Receivables Purchase Agreement


    EXHIBIT
      10.1.31

    

      AMENDED
        AND RESTATED

       

      RECEIVABLES
        PURCHASE AGREEMENT

       

      


       

      Dated
        as of June 2, 2005

       

      


       

      Among

       

      


       

      CATALOG
        RECEIVABLES LLC

       

      


       

      as
        Seller

       

      


       

      and

       

      


       

      SPIRIT
        OF AMERICA, INC.

       

      


       

      as
        Servicer

       

      


       

      and

       

      


       

      SHEFFIELD
        RECEIVABLES CORPORATION

       

      


       

      as
        Purchaser

       

      


       

      and

       

      


       

      BARCLAYS
        BANK PLC

       

      


       

      as
        Administrator

       

      


      


      


      


      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

      




      AMENDED
        AND RESTATED

       

      RECEIVABLES
        PURCHASE AGREEMENT

       

      


       

      Dated
        as of June 2, 2005

       

      THIS
        IS
        AN AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “Agreement”),
        among
        CATALOG RECEIVABLES LLC, a Delaware limited liability company (“Seller”),
        SPIRIT OF AMERICA, INC., (“Spirit”)
        a
        Delaware corporation, as servicer (in such capacity, “Servicer”),
        SHEFFIELD RECEIVABLES CORPORATION, a Delaware corporation (“Purchaser”),
        BARCLAYS BANK PLC, a public limited company organized under the laws of England
        and Wales (“Barclays”),
        as
        administrator for Purchaser (in such capacity, the “Administrator”).
        Unless otherwise indicated, capitalized terms used in this Agreement are
        defined
        in Appendix A.

       

      Background

       

      1. Seller
        is
        engaged in the business of purchasing receivables arising in revolving credit
        card accounts originated by Crosstown Traders, Inc., a Delaware corporation,
        and
        its subsidiaries.

       

      2. Seller
        has, and expects to have, Pool Receivables in which Seller intends to sell
        an
        undivided interest. Seller has requested Purchaser, and Purchaser has agreed,
        subject to the terms and conditions contained in this Agreement, to purchase
        such undivided interest, referred to herein as the Asset Interest, from Seller
        from time to time during the term of this Agreement (the “Transaction”).

       

      3. Seller
        and Purchaser desire that, subject to the terms and conditions of this
        Agreement, certain of the daily Collections in respect of the Asset Interest
        be
        reinvested in Pool Receivables, which reinvestment shall constitute part
        of the
        Asset Interest.

       

      4. Spirit
        has been requested, and is willing, to act as the Servicer of the Pool
        Receivables in accordance with the terms hereof.

       

      5. Barclays
        has been requested, and is willing, to act as the Administrator.

       

      6. To
        effect
        the Transaction, Seller, Servicer, Purchaser and Administrator initially
        entered
        into the Receivables Purchase Agreement, dated as of May 18, 2005 (the
“Prior
        RPA”).

       

      7. This
        Agreement amends and restates the Prior RPA in its entirety to recognize
        the
        addition of each of the Sub-Originators as a Transferring Party.

       

      NOW,
        THEREFORE, in consideration of the premises and the mutual agreements herein
        contained, the parties hereto, intending to be legally bound hereby, agree
        as
        follows:

       

      


       

      ARTICLE
        I  

       

      PURCHASES
        AND REINVESTMENTS

       

      SECTION
        1.01  Commitments
        to Purchase; Limits on Purchaser’s Obligations.
        Upon
        the terms and subject to the conditions of this Agreement, from time to time
        prior to the Termination Date, Seller may request that Purchaser purchase
        from
        Seller ownership interests in the Pool Assets (each being a “Purchase”)
        and
        Purchaser shall make such Purchase; provided
        that no
        Purchase shall be made by Purchaser to the extent that, after giving effect
        thereto, the then Senior Investor Balance would exceed the lesser of (a)
        the
        Facility Limit and (b) the Benchmark Amount; and provided
        further
        that
        each Purchase made pursuant to this Section
        1.01
        shall
        have a Purchase Price of at least $500,000 and shall be in integral multiples
        of
        $250,000.

       

      SECTION
        1.02  Purchase
        Procedures; Assignment of Purchaser’s Interests.

       

      (a)  Notice
        of Purchase.
        Each
        Purchase from Seller by Purchaser shall be made on notice from Seller to
        the Administrator received by the Administrator not later than 11:00 a.m.
        (New York City time) on the second Business Day before the date of such proposed
        Purchase. Each such notice of a proposed Purchase shall specify the desired
        amount and date of such Purchase. The “Purchase
        Price”
for
        each Purchase shall be the lesser of (i) the amount requested by Seller pursuant
        to this Section
        1.02(a)
        and (ii)
        the amount permitted pursuant to Section
        1.01.

       

      (b)  Funding
        of Purchase.
        On the
        date of each Purchase, Purchaser shall, upon satisfaction of the applicable
        conditions set forth in Article
        V,
        make
        available to the Administrator at the Administrator’s Office (or to such account
        as designated by the Administrator) the amount of its Purchase in same day
        funds, and after receipt by the Administrator of such funds, the Administrator
        will (a) apply such funds to make a deposit to the Cash Collateral Account
        to
        the extent necessary to cause the amount on deposit therein to equal or exceed
        the Required Cash Collateral Amount, and (b) make the remaining portion of
        such
        funds immediately available to Seller at such office or to such account as
        Seller shall designate in writing to the Administrator on or prior to the
        date
        hereof (or such other office or account as Seller shall designate from time
        to
        time).

       

      (c)  Assignment
        of Asset Interest.
        Seller
        hereby sells, assigns and transfers to Purchaser, effective on and as of
        the
        date of each Purchase by the Purchaser hereunder, the corresponding undivided
        ownership interest in the Pool Assets.

       

      SECTION
        1.03  Reinvestments
        of Certain Collections; Payment of Remaining
        Collections.
        (a)
        On the
        close of business on each Business Day during the period from the date hereof
        to
        the Final Payout Date, Servicer shall, out of all Collections received on
        such
        day:

       

      (i)  determine
        the portion of such Collections attributable on such day to the Asset Interest
        by multiplying (x) the amount of such Collections times
        (y) the
        Asset Interest at such time;

       

      (ii)  out
        of
        the portion of such Collections allocated to the Asset Interest pursuant
        to
clause
        (i),
        set
        aside and deposit into the Collection Account within two Business Days an
        amount
        at least equal to the sum of the estimated amount of Earned Discount
        accrued in respect of the Senior Investor Balance (based on rate information
        provided by the Administrator pursuant to Section
        2.03),
        all
        other amounts due to Purchaser or the Administrator hereunder and the Servicer’s
        Fee (in each case, accrued through such day) and an amount equal to any Cash
        Collateral Shortfall and any Reserve Account Shortfall not so previously
        set
        aside;

       

      (iii)  apply
        the
        Collections allocated to the Asset Interest pursuant to clause
        (i)
        and not
        required to be set aside pursuant to clause
        (ii)
        to the
        purchase from Seller of ownership interests in Pool Assets (each such purchase
        being a “Reinvestment”);
        provided
        that (A)
        if the then Senior Investor Balance would exceed the Benchmark Amount, then
        the
        Servicer shall not reinvest, but shall set aside and deposit into the Collection
        Account within two Business Days, a portion of such Collections which, together
        with other Collections previously set aside and then so held in the Collection
        Account, shall equal the amount necessary to reduce the Senior Investor Balance
        to the Benchmark Amount; (B) if the conditions precedent to Reinvestment
        in
Section
        5.02
        are not
        satisfied then Servicer shall not reinvest, but shall set aside and hold
        for the
        benefit of Purchaser, any of such remaining Collections, which Collections
        shall
        be deposited into the Collection Account within two Business Days; and (C)
        if
        the Seller shall have requested a reduction in the Senior Investor Balance,
        then, during the times specified in Section
        3.02(b)(ii),
        Servicer shall not reinvest, but shall set aside and hold for the benefit
        of
        Purchaser, a portion of such Collections until the amount thereof not so
        reinvested shall equal the amount of such reduction; and

       

      (iv)  pay
        to
        Seller (A) the portion of such Collections not allocated to the Asset Interest
        pursuant to clause
        (i)
        and (B)
        the Collections applied to Reinvestment pursuant to clause
        (iii).

       

      (b)  Unreinvested
        Collections.
        Servicer shall set aside in the Collection Account and hold in trust for
        the
        benefit of Purchaser all Collections which pursuant to clause
        (iii)
        of
Section
        1.03(a),
        may not
        be reinvested in Pool Assets. If, prior to the date when such Collections
        are
        required to be paid to the Administrator for the benefit of Purchaser pursuant
        to Section
        3.01,
        the
        amount of Collections so set aside exceeds the amount, if any, necessary
        to
        reduce the Senior Investor Balance to the Discounted Principal Receivables
        Balance, and the conditions precedent to Reinvestment set forth in Section
        5.02
        are
        satisfied, then the Servicer shall apply such Collections (or, if less, a
        portion of such Collections equal to the amount of such excess) to the making
        of
        a Reinvestment.

       

      SECTION
        1.04  Asset
        Interest.
        (a) Components
        of Asset Interest.
        On any
        date the Asset Interest will represent Purchaser’s combined undivided percentage
        ownership interest in (i) all then outstanding Pool Receivables, (ii) related
        Contracts, (iii) all Related Security with respect to such Pool Receivables,
        (iv) all Collections with respect thereto, (v) all rights of Seller (directly
        or
        as assignee of Transferor) under the First Tier Agreement and the Second
        Tier
        Agreement, (vi) all books and records evidencing or related to the foregoing,
        and (vii) all proceeds of the foregoing (collectively, the “Pool
        Assets”);
        provided,
        that,
        the
        Pool Assets shall not include any interests in any returned, repossessed
        or
        foreclosed goods and/or merchandise the sale of which gave rise to a
        Receivable.

       

      (b)  Computation
        of Asset Interest.
        On any
        date, the Asset Interest shall be equal to a fraction (expressed as a
        percentage), the numerator of which is the Senior Investor Balance and the
        denominator of which is the Benchmark Amount, each as of such day; provided,
        however,
        that
        during the Liquidation Period, the Asset Interest shall be the Asset Interest
        computed as of the day immediately preceding the commencement of the Liquidation
        Period; provided,
        further,
        that
        the Asset Interest shall not exceed 100%.

       

      (c)  Frequency
        of Computation.
        The
        Asset Interest shall be computed as of the close of business on each Business
        Day (after giving effect to Section
        1.03)
        and
        shall be reported as of the end of the Due Period in the Information Package
        delivered on each Report Date.

       

      SECTION
        1.05  Reduction
        of Facility Limit; Termination.
        Upon
        three Business Days’ prior written notice to the Administrator, the Seller may
        reduce the Facility Limit, or terminate this Agreement, provided
        that,
        after giving effect thereto, the Facility Limit is not less than the Senior
        Investor Balance. Any such reduction or termination shall be
        permanent.

       

      ARTICLE
        II  

       

      COMPUTATIONAL
        RULES

       

      SECTION
        2.01  Computation
        of Senior Investor Balance.
        In
        making any determination of the Senior Investor Balance, the following rules
        shall apply:

       

      (a)  Senior
        Investor Balance shall not be considered reduced by any allocation, setting
        aside or distribution of any portion of Collections unless such Collections
        shall have been actually delivered to the Administrator pursuant hereto;
        and

       

      (b)  Senior
        Investor Balance shall not be considered reduced by any distribution of any
        portion of Collections if at any time such distribution is rescinded or
        otherwise returned for any reason.

       

      SECTION
        2.02  Computation
        of Earned Discount.
        In
        making any determination of Earned Discount, the following rules shall
        apply:

       

      (a)  the
        Administrator shall determine the Earned Discount accruing with respect to
        the
        Senior Investor Balance, in accordance with the definition of Earned
        Discount;

       

      (b)  no
        provision of this Agreement shall require the payment or permit the collection
        of Earned Discount in excess of the maximum permitted by applicable law;
        and

       

      (c)  Earned
        Discount shall not be considered paid by any distribution if at any time
        such
        distribution is rescinded or otherwise returned for any reason.

       

      SECTION
        2.03  Estimates
        of Earned Discount Rate, Fees, etc.
        For
        purposes of determining the amounts required to be set aside by Servicer
        pursuant to Section
        1.03,
        the
        Administrator shall notify Servicer from time to time of the Earned Discount
        Rate applicable to the Senior Investor Balance and the rates at which fees
        and
        other amounts are accruing hereunder. It is understood and agreed that (i)
        the
        Earned Discount Rate may change from time to
        time,
        (ii) certain rate information provided by the Administrator to Servicer shall
        be
        based upon the Administrator’s good faith estimate, (iii) the amount of Earned
        Discount actually accrued with respect to any Settlement Period may exceed,
        or
        be less than, the amount set aside with respect thereto by Servicer, and
        (iv)
        the amount of fees or other payables accrued hereunder with respect to any
        Settlement Period may exceed, or be less than, the amount set aside with
        respect
        thereto by Servicer. Failure to set aside any amount so accrued shall not
        relieve Servicer of its obligation to remit Collections to the Administrator
        with respect to such accrued amount, as and to the extent provided in
Section
        3.01.

       

      ARTICLE
        III  

       

      SETTLEMENTS

       

      SECTION
        3.01  Settlement
        Procedures.

       

      The
        parties hereto will take the following actions with respect to each Settlement
        Period:

       

      (a)  Information
        Package.
        On or
        before the Report Date preceding each Settlement Date, Servicer shall deliver
        to
        the Administrator an electronic mail containing such information as shall
        be
        agreed in writing by Servicer and the Administrator prior to the Initial
        Funding
        Date (each, an “Information
        Package”).

       

      (b)  Earned
        Discount; Other Amounts Due.
        (i)
        On the
        tenth day before each Settlement Date, the Administrator shall notify Servicer
        of (x) the amount of Earned Discount that will have accrued in respect of
        the
        Senior Investor Balance during such Settlement Period (the amount of such
        Earned
        Discount shall be calculated using an estimate of the CP Rate, if necessary,
        for
        the remaining days in such Settlement Period; provided that each such estimated
        amount shall be adjusted as provided in the following paragraph (ii)), and
        (y)
        all fees and other amounts accrued and payable by Seller under this Agreement
        (other than the Senior Investor Balance).

       

      (ii)  If
        the
        Administrator shall have notified Servicer of the estimated amount of Earned
        Discount as provided in clause
        (i)
        above
        with respect to a Settlement Period and, on or prior to the applicable
        Settlement Date, the Administrator shall have determined that such estimate
        is
        inaccurate, the Administrator shall notify Servicer as soon as reasonably
        practicable and the Earned Discount for the subsequent Settlement Period
        shall
        be adjusted as follows. If the actual Earned Discount exceeds the estimated
        amount thereof, such excess shall be added to the Earned Discount for the
        subsequent Settlement Period (and in any event paid to the Administrator
        by
        Seller on or prior to the Final Payout Date). If the actual Earned Discount
        is
        less than the estimated amount thereof, the difference shall be subtracted
        from
        the Earned Discount for the subsequent Settlement Period (and in any event
        credited to amounts owed by Seller to the Administrator by Seller on the
        Final
        Payout Date). Notwithstanding the foregoing, any reconciliation in respect
        of
        the final Settlement Period as a consequence of any estimate described above
        shall be effected on the final Settlement Date. 

       

           
        (c)  Settlement
        Date Procedure - Reinvestment Period.
        On the
        twentieth (20th)
        day of
        each calendar month (commencing in August, 2005), or if such day is not a
        Business Day, the next succeeding Business Day (each, a “Settlement
        Date”)
        prior
        to the Termination Date, the Servicer shall transfer from the Collection
        Account
        all Available Funds, and shall apply such amount in the following
        order:

       

      (1)  to
        the
        Administrator on behalf of the Purchaser, an amount equal to the (i) Earned
        Discount accrued during such Settlement Period, plus any previously accrued
        Earned Discount not paid on a prior Settlement Date, and (ii) Program Fees
        accrued during such Settlement Period, plus any previously accrued Program
        Fees
        and not paid on a prior Settlement Date;

       

      (2)  to
        the
        Administrator on behalf of the Purchaser, an amount equal to the Unused Program
        Fees accrued during such Settlement Period, plus any previously accrued Unused
        Program Fees not paid on a prior Settlement Date;

       

      (3)  to
        the
        Administrator, an amount equal to the amount, if any, necessary to reduce
        the
        Senior Investor Balance to the Benchmark Amount (calculated after giving
        effect
        to any distribution to be made from the Cash Collateral Account on such day)
        and
        to reduce the Senior Investor Balance in accordance with Section
        3.02(b),
        which
        amount shall be distributed by the Administrator to the Purchaser for
        application to the Senior Investor Balance;

       

      (4)  to
        the
        Servicer, an amount equal to the Servicer’s Fee for such preceding Due Period,
        plus any previously accrued and unpaid Servicer’s Fee for the payment of the
        accrued and unpaid Servicer’s Fees;

       

      (5)  to
        the
        Reserve Account, to the extent necessary to cause funds on deposit therein
        to
        equal the Required Reserve Account Amount; 

       

      (6)  to
        the
        Cash Collateral Account, to the extent necessary to cause funds on deposit
        therein to equal (or, if Seller shall so direct, to exceed) the Required
        Cash
        Collateral Amount; and

       

      (7)  to
        the
        Administrator, all other amounts then due under this Agreement to the
        Administrator, the Purchaser, the Affected Parties or the Indemnified
        Parties;

       

      (8)  to,
        or at
        the direction of, Seller any remaining amounts.

       

      (d)  Settlement
        Date Procedure - Liquidation Period.
        On each
        Settlement Date during the Liquidation Period, the Servicer shall transfer
        from
        the Collection Account all Available Funds, and shall apply such amount in
        the
        following order:

       

      (1)  to
        the
        Administrator on behalf of the Purchaser, an amount equal to the (i) Earned
        Discount accrued during such Settlement Period, plus any previously
        accrued Earned Discount not paid on a prior Settlement Date, and (ii) Program
        Fees accrued during such Settlement Period, plus any previously accrued Program
        Fees and not paid on a prior Settlement Date;

       

      (2)  to
        the
        Administrator on behalf of the Purchaser, an amount equal to the Unused Program
        Fees accrued during such Settlement Period, plus any previously accrued Unused
        Program Fees not paid on a prior Settlement Date;

       

      (3)  to
        the
        Administrator, an amount equal to any remaining Purchaser’s Share of Collections
        until the Senior Investor Balance is reduced to zero, which amount shall
        be
        distributed by the Administrator to the Purchaser for application to the
        Senior
        Investor Balance;

       

      (4)  to
        the
        Servicer, an amount equal to the Servicer’s Fee for such preceding Due Period,
        plus any previously accrued and unpaid Servicer’s Fee for the payment of the
        accrued and unpaid Servicer’s Fees;

       

      (5)  to
        the
        Administrator, all other amounts then due under this Agreement to the
        Administrator, the Purchaser, the Affected Parties or the Indemnified Parties;
        and

       

      (6)  to,
        or at
        the direction of, Seller any remaining amounts.

       

      (e)  Non-Distribution
        of Servicer’s Fee.
        Unless
        the Administrator gives written notice to the contrary to Servicer (which
        notice
        may be given at any time), from and after the date on which the amounts (if
        any)
        set aside pursuant to Section
        1.03
        for any
        Settlement Period in respect of payments required to be made prior to the
        payment of the Servicer’s Fee on the related Settlement Date are sufficient to
        make such payments, the amounts (if any) set aside pursuant to Section
        1.03
        in
        respect of the Servicer’s Fee may be paid to Servicer, in which case no
        distribution shall be made in respect of Servicer’s Fee pursuant to clause
        (c)
        or
(d)
        above.

       

      (f)  Cap
        Agreements.

       

      (i)  Prior
        to
        the Initial Funding Date, Seller shall obtain a Cap Agreement in substantially
        the form of Exhibit
        B.
        The Cap
        Agreement shall entitle the Seller to receive monthly the Cap Payment, if
        any,
        as set forth in the Cap Agreement. Payments received by Seller under the
        Cap
        Agreement shall be deposited in the Collection Account within two Business
        Days
        of such receipt (or, if earlier, on the related Settlement Date), except
        that
        any payments received under a Cap Agreement as a result of the early termination
        thereof may instead be applied by Seller to the acquisition of a Replacement
        Interest Rate Cap.

       

      (ii)  The
        Administrator hereby appoints the Servicer to act as calculation agent under
        the
        Cap Agreements and the Servicer accepts such appointment.

       

      


       

      SECTION
        3.02  Deemed
        Collections; Reduction of Senior Investor Balance, Etc.

       

      (a)  Deemed
        Collections.
        If on
        any day

       

      (i)  any
        Pool
        Receivable is

       

      (A)  reduced
        as a result of any defective, rejected or returned merchandise or services,
        any
        cash discount, or any incorrect billing or other adjustment by Seller or
        any
        Affiliate of Seller,

       

      (B)  reduced
        or canceled as a result of a setoff in respect of any claim by the Obligor
        thereof against Seller or any Affiliate of Seller or any other Person (whether
        such claim arises out of the same or a related or an unrelated transaction),
        or

       

      (C)  reduced
        on account of the obligation of Seller to pay to the related Obligor any
        rebate
        or refund; or 

       

      (ii)  any
        of
        the representations or warranties of Seller set forth in Section
        6.01(j)
        were not
        true when made with respect to any Pool Receivable, or any of the
        representations or warranties of Seller set forth in Section 6.01(j)
        are no
        longer true with respect to any Pool Receivable,

       

      then,
        on
        such day, Seller shall be deemed to have received a Collection of such Pool
        Receivable

       

      (I)
        in
        the case of clause
        (i)
        above,
        in the amount of such reduction or cancellation; and

       

      (II)
        in
        the case of clause
        (ii)
        above,
        in the outstanding amount of such Pool Receivable.

       

      If
        Seller
        shall have deposited into the Collection Account the full outstanding amount
        of
        any Pool Receivable pursuant to this Section
        3.2(a),
        Purchaser and the Administrator shall reconvey any interest they have in
        such
        Pool Receivable, and the Contracts and Related Security with respect thereto,
        to
        Seller, without representation or warranty, but free and clear of all liens
        created by Purchaser and the Administrator. Any such reconveyed Receivable
        (and
        the Contracts and Related Security with respect thereto) shall be released
        from
        the ownership and security interests created under this Agreement and shall
        no
        longer be considered Pool Assets. It is understood and agreed that Seller
        may
        reconvey any such released Receivables, Contracts and Related Securities
        to
        Transferor, and Transferor may reconvey such assets to Parent Originator,
        in
        accordance with the terms of the Second Tier Agreement and the First Tier
        Agreement. At the expense of Seller, the Administrator and Purchaser shall
        execute such instruments and documents as Seller shall reasonably request
        to
        evidence such release, and, subject to giving at least five Business Days
        prior
        written notice to the Administrator, Seller is authorized to file amendments
        to
        the financing statements filed against the Transferring Parties in connection
        with the Transaction Documents to evidence such release.

       

      (b)  Seller’s
        Optional Reduction of Senior Investor Balance.
        Seller
        may at any time elect to reduce the Senior Investor Balance as
        follows:

       

      (i)  Seller
        shall give the Administrator at least three Business Days’ prior written
        notice of such reduction (including the amount of such proposed reduction
        and
        the proposed date on which such reduction will commence),

       

      (ii)  on
        the
        proposed date of commencement of such reduction and on each day thereafter,
        Servicer shall refrain from reinvesting Collections pursuant to Section
        1.03
        until
        the amount thereof not so reinvested shall equal the amount of such reduction,
        and

       

      (iii)  Servicer
        shall hold such Collections in trust for Purchaser, pending payment to the
        Administrator, as provided in Section
        3.01;

       

      provided
        that,

       

      (A)  the
        amount of any such reduction shall be not less than $100,000 and the Senior
        Investor Balance after giving effect to such reduction shall be not less
        than
        $100,000 (unless such reduction reduces Senior Investor Balance to zero),
        and

       

      (B)  Seller
        shall use reasonable efforts to attempt to choose a reduction amount, and
        the
        date of commencement thereof, so that such reduction shall commence and conclude
        in the same Settlement Period to the extent possible.

       

      SECTION
        3.03  Payments
        and Computations, Etc.

       

      (a)  Payments.
        All
        amounts to be paid or deposited by Seller or Servicer to the Administrator
        or
        any other Person hereunder (other than amounts payable under Section 4.02)
        shall
        be paid or deposited in accordance with the terms hereof no later than 11:00
        a.m. (New York City time) on the day when due in lawful money of the United
        States of America in same day funds to the Administrator at the bank account
        listed on Schedule
        B,
        for
        credit to such account as the Administrator shall specify.

       

      (b)  Method
        of Computation.
        All
        computations of interest, Earned Discount, any fees payable under Sections
        4.01(a)
        and
(b)
        and any
        other fees payable by Seller to Purchaser or the Administrator in connection
        with Purchases or the Asset Interest hereunder shall be made on the basis
        of a
        year of 360 days for the actual number of days (including the first day but
        excluding the last day) elapsed.

       

      SECTION
        3.04  Treatment
        of Collections and Deemed Collections.
        Seller
        shall deliver to Servicer all Collections deemed received by Seller pursuant
        to
Section
        3.02(a)
        during
        any Due Period by no later than the second Business Day preceding the related
        Settlement Date, and Servicer shall deposit any deemed Collections to the
        Collection Account within two Business Days of receipt thereof. So long as
        Seller shall hold any Collections or deemed Collections required to be paid
        to
        Servicer or the Administrator, it shall hold such Collections in trust and
        shall
        clearly mark its records to reflect such trust; provided
        that
        Seller shall not be required to hold such Collections in a separate deposit
        account containing only such Collections.

       

      SECTION
        3.05  Collection
        Account.
        Seller
        shall establish an Eligible Account in the name of the Seller, which is
        designated as the “Collection
        Account”.
        The
        Collection Account shall be maintained at the Transaction Account Bank subject
        to the terms of the Account Control Agreement and Section
        3.08.
        

       

      SECTION
        3.06  Reserve
        Account.

       

      (a)  Seller
        shall establish an Eligible Account in the name of the Seller until the Senior
        Investor Balance is reduced to zero, which is designated as the “Reserve
        Account”.
        The
        Reserve Account shall be maintained at the Transaction Account Bank subject
        to
        the terms of the Account Control Agreement and Section
        3.08.
        

       

      (b)  If
        on any
        Settlement Date a Shortfall shall exist, the Administrator shall withdraw
        from
        the Reserve Account an amount equal to the lesser of such Shortfall or the
        amount on deposit in the Reserve Account, and apply such funds in the same
        manner as Collections pursuant to Section
        3.01(c)
        or
3.01(d),
        as
        applicable.

       

      (c)  If
        on any
        Settlement Date or on the Final Payout Date, as applicable, after giving
        effect
        to all other withdrawals from and payments to the Reserve Account, the funds
        on
        deposit in the Reserve Account (exclusive of earnings on the investment of
        such
        funds) shall exceed the Required Reserve Account Amount, the Servicer (with
        prior written notice to the Administrator) shall withdraw such excess and
        pay
        such excess to, or at the direction of, Seller.

       

      SECTION
        3.07  Cash
        Collateral Account.

       

      (a)  Seller
        shall establish an Eligible Account in the name of the Seller until the Senior
        Investor Balance is reduced to zero, which is designated as the “Cash
        Collateral Account”.
        The
        Cash Collateral Account shall be maintained at the Transaction Account Bank
        subject to the terms of the Account Control Agreement and Section
        3.08.

       

      (b)  If
        on any
        Settlement Date a Shortfall shall remain after giving effect to any application
        of funds from the Reserve Account pursuant to Section
        3.06,
        the
        Administrator shall withdraw from the Cash Collateral Account an amount equal
        to
        the lesser of such Shortfall or the amount on deposit in the Cash Collateral
        Account, and apply such funds in the same manner as Collections pursuant
        to
Section
        3.01(c)
        or
3.01(d),
        as
        applicable.

       

      (c)  If
        on any
        Settlement Date or on the Final Payout Date, as applicable, after giving
        effect
        to all other withdrawals from and payable to the Collection Account, the
        funds
        on deposit in the Cash Collateral Account (exclusive of earnings on the
        investment of such funds) shall exceed the Required Cash Collateral Amounts
        and
        Seller shall request Servicer to do so, the Servicer (with prior written
        notice
        to the Administrator) shall withdraw such excess and pay such excess to,
        or at
        the direction of, Seller.

       

      SECTION
        3.08  Accounts
        Generally.

       

      (a)  Funds
        on
        deposit in each Transaction Account shall be invested by the Transaction
        Account
        Bank in Permitted Investments at the direction of Seller. Such investments
        made
        at any time will mature so that funds will be available for withdrawal no
        later
        than the following
        Settlement Date. All earnings on such investment during any such Settlement
        Period shall be deemed to be Available Funds on the related Settlement
        Date.

       

      (b)  If
        any
        Transaction Account shall cease to be an Eligible Account, the Administrator,
        until the Senior Investor Balance has been reduced to zero, shall, as necessary,
        cause each such account to be moved to an institution at which it shall be
        an
        Eligible Account.

       

      (c)  The
        Administrator shall have exclusive control of the Transaction Accounts. To
        the
        extent that a Transaction Account constitutes a “securities account” as defined
        in Section 8-501(a) of the UCC, the Transaction Account Bank shall act as
        securities intermediary and will treat the Administrator as entitled to exercise
        the rights that comprise such property, including all security entitlements,
        securities, financial assets, investment property and instruments (each as
        defined in the UCC) attributable to such Transaction Account. In the event
        that
        a Transaction Account is not considered to be a “securities account” under
        applicable law, such Transaction Account shall be deemed to be a “deposit
        account” (as defined in the UCC) to the extent a security interest can be
        granted and perfected under the UCC in such Transaction Account as a deposit
        account, and the Transaction Account Bank shall maintain such account not
        as a
        securities intermediary but as a “bank” (as defined in the UCC). The
        Administrator shall be deemed to be the customer of the Transaction Account
        Bank
        for purposes of such Transaction Account and as such shall be entitled to
        all
        rights that customers of banks have under applicable law with respect to
        deposit
        accounts, including the right to withdraw funds from, or close, such Transaction
        Account (which rights shall be exercised in accordance with the terms of
        this
        Agreement). Unless a Replacement Event shall take place and be continuing,
        the
        Administrator shall instruct the Transaction Account Bank to allow Servicer
        access to funds in the Transaction Accounts in order to effect the application
        of funds described in (and subject to the terms of) this Agreement and the
        other
        Transaction Documents.

       

      ARTICLE
        IV  

       

      FEES
        AND YIELD PROTECTION

       

      SECTION
        4.01  Fees.

       

      (a)  Structuring
        Fee.
        Seller
        shall pay to the Administrator a structuring fee (“Structuring
        Fee”)
        payable on such dates and in such amounts as are set forth in the letter
        dated
        the date hereof from the Administrator to Seller (the “Structuring
        Fee Letter”).

       

      (b)  Other
        Fees.
        Seller
        shall pay to the Administrator, for the account of the Purchaser, certain
        ongoing fees payable on such dates and in such amounts as are set forth in
        the
        letter dated the date hereof from the Administrator to Seller (the “Program
        Fee Letter”).

       

      SECTION
        4.02  Yield
        Protection.

       

      (a)  If
        (i)
        Regulation D or (ii) any Regulatory Change occurring after the date
        hereof:

       

      (A)  shall
        impose, modify or deem applicable any reserve (including, without limitation,
        any reserve imposed by the Federal Reserve Board, but excluding any reserve
        included in the determination of Earned Discount), special deposit
        or
        similar requirement against assets of any Affected Party, deposits or
        obligations with or for the account of any Affected Party or with or for
        the
        account of any affiliate (or entity deemed by the Federal Reserve Board to
        be an
        affiliate) of any Affected Party, or credit extended by any Affected Party;
        

       

      (B)  shall
        change the amount of capital maintained or required or requested or directed
        to
        be maintained by any Affected Party;

       

      (C)  shall
        impose any other condition affecting any Asset Interest owned or funded in
        whole
        or in part by any Affected Party, or its obligations or rights, if any, to
        make
        Purchases or Reinvestments or to provide funding therefor; or

       

      (D)  shall
        change the rate for, or the manner in which the Federal Deposit Insurance
        Corporation (or a successor thereto) assesses, deposit insurance premiums
        or
        similar charges;

       

      and
        the
        result of any of the foregoing is or would be:

       

      (x) to
        increase the cost to (or in the case of Regulation D referred to above, to
        impose a cost on) an Affected Party funding or making or maintaining any
        Purchases or Reinvestments, any purchases, reinvestments, or loans or other
        extensions of credit under the Liquidity Agreement, or any commitment of
        such
        Affected Party with respect to any of the foregoing,

       

      (y) to
        reduce
        the amount of any sum received or receivable by an Affected Party under this
        Agreement, or under the Liquidity Agreement with respect thereto,
        or

       

      (z) in
        the
        reasonable determination of such Affected Party, to reduce the rate of return
        on
        the capital of an Affected Party as a consequence of its obligations hereunder
        or arising in connection herewith to a level below that which such Affected
        Party could otherwise have achieved but for Regulation D or such Regulatory
        Change,

       

      then
        within thirty days after demand by such Affected Party (which demand shall
        be
        accompanied by a statement setting forth the basis of such demand), Seller
        shall
        pay directly to such Affected Party such additional amount or amounts as
        will
        compensate such Affected Party for such additional or increased cost or such
        reduction. This Section
        4.02(a)
        shall
        not apply to taxes.

       

      (b)  Each
        Affected Party will promptly notify Seller and the Administrator of any event
        of
        which it has knowledge which will entitle such Affected Party to compensation
        pursuant to this Section
        4.02;
        provided,
        however,
        no
        failure to give or delay in giving such notification shall adversely affect
        the
        rights of any Affected Party to such compensation.

       

      (c)  In
        determining any amount provided for or referred to in this Section
        4.02,
        an
        Affected Party may use any reasonable averaging and attribution methods that
        it
        (in its sole discretion) shall deem applicable. Any Affected Party when making
        a
        claim under this Section
        4.02
        shall
        submit to Seller a statement as to such increased cost or reduced return
        (including calculation
        thereof in reasonable detail), which statement shall, in the absence of
        demonstrable error, be conclusive and binding upon Seller.

       

      (d)  Purchaser
        agrees that it shall use its reasonable best efforts to take any action that
        will avoid the need to pay, or reduce the amount of, any increased amounts
        referred to in paragraph
        (a);
        provided
        that
        Purchaser shall not be obligated to take any actions that would, in the
        reasonable opinion of Purchaser, be disadvantageous to Purchaser.

       

      (e)  Subject
        to Section
        4.02(g),
        any and
        all payments made under this Agreement shall be made free and clear of, and
        without deduction for, any and all present or future Taxes. If any amount
        of
        Taxes shall be required by law to be deducted from or in respect of any sum
        payable hereunder to any Foreign assignee or participant of Purchaser, (i)
        the
        sum payable shall be increased as may be necessary so that after making all
        required deductions (including deductions applicable to additional sums payable
        under this Section
        4.02(e)),
        such
        Foreign assignee or participant of Purchaser, as the case may be, receives
        an
        amount equal to the sum it would have received had no such deductions been
        made,
        (ii) Seller shall make such deductions and (iii) Seller shall pay the full
        amount deducted to the relevant taxation authority or other authority in
        accordance with applicable law.

       

      (f)  Each
        Foreign assignee or participant of Purchaser, on or prior to the date pursuant
        to which it becomes an assignee or participant of Purchaser, and from time
        to
        time thereafter if requested in writing by Seller (unless such Foreign assignee
        or participant of Purchaser can no longer lawfully do so due to a change
        in law
        subsequent to the date it became an assignee or participant of Purchaser
        hereunder), shall provide Seller with Internal Revenue Service Form W-8BEN
        or
        W-8ECI, as appropriate, or any successor form prescribed by the Internal
        Revenue
        Service, certifying that such Foreign assignee or participant of Purchaser
        is
        entitled to benefits under an income tax treaty to which the United States
        is a
        party which reduces the rate of withholding tax on payments of interest to
        zero
        or certifying that the income receivable pursuant to this Agreement is
        effectively connected with the conduct of a trade or business in the United
        States.

       

      (g)  For
        any
        period with respect to which a Foreign assignee or participant of Purchaser
        has
        failed to provide the Seller with the appropriate form described in Section
        4.02(f)
        (other
        than if such failure is due to a change in law occurring subsequent to the
        date
        on which a form originally was required to be provided), such Foreign assignee
        or participant of Purchaser shall not be entitled to payments of additional
        amounts under Section
        4.02(e).

       

      SECTION
        4.03  Funding
        Losses.
        In the
        event that the Purchaser or any Liquidity Bank shall incur any loss or expense
        (including any loss or expense incurred by reason of the liquidation or
        reemployment of deposits or other funds acquired by the Purchaser or such
        Liquidity Bank to make any Purchase or Liquidity Funding or maintain any
        Purchase or Liquidity Funding) as a result of (i) any settlement with respect
        to
        any portion of the Senior Investor Balance being made on any day other than
        a
        Settlement Date, or (ii) any Purchase not being made in accordance with a
        request therefore under Section
        1.02
        (other
        than by reason of (a) a default by the Purchaser or such Liquidity Bank,
        (b)
        Purchaser’s failure to make available to the Administrator the required funds as
        set forth in Section
        1.02(b)
        or (c)
        the Administrator’s failure to make available the required funds to Seller as
        set forth in Section
        1.02(b)),
        then,
        upon written
        notice from the Administrator to Seller and Servicer, Seller shall pay to
        Servicer, and Servicer shall pay to the Administrator for the account of
        the
        Purchaser or such Liquidity Bank, the amount of such loss or expense. Such
        written notice (which shall include calculations in reasonable detail) shall,
        in
        the absence of manifest error, be conclusive and binding upon the Seller
        and
        Servicer.

       

      ARTICLE
        V  

       

      CONDITIONS
        OF PURCHASES

       

      SECTION
        5.01  Conditions
        Precedent to Initial Purchase.
        The
        initial Purchase hereunder is subject to the satisfaction of the conditions
        specified under this Section
        5.01
        on or
        before the Initial Funding Date (any or all of which may be waived by the
        Administrator in its sole discretion).

       

      (a)  The
        Administrator shall have received the following, each (unless otherwise
        indicated) dated such date and in form and substance satisfactory to the
        Administrator:

       

      (i)  Certified
        copies of resolutions of the Board of Directors, Managers or members, as
        applicable, of each of the Seller, the Transferor, the Originators and the
        Servicer authorizing the execution, delivery and performance of this Agreement
        and the other Transaction Documents to which it is a party; 

       

      (ii)  Certified
        copy of the organizational documents and governing instruments, as applicable,
        of each of the Seller, the Transferor, the Originators and the
        Servicer;

       

      (iii)  Good
        standing certificates for each of the Seller, the Transferor, the Originators
        and the Servicer issued as of a recent date acceptable to the Administrator
        by the Secretary of State of the jurisdiction where the Seller, the
        Transferor, each Originator and the Servicer, respectively, is
        organized;

       

      (iv)  A
        certificate of the Secretary or an Assistant Secretary of each of the Seller,
        the Transferor, the Originators and the Servicer certifying the names of
        its
        officer or officers authorized to sign this Agreement and other Transaction
        Documents to which it is a party;

       

      (v)  Such
        proper financing statements (Form UCC-1), to be filed against each of the
        Seller, the Transferor and the Originators as may be necessary or, in the
        opinion of the Administrator, desirable under the UCC or any comparable law
        of
        all appropriate jurisdictions to perfect Purchaser’s interests in the Pool
        Assets;

       

      (vi)  A
        search
        report provided in writing to the Administrator, listing all effective financing
        statements that name any of the Originators, the Transferor or the Seller
        as
        debtor and that are filed in the jurisdictions in which filings were made
        pursuant to subsection
        (e)
        above
        and in such other jurisdictions that Administrator shall reasonably request,
        together with copies of such financing statements (none of which shall cover
        any
        Pool Assets);

       

      (vii)  Favorable
        opinions of counsel to the Seller, the Transferor, the Originators and the
        Servicer, in form and substance reasonably satisfactory to the
        Administrator;

       

      (viii)  A
        written
        agreement between Servicer and the Administrator as to the form and required
        content of the Information Package, and a pro forma
        Information Package, prepared in respect of the proposed initial Purchase,
        as of
        a date no more than 3 Business Days prior to the Initial Funding Date;
        and

       

      (ix)  Fully
        executed copies of the Fee Letter, the First Tier Agreement, the Second Tier
        Agreement, the Account Control Agreement, the FSC Guaranty and the Cap
        Agreement, each of which agreements shall be in form and substance reasonably
        satisfactory to the Administrator;

       

      (b)  each
        of
        the Transaction Accounts shall have been established; and

       

      (c)  the
        Stock
        Purchase Agreement shall have been executed and delivered by the parties
        thereto
        in a form substantially similar to the form disclosed to the Administrator
        prior
        to the date hereof (or with such changes as could not reasonably be expected
        to
        have a Material Adverse Effect), a copy of such Stock Purchase Agreement
        shall
        have been delivered to the Administrator, and each Originator shall have
        become
        a direct or an indirect subsidiary of Charming Shoppes Inc. as contemplated
        thereby.

       

      SECTION
        5.02  Conditions
        Precedent to All Purchases and Reinvestments.
        Each
        Purchase (including the initial Purchase) and each Reinvestment hereunder
        shall
        be subject to the further conditions precedent that on the date of such Purchase
        or Reinvestment the following statements shall be true (and Seller by accepting
        the amount of such Purchase or by receiving the proceeds of such Reinvestment
        shall be deemed to have certified that):

       

      (a)  the
        representations and warranties contained in Sections
        6.01
        and
6.02
        are
        correct in all material respects on and as of such day as though made on
        and as
        of such day and shall be deemed to have been made on such day (except to
        the
        extent they explicitly refer to an earlier date),

       

      (b)  no
        event
        has occurred and is continuing, or would result from such Purchase or
        Reinvestment, that constitutes a Liquidation Event or Unmatured Liquidation
        Event,

       

      (c)  after
        giving effect to each proposed Purchase or Reinvestment, the Senior Investor
        Balance will not exceed the lesser of the Facility Limit and the Benchmark
        Amount, and

       

      (d)  the
        Termination Date shall not have occurred, 

       

      provided,
        however,
        the
        absence of the occurrence and continuance of an Unmatured Liquidation Event
        shall not be a condition precedent to any Reinvestment or any Purchase which
        does not cause the Senior Investor Balance, after giving effect to such
        Reinvestment or Purchase, to exceed the Senior Investor Balance as of the
        opening of business of the day of such Reinvestment or Purchase.

       

      ARTICLE
        VI  

       

      REPRESENTATIONS
        AND WARRANTIES

       

      SECTION
        6.01  Representations
        and Warranties of Seller.
        As of
        the Closing Date, the Initial Funding Date and each other date specified
        in
Section 5.02,
        Seller
        represents and warrants as follows:

       

      (a)  Organization
        and Good Standing.
        Seller
        has been duly organized and is validly existing as a limited liability company
        in good standing under the laws of Delaware, with power and authority to
        own its
        properties and to conduct its business as such properties are presently owned
        and such business is presently conducted, and had at all relevant times,
        and now
        has, all necessary power, authority, and legal right to acquire and own the
        Pool
        Receivables.

       

      (b)  Due
        Qualification.
        Seller
        is duly qualified to do business and is in good standing (or is exempt from
        such
        requirement), and has obtained all necessary licenses and approvals, in all
        jurisdictions in which the failure to so qualify or obtain such licenses
        or
        approvals would have a Material Adverse Effect. 

       

      (c)  Power
        and Authority; Due Authorization.
        Seller
        (i) has all necessary power, authority and legal right to (A) execute and
        deliver the Transaction Documents to which it is a party, (B) carry out the
        terms of the Transaction Documents to which it is a party, and (C) sell and
        assign the Asset Interest on the terms and conditions herein provided and
        (ii)
        has duly authorized by all necessary limited liability company action the
        execution, delivery and performance of the Transaction Documents to which
        it is
        a party and the sale and assignment of the Asset Interest on the terms and
        conditions herein provided.

       

      (d)  Enforceability.
        This
        Agreement constitutes, and each other Transaction Document to be executed
        by
        Seller when duly executed and delivered will constitute, a legal, valid and
        binding obligation of Seller enforceable in accordance with its terms, except
        as
        enforceability may be limited by bankruptcy, insolvency, reorganization,
        or
        other similar laws affecting the enforcement of creditors’ rights generally and
        by general principles of equity, regardless of whether such enforceability
        is
        considered in a proceeding in equity or at law.

       

      (e)  No
        Conflict.
        The
        execution and delivery of this Agreement and each other Transaction Document,
        the performance of the transactions contemplated hereunder and thereunder
        and
        the fulfillment of the terms hereof and thereof will not conflict with, result
        in any breach of any of the material terms and provisions of, or constitute
        (with or without notice or lapse of time or both) a default under, any
        indenture, contract, agreement, mortgage, deed of trust, or other instrument
        to
        which the Seller is a party or by which it or any of its properties are
        bound.

       

      (f)  No
        Violation.
        The
        consummation of the transactions contemplated by the Transaction Documents
        and
        the fulfillment of the terms thereof will not violate in any material respect
        any Requirements of Law applicable to the Seller.

       

      (g)  No
        Proceedings.
        There
        are no proceedings pending or, to the best knowledge of the Seller, threatened
        against the Seller before any Governmental Authority (i) asserting the
invalidity
        of this Agreement or any other Transaction Document, (ii) seeking to prevent
        the
        consummation of any of the transactions contemplated by this Agreement or
        any
        other Transaction Document, (iii) seeking any determination or ruling that,
        in
        the reasonable judgment of the Seller, could reasonably be expected to have
        a
        Material Adverse Effect or (iv) seeking any determination or ruling that
        would
        materially and adversely affect the validity or enforceability of this Agreement
        or any other Transaction Document.

       

      (h)  All
        Consents Required.
        All
        appraisals, authorizations, consents, orders or other actions of any Person
        or
        of any Governmental Authority required in connection with the execution and
        delivery by the Seller of this Agreement and each other Transaction Document,
        the performance of the transactions contemplated hereunder and thereunder
        and
        the fulfillment of the terms hereof, have been obtained. 

       

      (i)  Investment
        Company Act.
        The
        Seller is not an “investment company” within the meaning of the Investment
        Company Act of 1940, as amended.

       

      (j)  Quality
        of Title.
        Immediately prior to the transfer of an interest therein to Purchaser, each
        Pool
        Receivable, together with each other Pool Asset, is owned by Seller free
        and
        clear of any Lien (other than any Lien arising solely as the result of any
        action taken by Purchaser (or any assignee thereof) or by the Administrator);
        when Purchaser makes a Purchase or Reinvestment, it shall have acquired and
        shall at all times thereafter continuously maintain a valid and perfected
        first
        priority security interest in the Asset Interest, free and clear of any Lien
        (other than any Lien arising solely as the result of any action taken by
        Purchaser (or any assignee thereof) or by the Administrator); and no financing
        statement or other instrument similar in effect naming Seller as debtor or
        Seller covering any Pool Receivable or any other Pool Asset is on file in
        any
        recording office except (i) financing statements evidencing Liens released
        on
        the Initial Funding Date, which financing statements will be terminated within
        ten days after the Initial Funding Date, and (ii) such as may be filed in
        favor
        of Purchaser or the Administrator in accordance with this Agreement or in
        connection with any Lien arising solely as the result of any action taken
        by
        Purchaser (or any assignee thereof) or by the Administrator.

       

      SECTION
        6.02  Representations
        and Warranties of Servicer.
        As of
        the Closing Date, the Initial Funding Date and each other date specified
        in
Section 5.02,
        Servicer represents and warrants as follows:

       

      (a)  Organization

        and Good Standing.
        Servicer has been duly organized and is validly existing as a corporation
        in
        good standing under the laws of Delaware, with power and authority to own
        its
        properties and to conduct its business as such properties are presently owned
        and such business is presently conducted, and had at all relevant times,
        and now
        has, all necessary power, authority, and legal right to service the Pool
        Receivables.

       

      (b)  Due
        Qualification.
        Servicer is duly qualified to do business and is in good standing (or exempt
        from such requirements), and has obtained all necessary licenses and approvals,
        in all jurisdictions in which the failure to so qualify or obtain such licenses
        or approvals would have a Material Adverse Effect. 

       

      (c)  Power
        and Authority; Due Authorization.
        Servicer (i) has all necessary power, authority and legal right to (A) execute
        and deliver the Transaction Documents to which it is a party, and (B) carry
        out
        the terms of the Transaction Documents to which it is a party and (ii) has
        duly
        authorized by all necessary corporate action the execution, delivery and
        performance of the Transaction Documents to which it is a party.

       

      (d)  Enforceability.
        This
        Agreement constitutes, and each other Transaction Document to be executed
        by the
        Servicer when duly executed and delivered will constitute, a legal, valid
        and
        binding obligation of the Servicer enforceable in accordance with its terms,
        except as enforceability may be limited by bankruptcy, insolvency,
        reorganization, or other similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity, regardless of whether
        such
        enforceability is considered in a proceeding in equity or at law.

       

      (e)  No
        Conflict.
        The
        execution and delivery of this Agreement and each other Transaction Document,
        the performance of the transactions contemplated hereunder and thereunder
        and
        the fulfillment of the terms hereof and thereof will not conflict with, result
        in any breach of any of the material terms and provisions of, or constitute
        (with or without notice or lapse of time or both) a default under, any
        indenture, contract, agreement, mortgage, deed of trust, or other instrument
        to
        which the Servicer is a party or by which it or any of its properties are
        bound.

       

      (f)  No
        Violation.
        The
        consummation of the transactions contemplated by the Transaction Documents
        and
        the fulfillment of the terms thereof will not violate in any material respect
        any Requirements of Law applicable to the Servicer.

       

      (g)  No
        Proceedings.
        There
        are no proceedings pending or, to the best knowledge of the Servicer, threatened
        against the Servicer before any Governmental Authority (i) asserting the
        invalidity of this Agreement or any other Transaction Document, (ii) seeking
        to
        prevent the consummation of any of the transactions contemplated by this
        Agreement or any other Transaction Document, (iii) seeking any determination
        or
        ruling that, in the reasonable judgment of the Servicer, would materially
        and
        adversely affect the performance by the Servicer of its obligations under
        this
        Agreement or any other Transaction Document, (iv) seeking any determination
        or
        ruling that would materially and adversely affect the validity or enforceability
        of this Agreement or any other Transaction Document.

       

      (h)  All
        Consents Required.
        All
        appraisals, authorizations, consents, orders or other actions of any Person
        or
        of any Governmental Authority required in connection with the execution and
        delivery by the Servicer of this Agreement and each other Transaction Document,
        the performance of the transactions contemplated hereunder and thereunder
        and
        the fulfillment of the terms hereof, have been obtained.

       

      (i)  Credit
        and Collection Policy.
        The
        copy of the Credit and Collection Policy delivered by or on behalf of Servicer
        to the Administrator prior to the Closing Date is a true and complete copy
        thereof, as in effect on the Closing Date.

       

      ARTICLE
        VII  

       

      GENERAL
        COVENANTS OF SELLER AND SERVICER

       

      SECTION
        7.01  Covenants
        of Seller and Servicer.
        From
        the date hereof until the Final Payout Date, the Seller and Servicer, each
        as to
        itself, hereby covenants and agrees as follows:

       

      (a)  UCC
        Matters.The
        Seller shall not change its name, identity, limited liability company structure
        or state of registration in any manner that would (i) make any financing
        statement or continuation statement filed in accordance with this Agreement
        “seriously misleading” within the meaning of Section 9-506, 9-507 or 9-508 of
        the UCC or any other applicable provisions of the UCC or (ii) change the
        location of the Seller for purposes of Section 9-307 of the UCC, unless it
        shall
        have given to the Administrator at least thirty (30) days’ prior written notice
        thereof and shall have taken all action prior to making such change (or shall
        have made arrangements to take such action substantially simultaneously with
        such change, if it is not possible to take such action in advance) necessary
        or
        advisable in the reasonable opinion of the Administrator to amend all previously
        filed financing statements or continuation statements, or to file appropriate
        new financing statements.

       

      (b)  Compliance
        with Requirements of Law.
        The
        Servicer shall duly satisfy all obligations on its part to be fulfilled under
        or
        in connection with each Pool Receivable and the related Account and Contract,
        will maintain in effect all qualifications required under Requirements of
        Law in
        order to service properly each Pool Receivable and the related Account and
        Contract, and will comply in all material respects with all other Requirements
        of Law in connection with servicing each Pool Receivable and the related
        Account
        and Contract, the failure to comply with which would have a Material Adverse
        Effect.

       

      (c)  No
        Rescission or Cancellation.
        The
        Servicer shall not permit any rescission or cancellation of any Pool Receivable
        except as ordered by a court of competent jurisdiction or other Governmental
        Authority or in compliance with the Credit and Collection Policy.

       

      (d)  Protection
        of the Purchaser’s Rights.
        The
        Servicer shall take no action which, nor omit to take any action the omission
        of
        which, would impair the rights of the Purchaser in, or to receive, the
        Collections, nor shall it reschedule, revise or defer payments due on any
        Pool
        Receivable except in accordance with the respective cardholder agreements
        and
        Credit and Collection Policy.

       

      (e)  Receivables
        Not to be Evidenced by Promissory Notes.
        Except in connection with its enforcement or collection of a Pool Receivable,
        the Servicer will take no action to cause any Pool Receivable to be evidenced
        by
        any “instrument” (as defined in the UCC).

       

      (f)  Preservation
        of Corporate Existence.
        

       

      (i)  The
        Seller covenants and agrees to maintain at all times its existence as a limited
        liability company and all of its rights, privileges and franchises necessary
        in
        the normal conduct of its business, except for any right, privilege or franchise
        (a) that the Seller determines, in its reasonable, good faith business judgment,
        is no longer necessary or
        desirable in the conduct of its business, and (b) the loss of which will
        not
        adversely affect the rights of the Administrator or the Purchaser or have
        a
        Material Adverse Effect.

       

      (ii)  The
        Servicer covenants and agrees maintain at all times its corporate existence
        and
        all of its rights, privileges and franchises necessary in the normal conduct
        of
        its business, except for any right, privilege or franchise (a) that the Servicer
        determines, in its reasonable, good faith business judgment, is no longer
        necessary or desirable in the conduct of its business, and (b) the loss of
        which
        will not adversely affect the rights of the Administrator or the Purchaser
        or
        have a Material Adverse Effect

       

      (g)  Access
        to Information.
        The
        Seller and the Servicer covenant and agree to permit the Administrator or
        any of
        its agents or representatives, during regular business hours and upon at
        least
        two Business Days’ prior notice (A) to examine all books, records and documents
        (including, without limitation, computer tapes and disks) in the possession
        or
        under the control of Seller or of Servicer relating to Pool Receivables,
        including, without limitation, the related Accounts and Contracts and other
        agreements, and (B) to visit the offices and properties of Seller or of Servicer
        for the purpose of examining such materials described in clause
        (A)
        above;
provided,
        however,
        that,
        unless a Liquidation Event is continuing, no more than one such review shall
        be
        conducted during each fiscal year of Servicer.

       

      Unless
        otherwise agreed by the parties hereto, any information obtained by the
        Administrator pursuant to this Section
        7.01(g)
        shall be
        held in confidence by the Administrator unless and to the extent such
        information (i) has become available to the public, (ii) is required or
        requested by any Governmental Authority or in any court proceeding or (iii)
        is
        required by any Requirement of Law. In the case of any disclosure permitted
        by
clause
        (ii)
        or
(iii),
        the
        Administrator shall use commercially reasonable efforts to (x) provide the
        Seller with advance notice of any such disclosure and (y) cooperate with
        the
        Seller in limiting the extent or effect of any such disclosure.

       

      (h)  Credit
        and Collection Policies.
        The
        Servicer shall comply in all material respects with its Credit and Collection
        Policy in regard to each Pool Receivable and the related Contract.

       

      (i)  Collections.
        The
        Seller shall transfer to the Servicer all Collections received by the Seller
        in
        respect of the Pool Receivables as soon as practicable after receipt thereof
        by
        the Seller; provided that deemed Collections shall be transferred to the
        Servicer in accordance with Section
        3.02.
        The
        Servicer shall cause all collections received by the Servicer to be deposited
        into the Collection Account within 2 Business Days after receipt
        thereof.

       

      (j)  Status
        of Seller.
        The
        Seller shall maintain its existence as a bankruptcy remote entity and hereby
        agrees to comply with the limitations on its activities set forth in
Section
        9(j)
        of its
        LLC Agreement.

       

      (k)  Sales,
        Liens, Etc.
        Except
        as otherwise provided herein, Seller shall not sell, assign (by operation
        of law
        or otherwise) or otherwise dispose of, or create or suffer to exist any Lien
        upon or with respect to, any Pool Receivable or related Account or Contract
        or
        Related Security, or any interest therein.

       

      (l)  Replacement
        Servicer.
        The
        Servicer shall provide within 60 days after the Closing Date a written plan
        (the
“Replacement
        Servicer Plan”),
        which
        is acceptable to the Administrator, for transferring its servicing duties
        with
        respect to the Pool Receivables, the related Accounts and Contracts to a
        replacement servicer in the instance of a Replacement Event. 

       

      SECTION
        7.02  Reporting
        Requirements of Seller and Servicer.
        From
        the date hereof until the Final Payout Date, Seller and Servicer shall, unless
        the Administrator shall otherwise consent in writing, furnish to the
        Administrator:

       

      (a)  Liquidation
        and Replacement Events.
        As soon
        as possible and in any event within five Business Days after the occurrence
        of
        any Liquidation Event, any Unmatured Liquidation Event or any Replacement
        Event,
        a notice of such event;

       

      (b)  Litigation.
        As soon
        as possible and in any event within three Business Days of Seller’s or
        Servicer’s knowledge thereof, notice of (i) any litigation, investigation or
        proceeding which could have a Material Adverse Effect and (ii) any material
        adverse development in previously disclosed litigation;

       

      (c)  Change
        in Credit and Collection Policy.
        In the
        case of Servicer, prior to its effective date, notice of any material change
        in
        the Credit and Collection Policy, which, in the Servicer’s reasonable opinion,
        could have a Material Adverse Effect; it being understood and agreed that
        the
        Administrator shall promptly deliver a copy of any such notice to Moody’s;
        and

       

      (d)  Other.
        Promptly, from time to time, such other information, documents, records or
        reports respecting the Receivables or the condition or operations, financial
        or
        otherwise, of the Originators, the Seller and the Transferor as the
        Administrator may from time to time reasonably request in order to protect
        the
        interests of the Administrator or Purchaser under this Agreement.

       

      SECTION
        7.03  Transaction
        Documents.
        Neither
        Seller nor Servicer shall amend, modify, waive or provide consent under the
        provisions of any agreement expressly referenced in the definition of
“Transaction Document” unless the Administrator shall have given its prior
        written consent, which shall not be unreasonably withheld. Seller and Servicer
        shall take such actions as the Administrator shall reasonably request to
        enforce
        the rights and remedies of Seller under the Transaction Documents, including
        any
        rights it may have as assignee of Transferor.

       

      ARTICLE
        VIII  

       

      ADMINISTRATION
        AND COLLECTION

       

      SECTION
        8.01  Designation
        of Servicer.

       

      (a)  Appointment
        of Servicer.
        The
        servicing, administering and collection of the Pool Receivables shall be
        conducted by the Person designated as Servicer hereunder (“Servicer”)
        from
        time to time in accordance with this Section
        8.01.
        Until
        the Administrator gives to Seller and to Servicer a Successor Notice (as
        defined
        in Section
        8.01(b)),
        Spirit
        of America, Inc. is hereby designated as, and hereby agrees to perform the
        duties and obligations of, Servicer pursuant to the terms hereof.

       

      (b)  Successor
        Notice.
        Upon
        Servicer’s receipt of a notice from the Administrator of the Administrator’s
        designation of a new Servicer (a “Successor
        Notice”),
        Servicer agrees that it will terminate its activities as Servicer hereunder
        in a
        manner that the Administrator reasonably believes will facilitate the transition
        of the performance of such activities to the new Servicer, and the Administrator
        (or its designee) shall assume each and all of Seller’s obligations to service
        and administer such Receivables, on the terms and subject to the conditions
        herein set forth, and Servicer shall use its best efforts to assist the
        Administrator (or its designee) in assuming such obligations. The Administrator
        agrees not to give Servicer a Successor Notice until after the occurrence
        of a
        Replacement Event, in which case such Successor Notice may be given at any
        time
        in the Administrator’s discretion. If Servicer disputes the occurrence of a
        Replacement Event, Servicer may take appropriate action to resolve such dispute;
        provided
        that
        Servicer must terminate its activities hereunder as Servicer and allow the
        newly
        designated Servicer to perform such activities in accordance with the
        Replacement Servicer Plan on the date provided by the Administrator as described
        above, notwithstanding the commencement or continuation of any proceeding
        to
        resolve the aforementioned dispute; provided,
        further
        that in
        the event that such dispute is resolved in favor of Servicer and no other
        Replacement Event has occurred and is continuing, at Seller’s written request,
        Servicer shall be reinstated as Servicer.

       

      (c)  Subcontracts.
        Servicer may, with the prior consent of the Administrator, subcontract with
        any
        other person for servicing, administering or collecting the Pool Receivables,
        provided that (i) Servicer shall remain liable for the performance of the
        duties
        and obligations of Servicer pursuant to the terms hereof and (ii) such
        subcontract provides for termination upon the occurrence of a Liquidation
        Event.
        The Administrator hereby acknowledges and consents to the appointment of
        Parent
        Originator and/or Total System Services, Inc. as an approved
        subcontractor.

       

      SECTION
        8.02  Duties
        of Servicer.

       

      (a)  Appointment;
        Duties in General.
        Each of
        Seller, Purchaser and the Administrator hereby appoints as its agent Servicer,
        as from time to time designated pursuant to Section
        8.01,
        to
        enforce its rights and interests in and under the Pool Receivables, the Related
        Security and the related Contracts. Servicer shall take or cause to be taken
        all
        such actions as may be necessary or advisable to collect each Pool Receivable
        from time to time, all in accordance with applicable laws, rules and
        regulations, with reasonable care and diligence, and in accordance with the
        Credit and Collection Policy.

       

      (b)  Documents
        and Records.
        Seller
        shall deliver to Servicer, and Servicer shall hold in trust for Seller and
        Purchaser in accordance with their respective interests, all documents,
        instruments and records (including, without limitation, computer tapes or
        disks)
        that evidence or relate to Pool Receivables.

       

      (c)  Certain
        Duties to Seller.
        Servicer shall, as soon as practicable following receipt, turn over to Seller
        (i) that portion of Collections of Pool Receivables representing Seller’s
        undivided interest therein, and (ii) the Collections of any Receivable which
        is
        not a Pool Receivable. Servicer, if other than Seller, shall, as soon as
        practicable upon demand, deliver to Seller all documents, instruments and
        records in its possession that evidence or relate to Receivables
        of Seller other than Pool Receivables, and copies of documents, instruments
        and
        records in its possession that evidence or relate to Pool
        Receivables.

       

      (d)  Termination.
        Servicer’s authorization under this Agreement shall terminate upon the Final
        Payout Date.

       

      (e)  Power
        of Attorney.
        Seller
        hereby grants to Servicer an irrevocable power of attorney, with full power
        of
        substitution, coupled with an interest, to take in the name of Seller all
        steps
        which are necessary or advisable to endorse, negotiate or otherwise realize
        on
        any writing or other right of any kind held or transmitted by Seller or
        transmitted or received by Purchaser (whether or not from Seller) in connection
        with any Receivable.

       

      (f)  Procedures
        of Independent Accountants.
        No
        later than May 31 of each calendar year, commencing May 31, 2006, Servicer
        shall
        cause a firm of nationally recognized independent certified public accountants
        to perform the procedures described in Exhibit
        A
        hereto,
        and to provide a report with respect to such procedures to the Administrator.
        It
        is understood and agreed that such accountants may also perform other services
        for Servicer or its Affiliates. Such report may assume the accuracy of
        information provided by Servicer’s third party agents (other than Originators),
        and the accountants may qualify the report in a manner that is typical for
        reports of this type. 

       

      SECTION
        8.03  Rights
        of the Administrator.

       

      At
        any
        time following the designation of a Servicer other than Spirit of America,
        Inc.
        pursuant to Section
        8.01:

       

      (i)  The
        Administrator may direct the Obligors of Pool Receivables, or any of them,
        to
        pay all amounts payable under any Pool Receivable directly to the Administrator
        or its designee.

       

      (ii)  Seller
        shall, at the Administrator’s request and at Seller’s expense, give notice of
        the ownership of the Pool Receivables by Purchaser to each said Obligor and
        direct that payments be made directly to the Administrator or its
        designee.

       

      (iii)  Seller
        shall, at the Administrator’s request, (A) assemble all of the documents,
        instruments and other records (including, without limitation, computer programs,
        tapes and disks) which evidence the Pool Receivables, and the related Accounts
        and Contracts and Related Security, or which are otherwise reasonably necessary
        or desirable to service such Pool Receivables, and make the same available
        to
        the Administrator at a place selected by the Administrator and (B) segregate
        all
        cash, checks and other instruments received by it from time to time constituting
        Collections of Pool Receivables in a manner reasonably acceptable to the
        Administrator and promptly upon receipt, remit all such cash, checks and
        instruments, duly endorsed or with duly executed instruments of transfer,
        to the
        Administrator.

       

      (iv)  Each
        of
        Seller and Purchaser hereby authorizes the Administrator, and grants to the
        Administrator an irrevocable power of attorney, to take any and all steps
        in
        Seller’s name and on behalf of Seller and Purchaser which are reasonably
        necessary or desirable,
        in the determination of the Administrator, to collect all amounts due under
        any
        and all Pool Receivables, including, without limitation, endorsing Seller’s name
        on checks and other instruments representing Collections and enforcing such
        Pool
        Receivables and the related Contracts; provided
        that the
        Administrator shall not exercise its rights under such Power of Attorney
        unless
        a Successor Notice shall have been delivered pursuant to Section
        8.01(b).

       

      SECTION
        8.04  Limitation
        of Liability.
        The
        Administrator and the Purchaser shall not have any obligation or liability
        with
        respect to any Pool Receivables, Contracts or Accounts related thereto or
        any
        other related agreements, nor shall any of them be obligated to perform any
        of
        the obligations of Seller thereunder.

       

      SECTION
        8.05  Further
        Action Evidencing Purchases and Reinvestments.

       

      (a)  Further
        Assurances.
        Seller
        agrees that from time to time, at its expense, it will promptly execute and
        deliver all further instruments and documents, and take all further action
        that
        the Administrator or its designee may reasonably request in order to perfect,
        protect or more fully evidence the Purchases hereunder and the resulting
        Asset
        Interest, or to enable Purchaser or the Administrator or its designee to
        exercise or enforce any of their respective rights hereunder or under any
        Transaction Document. Without limiting the generality of the foregoing, Seller
        will upon the request of the Administrator or its designee execute and file
        such
        financing or continuation statements, or amendments thereto or assignments
        thereof, and such other instruments or notices, as may be necessary or
        appropriate.

       

      (b)  Additional
        Financing Statements; Performance by Administrator.
        Seller
        hereby authorizes the Administrator or its designee to file one or more
        financing or continuation statements, and amendments thereto and assignments
        thereof, relative to all or any of the Pool Assets now existing or hereafter
        arising in the name of Seller. If Seller fails to perform any of its agreements
        or obligations under this Agreement, the Administrator or its designee may
        (but
        shall not be required to) itself perform, or cause performance of, such
        agreement or obligation, and the reasonable expenses of the Administrator
        or its
        designee incurred in connection therewith shall be payable by Seller as provided
        in Section
        14.05.

       

      SECTION
        8.06  Application
        of Collections.
        Any
        payment by an Obligor in respect of any indebtedness owed by it to Seller
        shall,
        except as otherwise specified by such Obligor, as required by the underlying
        Contract or law or unless the Administrator instructs otherwise, be applied,
        first,
        as a
        Collection of any Pool Receivable or Receivables then outstanding of such
        Obligor in the order of the age of such Pool Receivables or Receivables,
        starting with the oldest of such Pool Receivable or Receivables and,
second,
        to any
        other indebtedness of such Obligor.

       

      SECTION
        8.07  Lockbox
        Accounts.

       

      (a)  The
        Servicer hereby confirms that Schedule
        C
        hereto
        describes all of the Lockbox Accounts into which Collections will be paid
        as of
        the Initial Funding Date. Within 60 days of the Initial Funding Date, Servicer
        and Seller shall cause each bank at which a Lockbox Account is maintained
        to
        enter into a Lockbox Agreement with Seller, Servicer and the Administrator.
        Neither
        Seller nor Servicer shall establish, or permit to be established, any other
        Lockbox Account unless the related account bank shall have entered into a
        Lockbox Agreement with Seller, Servicer and the Administrator.

       

      (b)  Servicer
        shall direct all Obligors to make payments in respect of the Receivables
        to a
        Lockbox Account described in the notice given to the Administrator pursuant
        to
        clause (a) above or to another Lockbox Account as to which a Lockbox Agreement
        is in effect.

       

      (c)  The
        Administrator shall be entitled to exercise its rights under the Lockbox
        Agreement during the continuance of a Liquidation Event or a Replacement
        Event,
        and agrees that it shall not exercise such rights at any other
        time.

       

      SECTION
        8.08  Access
        to Records.
        The
        Administrative Agent and the Purchaser agree, for the benefit of the Bank
        Agent,
        that the Bank Agent may have reasonable access to any books and records of
        the
        Transferring Parties, and use any equipment (including data processing
        equipment) of the Transferring Parties, that may be in the possession or
        control
        of the Administrative Agent and the Purchaser during reasonable business
        hours
        and at its own expense, but without any obligation to pay rent or compensation
        to the Transferring Parties, the Administrative Agent or the Purchaser, to
        the
        extent necessary to service and collect upon the collateral on which the
        Bank
        Agent has a lien.

       

      ARTICLE
        IX  

       

      SECURITY
        INTEREST

       

      SECTION
        9.01  Grant
        of Security Interest.
        To
        secure all obligations of Seller and Servicer arising in connection with
        this
        Agreement and each other Transaction Document to which either of them is
        a
        party, whether now or hereafter existing, due or to become due, direct or
        indirect, or absolute or contingent, including, without limitation, all
        Indemnified Amounts, payments on account of Collections and fees, in each
        case
pro rata
        according to the respective amounts thereof, Seller hereby assigns and grants
        to
        the Administrator, for the benefit of the Secured Parties, a security interest
        in all of Seller’s right, title and interest (including specifically any
        undivided interest retained by Seller hereunder) now or hereafter existing
        in,
        to and under (i) all the Pool Assets, (ii) the Transaction Accounts and all
        funds and other financial assets credited thereto, (iii) the Cap Agreement,
        and
        (iv) proceeds of the foregoing.

       

      SECTION
        9.02  Further
        Assurances.
        The
        provisions of Section
        8.05
        shall
        apply to the security interest granted under Section
        9.01
        as well
        as to the Purchases, Reinvestments and all the Asset Interests
        hereunder.

       

      SECTION
        9.03  Remedies.
        Upon
        the occurrence of a Liquidation Event, Purchaser shall have, with respect
        to the
        collateral granted pursuant to Section
        9.01,
        and in
        addition to all other rights and remedies available to Purchaser or the
        Administrator under this Agreement or other applicable law, all the rights
        and
        remedies of a secured party upon default under the UCC.

       

      ARTICLE
        X  

       

      LIQUIDATION
        EVENTS

       

      SECTION
        10.01  Liquidation
        Events.
        The
        following events shall be “Liquidation
        Events”
        hereunder:

       

      (a)  Seller,
        Transferor, any Originator or Servicer shall fail to perform or observe in
        any
        material respect any term, covenant or agreement that is an obligation of
        Seller, Transferor, any Originator or Servicer under the Transaction Documents
        (other than as referred to in clause
        (b)
        next
        following) and such failure shall remain unremedied for fifteen days after
        (1) written notice thereof shall have been given by the Administrator to
        Seller, Transferor, any Originator or Servicer, as applicable, or (2) Seller,
        Transferor, any Originator or Servicer, as applicable, has actual knowledge
        thereof, and such failure shall have a Material Adverse Effect; or 

       

      (b)  Seller,
        Transferor, any Originator or Servicer shall fail to make any payment or
        deposit
        to be made by it hereunder when due and such failure shall remain unremedied
        for
        more than one Business Day; or

       

      (c)  Any
        representation or warranty made or deemed to be made by the Seller, Transferor,
        any Originator or the Servicer under a Transaction Document or Information
        Package or other information or report delivered pursuant hereto shall prove
        to
        have been incorrect in any material respect when made and shall continue
        to be
        incorrect for a period of fifteen days after (i) written notice thereof shall
        have been given by the Administrator to the Seller or the Servicer (if Seller
        or
        its Affiliate is Servicer) or (ii) Seller or the Servicer (if Seller or its
        Affiliate is Servicer) has actual knowledge thereof, and such incorrect
        statement shall have a Material Adverse Effect; provided,
        that
        with respect to the breach of the representations or warranties set forth
        in
Section
        6.01(j),
        compliance by Seller with the provisions of Section
        3.02
        in
        respect thereof shall be deemed to cure such breach; or

       

      (d)  An
        Event
        of Bankruptcy shall have occurred and remain continuing with respect to the
        Seller, the Transferor, the Servicer or any Originator; or

       

      (e)  Any
        Originator, Seller or Transferor shall become an “investment company” or a
        company controlled by an “investment company” within the meaning of the
        Investment Company Act of 1940, as amended; or

       

      (f)  On
        any
        Settlement Date, the Average Excess Spread Percentage is less than 1.0%;
        or

       

      (g)  On
        any
        Settlement Date, the Average Monthly Principal Payment Rate Percentage is
        less
        than 6.0%; or 

       

      (h)  On
        any
        Settlement Date, the Average Dilution Percentage is greater than 8.0%;
        or

       

      (i)  Any
        Originator, Seller, Transferor or Servicer (if Servicer is Seller or its
        Affiliate) is subject to a Change in Control; or

       

      (j)  Any
        Originator shall become unable for any reason to transfer Receivables to
        the
        Transferor pursuant to the First Tier Agreement; or the Transferor shall
        become
        unable for any reason to transfer Receivables to the Seller pursuant to the
        Second Tier Agreement; or

       

      (k)  On
        any
        Settlement Date (after giving effect to all allocations of funds on such
        date),
        the Senior Investor Balance shall exceed the Benchmark Amount by more than
        $100,000, and such condition shall be unremedied for more than five Business
        Days; or

       

      (l)  A
        Cap
        Replacement Event shall have occurred and be continuing.

       

      SECTION
        10.02  Remedies.

       

      (a)  Optional
        Liquidation.
        Upon
        the occurrence of a Liquidation Event (other than a Liquidation Event described
        in subsection
        (d)
        of
Section
        10.01),
        the
        Administrator shall, at the request, or may with the consent, of Purchaser,
        by
        notice to Seller declare the Purchase Termination Date to have occurred and
        the
        Liquidation Period to have commenced.

       

      (b)  Automatic
        Liquidation.
        Upon
        the occurrence of a Liquidation Event described in subsection
        (d)
        of
Section
        10.01,
        the
        Purchase Termination Date shall occur and the Liquidation Period shall commence
        automatically.

       

      (c)  Optional
        Waiver.
        Upon
        the occurrence of any Liquidation Event, the Administrator, acting on behalf
        of
        the Purchaser, shall have the right to waive such Liquidation Event by providing
        a written notice of such waiver to the Seller and the Servicer, in which
        event
clauses
        (a)
        and
(b)
        above
        shall not be applicable to such Liquidation Event. The Administrator will
        promptly give Moody’s written notice of the execution of any such
        waiver.

       

      ARTICLE
        XI  

       

      THE
        ADMINISTRATOR

       

      SECTION
        11.01  Authorization
        and Action.
        Purchaser hereby irrevocably appoints, designates and authorizes the
        Administrator to take such action as agent on its behalf under the provisions
        of
        this Agreement or any other Transaction Document and to exercise such powers
        and
        perform such duties as are expressly delegated to the Administrator by the
        terms
        of this Agreement or any other Transaction Document, together with such powers
        as are reasonably incidental thereto. The Administrator shall not have any
        duties or responsibilities, except those expressly set forth herein or in
        any
        other Transaction Document, or any fiduciary relationship with the Purchaser,
        and no implied covenants, functions, responsibilities, duties, obligations
        or
        liabilities on the part of the Administrator shall be read into this Agreement
        or any other Transaction Document or otherwise exist for the Administrator.
        In
        performing its functions and duties hereunder and under the other Transaction
        Documents, (i) the Administrator shall act solely as agent for the Purchaser
        and
        the Secured Parties and (ii) the Administrator shall not be deemed to have
        assumed any obligation or relationship of trust or agency with or for any
        Transferring Party or the Servicer or any of such parties’ successors or
        assigns. The Administrator shall not be required to take any action that
        exposes
        the Administrator to personal liability or that is contrary to this Agreement,
        any other Transaction Document or applicable law. The
        appointment and authority of the Administrator hereunder shall terminate
        immediately following the Final Payout Date. 

       

      SECTION
        11.02  Administrator’s
        Reliance, Etc.
        The
        Administrator and its directors, officers, agents or employees shall not
        be (i)
        liable to Purchaser for any action taken or omitted to be taken by it or
        them
        under or in connection with the Transaction Documents, including, without
        limitation, the servicing, administering or collecting of Pool Receivables
        as
        Servicer pursuant to Section
        8.01
        (except
        for its or their own gross negligence, breach of contract or willful misconduct)
        or (ii) responsible in any manner to the Purchaser for any recitals, statements,
        representations or warranties made by any Transferring Party or the Servicer
        contained in this Agreement, any other Transaction Document or any certificate,
        report, statement or other document referred to or provided for in, or received
        under or in connection with, this Agreement, or any other Transaction Document
        or for the value, validity, effectiveness, genuineness, enforceability or
        sufficiency of this Agreement, or any other Transaction Document or any other
        document furnished in connection herewith or therewith, or for any failure
        of
        any Transferring Party or the Servicer to perform its obligations hereunder
        or
        thereunder, or for the perfection, priority, condition, value or sufficiency
        of
        any collateral pledged in connection herewith. Without limiting the generality
        of the foregoing, the Administrator: (a) may consult with legal counsel
        (including counsel for Seller), independent certified public accountants
        and
        other experts selected by it and shall not be liable for any action taken
        or
        omitted to be taken in good faith by it in accordance with the advice of
        such
        counsel, accountants or experts; (b) makes no warranty or representation
        to
        Purchaser or any other holder of any interest in Pool Receivables and shall
        not
        be responsible to Purchaser or any such other holder for any statements,
        warranties or representations made in or in connection with any Transaction
        Document; (c) shall not have any duty to ascertain or to inquire as to the
        performance or observance of any of the terms, covenants or conditions of
        any
        Transaction Document on the part of Seller or to inspect the property (including
        the books and records) of Seller; (d) shall not be responsible to Purchaser
        or
        any other holder of any interest in Pool Receivables for the due execution,
        legality, validity, enforceability, genuineness, sufficiency or value of
        any
        Transaction Document; and (e) shall not be deemed to have knowledge of any
        Unmatured Liquidation Event or Liquidation Event unless the Administrator
        has
        received notice from any Transferring Party, the Servicer or the
        Purchaser.

       

      SECTION
        11.03  Barclays
        and Affiliates.
        Barclays and any of its Affiliates may generally engage in any kind of business
        with Seller or any Obligor, any of their respective Affiliates and any Person
        who may do business with or own securities of Seller or any Obligor or any
        of
        their respective Affiliates, all as if Barclays were not the Administrator
        and
        without any duty to account therefor to Purchaser or any other holder of
        an
        interest in Pool Receivables. 

       

      SECTION
        11.04  Reliance
        by Administrator.
        The
        Administrator shall in all cases be entitled to rely, and shall be fully
        protected in relying, upon any document or conversation reasonably believed
        by
        it to be genuine and correct and to have been signed, sent or made by the
        proper
        Person or Persons and upon advice and statements of legal counsel (including,
        without limitation, counsel to Seller (it being understood that counsel to
        the
        Seller has no duty to or client-relationship with the Administrator)),
        independent accountants and other experts selected by the Administrator.
        The
        Administrator shall in all cases be fully justified in failing or refusing
        to
        take any action under this Agreement or any other Transaction Document unless
        it
        shall first receive
        such advice or concurrence of the Purchaser as it deems appropriate and it
        shall
        first be indemnified to its satisfaction, provided
        that
        unless and until the Administrator shall have received such advice, or unless
        the Purchaser shall have directed the Administrator to take or refrain from
        taking any action, the Administrator may take or refrain from taking any
        action,
        as the Administrator shall deem advisable and in the best interest of the
        Purchaser. The Administrator shall in all cases be fully protected in acting,
        or
        in refraining from acting, in accordance with a request of the Purchaser
        and
        such request and any action taken or failure to act pursuant thereto shall
        be
        binding upon the Purchaser. 

       

      SECTION
        11.05  Non-Reliance.
        The
        Purchaser expressly acknowledges that none of the Administrator or any of
        its
        respective officers, directors, employees, agents, attorneys-in-fact or
        affiliates has made any representations or warranties to it and that no act
        by
        the Administrator hereafter taken, including, without limitation, any review
        of
        the affairs of any Transferring Party or the Servicer, shall be deemed to
        constitute any representation or warranty by the Administrator. The Purchaser
        represents and warrants to the Administrator that it has and will, independently
        and without reliance upon the Administrator and based on such documents and
        information as it has deemed appropriate, made its own appraisal of an
        investigation into the business, operations, property, prospects, financial
        and
        other conditions and creditworthiness of the Seller and made its own decision
        to
        enter into this Agreement, the other Transaction Documents and all other
        documents related hereto or thereto.

       

      ARTICLE
        XII  

       

      ASSIGNMENT
        OF PURCHASER’S INTEREST

       

      SECTION
        12.01  Restrictions
        on Assignments.

       

      (a)  Except
        as
        provided in the next sentence, neither the Seller nor Servicer may assign
        its
        rights, or delegate its duties hereunder or any interest herein without the
        prior written consent of the Administrator. Servicer may assign its rights
        as
        Servicer under this Agreement to any of its Affiliates without prior written
        consent of the Administrator, provided
        that
        Servicer shall have given the Administrator ten days’ prior written notice
        thereof. Purchaser may not assign its rights hereunder (although it may delegate
        its duties hereunder as expressly indicated herein) or the Asset Interest
        (or
        any portion thereof) to any Person without the prior written consent of Seller,
        which shall not be unreasonably withheld (it being recognized and understood
        by
        all parties hereto that all parties hereto shall deem it reasonable for Seller
        to withhold such consent if any such proposed assignment would, in the
        reasonable determination of Seller, cause Seller to be required to pay to
        any
        Affected Party any of the amounts referred to in Section
        4.02);
        provided,
        however,
        that
        Purchaser may assign all of its rights and interests in the Transaction
        Documents, together with all its interest in the Asset Interest, to Barclays
        or
        any Affiliate of Barclays, or to any “bankruptcy remote” special purpose entity,
        the business of which is administered by Barclays or any Affiliate of Barclays
        or to any Liquidity Bank; provided,
        further,
        that
        such assignment shall not be expected to cause an increase in the Earned
        Discount Rate.

       

      (b)  Seller
        agrees to advise the Administrator within five Business Days after notice
        to
        Seller of any proposed assignment by Purchaser of the Asset Interest (or
        any
        portion thereof), not otherwise
        permitted under subsection
        (a),
        of
        Seller’s consent or non-consent to such assignment and, if it does not consent,
        the reasons therefor. If Seller does not consent to such assignment, Purchaser
        may immediately assign such Asset Interest (or portion thereof) to Barclays
        or
        any Affiliate of Barclays. All of the aforementioned assignments shall be
        upon
        such terms and conditions as Purchaser and the assignee may mutually
        agree.

       

      SECTION
        12.02  Rights
        of Assignee.
        Upon
        the assignment by Purchaser in accordance with this Article XII,
        the
        assignee receiving such assignment shall have all of the rights of Purchaser
        with respect to the Transaction Documents and the Asset Interest (or such
        portion thereof as has been assigned).

       

      SECTION
        12.03  Evidence
        of Assignment.
        Any
        assignment of the Asset Interest (or any portion thereof) to any Person may
        be
        evidenced by such instrument(s) or document(s) as may be reasonably satisfactory
        to Purchaser, the Administrator and the assignee.

       

      ARTICLE
        XIII  

       

      INDEMNIFICATION

       

      SECTION
        13.01  Indemnities
        by Seller.

       

      (a)  General
        Indemnity.
        Without
        limiting any other rights which any such Person may have hereunder or under
        applicable law, Seller hereby agrees to indemnify each of the Administrator,
        Purchaser, the Liquidity Banks, the Liquidity Agent, each of their respective
        Affiliates, and all successors, transferees, participants and assigns and
        all
        officers, directors, shareholders, controlling persons, employees and agents
        of
        any of the foregoing (each an “Indemnified
        Party”),
        forthwith on demand, from and against any and all damages, losses, claims,
        liabilities and related costs and expenses, including reasonable attorneys’ fees
        and disbursements (all of the foregoing being collectively referred to as
        “Indemnified
        Amounts”)
        awarded against or incurred by any of them arising out of or relating to
        the
        Transaction Documents, the Stock Purchase Agreement or the transactions
        contemplated thereby or the ownership or funding of the Asset Interest or
        in
        respect of any Receivable or Account or any Contract, excluding,
        however,
        (a)
        Indemnified Amounts to the extent resulting from gross negligence, breach
        of
        contract or willful misconduct on the part of any Indemnified Party or successor
        Servicer pursuant to Section
        8.01(b)
        if such
        successor Servicer is not an Affiliate of the Seller, (b) recourse (except
        as
        otherwise specifically provided in this Agreement) for any Receivable that
        is
        not paid as a result of credit related issues, or (c) any tax based upon
        or
        measured by net income.

       

      (b)  Procedure.
        In
        order for an Indemnified Party to be entitled to any indemnification provided
        for under this Agreement in respect of, arising out of, or involving a claim
        made by any Person against the Indemnified Party (a “Third
        Party Claim”),
        such
        Indemnified Party must notify the Seller in writing of the Third Party Claim
        within a reasonable time after receipt by such Indemnified Party of written
        notice of the Third Party Claim unless the Seller shall have previously obtained
        actual knowledge thereof. Thereafter, the Indemnified Party shall deliver
        to the
        Seller, within a reasonable time after the Indemnified Party’s receipt thereof,
        copies of all notices
        and documents (including court papers) received by the Indemnified Party
        relating to the Third Party Claim.

       

      (c)  Defense
        of Claims.
        If a
        Third Party Claim is made against an Indemnified Party, (a) the Seller will
        be entitled to participate in the defense thereof and, (b) if it so
        chooses, to assume the defense thereof with counsel selected by the Seller,
        provided that in connection with such assumption (i) such counsel is not
        reasonably objected to by the Indemnified Party, (ii) no material conflict
        of
        interest shall exist in relation to such Third Party Claim between such
        Indemnified Party and Seller, and (iii) the Seller, subject to Section
        14.15,
        first
        admits in writing its liability to indemnify the Indemnified Party with respect
        to all elements of such claim in full to the extent such claim is valid.
        Should
        the Seller so elect to assume the defense of a Third Party Claim, the Seller
        will not be liable to the Indemnified Party for any legal expenses subsequently
        incurred by the Indemnified Party in connection with the defense thereof.
        If the
        Seller elects to assume the defense of a Third Party Claim, the Indemnified
        Party will (i) cooperate in all reasonable respects with the Seller in
        connection with such defense and (ii) not admit any liability with respect
        to,
        or settle, compromise or discharge, such Third Party Claim without the Seller’s
        prior written consent, as the case may be. If the Seller shall assume the
        defense of any Third Party Claim, the Indemnified Party shall be entitled
        to
        participate in (but not control) such defense with its own counsel at its
        own
        expense. If the Seller does not assume the defense of any such Third Party
        Claim, the Indemnified Party may defend the same in such manner as it may
        deem
        appropriate, including settling such claim or litigation after giving prompt
        notice to the Seller of such terms and, subject to Section
        14.15,
        the
        Seller will promptly reimburse the Indemnified Party upon written request.
        Anything contained in this Agreement to the contrary notwithstanding, the
        Seller
        shall not be entitled to assume the defense of any part of a Third Party
        Claim
        that seeks an order, injunction or other equitable relief or relief for other
        than money damages against the Indemnified Party.

       

      ARTICLE
        XIV  

       

      MISCELLANEOUS

       

      SECTION
        14.01  Amendments,
        Etc.
        No
        amendment or waiver of any provision of this Agreement nor consent to any
        departure by Seller therefrom shall in any event be effective unless the
        same
        shall be in writing and signed by (a) Seller, the Administrator and Purchaser
        (with respect to an amendment) or (b) the Administrator and Purchaser (with
        respect to a waiver or consent by them) or Seller (with respect to a waiver
        or
        consent by it), as the case may be, and then such waiver or consent shall
        be
        effective only in the specific instance and for the specific purpose for
        which
        given.

       

      SECTION
        14.02  Notices,
        Etc.
        All
        notices and other communications provided for hereunder shall, unless otherwise
        stated herein, be in writing (including facsimile communication) and shall
        be
        personally delivered or sent by express mail or courier or by certified mail,
        postage prepaid, or by facsimile, to the intended party at the address or
        facsimile number of such party set forth in Schedule
        A
        or at
        such other address or facsimile number as shall be designated by such party
        in a
        written notice to the other parties hereto. All such notices and communications
        shall be effective, (a) if personally delivered or sent by express mail or
        courier
        or if sent by certified mail, when received, and (b) if transmitted by
        facsimile, when sent, receipt confirmed by telephone or electronic
        means.

       

      SECTION
        14.03  No
        Waiver; Remedies.
        No
        failure on the part of the Administrator, any Affected Party, any Indemnified
        Party, Purchaser or any other holder of the Asset Interest (or any portion
        thereof) to exercise, and no delay in exercising, any right hereunder shall
        operate as a waiver thereof; nor shall any single or partial exercise of
        any
        right hereunder preclude any other or further exercise thereof or the exercise
        of any other right. The remedies herein provided are cumulative and not
        exclusive of any remedies provided by law.

       

      SECTION
        14.04  Binding
        Effect; Survival.
        This
        Agreement shall be binding upon and inure to the benefit of Seller, the
        Administrator, Purchaser and their respective successors and assigns, the
        provisions of Section
        8.08
        shall
        inure to the benefit of the Bank Agent and its successors and assigns and
        the
        provisions of Section
        4.02
        and
Article
        XIII
        shall
        inure to the benefit of the Affected Parties and the Indemnified Parties,
        respectively, and their respective successors and assigns; provided,
        however,
        nothing
        in the foregoing shall be deemed to authorize any assignment not permitted
        by
Section 12.01.
        This
        Agreement shall create and constitute the continuing obligations of the parties
        hereto in accordance with its terms, and shall remain in full force and effect
        until the Final Payout Date. The rights and remedies with respect to any
        breach
        of any representation and warranty made by Seller pursuant to Article
        VI
        and the
        indemnification and payment provisions of Article
        XIII
        and
Sections
        4.02,
        14.05,
        14.06,
        14.08,
        and
14.15
        shall be
        continuing and shall survive any termination of this Agreement.

       

      SECTION
        14.05  Costs,
        Expenses and Taxes.
        In
        addition to its obligations under Article
        XIII,
        Seller
        agrees to pay on demand:

       

      (a)  all
        reasonable costs and expenses incurred by the Administrator and the Purchaser
        and their respective Affiliates in connection with the negotiation, preparation,
        execution and delivery, the administration (including periodic auditing)
        or the
        enforcement of, or any actual or claimed breach of, this Agreement and the
        other
        Transaction Documents, including, without limitation (i) the reasonable fees
        and
        expenses of counsel to any of such Persons incurred in connection with any
        of
        the foregoing or in advising such Persons as to their respective rights and
        remedies under any of the Transaction Documents, and (ii) all reasonable
        out-of-pocket expenses (including reasonable fees and expenses of independent
        accountants), incurred in connection with any review of Seller’s books and
        records either prior to the execution and delivery hereof or pursuant to
        Section
        7.01(g);
        and

       

      (b)  all
        stamp
        and other taxes and fees payable or determined to be payable in connection
        with
        the execution, delivery, filing and recording of this Agreement or the other
        Transaction Documents, and agrees to indemnify each Indemnified Party against
        any liabilities with respect to or resulting from any delay in paying or
        omission to pay such taxes and fees.

       

      SECTION
        14.06  No
        Proceedings/Purchaser.
        Seller,
        Servicer, Barclays (individually and as Administrator) each hereby agrees
        that
        it will not institute against Purchaser, or join any other Person in instituting
        against Purchaser, any insolvency proceeding (namely, any proceeding of the
        type
        referred to in the definition of Event of Bankruptcy) so long as any Commercial
        Paper Notes issued by Purchaser shall be outstanding or there shall not have
        elapsed one
        year
        plus one day since the last day on which any such Commercial Paper Notes
        shall
        have been outstanding. The foregoing shall not limit Seller’s right to file any
        claim in or otherwise take any action with respect to any insolvency proceeding
        that was instituted by any Person other than Seller.

       

      SECTION
        14.07  No
        Proceedings/Seller and Transferor.
        The
        Purchaser and the Administrator each hereby agrees that it will not institute
        against Seller or Transferor, or join any other Person in instituting against
        Seller or Transferor, any insolvency proceeding (namely, any proceeding of
        the
        type referred to in the definition of Event of Bankruptcy) prior to the date
        which is one year and one day after Final Payout Date. The foregoing shall
        not
        limit the right of the Purchaser or the Administrator to take any action
        with
        respect to any insolvency proceeding that was instituted by a Person other
        than
        Seller.

       

      SECTION
        14.08  Confidentiality.

       

      (a)  Each
        of
        the Purchaser and the Administrator covenants and agrees, and the Administrator
        shall cause each Affected Party to covenant and agree, on behalf of itself
        and
        its Affiliates, that all information (“Seller
        Information”)
        relating to the Seller, the Servicer (if an Affiliate of the Seller), their
        Affiliates, the structured financing conducted by any of them or the
        transactions contemplated by the Transaction Documents, in part or in whole,
        shall be held in confidence and each agrees not to use and not to disclose
        any
        of the contents of, provide any Person with copies of or use for any purpose
        not
        related to the Purchases hereunder any Seller Information other than disclosure
        to:

       

      (i)  Governmental
        Authorities with appropriate jurisdiction, including bank examiners or similar
        regulatory authorities;

       

      (ii)  any
        officer, director, member, manager, employee or outside accountant, auditor
        or
        attorney (each, a “Representative”)
        of the
        Purchaser, the Administrator or any Affected Party with a need to know such
        Seller Information in connection with the Purchases (it being understood
        that
        the officers, directors and employees of the Administrator and the other
        Affected Parties covered by this clause
        (i)
        do not
        include any individual whose responsibilities relate to any credit card or
        other
        consumer financing business conducted by the Administrator or any other Affected
        Party or its respective Affiliates);

       

      (iii)  any
        Rating Agency; or

       

      (iv)  to
        any
        surety or guarantor to the Purchaser.

       

      (b)  Each
        of
        Seller and Servicer covenants and agrees, on behalf of itself and its
        Affiliates, that all of the information in the Fee Letters (the “Purchaser
        Information”)
        shall
        be held in confidence and each agrees (x) not to disclose the Purchaser
        Information to the selling shareholders, or any Representative of the selling
        shareholders, under the Stock Purchase Agreement, and (y) not to use and
        not to
        disclose any of the contents of, provide any Person with copies of or use
        for
        any purpose not related to the transactions contemplated by the Transaction
        Documents any Purchaser Information, other than in each case disclosure
        to:

       

      (i)  Governmental
        Authorities with appropriate jurisdiction;

       

      (ii)  any
        Representative of Seller, Servicer or their Affiliates with the need to know
        such Purchaser Information in connection with the transactions contemplated
        by
        the Transaction Documents; or

       

      (iii)  any
        Rating Agency.

       

      (c)  Notwithstanding
        the above stated obligations, no Person will be liable for disclosure or
        use of
        Seller Information or Purchaser Information which (A) was required by law,
        including pursuant to regulation or administrative order, a subpoena or other
        legal process, (B) was in such Person’s possession or known to such Person prior
        to receipt or (C) is or becomes known to the public (without breach of any
        obligations hereunder). For the avoidance of doubt, disclosure by any Person
        (including without limitation by filing documents or reports with the Securities
        and Exchange Commission) of Seller Information or Purchaser Information made
        in
        good faith to comply with federal or state banking or securities laws shall
        be
        deemed to be “required by law” within the meaning of the preceding
        sentence.

       

      (d)  Notwithstanding
        the above stated obligations, the parties to this Agreement acknowledge and
        agree that (i) any obligations of confidentiality contained herein do not
        apply
        and have not applied from the commencement of discussions between the parties
        to
        the tax treatment and tax structure of the transactions contemplated by this
        Agreement and other Transaction Documents, and (ii) each party (and each
        of its
        employees, representatives or other agents) may disclose to any and all persons,
        without limitation of any kind, the tax treatment and tax structure of the
        transactions contemplated by this Agreement and other Transaction Documents
        and
        all materials of any kind (including opinions or other tax analyses) that
        are
        provided to such party relating to such tax treatment and tax structure,
        all
        within the meaning of the U.S. Department of Treasury Regulations, Section 1.6011-4.

       

      SECTION
        14.09  Captions
        and Cross References.
        The
        various captions (including, without limitation, the table of contents) in
        this
        Agreement are provided solely for convenience of reference and shall not
        affect
        the meaning or interpretation of any provision of this Agreement. Unless
        otherwise indicated, references in this Agreement to any Section, Appendix,
        Schedule or Exhibit are to such Section of or Appendix, Schedule or Exhibit
        to
        this Agreement, as the case may be, and references in any Section, subsection,
        or clause to any subsection, clause or subclause are to such subsection,
        clause
        or subclause of such Section, subsection or clause.

       

      SECTION
        14.10  Integration;
        Survival.
        This
        Agreement, together with the other Transaction Documents when executed and
        delivered by the respective parties thereto, contains a final and complete
        integration of all prior expressions by the parties hereto with respect to
        the
        subject matter hereof and shall constitute the entire understanding among
        the
        parties hereto with respect to the subject matter hereof, superseding all
        prior
        oral or written understandings. Sections
        14.06,
        14.07
        and
        14.08
        shall
        survive termination of this Agreement.

       

      SECTION
        14.11  Governing
        Law.
        THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL
        BE
        GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE
        OF NEW YORK, EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF
        PURCHASER IN THE RECEIVABLES IS GOVERNED BY THE LAWS OF THE JURISDICTION
        OTHER
        THAN THE STATE OF NEW YORK.

       

      SECTION
        14.12  Waiver
        Of Jury Trial.
        EACH OF THE PARTIES HERETO EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY
        IN ANY
        ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT,
        ANY
        OTHER TRANSACTION DOCUMENT OR ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED
        OR
        WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM
        ANY
        BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT
        OR ANY
        OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
        SHALL
        BE TRIED BEFORE A COURT AND NOT A JURY TRIAL.

       

      SECTION
        14.13  Consent
        To Jurisdiction; Waiver Of Immunities.
        EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IT IRREVOCABLY (i)
        SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND
        SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT,
        IN EITHER CASE SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
        ARISING
        OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT
        OF
        SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK
        STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE
        FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM
        TO
        THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.

       

      SECTION
        14.14  Execution
        in Counterparts.
        This
        Agreement may be executed in any number of counterparts and by the different
        parties hereto in separate counterparts, each of which when so executed shall
        be
        deemed to be an original and all of which when taken together shall constitute
        one and the same Agreement.

       

      SECTION
        14.15  No
        Recourse Against Other Parties.
        No
        recourse under any obligation, covenant or agreement of any of the
        Securitization Entities contained in this Agreement shall be had against
        any
        incorporator, stockholder, officer, director or employee of such Securitization
        Entity, by the enforcement of any assessment or by any legal or equitable
        proceeding, by virtue of any statute or otherwise; it being expressly agreed
        and
        understood that this Agreement is solely a corporate obligation of Purchaser,
        and that no personal liability whatever shall attach to or be incurred by
        the
        incorporators, stockholders, officers, directors, employees or Affiliate
        of such
        Securitization Entity, or any of them under or by reason of any of the
        obligations, covenants or agreements of such Securitization Entity contained
        in
        this Agreement, or implied therefrom, and that any and all personal liability
        for breaches by such Securitization Entity of any of such obligations, covenants
        or agreements either at common law or at equity, or by statute or constitution,
        of every such incorporator, stockholder, officer, director, employee or
        Affiliate is hereby expressly waived as a condition of and in consideration
        for
        the execution of this Agreement; provided,
        however,
        that
        nothing in this Section
        14.15
        shall
relieve
        any of the foregoing persons or entities from any liability arising from
        his,
        her or its willful misconduct or intentional misrepresentations.

       

      SECTION
        14.16  Amendment
        and Restatement.
        This
        Agreement amends and restates the Prior RPA, and upon the effectiveness of
        this
        Agreement, the terms and provisions of the Prior RPA shall be superseded
        hereby
        in their entirety. From and after the effectiveness hereof, all references
        to
        the Prior RPA in any other instrument or document shall be deemed to be
        references to this Agreement.

       

      [Signature
        Page to Follow]

       

      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      



      
        
          
            


          

           

        

        
           

          
            

          

        

        
           

          
            


          

        

      



      IN
        WITNESS WHEREOF, the parties have caused this Agreement to be executed by
        their
        respective officers thereunto duly authorized, as of the date first above
        written.

       

      

        CATALOG
          RECEIVABLES LLC,

        as
          Seller

        


        


        By:

        Name:

        Title:

        


        


        SPIRIT
          OF AMERICA, INC.,
          as
          Servicer

        


        


        By:
          

        Name:
          

        Title:
          

        


        


        SHEFFIELD
          RECEIVABLES CORPORATION,

        as
          Purchaser

        


        


        By:

        Name:

        Title:

        


        BARCLAYS
          BANK PLC,
          as
          Administrator

        


        


        By:

        Name:

        Title:



       

      


       

      


       

      


       

      


       

      


       

      


       

      


       


      
        
          
            


          

           

        

        
           

          
            

          

        

        
           

          
            


          

        

      



      Appendix
        A

       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      Schedule
        A

       

      Addresses
        for Notices

       

      Catalog
        Receivables LLC

      c/o
        Fashion Service Corp.

      450
        Winks
        Lane

      Bensalem,
        Pennsylvania 19020

      Attention:
        Kirk
        R.
        Simme

      Telephone:
        (215)
        638-6722

      Telecopy:
        (215) 633-4734

      


      with
        a
        copy to: 

      450
        Winks
        Lane 

      Bensalem,
        Pennsylvania 19020 

      Attention:
         Legal Department 

      Telephone:
         (215)
        638-6954 

      Telecopy:
         (215)
        638-6919

      


      Spirit
        of
        America, Inc.

      450
        Winks
        Lane 

      Bensalem,
        Pennsylvania 19020

      Attention:
        Kirk
        R.
        Simme

      Telephone:
        (215)
        638-6722

      Telecopy:
        (215) 633-4734

      


      with
        a
        copy to:

      450
        Winks
        Lane 

      Bensalem,
        Pennsylvania 19020 

      Attention:
         Legal Department 

      Telephone:
         (215)
        638-6954 

      Telecopy:
         (215)
        638-6919

      


      Sheffield
        Receivables Corporation

      c/o
        Barclays Bank PLC

      200
        Park
        Avenue

      New
        York,
        New York 10166 

      Attention:
        Janette Lieu, Asset Securitization Group

      Telephone:
        (212) 412-7618

      Telecopy:
        (212) 412-6846

      


      Barclays
        Bank PLC

      200
        Park
        Avenue

      New
        York,
        New York 10166 

      Attention:
        Janette Lieu, Asset Securitization Group

      Telephone:
        (212) 412-7618

      Telecopy:
        (212) 412-6846

      



      
        
           

        

        
           

          
            

          

        

        
           

        

      


      Schedule
        B

       

      


       

      Payment
        Account

       

      


      Bank: Barclays
        Bank

      ABA: 026002574

      Acct: 050791516

      Name: Sheffield
        4(2) Funding Account

      Ref: Charming
        Shoppes - Catalog Receivables LLC

      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      



      
        
           

        

        
           

          
            

          

        

        
           

        

      


      Schedule
        C

      


      Lockbox
        Accounts

       

      


      Wells
        Fargo Bank

      Bedford
        Fair Apparel

      Credit
        Card Settlement

      6355059754

      


      Wells
        Fargo Bank

      LM
&
        B Catalog

      Credit
        Card Settlement

      6355065388

      


      Wells
        Fargo Bank

      Monterey
        Bay Clothing

      Credit
        Card Settlement

      4100173897

      


      JPMorgan
        Chase Bank (formerly Bank One N.A.)

      Arizona
        Mail Order

      Credit
        Depository Account

      634888481

      


      JPMorgan
        Chase Bank (formerly Bank One N.A.)

      Bedford
        Fair Apparel

      Credit
        Depository Account

      634888499

      


      JPMorgan
        Chase Bank (formerly Bank One N.A.)

      LM
&
        B Catalog

      Credit
        Depository Account

      634888507

      


      JPMorgan
        Chase Bank (formerly Bank One N.A.)

      Monterey
        Bay Clothing

      Credit
        Depository Account

      635885700

      


      


       

      


       

      


       

      


       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      Exhibit
        A

       

      Procedures
        of Independent Accountants 

       

      	1.  	
              Select
                a random sample of 5 applications for testing of proper approval
                or denial
                of credit, applying the criteria specified in the Credit and Collection
                Policies.

            


       

      	2.  	
              Select
                a random sample of 5 transactions representing both credit authorizations
                and line changes and will review them for compliance with Credit
                and
                Collection Policies.

            


       

      	3.  	
              Perform
                observation tests for 5 individual delinquent accounts to determine
                if the
                collections procedures are being performed in accordance with the
                Credit
                and Collection Policies.

            


       

      	4.  	
              For
                a random selection of 5 accounts which are in excess of 30 days delinquent
                and up to 90 days delinquent, review prior account statements or
                system
                records to determine if the system is properly aging the balances.
                

            


       

      	5.  	
              For
                a random selection of 5 accounts which are in excess of 90 days
                delinquent, review prior account statements or system records to
                determine
                if the system is properly aging the balances.


            


       

      	6.  	
              Select
                a random sample of 5 accounts, if any, which are in excess of 180
                days
                delinquent and determine whether the account has been written off
                in
                accordance with Credit and Collection
                Policies.

            


       

      	7.  	
              Select
                5 days during the past 6 months and verify (i) Servicer’s calculation of
                the Asset Interest for such day and (ii) Servicer’s allocations of daily
                Collections for such days complies with Section 1.03 of the Receivables
                Purchase Agreement.

            


       

      	8.  	
              Select
                2 monthly servicing reports within the past 6 months and reconcile
                the
                following with Servicer’s systems and
                records:

            


       

      	a.  	
              Beginning
                and ending outstanding Principal Receivables
                balance

            


       

      	b.  	
              Beginning
                and ending Discounted Principal Receivables
                Balance

            


       

      	c.  	
              Beginning
                and ending Finance Charge Receivables
                balance

            


       

      	d.  	
              Monthly
                Finance Charge Collections, including Discount Collections
                component

            


       

      	e.  	
              Monthly
                Principal Collections

            


       

      	f.  	
              Monthly
                Charged-Off Receivables

            


       

      	g.  	
              Benchmark
                Amount

            


       

      	h.  	
              Required
                Reserve Account Amount

            


       

      	i.  	
              Required
                Reserve Account Percentage

            


       

      	j.  	
              Required
                Cash Collateral Amount

            


       

      	k.  	
              Cash
                Collateral Shortfall, Excess Cash Collateral, and Reserve Account
                Shortfall if any

            


       

      	9.  	
              Select
                2 monthly servicing reports within the past 6 months and recalculate
                the
                following:

            


       

      	a.  	
              Portfolio
                Excess Spread Percentage including Portfolio Excess Spread
                Amount

            


       

      	b.  	
              Monthly
                Principal Payment Rate

            


       

      	c.  	
              Dilution
                Percentage

            


       

      	10.  	
              Check
                the amounts distributed under the monthly reports selected and verify
                compliance with the waterfall allocation as specified in Section
                3.01 of
                the Receivables Purchase Agreement. Verify the flow of funds to and
                from
                accounts as complying with Section 3.01 of the Receivables Purchase
                Agreement.

            


       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      Exhibit
        B

       

      Form
        of
        Cap Agreement

       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      Exhibit
        C

       

      Form
        of
        First Tier Agreement

       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      Exhibit
        D

       

      Form
        of
        Second Tier Agreement