash and/or any
investments to such new deposit account and from the date such new account is
established, it shall be the Class C Spread Account. The Trustee at the written
direction of the Servicer (or the Servicer on the Trustee's behalf) shall make
withdrawals from the Class C Spread Account from time to time for the purposes
set forth in this Section 2.5. Funds on deposit in the Class C Spread Account
shall be invested at the written direction of the Servicer by the Trustee in
Permitted Investments. All such investments shall be held by the Trustee for the
benefit of the Class C Holders and the Covered Class D-1 Holders (and upon
payment in full of the Class C Investor Interest and Class D-1 Investor
Interest, the Holder of the Exchangeable Seller Certificate); provided that on
each Distribution Date, the Trustee shall (upon the written instruction of the
Servicer and in accordance with the information set forth in Exhibit A) apply
all interest and other investment earnings (net of losses and investment
expenses) as Available Interest Amounts, to the extent such interest and
earnings together with other funds in the Class C Spread Account exceed the
Required Class C Spread Amount, as provided in Section 2.2). Funds on deposit in
the Class C Spread Account shall be invested in Permitted Investments having
maturities such that such funds will be available not later than the succeeding
Distribution Date.
(b) If on any Distribution Date the aggregate amount available for
distribution pursuant to Section 2.2 on such Distribution Date is less than the
aggregate amount required to be distributed pursuant to Sections 2.2 (b)(i)
through (v), then the Servicer shall direct the Trustee to withdraw the amount
of such deficiency, up to the amount available in the Class C Spread Account,
from the Class C Spread Account and apply such amount in the order of priority
and in the manner set forth in Sections 2.2 (b)(i) through (v).
(c) If on any Distribution Date on which a Covered Class D-1 Holder is
a Class D-1 Holder, the aggregate amount available for distribution pursuant to
Section 2.2 (including any
10
Redirected Payments (as defined in the Class D-1 Purchase Agreement) on such
Distribution Date) of the Class D-1 Purchase Agreement is less than the
aggregate amount required to be distributed pursuant to Section 2.2(a)(i) and
2.2(b)(i) of the Class D-1 Purchase Agreement, then, after giving effect to any
withdrawals from the Class C Spread Account pursuant to paragraph (b) above, the
Servicer shall direct the Trustee to withdraw the amount of such deficiency, up
to the amount available in the Class C Spread Account and apply such amount in
accordance with Section 2.8 of the Class D-1 Purchase Agreement.
(d) If on any Distribution Date, after giving effect to all withdrawals
from and deposits to the Class C Spread Account, including any withdrawals
required under paragraphs (b) and (c) above, the amount on deposit in the Class
C Spread Account would exceed the Required Class C Spread Amount, then such
excess shall be distributed on such date to the Holder of the Exchangeable
Seller Certificate. On the date on which the Class C Investor Interest and the
Class D-1 Investor Interest have been reduced to zero and all other amounts
owing to the Class C Holders hereunder and under the Supplement and all other
amounts owing to the Class D-1 Holders under the Class D-1 Purchase Agreement
and the Supplement have been paid in full, the Servicer shall direct the Trustee
to distribute all amounts then remaining in the Class C Spread Account to the
Holder of the Exchangeable Seller Certificate.
SECTION 2.6 Nonrecourse and Recourse Obligations; Obligations Absolute.
Except as provided in Section 2.7, notwithstanding any provision in any other
Section of this Agreement to the contrary, the obligation to pay the Repayment
Amount shall be without recourse to (i) the Seller, the Servicer, the Trustee,
any Certificateholder, any Certificate Owner, any Receivables Purchaser or any
Purchaser Representative or (ii) any affiliate, officer, director, employee or
agent of any Person described in clause (i), and the obligation to pay such
amounts hereunder shall be limited solely to the application of Available
Amounts, as described in Section 2.2 hereof, and withdrawals from the Class C
Spread Account as described in Section 2.5 hereof, in the Pooling and Servicing
Agreement and the Supplement, which amounts shall be subordinated to the rights
of other Investor Certificateholders as provided herein and in the Pooling and
Servicing Agreement and the Supplement.
SECTION 2.7 Indemnification. (a) The Trust, acting through the Trustee
(and at the direction of the Servicer), but only to the extent funds are
available therefor under Section 2.2 and Section 2.5, the Seller and the
Servicer agree to indemnify and hold harmless each Class C Holder and any
director, officer, employee, representative or agent of such Class C Holder
(each such Person being an "Indemnitee") from and against any and all claims,
damages, losses, liabilities, costs or expenses (including reasonable fees and
expenses of counsel) whatsoever (other than claims for payment of Class C
Monthly Interest, Class C Deficiency Amounts and Class C Monthly Principal)
which the Indemnitee may incur (or which may be claimed against the Indemnitee)
by reason of or in connection with (i) the execution and delivery of payment
under, this Agreement or the Class C Investor Interest or (ii) the transactions
contemplated hereby, except (A) to the extent that any such claim, damage, loss,
liability, cost or expense shall be caused by the willful misconduct or gross
negligence of the Indemnitee in performing its obligations under this Agreement
or a Class C Certificate, (B) to the extent that any such claim, damage, loss,
liability, cost or expense relates to any income or franchise tax based on the
net income of such Class C Holder or any other tax upon or measured by income,
gross receipts, assets or capital of such Class C Holder imposed by the United
States of America or by any
11
state, locality or foreign jurisdiction in which such Class C Holder maintains
an office or permanent establishment or is otherwise doing business or (C) as
provided in Section 7.3 hereof. If an Indemnitee has a claim for indemnification
pursuant to this Section 2.7 arising from (i) any representation and warranty of
the Seller or the Servicer made herein or in the Pooling and Servicing Agreement
being incorrect in any material respect when made, (ii) noncompliance by the
Seller or the Servicer with the terms and provisions of this Agreement, the
Pooling and Servicing Agreement or the Supplement or (iii) the amounts of any
Class C Reduction Amount, to the extent such amounts represent amounts which the
Seller or the Servicer failed to deposit in the Collection Account in accordance
with the Pooling and Servicing Agreement, together with interest thereon, such
claim, notwithstanding the terms of Section 2.6, shall be with recourse to the
Seller or the Servicer, as the case may be, but not to any successor to the
Servicer. Notwithstanding the preceding sentence, the sole remedy against the
Seller or the Servicer for a breach of a representation, warranty or covenant
made in the Pooling and Servicing Agreement shall be limited to the right to
remedies provided therein and this Section 2.7 is not intended to create any
claim against the Seller or Servicer not otherwise created by the terms of the
Pooling and Servicing Agreement.
(b) Promptly after the receipt by any Indemnitee of a notice of
commencement of any action, such Indemnitee will, if a claim in respect thereof
is to be made against the Trust, the Seller or the Servicer pursuant to Section
2.7(a) (the "Indemnifying Party"), notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify such Indemnifying Party
will not relieve such Indemnifying Party from any liability which it may have to
such Indemnitee pursuant to Section 2.7(a) except and to the extent of any
prejudice to such Indemnifying Party arising from such failure to provide such
notice. In case any such action shall be brought against any Indemnitee and it
shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
Indemnitee (who shall not, except with the consent of such Indemnitee, be
counsel to the Indemnifying Party) with respect to such action, and it being
understood that the Indemnifying Party shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for all such indemnified parties. Upon receipt of notice from an
Indemnifying Party to such Indemnitee of such Indemnifying Party's election so
to appoint counsel to assume the defense of such action and approval by such
Indemnitee of such counsel, such Indemnifying Party will not be liable to such
Indemnitee under this Section 2.7 for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof other than
reasonable costs of investigation. No Indemnifying Party shall, without the
prior written consent of the Indemnitee, effect any settlement of any pending or
threatened action in respect of which any Indemnitee is or could have been a
party and indemnity could have been sought hereunder by such Indemnitee unless
such settlement includes an unconditional release of such Indemnitee from all
liability on any claims that are the subject matter of such action. No
Indemnifying Party shall be liable under this section for any settlement of any
claim or action effected without their prior written consent, which shall not be
unreasonably withheld. Notwithstanding the foregoing, in case any action is
brought against an Indemnitee in which the Seller, the Servicer or the Trust is
a defendant, and such Indemnitee shall have concluded that there may be legal
defenses available to it that are different from or
12
additional to those available to the Seller, the Servicer or the Trust, such
Indemnitee shall have the right to select and, at its own expense, retain
separate counsel to assert such legal defenses and to otherwise participate in
the defense.
SECTION 2.8 Increased Cost, Reduced Return and Taxes.
(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), special deposit or similar requirement against assets
of any Funding Source, deposits or obligations with or for the account
of any Funding Source or with or for the account of any affiliate (or
entity deemed by the Federal Reserve Board to be an affiliate) of any
Funding Source, or credit extended by any Funding Source under any
Funding Agreement; or
(B) shall change the amount of capital maintained or required
or requested or directed to be maintained by any Funding Source; or
(C) shall impose any other condition affecting any Class C
Certificates owned or funded in whole or in part by any Funding Source,
or its obligations or rights, if any, to fund the Class C Investor
Interest;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of Regulation D
referred to above, to impose a cost on) a Funding Source funding the
Class C Investor Interest, any purchases, reinvestments, or loans or
other extensions of credit under the Liquidity Agreement or any Credit
Agreement, or any commitment of such Funding Source with respect to any
of the foregoing,
(y) to reduce the amount of any sum received or receivable by
a Funding Source under the Liquidity Agreement or the Credit Agreement
with respect thereto, or
(z) in the reasonable determination of such Funding Source, to
reduce the rate of return on the capital of a Funding Source as a
consequence of its obligations arising in connection herewith to a
level below that which such Funding Source could otherwise have
achieved but for Regulation D or such Regulatory Change,
then within thirty days after demand by such Funding Source (which demand shall
be accompanied by a statement setting forth the basis of such demand), the Trust
shall pay to the applicable Structured Holder solely from Available Amounts
available therefor in accordance with Section 2.2(b) for the benefit of such
Funding Source, such amounts charged to such Funding Source or to compensate
such Funding Source for such reduction. This Section 2.8(a) shall not apply to
Taxes. For the avoidance of doubt, any interpretation of Accounting Research
Bulletin No. 51 by the Financial Accounting Standards Board (including
Interpretation of No.
13
46: Consolidation of Variable Entities) shall constitute an adoption, change,
request or directive subject to this Section 2.8(a).
(b) Each Funding Source will promptly notify the applicable Structured
Holder and the Seller of any event of which it has knowledge which will entitle
such Funding Source to compensation pursuant to this Section 2.8; provided,
however, no failure to give or delay in giving such notification shall adversely
affect the rights of any Funding Source to such compensation.
(c) In determining any amount provided for or referred to in this
Section 2.8, a Funding Source may use any reasonable averaging and attribution
methods that it (in its sole discretion) shall deem applicable. Any Funding
Source when making a claim under this Section 2.8 shall submit to the applicable
Structured Holder and the 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) Each Structured Holder agrees that it shall use its reasonable best
efforts to take any action that will avoid the need to pay, or will reduce the
amount of, any increased amounts referred to in paragraph (a) and agrees that
the Servicer may require such Structured Holder to replace a Funding Source if
there arises any obligation to make any payments to such Funding Source pursuant
to this Section 2.8; provided that a Structured Holder shall not be obligated to
take any actions that would, in the reasonable opinion of such Structured
Holder, be disadvantageous to such Structured Holder and shall not be required
to replace any Funding Source unless such replacement Funding Source is
reasonably acceptable to such Structured Holder.
(e) Subject to Section 2.8(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
Funding Source that is an assignee or participant of a Structured Holder, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.8(e)), such Foreign Funding Source receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Trustee shall make such deductions and (iii) the Trustee shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law solely from Available Amounts available therefor
in accordance with Section 2.2.
(f) Each Foreign Funding Source that is an assignee or participant of a
Structured Holder, on or prior to the date pursuant to which it becomes an
assignee or participant of the such Structured Holder, and from time to time
thereafter if requested in writing by the Seller (unless such Funding Source can
no longer lawfully do so due to a change in law subsequent to the date it became
an assignee or participant of such Structured Holder hereunder), shall provide
Seller and the Trustee with Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Funding Source 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
14
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 Funding Source that is a
Foreign assignee or participant of a Structured Holder has failed to provide the
Seller with the appropriate form described in Section 2.8(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 Funding Source shall not be
entitled to payments of additional amounts under Section 2.8(e).
ARTICLE III
Representations and Warranties of Seller and Servicer
SECTION 3.1 Representations and Warranties of the Servicer. Spirit,
Inc., as Servicer, hereby represents and warrants to the Initial Class
C Holder as of the Closing Date as follows:
(a) Organization and Good Standing. The Servicer is a corporation duly
organized and validly existing under the laws of the State of Delaware and has
full corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement and each other Transaction Document to which it is a party.
(b) Due Qualification. The Servicer is duly qualified to do business
and is in good standing (or is exempt from such requirement) in any state
required in order to conduct its business, and has obtained all necessary
licenses and approvals with respect to the Servicer required under applicable
law, except in each case where the failure to do so would not individually or in
the aggregate have a material adverse effect on the Class C Certificates.
(c) Due Authorization. The execution and delivery by the Servicer of
this Agreement and each other Transaction Document to which it is a party and
the consummation of the transactions provided for hereunder and thereunder have
been duly authorized by the Servicer by all necessary corporate action on its
part and this Agreement and each other Transaction Document to which it is a
party will remain, from the time of its execution, an official record of the
Servicer.
(d) Enforceability. Each of this Agreement and each other Transaction
Document to which the Servicer is a party has been duly executed and delivered
by the Servicer and constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its terms, except
as such enforceability may be limited by Debtor Relief Laws.
(e) No Conflict. The execution and delivery of this Agreement and each
other Transaction Document to which the Servicer is a party, the performance of
the transactions contemplated hereunder and thereunder and the fulfillment of
the terms hereof and thereof will not conflict with, result in any breach of any
of the material terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Servicer is a party or
by which it or any of its properties are bound.
15
(f) No Violation. The execution and delivery of this Agreement and each
other Transaction Document to which the Servicer is a party, the performance of
the transactions contemplated hereunder and thereunder and the fulfillment of
the terms hereof and thereof will not conflict with or violate in any material
respect any Requirements of Law applicable to the Servicer.
(g) No Proceedings. There are no actions, investigations or proceedings
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) asserting the invalidity of this
Agreement or any other Transaction Document to which it is a party, (ii) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement or any other Transaction Document, (iii) seeking any determination or
ruling that, in the reasonable judgment of the Servicer, would materially and
adversely affect the performance by the Servicer of its obligations under this
Agreement or any other Transaction Document to which it is a party, (iv) seeking
any determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement or any other Transaction Document
or (v) seeking to affect adversely the income tax attributes of the Trust.
(h) All Consents Required. All appraisals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery by the Servicer of this
Agreement and each other Transaction Document to which it is a party, the
performance of the transactions contemplated hereunder and thereunder and the
fulfillment of the terms hereof, have been obtained.
(i) Incorporated Representations and Warranties. Its representations
and warranties in Section 3.3 of the Pooling and Servicing Agreement are true
and correct in all material respects as of the dates they were so made.
(j) Financial Statements. The Servicer has delivered to the Initial
Class C Holder complete and correct copies of the audited consolidated balance
sheet and audited consolidated statement of income of Charming Shoppes, Inc. for
the fiscal year ended January 31, 2004.
(k) No Adverse Change. There has not been any material adverse change
in the business, operations, financial condition, properties or assets of the
Servicer since the date of its formation.
(l) Trust Indenture Act; Investment Company Act. Neither the Pooling
and Servicing Agreement nor the Supplement is required to be qualified under the
Trust Indenture Act of 1939, and the Trust is not required to be registered
under the Investment Company Act of 1940, as amended.
(m) No Early Amortization Event, Insolvency Event or Servicer Default.
No Early Amortization Event with respect to the Series 2004-1 Certificates,
Insolvency Event, or Servicer Default has occurred and is continuing, and no
event, act or omission has occurred and is continuing which, with the lapse of
time, the giving of notice or both, would constitute such an Early Amortization
Event, Insolvency Event or Servicer Default.
16
(n) Reports. No report, statement, exhibit or other written information
required to be furnished by the Servicer or any of its Affiliates, agents or
representatives to the Class C Holders pursuant to this Agreement, the Pooling
and Servicing Agreement or the Supplement is or shall be inaccurate in any
material respect, or contains or shall contain any material misstatement of
fact, or omits or shall omit to state a material fact or any fact necessary to
make the statements contained therein not misleading, in each case, as of the
date it is or shall be dated or (except as otherwise disclosed to the Class C
Holders at such time) as of the date so furnished.
SECTION 3.2 Representations and Warranties of the Seller. CSRC, as
Seller, hereby represents and warrants to the Initial Class C Holder as of the
Closing Date as follows:
(a) Organization and Good Standing. The Seller is a corporation duly
organized and validly existing under the laws of the State of Delaware and has
full corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement and each other Transaction Document to which it is a party.
(b) Due Qualification. The Seller is duly qualified to do business and
is in good standing (or is exempt from such requirement) in any state required
in order to conduct its business, and has obtained all necessary licenses and
approvals with respect to the Seller required under applicable law, except in
each case where the failure to do so would not individually or in the aggregate
have a material adverse effect on the Class C Certificates.
(c) Due Authorization. The execution and delivery by the Seller of this
Agreement and each other Transaction Document to which it is a party and the
consummation of the transactions provided for hereunder and thereunder have been
duly authorized by the Seller by all necessary corporate action on its part and
this Agreement and each other Transaction Document to which it is a party will
remain, from the time of its execution, an official record of the Seller.
(d) Enforceability. Each of this Agreement and each other Transaction
Document to which the Seller is a party has been duly executed and delivered by
the Seller and constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by Debtor Relief Laws.
(e) No Conflict. The execution and delivery of this Agreement and each
other Transaction Document to which the Seller is a party, the performance of
the transactions contemplated hereunder and thereunder and the fulfillment of
the terms hereof and thereof will not conflict with, result in any breach of any
of the material terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Seller is a party or
by which it or any of its properties are bound.
(f) No Violation. The execution and delivery of this Agreement and each
other Transaction Document to which the Seller is a party, the performance of
the transactions contemplated hereunder and thereunder and the fulfillment of
the terms hereof and thereof will
17
not conflict with or violate in any material respect any Requirements of Law
applicable to the Seller.
(g) No Proceedings. There are no actions, investigations or proceedings
pending or, to the best knowledge of the Seller, threatened against the Seller
before any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement or
any other Transaction Document to which it is a party, (ii) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement or
any other Transaction Document, (iii) seeking any determination or ruling that,
in the reasonable judgment of the Seller, would materially and adversely affect
the performance by the Seller of its obligations under this Agreement or any
other Transaction Document to which it is a party, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement or any other Transaction Document or (v)
seeking to affect adversely the income tax attributes of the Trust.
(h) All Consents Required. All appraisals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery by the Seller of this
Agreement and each other Transaction Document to which it is a party, the
performance of the transactions contemplated hereunder and thereunder and the
fulfillment of the terms hereof, have been obtained.
(i) Incorporated Representations and Warranties. Its representations
and warranties in Sections 2.3 and 2.4 of the Pooling and Servicing Agreement
are true and correct in all material respects as of the dates they were so made.
(j) Trust Indenture Act; Investment Company Act. Neither the Pooling
and Servicing Agreement nor the Supplement is required to be qualified under the
Trust Indenture Act of 1939, and the Trust is not required to be registered
under the Investment Company Act of 1940, as amended.
(k) No Early Amortization Event, Insolvency Event or Servicer Default.
No Early Amortization Event with respect to the Series 2004-1 Certificates,
Insolvency Event, or Servicer Default has occurred and is continuing, and no
event, act or omission has occurred and is continuing which, with the lapse of
time, the giving of notice or both, would constitute an Early Amortization
Event, Insolvency Event or Servicer Default.
(l) No Adverse Change. There has not been any material adverse change
in the business, operations, financial condition, properties or assets of the
Seller since the fiscal year ended January 31, 2004.
(m) Class C Certificates. The Class C Certificates have been duly and
validly authorized, and, when executed and authenticated in accordance with the
terms of the Pooling and Servicing Agreement and the Supplement and delivered to
and paid for in accordance with this Agreement, will be duly and validly issued
and outstanding, and will be entitled to the benefits of the Pooling and
Servicing Agreement, the Supplement and this Agreement.
(n) Securities Laws. Based upon, among other things, the
representations and warranties of the Initial Class C Holders hereunder, the
sale of the Class C Certificates pursuant
18
to the terms of this Agreement, the Pooling and Servicing Agreement and the
Supplement will not require the registration of such Class C Certificates under
the Securities Act of 1933, as amended.
ARTICLE IV
Conditions Precedent
Sections 4.1 through 4.10 constitute conditions precedent to the
obligation of the Initial Class C Holder to purchase the Class C Certificates on
the Closing Date.
SECTION 4.1 Representations and Warranties. On the Closing Date and
after giving effect to the issuance of the Series 2004-1 Certificates, all
representations and warranties of the Seller and the Servicer contained herein
or in the Purchase Agreement and the Pooling and Servicing Agreement or
otherwise made in writing pursuant to any of the provisions hereof or thereof
shall be true and correct in all material respects with the same force and
effect as though such representations and warranties had been made on and as of
such date (unless such representations and warranties specifically relate to an
earlier date).
SECTION 4.2 Documents. The Initial Class C Holder shall have received
an executed copy of each document described in Section 6 of the Senior
Certificate Purchase Agreement (excluding Section 6(j) and the second sentence
of Section 6(e) but including reliance letters on all opinions delivered to the
Rating Agencies).
SECTION 4.3 Related Agreements. The Initial Class C Holders shall have
received copies of each of the Purchase Agreement, the Pooling and Servicing
Agreement, the Security Agreement, the Supplement (which shall be satisfactory
to the Initial Class C Holder) and the Senior Certificate Purchase Agreement,
duly executed by the parties thereto.
SECTION 4.4 Accountants' Letter. The Initial Class C Holder shall have
received a copy of the letter of Ernst & Young, delivered pursuant to Section
6(m) of the Senior Certificate Purchase Agreement.
SECTION 4.5 Certificate Issuance. On or prior to the Closing Date (i)
all Series 2004-1 Certificates shall have been duly executed and authenticated
and delivered in accordance with Section 6.2 of the Pooling and Servicing
Agreement, (ii) the Class C Certificates shall have been delivered to the
Initial Class C Holder in accordance with the terms hereof, and (iii) the Class
A Certificates, Class M Certificates and Class B Certificates shall have been
sold pursuant to the Senior Certificate Purchase Agreement.
SECTION 4.6 Officer's Certificates. On the Closing Date, the Initial
Class C Holder shall have received from the Seller and the Servicer, as
applicable, a certificate of (a) an Assistant Secretary of the Seller or the
Servicer, as the case may be, attaching a copy of the resolutions of the Board
of Directors of such Person, authorizing the execution, delivery and performance
of this Agreement and the other Transaction Documents to which the Seller or the
Servicer, as applicable, is a party, and as to the incumbency of certain
officers of the Seller or the Servicer, as applicable, authorized to execute
this Agreement and the other Transaction
19
Documents to which such Person is a party, and (b) an authorized officer of each
of the Seller and the Servicer as to the fulfillment of the condition set forth
in Section 4.1 (as the same relates to such Person).
SECTION 4.7 Spread Account. On the Closing Date, the Initial Class C
Holder shall have received from the Trustee satisfactory evidence of the
establishment of the Class C Spread Account.
SECTION 4.8 Certificate Rating. On the Closing Date, the Initial Class
C Holder shall have received evidence reasonably satisfactory to it that the
Class A Certificate will be rated in the highest rating category by at least one
nationally recognized rating agency, the Class M Certificates will be rated at
least "AA" by at least one nationally recognized rating agency, the Class B
Certificates will be rated at least "A" by at least one nationally recognized
rating agency, and that the Class C Certificates will be rated at least "Baa2"
or its equivalent by at least one nationally recognized rating agency.
SECTION 4.9 The Trustee. The Initial Class C Holder shall have received
a certificate from the Trustee, in form and substance reasonably satisfactory to
it covering the incumbency and specimen signatures of its officers executing
such documents.
SECTION 4.10 Additional Documents. The Initial Class C Holder shall
have received such additional certificates, letters or opinions as it or its
counsel may reasonably request.
ARTICLE V
Covenants of the Seller and Servicer
Each of the Seller and Servicer (and each Successor Servicer) covenants
and agrees that, until the Class C Investor Interest is reduced to zero, unless
the Required Class C Holders shall otherwise consent in writing, each of the
Seller and Servicer (and each Successor Servicer) will:
SECTION 5.1 Certificates. Furnish to the Class C Holders a copy of each
certificate, report, statement, notice or other communication furnished by or on
behalf of the Seller or the Servicer to the Trustee or to the Rating Agencies
concurrently therewith and furnish to the Class C Holders promptly after receipt
thereof a copy of each notice, demand or other communication received by or on
behalf of Seller or Servicer with respect to the Series 2004-1 Certificates,
this Agreement, the Pooling and Servicing Agreement or the Supplement.
SECTION 5.2 Monthly Status Reports. Furnish to each Class C Holder (or
cause to be furnished to each Class C Holder), two Business Days prior to each
Distribution Date information relating to distributions of Available Amounts and
amounts on deposit in the Class C Spread Account in a certificate substantially
in the form of Exhibit A hereto, and such other information with respect to the
Trust's property as the Required Class C Holders may reasonably request
(including a copy of the monthly statements with respect to the Class C Spread
Account furnished by the Trustee).
SECTION 5.3 Servicer Default. Furnish to each Class C Holder, promptly
after the occurrence of any Servicer Default, a certificate of an appropriate
officer of the Servicer setting
20
forth the circumstances of such Servicer Default and any action taken or
proposed to be taken by the Servicer with respect thereto.
SECTION 5.4 Reassignment of Certificates. Not effect a reassignment of
the Series 2004-1 Certificates pursuant to Section 12.2 of the Pooling and
Servicing Agreement and Section 4 of the Supplement unless the Class C Investor
Interest and all other amounts owing to the Class C Holders hereunder and under
the Supplement shall have been paid in full.
SECTION 5.5 Rule 144A Information. The Seller will promptly furnish or
cause to be furnished to any Class C Holder and upon request of any Class C
Holder, to any prospective purchaser of any Class C Certificate, copies of the
information required to be delivered to Class C Holders and any prospective
purchasers pursuant to Rule 144A(d)(4) under the Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection with resales
by such holders of the Class C Certificates. The Seller shall pay the expenses
of printing and distributing all such documents.
SECTION 5.6 Seller Financial Information; Other Information;
Confidentiality.
(a) Furnish to the Class C Holders (or in the case of clause (ii) cause
the Trustee to furnish) (i) no later than 45 days following the end of each
quarter, in the case of the Originator, its call report for such quarterly
period, and in any other case, such other publicly available financial
information, if any, as to the Originator, Spirit, Inc., Charming Shoppes, Inc.
, CSRC or the Receivables as the Required Class C Holders may reasonably
request, (ii) a copy of each report prepared under Section 3.6(b) of the Pooling
and Servicing Agreement, and (iii) notice of the occurrence of any Early
Amortization Event with respect to the Series 2004-1 Certificates. All such
information acquired by a Class C Holder hereunder shall be kept confidential to
the extent provided in Section 6.1(b).
(b) Use reasonable efforts to cause all information provided to any
Class C Holder pursuant to this Agreement, the Pooling and Servicing Agreement
or the Supplement, or in connection with any action required or permitted to be
taken hereunder or thereunder, to be complete and accurate in all material
respects.
SECTION 5.7 Class C Holders' Identities. Maintain as confidential and
not disclose to any Person (other than any officer, employee, agent, counsel,
advisor, Rating Agency or representative of a party hereto or any underwriter of
the Series 2004-1 Certificates or its counsel) the pricing terms of this
Agreement or the identify of any Class C Holder, except as such Class C Holder
may have consented to in writing prior to any proposed disclosure or except as
the Servicer, CSRC or the Originator may have been advised by counsel is (i)
required by law, including, without limitation, any securities or banking laws,
rules, orders or regulations or (ii) reasonably necessary or desirable in
connection with any lawsuit or governmental investigation or proceeding;
provided, however, that in any such instance, the Servicer or the Seller, as
applicable, shall notify such Class C Holder of its intention to make any such
disclosure prior to making such disclosure.
SECTION 5.8 Amendments and Modifications. (a) Not amend, waive or
otherwise modify the provisions of the Supplement or any Interest Rate Swap
Agreement, or the
21
performance of any of the terms thereof, unless the Class C Holders have
consented in writing to such amendment, waiver or modification, which consent
shall not be unreasonably withheld or delayed.
(b) In addition to the requirements of Section 13.1 of the Pooling and
Servicing Agreement, not amend the Pooling and Servicing Agreement without the
prior written consent of the Class C Holders unless such amendment shall not, as
evidenced by an Opinion of Counsel for the Seller addressed to the Trustee and
the Class C Holders, adversely affect in any material respect the interests of
the Class C Holders. For the avoidance of doubt, the following actions shall not
require the consent of the Class C Holders:
(1) the issuance of a new Series pursuant to and in accordance
with the terms of the Pooling and Servicing Agreement;
(2) the addition of Accounts, including Additional Accounts,
pursuant to Section 2.6 of the Pooling and Servicing
Agreement; provided that with respect to any designation of
Additional Accounts pursuant to Section 2.6(b) of the
Agreement, the Seller shall have provided the Class C
Certificateholders with an Officer's Certificate certifying
that such designation of Additional Accounts will not, as of
the related Addition Date, (x) result in a reduction or
withdrawal by either Rating Agency of its ratings for the
Series 2004-1 Certificates, (y) cause a Series 2004-1 Early
Amortization Event to occur or (z) be reasonably expected by
the Seller to materially adversely affect in any manner the
timing or amount of payments to the Class C
Certificateholders;
(3) the removal of Accounts pursuant to Section 2.7 of the Pooling
and Servicing Agreement; and
(4) the amendment of a supplement or receivables purchase
agreement other than the Supplement.
(c) Not increase the Series 2004-1 Investor Monthly Servicing Fee as
contemplated by Section 3 of the Supplement unless the Class C Holders have
consented thereto, which consent will not be unreasonably withheld or delayed.
SECTION 5.9 Trigger Increase Event. Furnish to the Class C Holders,
promptly after the occurrence of any Trigger Increase Event, a certificate of an
appropriate officer of the Servicer setting forth the circumstances of such
Trigger Increase Event and any action taken or proposed to be taken by the
Servicer, if any, with respect thereto and furnish to the Class C Holders such
other information with respect to any such Trigger Increase Event as any Class C
Holder may reasonably request.
SECTION 5.10 Liens. Not create, incur or otherwise permit to exist any
mortgage, pledge, lien or other encumbrance on the Class C Spread Account other
than any interests of the Class C Holders, the Covered Class D-1 Holders and the
Holder of the Exchangeable Seller Certificate.
22
SECTION 5.11 Discount Option Receivables. In the event that the Seller
has given the Trustee notice of the designation of Discount Option Receivables,
not terminate or discontinue or reduce such amount without the written consent
of the Class C Holders unless, on or prior to the date of such discontinuance or
reduction, the amount on deposit in the Class C Spread Account is equal to the
Required Class C Spread Amount (determined as if no such discount is in effect).
SECTION 5.12 Access. At such reasonable times as the Class C Holders
may notify the Seller and the Servicer upon five Business Days' notice in
writing or by telephone during normal business hours and at the expense of the
Class C Holders, afford the Class C Holders reasonable access to all records
maintained by the Seller or the Servicer relating to the Receivables for
purposes of inspection, to which inspection the Trustee by its acceptance of
this Agreement hereby consents.
SECTION 5.13 Performance of Agreements. For the benefit of the Class C
Holders, perform each of their respective agreements, representations,
warranties, covenants and indemnities under, and comply in all material respects
with each of the respective terms and provisions applicable to it in, the
Pooling and Servicing Agreement and Supplement which are hereby incorporated by
reference into this Agreement as if set forth herein in full.
SECTION 5.14 Payments. Subject to Section 2.6, timely make all
payments, deposits or transfers and give all instruction to transfer when
required under the Pooling and Servicing Agreement and the Supplement.
SECTION 5.15 Further Actions. Execute and promptly deliver to the Class
C Holders all such documents and instruments and do all such other acts and
things as may be necessary or reasonably required by the Class C Holders or the
Trustee to enable the Trustee or the Class C Holders to exercise and enforce
their respective rights under this Agreement, the Pooling Agreement, the
Supplement and to realize thereon, and the Seller shall record and file and
re-record and refile all such documents and instruments, at such time or times,
in such manner and at such place or places, as may be necessary or reasonably
required by the Trustee or the Class C Holders to validate, preserve, perfect
and protect the position of the Trustee or the Class C Holders hereunder and
under the Pooling and Servicing Agreement and the Supplement and the Sellers and
the Servicer shall maintain each of such documents as part of its official
records.
SECTION 5.16 Class D Cancellation. Not cause any Class D Certificate to
be cancelled under Section 4.16 of the Supplement if, at the time of such
cancellation (or immediately after giving effect thereto), (i) an Early
Amortization Event has occurred and is continuing, or (ii) the Three Month
Excess Yield Percentage is less than 2%.
ARTICLE VI
Representations, Warranties and Covenants of the Initial Class C Holder
and the Trustee
SECTION 6.1 Representations, Warranties and Covenants of the Class C
Holder. (a) As of the date hereof, the Initial Class C Holder represents and
warrants (and each other Class C Holder shall be deemed to represent and warrant
as of the date that its acquisition of any Class C Certificate becomes
effective) that:
23
(i) it is a "qualified institutional buyer" as that term is
defined under Rule 144A of the Act and it is not purchasing the Class C
Certificate with a view to making a distribution thereof (within the
meaning of the Securities Act);
(ii) either (x) it is not acquiring such Class C Certificate
with the assets of an "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") whether or not subject to ERISA, any "plan" described
in Section 4975(e)(1) of the Code or any entity deemed to hold "plan
assets" of any of the foregoing (each, a "Benefit Plan Investor") or
(y) it is an insurance company purchasing the Class C Certificate with
assets of its general account, and at the time of acquisition and
throughout the period of holding, (a) it meets all of the requirements
of and is eligible for exemptive relief under Prohibited Transaction
Class Exemption 95-60; (b) less than 25% of the assets of such general
account are assets of Benefit Plan Investors; and (c) it is not a
servicer to the Trust or an affiliate of a servicer to the Trust, and
would not otherwise be excluded under 29 CFR Section 2510.3-101(f)(1);
(iii) no registration with consent or approval of or other
action by any federal, state or other governmental authority or
regulatory body having jurisdiction over it is required in connection
with the execution, delivery or performance by it of this Agreement;
and
(iv) such Class C Holder is 1 Private Holder and is a U.S.
Person (as defined in Section 7701(a)(30) of the Code).
(b) Each Class C Holder covenants and agrees to maintain as
confidential, not disclose to any Person (other than any officer, employee,
agent, counsel, advisor or representative of a party hereto) and not use for any
purpose other than in connection with this Agreement, all information acquired
by such Class C Holder that is not publicly available relating to the Trust, the
Originator, the Seller or the Servicer which it obtained in connection with the
transactions contemplated hereby, except (x) as the Trustee, the Seller, the
Originator or the Servicer may have consented to in writing prior to any
proposed disclosure, (y) if such Class C Holder is a Structured Holder, such
information may be disclosed to Persons that hold subordinated notes issued by
such Structured Holder, and (z) as it may have been advised by counsel is (i)
required by law, including, without limitation, any securities or banking laws,
rules, orders or regulations or (ii) reasonably necessary or desirable in
connection with any lawsuit or governmental investigation or proceeding,
provided, however, that in any such instance such Class C Holder will notify the
Seller and the Servicer of its intention to make any such disclosure prior to
making any such disclosure. Notwithstanding anything herein to the contrary, (a)
each of the parties to this Agreement (and each employee, representative or
other agent of such parties) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to such parties relating to such tax treatment and tax structure
and (b) any Class C Holder may disclose information concerning the purchase or
sale of the Class C Certificates by such Class C Holder to any federal or state
regulatory authority having jurisdiction over such Class C Holder and the
National Association of Insurance Commissioners
24
or any similar organization, or any nationally recognized rating agency that
requires access to information about such Class C Holder's investment portfolio.
SECTION 6.2 Representations, Warranties and Covenants of the Trustee.
The Trustee represents, warrants and covenants to the Initial Class C Holder
that:
(i) The Trustee is a national banking association duly
authorized to engage in the business of banking under the laws of the
United States of America;
(ii) The Trustee has full power and authority to deliver and
perform this Agreement, and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement; and
(iii) This Agreement has been duly executed and delivered by
the Trustee and constitutes its legal, valid and binding obligation in
accordance with its terms.
(iv) The Trustee shall not amend, waive or otherwise modify
any provisions of any Interest Rate Swap Agreement unless the Class C
Holders have consented in writing thereto (such consent not to be
unreasonably withheld or delayed).
ARTICLE VII
Miscellaneous
SECTION 7.1 Amendments and Waivers. This Agreement shall not be amended
or modified without the written consent of the Seller, the Trustee, the Servicer
and the Required Class C Holders. No waiver of, or consent to the departure
from, any provision of this Agreement by any party hereto shall be effective
without the written consent of the Seller, the Servicer, the Trustee, and the
Required Class C Holders; provided, however, that no amendment reducing the
amount or delaying any payment to be made to the Class C Holders hereunder or
modifying the definition of Required Class C Holders shall be effective without
the written consent of all Class C Holders. The Servicer shall provide to
Moody's a copy of any amendment prior to the effectiveness thereof.
Additionally, to the extent that any Class C Holder is a Structured Holder, no
action otherwise permitted pursuant to this Section 7.1 shall be permitted
unless each rating agency then rating the outstanding Commercial Paper issued by
such Structured Holder shall have provided prior written confirmation that such
action would not cause such rating agency to reduce or withdraw its then current
rating of such Commercial Paper.
SECTION 7.2 Servicer Transfer. In the event that a transfer of
servicing occurs under Article X of the Pooling and Servicing Agreement, from
and after the effective date of such transfer, the Successor Servicer appointed
pursuant to the Pooling and Servicing Agreement, and not Spirit, Inc., shall be
responsible for the performance of all servicing functions to be performed by
the Servicer from and after such date, except as provided in the Pooling and
Servicing Agreement. Such transfer shall not affect any rights or obligations of
Spirit, Inc. which arose prior to the effective date of the transfer of
servicing or the rights or obligations of Spirit, Inc. under Sections 2.2,
Section 2.7 and Article V (in the case of Sections 5.2 or 5.3 under Article V,
excluding any documents received by any Successor Servicer and also excluding
any
25
documents received by Spirit, Inc. from the Successor Servicer), or Section
7.3 of this Agreement, whether arising before or after such date.
SECTION 7.3 Fees and Expenses. Each party shall pay all fees and
expenses incurred by it in connection with preparing and entering into this
Agreement; provided, however, that the Seller will reimburse the Initial Class C
Holder for its out-of-pocket expenses and shall directly pay all reasonable
legal fees and expenses and disbursements of its counsel (including fees,
expenses and disbursements of such counsel incurred in connection with the
preparation and execution of this Agreement and the Class D-1 Purchase
Agreement) in an aggregate amount not to exceed $20,000. The Trust through the
Trustee (acting in accordance with instructions of the Servicer), but solely to
the extent funds are available therefor under Section 2.2(b), and the Seller
agree to pay on demand all reasonable costs and expenses of the Class C Holders
in connection with any amendment to, or any waiver requested under, this
Agreement, and of the Class C Holders in connection with the "work-out" or
enforcement of its rights under this Agreement or any of the other documents
delivered in connection herewith, including, without limitation, the reasonable
fees and out-of-pocket expenses of its legal counsel with respect thereto.
SECTION 7.4 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS CONFLICTS OF LAW PROVISIONS.
SECTION 7.5 No Waiver. Neither any failure nor any delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise or the exercise of any other right, power or
privilege.
SECTION 7.6 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7.7 Termination. This Agreement shall remain in full force and
effect until the earlier of (i) the payment in full of the Class C Investor
Interest and all other amounts payable to the Class C Holders hereunder and
under the Supplement and (ii) the Series 2004-1 Termination Date; provided that
Sections 2.6, 2.7, 2.8, 7.10, 7.12 and 7.16 shall survive the termination of
this Agreement.
SECTION 7.8 Transfer Restrictions. (a) The Initial Class C Holder shall
deliver, on or prior to the Closing Date, to the to the Seller and the Trustee a
purchaser representation letter substantially in the form attached hereto as
Exhibit B for such Initial Class C Holder and for each Funding Source executing
the Liquidity Agreement as a "Liquidity Bank" on the Closing Date. Additionally,
for so long as any Structured Holder is a Class C Holder, such Structured Holder
shall require each Funding Source that executes a Credit Agreement or Liquidity
Agreement pursuant to which such Funding Source agrees to purchase an interest
in all or a portion of the
26
Class C Investor Interest from time to time to deliver to the Seller and the
Trustee a purchaser representation letter substantially in the form attached
hereto as Exhibit B for such Funding Source on or prior to the execution of such
Credit Agreement or Liquidity Agreement. No Class C Certificate may be offered,
sold or otherwise transferred to any Person (other than the Seller or a State
Street Related Party) unless (x) the Seller shall have been given an opportunity
to purchase such Class C Certificate in accordance with Section 7.8(c) and (y)
if the Seller does not exercise its right to purchase such Class C Certificate,
the Seller shall have given its prior written approval to such offer, sale or
transfer (which approval shall not be unreasonably withheld). Each Class C
Holder further agrees that it will not make any general solicitation or general
advertising for the offer or sale of its Class C Certificate and will not
transfer its Class C Certificate (or any portion thereof) to any Person except
to a Person within the United States which such Class C Holder reasonably
believes is a "qualified institutional buyer" (as defined in Rule 144A under the
Act) that is purchasing (1) for its own account or (2) for the account of a
"qualified institutional buyer" (as so defined) that is, in either case, aware
that such resale, pledge or transfer is being made in reliance on an exemption
from registration under the Act, and, in either case, unless such Person is a
U.S. Person (as defined in Section 7701(a)(30) of the Code) and shall have
delivered to such Class C Holder a purchaser representation letter substantially
in the form attached hereto as Exhibit B. Each Class C Holder further agrees to
provide to any Person purchasing a Class C Certificate (or any portion thereof)
from it a notice advising such purchaser that resales of the Class C
Certificates are restricted as stated above.
(b) Seller shall not execute, and (if given prior written notice by the
Servicer of the inability of the Seller to execute any Subject Instrument by
operation of this clause (b)) the Transfer Agent and Registrar shall not
register the transfer of, any Class C Certificate unless (i) after giving effect
to the execution or transfer of such Class C Certificate, there would be no more
than 5 Private Holders of Class C Certificates and (ii) the other conditions to
transfer set forth in Section 6.3 of the Pooling Agreement and in Section 16 of
the Series 2004-1 Supplement to the Pooling Agreement have been satisfied.
(c) Any Class C Holder that intends to offer, sell or otherwise
transfer its Class C Certificate to a Person other than the Seller or any State
Street Related Party (any such offering, sale or transfer being herein called a
"Proposed Transfer"), such Class C Holder shall give the Seller not less than
ten days prior written notice of the Proposed Transfer. Such notice shall
include the proposed date of transfer, the Person or Persons to which such
transfer will be made, and all other material terms of the Proposed Transfer
(other than the purchase price). During the period of five Business Days
following the Seller's receipt of such notice, the Seller shall be entitled to
notify such Class C Holder that the Seller will acquire such Class C Certificate
on the terms set forth in such notice and at a price acceptable to such Class C
Holder in its sole discretion. Such acquisition will occur on or before the date
specified for the Proposed Transfer in such notice, and each Class C Holder
hereby agrees, subject to acceptance of the purchase price therefor, to transfer
such Class C Certificate to the Seller on the terms set forth in any such notice
sent by it. If the Seller does not notify such Class C Holder of its intent to
acquire such Class C Certificate within such five Business Day period, it will
be deemed to have elected not to so acquire such Class C Certificate.
27
SECTION 7.9 Notices.
(a) All notices and other communications provided for hereunder shall
be in writing (including telecopy) and, if to the Seller, the Servicer or the
Trustee either mailed, telecopied, couriered or delivered to it, addressed to it
at its address set forth in the Pooling and Servicing Agreement, or if to the
Initial Class C Holder, as set forth below:
Clipper Receivables Company LLC
c/o State Street Global Markets, LLC, as Program Administrator
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Clipper Receivables Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If such notice is to any subsequent Class C Holder, such notice shall
be given in accordance with the terms of the Pooling and Servicing Agreement.
All notices and other communications shall, when mailed, be effective
on the first Business Day after the date of receipt, addressed as aforesaid. Any
party hereto may change the address or telecopier number to which notices to it
are to be sent by notice given to the other parties hereto.
(b) Any notice or written direction given by a Class C Holder to the
Trustee hereunder may conclusively be relied upon by the Trustee, absent
manifest error.
SECTION 7.10 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement.
SECTION 7.11 Exclusive Benefit. The rights and remedies of the Class C
Holders specified herein are for the sole and exclusive benefit, use and
protection of the Class C Holders, and the Class C Holders are entitled, but
shall have no duty or obligation to the Seller, the Servicer, the Trustee, the
other Certificateholders or otherwise, to exercise or to refrain from exercising
any right or remedy reserved to the Class C Holders hereunder or cause the
Trustee or any other party to exercise or to refrain from exercising any right
or remedy available to it. Notwithstanding the foregoing, the Covered Class D-1
Holders shall be third-party beneficiaries of amounts on deposit in the Class C
Spread Account to the extent provided in Section 2.5.
SECTION 7.12 Limitation of Remedies. (a) No Class C Holder shall have
the right to cause the Class C Investor Interest or any portion thereof to
become due and payable prior to any Distribution Date or other date on which
amounts are payable hereunder to such Class C Holder other than as set forth in
Section 2.2 hereof and shall not attempt to exercise any of its rights hereunder
with respect to Available Amounts or amounts on deposit in the Class C Spread
Account prior to such due date or Distribution Date.
(b) The obligations of each Class C Holder under this Agreement, or any
other agreement, instrument, document or certificate executed and delivered by
or issued by such
28
Class C Holder or any officer thereof are solely the corporate obligations of
such Class C Holder. No recourse shall be had for payment of any fee or other
obligation or claim arising out of or relating to this Agreement or any other
agreement, instrument, document or certificate executed and delivered or issued
by such Class C Holder or any officer thereof in connection therewith, against
any stockholder, employee, officer, director or incorporator of such Class C
Holder.
SECTION 7.13 Counterparts. This Agreement may be executed in any number
of counterparts, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
SECTION 7.14 Entire Agreement. This Agreement constitutes the entire
agreement between the parties relative to the subject matter hereof. Any
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party other than the parties hereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 7.15 Headings. Article, Section and subsection headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 7.16 Nonpetition Agreement. (a) Notwithstanding any prior
termination of this Agreement, no Class C Holder shall, prior to the date which
is one year and one day after the final payment of the Certificates, acquiesce,
petition or otherwise invoke or cause the Trust or the Seller to invoke the
process of any governmental authority for the purpose of commencing or
sustaining a case against the Trust or the Seller under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust or the Seller or any substantial part of its property or ordering the
winding up or liquidation of the affairs of the Trust or the Seller.
(b) Notwithstanding any prior termination of this Agreement, none of
the Seller, the Servicer nor the Trustee shall acquiesce, petition or otherwise
invoke or cause any Structured Holder to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against such
Structured Holder under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator of other similar official of such Structured Holder or any
substantial part of its property or ordering the winding up or liquidation of
the affairs of such Structured Holder until the date which is one year and one
day after the latest maturing Commercial Paper issued by such Structured Holder
have been paid.
SECTION 7.17 Waiver of Jury Trial. EACH OF, THE SELLER, THE SERVICER,
THE TRUSTEE, AND EACH CLASS C HOLDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT, THE CLASS C CERTIFICATES OR ANY OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE
29
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE SELLER, THE
SERVICER, THE TRUSTEE, OR ANY CLASS C HOLDER. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE CLASS C HOLDERS PURCHASING THE CLASS C CERTIFICATES DESCRIBED
HEREIN.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
SPIRIT OF AMERICA, INC., as Servicer
By:
---------------------------------------
Name:
Title:
CHARMING SHOPPES RECEIVABLES
CORP., as Seller
By:
---------------------------------------
Name:
Title:
S-1
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Trustee
By:
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
S-3
CLIPPER RECEIVABLES COMPANY LLC,
as a Class C Holder
By:
---------------------------------------
Name:
Title:
S-3
SCHEDULE I
Initial Class C Holder
Name of Initial Class C Holder Principal Amount of Class C Certificate
------------------------------ ---------------------------------------
Clipper Receivables Company LLC $16,200,000
EXHIBIT A to Certificate Purchase Agreement
CHARMING SHOPPES MASTER TRUST SERIES 2004-1
DUE PERIOD ENDING ______________
SPIRIT OF AMERICA, INC. Form 2004-1 C1
CHARMING SHOPPES MASTER TRUST
Series 2004-1 Class C Certificate Agreement
Exhibit A
Monthly Status Report to the Enhancement Provider:
Capitalized terms used in this Statement have their respective meanings set
forth in the 2004-1 Class C Certificate Purchase Agreement.
Distribution Date: 09/15/04
1 Class C Investor Interest at Beginning of Due Period $0.00
2 Class C Investor Interest at End of Due Period $0.00
3 Class C Monthly Principal Payable $0.00
4 Class C Investor Interest on this Distribution Date $0.00
5 Class C Monthly Interest Payable $0.00
6 Class C Net Swap Payment $0.00
7 Series 2004-1 Floating Allocation Percentage 0.000%
8 Series 2004-1 Class C Floating Allocation Percentage 0.000%
9 Monthly Payment Percentage
(a) Monthly Payment Rate Percentage - current period 0.000%
(b) Monthly Payment Rate Percentage - preceding period 0.000%
(c) Monthly Payment Rate Percentage - second preceding period 0.000%
(d) Three month average Monthly Payment Percentage 0.000%
(d) Required Monthly Payment Percentage 0.000%
10 Excess Yield Percentage
(a) Excess Yield Percentage - current period 0.000%
(b) Excess Yield Percentage - preceding period 0.000%
(c) Excess Yield Percentage - second preceding period 0.000%
(d) Three month average Excess Yield Percentage 0.000%
(e) Required Excess Yield Percentage 0.000%
11 Class C Spread Account
(a) Required Class C Spread Account $0.00
12 (b) Deposits/(withdrawals) from the Class C Spread Account on this $0.00
Distribution Date
13 (c) Amount on deposit in the Class C Spread Account as of this Distribution Date $0.00
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Vice President
Spirit of America Inc.
Note - Reporting on class deficiency amounts, class additional interest,
certificate reductions, reallocations of collections, unreimbursed charge-offs,
discounting of principal, allocation of dilution to investors and other
transactions contemplated by the Series 2004-1 Supplement will be added to the
above report as applicable.
A-1
Exhibit B
to Certificate Purchase Agreement
FORM OF REPRESENTATION LETTER
Wachovia Bank, National Association
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx, XX 1249
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Corporate Trust Administration
Charming Shoppes Receivables Corp.
c/o Charming Shoppes, Inc.
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Re: Purchase of $[__________] principal amount of Charming Shoppes
Master Trust Series 2004-1 Floating Rate Asset Backed
Certificates, Class C
Ladies and Gentlemen:
Reference is made to that certain Class C Certificate Purchase
Agreement, dated as of August 5, 2004 (the "Class C CPA"), among Wachovia Bank,
National Association, as Trustee, Charming Shoppes Receivables Corp. ("CSRC"),
as Seller, Spirit of America, Inc., as Servicer and the Class C Holders
described therein. In connection with our purchase of the above Asset Backed
Certificates (the "Certificates"), we (the "Purchaser") confirm that:
(1) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "1933 Act"),
and are being sold to us in a transaction that is exempt from
the registration requirements of the 1933 Act and of any
applicable state securities laws;
(2) any information we desire concerning the Certificates or any
other matter relevant to our decision to purchase the
Certificates is or has been made available to us;
(3) we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates, and we (and any
account for which we are purchasing) are able to bear the
economic risk of an investment in the Certificates;
(4) we are a qualified institutional buyer as defined in Rule 144A
promulgated under the 1933 Act (a "QIB") that is purchasing
for its own account or for the account of a QIB and have
completed one of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2 (each, a "Certification
Form");
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(5) we will not make any general solicitation or general
advertising for the offer or sale of our Certificates and will
not transfer our Certificates (or any portion thereof) to any
Person except to a U.S. Person (as defined in Section
7701(a)(30) of the Code) within the United States which we
reasonably believe is a QIB that is purchasing (i) for its own
account or (ii) for the account of a QIB, and, in such case,
unless such Person shall have delivered to us a purchaser
representation letter substantially in the form hereof;
(6) we are either (i) not acquiring such Certificates with the
assets of an "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") whether or not subject to ERISA,
any "plan" described in Section 4975(e)(1) of the Code or any
entity deemed to hold "plan assets" of any of the foregoing
(each, a "Benefit Plan Investor") or (ii) an insurance company
purchasing the Certificates with assets of our general
account, and at the time of acquisition and throughout the
period of holding, (a) we meet all of the requirements of and
are eligible for exemptive relief under Prohibited Transaction
Class Exemption 95-60; (b) less than 25% of the assets of such
general account are assets of Benefit Plan Investors; and (c)
we are not a servicer to the Trust or an affiliate of a
servicer to the Trust, and would not otherwise be excluded
under 29 CFR Section 2510.3-101(f)(1);
(7) no registration with, consent or approval of or other action
by any federal, state or other governmental authority or
regulatory body having jurisdiction over it is required in
connection with the execution, delivery or performance by it
of the Class C CPA;
(8) we are each 1 Private Holder and a U.S. Person (as defined in
Section 7701(a)(30) of the Code);
(9) we covenant and agree to maintain as confidential, not
disclose to any Person (other than any officer, employee,
agent, counsel, advisor or representative of a party hereto),
and not use for any purpose other than in connection with this
Agreement, all information acquired by us that is not publicly
available relating to the Trust, the Seller, the Originator or
the Servicer which we obtained in connection with the
transactions contemplated hereby, except (A) as the Trustee,
the Seller or the Servicer may have consented to in writing
prior to any proposed disclosure, (B) as we have been advised
by counsel is (i) required by law, including, without
limitation, any securities or banking laws, rules, orders or
regulations or (ii) reasonably necessary or desirable in
connection with any lawsuit or governmental investigation or
proceeding, provided in each such instance we will notify the
Seller and the Servicer of our intention to make any such
disclosure prior to making such disclosure; and provided
further that we may disclose to any and all persons the tax
treatment and tax structure of the transaction and all
materials of any kind (including opinions or other tax
analyses) that are provided to us relating to such tax
treatment and tax structure and such information concerning
the purchase or sale of the Class C Certificates as we may be
required to disclose to any federal or state regulatory
authority having
B-2
jurisdiction over us and the National Association of Insurance
Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information
about our investment portfolio;
(10) we understand that any sale or other transfer of the Class C
Certificates will be subject to the additional transfer
restrictions and the notice requirements as described in the
Class C CPA and acknowledge that we have received a copy of
the Class C CPA;
(11) we are not acquiring, and will not sell or otherwise transfer,
any Class C Certificates through (i) an "established
securities market" within the meaning of section 7704(b)(1) of
the Code, and any proposed, temporary or final treasury
regulation thereunder, including, without limitation, an
over-the-counter-market or an interdealer quotations system
that regularly disseminates firm buy or sell quotations or
(ii) a "secondary market" or "substantial equivalent thereof"
within the meaning of section 7704(b)(1) of the Code, and any
proposed, temporary or final treasury regulation thereunder,
including a market wherein interests in the Trust are
regularly quoted by any person making a market in such
interests and a market wherein any person regularly makes
available bid or offer quotes with respect to interests in the
Trust and stands ready to effect buy or sell transactions at
the quoted prices for itself or on behalf of others;
(12) we are not a competitor of CSRC or any Affiliate of CSRC; it
being understood that for purposes of the foregoing
certification, a "competitor" means a Person, or Affiliate
thereof, engaged in any of the same businesses as the
businesses conducted by CSRC or its Affiliates; but
notwithstanding the foregoing, the term "competitor" shall not
include any bank, trust company, savings and loan association
or other financial institution, any investment company, any
insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form,
unless, in any such case, such Person, or affiliate thereof,
is engaged in the business of issuing and owning retail
private label credit card programs; and
(13) we understand that the Certificates will bear a legend to
substantially the following effect:
"THIS CERTIFICATE WAS ISSUED PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY BE SOLD ONLY PURSUANT TO A REGISTRATION
STATEMENT EFFECTIVE UNDER THE ACT OR AN EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE ACT. IN ADDITION, THE TRANSFER
OF THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS SET FORTH IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. A COPY
OF THE POOLING AND SERVICING AGREEMENT WILL BE FURNISHED TO
THE HOLDER OF THIS CERTIFICATE BY THE TRUSTEE UPON WRITTEN
REQUEST.
B-3
THIS CERTIFICATE, OR AN INTEREST HEREIN, MAY NOT BE
ACQUIRED BY OR FOR THE ACCOUNT OF ANY EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), WHETHER OR
NOT SUBJECT TO ERISA, OR A PLAN THAT IS DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, INCLUDING AN
INDIVIDUAL RETIREMENT ACCOUNT (EACH, A "BENEFIT PLAN
INVESTOR"), OR BY OR FOR THE ACCOUNT OF ANY ENTITY WHOSE
UNDERLYING ASSETS INCLUDE ANY BENEFIT PLAN ASSETS. BY
ACQUIRING THIS CERTIFICATE OR AN INTEREST HEREIN, THE
PURCHASER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT EITHER (I) IT IS NOT A BENEFIT PLAN INVESTOR,
AND THAT ITS ACQUISITION OF THIS CERTIFICATE OR AN INTEREST
HEREIN IS IN COMPLIANCE WITH THE FOREGOING RESTRICTIONS ON
BENEFIT PLAN ASSETS OR (II) IT IS AN INSURANCE COMPANY
PURCHASING THIS CERTIFICATE OR INTEREST HEREIN WITH ASSETS OF
ITS GENERAL ACCOUNT, AND AT THE TIME OF ACQUISITION AND
THROUGHOUT THE PERIOD OF HOLDING, (A) IT MEETS ALL OF THE
REQUIREMENTS OF AND IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, (B) LESS THAN
25% OF THE ASSETS OF SUCH ACCOUNT ARE ASSETS OF A BENEFIT PLAN
INVESTOR AND (C) IT IS NOT A SERVICER TO THE TRUST OR AN
AFFILIATE OF SUCH SERVICER, AND WOULD NOT OTHERWISE BE
EXCLUDED UNDER 29 CFR SECTION 2510.3-101(f)(1).
NEITHER THIS CERTIFICATE, NOR ANY PORTION OF THIS
CERTIFICATE, MAY BE TRANSFERRED (X) IF AFTER GIVING EFFECT TO
THE EXECUTION OR TRANSFER OF SUCH CERTIFICATE, THERE WOULD BE
MORE THAN (I) 5 PRIVATE HOLDERS OF CLASS C CERTIFICATES OR
(II) 100 PRIVATE HOLDERS, OR (Y) ON OR THROUGH (I) AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION
7704(b)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN
OVER-THE-COUNTER-MARKET OR AN INTERDEALER QUOTATIONS SYSTEM
THAT REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS OR
(II) "SECONDARY MARKET" OR "SUBSTANTIAL EQUIVALENT THEREOF"
WITHIN THE MEANING OF SECTION 7704(b)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, AND ANY PROPOSED, TEMPORARY
OR FINAL TREASURY REGULATION THEREUNDER, INCLUDING A MARKET
WHEREIN INTERESTS IN THE TRUST ARE REGULARLY QUOTED BY ANY
PERSON MAKING A MARKET IN SUCH INTERESTS AND A MARKET WHEREIN
ANY PERSON REGULARLY MAKES AVAILABLE BID OR OFFER QUOTES WITH
RESPECT TO INTEREST IN THE TRUST AND STANDS READY TO EFFECT
BUY OR
B-4
SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF
OF OTHERS. ANY ATTEMPTED TRANSFER, ASSIGNMENT, CONVEYANCE,
PARTICIPATION OR SUBDIVISION IN CONTRAVENTION OF THE PRECEDING
RESTRICTIONS, AS REASONABLY DETERMINED BY THE SELLER, SHALL BE
VOID AB INITIO AND THE PURPORTED TRANSFEROR, SELLER, OR
SUBDIVIDER OF SUCH CERTIFICATE SHALL BE CONSTRUED TO BE
TREATED AS THE CERTIFICATEHOLDER OF ANY SUCH CERTIFICATE FOR
ALL PURPOSES OF THE POOLING AND SERVICING AGREEMENT."
The Seller and the Trustee are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
B-5
Capitalized terms used but not defined herein shall have those meanings
set forth for such terms in the Class C CPA.
Very truly yours,
[Name of Purchaser]
By:
--------------------------------------
(Authorized Officer)
B-6
Annex 1 to Exhibit B
Qualified Institutional Buyer Status Under SEC Rule 144A
(Buyers other than investment companies)
Wachovia Bank, National Association
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx, XX 1249
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Corporate Trust Administration
Charming Shoppes Receivables Corp.
c/o Charming Shoppes, Inc.
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
[Transferring Class C Holder]
Name of Buyer: _____________________________________ ("Buyer")
I hereby certify that as indicated below, I am the duly-authorized
President, Chief Financial Officer, Vice President or other executive officer of
Buyer.
In connection with purchases of securities by Buyer, I hereby certify
to you and, if you act as broker for one or more customers, to such customers,
that Buyer is a "qualified institutional buyer" as defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (i) Buyer owned
and/or invested on a discretionary basis $_______(1) in securities (except for
the excluded securities referred to below) as of the end of Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
Buyer satisfies the criteria in the category marked below:
Corporation, etc. Buyer is a corporation (other than a bank,
savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
Bank. Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited
-------------------
(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities of issuers that are not affiliated with the Buyer, unless Buyer is
a dealer, and, in that case, Buyer must own and/or invest on a discretionary
basis at least $10,000,000 in securities of issuers that are not affiliated with
the Buyer.
B-7
net worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
Savings and Loan. Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over
any such institution or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
Broker-dealer. Buyer is a dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
Insurance Company. Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which
is subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the District
of Columbia.
State or Local Plan. Buyer is a plan established and maintained by
a State, its political subdivisions, or any agency or
instrumentality of a State or its political subdivisions, for the
benefit of its employees.
Investment Advisor. Buyer is an investment advisor registered
under the Investment Advisers Act of 1940.
The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with Buyer, (ii) securities that are part of an
unsold allotment to or subscription by Buyer (if Buyer is a dealer), (iii)
securities issued or guaranteed by the U.S. or any instrumentality thereof, (iv)
bank deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement, and (viii) currency, interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis, Buyer used the cost of such securities
to Buyer and did not include any of the securities referred to in the preceding
paragraph.
Further, in determining such aggregate amount, Buyer may have included
securities owned by subsidiaries of Buyer, but only if such subsidiaries are
consolidated with Buyer in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under Buyer's direction. However, such securities were
not included if Buyer is a majority-owned, consolidated subsidiary of another
enterprise and Buyer is not itself a reporting company under the Securities
Exchange Act of 1934.
[Buyer acknowledges that it is familiar with Rule 144A and understands
that you and your customers (if you act as a broker for one or more customers)
are and will continue to rely
B-8
on the statements made herein because one or more sales by you for your own
account of your customer's account to Buyer may be in reliance on Rule 144A.
Will Buyer be purchasing Rule 144A securities only for
Buyer's own account? ___ ___
Yes No
If the answer to this question is "no", Buyer agrees that, in
connection with any purchase of securities sold to Buyer for the account of a
third party (including any separate account) in reliance on Rule 144A, Buyer
will only purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A. In addition,
Buyer agrees that Buyer will not purchase securities for a third party unless
Buyer has obtained a current representation letter from such third party or
taken other appropriate steps contemplated by Rule 144A to conclude that such
third party independently meets the definition of "qualified institutional
buyer" set forth in Rule 144A.](2)
Buyer agrees to notify you of any changes in the information and
conclusions herein. Until such notice is given to you, Buyer's purchase of
securities from you, or through you from your customers will constitute a
reaffirmation of the foregoing certifications and acknowledgments as of the date
of such purchase.
Further, if Buyer is a bank or savings and loan as provided above,
Buyer agrees that it will furnish you with updated annual financial statements
promptly after they become available.
Date:______________________
Very truly yours,
[Print Name of Buyer]
By:
---------------------------------------
Name:
Title:
-------------------
(2) Bracketed language to be included only in Certification Forms from Buyers in
connection with re-sales pursuant to Rule 144A.
B-9
Annex 2 to Exhibit B
Wachovia Bank, National Association
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx, XX 1249
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Corporate Trust Administration
Charming Shoppes Receivables Corp.
c/o Charming Shoppes, Inc.
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Name of Buyer: ____________________________________ ("Buyer")
Name of Investment Adviser: _________________________ ("Adviser")
I hereby certify that, as indicated below, I am the duly-authorized
President, Chief Financial Officer or Vice President of Buyer or, if Buyer is a
"qualified institutional buyer" as defined in Rule 144A under the Securities Act
of 1933, as amended ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), of Adviser.
In connection with purchases of securities by Buyer, I hereby certify
to you and, if you act as broker for one or more customers, to such customers,
that Buyer is a "qualified institutional buyer" as defined in Rule 144A because
(i) Buyer is an investment company registered under the Investment Company Act
of 1940 and (ii) as marked below, Buyer alone, or Buyer's Family of Investment
Companies, owned at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of Buyer's most recent fiscal year.
______ Buyer owned $________ in securities (other than the excluded
securities referred to below) as of the end of Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
______ Buyer is part of a Family of Investment Companies which owned
in the aggregate $_______ in securities (other than the
excluded securities referred to below) as of the end of
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
For purposes of determining the amount of securities owned by Buyer or Buyer's
Family of Investment Companies, I used the cost of such securities.
The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
B-10
The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with Buyer or are part of Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
[On behalf of Buyer, I acknowledge that Buyer is familiar with Rule
144A and understands that you and your customers (if you act as a broker for one
or more customers) are and will continue to rely on the statements made herein
because one or more sales to Buyer by you for your own account or your
customer's account will be in reliance on Rule 144A. In addition, on behalf of
Buyer, I agree that, in connection with any purchase of securities sold by or
through you in reliance on Rule 144A, Buyer will only purchase for Buyer's own
account.](3)
Finally, on behalf of Buyer or Adviser (as appropriate), I also agree
to notify you of any changes in the information and conclusions herein. Until
such notice is given to you, Buyer's purchase of securities from you, or through
you from your customers, will constitute a reaffirmation of the foregoing
certifications and acknowledgments as of the date of such purchase.
Date:______________________
Very truly yours,
[Print Name of Buyer]
By:
-------------------------------------
Name:
Title:
On behalf of:
[Name of Buyer/Adviser]
-------------------
(3) Bracketed language to be included only in Certification Forms from Buyers in
connection with re-sales pursuant to Rule 144A.
B-11
