Exhibit 10.123

EXECUTION COPY

 

 

CHARMING SHOPPES RECEIVABLES CORP.

Seller

SPIRIT OF AMERICA, INC.

Servicer

and

U.S. BANK NATIONAL ASSOCIATION

Trustee

on behalf of the Series 2007-1 Certificateholders

 

 

SERIES 2007-1 SUPPLEMENT

Dated as of October 17, 2007

to

SECOND AMENDED AND RESTATED POOLING AND

SERVICING AGREEMENT

Dated as of November 25, 1997, as amended

 

 

$320,000,000

CHARMING SHOPPES MASTER TRUST

SERIES 2007-1

 

 

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TABLE OF CONTENTS

 

         Page

SECTION 1.

  Designation    1

SECTION 2.

  Definitions    2

SECTION 3.

  Servicing Compensation    32

SECTION 4.

  Reassignment and Transfer Terms    33

SECTION 5.

  Delivery and Payment for the Series 2007-1 Certificates    33

SECTION 6.

  Depository; Form of Delivery of Series 2007-1 Certificates    33

SECTION 7.

  Interest Rate Hedge Agreements    34

SECTION 8.

  Article IV of Agreement    34

SECTION 9.

  Article V of the Agreement    62

SECTION 10.

  Series 2007-1 Early Amortization Events    64

SECTION 11.

  Series 2007-1 Termination    66

SECTION 12.

  Ratification of Agreement    66

SECTION 13.

  Counterparts    66

SECTION 14.

  No Petition    66

SECTION 15.

  Forms of Series 2007-1 Certificates    67

SECTION 16.

  Transfer Restrictions    68

SECTION 17.

  Certain Amendments    76

SECTION 18.

  Commercial Law Representations and Warranties of the Seller    76

SECTION 19.

  Governing Law    77

SECTION 20.

  Third Party Beneficiary    77

EXHIBITS

    

EXHIBIT A-1

  Form of Class A-1 Certificate   

EXHIBIT A-2

  Form of Class A-2 Certificate   

EXHIBIT M-1

  Form of Class M-1 Certificate   

EXHIBIT M-2

  Form of Class M-2 Certificate   

EXHIBIT B-1

  Form of Class B-1 Certificate   

EXHIBIT B-2

  Form of Class B-2 Certificate   

EXHIBIT C

  Form of Class C Certificate   

EXHIBIT D-1

  Form of Class D-1 Certificate   

EXHIBIT D-2

  Form of Class D-2 Certificate   

EXHIBIT E

  Form of Monthly Payment Instructions and Notification to the Trustee   

EXHIBIT F

  Form of Monthly Certificateholders’ Statement   

EXHIBIT G-1

  Form of Regulation S Book-Entry Certificate to Restricted Book-Entry
Certificate Transfer Certificate   

EXHIBIT G-2

  Form of Restricted Book-Entry Certificate to Regulation S Book-Entry
Certificate Transfer Certificate   

EXHIBIT H-1

  Form of Interest Rate Swap Agreement   

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TABLE OF CONTENTS

 

EXHIBIT H-2

  Form of Interest Rate Cap Agreement

EXHIBIT I

  Form of Non-U.S. Beneficial Ownership Certification by Member Organization

EXHIBIT J

  Form of Non-U.S. Beneficial Ownership Certification by Euroclear or
Clearstream Banking, Société Anonyme

 

ii

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This SERIES 2007-1 SUPPLEMENT, dated as of October 17, 2007 (this “Supplement”),
is among CHARMING SHOPPES RECEIVABLES CORP., a Delaware corporation, as Seller
(the “Seller”), SPIRIT OF AMERICA, INC., a Delaware corporation, as Servicer
(the “Servicer”), and U.S. BANK NATIONAL ASSOCIATION (as successor to Wachovia
Bank, National Association), as Trustee (the “Trustee”) under the Second Amended
and Restated Pooling and Servicing Agreement dated as of November 25, 1997 and
heretofore amended among the Seller, the Servicer and the Trustee (as further
amended or otherwise modified from time to time, the “Agreement”).

Section 6.9 of the Agreement provides, among other things, that the Seller, the
Servicer and the Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the delivery by the
Trustee to the Seller for the execution and redelivery to the Trustee for
authentication of one or more Series of Certificates.

Pursuant to this Supplement, the Seller and the Trustee shall create a new
Series of Investor Certificates and shall specify the Principal Terms thereof.

SECTION 1. Designation.

(a) There is hereby created a Series of Investor Certificates to be issued in
five classes pursuant to the Agreement and this Series Supplement and to be
known together as the Series 2007-1 Certificates. The five classes shall be
designated the Class A Asset Backed Certificates, Series 2007-1 (the “Class A
Certificates”), the Class M Asset Backed Certificates, Series 2007-1 (the “Class
M Certificates”), the Class B Asset Backed Certificates, Series 2007-1 (the
“Class B Certificates”), the Class C Asset Backed Certificates, Series 2007-1
(the “Class C Certificates”) and the Class D Asset Backed Certificates, Series
2007-1 (the “Class D Certificates”). The Class A Asset Backed Certificates shall
be comprised of two subclasses designated as the Class A-1 Asset Backed
Certificates, Series 2007-1 (the “Class A-1 Certificates”) and the Class A-2
Asset Backed Certificates, Series 2007-1 (the “Class A-2 Certificates”). The
Class M Asset Backed Certificates shall be comprised of two subclasses
designated as the Class M-1 Asset Backed Certificates, Series 2007-1 (the “Class
M-1 Certificates”) and the Class M-2 Asset Backed Certificates, Series 2007-1
(the “Class M-2 Certificates”). The Class B Asset Backed Certificates shall be
comprised of two subclasses designated as the Class B-1 Asset Backed
Certificates, Series 2007-1 (the “Class B-1 Certificates”) and the Class B-2
Asset Backed Certificates, Series 2007-1 (the “Class B-2 Certificates”). The
Class D Asset Backed Certificates shall be comprised of two subclasses
designated as the Class D-1 Asset Backed Certificates, Series 2007-1 (the “Class
D-1 Certificates”) and the Class D-2 Asset Backed Certificates, Series 2007-1
(the “Class D-2 Certificates”).

(b) Series 2007-1 shall be included in Group One. Series 2007-1 shall be a
Paired Series with respect to Series 2002-1.

(c) If any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Agreement, the terms
and provisions of this Supplement shall be controlling.

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SECTION 2. Definitions. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Supplement shall govern with respect
to this Series. All Article, Section or subsection references herein shall mean
Article, Section or subsections of the Agreement, except as otherwise provided
herein. All capitalized terms not otherwise defined herein are defined in the
Agreement. Each capitalized term defined herein shall relate only to the Series
2007-1 Certificates and no other Series of Certificates or Receivables Purchase
Series issued by the Trust.

“Amortization Period” shall mean, with respect to Series 2007-1, the Controlled
Amortization Period or the Early Amortization Period.

“Available Funds” shall mean, with respect to any Distribution Date, the sum of
Class A Available Funds, Class M Available Funds, Class B Available Funds, Class
C Available Funds and Class D Available Funds, in each case for such
Distribution Date.

“Available Principal Collections” shall mean, with respect to any Distribution
Date, the sum of:

 

  (a)(i) with respect to any Distribution Date prior to the earlier to occur of
(A) payment in full of the Series 2002-1 Certificates and (B) the end of the
Funding Period, $0; and (ii) with respect to any other Distribution Date, the
Principal Allocation Percentage of all Collections of Principal Receivables
received during the related Due Period, minus the amount of Reallocated Class D
Principal Collections, Reallocated Class C Principal Collections, Reallocated
Class B Principal Collections and Reallocated Class M Principal Collections with
respect to such Due Period which pursuant to Section 4.12 are required to fund
the Class A Required Amount, the Class M Required Amount, the Class B Required
Amount and the Class C Required Amount,

 

  (b) any Shared Principal Collections with respect to other Series in Group One
that are allocated to Series 2007-1 in accordance with Section 4.15 for such
Distribution Date,

 

  (c) any other amounts which pursuant to subsections 4.9(a) and 4.11(a) (to the
extent allocable to the Class A Investor Loss Amount or the Class A Investor
Dilution Amount), (b), (c) (to the extent allocable to the Class M Investor Loss
Amount or the Class M Investor Dilution Amount), (d), (e) (to the extent
allocable to the Class B Investor Loss Amount or the Class B Investor Dilution
Amount), (f), (i), (j), (k), (o), (p) and (q) for such Due Period (other than
such amounts paid from Reallocated Principal Collections) are to be treated as
Available Principal Collections for such Distribution Date, and

 

  (d) the amount, if any, specified by the Holder of the Exchangeable Seller
Certificate pursuant to the first proviso to subsection 4.5(b)(ii) to be
distributed as Available Principal Collections on such Distribution Date.

 

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“Average Principal Balance” shall mean, for any Due Period in which one or more
Reset Dates occur, the weighted average of the Principal Receivables on the
first day of each Subperiod in such Due Period, it being understood that such
average will be weighted according to a fraction, the numerator of which is the
number of days during the relevant Subperiod and the denominator of which is the
number of days in such Due Period.

“Base Rate” shall mean, for any Due Period, an annualized percentage equivalent
of a fraction, the numerator of which is equal to the sum of Monthly Interest
and any Net Swap Payment for the related Distribution Date and the Series 2007-1
Investor Monthly Servicing Fee for such Due Period, and the denominator of which
is equal to the outstanding principal amount of the Series 2007-1 Certificates,
determined as of the last day of the immediately preceding Due Period (or, for
the initial Due Period, the outstanding principal amount of the Series 2007-1
Certificates as of the Closing Date).

“Benefit Plan Investor” shall have the meaning specified in subsection
16(c)(vii) of this Supplement.

“Cash Pre-Funded Amount” shall mean the amount on deposit in the Pre-Funding
Account from time to time, excluding any investment income on funds on deposit
therein.

“Class” shall mean any of the Class A Investor Interest, the Class M Investor
Interest, the Class B Investor Interest, the Class C Investor Interest or the
Class D Investor Interest.

“Class A Additional Interest” shall mean the sum of the Class A-1 Additional
Interest and the Class A-2 Additional Interest.

“Class A Available Funds” shall mean, with respect to any Distribution Date, an
amount equal to the sum of (a) the Class A Floating Allocation of the
Collections of Finance Charge Receivables allocated to the Series 2007-1
Certificates and deposited in the Collection Account for the related Due Period
(including amounts under Sections 4.19(c) and 4.20(b) and other amounts that are
in each case to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement (other than the Class A Net Swap Receipt)) and
(b) any Class A Net Swap Receipt for such Distribution Date.

“Class A Certificate Rate” means the Class A-1 Certificate Rate or the Class A-2
Certificate Rate, as applicable.

“Class A Certificateholder” shall mean each Person in whose name a Class A
Certificate is registered in the Certificate Register.

“Class A Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class A Controlled Amortization Amount” for any Due Period related to the
Controlled Amortization Period shall mean $26,400,000.00; provided, however,
that such amount shall be adjusted downward to reflect (i) any reduction to the
Class A Investor Interest as a result of any cancellation of Class A
Certificates pursuant to Section 4.16 and (ii) any principal payments to the
Class A Certificateholders pursuant to subsection 4.9(h), so that such amount
shall be equal to 1/8th of the outstanding principal amount of the Class A
Certificates as of the last day of the Due Period prior to the commencement of
the Controlled Amortization Period.

 

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“Class A Controlled Amortization Shortfall” shall mean (i) with respect to the
first Due Period related to the Controlled Amortization Period, zero, and
(ii) with respect to each other Due Period during the Controlled Amortization
Period occurring on or prior to the Class A Expected Final Payment Date, the
excess, if any, of the Class A Controlled Payment Amount for the previous Due
Period over the amount of Available Principal Collections distributed as payment
of such Class A Controlled Payment Amount on the Distribution Date related to
such previous Due Period.

“Class A Controlled Payment Amount” for any Due Period, shall mean, the sum of
(a) the Class A Controlled Amortization Amount and (b) any existing Class A
Controlled Amortization Shortfall.

“Class A Deficiency Amount” shall mean the sum of the Class A-1 Deficiency
Amount and the Class A-2 Deficiency Amount.

“Class A Expected Final Payment Date” shall mean the November 2012 Distribution
Date.

“Class A Fixed Allocation” shall mean, with respect to any Due Period other than
a Due Period relating to the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class A Investor Interest as of the close of business on the last day of the
Revolving Period and the denominator of which is equal to the Series Investor
Interest as of the close of business on the last day of the Revolving Period.

“Class A Floating Allocation” shall mean, with respect to any Due Period
(including any day within such Due Period), the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:

(a) the numerator of which is the Class A Investor Interest as of the close of
business on the last day of the preceding Due Period (or with respect to the
first Due Period ending after the Closing Date, the Class A Investor Interest as
of the Closing Date); and

(b) the denominator of which is equal to the Series Investor Interest as of the
close of business on the last day of the preceding Due Period (or with respect
to the first Due Period ending after the Closing Date, the Series Investor
Interest as of the Closing Date).

“Class A Initial Investor Interest” shall mean the aggregate initial principal
amount of the Class A Certificates, which is $211,200,000. $153,800,000 of such
initial principal amount is allocated to the Class A-1 Certificates. $57,400,000
of such initial principal amount is allocated to the Class A-2 Certificates.

 

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“Class A Investor Allocation” shall mean, with respect to any Due Period,
(a) with respect to Series 2007-1 Investor Loss Amounts, Series 2007-1 Investor
Dilution Amount and Collections of Finance Charge Receivables at any time and
Collections of Principal Receivables during the Revolving Period, the Class A
Floating Allocation and (b) with respect to Collections of Principal Receivables
during the Controlled Amortization Period or Early Amortization Period, the
Class A Fixed Allocation.

“Class A Investor Charge-Off” shall have the meaning specified in
subsection 4.10(a).

“Class A Investor Dilution Amount” shall mean, for any Distribution Date, an
amount equal to the product of (a) the Series 2007-1 Investor Dilution Amount
for such Distribution Date and (b) the Class A Floating Allocation for the
related Due Period.

“Class A Investor Interest” shall mean, on any date of determination, an amount
equal to the greater of (x) zero and (y) an amount equal to (a) the Class A
Initial Investor Interest, minus (b) the aggregate amount of principal payments
made to Class A Certificateholders prior to such date (other than any principal
payment made pursuant to subsection 4.9(h)), minus (c) the excess, if any, of
the aggregate amount of Class A Investor Charge-Offs pursuant to subsection
4.10(a) over Class A Investor Charge-Offs reimbursed pursuant to subsection
4.11(b) prior to such date of determination, minus (d) the amount of any
reduction to the Class A Investor Interest as a result of the purchase by the
Seller and subsequent cancellation of the Class A Certificates pursuant to
Section 4.16, minus (e) the Class A Percentage of the Initial Total Pre-Funded
Amount, plus (f) the Class A Percentage of the amount of any increases to the
Series Investor Interest pursuant to Section 4.21 during the Funding Period. The
Class A Investor Interest shall be allocated to each subclass of the Class A
Certificates proportionately according to the outstanding principal amount
thereof.

“Class A Investor Loss Amount” shall mean, with respect to each Distribution
Date, an amount equal to the product of (a) the Investor Loss Amount for the
related Due Period and (b) the Class A Floating Allocation applicable for the
related Due Period.

“Class A Monthly Interest” shall mean the sum of the Class A-1 Monthly Interest
and the Class A-2 Monthly Interest.

“Class A Monthly Principal” shall mean the monthly principal distributable in
respect of the Class A Certificates as calculated in accordance with subsection
4.7(a).

“Class A Net Swap Payment” shall mean, for any Distribution Date, the net amount
payable by the Trust to the Hedge Counterparty pursuant to the Class A Swap on
that Distribution Date as a result of LIBOR being less than the Class A Swap
Rate. For the avoidance of doubt, Class A Net Swap Payments do not include Hedge
Termination Fees or payment of breakage or other miscellaneous costs.

“Class A Net Swap Receipt” shall mean, for any Distribution Date, the net amount
payable to the Trust from the Hedge Counterparty pursuant to the Class A Swap on
that Distribution Date as a result of LIBOR being greater than the Class A Swap
Rate.

“Class A Percentage” shall mean a fraction, the numerator of which is the
Class A Initial Investor Interest and the denominator of which is the Initial
Investor Interest.

 

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“Class A Required Amount” shall have the meaning specified in subsection 4.8(a).

“Class A Servicing Fee” shall have the meaning specified in Section 3 of this
Supplement.

“Class A Swap” shall mean any Interest Rate Swap Agreement relating to the Class
A-1 Certificates.

“Class A Swap Rate” shall mean 5.056% per annum.

“Class A-1 Additional Interest” shall have the meaning specified in subsection
4.6(a).

“Class A-1 Certificate Rate” shall mean, with respect to any Interest Period, a
per annum rate equal to LIBOR as of the related LIBOR Determination Date for
such Interest Period plus 1.25%.

“Class A-1 Certificateholder” shall mean each Person in whose name a Class A-1
Certificate is registered in the Certificate Register.

“Class A-1 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class A-1 Deficiency Amount” shall have the meaning specified in subsection
4.6(a).

“Class A-1 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class A-1 Certificates as calculated in accordance with
subsection 4.6(a).

“Class A-2 Additional Interest” shall have the meaning specified in subsection
4.6(b).

“Class A-2 Certificate Rate” shall mean, with respect to any Interest Period, a
fixed per annum rate equal to 6.15%.

“Class A-2 Certificateholder” shall mean each Person in whose name a Class A-2
Certificate is registered in the Certificate Register.

“Class A-2 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class A-2 Deficiency Amount” shall have the meaning specified in subsection
4.6(b).

“Class A-2 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class A-2 Certificates as calculated in accordance with
subsection 4.6(b).

“Class B Additional Interest” shall mean the sum of the Class B-1 Additional
Interest and the Class B-2 Additional Interest.

“Class B Available Funds” shall mean, with respect to any Distribution Date, an
amount equal to the sum of (a) the Class B Floating Allocation of the
Collections of Finance Charge Receivables allocated to the Series 2007-1
Certificates and deposited in the Collection Account

 

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for the related Due Period (including amounts under Sections 4.19(c) and 4.20(b)
and other amounts that are in each case to be treated as Collections of Finance
Charge Receivables in accordance with the Agreement (other than the Class B Net
Swap Receipt)) and (b) the Class B Net Swap Receipt for the related Distribution
Date.

“Class B Certificate Rate” shall mean the Class B-1 Certificate Rate or the
Class B-2 Certificate Rate, as applicable.

“Class B Certificateholder” shall mean each Person in whose name a Class B
Certificate is registered in the Certificate Register.

“Class B Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class B Controlled Amortization Amount” for any Due Period related to the
Controlled Amortization Period shall mean $30,400,000; provided, however, that
such amount shall be adjusted downward to reflect (i) any reduction to the Class
B Investor Interest as a result of any cancellation of Class B Certificates
pursuant to Section 4.16 and (ii) any principal payments to the Class B
Certificateholders pursuant to subsection 4.9(h), so that such amount shall be
equal to the outstanding principal amount of the Class B Certificates as of the
last day of the Due Period prior to the commencement of the Controlled
Amortization Period.

“Class B Controlled Amortization Shortfall” shall mean (i) with respect to the
first Due Period related to the Controlled Amortization Period occurring after
the Class M Expected Final Payment Date, zero, and (ii) with respect to each
other Due Period thereafter during the Controlled Amortization Period occurring
on or prior to the Class B Expected Final Payment Date, means the excess, if
any, of the Class B Controlled Payment Amount for the previous Due Period over
the amount of Available Principal Collections distributed as payment of such
Class B Controlled Payment Amount on the Distribution Date related to such
previous Due Period.

“Class B Controlled Payment Amount” for any Due Period, shall mean, the sum of
(a) the Class B Controlled Amortization Amount and (b) any existing Class B
Controlled Amortization Shortfall.

“Class B Deficiency Amount” shall mean the sum of the Class B-1 Deficiency
Amount and the Class B-2 Deficiency Amount.

“Class B Expected Final Payment Date” shall mean the January 2013 Distribution
Date.

“Class B Fixed Allocation” shall mean, with respect to any Due Period other than
a Due Period relating to the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class B Investor Interest as of the close of business on the last day of the
Revolving Period, and the denominator of which is equal to the Series Investor
Interest as of the close of business on the last day of the Revolving Period.

“Class B Floating Allocation” shall mean, with respect to any Due Period
(including any day within such Due Period), the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:

(a) the numerator of which is the Class B Investor Interest as of the close of
business on the last day of the preceding Due Period (or with respect to the
first Due Period ending after the Closing Date, the Class B Investor Interest as
of the Closing Date); and

 

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(b) the denominator of which is equal to the Series Investor Interest as of the
close of business on the last day of the preceding Due Period (or with respect
to the first Due Period ending after the Closing Date, the Series Investor
Interest as of the Closing Date).

“Class B Initial Investor Interest” shall mean the aggregate initial principal
amount of the Class B Certificates, which is $30,400,000. $16,900,000 of such
initial principal amount is allocated to the Class B-1 Certificates. $13,500,000
of such initial principal amount is allocated to the Class B-2 Certificates.

“Class B Investor Allocation” shall mean, with respect to any Due Period
(a) with respect to Series 2007-1 Investor Loss Amounts, Series 2007-1 Investor
Dilution Amounts and Collections of Finance Charge Receivables at any time and
Collections of Principal Receivables during the Revolving Period, the Class B
Floating Allocation and (b) with respect to Collections of Principal Receivables
during the Controlled Amortization Period or Early Amortization Period, the
Class B Fixed Allocation.

“Class B Investor Charge-Off” shall have the meaning specified in
subsection 4.10(c).

“Class B Investor Dilution Amount” shall mean, for any Distribution Date, an
amount equal to the product of (a) the Series 2007-1 Investor Dilution Amount
for such Distribution Date and (b) the Class B Floating Allocation for the
related Due Period.

“Class B Investor Interest” shall mean, on any date of determination, an amount
equal to the greater of (x) zero and (y) an amount equal to (a) the Class B
Initial Investor Interest, minus (b) the aggregate amount of principal payments
made to Class B Certificateholders prior to such date (other than any principal
payment made pursuant to subsection 4.9(h)), minus (c) the aggregate amount of
Class B Investor Charge-Offs for all prior Distribution Dates pursuant to
subsections 4.10(a), (b) and (c), minus (d) the aggregate amount of Reallocated
Class B Principal Collections allocated pursuant to subsection 4.12(b)(iv) on
all prior Distribution Dates, minus (e) the amount of any reduction to the Class
B Investor Interest as a result of the purchase by the Seller and subsequent
cancellation of the Class B Certificates pursuant to Section 4.16, minus (f) the
Class B Percentage of the Initial Total Pre-Funded Amount, plus (g) the Class B
Percentage of the amount of any increases to the Series Investor Interest
pursuant to Section 4.21 during the Funding Period, plus (h) the aggregate
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available on all prior Distribution Dates pursuant to subsection 4.11(f) for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c) and (d). The Class B Investor Interest shall be allocated to each subclass
of the Class B Certificates proportionately according to the outstanding
principal amount thereof.

 

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“Class B Investor Loss Amount” shall mean, with respect to each Distribution
Date, an amount equal to the product of (a) the Investor Loss Amount for the
related Due Period and (b) the Class B Floating Allocation applicable for the
related Due Period.

“Class B Monthly Interest” shall mean the sum of the Class B-1 Monthly Interest
and the Class B-2 Monthly Interest.

“Class B Monthly Principal” shall mean the monthly principal distributable in
respect of the Class B Certificates as calculated in accordance with subsection
4.7(c).

“Class B Net Swap Payment” shall mean, for any Distribution Date, the net amount
payable by the Trust to the Hedge Counterparty pursuant to the Class B Swap on
that Distribution Date as a result of LIBOR being less than the Class B Swap
Rate. For the avoidance of doubt, Class B Net Swap Payments do not include Hedge
Termination Fees or payment of breakage or other miscellaneous costs.

“Class B Net Swap Receipt” shall mean, for any Distribution Date, the net amount
payable to the Trust from the Hedge Counterparty pursuant to the Class B Swap on
that Distribution Date as a result of LIBOR being greater than the Class B Swap
Rate.

“Class B Percentage” shall mean a fraction, the numerator of which is the
Class B Initial Investor Interest and the denominator of which is the Initial
Investor Interest.

“Class B Principal Commencement Date” shall have the meaning specified in
subsection 4.7(c).

“Class B Required Amount” shall have the meaning specified in subsection 4.8(c).

“Class B Servicing Fee” shall have the meaning specified in Section 3 of this
Supplement.

“Class B Swap” shall mean any Interest Rate Swap Agreement relating to the Class
B Certificates.

“Class B Swap Rate” shall mean 5.084% per annum.

“Class B-1 Additional Interest” shall have the meaning specified in subsection
4.6(e).

“Class B-1 Certificate Rate” shall mean, with respect to any Interest Period, a
per annum rate equal to LIBOR as of the related LIBOR Determination Date for
such Interest Period plus 2.00%.

“Class B-1 Certificateholder” shall mean each Person in whose name a Class B-1
Certificate is registered in the Certificate Register.

“Class B-1 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class B-1 Deficiency Amount” shall have the meaning specified in subsection
4.6(e).

 

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“Class B-1 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class B-1 Certificates as calculated in accordance with
subsection 4.6(e).

“Class B-2 Additional Interest” shall have the meaning specified in subsection
4.6(f).

“Class B-2 Certificate Rate” shall mean, with respect to any Interest Period, a
fixed per annum rate equal to 6.91%.

“Class B-2 Certificateholder” shall mean each Person in whose name a Class B-2
Certificate is registered in the Certificate Register.

“Class B-2 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class B-2 Deficiency Amount” shall have the meaning specified in subsection
4.6(f).

“Class B-2 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class B-2 Certificates as calculated in accordance with
subsection 4.6(f).

“Class C Available Funds” shall mean, with respect to any Distribution Date, an
amount equal to the sum of (a) the Class C Floating Allocation of Collections of
Finance Charge Receivables allocated to the Series 2007-1 Certificates and
deposited in the Collection Account for the related Due Period (including
amounts under Sections 4.19(c) and 4.20(b) and other amounts that are in each
case to be treated as Collections of Finance Charge Receivables in accordance
with the Agreement (other than the Class C Net Cap Receipt)) and (b) the Class C
Net Cap Receipt for the related Distribution Date.

“Class C Cap” shall mean any Interest Rate Cap Agreement relating to the Class C
Certificates.

“Class C Cap Rate” shall mean 9.00% per annum.

“Class C Certificate Rate” with respect to any Interest Period shall have the
meaning specified in the Class C Purchase Agreement; provided that the Class C
Certificate Rate shall in no event exceed a per annum rate equal to LIBOR as of
the LIBOR Determination Date for such Interest Period plus 4.00%.

“Class C Certificateholder” shall mean each Person in whose name a Class C
Certificate is registered in the Certificate Register.

“Class C Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class C Deficiency Amount” shall have the meaning specified in subsection
4.6(g).

“Class C Expected Final Payment Date” shall mean the February 2013 Distribution
Date.

 

10

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“Class C Fixed Allocation” shall mean, with respect to any Due Period other than
a Due Period relating to the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class C Investor Interest as of the close of business on the last day of the
Revolving Period, and the denominator of which is equal to the Series Investor
Interest as of the close of business on the last day of the Revolving Period.

“Class C Floating Allocation” shall mean, with respect to any Due Period
(including any day within such Due Period), the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:

(a) the numerator of which is the Class C Investor Interest as of the close of
business on the last day of the preceding Due Period (or with respect to the
first Due Period ending after the Closing Date, the Class C Investor Interest as
of the Closing Date); and

(b) the denominator of which is equal to the Series Investor Interest as of the
close of business on the last day of the preceding Due Period (or with respect
to the first Due Period ending after the Closing Date, the Series Investor
Interest as of the Closing Date).

“Class C Initial Investor Interest” shall mean the aggregate initial principal
amount of the Class C Certificates, which is $28,800,000.

“Class C Investor Allocation” shall mean, with respect to any Due Period
(a) with respect to Series 2007-1 Investor Loss Amounts, Series 2007-1 Investor
Dilution Amounts and Collections of Finance Charge Receivables at any time and
Collections of Principal Receivables during the Revolving Period, the Class C
Floating Allocation and (b) with respect to Collections of Principal Receivables
during the Controlled Amortization Period or Early Amortization Period, the
Class C Fixed Allocation.

“Class C Investor Charge-Off” shall have the meaning specified in
subsection 4.10(d).

“Class C Investor Dilution Amount” shall mean, for any Distribution Date, an
amount equal to the product of (a) the Series 2007-1 Investor Dilution Amount
for such Distribution Date and (b) the Class C Floating Allocation for the
related Due Period.

“Class C Investor Interest” shall mean, on any date of determination, an amount
equal to the greater of (x) zero and (y) an amount equal to (a) the Class C
Initial Investor Interest, minus (b) the aggregate amount of principal payments
made to the Class C Certificateholders prior to such date (other than any
principal payment made pursuant to subsection 4.9(h)), minus (c) the aggregate
amount of Class C Investor Charge-Offs for all prior Distribution Dates pursuant
to subsections 4.10(a), (b), (c) and (d), minus (d) the aggregate amount of
Reallocated Class C Principal Collections allocated pursuant to subsection
4.12(b)(iii) on all prior Distribution Dates, minus (e) the amount of any
reduction to the Class C Investor Interest as a result of the purchase by the
Seller and subsequent cancellation of the Class C Certificates pursuant to
Section 4.16, minus (f) the Class C Percentage of the Initial Total Pre-Funded
Amount, plus (g) the Class C Percentage of the amount of any increases to the
Series Investor Interest pursuant to Section 4.21 during the Funding Period, and
plus (h) the aggregate amount of Excess Spread and Shared

 

11

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Excess Finance Charge Collections allocated and available on all prior
Distribution Dates pursuant to subsection 4.11(k) for the purpose of reimbursing
amounts deducted pursuant to the foregoing clauses (c) and (d).

“Class C Investor Loss Amount” shall mean, with respect to any Distribution
Date, an amount equal to the product of (a) the Investor Loss Amount for the
related Due Period and (b) the Class C Floating Allocation applicable for the
related Due Period.

“Class C Monthly Interest” shall have the meaning specified in subsection
4.6(g).

“Class C Monthly Principal” shall mean the monthly principal distributable in
respect of the Class C Certificates as calculated in accordance with subsection
4.7(d).

“Class C Net Cap Receipt” means, for any Distribution Date, the net amount
payable to the Trust from the Hedge Counterparty pursuant to the Class C Cap on
that Distribution Date as a result of LIBOR being greater than the Class C Cap
Rate.

“Class C Percentage” shall mean a fraction, the numerator of which is the
Class C Initial Investor Interest and the denominator of which is the Initial
Investor Interest.

“Class C Purchase Agreement” shall mean the agreement among the Seller, the
Servicer, the Trustee and the Class C Certificateholders, as amended, modified
or restated from time to time.

“Class C Required Amount” shall mean the amount, if any, equal to the sum of
(a) the amount, if any, by which the sum of (i) the Class C Monthly Interest for
such Distribution Date, plus (ii) the Class C Deficiency Amount, if any, for
such Distribution Date, plus (iii) the Class C Investor Loss Amount, if any, for
the prior Due Period, plus (iv) the Class C Investor Dilution Amount, if any,
for such Distribution Date exceeds the amount of Excess Spread available to be
applied to such amounts pursuant to subsections 4.11(h), (i) and (j), plus
(b) the amount, if any, by which the sum of (i) the Class C Servicing Fee for
the prior Due Period, plus (ii) the Class C Servicing Fee, if any, due but not
paid on any prior Distribution Date, exceeds the Class C Available Funds for the
related Due Period and the amount of any Excess Spread available to be applied
to such amount pursuant to subsection 4.11(g).

“Class C Servicing Fee” shall have the meaning specified in Section 3 of this
Supplement.

“Class D Available Funds” shall mean, with respect to any Distribution Date, an
amount equal to the Class D Floating Allocation of Collections of Finance Charge
Receivables allocated to the Series 2007-1 Certificates and deposited in the
Collection Account for the related Due Period (including amounts under Sections
4.19(c) and 4.20(b) and other amounts that are in each case to be treated as
Collections of Finance Charge Receivables in accordance with the Agreement).

“Class D Certificateholders” shall mean any Person in whose name a Class D
Certificate is registered in the Certificate Register.

 

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“Class D Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class D Deficiency Amount” shall mean, with respect to any Distribution Date,
the sum of the Class D-1 Deficiency Amount plus the Class D-2 Deficiency Amount.

“Class D Expected Final Payment Date” shall mean the March 2013 Distribution
Date.

“Class D Fixed Allocation” shall mean, with respect to any Due Period other than
a Due Period relating to the Revolving Period, the sum of the Class D-1 Fixed
Allocation and the Class D-2 Fixed Allocation.

“Class D Floating Allocation” shall mean, with respect to any Due Period
(including any day within such Due Period), the sum of the Class D-1 Floating
Allocation and the Class D-2 Floating Allocation.

“Class D Initial Investor Interest” shall mean $30,400,000, which amount shall
be allocated between the Class D-1 Initial Investor Interest and the Class D-2
Initial Investor Interest as set forth in the Class D Purchase Agreements.

“Class D Investor Allocation” shall mean, with respect to any Due Period,
(a) with respect to Series 2007-1 Investor Loss Amounts, Series 2007-1 Investor
Dilution Amounts and Collections of Finance Charge Receivables at any time and
Principal Receivables during the Revolving Period, the Class D Floating
Allocation and (b) with respect to Collections of Principal Receivables during
the Controlled Amortization Period or Early Amortization Period, the Class D
Fixed Allocation.

“Class D Investor Charge-Offs” shall mean the sum of Class D-1 Investor
Charge-Offs plus Class D-2 Investor Charge-Offs.

“Class D Investor Dilution Amount” shall mean, for any Distribution Date, an
amount equal to the product of (a) the Series 2007-1 Investor Dilution Amount
for such Distribution Date and (b) the Class D Floating Allocation for the
related Due Period.

“Class D Investor Interest” shall mean, on any date of determination, the sum of
the Class D-1 Investor Interest plus the Class D-2 Investor Interest.

“Class D Investor Loss Amount” shall mean, with respect to any Distribution
Date, an amount equal to the product of (a) the Investor Loss Amount for the
related Due Period and (b) the Class D Floating Allocation applicable for the
related Due Period.

“Class D Monthly Interest” shall mean the sum of the Class D-1 Monthly Interest
plus the Class D-2 Monthly Interest.

“Class D Monthly Principal” shall mean the sum of the Class D-1 Monthly
Principal plus the Class D-2 Monthly Principal.

 

13

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“Class D Percentage” shall mean the sum of the Class D-1 Percentage and the
Class D-2 Percentage.

“Class D Purchase Agreement(s)” shall mean the Class D-1 Purchase Agreement
and/or the Class D-2 Purchase Agreement, as the case may be.

“Class D Servicing Fee” shall mean the sum of the Class D-1 Servicing Fee plus
the Class D-2 Servicing Fee.

“Class D-1 Certificate Rate” with respect to any Interest Period shall have the
meaning specified in the Class D-1 Purchase Agreement; provided that the Class
D-1 Certificate Rate shall in no event exceed a per annum rate equal to (i) if
the Class D-1 Certificate Rate is a floating rate, LIBOR as of the LIBOR
Determination Date for such Interest Period plus 10.0% and (ii) if the Class D-1
Certificate Rate is a fixed rate, 15.0%.

“Class D-1 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class D-1 Deficiency Amount” shall have the meaning specified in
subsection 4.6(h).

“Class D-1 Fixed Allocation” shall mean, with respect to any Due Period other
than a Due Period relating to the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Class D-1 Investor Interest as of the close of business on the last day
of the Revolving Period, and the denominator of which is equal to the Series
Investor Interest as of the close of business on the last day of the Revolving
Period.

“Class D-1 Floating Allocation” shall mean, with respect to any Due Period
(including any day within such Due Period), the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:

(a) the numerator of which is the Class D-1 Investor Interest as of the close of
business on the last day of the preceding Due Period (or with respect to the
first Due Period ending after the Closing Date, the Class D-1 Investor Interest
as of the Closing Date); and

(b) the denominator of which is equal to the Series Investor Interest as of the
close of business on the last day of the preceding Due Period (or with respect
to the first Due Period ending after the Closing Date, the Series Investor
Interest as of the Closing Date).

“Class D-1 Initial Investor Interest” shall mean the portion of the Class D
Initial Investor Interest allocated to the Class D-1 Investor Interest, as set
forth in the Class D-1 Purchase Agreement.

“Class D-1 Investor Allocation” shall mean, with respect to any Due Period,
(a) with respect to Series 2007-1 Investor Loss Amounts, Series 2007-1 Investor
Dilution Amounts and Collections of Finance Charge Receivables at any time and
Principal Receivables during the

 

14

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Revolving Period, the Class D-1 Floating Allocation and (b) with respect to
Collections of Principal Receivables during the Controlled Amortization Period
or Early Amortization Period, the Class D-1 Fixed Allocation.

“Class D-1 Investor Charge-Off” shall have the meaning specified in
subsection 4.10(e).

“Class D-1 Investor Interest” shall mean, on any date of determination, an
amount equal to the greater of (x) zero and (y) an amount equal to (a) the Class
D-1 Initial Investor Interest, minus (b) the aggregate amount of principal
payments made to the holders of the Class D-1 Certificates prior to such date
(other than any principal payments made pursuant to subsection 4.9(h)), minus
(c) the aggregate amount of Class D-1 Investor Charge-Offs for all prior
Distribution Dates pursuant to subsections 4.10(a) through (e), minus (d) the
aggregate amount of Reallocated Class D-1 Principal Collections allocated
pursuant to subsection 4.12(b)(ii) on all prior Distribution Dates, minus
(e) the amount of any reduction to the Class D-1 Investor Interest as a result
of the purchase by the Seller and subsequent cancellation of the Class D-1
Certificates pursuant to Section 4.16, minus (f) the Class D-1 Percentage of the
Initial Total Pre-Funded Amount, plus (g) the Class D-1 Percentage of the amount
of any increases to the Series Investor Interest pursuant to Section 4.21 during
the Funding Period, plus (h) the aggregate amount of Excess Spread and Shared
Excess Finance Charge Collections allocated and available on all prior
Distribution Dates pursuant to subsection 4.11(q) for the purpose of reimbursing
amounts deducted pursuant to the foregoing clauses (c) and (d); provided that
the Class D-1 Investor Interest determined pursuant to the foregoing clauses
(a) through (h) may be subject to further increase or decrease under the
circumstances described in Section 16(e) of this Supplement.

“Class D-1 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class D-1 Certificates as calculated in accordance with
subsection 4.6(h).

“Class D-1 Monthly Principal” shall mean the monthly principal distributable in
respect of the Class D-1 Certificates as calculated in accordance with
subsection 4.7(e).

“Class D-1 Percentage” shall mean a fraction, the numerator of which is the
Class D-1 Initial Investor Interest and the denominator of which is the Initial
Investor Interest.

“Class D-1 Purchase Agreement” shall be the agreement among the Seller, the
Servicer, the Trustee and the Class D-1 Certificateholders, as amended, modified
or restated from time to time.

“Class D-1 Servicing Fee” shall have the meaning specified in Section 3 of this
Supplement.

“Class D-2 Certificate Rate” with respect to any Interest Period shall have the
meaning specified in the Class D-2 Purchase Agreement; provided that the Class
D-2 Certificate Rate shall in no event exceed a per annum rate equal to (i) if
the Class D-2 Certificate Rate is a floating rate, LIBOR as of the LIBOR
Determination Date for such Interest Period plus 10.0% and (ii) if the Class D-2
Certificate Rate is a fixed rate, 15.0%.

“Class D-2 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

 

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“Class D-2 Deficiency Amount” shall have the meaning specified in
subsection 4.6(i).

“Class D-2 Fixed Allocation” shall mean, with respect to any Due Period other
than a Due Period relating to the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Class D-2 Investor Interest as of the close of business on the last day
of the Revolving Period, and the denominator of which is equal to the Series
Investor Interest as of the close of business on the last day of the Revolving
Period.

“Class D-2 Floating Allocation” shall mean, with respect to any Due Period
(including any day within such Due Period), the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:

(a) the numerator of which is the Class D-2 Investor Interest as of the close of
business on the last day of the preceding Due Period (or with respect to the
first Due Period ending after the Closing Date, the Class D-2 Investor Interest
as of the Closing Date); and

(b) the denominator of which is equal to the Series Investor Interest as of the
close of business on the last day of the preceding Due Period (or with respect
to the first Due Period ending after the Closing Date, the Series Investor
Interest as of the Closing Date).

“Class D-2 Initial Investor Interest” shall mean the portion of the Class D
Initial Investor Interest allocated to the Class D-2 Investor Interest, as set
forth in the Class D-2 Purchase Agreement.

“Class D-2 Investor Allocation” shall mean, with respect to any Due Period,
(a) with respect to Series 2007-1 Investor Loss Amounts, Series 2007-1 Investor
Dilution Amounts and Collections of Finance Charge Receivables at any time and
Principal Receivables during the Revolving Period, the Class D-2 Floating
Allocation and (b) with respect to Collections of Principal Receivables during
the Controlled Amortization Period or Early Amortization Period, the Class D-2
Fixed Allocation.

“Class D-2 Investor Charge-Off” shall have the meaning specified in
subsection 4.10(e).

“Class D-2 Investor Interest” shall mean, on any date of determination, an
amount equal to the greater of (x) zero and (y) an amount equal to (a) the Class
D-2 Initial Investor Interest, minus (b) the aggregate amount of principal
payments made to the holders of the Class D-2 Certificates prior to such date
(other than any principal payments made pursuant to subsection 4.9(h)), minus
(c) the aggregate amount of Class D-2 Investor Charge-Offs for all prior
Distribution Dates pursuant to subsections 4.10(a) through (e), minus (d) the
aggregate amount of Reallocated Class D-2 Principal Collections allocated
pursuant to subsection 4.12(b)(i) on all prior Distribution Dates, minus (e) the
amount of any reduction to the Class D-2 Investor Interest as a result of the
purchase by the Seller and subsequent cancellation of the Class D-2 Certificates
pursuant to Section 4.16, minus (f) the Class D-2 Percentage of the Initial
Total Pre-Funded Amount, plus (g) the Class D-2 Percentage of the amount of any
increases to the Series Investor Interest pursuant to Section 4.21 during the
Funding Period, plus (h) the aggregate amount of

 

16

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Excess Spread and Shared Excess Finance Charge Collections allocated and
available on all prior Distribution Dates pursuant to subsection 4.11(q) for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c) and (d) ; provided that the Class D-2 Investor Interest determined pursuant
to the foregoing clauses (a) through (h) may be subject to further increase or
decrease under the circumstances described in Section 16(e) of this Supplement.

“Class D-2 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class D-2 Certificates as calculated in accordance with
subsection 4.6(i).

“Class D-2 Monthly Principal” shall mean the monthly principal distributable in
respect of the Class D-2 Certificates as calculated in accordance with
subsection 4.7(f).

“Class D-2 Percentage” shall mean a fraction, the numerator of which is the
Class D-2 Initial Investor Interest and the denominator of which is the Initial
Investor Interest.

“Class D-2 Purchase Agreement” shall mean the agreement among the Seller, the
Servicer, the Trustee and the Class D-2 Certificateholders, as amended, modified
or restated from time to time.

“Class D-2 Servicing Fee” shall have the meaning specified in Section 3 of this
Supplement.

“Class M Additional Interest” shall mean the sum of the Class M-1 Additional
Interest and the Class M-2 Additional Interest.

“Class M Available Funds” shall mean, with respect to any Distribution Date, an
amount equal to the sum of (a) the Class M Floating Allocation of the
Collections of Finance Charge Receivables allocated to the Series 2007-1
Certificates and deposited in the Collection Account for the related Due Period
(including amounts under Sections 4.19(c) and 4.20(b) and other amounts that are
in each case to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement (other than the Class M Net Swap Receipt)) and
(b) the Class M Net Swap Receipt for the related Distribution Date.

“Class M Certificate Rate” means the Class M-1 Certificate Rate or the Class M-2
Certificate Rate, as applicable.

“Class M Certificateholder” shall mean each Person in whose name a Class M
Certificate is registered in the Certificate Register.

“Class M Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class M Controlled Amortization Amount” for any Due Period related to the
Controlled Amortization Period shall mean $19,200,000; provided, however, that
such amount shall be adjusted downward to reflect (i) any reduction to the Class
M Investor Interest as a result of any cancellation of Class M Certificates
pursuant to Section 4.16 and (ii) any principal payments to the Class M
Certificateholders pursuant to subsection 4.9(h), so that such amount shall be
equal to the outstanding principal amount of the Class M Certificates as of the
last day of the Due Period prior to the commencement of the Controlled
Amortization Period.

 

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“Class M Controlled Amortization Shortfall” shall mean (i) with respect to the
first Due Period related to the Controlled Amortization Period occurring after
the Class A Expected Final Payment Date, zero, and (ii) with respect to each
other Due Period thereafter during the Controlled Amortization Period occurring
on or prior to the Class M Expected Final Payment Date, means the excess, if
any, of the Class M Controlled Payment Amount for the previous Due Period over
the amount of Available Principal Collections distributed as payment of such
Class M Controlled Payment Amount on the Distribution Date related to such
previous Due Period.

“Class M Controlled Payment Amount” for any Due Period, shall mean, the sum of
(a) the Class M Controlled Amortization Amount and (b) any existing Class M
Controlled Amortization Shortfall.

“Class M Deficiency Amount” shall mean the sum of the Class M-1 Deficiency
Amount and the Class M-2 Deficiency Amount.

“Class M Expected Final Payment Date” shall mean the December 2012 Distribution
Date.

“Class M Fixed Allocation” shall mean, with respect to any Due Period other than
a Due Period relating to the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class M Investor Interest as of the close of business on the last day of the
Revolving Period, and the denominator of which is equal to the Series Investor
Interest as of the close of business on the last day of the Revolving Period.

“Class M Floating Allocation” shall mean, with respect to any Due Period
(including any day within such Due Period), the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:

(a) the numerator of which is the Class M Investor Interest as of the close of
business on the last day of the preceding Due Period (or with respect to the
first Due Period ending after the Closing Date, the Class M Investor Interest as
of the Closing Date); and

(b) the denominator of which is equal to the Series Investor Interest as of the
close of business on the last day of the preceding Due Period (or with respect
to the first Due Period ending after the Closing Date, the Series Investor
Interest as of the Closing Date).

“Class M Initial Investor Interest” shall mean the aggregate initial principal
amount of the Class M Certificates, which is $19,200,000. $4,000,000 of such
initial principal amount is allocated to the Class M-1 Certificates. $15,200,000
of such initial principal amount is allocated to the Class M-2 Certificates.

 

18

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“Class M Investor Allocation” shall mean, with respect to any Due Period
(a) with respect to Series 2007-1 Investor Loss Amounts, Series 2007-1 Investor
Dilution Amounts and Collections of Finance Charge Receivables at any time and
Collections of Principal Receivables during the Revolving Period, the Class M
Floating Allocation and (b) with respect to Collections of Principal Receivables
during the Controlled Amortization Period or Early Amortization Period, the
Class M Fixed Allocation.

“Class M Investor Charge-Off” shall have the meaning specified in
subsection 4.10(b).

“Class M Investor Dilution Amount” shall mean, for any Distribution Date, an
amount equal to the product of (a) the Series 2007-1 Investor Dilution Amount
for such Distribution Date and (b) the Class M Floating Allocation for the
related Due Period.

“Class M Investor Interest” shall mean, on any date of determination, an amount
equal to the greater of (x) zero and (y) an amount equal to (a) the Class M
Initial Investor Interest, minus (b) the aggregate amount of principal payments
made to Class M Certificateholders prior to such date (other than any principal
payment made pursuant to subsection 4.9(h)), minus (c) the aggregate amount of
Class M Investor Charge-Offs for all prior Distribution Dates pursuant to
subsections 4.10(a) and (b), minus (d) the aggregate amount of Reallocated Class
M Principal Collections allocated pursuant to subsection 4.12(b)(v) on all prior
Distribution Dates, minus (e) the amount of any reduction to the Class M
Investor Interest as a result of the purchase by the Seller and subsequent
cancellation of the Class M Certificates pursuant to Section 4.16, minus (f) the
Class M Percentage of the Initial Total Pre-Funded Amount, plus (g) the Class M
Percentage of the amount of any increases to the Series Investor Interest
pursuant to Section 4.21 during the Funding Period, plus (h) the aggregate
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available on all prior Distribution Dates pursuant to subsection 4.11(d) for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c) and (d). The Class M Investor Interest shall be allocated to each subclass
of the Class M Certificates proportionately according to the outstanding
principal amount thereof.

“Class M Investor Loss Amount” shall mean, with respect to each Distribution
Date, an amount equal to the product of (a) the Investor Loss Amount for the
related Due Period and (b) the Class M Floating Allocation applicable for the
related Due Period.

“Class M Monthly Interest” shall mean the sum of the Class M-1 Monthly Interest
and the Class M-2 Monthly Interest.

“Class M Monthly Principal” shall mean the monthly principal distributable in
respect of the Class M Certificates as calculated in accordance with subsection
4.7(b).

“Class M Net Swap Payment” shall mean, for any Distribution Date, the net amount
payable by the Trust to the Hedge Counterparty pursuant to the Class M Swap on
that Distribution Date as a result of LIBOR being less than the Class M Swap
Rate. For the avoidance of doubt, Class M Net Swap Payments do not include Hedge
Termination Fees or payment of breakage or other miscellaneous costs.

“Class M Net Swap Receipt” means, for any Distribution Date, the net amount
payable to the Trust from the Hedge Counterparty pursuant to the Class M Swap on
that Distribution Date as a result of LIBOR being greater than the Class M Swap
Rate.

 

19

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“Class M Percentage” shall mean a fraction, the numerator of which is the Class
M Initial Investor Interest and the denominator of which is the Initial Investor
Interest.

“Class M Principal Commencement Date” shall have the meaning specified in
subsection 4.7(b).

“Class M Required Amount” shall have the meaning specified in subsection 4.8(b).

“Class M Servicing Fee” shall have the meaning specified in Section 3 of this
Supplement.

“Class M Swap” shall mean any Interest Rate Swap Agreement relating to the Class
M-1 Certificates.

“Class M Swap Rate” means 5.081% per annum.

“Class M-1 Additional Interest” shall have the meaning specified in subsection
4.6(c).

“Class M-1 Certificate Rate” shall mean, with respect to any Interest Period, a
per annum rate equal to LIBOR as of the related LIBOR Determination Date for
such Interest Period plus 1.65%.

“Class M-1 Certificateholder” shall mean each Person in whose name a Class M-1
Certificate is registered in the Certificate Register.

“Class M-1 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class M-1 Deficiency Amount” shall have the meaning specified in subsection
4.6(c).

“Class M-1 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class M-1 Certificates as calculated in accordance with
subsection 4.6(c).

“Class M-2 Additional Interest” shall have the meaning specified in subsection
4.6(d).

“Class M-2 Certificate Rate” shall mean, with respect to any Interest Period, a
fixed per annum rate equal to 6.56%.

“Class M-2 Certificateholder” shall mean each Person in whose name a Class M-2
Certificate is registered in the Certificate Register.

“Class M-2 Certificates” shall have the meaning specified in subsection 1(a) of
this Supplement.

“Class M-2 Deficiency Amount” shall have the meaning specified in subsection
4.6(d).

“Class M-2 Monthly Interest” shall mean the monthly interest distributable in
respect of the Class M-2 Certificates as calculated in accordance with
subsection 4.6(d).

 

20

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“Clearstream” means Clearstream Banking, société anonyme.

“Closing Date” shall mean October 17, 2007.

“Controlled Amortization Period” shall mean, unless an Early Amortization Event
shall have occurred prior thereto, the period commencing on March 1, 2012, and
ending upon the first to occur of (a) the payment in full of the Series 2007-1
Certificates, (b) the commencement of the Early Amortization Period and (c) the
Series 2007-1 Termination Date.

“Controlling Certificateholders” shall mean (a) on any date of determination on
which the Class A Investor Interest, the Class M Investor Interest and the Class
B Investor Interest is greater than zero, the Holders of Class A Certificates,
Class M Certificates and Class B Certificates evidencing more than 50% of the
sum of the Class A Investor Interest, the Class M Investor Interest and the
Class B Investor Interest, (b) thereafter, on any date of determination on which
the Class C Investor Interest is greater than zero, the Holders of Class C
Certificates evidencing more than 50% of the Class C Investor Interest and
(c) thereafter, the Required Class D Holders (as defined in the Class D Purchase
Agreement).

“Cumulative Principal Shortfall” shall mean the sum of the Principal Shortfalls
(as such term is defined in each of the related Supplements or Receivables
Purchase Agreement) for each Series in Group One that are Principal Sharing
Series.

“Depository” means The Depository Trust Company, as initial Depository, or any
successor Clearing Agency appointed by the Seller.

“Designated Maturity” shall mean, for any LIBOR Determination Date, one month.

“Distribution Date” shall mean November 15, 2007 and the fifteenth day of each
calendar month thereafter, or if such fifteenth day is not a Business Day, the
next succeeding Business Day.

“Early Amortization Period” shall mean the period commencing at the close of
business on the Business Day immediately preceding the day on which an Early
Amortization Event with respect to Series 2007-1 is deemed to have occurred, and
ending on the Series 2007-1 Termination Date.

“Enhancement” shall mean (a) with respect to the Class A Certificates, the
subordination of the Class M Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, (b) with respect to the Class M
Certificates, the subordination of the Class B Certificates, Class C
Certificates and the Class D Certificates, (c) with respect to the Class B
Certificates, the subordination of the Class C Certificates and the Class D
Certificates, (d) with respect to the Class C Certificates, the subordination of
the Class D Certificates, and (e) with respect to the Class D-1 Certificates,
the subordination of the Class D-2 Certificates.

“Enhancement Provider” shall mean, collectively, the Class C Certificateholders
and the Class D Certificateholders specified as such in the Class C Purchase
Agreement or the Class D Purchase Agreement, as applicable.

 

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“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System.

“Excess Spread” shall mean, with respect to any Distribution Date, the sum of
the amounts with respect to such Distribution Date, if any, specified pursuant
to subsections 4.9(a)(v), 4.9(b)(iii), 4.9(c)(iii), 4.9(d)(ii) and 4.9(e)(ii).

“Finance Charge Shortfall” shall have the meaning specified in
subsection 4.14(b).

“Fixed Allocation Percentage” shall mean, with respect to any Due Period
(including any day within such Due Period) occurring on or after the Fixed
Principal Allocation Date, the percentage equivalent of a fraction:

(a) the numerator of which is the Series Investor Interest as of the close of
business on the last day of the Revolving Period; provided, that if Series
2007-1 is paired with a Paired Series (other than Series 2002-1) and an Early
Amortization Event occurs with respect to such Paired Series, the Seller shall,
by written notice delivered to the Trustee, the Servicer and the Rating
Agencies, reduce the numerator to an amount equal to the Series Investor
Interest as of the last day of the revolving period for such Paired Series;
provided that each of the Rating Agencies confirms in writing, concurrently with
the issuance of such Paired Series (other than Series 2002-1), that such change
would not result in a reduction or withdrawal by such Rating Agency of its
rating for the Series 2007-1 Certificates; and

(b) the denominator of which is the greater of (i) the sum of (A) the aggregate
amount of Principal Receivables in the Trust at the end of the day on the last
day of the prior Due Period and (B) the Excess Funding Amount as of the close of
business of the last day of the prior Due Period, and (ii) the sum of the
numerators used to calculate the Investor/Purchaser Percentages for such Due
Period with respect to Principal Receivables for all Series of Certificates and
Receivable Purchase Series outstanding;

provided, that with respect to any Due Period in which one or more Reset Dates
occur:

(x) the denominator determined pursuant to subclause (b)(i)(A) shall be (1) the
aggregate amount of Principal Receivables in the Trust as of the close of
business on the later of the last day of the preceding Due Period or the
preceding Reset Date, for the period from and including the first day of the
current Due Period or preceding Reset Date, as applicable, to but excluding such
Reset Date and (2) the aggregate amount of Principal Receivables in the Trust as
of the close of business on such Reset Date, for the period from and including
such Reset Date to the earlier of the last day of such Due Period (in which case
such period shall include such day) or the next succeeding Reset Date (in which
case such period shall not include such succeeding Reset Date); and provided
further that with respect to any Due Period in which a Reset Date occurs, if the
Servicer need not make daily deposits of Collections into the Collection
Account, the amount in subclause (b)(i)(A) shall be the Average Principal
Balance; and

 

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(y) the denominator determined pursuant to subclause (b)(ii) shall be (1) the
sum of the numerators used to calculate the Investor/Purchaser Percentages for
all outstanding Series for allocations with respect to Principal Receivables for
all such Series as of the close of business on the later of the last day of the
preceding Due Period or the preceding Reset Date, for the period from and
including the first day of the current Due Period or preceding Reset Date, as
applicable, to but excluding such Reset Date and (2) the sum of the numerators
used to calculate the Investor/Purchaser Percentages for all outstanding Series
for allocations with respect to Principal Receivables for all such Series as of
the close of business on such Reset Date, for the period from and including such
Reset Date to the earlier of the last day of such Due Period (in which case such
period shall include such day) or the next succeeding Reset Date (in which case
such period shall not include such succeeding Reset Date).

“Fixed Principal Allocation Date” shall mean the earlier of (a) the date on
which an Early Amortization Period with respect to Series 2007-1 commences, and
(b) the date of commencement of the Controlled Amortization Period.

“Floating Allocation Percentage” shall mean, with respect to any Due Period
(including any day within such Due Period), the percentage equivalent of a
fraction:

(a) the numerator of which is the Investor Interest at the end of the day on the
last day of the preceding Due Period (or with respect to the first Due Period
ending after the Closing Date, the Investor Interest as of the Closing Date),
and

(b) the denominator of which is the greater of (1) the sum of (A) the aggregate
amount of Principal Receivables in the Trust at the end of the day on the last
day of the prior Due Period (or with respect to the first Due Period ending
after the Closing Date, at the end of the day on the Closing Date) and (B) the
Excess Funding Amount as of the close of business of the last day of the
preceding Due Period, and (2) the sum of the numerators used to calculate the
Investor/Purchaser Percentages for such Due Period with respect to Finance
Charge Receivables, Series Dilution Amounts or Loss Amounts, as applicable, for
all Series of Certificates and Receivable Purchase Series outstanding;

provided that with respect to any Due Period in which one or more Reset Dates
occur:

(x) the numerator determined pursuant to subclause (a) shall be (1) the Investor
Interest at the end of the day on the later of (A) the last day of the preceding
Due Period (or with respect to the first Due Period ending after the Closing
Date, the Investor Interest as of the Closing Date) or (B) the preceding Reset
Date, for the period from and including the first day of the current Due Period
or preceding Reset Date, as applicable, to but excluding such Reset Date and
(2) the Investor Interest at the end of the day on such Reset Date, for the
period from and including such Reset Date to the earlier of the last day of such
Due Period (in which case such period shall include such day) or the next
succeeding Reset Date (in which case such period shall not include such
succeeding Reset Date);

 

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(y) the denominator determined pursuant to subclause (b)(1)(A) shall be (1) the
aggregate amount of Principal Receivables in the Trust as of the close of
business on the later of the last day of the preceding Due Period or the
preceding Reset Date, for the period from and including the first day of the
current Due Period or preceding Reset Date, as applicable, to but excluding such
Reset Date and (2) the aggregate amount of Principal Receivables in the Trust as
of the close of business on such Reset Date, for the period from and including
such Reset Date to the earlier of the last day of such Due Period (in which case
such period shall include such day) or the next succeeding Reset Date (in which
case such period shall not include such succeeding Reset Date); provided that
with respect to any Due Period in which a Reset Date occurs, if the Servicer
need not make daily deposits of Collections into the Collection Account, the
amount in subclause (b)(1)(A) shall be the Average Principal Balance; and

(z) the denominator determined pursuant to subclause (b)(2) shall be (1) the sum
of the numerators used to calculate the Investor/Purchaser Percentages for all
outstanding Series for allocations with respect to Finance Charge Receivables,
Loss Amounts or Principal Receivables, as applicable, for all such Series as of
the close of business on the later of the last day of the preceding Due Period
or the preceding Reset Date, for the period from and including the first day of
the current Due Period or preceding Reset Date, as applicable, to but excluding
such Reset Date and (2) the sum of the numerators used to calculate the
Investor/Purchaser Percentages for all outstanding Series for allocations with
respect to Finance Charge Receivables, Series Dilution Amounts, Loss Amounts or
Principal Receivables, as applicable, for all such Series as of the close of
business on such Reset Date, for the period from and including such Reset Date
to the earlier of the last day of such Due Period (in which case such period
shall include such day) or the next succeeding Reset Date (in which case such
period shall not include such succeeding Reset Date).

“Funding Period” shall mean the period from and including the Closing Date to
and including the earliest of (x) the first day on which the Series Investor
Interest equals the Initial Investor Interest; (y) the commencement of the Early
Amortization Period and (z) the May 2008 Distribution Date.

“Funding Period Reserve Account” shall have the meaning set forth in subsection
4.20(a).

“Funding Period Reserve Draw Amount” shall mean, with respect to each
Distribution Date during the Funding Period, the lesser of (a) the amount on
deposit in the Funding Period Reserve Account on such Distribution Date, other
than net investment income (before giving effect to any withdrawal to be made
from the Funding Period Reserve Account on such Distribution Date) and (b) the
Pre-Funding Interest Amount for such Distribution Date.

“Funding Period Termination Distribution Date” shall mean the earlier to occur
of (x) the first Distribution Date to occur following the commencement of the
Early Amortization Period and (y) if the Funding Period shall not have
terminated pursuant to clause (x) of the definition of “Funding Period” (after
giving effect to any increase in the Series Investor Interest on the May 2008
Distribution Date), the May 2008 Distribution Date.

 

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“Group One” shall mean Series 2007-1 and each other Series specified in the
related Supplement or Receivables Purchase Agreement to be included in Group
One.

“Hedge Counterparty” means Barclays Bank PLC or any other counterparty under the
initial Interest Rate Swap Agreements or any Interest Rate Cap Agreement or any
successor agreement pertaining to the initial Class A Swap, the initial Class M
Swap, the initial Class B Swap or the initial Class C Cap.

“Hedge Reserve Account” shall mean the account established and maintained
pursuant to subsection 4.22(a).

“Hedge Termination Fee” shall have the meaning specified in subsection 4.22(c).

“Initial Investor Interest” shall mean the sum of the Class A Initial Investor
Interest, the Class M Initial Investor Interest, the Class B Initial Investor
Interest, the Class C Initial Investor Interest and the Class D Initial Investor
Interest.

“Initial Purchaser” shall mean Barclays Capital Inc., as initial purchaser of
the Class A Certificates, the Class M Certificates and the Class B Certificates.

“Initial Total Pre-Funded Amount” shall mean $285,000,000.

“Interest Period” shall mean, with respect to any Distribution Date, the period
from and including the previous Distribution Date through the day preceding such
Distribution Date, except that the initial Interest Period shall be the period
from and including the Closing Date through the day preceding the initial
Distribution Date.

“Interest Rate Cap Agreement” shall mean each interest rate cap agreement
between Trustee, on behalf of the Trust, and the Hedge Counterparty
substantially in the form of Exhibit H-2; provided, however, that any Interest
Rate Cap Agreement can deviate from the terms described in Exhibit H-2 at the
direction of the Servicer if the Rating Agency Condition is satisfied, and the
Trustee shall be conclusively entitled to rely on such direction.

“Interest Rate Hedge Agreements” shall mean the Interest Rate Swap Agreements
and the Interest Rate Cap Agreements.

“Interest Rate Swap Agreement” shall mean each interest rate swap agreement
between Trustee, on behalf of the Trust, and the Hedge Counterparty
substantially in the form of Exhibit H-1; provided, however, that the Interest
Rate Swap Agreements can deviate from the terms described in Exhibit H-1 at the
direction of the Servicer if the Rating Agency Condition is satisfied, and the
Trustee shall be conclusively entitled to rely on such direction.

“Investor Charge-Offs” shall mean, on any date of determination, an amount equal
to the sum of (i) the Class A Investor Charge-Offs, (ii) the Class M Investor
Charge-Offs, (iii) the Class B Investor Charge-Offs, (iv) the Class C Investor
Charge-Offs and (v) the Class D Investor Charge-Offs.

 

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“Investor Interest” for Series 2007-1 shall mean the Series Investor Interest.

“Investor Loss Amount” shall mean, with respect to any Distribution Date, an
amount equal to the product of (a) the aggregate of the Loss Amounts for the
related Due Period and (b) the Floating Allocation Percentage for such Due
Period.

“Investor/Purchaser Percentage” for Series 2007-1 shall mean, with respect to
Collections of Principal Receivables, the Principal Allocation Percentage, and
with respect to Collections of Finance Charge Receivables, Series Dilution
Amounts or Loss Amounts, the Floating Allocation Percentage.

“Lane Bryant Portfolio” shall mean the accounts that the Originator expects to
acquire which arise under a portfolio of proprietary credit cards used primarily
at Lane Bryant® stores.

“Lane Bryant Portfolio Distribution Date” shall mean the earlier to occur of
(x) February 15, 2008, and (y) the first Distribution Date that is at least ten
(10) days after the date on which the Servicer shall have notified the Trustee
in writing that the Originator will not acquire the Lane Bryant Portfolio.

“LIBOR” shall mean, for any Interest Period, the London interbank offered rate
for United States dollar deposits of the Designated Maturity determined by the
Trustee for each Interest Period in accordance with the provisions of
Section 4.17.

“LIBOR Determination Date” shall mean October 15, 2007 for the initial Interest
Period and the second London Business Day prior to the commencement of each
subsequent Interest Period.

“London Business Day” shall mean a day on which the Trustee and commercial banks
in the City of London are open for the transaction of commercial banking
business.

“Minimum Required Funding Period Reserve Amount” shall mean, with respect to any
Distribution Date, an amount equal to the product of (i) 1.3% and (ii) the
amount on deposit in the Pre-Funding Account on such Distribution Date (after
taking into account any withdrawals to be made from the Pre-Funding Account on
such Distribution Date pursuant to subsection 4.19(b)).

“Minimum Required Hedge Reserve Amount” shall mean $5,000,000.

“Minimum Seller Interest” for Series 2007-1 shall mean zero.

“Monthly Interest” shall mean, with respect to any Distribution Date, the sum of
(a) the Class A Monthly Interest, the Class A Additional Interest, if any, and
the unpaid Class A Deficiency Amount, if any; (b) the Class M Monthly Interest,
the Class M Additional Interest, if any, and the unpaid Class M Deficiency
Amount, if any; (c) the Class B Monthly Interest, the Class B Additional
Interest, if any, and the unpaid Class B Deficiency Amount, if any; (d) the
Class C Monthly Interest and the unpaid Class C Deficiency Amount, if any; and
(e) the Class D Monthly Interest and unpaid Class D Deficiency Amount, each with
respect to such Distribution Date.

 

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“Net Hedge Receipt” shall mean, for any Distribution Date, the sum of the
Class A Net Swap Receipt (if any), the Class M Net Swap Receipt (if any), the
Class B Net Swap Receipt (if any) and the Class C Net Cap Receipt (if any), each
for such Distribution Date.

“Net Swap Payment” shall mean, for any Distribution Date, the sum of the Class A
Net Swap Payment (if any), the Class M Net Swap Payment (if any) and the Class B
Net Swap Payment (if any), each for such Distribution Date.

“Portfolio Yield” shall mean, with respect to any Due Period, the annualized
percentage equivalent of a fraction, the numerator of which is an amount equal
to the result of (a) the Floating Allocation Percentage of Collections of
Finance Charge Receivables allocated to the Series 2007-1 Certificates for such
Due Period (including net investment earnings on funds on deposit in the
Pre-Funding Account and the Funding Period Reserve Account and certain other
amounts that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement and this Supplement) plus (b) amounts withdrawn
from the Funding Period Reserve Account pursuant to subsection 4.20(c) and
(c) any Net Hedge Receipt for the related Distribution Date, such amount to be
calculated on a cash basis after subtracting the Investor Loss Amount and the
Series 2007-1 Investor Dilution Amount for such Due Period, and the denominator
of which is the outstanding principal amount of the Series 2007-1 Certificates
as of the last day of the preceding Due Period (or with respect to the initial
Due Period, the outstanding principal amount of the Series 2007-1 Certificates
on the Closing Date); it being understood that such fraction shall be annualized
by dividing the fraction obtained in accordance with the definition set forth
above by the number of days in such Due Period and multiplying such amount by
365.

“Pre-Funded Portion” shall mean (i) with respect to Class A Certificates, an
amount equal to the Class A Percentage times the amount of funds on deposit in
the Pre-Funding Account, (ii) with respect to Class M Certificates, an amount
equal to the Class M Percentage times the amount of funds on deposit in the
Pre-Funding Account, (iii) with respect to the Class B Certificates, an amount
equal to the Class B Percentage times the amount of funds on deposit in the
Pre-Funding Account, (iv) with respect to Class C Certificates, an amount equal
to the Class C Percentage times the amount of funds on deposit in the
Pre-Funding Account, (v) with respect to Class D-1 Certificates, an amount equal
to the Class D-1 Percentage times the amount of funds on deposit in the
Pre-Funding Account, and (vi) with respect to the Class D-2 Certificates, an
amount equal to the Class D-2 Percentage times the amount of funds on deposit in
the Pre-Funding Account.

“Pre-Funding Account” shall mean the account established and maintained pursuant
to subsection 4.19(a).

 

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“Pre-Funding Interest Amount” shall mean, for any Distribution Date during the
Funding Period, the excess, if any, of:

(i) the product of

(A) the result of the Monthly Interest for such Distribution Date, minus Net
Hedge Receipts received by the Trust, plus Net Swap Payments payable by the
Trust on that Distribution Date,

multiplied by

(B) a fraction, the numerator of which is equal to the daily average amount on
deposit in the Pre-Funding Account during the preceding Due Period, other than
net investment income, and the denominator of which is equal to the daily
average outstanding principal amount of the Series 2007-1 Certificates during
the preceding Due Period, over

(ii) the investment earnings on funds in the Pre-Funding Account (net of
investment losses and expenses) for such Distribution Date.

“Principal Allocation Percentage” shall mean, (a) with respect to any Due Period
(including any day within such Due Period) occurring prior to the Fixed
Principal Allocation Date, the Floating Allocation Percentage for such Due
Period, and (b) with respect to any Due Period (including any day within such
Due Period) occurring on or after the Fixed Principal Allocation Date, the Fixed
Allocation Percentage for such Due Period.

“Principal Shortfall” shall mean, as the context requires, any of the following:
(a) on any Distribution Date with respect to the Controlled Amortization Period,
(i) if such Distribution Date is on or prior to the Class A Expected Final
Payment Date, the amount by which the Class A Controlled Payment Amount for the
prior Due Period exceeds the amount of Available Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), (ii) if such Distribution Date occurs after the Class A
Expected Final Payment Date but on or prior to the Class M Expected Final
Payment Date, the amount by which the Class M Controlled Payment Amount for the
prior Due Period exceeds the amount of Available Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections) and (iii) if such Distribution Date occurs after the
Class M Expected Final Payment Date but on or prior to the Class B Expected
Final Payment Date, the amount by which the Class B Controlled Payment Amount
for the prior Due Period exceeds the amount of Available Principal Collections
for such Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections); (b) on the Class C Expected Final Payment Date (if an
Early Amortization Event with respect to Series 2007-1 has not occurred), the
amount by which the Class C Investor Interest exceeds the amount of Available
Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections); (c) on the Class D Expected Final
Payment Date (if an Early Amortization Event with respect to Series 2007-1 has
not occurred), the amount by which the Class D Investor Interest exceeds the
amount of Available Principal Collections for such Distribution Date (excluding
any portion thereof attributable to Shared Principal Collections); and (d) on
any Distribution Date with respect to the Early Amortization Period, the amount
by which the Investor Interest exceeds the Available Principal Collections for
such Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections).

 

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“QIB” shall mean a “qualified institutional buyer” (as defined in Rule 144A
under the Securities Act).

“Rating Agency” shall mean Moody’s and Standard & Poor’s.

“Reallocated Class B Principal Collections” shall mean, with respect to any
Distribution Date, Collections of Principal Receivables allocated to Series
2007-1 for the preceding Due Period in an amount not to exceed the lesser of
(i) the product of (A) the Class B Investor Allocation times (B) the
Investor/Purchaser Percentage times (C) the aggregate amount of Collections in
respect of Principal Receivables deposited in the Collection Account for the
related Due Period; and (ii) the Class B Investor Interest after giving effect
to any reduction of the Class B Investor Interest pursuant to subsection 4.10(c)
on such Distribution Date.

“Reallocated Class C Principal Collections” shall mean, with respect to any
Distribution Date, Collections of Principal Receivables allocated to Series
2007-1 for the preceding Due Period in an amount not to exceed the lesser of
(i) the product of (A) the Class C Investor Allocation times (B) the
Investor/Purchaser Percentage times (C) the aggregate amount of Collections in
respect of Principal Receivables deposited in the Collection Account for the
related Due Period; and (ii) the Class C Investor Interest after giving effect
to any reduction of the Class C Investor Interest pursuant to subsection 4.10(d)
on such Distribution Date.

“Reallocated Class D Principal Collections” shall mean, with respect to any
Distribution Date, the sum of Reallocated Class D-1 Principal Collections plus
Reallocated Class D-2 Principal Collections.

“Reallocated Class D-1 Principal Collections” shall mean, with respect to any
Distribution Date, Collections of Principal Receivables allocated to Series
2007-1 for the preceding Due Period in an amount not to exceed the lesser of
(i) the product of (A) the Class D-1 Investor Allocation times (B) the
Investor/Purchaser Percentage times (C) the aggregate amount of Collections in
respect of Principal Receivables deposited in the Collection Account for the
related Due Period; and (ii) the Class D-1 Investor Interest after giving effect
to any reduction of the Class D-1 Investor Interest pursuant to subsection
4.10(e) on such Distribution Date.

“Reallocated Class D-2 Principal Collections” shall mean, with respect to any
Distribution Date, Collections of Principal Receivables allocated to Series
2007-1 for the preceding Due Period in an amount not to exceed the lesser of
(i) the product of (A) the Class D-2 Investor Allocation times (B) the
Investor/Purchaser Percentage times (C) the aggregate amount of Collections in
respect of Principal Receivables deposited in the Collection Account for the
related Due Period; and (ii) the Class D-2 Investor Interest after giving effect
to any reductions of the Class D-2 Investor Interest pursuant to subsection
4.10(e) on such Distribution Date.

“Reallocated Class M Principal Collections” shall mean, with respect to any
Distribution Date, Collections of Principal Receivables allocated to Series
2007-1 for the preceding Due Period in an amount not to exceed the lesser of
(i) the product of (A) the Class M Investor Allocation times (B) the
Investor/Purchaser Percentage times (C) the aggregate amount of

 

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Collections in respect of Principal Receivables deposited in the Collection
Account for the related Due Period; and (ii) the Class M Investor Interest after
giving effect to any reduction of the Class M Investor Interest pursuant to
subsection 4.10(b) on such Distribution Date.

“Reallocated Principal Collections” shall mean the sum of (a) Reallocated Class
M Principal Collections, (b) Reallocated Class B Principal Collections,
(c) Reallocated Class C Principal Collections and (d) Reallocated Class D
Principal Collections.

“Reference Banks” shall mean four major banks in the London interbank market
selected by the Servicer.

“Regulation S Book-Entry Certificate” shall have the meaning specified in
subsection 15(b) of this Supplement.

“Regulation S Permanent Book-Entry Certificate” shall have the meaning specified
in subsection 15(b) of this Supplement.

“Regulation S Temporary Book-Entry Certificate” shall have the meaning specified
in subsection 15(b) of this Supplement.

“Reset Date” shall mean the occurrence of any Addition Date, any Removal Date or
any day on which the Investor Interest is increased pursuant to Section 4.21 or
the outstanding principal amount of the Series 2007-1 Certificates is decreased
pursuant to Section 4.9(h).

“Restricted Book-Entry Certificate” shall have the meaning specified in
Section 15(b).

“Reuters Screen LIBOR01 Page” shall mean the display page currently so
designated on the Reuters Monitor Money Rates (or such other page as may replace
that page on that service, or such other service as may be the successor
information vendor for purposes of displaying comparable rates or prices.)

“Revolving Period” shall mean the period from and including the Closing Date to,
but not including, the Fixed Principal Allocation Date.

“Series 2007-1” shall mean the Series of the Charming Shoppes Master Trust
represented by the Investor Certificates.

“Series 2007-1 Certificateholder” shall mean the Holder of record of any Series
2007-1 Certificate.

“Series 2007-1 Certificates” shall mean the Class A Certificates, the Class M
Certificates, the Class B Certificates, the Class C Certificates and the Class D
Certificates.

“Series 2007-1 Early Amortization Event” shall have the meaning specified in
Section 10 of this Supplement.

“Series 2007-1 Investor Dilution Amount” shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Series Percentage
for the related Due Period and (b) any Series Dilution Amount remaining after
giving effect to any addition of Accounts and other actions taken pursuant to
Sections 4.3(d) and 2.6.

 

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“Series 2007-1 Investor Monthly Servicing Fee” shall have the meaning specified
in Section 3 of this Supplement.

“Series 2007-1 Termination Date” shall mean the earliest to occur of (a) the
Distribution Date on which the Series 2007-1 Certificates are paid in full,
(b) the September 2017 Distribution Date or (c) the date of termination of the
Trust pursuant to Section 12.1 of the Agreement.

“Series 2007-1 Unfunded Dilution Amount” shall mean, on any Distribution Date,
an amount equal to any unfunded Series 2007-1 Investor Dilution Amount remaining
after application of Class A Available Funds pursuant to subsection 4.9(a)(iv)
and Excess Spread and Shared Excess Finance Charge Collections in accordance
with Section 4.11.

“Series Investor Interest” shall mean, on any date of determination, an amount
equal to the sum of (i) the Class A Investor Interest, (ii) the Class M Investor
Interest, (iii) the Class B Investor Interest, (iv) the Class C Investor
Interest and (v) the Class D Investor Interest, each as of such date.

“Series Servicing Fee Percentage” shall mean 2.0%.

“Shared Excess Finance Charge Collections” shall mean, with respect to any
Distribution Date, as the context requires, either (a) the aggregate amount of
Collections of Finance Charge Receivables allocated to the Series 2007-1
Certificates but available to cover Finance Charge Shortfalls for other Series
in Group One, if any, or (b) the aggregate amount of Collections of Finance
Charge Receivables and other amounts allocable to other Series in Group One in
excess of the amounts necessary to make required payments with respect to such
Series, if any, and available to cover any Finance Charge Shortfall with respect
to the Series 2007-1 Certificates as described in Section 4.14.

“Shared Principal Collections” shall mean, as the context requires, either
(a) the amount allocated to the Series 2007-1 Certificates which may be applied
to cover Principal Shortfalls with respect to other outstanding Series in Group
One, or (b) the amounts allocated to the Investor Certificates of other Series
in Group One that the applicable Supplements for such Series specify are to be
treated as “Shared Principal Collections” and which may be applied to cover
Principal Shortfalls with respect to the
Series 2007-1 Certificates pursuant to Section 4.15.

“Specified Days” shall mean, with respect to any Interest Period, (a) 30 (or, in
the case of the first Interest Period, the number of days in such Interest
Period), when used with reference to the calculation of interest for any Class A
Certificates, Class M Certificates, Class B Certificates or Class D Certificates
that bear interest at a fixed rate during such Interest Period and (b) the
number of days in such Interest Period, when used with reference to the
calculation of interest for any Class of Certificates that bears interest at a
floating rate during such Interest Period.

 

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“subclass” shall mean (a) with respect to the Class A Certificates, the
Class A-1 Certificates and the Class A-2 Certificates, (b) with respect to the
Class M Certificates, the Class M-1 Certificates and the Class M-2 Certificates,
(c) with respect to the Class B Certificates, the Class B-1 Certificates and the
Class B-2 Certificates, and (d) with respect to the Class D Certificates, the
Class D-1 Certificates and the Class D-2 Certificates.

“Subperiod” shall mean, with respect to a Due Period in which one or more Reset
Dates occur (the “Subject Due Period”), any of the following:

(i) the period from and including the last day of the prior Due Period to but
excluding the first Reset Date in the Subject Due Period,

(ii) the period from and including the last Reset Date in the Subject Due Period
to and including the last day of the Subject Due Period, and

(iii) the period, if any, from and including one Reset Date in the Subject Due
Period to but excluding the next Reset Date.

SECTION 3. Servicing Compensation. The share of the Monthly Servicing Fee
allocable to Series 2007-1 (the
“Series 2007-1 Investor Monthly Servicing Fee”) with respect to any Due Period
shall be equal to one-twelfth of the product of (i) the Series Servicing Fee
Percentage and (ii) (a) the Investor Interest as of the last day of such Due
Period minus (b) the product of the amount, if any, on deposit in the Excess
Funding Account as of the last day of such Due Period and the Principal
Allocation Percentage for such Due Period; provided, however, that with respect
to the initial Due Period ending after the Closing Date, the Series 2007-1
Investor Monthly Servicing Fee shall be adjusted based on the ratio of the
number of days in the initial Due Period to 30; provided, further, that if a
Successor Servicer that is not an Affiliate of the Seller is appointed, the
Series 2007-1 Investor Servicing Fee shall be such amount as may be agreed upon
in writing between such Successor Servicer and the Trustee, so long as the
Trustee shall have received written confirmation from each of the Rating
Agencies then rating any Class of Series 2007-1 Certificates that such change
would not result in a reduction or withdrawal by such Rating Agency of its
rating of any Class of the Series 2007-1 Certificates. The share of the Series
2007-1 Investor Monthly Servicing Fee allocable to the Class A Investor Interest
with respect to any Due Period (the “Class A Servicing Fee”) shall be equal to
the product of (i) the Class A Floating Allocation, and (ii) the Series 2007-1
Investor Monthly Servicing Fee for such Due Period. The share of the Series
2007-1 Investor Monthly Servicing Fee allocable to the Class M Investor Interest
with respect to any Due Period (the “Class M Servicing Fee”) shall be equal to
the product of (i) the Class M Floating Allocation and (ii) the Series 2007-1
Investor Monthly Servicing Fee for such Due Period. The share of the Series
2007-1 Investor Monthly Servicing Fee allocable to the Class B Investor Interest
with respect to any Due Period (the “Class B Servicing Fee”) shall be equal to
the product of (i) the Class B Floating Allocation and (ii) the Series 2007-1
Investor Monthly Servicing Fee for such Due Period. The share of the Series
2007-1 Investor Monthly Servicing Fee allocable to the Class C Investor Interest
with respect to any Due Period (the “Class C Servicing Fee”) shall be equal to
the product of (i) the Class C Floating Allocation and (ii) the Series 2007-1
Investor Monthly Servicing Fee for such Due Period. The share of the Series
2007-1 Investor Monthly Servicing Fee allocable to the Class D-1 Investor
Interest with respect to any Due Period (the

 

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“Class D-1 Servicing Fee”) shall be equal to the product of (i) the Class D-1
Floating Allocation and (ii) the Series 2007-1 Investor Monthly Servicing Fee
for such Due Period. The share of the Series 2007-1 Investor Monthly Servicing
Fee allocable to the
Class D-2 Investor Interest with respect to any Due Period (the “Class D-2
Servicing Fee”) shall be equal to the product of (i) the Class D-2 Floating
Allocation and (ii) the Series 2007-1 Investor Monthly Servicing Fee for such
Due Period.

Except as specifically provided above, the Monthly Servicing Fee shall be paid
by the cash flows from the Trust allocated to the Seller or the
Certificateholders of other Series (as provided in the related Supplements or
Receivables Purchase Agreements) and in no event shall the Trust, the Trustee or
the Series 2007-1 Certificateholders be liable therefor. The Class A Servicing
Fee shall be payable to the Servicer solely to the extent amounts are available
for distribution in respect thereof pursuant to subsections 4.9(a)(ii) and
4.11(a). The Class M Servicing Fee shall be payable to the Servicer solely to
the extent amounts are available for distribution in respect thereof pursuant to
subsections 4.9(b)(ii) and 4.11(c). The Class B Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsections 4.9(c)(ii) and 4.11(e). The Class C Servicing Fee shall
be payable solely to the extent amounts are available for distribution in
respect thereof pursuant to subsections 4.9(d)(i) and 4.11(g). The Class D
Servicing Fee shall be payable solely to the extent amounts are available for
distribution in respect thereof pursuant to subsections 4.9(e)(i) and 4.11(m).

SECTION 4. Reassignment and Transfer Terms. The Series 2007-1 Certificates shall
be subject to retransfer to the Seller at its option, in accordance with the
terms specified in subsection 12.2(a) of the Agreement, on any Distribution Date
on or after the Distribution Date on which the Series Investor Interest is less
than or equal to 10% of the Series Investor Interest on the Funding Period
Termination Distribution Date (after giving effect to any increase in the Series
Investor Interest on such date). The deposit required in connection with any
such repurchase shall be equal to the Series Investor Interest plus accrued and
unpaid interest on the Series 2007-1 Certificates through the day preceding the
Distribution Date on which the repurchase occurs.

SECTION 5. Delivery and Payment for the Series 2007-1 Certificates. The Seller
shall execute and deliver the Series 2007-1 Certificates to the Trustee for
authentication in accordance with Section 6.1 of the Agreement. The Trustee
shall deliver the Series 2007-1 Certificates when authenticated in accordance
with Section 6.2 of the Agreement.

SECTION 6. Depository; Form of Delivery of Series 2007-1 Certificates.

(a) The Class A Certificates, the Class M Certificates and the Class B
Certificates shall be delivered as Book-Entry Certificates as provided in
Sections 6.2 and 6.10 of the Agreement. The Class C Certificates and the Class D
Certificates shall be delivered as Definitive Certificates as provided in
Sections 6.2 and 6.12 of the Agreement.

(b) The Depository for Series 2007-1 shall be The Depository Trust Company, and
the Class A Certificates, the Class M Certificates and Class B Certificates
shall be initially registered in the name of Cede & Co., its nominee.

 

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SECTION 7. Interest Rate Hedge Agreements. (a) The Trustee shall, on behalf of
the Trust, enter into a Class A Swap, a Class M Swap, a Class B Swap and a Class
C Cap on the Closing Date for the benefit of the Class A Certificateholders, the
Class M Certificateholders, the Class B Certificateholders and the Class C
Certificateholders. The notional amount under each Interest Rate Hedge Agreement
for any Interest Period shall be determined prior to the issuance of the Series
2007-1 Certificates and shall be set forth in a schedule to the initial Interest
Rate Hedge Agreement for the related Class. If the Lane Bryant Portfolio
acquisition does not occur prior to the Lane Bryant Portfolio Distribution Date,
the notional amount of each Interest Rate Hedge Agreement shall be adjusted to
give effect to the payments made to the holders of the Series 2007-1
Certificates on the Lane Bryant Portfolio Distribution Date. If any of the
initial Interest Rate Hedge Agreements is terminated and replaced, the
replacement Interest Rate Hedge Agreement must have the same notional amount
with respect to the periods covered by the replacement Interest Rate Hedge
Agreement unless the Rating Agency Condition shall have been satisfied with
respect to a different notional amount.

Class A Net Swap Receipts shall be deposited by the Trustee in the Collection
Account on the date such Class A Net Swap Receipts are paid and shall be treated
as Collections of Finance Charge Receivables allocated to the Series 2007-1
Certificates and available to be applied as Class A Available Funds. Class M Net
Swap Receipts shall be deposited by the Trustee in the Collection Account on the
date such Class M Net Swap Receipts are paid and shall be treated as Collections
of Finance Charge Receivables allocated to the Series 2007-1 Certificates and
available to be applied as Class M Available Funds. Class B Net Swap Receipts
shall be deposited by the Trustee in the Collection Account on the date such
Class B Net Swap Receipts are paid and shall be treated as Collections of
Finance Charge Receivables allocated to the Series 2007-1 Certificates and
available to be applied as Class B Available Funds. Class C Net Cap Receipts
shall be deposited by the Trustee in the Collection Account on the date such
Class C Net Cap Receipts are paid and shall be treated as Collections of Finance
Charge Receivables allocated to the Series 2007-1 Certificates and available to
be applied as Class C Available Funds.

On any Distribution Date when the Class A Net Swap Payment, the Class M Net Swap
Payment or the Class B Net Swap Payment is greater than zero, the Trustee shall
pay such Class A Net Swap Payment, Class M Net Swap Payment or Class B Net Swap
Payment from the Class A Available Funds, the Class M Available Funds and the
Class B Available Funds, respectively, as provided in Sections 4.9(a), 4.9(b)
and 4.9(c). If the Class A Available Funds, the Class M Available Funds or the
Class B Available Funds are insufficient to pay the Class A Net Swap Payment,
the Class M Net Swap Payment and the Class B Net Swap Payment, respectively, the
Class A Net Swap Payment, the Class M Net Swap Payment, and the Class B Net Swap
Payment will be paid from the Excess Spread and Shared Excess Finance Charge
Collections, as provided in Sections 4.11(a), 4.11(c), 4.11(e) and 4.14(b).

(b) Subject to satisfaction of the Rating Agency Condition, the Servicer may at
any time obtain a replacement Interest Rate Hedge Agreement.

SECTION 8. Article IV of Agreement. Sections 4.1, 4.2 and 4.3 of the Agreement
shall be read in their entirety as provided in the Agreement. Article IV of the
Agreement (except for Sections 4.1, 4.2 and 4.3 thereof) shall read in its
entirety as follows and shall be applicable only to the Series 2007-1
Certificates.

 

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ARTICLE IV.

RIGHTS OF CERTIFICATEHOLDERS AND RECEIVABLES

PURCHASERS AND ALLOCATION AND APPLICATION OF COLLECTIONS

SECTION 4.4. Rights of Series 2007-1 Certificateholders. The Series 2007-1
Certificates shall represent undivided interests in the Trust, consisting of the
right to receive, to the extent necessary to make the required payments with
respect to such Series 2007-1 Certificates at the times and in the amounts
specified in this Agreement, (a) the Floating Allocation Percentage and
Principal Allocation Percentage (as applicable from time to time) of Collections
received with respect to the Receivables (including certain other amounts that
are to be treated as collections of Receivables in accordance with the terms of
this Agreement), (b) any other funds on deposit (or to be deposited) in the
Collection Account or the Excess Funding Account allocated to Series 2007-1 and
(c) any other amounts that pursuant to this Agreement or any Supplement are
allocable to Series 2007-1. The Class D-2 Certificates shall be subordinate to
the Class D-1 Certificates as described herein and in the Class D Purchase
Agreement. The Class D Certificates shall be subordinate to the Class A
Certificates, the Class M Certificates, the Class B Certificates and the Class C
Certificates. The Class C Certificates shall be subordinate to the Class A
Certificates, the Class M Certificates and the Class B Certificates. The Class
B-1 Certificates shall be pari passu with the Class B-2 Certificates. The Class
B Certificates shall be subordinate to the Class A Certificates and the Class M
Certificates. The Class M-1 Certificates shall be pari passu with the Class M-2
Certificates. The Class M Certificates will be subordinate to the Class A
Certificates. The Class A-1 Certificates shall be pari passu with the Class A-2
Certificates. The Exchangeable Seller Certificate shall not represent any
interest in the Collection Account or the Excess Funding Account except as
specifically provided in this Article IV.

SECTION 4.5. Allocations.

(a) Allocations During the Revolving Period. During the Revolving Period, the
Servicer shall, prior to the close of business on the day any Collections are
deposited in the Collection Account, allocate to the Series 2007-1
Certificateholders and the Hedge Counterparty, the following amounts as set
forth below:

(i) An amount equal to the product of (A) the Floating Allocation Percentage on
such date and (B) the aggregate amount of Collections processed in respect of
Finance Charge Receivables on such date, to be applied in accordance with
Sections 4.9 and 4.11.

(ii) If the Series 2002-1 Certificates have been paid in full, an amount equal
to the product of (A) the Investor/Purchaser Percentage on such date and (B) the
aggregate amount of Collections processed in respect of Principal Receivables on
such date, which amount shall be, first, held in the Collection Account to the
extent of amounts to be distributed pursuant to Section 4.9(f)(i) on the next
Distribution Date, second, if any other Principal Sharing Series is outstanding
and in its accumulation period or amortization

 

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period, held in the Collection Account for application, to the extent necessary,
as Shared Principal Collections to other Principal Sharing Series on the related
Distribution Date, third, deposited to the Excess Funding Account to the extent
necessary so that the Seller Interest is not less than the Minimum Seller
Interest and, fourth, paid to the Holders of the Exchangeable Seller
Certificate. With respect to each Due Period falling in the Revolving Period, to
the extent that Collections of Principal Receivables allocated to the Series
2007-1 Certificateholders pursuant to this subsection are paid to any Holder of
the Exchangeable Seller Certificate, such Holder shall make an amount equal to
the Reallocated Principal Collections for the related Distribution Date
available on that Distribution Date for application in accordance with
Section 4.12; provided, however, that if such Holder fails to make such funds
available, then an amount of Collections of Principal Receivables allocated to
Series 2007-1 and on deposit in the Collection Account equal to that deficiency
shall be treated as Reallocated Principal Collections for application in
accordance with Section 4.12, prior to any other application of such
Collections.

(b) Allocations During the Controlled Amortization Period. During the Controlled
Amortization Period, the Servicer shall, prior to the close of business on the
day any Collections are deposited in the Collection Account, allocate to the
Series 2007-1 Certificateholders and the Hedge Counterparty, the following
amounts as set forth below:

(i) An amount equal to the product of (A) the Floating Allocation Percentage on
such date and (B) the aggregate amount of Collections processed in respect of
Finance Charge Receivables on such date, to be applied in accordance with
Sections 4.9 and 4.11.

(ii) An amount equal to the product of (A) the Investor/Purchaser Percentage on
such date and (B) the aggregate amount of Collections processed in respect of
Principal Receivables on such date, which amount shall be, first, held in the
Collection Account to the extent of amounts to be distributed pursuant to
Section 4.9(g) on the next Distribution Date, and, second, if any other
Principal Sharing Series is outstanding and in its accumulation period or
amortization period, held in the Collection Account for application, to the
extent necessary, as Shared Principal Collections to other Principal Sharing
Series on the next Distribution Date, third, deposited to the Excess Funding
Account to the extent necessary so that the Seller Interest is not less than the
Minimum Seller Interest and, fourth, paid to the Holder of the Exchangeable
Seller Certificate, provided that, upon written notice to the Servicer and the
Trustee, such Holder may specify that any such amount to be distributed to it
after the Class A Investor Interest has been paid in full shall be retained in
the Collection Account for distribution pursuant to Section 4.9(g) as Available
Principal Collections on the Distribution Date following the next Distribution
Date. With respect to each Due Period falling in the Controlled Amortization
Period, to the extent that Collections of Principal Receivables allocated to the
Series 2007-1 Certificateholders pursuant to this subsection are paid to any
Holder of the Exchangeable Seller Certificate, such Holder shall make an amount
equal to the Reallocated Principal Collections for the related Distribution Date
available on that Distribution Date for application in accordance with
Section 4.12; provided, however, that if such Holder fails to make such funds
available, then an amount of Collections on Principal Receivables equal to that
deficiency shall be treated as Reallocated Principal Collections for application
in accordance with Section 4.12, prior to any other application of the amounts
in the Collection Account.

 

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(c) Allocations During the Early Amortization Period. During the Early
Amortization Period, the Servicer shall, prior to the close of business on the
day any Collections are deposited in the Collection Account, allocate to the
Series 2007-1 Certificateholders and the Hedge Counterparty, the following
amounts as set forth below:

(i) An amount equal to the product of (A) the Floating Allocation Percentage on
such date and (B) the aggregate amount of such Collections processed in respect
of Finance Charge Receivables on such date, to be applied in accordance with
Sections 4.9 and 4.11.

(ii) An amount equal to the product of (A) the Class D-2 Investor Allocation on
such date, (B) the Investor/Purchaser Percentage on such date and (C) the
aggregate amount of Collections processed in respect of Principal Receivables on
such date, to be applied first in accordance with Section 4.12(b)(i) and then in
accordance with subsection 4.9(g).

(iii) An amount equal to the product of (A) the Class D-1 Investor Allocation on
such date, (B) the Investor/Purchaser Percentage on such date and (C) the
aggregate amount of Collections processed in respect of Principal Receivables on
such date, to be applied first in accordance with Section 4.12(b)(ii) and then
in accordance with subsection 4.9(g).

(iv) An amount equal to the product of (A) the Class C Investor Allocation on
such date, (B) the Investor/Purchaser Percentage on such date and (C) the
aggregate amount of Collections processed in respect of Principal Receivables on
such date, to be applied first in accordance with Section 4.12(b)(iii) and then
in accordance with subsection 4.9(g).

(v) An amount equal to the product of (A) the Class B Investor Allocation on
such date, (B) the Investor/Purchaser Percentage on such date and (C) the
aggregate amount of Collections processed in respect of Principal Receivables on
such date, to be applied first in accordance with Section 4.12(b)(iv) and then
in accordance with subsection 4.9(g).

(vi) An amount equal to the product of (A) the Class M Investor Allocation on
such date, (B) the Investor/Purchaser Percentage on such date and (C) the
aggregate amount of Collections processed in respect of Principal Receivables on
such date, to be applied first in accordance with Section 4.12(b)(v) and then in
accordance with subsection 4.9(g).

(vii) An amount equal to the product of (A) the Class A Investor Allocation on
such date, (B) the Investor/Purchaser Percentage on such date and (C) the
aggregate amount of Collections processed in respect of Principal Receivables on
such date, to be applied in accordance with subsection 4.9(g).

 

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SECTION 4.6. Determination of Monthly Interest.

(a) The amount of monthly interest distributable in respect of the Class A-1
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class A-1 Certificate Rate in effect with
respect to the related Interest Period, and (iii) the outstanding principal
amount of the Class A-1 Certificates determined as of the Record Date preceding
such Distribution Date (the “Class A-1 Monthly Interest”); provided, that in
addition to Class A-1 Monthly Interest an amount equal to the amount of any
unpaid Class A-1 Deficiency Amounts, as defined below, plus an amount equal to
the product of (A) a fraction, the numerator of which is the Specified Days and
the denominator of which is 360, (B) the sum of the Class A-1 Certificate Rate
in effect with respect to the related Interest Period, and 1.0% per annum, and
(C) any Class A-1 Deficiency Amounts from the prior Distribution Date, as
defined below, or the portion thereof which has not theretofore been paid to
Class A-1 Certificateholders (the “Class A-1 Additional Interest”), shall also
be distributable in respect of the Class A-1 Certificates. The “Class A-1
Deficiency Amount” for any Distribution Date shall be equal to the excess, if
any, of the aggregate amount accrued pursuant to this subsection 4.6(a) for all
Interest Periods prior to the immediately preceding Interest Period, over the
amount actually paid to Class A-1 Certificateholders in respect of such amounts
on all prior Distribution Dates.

(b) The amount of monthly interest distributable in respect of the Class A-2
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class A-2 Certificate Rate, and (iii) the
outstanding principal amount of the Class A-2 Certificates determined as of the
Record Date preceding such Distribution Date (the “Class A-2 Monthly Interest”);
provided, that in addition to Class A-2 Monthly Interest an amount equal to the
amount of any unpaid Class A-2 Deficiency Amounts, as defined below, plus an
amount equal to the product of (A) a fraction, the numerator of which is the
Specified Days and the denominator of which is 360, (B) the sum of the Class A-2
Certificate Rate and 1.0% per annum, and (C) any Class A-2 Deficiency Amounts
from the prior Distribution Date, as defined below, or the portion thereof which
has not theretofore been paid to Class A-2 Certificateholders (the “Class A-2
Additional Interest”), shall also be distributable in respect of the Class A-2
Certificates. The “Class A-2 Deficiency Amount” for any Distribution Date shall
be equal to the excess, if any, of the aggregate amount accrued pursuant to this
subsection 4.6(b) for all Interest Periods prior to the immediately preceding
Interest Period, over the amount actually paid to Class A-2 Certificateholders
in respect of such amounts on all prior Distribution Dates.

(c) The amount of monthly interest distributable in respect of the Class M-1
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class M-1 Certificate Rate in effect with
respect to the related Interest Period, and (iii) the outstanding principal
amount of the Class M-1 Certificates determined as of the Record Date preceding
such Distribution Date (the “Class M-1 Monthly Interest”); provided, that in
addition to the Class M-1 Monthly Interest an amount equal to the amount of any
unpaid Class M-1 Deficiency Amounts, as defined below, plus an amount equal to
the product of (A) a fraction, the numerator of which is the Specified Days and
the denominator of which is 360, (B) the sum of the Class M-1 Certificate Rate
in effect with respect to the related Interest Period, and 1.0% per annum, and
(C)

 

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any Class M-1 Deficiency Amount from the prior Distribution Date, as defined
below, or the portion thereof which has not theretofore been paid to Class M-1
Certificateholders (the “Class M-1 Additional Interest”), shall also be
distributable in respect of the Class M-1 Certificates. The “Class M-1
Deficiency Amount” for any Distribution Date shall be equal to the excess, if
any, of the aggregate amount accrued pursuant to this subsection 4.6(c) for all
Interest Periods prior to the immediately preceding Interest Period, over the
amount actually paid to the Class M-1 Certificateholders in respect of such
amounts on all prior Distribution Dates.

(d) The amount of monthly interest distributable in respect of the Class M-2
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class M-2 Certificate Rate, and (iii) the
outstanding principal amount of the Class M-2 Certificates determined as of the
Record Date preceding such Distribution Date (the “Class M-2 Monthly Interest”);
provided, that in addition to Class M-2 Monthly Interest an amount equal to the
amount of any unpaid Class M-2 Deficiency Amounts, as defined below, plus an
amount equal to the product of (A) a fraction, the numerator of which is the
Specified Days and the denominator of which is 360, (B) the sum of the Class M-2
Certificate Rate and 1.0% per annum, and (C) any Class M-2 Deficiency Amounts
from the prior Distribution Date, as defined below, or the portion thereof which
has not theretofore been paid to Class M-2 Certificateholders (the “Class M-2
Additional Interest”), shall also be distributable in respect of the Class M-2
Certificates. The “Class M-2 Deficiency Amount” for any Distribution Date shall
be equal to the excess, if any, of the aggregate amount accrued pursuant to this
subsection 4.6(d) for all Interest Periods prior to the immediately preceding
Interest Period, over the amount actually paid to Class M-2 Certificateholders
in respect of such amounts on all prior Distribution Dates.

(e) The amount of monthly interest distributable in respect of the Class B-1
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class B-1 Certificate Rate in effect with
respect to the related Interest Period, and (iii) the outstanding principal
amount of the Class B-1 Certificates determined as of the Record Date preceding
such Distribution Date (the “Class B-1 Monthly Interest”); provided, that in
addition to the Class B-1 Monthly Interest an amount equal to the amount of any
unpaid Class B-1 Deficiency Amounts, as defined below, plus an amount equal to
the product of (A) a fraction, the numerator of which is the Specified Days and
the denominator of which is 360, (B) the sum of the Class B-1 Certificate Rate
in effect with respect to the related Interest Period, and 1.0% per annum, and
(C) any Class B-1 Deficiency Amount from the prior Distribution Date, as defined
below, or the portion thereof which has not theretofore been paid to Class B-1
Certificateholders (the “Class B-1 Additional Interest”), shall also be
distributable in respect of the Class B-1 Certificates. The “Class B-1
Deficiency Amount” for any Distribution Date shall be equal to the excess, if
any, of the aggregate amount accrued pursuant to this subsection 4.6(e) for all
Interest Periods prior to the immediately preceding Interest Period, over the
amount actually paid to the Class B-1 Certificateholders in respect of such
amounts on all prior Distribution Dates.

(f) The amount of monthly interest distributable in respect of the Class B-2
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class B-2 Certificate Rate, and (iii) the
outstanding principal amount of the Class B-2

 

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Certificates determined as of the Record Date preceding such Distribution Date
(the “Class B-2 Monthly Interest”); provided, that in addition to Class B-2
Monthly Interest an amount equal to the amount of any unpaid Class B-2
Deficiency Amounts, as defined below, plus an amount equal to the product of
(A) a fraction, the numerator of which is the Specified Days and the denominator
of which is 360, (B) the sum of the Class B-2 Certificate Rate and 1.0% per
annum, and (C) any Class B-2 Deficiency Amounts from the prior Distribution
Date, as defined below, or the portion thereof which has not theretofore been
paid to Class B-2 Certificateholders (the “Class B-2 Additional Interest”),
shall also be distributable in respect of the Class B-2 Certificates. The “Class
B-2 Deficiency Amount” for any Distribution Date shall be equal to the excess,
if any, of the aggregate amount accrued pursuant to this
subsection 4.6(f) for all Interest Periods prior to the immediately preceding
Interest Period, over the amount actually paid to Class B-2 Certificateholders
in respect of such amounts on all prior Distribution Dates.

(g) The amount of monthly interest distributable in respect of the Class C
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class C Certificate Rate in effect with
respect to the related Interest Period, and (iii) the sum of the Class C
Investor Interest plus the applicable Pre-Funded Portion, each determined as of
the Record Date preceding such Distribution Date (the “Class C Monthly
Interest”); provided, that in addition to the Class C Monthly Interest an amount
equal to any unpaid Class C Deficiency Amounts, as defined below, shall also be
distributed to the Class C Certificateholders. The “Class C Deficiency Amount”
for any Distribution Date shall be equal to the excess, if any, of the aggregate
amount accrued pursuant to this subsection 4.6(g) for all Interest Periods prior
to the immediately preceding Interest Period, over the amount actually paid to
the Class C Certificateholders in respect of such amounts on all prior
Distribution Dates.

(h) The amount of monthly interest distributable in respect of the Class D-1
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class D-1 Certificate Rate in effect with
respect to the related Interest Period, and (iii) the sum of the Class D-1
Investor Interest plus the applicable Pre-Funded Portion, each determined as of
the Record Date preceding such Distribution Date (the “Class D-1 Monthly
Interest”); provided, that in addition to the Class D-1 Monthly Interest an
amount equal to any unpaid Class D-1 Deficiency Amounts, as defined below, shall
also be distributed to the Class D-1 Certificateholders. The “Class D-1
Deficiency Amount” for any Distribution Date shall be equal to the excess, if
any, of the aggregate amount accrued pursuant to this
subsection 4.6(h) for all Interest Periods prior to the immediately preceding
Interest Period, over the amount actually paid to the Class D-1
Certificateholders in respect of such amounts on all prior Distribution Dates.

(i) The amount of monthly interest distributable in respect of the Class D-2
Certificates on each Distribution Date shall be an amount equal to the product
of (i) a fraction, the numerator of which is the Specified Days and the
denominator of which is 360, (ii) the Class D-2 Certificate Rate in effect with
respect to the related Interest Period, and (iii) the sum of the Class D-2
Investor Interest plus the applicable Pre-Funded Portion, each determined as of
the Record Date preceding such Distribution Date (the
“Class D-2 Monthly Interest”); provided, that in addition to the Class D-2
Monthly Interest an amount equal to any unpaid Class D-2 Deficiency Amounts, as
defined below, shall also be distributed to the Class D-2

 

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Certificateholders. The “Class D-2 Deficiency Amount” for any Distribution Date
shall be equal to the excess, if any, of the aggregate amount accrued pursuant
to this subsection 4.6(i) for all Interest Periods prior to the immediately
preceding Interest Period, over the amount actually paid to the Class D-2
Certificateholders in respect of such amounts on all prior Distribution Dates.

SECTION 4.7. Determination of Monthly Principal.

(a) The amount of monthly principal distributable with respect to the Class A
Certificates on each Distribution Date (the “Class A Monthly Principal”),
beginning with the Distribution Date in the month following the month in which
the Controlled Amortization Period or, if earlier, the Early Amortization
Period, begins, shall be equal to the least of (i) the Available Principal
Collections with respect to such Distribution Date, (ii) for each Distribution
Date with respect to the Controlled Amortization Period prior to the Class A
Expected Final Payment Date, the Class A Controlled Payment Amount for the Due
Period related to such Distribution Date and (iii) the Class A Investor Interest
on such Distribution Date (after taking into account any adjustments to be made
on such Distribution Date pursuant to Section 4.10).

(b) The amount of monthly principal distributable with respect to the Class M
Certificates on each Distribution Date (the “Class M Monthly Principal”)
beginning with the Distribution Date immediately following the Distribution Date
on which the Class A Investor Interest has been paid in full, and during the
Early Amortization Period, beginning with the Distribution Date on which the
Class A Investor Interest has been paid in full (in either case, the “Class M
Principal Commencement Date”), shall be an amount equal to the least of (i) the
Available Principal Collections with respect to such Distribution Date (minus
the portion of such Available Principal Collections applied to Class A Monthly
Principal on such Distribution Date), (ii) for each Distribution Date with
respect to the Controlled Amortization Period beginning on the Class M Principal
Commencement Date but prior to the Class M Expected Final Payment Date, the
Class M Controlled Payment Amount for the Due Period related to such
Distribution Date and (iii) the Class M Investor Interest (after taking into
account any adjustments to be made on such Distribution Date pursuant to
Sections 4.10 and 4.12) on such Distribution Date.

(c) The amount of monthly principal distributable with respect to the Class B
Certificates on each Distribution Date (the “Class B Monthly Principal”)
beginning with the Distribution Date immediately following the Distribution Date
on which the Class A Investor Interest and the Class M Investor Interest have
been paid in full, and during the Early Amortization Period, beginning with the
Distribution Date on which the Class A Investor Interest and the Class M
Investor Interest have been paid in full (in either case, the “Class B Principal
Commencement Date”), shall be an amount equal to the least of (i) the Available
Principal Collections with respect to such Distribution Date (minus the portion
of such Available Principal Collections applied to Class A Monthly Principal and
Class M Monthly Principal on such Distribution Date), (ii) for each Distribution
Date with respect to the Controlled Amortization Period beginning on the Class B
Principal Commencement Date but prior to the Class B Expected Final Payment
Date, the Class B Controlled Payment Amount for the Due Period related to such
Distribution Date and (iii) the Class B Investor Interest (after taking into
account any adjustments to be made on such Distribution Date pursuant to
Sections 4.10 and 4.12) on such Distribution Date.

 

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(d) The amount of monthly principal distributable with respect to the Class C
Certificates on each Distribution Date (the “Class C Monthly Principal”) shall
be, beginning with the Distribution Date on which the Class B Investor Interest
has been paid in full, an amount equal to the lesser of (i) the Available
Principal Collections with respect to such Distribution Date (minus the portion
of such Available Principal Collections applied to Class A Monthly Principal,
Class M Monthly Principal and Class B Monthly Principal on such Distribution
Date) and (ii) the Class C Investor Interest (after taking into account any
adjustments to be made on such Distribution Date pursuant to Sections 4.10 and
4.12) on such Distribution Date.

(e) The amount of monthly principal distributable with respect to the Class D-1
Certificates on each Distribution Date (the “Class D-1 Monthly Principal”) shall
be, beginning with the Distribution Date on which the Class C Investor Interest
has been paid in full, an amount equal to the lesser of (i) the Available
Principal Collections with respect to such Distribution Date (minus the portion
of such Available Principal Collections applied to Class A Monthly Principal,
Class M Monthly Principal, Class B Monthly Principal and Class C Monthly
Principal on such Distribution Date) and (ii) the Class D-1 Investor Interest
(after taking into account any adjustments to be made on such Distribution Date
pursuant to Sections 4.10 and 4.12) on such Distribution Date.

(f) The amount of monthly principal distributable with respect to the Class D-2
Certificates on each Distribution Date (the “Class D-2 Monthly Principal”) shall
be, beginning with the Distribution Date on which the Class D-1 Investor
Interest has been paid in full, an amount equal to the lesser of (i) the
Available Principal Collections with respect to such Distribution Date (minus
the portion of such Available Principal Collections applied to Class A Monthly
Principal, Class M Monthly Principal, Class B Monthly Principal, Class C Monthly
Principal and Class D-1 Monthly Principal on such Distribution Date) and
(ii) the Class D-2 Investor Interest (after taking into account any adjustments
to be made on such Distribution Date pursuant to Sections 4.10 and 4.12) on such
Distribution Date.

SECTION 4.8. Coverage of Class A, Class M and Class B Required Amounts.

(a) On or before each Distribution Date, the Servicer shall determine the amount
(the “Class A Required Amount”), if any, by which the sum of (i) the Class A
Monthly Interest for such Distribution Date, plus (ii) the Class A Deficiency
Amount, if any, for such Distribution Date, plus (iii) the Class A Additional
Interest, if any, for such Distribution Date, plus (iv) the Class A Servicing
Fee for the related Due Period, plus (v) the Class A Servicing Fee, if any, due
but not paid on any prior Distribution Date, plus (vi) the Class A Investor Loss
Amount, if any, for such Distribution Date, plus (vii) the Class A Investor
Dilution Amount for such Distribution Date, plus (viii) the Class A Net Swap
Payment, if any, for such Distribution Date exceeds the Class A Available Funds
for such Distribution Date.

(b) On or before each Distribution Date, the Servicer shall also determine the
amount (the “Class M Required Amount”), if any, by which the sum of (i) the
Class M Monthly Interest for such Distribution Date, plus (ii) the Class M
Deficiency Amount, if any, for such Distribution Date, plus (iii) the Class M
Additional Interest, if any, for such Distribution Date, plus (iv) the Class M
Servicing Fee for the related Due Period, plus (v) the Class M Servicing Fee, if
any, due but not paid on any prior Distribution Date, plus (vi) the Class M
Investor Loss Amount, if any, for such Distribution Date, plus (vii) the Class M
Investor Dilution Amount for such Distribution Date, plus (viii) the Class M Net
Swap Payment, if any, for such Distribution Date exceeds the Class M Available
Funds for such Distribution Date.

 

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(c) On or before each Distribution Date, the Servicer shall also determine the
amount (the “Class B Required Amount”), if any, by which the sum of (i) the
Class B Monthly Interest for such Distribution Date, plus (ii) the Class B
Deficiency Amount, if any, for such Distribution Date, plus (iii) the Class B
Additional Interest, if any, for such Distribution Date, plus (iv) the Class B
Servicing Fee for the related Due Period, plus (v) the Class B Servicing Fee, if
any, due but not paid on any prior Distribution Date, plus (vi) the Class B
Investor Loss Amount, if any, for such Distribution Date, plus (vii) the Class B
Investor Dilution Amount for such Distribution Date, plus (viii) the Class B Net
Swap Payment, if any, for such Distribution Date exceeds the Class B Available
Funds for such Distribution Date.

(d) In the event that the Class A Required Amount, the Class M Required Amount
or the Class B Required Amount for such Distribution Date is greater than zero,
the Servicer shall give written notice to the Trustee of such positive Class A
Required Amount, Class M Required Amount or Class B Required Amount on or before
such Distribution Date. For any Distribution Date, in the event that the Class A
Required Amount for such Distribution Date is greater than zero, all or a
portion of the Excess Spread and Shared Excess Finance Charge Collections with
respect to such Distribution Date in an amount equal to the Class A Required
Amount, to the extent available, for such Distribution Date shall be distributed
on such Distribution Date pursuant to subsection 4.11(a). In the event that the
Class A Required Amount for such Distribution Date exceeds the amount of Excess
Spread and Shared Excess Finance Charge Collections with respect to such
Distribution Date, Reallocated Principal Collections with respect to the related
Due Period shall be applied as specified in Section 4.12. In the event that the
Class M Required Amount for such Distribution Date exceeds the amount of Excess
Spread and Shared Excess Finance Charge Collections available to fund the Class
M Required Amount pursuant to subsection 4.11(c), the Reallocated Class B
Principal Collections, the Reallocated Class C Principal Collections and the
Reallocated Class D Principal Collections (after application, in each case, to
the Class A Required Amount) with respect to the related Due Period shall be
applied as specified in Section 4.12; provided, however, that the sum of any
payments pursuant to this paragraph shall not exceed the sum of the Class A
Required Amount and the Class M Required Amount. In the event that the Class B
Required Amount for such Distribution Date exceeds the amount of Excess Spread
and Shared Excess Finance Charge Collections available to fund the Class B
Required Amount pursuant to subsection 4.11(e), the Reallocated Class C
Principal Collections and Reallocated Class D Principal Collections (after
application, in each case, to the Class A Required Amount and the Class M
Required Amount) with respect to the related Due Period shall be applied as
specified in Section 4.12; provided, however, that the sum of any payments
pursuant to this paragraph shall not exceed the sum of the Class A Required
Amount, the Class M Required Amount and the Class B Required Amount.

 

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SECTION 4.9. Monthly Payments. On or before each Distribution Date, the Servicer
shall instruct the Trustee in writing (which writing shall be substantially in
the form of Exhibit E hereto) to withdraw and the Trustee, acting in accordance
with such instructions, shall withdraw on such Distribution Date, to the extent
of available funds, the amounts required to be withdrawn from the Collection
Account as follows:

(a) an amount equal to the Class A Available Funds for the related Due Period
shall be distributed on each Distribution Date in the following priority:

(i) on a pari passu and pro rata basis based on amounts owing under this clause
(i) to each of the Class A-1 Certificateholders, the Class A-2
Certificateholders and the Hedge Counterparty under the Class A Swap (A) an
amount equal to Class A Monthly Interest for such Distribution Date, plus the
amount of any Class A Deficiency Amount for such Distribution Date, plus the
amount of any Class A Additional Interest for such Distribution Date, shall be
distributed to the Class A Certificateholders and (B) any Class A Net Swap
Payment shall be paid to the Hedge Counterparty under the Class A Swap;

(ii) an amount equal to the Class A Servicing Fee for such Distribution Date
plus the amount of any Class A Servicing Fee due but not paid to the Servicer on
any prior Distribution Date shall be distributed to the Servicer;

(iii) an amount equal to the Class A Investor Loss Amount, if any, for the
related Due Period shall be treated as a portion of Available Principal
Collections for such Distribution Date;

(iv) an amount equal to the Class A Investor Dilution Amount, if any, for the
related Due Period shall be treated as a portion of Available Principal
Collections for such Distribution Date; and

(v) the balance, if any, shall constitute Excess Spread and shall be allocated
and distributed as set forth in Section 4.11.

(b) an amount equal to the Class M Available Funds for the related Due Period
shall be distributed on each Distribution Date in the following priority:

(i) on a pari passu and pro rata basis based on amounts owing under this clause
(i) to each of the Class M-1 Certificateholders, the Class M-2
Certificateholders and the Hedge Counterparty under the Class M Swap (A) an
amount equal to the Class M Monthly Interest for such Distribution Date, plus
the amount of any Class M Deficiency Amount for such Distribution Date, plus the
amount of any Class M Additional Interest for such Distribution Date, shall be
distributed to the Class M Certificateholders and (B) any Class M Net Swap
Payment shall be paid to the Hedge Counterparty under the Class M Swap;

(ii) an amount equal to the Class M Servicing Fee for such Distribution Date,
plus the amount of any Class M Servicing Fee due but not paid to the Servicer on
any prior Distribution Date shall be distributed to the Servicer; and

(iii) the balance, if any, shall constitute Excess Spread and shall be allocated
and distributed as set forth in Section 4.11.

 

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(c) an amount equal to the Class B Available Funds for the related Due Period
shall be distributed on each Distribution Date in the following priority:

(i) on a pari passu and pro rata basis based on amounts owing under this clause
(i) to the each of the Class B-1 Certificateholders, the Class B-2
Certificateholders and the Hedge Counterparty under the Class B Swap (A) an
amount equal to the Class B Monthly Interest for such Distribution Date, plus
the amount of any Class B Deficiency Amount for such Distribution Date, plus the
amount of any Class B Additional Interest for such Distribution Date, shall be
distributed to the Class B Certificateholders and (B) any Class B Net Swap
Payment shall be paid to the Hedge Counterparty under the Class B Swap;

(ii) an amount equal to the Class B Servicing Fee for such Distribution Date,
plus the amount of any Class B Servicing Fee due but not paid to the Servicer on
any prior Distribution Date shall be distributed to the Servicer; and

(iii) the balance, if any, shall constitute Excess Spread and shall be allocated
and distributed as set forth in Section 4.11.

(d) An amount equal to the Class C Available Funds for the related Due Period
shall be distributed on each Distribution Date in the following priority:

(i) an amount equal to the Class C Servicing Fee for such Distribution Date plus
the amount of any Class C Servicing Fee due but not paid to the Servicer on any
prior Distribution Date shall be distributed to the Servicer; and

(ii) the balance, if any, shall constitute Excess Spread and shall be allocated
and distributed as set forth in Section 4.11.

(e) An amount equal to the Class D Available Funds for the related Due Period
shall be distributed on each Distribution Date in the following priority:

(i) an amount equal to the Class D Servicing Fee for such Distribution Date plus
the amount of any Class D Servicing Fee due but not paid to the Servicer on any
prior Distribution Date shall be distributed to the Servicer; and

(ii) the balance, if any, shall constitute Excess Spread and shall be allocated
and distributed as set forth in Section 4.11.

(f) During the Revolving Period, an amount equal to the Available Principal
Collections for the related Due Period shall be distributed on each Distribution
Date in the following priority:

(i) first, an amount equal to any amounts required to be applied on such date
from Available Principal Collections pursuant to the Class C Purchase Agreement
shall be so applied, and second, an amount equal to any amounts required to be
applied on such date from Available Principal Collections pursuant to the Class
D Purchase Agreement shall be so applied; and

(ii) an amount equal to Available Principal Collections remaining after giving
effect to the applications specified in subsection 4.9(f)(i) above shall be
treated as Shared Principal Collections and applied to Series in Group One that
are Principal Sharing Series other than this Series 2007-1 and as provided in
Section 4.3(f).

 

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(g) During the Controlled Amortization Period or the Early Amortization Period
(beginning with the Distribution Date in the month following the month in which
the Controlled Amortization Period or the Early Amortization Period begins), an
amount equal to the Available Principal Collections for the related Due Period
shall be distributed on each Distribution Date in the following priority:

(i) an amount equal to the Class A Monthly Principal for such Distribution Date
shall be distributed to the Class A Certificateholders;

(ii) after giving effect to the distribution referred to in clause (i) above,
beginning on the Class M Principal Commencement Date, an amount equal to the
Class M Monthly Principal shall be distributed to the Class M
Certificateholders;

(iii) after giving effect to the distribution referred to in clauses (i) and
(ii) above, beginning on the Class B Principal Commencement Date, an amount
equal to the Class B Monthly Principal shall be distributed to the Class B
Certificateholders;

(iv) after giving effect to the distribution referred to in clauses (i),
(ii) and (iii) above, beginning with the Distribution Date on which the Class B
Investor Interest has been paid in full, an amount equal to the Class C Monthly
Principal shall be distributed to the Class C Certificateholders in accordance
with the Class C Purchase Agreement;

(v) after giving effect to the distributions referred to in clauses (i), (ii),
(iii) and (iv) above, beginning with the Distribution Date on which the Class C
Investor Interest has been paid in full, an amount equal to the Class D Monthly
Principal shall be distributed to the Class D Certificateholders in accordance
with the Class D Purchase Agreements;

(vi) after giving effect to the distributions referred to in clauses (i), (ii),
(iii), (iv) and (v) above, first an amount equal to any amounts required to be
applied from Available Principal Collections on such date pursuant to the Class
C Purchase Agreement shall be so applied, and second, an amount equal to any
amounts required to be applied from Available Principal Collections on such date
pursuant to the Class D Purchase Agreement shall be so applied ; and

(vii) an amount equal to Available Principal Collections remaining after the
applications specified in clauses (i), (ii), (iii), (iv), (v) and (vi) above
shall be treated as Shared Principal Collections and applied to Series in Group
One which are Principal Sharing Series other than this Series 2007-1 and as
provided in Section 4.3(f).

For each of the Class A, Class M and Class B Certificates, such principal
payments shall be applied to each of the subclasses of such Class on a pro rata
basis according to the initial principal amount of such subclass. For the Class
D Certificates, such principal payments shall be applied as provided in the
Class D Purchase Agreements.

 

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(h) On each of the Lane Bryant Portfolio Distribution Date and the Funding
Period Termination Distribution Date, an amount equal to the amount withdrawn
from the Pre-Funding Account and deposited in the Collection Account for
application to the principal amount of the Certificates, as specified in
subsection 4.19(b), shall be distributed to the Class A Certificateholders, the
Class M Certificateholders, the Class B Certificateholders, the Class C
Certificateholders and Class D Certificateholders in reduction of the
outstanding principal amount of the Class A Certificates, the Class M
Certificates, the Class B Certificates, the Class C Certificates and the Class D
Certificates, pro rata according to the initial principal amount of each such
Class. For each of the Class A, Class M and Class B Certificates, such principal
payments shall be applied to each of the subclasses of such Class on a pro rata
basis according to the initial principal amount of such subclass. For the Class
D Certificates, such principal payments shall be applied as provided in the
Class D Purchase Agreements.

SECTION 4.10. Investor Charge-Offs.

(a) On or before each Distribution Date, the Servicer shall calculate the
Class A Investor Loss Amount. If on any Distribution Date, the Class A Investor
Loss Amount for the prior Due Period exceeds the sum of the amounts allocated
with respect thereto pursuant to subsection 4.9(a)(iii), subsection 4.11(a) and
Section 4.12 with respect to such Due Period, the Class D-2 Investor Interest
(after giving effect to reductions for any Class D-2 Investor Charge-Offs
described in paragraph (e) and any Reallocated Class D-2 Principal Collections
on such Distribution Date) will be reduced by the amount of such excess. If such
reduction would cause the Class D-2 Investor Interest to be a negative number
(but for the proviso in the definition thereof), the Class D-2 Investor Interest
will be reduced to zero, and the Class D-1 Investor Interest (after giving
effect to reductions for any Class D-1 Investor Charge-Offs described in
paragraph (e) and any Reallocated Class D-1 Principal Collections on such
Distribution Date) will be reduced by the amount by which the Class D-2 Investor
Interest would have been reduced below zero. If such reduction would cause the
Class D-1 Investor Interest to be a negative number (but for the proviso in the
definition thereof), the Class D-1 Investor Interest will be reduced to zero,
and the Class C Investor Interest (after giving effect to reductions for any
Class C Investor Charge-Offs described in paragraph (d) and any Reallocated
Class C Principal Collections on such Distribution Date) will be reduced by the
amount by which the Class D-1 Investor Interest would have been reduced below
zero. If such reduction would cause the Class C Investor Interest to be a
negative number (but for the proviso in the definition thereof), the Class C
Investor Interest will be reduced to zero, and the Class B Investor Interest
(after giving effect to reductions for any Class B Investor Charge-Offs
described in paragraph (c) and any Reallocated Class B Principal Collections on
such Distribution Date) will be reduced by the amount by which the Class C
Investor Interest would have been reduced below zero. If such reduction would
cause the Class B Investor Interest to be a negative number (but for the proviso
in the definition thereof), the Class B Investor Interest will be reduced to
zero, and the Class M Investor Interest (after giving effect to reductions for
any Class M Investor Charge-Offs described in paragraph (b) and any Reallocated
Class M Principal Collections on such Distribution Date) will be reduced by the
amount by which the Class B Investor Interest would have been reduced below
zero. If such reduction would cause the Class M Investor Interest to be a
negative number (but for the proviso in the definition thereof), the Class M
Investor Interest will be reduced to zero, and the Class A Investor Interest
will be reduced by the amount by which the Class M Investor Interest would have
been reduced below zero, but not by more than

 

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the Class A Investor Loss Amount for such Distribution Date. Additionally, the
Class A Investor Interest shall be reduced by the amount of any Series 2007-1
Unfunded Dilution Amount remaining after giving effect to any related Class M
Investor Charge-Off, Class B Investor Charge-Off, Class C Investor Charge-Off
and Class D Investor Charge-Off. The reductions described in the two prior
sentences are referred to collectively as a “Class A Investor Charge-Off”. If
the Class A Investor Interest has been reduced by the amount of any Class A
Investor Charge-Offs, it will be reimbursed on any Distribution Date (but not by
an amount in excess of the aggregate Class A Investor Charge-Offs) by the amount
of Excess Spread and Shared Excess Finance Charge Collections allocated and
available for such purpose pursuant to subsection 4.11(b).

(b) On or before each Distribution Date, the Servicer shall calculate the Class
M Investor Loss Amount. If on any Distribution Date, the Class M Investor Loss
Amount for the prior Due Period exceeds the amounts allocated with respect
thereto pursuant to subsection 4.11(c) and Section 4.12 with respect to such Due
Period, the Class D-2 Investor Interest (after giving effect to reductions for
any Class D-2 Investor Charge-Offs described in paragraph (a) and paragraph
(e) and any Reallocated Class D-2 Principal Collections on such Distribution
Date) will be reduced by the amount of such excess. If such reduction would
cause the Class D-2 Investor Interest to be a negative number (but for the
proviso in the definition thereof), the Class D-2 Investor Interest will be
reduced to zero, and the Class D-1 Investor Interest (after giving effect to
reductions for any Class D-1 Investor Charge-Offs described in paragraph (a) and
paragraph (e) and any Reallocated Class D-1 Principal Collections on such
Distribution Date) will be reduced by the amount by which the Class D-2 Investor
Interest would have been reduced below zero. If such reduction would cause the
Class D-1 Investor Interest to be a negative number (but for the proviso in the
definition thereof), the Class D-1 Investor Interest will be reduced to zero,
and the Class C Investor Interest (after giving effect to reductions for any
Class C Investor Charge-Offs described in paragraph (a) and paragraph (d) and
any Reallocated Class C Principal Collections on such Distribution Date) will be
reduced by the amount by which the Class D-1 Investor Interest would have been
reduced below zero. If such reduction would cause the Class C Investor Interest
to be a negative number (but for the proviso in the definition thereof), the
Class C Investor Interest will be reduced to zero, and the Class B Investor
Interest (after giving effect to reductions for any Class B Investor Charge-Offs
described in paragraph (a) and paragraph (c) and any Reallocated Class B
Principal Collections on such Distribution Date) will be reduced by the amount
by which the Class C Investor Interest would have been reduced below zero. If
such reduction would cause the Class B Investor Interest to be a negative number
(but for the proviso in the definition thereof), the Class B Investor Interest
shall be reduced to zero, and the Class M Investor Interest shall be reduced by
the amount by which the Class B Investor Interest would have been reduced below
zero, but not by more than the Class M Investor Loss Amount for such
Distribution Date. Additionally, the Class M Investor Interest shall be reduced
by the amount of any Series 2007-1 Unfunded Dilution Amount remaining after
giving effect to any related Class B Investor Charge-Off, Class C Investor
Charge-Off and Class D Investor Charge-Off. The reductions to the Class M
Investor Interest under this subsection 4.10(b), together with all reductions to
the Class M Investor Interest under subsection 4.10(a), are collectively
referred to as a “Class M Investor Charge-Off”. The Class M Investor Interest
will thereafter be reimbursed (but not to an amount in excess of the unpaid
principal amount of the Class M Certificates) on any Distribution Date by the
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available for that purpose as described under subsection 4.11(d).

 

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(c) On or before each Distribution Date, the Servicer shall calculate the
Class B Investor Loss Amount. If on any Distribution Date, the Class B Investor
Loss Amount for the prior Due Period exceeds the amounts allocated with respect
thereto pursuant to subsection 4.11(e) and Section 4.12 with respect to such Due
Period, the Class D-2 Investor Interest (after giving effect to reductions for
any Class D-2 Investor Charge-Offs described in paragraph (a), paragraph (b) and
paragraph (e) and any Reallocated Class D-2 Principal Collections on such
Distribution Date) will be reduced by the amount of such excess. If such
reduction would cause the Class D-2 Investor Interest to be a negative number
(but for the proviso in the definition thereof), the Class D-2 Investor Interest
will be reduced to zero, and the Class D-1 Investor Interest (after giving
effect to reductions for any Class D-1 Investor Charge-Offs described in
paragraph (a), paragraph (b) and paragraph (e) and any Reallocated Class D-1
Principal Collections on such Distribution Date) will be reduced by the amount
by which the Class D-2 Investor Interest would have been reduced below zero. If
such reduction would cause the Class D-1 Investor Interest to be a negative
number (but for the proviso in the definition thereof), the Class D-1 Investor
Interest will be reduced to zero, and the Class C Investor Interest (after
giving effect to reductions for any Class C Investor Charge-Offs described in
paragraph (a), paragraph (b) and paragraph (d) and any Reallocated Class C
Principal Collections on such Distribution Date) will be reduced by the amount
by which the Class D-1 Investor Interest would have been reduced below zero. If
such reduction would cause the Class C Investor Interest to be a negative number
(but for the proviso in the definition thereof), the Class C Investor Interest
shall be reduced to zero and the Class B Investor Interest shall be reduced by
the amount by which the Class C Investor Interest would have been reduced below
zero, but not by more than the Class B Investor Loss Amount for such
Distribution Date. Additionally, the Class B Investor Interest shall be reduced
by the amount of any Series 2007-1 Unfunded Dilution Amount remaining after
giving effect to any related Class C Investor Charge-Off and Class D Investor
Charge-Off. The reductions to the Class B Investor Interest under this
subsection 4.10(c), together with all reductions to the Class B Investor
Interest under subsections 4.10(a) and 4.10(b), are collectively referred to as
a “Class B Investor Charge-Off”. The Class B Investor Interest will thereafter
be reimbursed (but not to an amount in excess of the unpaid principal amount of
the Class B Certificates) on any Distribution Date by the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated and available for
that purpose as described under subsection 4.11(f).

(d) On or before each Distribution Date, the Servicer shall calculate the
Class C Investor Loss Amount. If on any Distribution Date, the Class C Investor
Loss Amount for the prior Due Period exceeds the amount of Excess Spread, Shared
Excess Finance Charge Collections and Reallocated Class D Principal Collections
which are allocated and available to fund such amount pursuant to subsection
4.11(i) and Section 4.12, the Class D-2 Investor Interest (after giving effect
to reductions for any Class D-2 Investor Charge-Offs described in paragraphs
(a), (b) and (c) and paragraph (e) and any Reallocated Class D-2 Principal
Collections on such Distribution Date) will be reduced by the amount of such
excess. If such reduction would cause the Class D-2 Investor Interest to be a
negative number (but for the proviso in the definition thereof), the Class D-2
Investor Interest will be reduced to zero, and the Class D-1 Investor Interest
(after giving effect to reductions for any Class D-1 Investor Charge-Offs
described in

 

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paragraphs (a), (b) and (c) and paragraph (e) and any Reallocated Class D-1
Principal Collections on such Distribution Date) will be reduced by the amount
by which the Class D-2 Investor Interest would have been reduced below zero. If
such reduction would cause the Class D-1 Investor Interest to be a negative
number (but for the proviso in the definition thereof), the Class D-1 Investor
Interest will be reduced to zero, and the Class C Investor Interest will be
reduced by the amount by which the Class D-1 Investor Interest would have been
reduced below zero, but not by more than the Class C Investor Loss Amount for
such Distribution Date. Additionally, the Class C Investor Interest shall be
reduced by the amount of any Series 2007-1 Unfunded Dilution Amount remaining
after giving effect to any related Class D Investor Charge-Off. The reductions
to the Class C Investor Interest under this subsection 4.10(d), together with
all reductions to the Class C Investor Interest under subsections 4.10(a),
(b) and (c), are referred to collectively as a “Class C Investor Charge-Off”.
The Class C Investor Interest will thereafter be reimbursed (but not in excess
of the unreimbursed amount of such reductions) on any Distribution Date by the
amount of the Excess Spread and Shared Excess Finance Charge Collections
allocated and available under subsection 4.11(k).

(e) On or before each Distribution Date, the Servicer shall calculate the Class
D Investor Loss Amount. If on any Distribution Date, the Class D Investor Loss
Amount for the prior Due Period exceeds the amount of Excess Spread and Shared
Excess Finance Charge Collections which is allocated and available to fund such
amount pursuant to subsection 4.11(o), the
Class D-2 Investor Interest will be reduced by the amount of such excess. If
such reduction would cause the Class D-2 Investor Interest to be a negative
number (but for the proviso in the definition thereof), the Class D-2 Investor
Interest will be reduced to zero, and the Class D-1 Investor Interest will be
reduced by the amount by which the Class D-2 Investor Interest would have been
reduced below zero but not by more than the lesser of any remaining Class D
Investor Loss Amount for such Distribution Date and the Class D-1 Investor
Interest. Additionally, the Class D-2 Investor Interest shall be reduced by the
amount of any Series 2007-1 Unfunded Dilution Amount. If such reduction would
cause the Class D-2 Investor Interest to be a negative number (but for the
proviso in the definition thereof), the Class D-2 Investor Interest will be
reduced to zero, and the Class D-1 Investor Interest will be reduced by the
amount by which the Class D-2 Investor Interest would have been reduced below
zero but not by more than the lesser of any remaining Series 2007-1 Unfunded
Dilution Amount for such Distribution Date and the Class D-1 Investor Interest.
The reductions to the Class D-2 Investor Interest under this clause (e),
together with all reductions to the Class D-2 Investor Interest under
subsections 4.10(a), (b), (c) and (d), are referred to collectively as a “Class
D-2 Investor Charge-Off”. The reductions to the Class D-1 Investor Interest
under this subsection 4.10(e), together with all reductions to the Class D-1
Investor Interest under subsections 4.10(a), (b), (c) and (d), are referred to
collectively as a “Class D-1 Investor Charge-Off”. Each of the Class D-1
Investor Interest and the
Class D-2 Investor Interest will thereafter be reimbursed (but not in excess of
the unreimbursed amount of such reductions) on any Distribution Date by the
amount of the Excess Spread and Shared Excess Finance Charge Collections
allocated and available for that purpose as described under subsection 4.11(q).

 

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SECTION 4.11. Excess Spread; Shared Excess Finance Charge Collections. On or
before each Distribution Date, the Servicer shall instruct the Trustee in
writing (which writing shall be substantially in the form of Exhibit E hereto)
to apply Excess Spread and Shared Excess Finance Charge Collections allocated to
Series 2007-1 with respect to the related Due Period to make the following
distributions on each Distribution Date in the following priority:

(a) an amount equal to the Class A Required Amount, if any, with respect to such
Distribution Date shall be used to fund the Class A Required Amount and be
applied in accordance with, and in the priority set forth in, subsection 4.9(a);

(b) an amount equal to the aggregate amount of Class A Investor Charge-Offs
which have not been previously reimbursed shall be treated as a portion of
Available Principal Collections for such Distribution Date;

(c)(I) an amount equal to the Class M Required Amount, if any, with respect to
such Distribution Date shall be used to fund any deficiency pursuant to
subsections 4.9(b)(i) and (ii) in the order of priority specified therein and
(II) any remaining amount up to the sum of the Class M Investor Loss Amount and
Class M Investor Dilution Amount for the related Due Period shall be treated as
a portion of Available Principal Collections for such Distribution Date;

(d) an amount equal to the aggregate amount by which the Class M Investor
Interest has been reduced as described in clauses (c) and (d) of the definition
of Class M Investor Interest (but not in excess of the unreimbursed amount of
such reductions) shall be treated as a portion of Available Principal
Collections for such Distribution Date;

(e)(I) an amount equal to the Class B Required Amount, if any, with respect to
such Distribution Date shall be used to fund any deficiency pursuant to
subsections 4.9(c)(i) and (ii) in the order of priority specified therein and
(II) any remaining amount up to the sum of the Class B Investor Loss Amount and
Class B Investor Dilution Amount for the related Due Period shall be treated as
a portion of Available Principal Collections for such Distribution Date;

(f) an amount equal to the aggregate amount by which the Class B Investor
Interest has been reduced as described in clauses (c) and (d) of the definition
of Class B Investor Interest (but not in excess of the unreimbursed amount of
such reductions) shall be treated as a portion of Available Principal
Collections for such Distribution Date;

(g) an amount equal to the excess, if any, of the Class C Servicing Fee for such
Distribution Date plus the amount of any Class C Servicing Fee due but not paid
to the Servicer on any prior Distribution Date over the Class C Available Funds
for such Distribution Date shall be paid to the Servicer;

(h) on a pro rata basis based on amounts owing in this clause (h) to the Class C
Certificateholders, an amount equal to the sum of the Class C Monthly Interest
plus the Class C Deficiency Amount for such Distribution Date shall be
distributed to the
Class C Certificateholders in accordance with the Class C Purchase Agreement;

(i) an amount equal to the Class C Investor Loss Amount, if any, for the related
Due Period shall be treated as a portion of Available Principal Collections for
such Distribution Date;

 

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(j) an amount equal to the Class C Investor Dilution Amount, if any, for the
related Due Period shall be treated as a portion of Available Principal
Collections for such Distribution Date;

(k) an amount equal to the aggregate amount by which the Class C Investor
Interest has been reduced as described in clauses (c) and (d) of the definition
of Class C Investor Interest (but not in excess of the unreimbursed amount of
such reductions) shall be treated as a portion of Available Principal
Collections for such Distribution Date;

(l) an amount equal to the aggregate of any other amounts then due to the Class
C Certificateholders or required to be applied pursuant to the Class C Purchase
Agreement out of Excess Spread and Shared Excess Finance Charge Collections
allocated to Series 2007-1 shall be distributed for application in accordance
with the Class C Purchase Agreement;

(m) an amount equal to the excess, if any, of the Class D Servicing Fee for such
Distribution Date plus the amount of any Class D Servicing Fee due but not paid
to the Servicer on any prior Distribution Date over the Class D Available Funds
for such Distribution Date shall be paid to the Servicer;

(n) an amount equal to the Class D Monthly Interest plus the amount of any Class
D Deficiency Amount for such Distribution Date shall be distributed to the Class
D Certificateholders in accordance with the Class D Purchase Agreements;

(o) an amount equal to the Class D Investor Loss Amount, if any, for the related
Due Period shall be treated as a portion of Available Principal Collections for
such Distribution Date;

(p) an amount equal to the Class D Investor Dilution Amount, if any, for the
related Due Period shall be treated as a portion of Available Principal
Collections for such Distribution Date;

(q) first an amount equal to the aggregate amount by which the Class D-1
Investor Interest has been reduced as described in clauses (c) and (d) of the
definition of Class D-1 Investor Interest (but not in excess of the unreimbursed
amount of such reductions) shall be treated as a portion of Available Principal
Collections for such Distribution Date and then an amount equal to the aggregate
amount by which the Class D-2 Investor Interest has been reduced as described in
clauses (c) and (d) of the definition of Class D-2 Investor Interest (but not in
excess of the unreimbursed amount of such reductions) shall be treated as a
portion of Available Principal Collections for such Distribution Date;

(r) an amount equal to the excess, if any, of (A) the Minimum Required Funding
Period Reserve Amount over (B) the amount on deposit in the Funding Period
Reserve Account (after taking into account any withdrawals to be made from the
Funding Period Reserve Account on such Distribution Date pursuant to subsection
4.20(c)(i)), shall be deposited into the Funding Period Reserve Account;

 

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(s) an amount equal to the aggregate of any other amounts then due to the Class
D Certificateholders or required to be applied pursuant to the Class D Purchase
Agreements out of Excess Spread and Shared Excess Finance Charge Collections
allocated to Series 2007-1 shall be distributed for application in accordance
with the Class D Purchase Agreements;

(t) on a pro rata basis based on amounts owing under this clause (t), to the
extent not already paid under Section 4.22(c) hereof: (A) an amount equal to any
Hedge Termination Fees or other additional payments owed to the Hedge
Counterparty under the Class A Swap shall be paid to the Hedge Counterparty
under the Class A Swap, (B) an amount equal to any Hedge Termination Fees or
other additional payments owed to the Hedge Counterparty under the Class M Swap
shall be paid to the Hedge Counterparty under the Class M Swap, (C) an amount
equal to any Hedge Termination Fees or other additional payments owed to the
Hedge Counterparty under the Class B Swap shall be paid to the Hedge
Counterparty under the Class B Swap, (D) an amount equal to any additional
payments owed to the Hedge Counterparty under the Class C Cap shall be paid to
the Hedge Counterparty under the Class C Cap, and (E) an amount equal to the
excess, if any, of (a) the Minimum Required Hedge Reserve Amount over (b) the
amount on deposit in the Hedge Reserve Account shall be deposited into the Hedge
Reserve Account; and

(u) the balance, if any, will constitute a portion of Shared Excess Finance
Charge Collections for such Distribution Date and will be available for
allocation to other Series in Group One and, to the extent not required to be
applied as Shared Excess Finance Charge Collections with respect to any Series
in Group One, shall be distributed to the Holder of the Exchangeable Seller
Certificate or any other Person then entitled to such amounts.

SECTION 4.12. Reallocated Principal Collections.

(a) On or before each Distribution Date, the Servicer shall instruct the Trustee
in writing (which writing shall be substantially in the form of Exhibit E
hereto) to apply Reallocated Principal Collections (applying all Reallocated
Principal Collections in accordance with subsection 4.12(b)) with respect to
such Distribution Date, to make the following distributions on each Distribution
Date in the following priority:

(i) an amount equal to the excess, if any, of (x) the Class A Required Amount,
if any, with respect to such Distribution Date over (y) the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated to Series 2007-1
with respect to the related Due Period, shall be applied in accordance with, and
in the priority set forth in, subsections 4.9(a)(i), (ii), (iii) and (iv);

(ii) an amount equal to the excess, if any, of (x) the Class M Required Amount,
if any, with respect to such Distribution Date over (y) the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated and available to
the
Class M Certificates pursuant to subsection 4.11(c) on such Distribution Date
shall be applied first in accordance with, and in the priority set forth in
subsections 4.9(b)(i) and (ii) and then pursuant to and in the priority set
forth in subsection 4.11(c)(II);

 

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(iii) an amount equal to the excess, if any, of (x) the Class B Required Amount,
if any, with respect to such Distribution Date over (y) the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated and available to
the Class B Certificates pursuant to subsection 4.11(e) on such Distribution
Date shall be applied first in accordance with, and in the priority set forth in
subsections 4.9(c)(i) and (ii) and then pursuant to and in the priority set
forth in subsection 4.11(e)(II); and

(iv) an amount equal to the excess, if any, of (x) the Class C Required Amount,
if any, with respect to such Distribution Date over (y) the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated and available to
the Class C Investor Interest pursuant to subsections 4.11(g), 4.11(h), 4.11(i)
and 4.11(j) on such Distribution Date shall be applied first pursuant to
subsection 4.9(d)(i), and then pursuant to and in the priority set forth in
subsections 4.11(h), 4.11(i) and 4.11(j).

(b) On each Distribution Date on which the Servicer shall instruct the Trustee
to apply Reallocated Principal Collections pursuant to paragraph (a) above, the
Trustee shall apply such Reallocated Principal Collections in the following
order of priority and only to the extent provided below:

(i) applying Reallocated Class D-2 Principal Collections in accordance with
subsections 4.12 (a)(i) through (a)(iv);

(ii) if any amounts remain outstanding under subsections 4.12 (a)(i) through
(a)(iv) after giving effect to Reallocated
Class D-2 Principal Collections, then applying Reallocated Class D-1 Principal
Collections in accordance with subsections 4.12 (a)(i) through (a)(iv);

(iii) if any amounts remain outstanding under subsections 4.12(a)(i), (a)(ii) or
(a)(iii) above after giving effect to Reallocated Class D Principal Collections,
then applying Reallocated Class C Principal Collections in accordance with
subsections 4.12(a)(i), (a)(ii) and (a)(iii);

(iv) if any amounts remain outstanding under subsection 4.12 (a)(i) or (a)(ii)
above after giving effect to Reallocated
Class D Principal Collections and Reallocated Class C Principal Collections,
then applying Reallocated Class B Principal Collections in accordance with
subsection 4.12(a)(i) or (a)(ii); and

(v) if any amounts remain outstanding under subsection 4.12 (a)(i) above after
giving effect to Reallocated Class D Principal Collections, Reallocated Class C
Principal Collections and Reallocated Class B Principal Collections, then
applying Reallocated Class M Principal Collections in accordance with subsection
4.12(a)(i).

(c) On each Distribution Date, the Class D-2 Investor Interest shall be reduced
by the amount of Reallocated Class D-2 Principal Collections applied in
accordance with subsection 4.12(b) for such Distribution Date, the Class D-1
Investor Interest shall be reduced by the amount of Reallocated Class D-1
Principal Collections applied in accordance with subsection 4.12(b) for such
Distribution Date, the Class C Investor Interest shall be reduced by the amount
of Reallocated Class C Principal Collections applied in accordance with
subsection 4.12(b) for such Distribution Date, the Class B Investor Interest
shall be reduced by the amount of Reallocated Class B Principal

 

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Collections applied in accordance with subsection 4.12(b) for such Distribution
Date and the Class M Investor Interest shall be reduced by the amount of
Reallocated Class M Principal Collections applied in accordance with subsection
4.12(b) for such Distribution Date. Each of the Class M Investor Interest, the
Class B Investor Interest, the Class C Investor Interest, the
Class D-1 Investor Interest and the Class D-2 Investor Interest will thereafter
be reimbursed (but not in excess of the unreimbursed amount of such reductions)
on any Distribution Date by the amount of the Excess Spread and Shared Excess
Finance Charge Collections allocated and available to (A) the Class M Investor
Interest pursuant to subsection 4.11(d), (B) the Class B Investor Interest
pursuant to subsection 4.11(f), (C) the Class C Investor Interest pursuant to
subsection 4.11(k) and (D) to the Class D-1 Investor Interest and Class D-2
Investor Interest pursuant to subsection 4.11(q).

SECTION 4.13. Seller’s or Servicer’s Failure to Make a Deposit or Payment. If
the Servicer or the Seller fails to make, or give instructions to make, any
payment or deposit required to be made or given by the Servicer or Seller,
respectively, at the time specified in the Agreement (including applicable grace
periods), the Trustee shall make such payment or deposit from the applicable
account without instruction from the Servicer or Seller. The Trustee shall be
required to make any such payment, deposit or withdrawal hereunder only to the
extent that the Trustee has sufficient information to allow it to determine the
amount thereof; provided, however, that the Trustee shall in all cases be deemed
to have sufficient information to determine the amount of interest payable to
the Series 2007-1 Certificateholders on each Distribution Date. The Servicer
shall, upon request of the Trustee, promptly provide the Trustee with all
information necessary to allow the Trustee to make such payment, deposit or
withdrawal. Such funds or the proceeds of such withdrawal shall be applied by
the Trustee in the manner in which such payment or deposit should have been made
by the Seller or the Servicer, as the case may be.

SECTION 4.14. Shared Excess Finance Charge Collections.

(a) The balance of any Available Funds on deposit in the Collection Account
after giving effect to subsections 4.11(a) through (t) will constitute a portion
of Shared Excess Finance Charge Collections and will be available for allocation
to other Series in Group One or to the Holder of the Exchangeable Seller
Certificate as described in Section 4.3(g).

(b) Series 2007-1 shall be included in Group One. Subject to subsection 4.3(g)
of the Agreement, Shared Excess Finance Charge Collections with respect to the
Series in Group One for any Distribution Date will be allocated to Series 2007-1
in an amount equal to the product of (x) the aggregate amount of Shared Excess
Finance Charge Collections with respect to all Series in Group One for such
Distribution Date and (y) a fraction, the numerator of which is the Finance
Charge Shortfall for Series 2007-1 for such Distribution Date and the
denominator of which is the aggregate amount of Finance Charge Shortfalls for
all Series in Group One for such Distribution Date. The “Finance Charge
Shortfall” for Series 2007-1 for any Distribution Date will be equal to the
excess, if any, of (a) the full amount required to be paid, without duplication,
pursuant to subsections 4.11(a) through (t) on such Distribution Date over
(b) the Excess Spread for such Distribution Date.

 

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SECTION 4.15. Shared Principal Collections. Subject to subsection 4.3(f) of the
Agreement, Shared Principal Collections for any Distribution Date will be
allocated to Series 2007-1 in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Series in
Group One that are Principal Sharing Series for such Distribution Date and (y) a
fraction, the numerator of which is the Principal Shortfall for Series 2007-1
for such Distribution Date and the denominator of which is the Cumulative
Principal Shortfall for such Distribution Date.

SECTION 4.16. Purchase and Cancellation of Certificates. The Seller may on any
Distribution Date on or after the Funding Period Termination Distribution Date,
upon five Business Days’ prior written notice to the Trustee, purchase Series
2007-1 Certificates on the secondary market and request the Trustee to cancel
such Series 2007-1 Certificates purchased by the Seller on such Distribution
Date. In such case, the Class A, Class M, Class B, Class C and/or Class D
Investor Interest, as applicable, will be reduced by the portion thereof
represented by such cancelled Certificates; provided that after giving effect to
any cancellation (A) the Class M Investor Interest shall not be less than 6.0%
of the Series 2007-1 Investor Interest (calculated after giving effect to such
cancellation), (B) the Class B Investor Interest shall not be less than 9.5% of
the Series 2007-1 Investor Interest (calculated after giving effect to such
cancellation), (C) the Class C Investor Interest shall not be less than 9.0% of
the Series 2007-1 Investor Interest (calculated after giving affect to such
cancellation), and (D) the Class D Investor Interest shall not be less than 9.5%
of the Series 2007-1 Investor Interest (calculated after giving effect to such
cancellations). No Certificateholder shall be required to sell its Certificates
to the Seller pursuant to this Section 4.16.

SECTION 4.17. Determination of LIBOR.

(a) On each LIBOR Determination Date, the Trustee shall determine LIBOR on the
basis of the rate for deposits in United States dollars for a period of the
Designated Maturity which appears on Reuters Screen LIBOR01 Page as of 11:00
a.m., London time, on that date. If such rate does not appear on Reuters Screen
LIBOR01 Page, the rate for that LIBOR Determination Date will be determined
based on the rates at which deposits in United States dollars are offered by the
Reference Banks at approximately 11:00 a.m., London time, on that day to prime
banks in the London interbank market for a period of the Designated Maturity.
The Trustee or the Hedge Counterparty will request the principal London office
of each of the Reference Banks to provide a quotation of its rate. If at least
two quotations are provided, the rate for that LIBOR Determination Date will be
the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that LIBOR Determination Date will be the arithmetic mean
of the rates quoted by four major banks in New York City, selected by the
Servicer, at approximately 11:00 a.m., New York City time, on that day for loans
in United States dollars to leading European banks for a period of the
Designated Maturity.

(b) The Class A Certificate Rates, Class M Certificate Rates, Class B
Certificate Rates, Class C Certificate Rate, Class D-1 Certificate Rate and
Class D-2 Certificate Rate applicable to the then current and the immediately
preceding Interest Periods may be obtained by any Series 2007-1
Certificateholder by telephoning the Trustee at its Corporate Trust Office at
(800) 934-6802.

 

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(c) On each LIBOR Determination Date prior to 12:00 noon New York City time, the
Trustee shall send to the Servicer by facsimile, notification of LIBOR for the
following Interest Period.

SECTION 4.18. Paired Series. Any other Series in Group One may be designated
(but only with the consent of the Class C Certificateholders and the Class D
Certificateholders specified in the Class C Purchase Agreement or the Class D
Certificate Purchase Agreements, as applicable, and subject to satisfaction of
the Rating Agency Condition) as a Paired Series for Series 2007-1. Such Paired
Series either shall be prefunded with an initial deposit to a prefunding account
in an amount up to the initial principal amount of such Paired Series and
primarily from the sale of such Paired Series or shall have a variable principal
amount. Any such prefunding account shall be held for the benefit of such Paired
Series and not for the benefit of the Series 2007-1 Certificateholders. As funds
in the Collection Account are allocated for distribution as Available Principal
Collections during the Early Amortization Period or Controlled Amortization
Period, either (i) in the case of a prefunded Paired Series, an equal amount of
funds in any prefunding account for such Paired Series shall be released and
distributed pursuant to the terms of such Paired Series or (ii) in the case of a
Paired Series having a variable principal amount, an interest in such variable
Paired Series in an equal or lesser amount may be sold by the Trust and the
proceeds thereof will be distributed pursuant to the terms of such Paired
Series, and, in either case, the Investor Interest of such Paired Series will
increase by up to a corresponding amount. Upon payment in full of the Series
Investor Interest, assuming that there have been no unreimbursed Loss Amounts
with respect to any related Paired Series, the aggregate amount of such Paired
Series shall have been increased by an amount up to an aggregate amount equal to
the Series Investor Interest paid to the Series 2007-1 Certificateholders (or
such other amount as the holders of such Paired Series shall agree).

SECTION 4.19 Pre-Funding Account. (a) The Seller hereby directs the Servicer,
for the benefit of the Series 2007-1 Certificateholders, to establish and
maintain or cause to be established and maintained in the name of the Trustee
and for the Trustee, on behalf of the Series 2007-1 Certificateholders, with a
Qualified Depository Institution (which initially shall be the Trustee) a
segregated trust account (the “Pre-Funding Account”), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series 2007-1 Certificateholders. The Seller does hereby transfer, assign,
set over and otherwise convey to the Trust for the benefit of the Series 2007-1
Certificateholders, without recourse, all of its right, title and interest (if
any) in, to and under the Pre-Funding Account, any cash and/or investments on
deposit therein and any proceeds of the foregoing, including the investment
earnings. The Pre-Funding Account shall be owned by, and under the sole dominion
and control of, the Trustee for the benefit of the Series 2007-1
Certificateholders. If, at any time, the institution holding the Pre-Funding
Account ceases to be a Qualified Depository Institution, the Seller shall direct
the Servicer to establish within 10 Business Days a new Pre-Funding Account
meeting the conditions specified above with a Qualified Depository Institution,
transfer any cash and/or any investments to such new Pre-Funding Account and
from the date such new Pre-Funding Account is established, it shall be the
“Pre-Funding Account.” In addition, after five days notice to the Trustee, the
Seller may direct the Servicer to establish a new Pre-Funding Account meeting
the conditions specified above with a different Qualified Depository
Institution, transfer any cash and/or investments to such new Pre-Funding
Account and from the date such new Pre-Funding Account is established, it shall
be, for the Series 2007-1 Certificates, the “Pre-Funding Account.” The Trustee,
at the direction of the Servicer, shall make withdrawals and payments from the
Pre-Funding Account for the purposes of carrying out the Servicer’s or Trustee’s
duties hereunder.

 

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(b) A portion of the cash proceeds of the sale of the Series 2007-1 Certificates
in an amount equal to $285,000,000 shall be deposited into the Pre-Funding
Account on the Closing Date. This amount shall be the Initial Total Pre-Funded
Amount. On each Distribution Date, the Trustee, at the direction of the
Servicer, shall withdraw from the Pre-Funding Account and deposit in the
Collection Account all interest and other investment income on the Cash
Pre-Funded Amount. Interest (including reinvested interest) and other investment
income on funds on deposit in the Pre-Funding Account shall not be considered
part of the Cash Pre-Funded Amount for purposes of this Supplement. Funds on
deposit in the Pre-Funding Account shall be withdrawn by the Trustee, at the
direction of the Servicer, and paid to the Seller to the extent of any increases
in the Series Investor Interest pursuant to Section 4.21. If (x) the Lane Bryant
Portfolio shall not have been acquired by the Originator on or before
January 31, 2008, or the Servicer shall have notified the Trustee in writing on
or prior to January 31, 2008 that the Originator will not acquire the Lane
Bryant Portfolio prior to January 31, 2008, and (y) any Cash Pre-Funded Amount
remains on deposit in the Pre-Funding Account, on the Lane Bryant Portfolio
Distribution Date the lesser of (i) such remaining Cash Pre-Funded Amount net of
interest and earnings on investments of funds on deposit in the Pre-Funding
Account on such date) and (ii) $220,000,000 will be deposited into the
Collection Account and applied by the Trustee, at the direction of the Servicer,
in accordance with subsection 4.9(h) to reduce the outstanding principal amount
of the Class A Certificates, the Class M Certificates, the Class B Certificates,
the Class C Certificates and the Class D Certificates as specified in subsection
4.9(h). If the Funding Period Termination Distribution Date occurs and any Cash
Pre-Funded Amount remains on deposit in the Pre-Funding Account, on such date
such remaining Cash Pre-Funded Amount will be deposited into the Collection
Account and will be applied by the Trustee, at the direction of the Servicer, in
accordance with subsection 4.9(h) to reduce the outstanding principal amount of
the Class A Certificates, the Class M Certificates, the Class B Certificates,
the Class C Certificates and the Class D Certificates as specified in subsection
4.9(h).

(c) Funds on deposit in the Pre-Funding Account shall be invested in Permitted
Investments by the Trustee, at the direction of the Servicer. Funds on deposit
in the Pre-Funding Account on any Distribution Date, after giving effect to any
withdrawals from the Pre-Funding Account, shall be invested in Permitted
Investments that will mature so that such funds will be available for withdrawal
on the following Distribution Date. All interest and earnings (net of losses and
investment expenses) on funds on deposit in the Pre-Funding Account shall be
deposited by the Trustee, at the direction of the Servicer, in the Collection
Account on each Distribution Date and treated as Collections of Finance Charge
Receivables allocated to the Series 2007-1 Certificates for the prior Due
Period.

(d) The parties hereto intend that the Pre-Funding Account shall be an account
of the Trustee, and not an account of the Seller. If, notwithstanding the intent
of the parties hereto, it shall be determined that the Seller has any rights in
the Pre-Funding Account, the Seller hereby grants to the Trustee, to secure all
of its obligations hereunder, a security interest in all of its right, title,
and interest, whether now owned or hereafter acquired, in, to, and under the
Pre-Funding Account, all money, instruments, investment property, and other
property credited to or on deposit in the Pre-Funding Account, and all proceeds
thereof.

 

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SECTION 4.20. Funding Period Reserve Account. (a) The Seller hereby directs the
Servicer, for the benefit of the Series 2007-1 Certificateholders, to establish
and maintain or cause to be established and maintained in the name of the
Trustee and for the Trustee, on behalf of the Series 2007-1 Certificateholders,
with a Qualified Depository Institution (which initially shall be the Trustee) a
segregated trust account (the “Funding Period Reserve Account”), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 2007-1 Certificateholders. The Seller does hereby
transfer, assign, set over and otherwise convey to the Trust for the benefit of
the Series 2007-1 Certificateholders, without recourse, all of its right, title
and interest (if any) in, to and under the Funding Period Reserve Account, any
cash and/or investments on deposit therein and any proceeds of the foregoing,
including the investment earnings. The Funding Period Reserve Account shall be
owned by, and under the sole dominion and control of, the Trustee for the
benefit of the Series 2007-1 Certificateholders. If, at any time, the
institution holding the Funding Period Reserve Account ceases to be a Qualified
Depository Institution, the Seller shall direct the Servicer to establish within
10 Business Days a new Funding Period Reserve Account meeting the conditions
specified above with a Qualified Depository Institution, transfer any cash
and/or any investment to such new Funding Period Reserve Account and from the
date such new Funding Period Reserve Account is established, it shall be the
“Funding Period Reserve Account.” In addition, after five days notice to the
Trustee, the Seller may direct the Servicer to establish a new Funding Period
Reserve Account meeting the conditions specified above with a different
Qualified Depository Institution, transfer any cash and/or investments to such
new Funding Period Reserve Account and from the date such new Funding Period
Reserve Account is established, it shall be, for the Series 2007-1 Certificates,
the “Funding Period Reserve Account.” Pursuant to the authority granted to the
Servicer in subsection 3.1(b) of the Agreement, the Servicer shall have the
power, revocable by the Trustee, to make withdrawals and payments or to instruct
the Trustee to make withdrawals and payments from the Funding Period Reserve
Account for the purposes of carrying out the Servicer’s or Trustee’s duties
hereunder.

(b) The Servicer shall deposit $3,705,000 into the Funding Period Reserve
Account on the Closing Date. Funds on deposit in the Funding Period Reserve
Account (after giving effect to any withdrawals from the Funding Period Reserve
Account) shall be invested by the Trustee at the direction of the Servicer in
Permitted Investments so that funds will be available for withdrawal on the
following Distribution Date. The interest and other investment income (net of
investment expenses and losses) earned on such investments shall be deposited in
the Collection Account on each Distribution Date and treated as Collections of
Finance Charge Receivables allocated to the Series 2007-1 Certificates for the
preceding Due Period and available to be applied as Available Funds.

(c) On or before each Distribution Date with respect to the Funding Period, the
Trustee at the direction of the Servicer shall (i) withdraw from the Funding
Period Reserve Account an amount equal to the Funding Period Reserve Draw Amount
for such Distribution Date and deposit such amount into the Collection Account
for application as Available Funds and (ii) deposit in the Funding Period
Reserve Account an amount equal to the amount specified in, and otherwise in
accordance with, subsection 4.11(r).

 

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(d) The Funding Period Reserve Account shall be terminated following the earlier
to occur of (a) the completion of the Funding Period and (b) the termination of
the Trust pursuant to the Agreement. Upon the termination of the Funding Period
Reserve Account, all amounts on deposit therein (after giving effect to any
withdrawal from the Funding Period Reserve Account on such date as described
above) shall be distributed to the Holder of the Exchangeable Seller
Certificate.

SECTION 4.21. Adjustments to Investor Interest.

(a) Series 2007-1 shall be a Paired Series with respect to Series 2002-1. On any
Business Day during the Funding Period, the Series Investor Interest will be
increased (but not above an amount equal to the Initial Investor Interest) by
the amount of any decrease in the Investor Interest for Series 2002-1 on or
prior to such day, provided that the aggregate amount of such increases pursuant
to this clause (a) do not exceed the aggregate amount of the Investor Interest
for Series 2002-1. The Class A Investor Interest shall be increased by an amount
equal to the Class A Percentage of the amount of such decrease, the Class M
Investor Interest shall be increased by an amount equal to the Class M
Percentage of the amount of such decrease, the Class B Investor Interest shall
be increased by an amount equal to the Class B Percentage of the amount of such
decrease, the Class C Investor Interest shall be increased by an amount equal to
the Class C Percentage of the amount of such decrease, and the Class D Investor
Interest shall be increased by an amount equal to the Class D Percentage of the
amount of such decrease (which increase shall be allocated between the Class D-1
Investor Interest and the Class D-2 Investor Interest as provided in the Class D
Purchase Agreements), whereupon the Trustee shall instruct the Servicer to
withdraw from the Pre-Funding Account and pay to the Seller an amount equal to
the increase in the Series Investor Interest.

(b) The Seller may on any Business Day during the Funding Period determine to
increase the Series Investor Interest amount up to the Initial Investor Interest
by transferring new Receivables to the Trust so long as such increase to the
Series Investor Interest would not cause the Seller Interest to be reduced below
zero or cause an Early Amortization Event to occur with respect to any
outstanding Series. Upon determining to increase the Series Investor Interest
pursuant to this Section 4.21(b), the Seller shall deliver to the Servicer and
the Trustee an Officers’ Certificate specifying the amount of the increase in
the Series Investor Interest the Seller has determined to make and certifying
that such increase to the Series Investor Interest will not cause the Seller
Interest to be reduced below zero or cause an Early Amortization Event to occur
with respect to any outstanding Series. Upon receipt of such Officer’s
Certificate by the Trustee, the Class A Investor Interest shall be increased by
an amount equal to the Class A Percentage of the amount of such increase, the
Class M Investor Interest shall be increased by an amount equal to the Class M
Percentage of the amount of such increase, the Class B Investor Interest shall
be increased by an amount equal to the Class B Percentage of the amount of such
increase, the Class C Investor Interest shall be increased by an amount equal to
the Class C Percentage of the amount of such increase, the Class D Investor
Interest shall be increased by an amount equal to the Class D Percentage of the
amount of such increase (which increase shall be allocated between the Class D-1
Investor Interest and the Class D-2 Investor Interest as provided in the Class D
Purchase Agreements), whereupon the Trustee shall instruct the Servicer to
withdraw from the Pre-Funding Account and pay to the Seller an amount equal to
the increase in the Series Investor Interest.

 

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SECTION 4.22. Hedge Reserve Account. (a) The Seller hereby directs the Servicer,
for the benefit of the Hedge Counterparty, to establish and maintain or cause to
be established and maintained in the name of the Trustee and for the Trustee, on
behalf of the Hedge Counterparty, with a Qualified Depository Institution (which
initially shall be the Trustee) a segregated trust account (the “Hedge Reserve
Account”), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Hedge Counterparty. The Seller does
hereby transfer, assign, set over and otherwise convey to the Trust for the
benefit of the Hedge Counterparty, without recourse, all of its right, title and
interest (if any) in, to and under the Hedge Reserve Account, any cash and/or
investments on deposit therein and any proceeds of the foregoing, including the
investment earnings. The Hedge Reserve Account shall be owned by, and under the
sole dominion and control of, the Trustee for the benefit of the Hedge
Counterparty. If, at any time, the institution holding the Hedge Reserve Account
ceases to be a Qualified Depository Institution, the Seller shall direct the
Servicer to establish within 10 Business Days a new Hedge Reserve Account
meeting the conditions specified above with a Qualified Depository Institution,
transfer any cash and/or any investment to such new Hedge Reserve Account and
from the date such new Hedge Reserve Account is established, it shall be the
“Hedge Reserve Account.” In addition, after five days notice to the Trustee, the
Seller may direct the Servicer to establish a new Hedge Reserve Account meeting
the conditions specified above with a different Qualified Depository
Institution, transfer any cash and/or investments to such new Hedge Reserve
Account and from the date such new Hedge Reserve Account is established, it
shall be, the “Hedge Reserve Account.” Pursuant to the authority granted to the
Servicer in subsection 3.1(b) of the Agreement, the Servicer shall have the
power, revocable by the Trustee, to make withdrawals and payments or to instruct
the Trustee to make withdrawals and payments from the Hedge Reserve Account for
the purposes of carrying out the Servicer’s or Trustee’s duties hereunder.

(b) The Servicer shall deposit $1,700,000 into the Hedge Reserve Account on the
Closing Date. On each Distribution Date prior to the termination of the Hedge
Reserve Account pursuant to subsection 4.22(d), the Trustee at the direction of
the Servicer shall deposit in the Hedge Reserve Account an amount equal to the
amount specified in, and otherwise in accordance with,
subsection 4.11(t). Funds on deposit in the Hedge Reserve Account (after giving
effect to any withdrawals from the Hedge Reserve Account) shall be invested by
the Trustee at the direction of the Servicer in Permitted Investments so that
funds will be available for withdrawal on the following Distribution Date. The
interest and other investment income (net of investment expenses and losses)
earned on such investments shall be deposited in the Collection Account each
Distribution Date following and treated as Collections of Finance Charge
Receivables allocated to the Series 2007-1 Certificates for the preceding Due
Period and available to be applied as Available Funds.

(c) Upon termination of any Interest Rate Swap Agreement for which a partial or
early termination fee (such fee, a “Hedge Termination Fee”) is incurred pursuant
to the terms of the applicable Interest Rate Swap Agreement, the Trustee shall,
at the written direction of the Servicer, withdraw the amount of such
termination fee from the Hedge Reserve Account and distribute such termination
fee directly to the applicable Hedge Counterparty. If more than one Hedge
Termination Fee shall be outstanding at any time, the Trustee shall make such
distributions to the applicable Hedge Counterparties in the following order of
priority: first, to the Hedge Counterparty for the Class A Swap; second, to the
Hedge Counterparty for the Class M Swap; and third, to the Hedge Counterparty
for the Class B Swap.

 

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(d) The Hedge Reserve Account shall be terminated following the earliest to
occur of (a) the Lane Bryant Portfolio Distribution Date, (b) February 15, 2008,
(c) the date on which the Originator acquires the Lane Bryant Portfolio, and
(d) the termination of the Trust pursuant to the Agreement. Upon the termination
of the Hedge Reserve Account, all amounts on deposit therein (after giving
effect to any withdrawal from the Hedge Reserve Account on such date as
described above) shall be distributed to the Holder of the Exchangeable Seller
Certificate.

SECTION 4.23 Designation of Trustee’s Jurisdiction. The Trustee hereby agrees
that its jurisdiction for purposes of the applicable UCC is New York.

SECTION 4.24 Permitted Investments. In selecting Permitted Investments for the
funds on deposit in the Collection Account, the Funding Period Reserve Account,
the Hedge Reserve Account and the Pre-Funding Account, the Servicer shall make
such selection after consultation with the Trustee and with a view to ensuring
that an amount equal to the sum of (i) Monthly Interest due on each Distribution
Date, and (ii) during the Amortization Period, the amount of principal to be
paid on the Series 2007-1 Certificates on such Distribution Date will be held by
the Trustee in uninvested funds on the Business Day immediately prior to such
Distribution Date.

SECTION 9. Article V of the Agreement. Article V of the Agreement shall read in
its entirety as follows and shall be applicable only to the Series 2007-1
Certificates:

ARTICLE V.

DISTRIBUTIONS AND REPORTS TO INVESTOR

CERTIFICATEHOLDERS

SECTION 5.1. Distributions.

(a) On each Distribution Date, the Trustee shall distribute (in accordance with
the certificate delivered by the Servicer to the Trustee pursuant to subsection
3.4(b)) to each Class A Certificateholder of record on the immediately preceding
Record Date (other than as provided in Section 12.3 respecting a final
distribution) such Class A Certificateholder’s pro rata share (based on the
aggregate Undivided Trust Interests represented by Class A Certificates held by
such Class A Certificateholder) of amounts on deposit in the Collection Account
as are payable to the Class A Certificateholders pursuant to Section 4.9 or 4.11
of this Supplement by check mailed to each Class A Certificateholder (at such
Class A Certificateholder’s address as it appears in the Certificate Register),
except that with respect to Class A Certificates registered in the name of the
nominee of a Clearing Agency, such distribution shall be made in immediately
available funds.

(b) On each Distribution Date, the Trustee shall distribute (in accordance with
the certificate delivered by the Servicer to the Trustee pursuant to subsection
3.4(b)) to each Class M Certificateholder of record on the immediately preceding
Record Date (other than as provided in Section 12.3 respecting a final
distribution) such Class M Certificateholder’s pro rata share

 

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(based on the aggregate Undivided Trust Interests represented by Class M
Certificates held by such Class M Certificateholder) of amounts on deposit in
the Collection Account as are payable to the Class M Certificateholders pursuant
to Section 4.9 or 4.11 of this Supplement by check mailed to each Class M
Certificateholder (at such Class M Certificateholder’s address as it appears in
the Certificate Register), except that with respect to Class M Certificates
registered in the name of the nominee of a Clearing Agency, such distribution
shall be made in immediately available funds.

(c) On each Distribution Date, the Trustee shall distribute (in accordance with
the certificate delivered by the Servicer to the Trustee pursuant to subsection
3.4(b)) to each Class B Certificateholder of record on the immediately preceding
Record Date (other than as provided in Section 12.3 respecting a final
distribution) such Class B Certificateholder’s pro rata share (based on the
aggregate Undivided Trust Interests represented by Class B Certificates held by
such Class B Certificateholder) of amounts on deposit in the Collection Account
as are payable to the Class B Certificateholders pursuant to Section 4.9 or 4.11
of this Supplement by check mailed to each Class B Certificateholder (at such
Class B Certificateholder’s address as it appears in the Certificate Register),
except that with respect to Class B Certificates registered in the name of the
nominee of a Clearing Agency, such distribution shall be made in immediately
available funds.

(d) Unless otherwise specified in the Class C Purchase Agreement, on each
Distribution Date, the Trustee shall distribute to each Class C
Certificateholder of record on the immediately preceding Record Date (other than
as provided in Section 12.3 of the Agreement respecting a final distribution)
such Class C Certificateholder’s pro rata share (based on the aggregate
Undivided Trust Interests represented by Class C Certificates held by such Class
C Certificateholder) of amounts on deposit in the Collection Account as are
payable to the Class C Certificateholders pursuant to Section 4.9 or 4.11 of
this Supplement or the Class C Purchase Agreement by check mailed to each Class
C Certificateholder (at such Certificateholder’s address as it appears in the
Certificate Register) or by wire transfer of immediately available funds to such
account designated in writing by such Class C Certificateholder to the Trustee
not later than the Distribution Date preceding such Distribution Date.

(e) Unless otherwise specified in the Class D-1 Purchase Agreement, on each
Distribution Date, the Trustee shall distribute to each Class D-1
Certificateholder of record on the immediately preceding Record Date (other than
as provided in Section 12.3 of the Agreement respecting a final distribution)
such Class D-1 Certificateholder’s pro rata share (based on the aggregate
Undivided Trust Interests represented by Class D-1 Certificates held by such
Class D-1 Certificateholder) of amounts on deposit in the Collection Account as
are payable to the Class D-1 Certificateholders pursuant to Section 4.9 or 4.11
of this Supplement or the applicable
Class D Purchase Agreement by check mailed to each Class D-1 Certificateholder
(at such Class D-1 Certificateholder’s address as it appears in the Certificate
Register) or by wire transfer of immediately available funds to such account
designated in writing by such Class D-1 Certificateholder to the Trustee not
later than the Distribution Date preceding such Distribution Date.

 

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(f) Unless otherwise specified in the Class D-2 Purchase Agreement, on each
Distribution Date, the Trustee shall distribute to each Class D-2
Certificateholder of record on the immediately preceding Record Date (other than
as provided in Section 12.3 of the Agreement respecting a final distribution)
such Class D-2 Certificateholder’s pro rata share (based on the aggregate
Undivided Trust Interests represented by Class D-2 Certificates held by such
Class D-2 Certificateholder) of amounts on deposit in the Collection Account as
are payable to the Class D-2 Certificateholders pursuant to Section 4.9 or 4.11
of this Supplement or the applicable
Class D Purchase Agreement by check mailed to each Class D-2 Certificateholder
(at such Class D-2 Certificateholder’s address as it appears in the Certificate
Register) or by wire transfer of immediately available funds to such account
designated in writing by such Class D-2 Certificateholder to the Trustee not
later than the Distribution Date preceding such Distribution Date.

SECTION 5.2. Monthly Certificateholders’ Statement.

(a) On or before each Distribution Date, the Paying Agent shall forward to each
Series 2007-1 Certificateholder and each Rating Agency a statement substantially
in the form of Exhibit F to this Supplement prepared by the Servicer,
appropriately completed.

(b) Annual Certificateholders’ Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 2008, the Trustee shall distribute
to each Person who at any time during the preceding calendar year was a Series
2007-1 Certificateholder, a statement prepared by the Servicer containing the
information required to be contained in the regular monthly statement to Series
2007-1 Certificateholders, aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series 2007-1 Certificateholder,
together with such other customary information (consistent with the treatment of
the Class A Certificates, the Class M Certificates and the Class B Certificates
as debt) as the Servicer deems necessary or desirable to enable the Series
2007-1 Certificateholders to prepare their tax returns. The Servicer will
provide such information to the Trustee as soon as possible after January 1 of
each calendar year. Such obligations of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time in effect.

SECTION 10. Series 2007-1 Early Amortization Events. If any one of the following
events shall occur with respect to the Series 2007-1 Certificates:

(a) failure on the part of the Seller or the Originator (i) to make any payment
or deposit required by the terms of (A) the Agreement, (B) this Supplement or
(C) the Purchase Agreement, on or before the date occurring five Business Days
after the date such payment or deposit is required to be made herein or
(ii) duly to observe or perform in any material respect any of its covenants or
agreements set forth in the Agreement, this Supplement or the Purchase
Agreement, which failure has a material adverse effect on the Class A
Certificateholders, the Class M Certificateholders, the Class B
Certificateholders or the Class C Certificateholders and which continues
unremedied for a period of 35 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Seller by the Trustee, or to the Seller and the Trustee by the Controlling
Certificateholders, and continues to affect materially and adversely the
interests of the Class A Certificateholders, the Class M Certificateholders, the
Class B Certificateholders or the Class C Certificateholders for such period;

 

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(b) any representation or warranty made by the Seller or the Originator in the
Agreement, this Supplement or the Purchase Agreement, or any information
contained in a computer file or microfiche or written list required to be
delivered by the Seller pursuant to Section 2.1 or 2.6 or by the Originator
pursuant to Section 1.1 or 2.4(e) of the Purchase Agreement, (i) shall prove to
have been incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Trustee, or to the Seller
and the Trustee by the Controlling Certificateholders, and (ii) as a result of
which the interests of the Class A Certificateholders, the Class M
Certificateholders, the Class B Certificateholders or the Class C
Certificateholders are materially and adversely affected and continue to be
materially and adversely affected for such period; provided, however, that a
Series 2007-1 Early Amortization Event pursuant to this subsection 9(b) shall
not be deemed to have occurred hereunder if the Seller has accepted reassignment
of the related Receivable, or all of such Receivables, if applicable, during
such period in accordance with the provisions of the Agreement;

(c) the average Portfolio Yield for any three consecutive Due Periods is reduced
to a rate which is less than the average Base Rate for such period;

(d) the Seller shall fail to convey Receivables arising under Additional
Accounts to the Trust, as required by
subsection 2.6(a) of the Agreement;

(e) any Servicer Default shall occur which would have a material adverse effect
on the Class A Certificateholders, the Class M Certificateholders, the Class B
Certificateholders or the Class C Certificateholders;

(f) the Class A Investor Interest shall not be paid in full on the Class A
Expected Final Payment Date, or the Class M Investor Interest shall not be paid
in full on the Class M Expected Final Payment Date, or the Class B Investor
Interest shall not be paid in full on the Class B Expected Final Payment Date;

(g) Fashion Service Corp. shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to all or
substantially all of its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
Fashion Service Corp.; or Fashion Service Corp. shall admit in writing its
inability to pay its debts generally as they become due, commence or have
commenced against it (unless dismissed within thirty days) as a debtor a
proceeding under any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations;

(h) the early termination of the Class A Swap, the Class M Swap, the Class B
Swap or the Class C Cap unless the Trustee obtains a replacement Class A Swap,
Class M Swap, Class B Swap or Class C Cap, as applicable, or enters into another
interest rate hedging arrangement with respect to the Class A-1 Certificates,
Class M-1 Certificates, Class B-1

 

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Certificates or Class C Certificates that satisfies the Rating Agency Condition
within 5 Business Days following the termination of such Class A Swap, Class M
Swap, Class B Swap or Class C Cap, as applicable; provided that the partial
termination of an Interest Rate Hedge Agreement due to the occurrence of the
Lane Bryant Portfolio Distribution Date, as contemplated by the Interest Rate
Hedge Agreements, shall not be a Series 2007-1 Early Amortization Event; or

(i) failure of any Hedge Counterparty to make a payment under any of the
Interest Rate Hedge Agreements for the
Class A-1 Certificates, Class M-1 Certificates, Class B-1 Certificates or Class
C Certificates in respect of a payment obligation arising as a result of LIBOR
being greater than the specified fixed rate for the related Interest Rate Hedge
Agreement, and the failure is not cured within 5 Business Days after payment is
due;

then, (x) in the case of any event described in subparagraph (a), (b) or
(e) after the applicable grace period set forth in such subparagraphs, either
the Trustee or the Controlling Certificateholders by notice then given in
writing to the Seller and the Servicer (and to the Trustee if given by the
Certificateholders) may declare that an early amortization event (a “Series
2007-1 Early Amortization Event”) has occurred as of the date of such notice and
(y) in the case of any event described in subparagraphs (c), (d), (f), (g),
(h) or (i), a Series 2007-1 Early Amortization Event shall occur without any
notice or other action on the part of the Trustee or the Series 2007-1
Certificateholders immediately upon the occurrence of such event.

SECTION 11. Series 2007-1 Termination. The right of the Series 2007-1
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series 2007-1 Termination Date. For purposes of
Series 2007-1, the reference to “110%” in Section 12.1(c) of the Agreement shall
be deemed to be a reference to “110% (or if such percentage would cause an Early
Amortization Event to occur with respect to any other outstanding Series, the
greater of (x) such lesser percentage as would not cause such Early Amortization
Event and (y) the then current Series Allocation Percentage)”. The proceeds of
such sale shall be treated as Collections on the Receivables that are allocated
to Series 2007-1 pursuant to the Agreement and this Supplement and shall be
distributed in accordance with the terms of this Supplement; provided, however,
that the Servicer shall determine conclusively the amount of such proceeds that
are allocable to Finance Charge Receivables and the amount of such proceeds that
are allocable to Principal Receivables.

SECTION 12. Ratification of Agreement. As supplemented by this Supplement, the
Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Supplement shall be read, taken, and construed as one and
the same instrument.

SECTION 13. Counterparts. This Supplement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.

SECTION 14. No Petition. Each of the Trustee, the Servicer and the Seller (with
respect to the Trust only), by entering into this Supplement and each Series
2007-1 Certificateholder, by accepting a Series 2007-1 Certificate, shall not,
prior to the date which is one year and one day after the last day on which any
Investor Certificate shall have been outstanding, acquiesce, petition or
otherwise invoke or cause the Trust or the Seller to invoke the

 

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process of any Governmental Authority for the purpose of commencing or
sustaining a case against the Trust or the Seller under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust or the Seller or any substantial part of its property or ordering the
winding up or liquidation of the affairs of the Trust or the Seller.

SECTION 15. Forms of Series 2007-1 Certificates.

(a) Form of Certificates. The form of each of the Class A-1 Certificates, the
Class A-2 Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class B-1 Certificates, the Class B-2 Certificates, the Class C
Certificates, the Class D-1 Certificates and the Class D-2 Certificates,
including the Certificate of Authentication, shall be substantially as set forth
respectively as Exhibits A-1, A-2, M-1, M-2, B-1, B-2, C, D-1 and D-2 hereto,
respectively.

(b) Book-Entry Certificates.

(i) The Class A Certificates, the Class M Certificates and the Class B
Certificates that are not sold in offshore transactions in reliance on
Regulation S under the Securities Act shall be offered and sold in reliance on
the exemption from registration under Rule 144A (except for any sale directly
from the Trust) and shall be issued initially in the form of one or more
permanent global certificates in definitive, fully registered form without
interest coupons with the applicable legends set forth in Exhibits A, M and B
hereto, as applicable, added to the form of such Certificates (each, a
“Restricted Book-Entry Certificate”), which shall be registered in the name of
the nominee of the Depository and deposited with the Trustee, as custodian for
the Depository. The aggregate principal amount of the Restricted Book-Entry
Certificates may from time to time be increased or decreased by adjustments made
on the records of the Trustee or the Depository or its nominee, as the case may
be, as hereinafter provided.

(ii) The Class A Certificates, the Class M Certificates and the Class B
Certificates offered and sold in offshore transactions in reliance on Regulation
S under the Securities Act shall be issued initially, and during the “40 day
distribution compliance period” described below shall remain, in the form of
temporary global certificates, without interest coupons (the “Regulation S
Temporary Book-Entry Certificates”), to be held by the Depository and registered
in the name of a nominee of the Depository or its custodian for the respective
accounts of Euroclear and Clearstream duly executed by the Seller and
authenticated by the Trustee as hereinafter provided. The “40 day distribution
compliance period” shall be terminated upon the later of (i) the end of the
distribution compliance period (as defined in Rule 902 of the Securities Act)
and (ii) receipt by the Trustee of a written certificate from the Depository,
together with copies of certificates substantially in the form of Exhibit I from
Euroclear or Clearstream, certifying that the beneficial owner of such
Regulation S Temporary Book-Entry Certificate is a non-U.S. person. Following
the termination of the 40 day distribution compliance period, beneficial
interests in the Regulation S Temporary Book-Entry Certificates may be exchanged
for beneficial interests in permanent Book-Entry Certificates (the “Regulation S
Permanent Book-Entry Certificates”; and together with the Regulation S Temporary

 

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Book-Entry Certificate, the “Regulation S Book-Entry Certificates”), which will
be duly executed by the Seller and authenticated by the Trustee as hereinafter
provided and which will be deposited with the Trustee, as custodian for the
Depository, and registered in the name of the Depository or a nominee thereof.
Upon any exchange of a portion of a Regulation S Temporary Book-Entry
Certificate for a comparable portion of a Regulation S Permanent Book-Entry
Certificate, the Trustee shall endorse on the schedules affixed to each of such
Regulation S Book-Entry Certificate (or on continuations of such schedules
affixed to each of such Regulation S Book-Entry Certificate and made parts
thereof) appropriate notations evidencing the date of transfer and (x) with
respect to the Regulation S Temporary Book-Entry Certificate, a decrease in the
principal amount thereof equal to the amount covered by the applicable
certification and (y) with respect to the Regulation S Permanent Book-Entry
Certificate, an increase in the principal amount thereof equal to the principal
amount of the decrease in the Regulation S Temporary Book-Entry Certificate.

(c) Definitive Series 2007-1 Certificates. (i) The Class C Certificates and the
Class D Certificates shall be issued in the form of Definitive Certificates with
the applicable legends set forth in Exhibits C and D, hereto, which shall be
registered in the name of the Holder or a nominee thereof, duly executed by the
Trust and authenticated by the Trustee as hereinafter provided. Except as
provided in Section 6.12 of the Agreement, owners of beneficial interests in the
Book-Entry Certificates shall not be entitled to receive Definitive
Certificates.

SECTION 16. Transfer Restrictions.

(a) No Series 2007-1 Certificate may be sold or transferred (including, without
limitation, by pledge or hypothecation) unless such sale or transfer is exempt
from the registration requirements of the Securities Act and is exempt from the
registration requirements under applicable state securities laws.

No Class A Certificate, Class M Certificate or Class B Certificate may be
offered, sold or delivered within the United States or to, or for the benefit
of, U.S. Persons as defined in Regulation S except to QIBs purchasing for their
own account or for the accounts of one or more QIBs, for which the purchaser is
acting as fiduciary or agent in accordance with Rule 144A in reliance on the
exemption from registration in Section 4(2) of the Securities Act. The Class A
Certificates, the Class M Certificates and the Class B Certificates may also be
sold or resold, as the case may be, in offshore transactions to non-U.S. Persons
in reliance on Regulation S under the Securities Act.

No Class C Certificate or Class D Certificate may be offered, sold or delivered
to, or for the benefit of, any Person except U.S. Persons (as defined in
Section 7701(a)(30) of the Code) within the United States that are QIBs
purchasing for their own account or for the accounts of one or more QIBs, for
which the purchaser is acting as a fiduciary or agent in accordance with Rule
144A in reliance on the exemption for registration in Section 4(2) of the
Securities Act.

None of the Trust, the Trustee, the Seller, the Originator, the Servicer or any
other Person may register the Series 2007-1 Certificates under the Securities
Act or any applicable securities laws.

 

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(b) Notwithstanding any provision to the contrary herein, so long as a
Book-Entry Certificate remains outstanding and is held by or on behalf of the
Depository, transfers of a Book-Entry Certificate, in whole or in part, shall
only be made in accordance with this Section 16(b) and Section 6.10 of the
Agreement.

(i) Subject to clauses (ii) and (iii) of this Section 16(b), transfers of a
Book-Entry Certificate shall be limited to transfers of such Book-Entry
Certificate in whole, but not in part, to a nominee of the Depository or to a
successor of the Depository or such successor’s nominee.

(ii) Regulation S Book-Entry Certificate to Restricted Book-Entry Certificate.
If a holder of a beneficial interest in a Regulation S Book-Entry Certificate
wishes to transfer all or a part of its interest in such Regulation S Book-Entry
Certificate to a Person who wishes to take delivery thereof in the form of a
Restricted Book-Entry Certificate, such holder may, subject to the terms hereof
and the rules and procedures of Euroclear or Clearstream, as the case may be,
and the Depository exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Restricted Book-Entry Certificate of the
same Class. Upon receipt by the Transfer Agent and Registrar, of
(A) instructions from Euroclear, Clearstream or the Depository, as the case may
be, directing the Trustee, as Transfer Agent and Registrar, to cause such
Restricted Book-Entry Certificate to be increased by an amount equal to such
beneficial interest in such Regulation S Book-Entry Certificate but not less
than the minimum denomination applicable to the related Class of Series 2007-1
Certificates, and (B) a certificate substantially in the form of Exhibit G-1
hereto given by the prospective transferee of such beneficial interest and
stating, among other things, that such transferee acquiring such interest in a
Restricted Book-Entry Certificate is a QIB, is obtaining such beneficial
interest in a transaction pursuant to Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction, then Euroclear, Clearstream or the Trustee, as Transfer
Agent and Registrar, as the case may be, will instruct the Depository to reduce
such Regulation S Book-Entry Certificate by the aggregate principal amount of
the interest in such Regulation S Book-Entry Certificate to be transferred,
increase the Restricted Book-Entry Certificate specified in such instructions by
an amount equal to such reduction in such principal amount of the Regulation S
Book-Entry Certificate and make the corresponding adjustments to the applicable
participants’ accounts.

(iii) Restricted Book-Entry Certificate to Regulation S Book-Entry Certificate.
If a holder of a beneficial interest in a Restricted Book-Entry Certificate
wishes to transfer all or a part of its interest in such Restricted Book-Entry
Certificate to a Person who wishes to take delivery thereof in the form of a
Regulation S Book-Entry Certificate, such holder may, subject to the terms
hereof and the rules and procedures of Euroclear or Clearstream, as the case may
be, and the Depository exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Regulation S Book-Entry Certificate of the
same Class. Upon receipt by the Trustee, as Transfer Agent and Registrar, of
(A) instructions from Euroclear, Clearstream or the Depository, as the case may
be, directing the Trustee, as Transfer Agent and Registrar, to cause such
Regulation S Book-Entry Certificate to be increased by an amount equal to the
beneficial

 

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interest in such Restricted Book-Entry Certificate but not less than the minimum
denomination applicable to the related Class of Series 2007-1 Certificates to be
exchanged, and (B) a certificate substantially in the form of Exhibit G-2 hereto
given by the prospective transferee of such beneficial interest and stating,
among other things, that such transferee acquiring such interest in a
Regulation S Book-Entry Certificate is a non-U.S. Person located outside the
United States and such transfer is being made pursuant to Rule 903 or 904 under
Regulation S of the Securities Act, then Euroclear, Clearstream or the Trustee,
as Transfer Agent and Registrar, as the case may be, will instruct the
Depository to reduce such Restricted Book-Entry Certificate by the aggregate
principal amount of the interest in such Restricted Book-Entry Certificate to be
transferred, increase the Regulation S Book-Entry Certificate specified in such
instructions by an aggregate principal amount equal to such reduction in the
principal amount of the Restricted Book-Entry Certificate and make the
corresponding adjustments to the applicable participants’ accounts.

(iv) Other Exchanges. In the event that a Class A Certificate, a Class M
Certificate or a Class B Certificate initially represented by a Book-Entry
Certificate is exchanged for one or more Definitive Certificates pursuant to
Section 6.12 of the Agreement, the related Class A Certificateholder, Class M
Certificateholder or Class B Certificateholder, as the case may be, shall be
required to deliver a representation letter with respect to the matters
described in subsections 16(c) and (d) of this Supplement. Such Definitive
Certificates may be exchanged for one another only upon delivery of a
representation letter with respect to the matters described in subsections 16(c)
and (d) of this Supplement and in accordance with such procedures as are
substantially consistent with the provisions above (including certification
requirements intended to insure that such transfers comply with Rule 144A or are
to non-U.S. Persons, or otherwise comply with Regulation S under the Securities
Act, as the case may be) and as may be from time to time adopted by the Trust
and the Trustee.

(c) Each beneficial owner of Restricted Book-Entry Certificates or Regulation S
Book-Entry Certificates will be deemed to represent and agree as follows (terms
used in this paragraph that are defined in Rule 144A or Regulation S under the
Securities Act are used herein as defined therein):

(i) The owner either (A)(1) is a QIB, (2) is aware that the sale of the Class A
Certificates, Class M Certificates or Class B Certificates, as applicable, to it
(other than the initial sale by the Trust) is being made in reliance on the
exemption from registration provided by Rule 144A under the Securities Act and
(3) is acquiring the Class A Certificates, Class M Certificates or Class B
Certificates, as applicable, for its own account or for one or more accounts,
each of which is a QIB, and as to each of which the owner exercises sole
investment discretion, and in a principal amount of not less than $100,000 for
the purchaser or for each such account, as the case may be, or (B) (1) is not a
U.S. Person (as defined under Regulation S of the Securities Act) and (2) is
purchasing the Class A Certificates, Class M Certificates or Class B
Certificates, as applicable, pursuant to Rule 903 or 904 of Regulation S of the
Securities Act. The owner has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the Class A Certificates, Class M

 

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Certificates or Class B Certificates, as applicable, and the owner and any
accounts for which it is acting are each able to bear the economic risk of the
owner’s or its investment. The owner understands that in the event that at any
time the Trust or the Trustee determines that such purchaser was in breach, at
the time given, of any of the representations or agreements set forth in this
clause (i), upon direction from the Trust the Trustee shall consider the
acquisition of the related Class A Certificates, Class M Certificates or Class B
Certificates, as applicable, void and require that the related Class A
Certificates, Class M Certificates or Class B Certificates, as applicable, be
transferred to a Person designated by the Trust.

(ii) The owner understands that the Class A Certificates, Class M Certificates
or Class B Certificates, as applicable, are being offered only in a transaction
not involving any public offering in the United States within the meaning of the
Securities Act, the Class A Certificates, Class M Certificates or Class B
Certificates, as applicable, have not been and will not be registered under the
Securities Act, and, if in the future the owner decides to offer, resell, pledge
or otherwise transfer the Class A Certificates, Class M Certificates or Class B
Certificates, as applicable, such Class A Certificates, Class M Certificates or
Class B Certificates, as applicable, may be offered, resold, pledged or
otherwise transferred in accordance with the Agreement and this Supplement and
the applicable legend on such Series 2007-1 Certificates set forth in Exhibit A,
M or B hereto, as applicable. The owner acknowledges that no representation is
made by the Trust, the Trustee, the Seller or the Initial Purchaser, as the case
may be, as to the availability of any exemption under the Securities Act or any
State securities laws for resale of the Series 2007-1 Certificates.

(iii) The owner is not purchasing the Class A Certificates, Class M Certificates
or Class B Certificates, as applicable, with a view to the resale, distribution
or other disposition thereof in violation of the Securities Act. The owner
understands that an investment in the Series 2007-1 Certificates involves
certain risks, including the risk of loss of all or a substantial part of its
investment under certain circumstances. The owner has had access to such
financial and other information concerning the Originator, the Seller, the
Servicer, the Trust and the Series 2007-1 Certificates as it deemed necessary or
appropriate in order to make an informed investment decision with respect to its
purchase of the Class A Certificates, Class M Certificates or Class B
Certificates, as applicable, including an opportunity to ask questions of and
request information from the Originator, the Seller and the Servicer.

(iv) In connection with the purchase of the Series 2007-1 Certificates: (A) none
of the Trust, the Initial Purchaser or the Trustee is acting as a fiduciary or
financial or investment adviser for the owner; (B) the owner is not relying (for
purposes of making any investment decision or otherwise) upon any advice,
counsel or representations (whether written or oral) of the Originator, the
Seller, the Servicer, the Trust, the Initial Purchaser or the Trustee or any of
their Affiliates other than, in the case of the Trust, in a current offering
memorandum for such Series 2007-1 Certificates and any representations expressly
set forth in a written agreement with such party; (C) none of the Originator,
the Seller, the Trust, the Initial Purchaser or the Trustee or any of their
Affiliates has given to the owner (directly or indirectly through any other
Person) any

 

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assurance, guarantee, or representation whatsoever as to the expected or
projected success, profitability, return, performance, result, effect,
consequence, or benefit (including legal, regulatory, tax, financial,
accounting, or otherwise) of its purchase, (D) the owner has consulted with its
own legal, regulatory, tax, business, investment, financial, and accounting
advisers to the extent it has deemed necessary, and it has made its own
investment decisions (including decisions regarding the suitability of any
transaction pursuant to the Agreement or this Supplement) based upon its own
judgment and upon any advice from such advisers as it has deemed necessary and
not upon any view expressed by the Originator, the Seller, the Trust, the
Initial Purchaser or the Trustee or any of their Affiliates; and (E) the owner
is purchasing the Class A Certificates, Class M Certificates or Class B
Certificates, as applicable, with a full understanding of all of the terms,
conditions and risks thereof (economic and otherwise), and is capable of
assuming and willing to assume (financially and otherwise) these risks.

(v) Neither the owner nor such account was formed for the purpose of acquiring
any Series 2007-1 Certificates (unless the Trust, in its sole discretion and
with the advice of counsel in respect of U.S. securities laws, expressly
otherwise permits). The owner and each such account agrees that it shall not
hold such Series 2007-1 Certificates for the benefit of any other
Person and shall be the sole beneficial owner thereof for all purposes and that
it shall not sell participation interests in the Series 2007-1 Certificates or
enter into any other arrangement pursuant to which any other Person shall be
entitled to a beneficial interest in the distributions on the Series 2007-1
Certificates. The owner understands and agrees that any purported transfer of
the Series 2007-1 Certificates to an owner that does not comply with the
requirements of this clause (v) shall be null and void ab initio. The owner
understands that in the event that at any time the Trustee has determined, or
the Trust notifies the Trustee that the Trust has determined, that such
purchaser was in breach, at the time given, of any of the representations or
agreements set forth in clause (i) above, then the Trustee shall consider the
acquisition of the related Series 2007-1 Certificates void and require that the
related Series 2007-1 Certificates be transferred to a Person designated by the
Trust.

(vi) The owner understands that the Class A Certificates, Class M Certificates
and Class B Certificates will bear the applicable legend set forth in Exhibit A,
M or B hereto.

(vii) Either (A) the owner is not acquiring such Series 2007-1 Certificate (or
any interest therein) with the assets of an “employee benefit plan” as defined
in Section 3(3) of ERISA that is subject to Title I of ERISA, a “plan” as
defined in and subject to Section 4975 of the Code, or an entity deemed to hold
plan assets of any of the foregoing (each, a “Benefit Plan Investor”) or (B) it
is an insurance company purchasing such Series 2007-1 Certificate (or interest
therein) with the assets of its general account and, at the time of acquisition
and throughout the period of holding, (x) it satisfies all of the conditions of
Prohibited Transaction Class Exemption 95-60; (y) less than 25% of the assets of
the general account are or represent assets of Benefit Plan Investors; and
(z) it is not (1) the issuer, (2) a person who has discretionary authority or
control with respect to the assets of the trust or provides investment advice
for a fee (direct or indirect) with respect to such assets, or (3) any affiliate
of such a person, and would not otherwise be disregarded under 29 C.F.R.
Section 2510.3-101(f)(1).

 

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If the owner is a non-U.S. or governmental plan, its acquisition, holding and
disposition of such Series 2007-1 Certificate (or interest therein) will not
result in a non-exempt prohibited transaction under, or a violation of, any
applicable law that is substantially similar to the fiduciary responsibility or
prohibited transaction provisions of ERISA or Section 4975 of the Code.

(viii) If such owner is acquiring the Class A Certificates, the Class M
Certificates or the Class B Certificates in an “offshore transaction” (as
defined in Regulation S), it acknowledges that such Series 2007-1 Certificates
will initially be represented by the Regulation S Temporary Book-Entry
Certificates and that transfers thereof or any interest or participation therein
are restricted as described herein. It understands that the Temporary Regulation
S Book-Entry Certificate will bear a legend to the following effect unless the
Seller determines otherwise, consistent with applicable law:

“THIS GLOBAL CERTIFICATE IS A TEMPORARY GLOBAL CERTIFICATE FOR PURPOSES OF
REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”). NEITHER THIS TEMPORARY GLOBAL CERTIFICATE NOR ANY
INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE
SERIES 2007-1 SUPPLEMENT. NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL
CERTIFICATE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON
UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF
THE SERIES 2007-1 SUPPLEMENT.”

(ix) If such owner is acquiring the Class A Certificates, the Class M
Certificates or the Class B Certificates in an “offshore transaction” (as
defined in Regulation S), the owner is aware that the sale of such Series 2007-1
Certificates to it is being made in reliance on the exemption from registration
provided by Regulation S and understands that the Series 2007-1 Certificates
offered in reliance on Regulation S under the Securities Act will be represented
by one or more Regulation S Book-Entry Certificates and will bear the
appropriate legends set forth in Exhibits A, B and C as applicable. The Series
2007-1 Certificates so represented may not at any time be held by or on behalf
of U.S. Persons as defined in Regulation S. Each of the owner and the related
Holder is not, and will not be, a U.S. Person as defined in Regulation S. Before
any interest in a Regulation S Book-Entry Certificate may be offered, resold,
pledged or otherwise transferred to a Person who takes delivery in the form of a
Restricted Book-Entry Certificate, the transferor and the prospective transferee
will be required to provide the Trustee with a written certification
substantially in the form of Exhibit G-1 hereto as to compliance with the
transfer restrictions.

 

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(d) The transfers of the Class C Certificates and the Class D Certificates are
subject to additional restrictions set forth in the Class C Purchase Agreement
and the applicable Class D Purchase Agreement, respectively. Each of the Class C
Certificates and the Class D Certificates are Subject Instruments subject to the
transfer restrictions set forth in Section 6.3(e) of the Agreement.
Notwithstanding Section 6.3 of the Agreement, Seller shall not execute, and the
Transfer Agent and Registrar shall not register the transfer of, (i) any Class C
Certificate, if after giving effect to the execution or transfer of such Class C
Certificate, there would be more than 10 Private Holders of Class C Certificates
or (ii) any Class D Certificate, if after giving effect to the execution or
transfer of such Class D Certificate, there would be more than 5 Private Holders
of Class D Certificates. For purposes of this Supplement and the Agreement, each
Holder of a Class C Certificate or a Class D Certificate shall be a “Private
Holder.”

(e) If any Person owns either the Class D-1 Certificates or the Class D-2
Certificates, such Person may, upon written request to the Trustee and Transfer
Agent and Registrar, exchange all or any portion of the Class D Certificates in
one subclass owned by it for a principal amount of Class D Certificates in the
other subclass equal to the principal amount of Class D Certificates surrendered
to the Transfer Agent and Registrar for exchange. Upon any such exchange, the
portion of the Class D Investor Interest attributable to one subclass shall be
proportionately reduced based on the proportion that the outstanding principal
amount of the Class D Certificates so exchanged bears to the outstanding
principal amount of the Class D Certificates of such subclass before giving
effect to the exchange, and the portion of the Class D Investor Interest
attributable to the other subclass shall be increased by a corresponding amount.

The Trustee shall authenticate and deliver to each Person requesting such an
exchange such new Class D-1 Certificates and Class D-2 Certificates as such
Person shall be entitled to receive pursuant to this Section 16(e).

(f) Any purported transfer of a Series 2007-1 Certificate of the Trust not in
accordance with the Agreement and Section 16 of this Supplement and, in the case
of the Class C Certificates and Class D Certificates, in accordance with the
Class C Purchase Agreement and the applicable Class D Purchase Agreement,
respectively shall be null and void and shall not be given effect for any
purpose hereunder.

(g) Notwithstanding anything contained in this Supplement to the contrary,
neither the Trustee nor the Transfer Agent and Registrar shall be responsible or
liable for compliance with applicable federal or state securities laws
(including, without limitation, the Securities Act or Rule 144A or Regulation S
promulgated thereunder), ERISA or the Code (or any applicable regulations
thereunder); provided that if a specified transfer certificate or opinion of
counsel is required by the express terms of the Agreement and Section 16 of this
Supplement or, in the case of the Class C Certificates and Class D Certificates,
the terms of the Class C Purchase Agreement and applicable Class D Purchase
Agreement, respectively, to be delivered to the Trustee or Transfer Agent and
Registrar prior to registration of transfer of a Series 2007-1 Certificate, the
Trustee and/or Transfer Agent and Registrar, as applicable, shall be under a
duty to receive such certificate or opinion of counsel and to examine the same
to determine whether it conforms on its face to the requirements hereof and, in
the case of the Class C Certificates and Class D Certificates, the requirements
of the Class C Purchase Agreement and Class D Purchase Agreements, respectively,
and the Trustee or Transfer Agent and Registrar, as the case may be, shall
promptly notify the party delivering the same if it determines that such
certificate or opinion does not so conform.

 

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(h) If the Trustee determines or is notified by the Trust, the Seller or the
Servicer that (i) a transfer or attempted or purported transfer of any interest
in any Series 2007-1 Certificate was not consummated in compliance with the
provisions of Section 16 of this Supplement on the basis of an incorrect form or
certification from the transferee or purported transferee, (ii) a transferee
failed to deliver to the Trustee any form or certificate required to be
delivered hereunder, (iii) the holder of any interest in a Series 2007-1
Certificate is in breach of any representation or agreement set forth in any
certificate or any deemed representation or agreement of such holder or
(iv) such transfer would have the effect of causing the assets of the Trust to
be deemed to be “plan assets” for purposes of ERISA, the Trustee will not
register such attempted or purported transfer and if a transfer has been
registered, such transfer shall be absolutely null and void ab initio and shall
vest no rights in the purported transferee (such purported transferee, a
“Disqualified Transferee”) and the last preceding holder of such interest in
such Series 2007-1 Certificate that was not a Disqualified Transferee shall be
restored to all rights as a holder thereof retroactively to the date of transfer
of such Series 2007-1 Certificate by such holder. The purported transferor of
such Series 2007-1 Certificates or beneficial interest therein shall be required
to cause the purported transferee to surrender the Series 2007-1 Certificates or
any beneficial interest therein in return for a refund of the consideration paid
therefor by such transferee (together with interest thereon) or to cause the
purported transferee to dispose of such Series 2007-1 Certificates or beneficial
interest promptly in one or more open market sales to one or more Persons each
of whom satisfies the requirements of the Agreement and this Supplement and the
legends on the Series 2007-1 Certificates, and such purported transferor shall
take, and shall cause such transferee to take, all further action necessary or
desirable, in the judgment of the Trustee, to ensure that such Series 2007-1
Certificates or any beneficial interest therein are held by Persons in
compliance therewith.

In addition, the Trust may require that the interest in the Series 2007-1
Certificate referred to in (i), (ii) or (iii) in the preceding paragraph be
transferred to any Person designated by the Trust at a price determined by the
Trust, based upon its estimation of the prevailing price of such interest and
each Holder, by acceptance of an interest in a Series 2007-1 Certificate,
authorizes the Trust to take such action. In any case, neither the Trust nor the
Trustee will be held responsible, other than the Trustee, to the extent of its
obligations under Section 16(g) (but subject to Article XI), for any losses that
may be incurred as a result of any required transfer under this Section 16(h).

(i) To the extent applicable to the Trust, the Trust shall comply with the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56 (2001) (the
“Patriot Act”). To the extent applicable to the Trust, the Trust shall impose
additional transfer restrictions to comply with the Patriot Act and each Holder
agrees to comply with such transfer restrictions. The Trust shall notify the
Trustee and the Transfer Agent and Registrar of the imposition of any such
transfer restrictions, and the Trustee shall give notice to all Holders of such
transfer restrictions. In order to comply with U.S. laws and regulations,
including the Patriot Act, the Trust may request from an owner or a prospective
owner such information as it reasonably believes is necessary to verify the
identity of such owner or prospective owner, and to determine whether such owner
or

 

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prospective owner is permitted to be an owner of the Series 2007-1 Certificates
pursuant to such laws and regulations. In the event of the delay or failure by
any owner or prospective owner of the Series 2007-1 Certificates to deliver to
the Trust any such requested information, the Trust (or the Initial Purchaser,
the Servicer or the Trustee on its behalf) may (i) require such owner to
immediately transfer any Series 2007-1 Certificate, or beneficial interest
therein, held by such owner to an owner meeting the requirements of this
Supplement and the Agreement, (ii) refuse to accept the subscription of a
prospective owner, or (iii) take any other action required to comply with such
laws and regulations. In addition, following the delivery of any such
information, the Trust (or the Initial Purchaser, the Servicer or the Trustee on
its behalf) may take any of the actions identified in clauses (i)-(iii) above.
In certain circumstances, the Trust, the Trustee, the Servicer or the Initial
Purchaser may be required to provide information about owners to regulatory
authorities and to take any further action as may be required by law. None of
the Trust, the Trustee, the Servicer or the Initial Purchaser will be liable for
any loss or injury to an owner or prospective owner that may occur as a result
of disclosing such information, refusing to accept the subscription of any
potential owner, redeeming any investment in a certificate or taking any other
action required by law.

SECTION 17. Certain Amendments. In addition to any other provisions relating to
amendments in either the Agreement or this Supplement:

(i) This Supplement may be amended by written agreement of the Seller, subject
to satisfaction of the Rating Agency Condition but without the consent of the
Servicer, Trustee or any Series 2007-1 Certificateholder, if such amendment is
to the Series 2007-1 Supplement and is made to conform the terms of this
Supplement to the terms described in any offering memorandum relating to the
initial offer and sale of the Class A Certificates, Class M Certificates and
Class B Certificates; provided, however, that no such amendment shall be deemed
effective without the Trustee’s consent, if the Trustee’s rights, duties and
obligations hereunder are thereby modified; and

(ii) None of Sections 4.9(a), 4.9(b), 4.9(c) and 4.11(t) of this Supplement may
be amended in a manner that adversely affects the payment priority of the Hedge
Counterparty, relative to the payment priority of the Certificateholders
described in such Section, without the prior written consent of the Hedge
Counterparty.

The Servicer shall provide notice to the Rating Agencies of the waiver of any
Early Amortization Event with respect to Series 2007-1.

SECTION 18. Commercial Law Representations and Warranties of the Seller. The
Seller hereby makes the following representations and warranties. Such
representations and warranties shall survive until the termination of the Series
2007-1 Supplement. Such representations and warranties speak as of the date that
the Collateral (as defined below) is transferred to the Trustee but shall not be
waived by any of the parties to this Supplement unless each Rating Agency shall
have notified the Seller, the Servicer and the Trustee in writing that such
waiver will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class to which it is a Rating Agency.

 

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(a) The Agreement creates a valid and continuing security interest (as defined
in the applicable UCC) in favor of the Trustee in the Receivables described in
Section 2.1 of the Agreement (the “Collateral”), which security interest is
prior to all other liens, and is enforceable as such against creditors of and
purchasers from the Seller.

(b) The Collateral constitutes an “account” or a “general intangible” within the
meaning of the applicable UCC.

(c) At the time of its transfer of the Collateral pursuant to the Agreement, the
Seller owned and had good and marketable title to the Collateral free and clear
of any lien, claim or encumbrance of any Person.

(d) The Seller has caused or will have caused, within ten (10) days of the
initial execution of this Supplement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the Collateral
granted to the Trustee pursuant to the Agreement.

(e) Other than the security interest granted to the Trustee pursuant to the
Agreement, the Seller has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed the Collateral. The Seller has not authorized
the filing of and is not aware of any financing statements against the Seller
that include a description of the Collateral other than any financing statement
relating to the security interest granted to the Trustee pursuant to the
Agreement or that has been terminated. The Seller is not aware of any judgment
or tax lien filings against the Seller.

SECTION 19. Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 20. Third Party Beneficiary. The Hedge Counterparty is an intended
beneficiary of this Supplement; provided that any action to be taken to enforce
the terms of Supplement against the Seller or the Servicer shall be taken by the
Trustee for the benefit of the holders of the Series 2007-1 Certificates and the
Hedge Counterparty as their interests appear.

 

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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have caused this
Series 2007-1 Supplement to be duly executed by their respective officers as of
the day and year first above written.

 

CHARMING SHOPPES RECEIVABLES CORP.,     Seller By:  

/s/ Kirk R. Simme

Name:   Kirk R. Simme Title:   Vice President

SPIRIT OF AMERICA, INC.

    Servicer

By:  

/s/ Kirk R. Simme

Name:   Kirk R. Simme Title:   Vice President

U.S. BANK NATIONAL ASSOCIATION,

    Trustee

By:  

/s/ Tamara Schultz-Fugh

Name:   Tamara Schultz-Fugh Title:   Vice President

 

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