EXHIBIT 10.8 AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

Receivables Purchase Transfer Agreement

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CHARMING SHOPPES INC | CATALOG RECEIVABLES LLC | SPIRIT OF AMERICA, INC. | SHEFFIELD RECEIVABLES CORPORATION | BARCLAYS BANK PLC

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Title: EXHIBIT 10.8 AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
Governing Law: New York Date: 9/7/2005
Industry: Retail (Apparel) Sector: Services

EXHIBIT 10.8

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

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TABLE OF CONTENTS

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ARTICLE I PURCHASES AND REINVESTMENTS..................................... 2

SECTION 1.01 Commitments to Purchase; Limits on Purchaser's

Obligations............................................. 2

SECTION 1.02 Purchase Procedures; Assignment of Purchaser's

Interests............................................... 2

SECTION 1.03 Reinvestments of Certain Collections; Payment of

Remaining Collections................................... 2

SECTION 1.04 Asset Interest.......................................... 3

SECTION 1.05 Reduction of Facility Limit; Termination................ 4

ARTICLE II COMPUTATIONAL RULES............................................. 4

SECTION 2.01 Computation of Senior Investor Balance.................. 4

SECTION 2.02 Computation of Earned Discount.......................... 4

SECTION 2.03 Estimates of Earned Discount Rate, Fees, etc............ 4

ARTICLE III SETTLEMENTS..................................................... 5

SECTION 3.01 Settlement Procedures................................... 5

SECTION 3.02 Deemed Collections; Reduction of Senior Investor

Balance, Etc............................................ 8

SECTION 3.03 Payments and Computations, Etc.......................... 9

SECTION 3.04 Treatment of Collections and Deemed Collections......... 9

SECTION 3.05 Collection Account...................................... 9

SECTION 3.06 Reserve Account......................................... 10

SECTION 3.07 Cash Collateral Account................................. 10

SECTION 3.08 Accounts Generally...................................... 10

ARTICLE IV FEES AND YIELD PROTECTION....................................... 11

SECTION 4.01 Fees.................................................... 11

SECTION 4.02 Yield Protection........................................ 11

SECTION 4.03 Funding Losses.......................................... 13

ARTICLE V CONDITIONS OF PURCHASES......................................... 14

SECTION 5.01 Conditions Precedent to Initial Purchase................ 14

SECTION 5.02 Conditions Precedent to All Purchases and

Reinvestments........................................... 15

ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................. 16

SECTION 6.01 Representations and Warranties of Seller................ 16

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SECTION 6.02 Representations and Warranties of Servicer.............. 17

ARTICLE VII GENERAL COVENANTS OF SELLER AND SERVICER........................ 19

SECTION 7.01 Covenants of Seller and Servicer........................ 19

SECTION 7.02 Reporting Requirements of Seller and Servicer........... 21

SECTION 7.03 Transaction Documents................................... 21

ARTICLE VIII ADMINISTRATION AND COLLECTION................................... 21

SECTION 8.01 Designation of Servicer................................. 21

SECTION 8.02 Duties of Servicer...................................... 22

SECTION 8.03 Rights of the Administrator............................. 23

SECTION 8.04 Limitation of Liability................................. 24

SECTION 8.05 Further Action Evidencing Purchases and

Reinvestments........................................... 24

SECTION 8.06 Application of Collections.............................. 24

SECTION 8.07 Lockbox Accounts........................................ 24

SECTION 8.08 Access to Records....................................... 25

ARTICLE IX SECURITY INTEREST............................................... 25

SECTION 9.01 Grant of Security Interest.............................. 25

SECTION 9.02 Further Assurances...................................... 25

SECTION 9.03 Remedies................................................ 25

ARTICLE X LIQUIDATION EVENTS.............................................. 26

SECTION 10.01 Liquidation Events...................................... 26

SECTION 10.02 Remedies................................................ 27

ARTICLE XI THE ADMINISTRATOR............................................... 27

SECTION 11.01 Authorization and Action................................ 27

SECTION 11.02 Administrator's Reliance, Etc........................... 28

SECTION 11.03 Barclays and Affiliates................................. 28

SECTION 11.04 Reliance by Administrator............................... 28

SECTION 11.05 Non-Reliance............................................ 29

ARTICLE XII ASSIGNMENT OF PURCHASER'S INTEREST.............................. 29

SECTION 12.01 Restrictions on Assignments............................. 29

SECTION 12.02 Rights of Assignee...................................... 30

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SECTION 12.03 Evidence of Assignment.................................. 30

ARTICLE XIII INDEMNIFICATION................................................. 30

SECTION 13.01 Indemnities by Seller................................... 30

ARTICLE XIV MISCELLANEOUS................................................... 31

SECTION 14.01 Amendments, Etc......................................... 31

SECTION 14.02 Notices, Etc............................................ 31

SECTION 14.03 No Waiver; Remedies..................................... 32

SECTION 14.04 Binding Effect; Survival................................ 32

SECTION 14.05 Costs, Expenses and Taxes............................... 32

SECTION 14.06 No Proceedings/Purchaser................................ 32

SECTION 14.07 No Proceedings/Seller and Transferor.................... 33

SECTION 14.08 Confidentiality......................................... 33

SECTION 14.09 Captions and Cross References........................... 34

SECTION 14.10 Integration; Survival................................... 34

SECTION 14.11 Governing Law........................................... 34

SECTION 14.12 Waiver Of Jury Trial.................................... 35

SECTION 14.13 Consent To Jurisdiction; Waiver Of Immunities........... 35

SECTION 14.14 Execution in Counterparts............................... 35

SECTION 14.15 No Recourse Against Other Parties....................... 35

SECTION 14.16 Amendment and Restatement............................... 36

APPENDICES

Appendix A Definitions

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SCHEDULES

Schedule A Addresses

Schedule B Payment Account

Schedule C Lockbox Accounts

EXHIBITS

Exhibit A Procedures of Independent Accountants

Exhibit B Form of Cap Agreement

Exhibit C Form of First Tier Agreement

Exhibit D Form of Second Tier Agreement

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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:

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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).

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

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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.

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(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%.

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

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

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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.

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(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

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(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.

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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

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.

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(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.

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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.

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.

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

<PAGE>

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.

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

<PAGE>

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;

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.

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

<PAGE>

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

<PAGE>

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);

<PAGE>

(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

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,

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.

<PAGE>

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.

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

<PAGE>

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.

<PAGE>

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.

<PAGE>

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.

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

<PAGE>

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.

<PAGE>

(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;

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.

<PAGE>

(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.

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.

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

<PAGE>

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

<PAGE>

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.

<PAGE>

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.

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.

<PAGE>

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

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

<PAGE>

(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.

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.

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

notices and documents (including court papers) received by the Indemnified Party

relating to the Third Party Claim.

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

<PAGE>

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

<PAGE>

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:

<PAGE>

(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.

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

<PAGE>

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

<PAGE>

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]

<PAGE>

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:

---------------------------------------------

<PAGE>

APPENDIX A

DEFINITIONS

This is Appendix A to the Receivables Purchase Agreement dated as of

June 2, 2005 among Catalog Receivables LLC, Spirit of America, Inc.,

Sheffield Receivables Corporation, and Barclays Bank PLC, as Administrator

(as amended, supplemented or otherwise modified from time to time, this

"Agreement"). Certain terms that are capitalized and used herein but not

otherwise defined shall have the meanings set forth in the First Tier

Agreement (as defined below).

A. Defined Terms. As used in this Agreement, unless the context

requires a different meaning, the following terms have the meanings

indicated hereinbelow:

"Account" means each Initial Account and each Additional Account.

"Account Control Agreement" means an agreement relating to the control

of one or more Transaction Accounts among Seller, the Servicer, the

Administrator and the Transaction Account Bank.

"Administrator" has the meaning set forth in the preamble.

"Administrator's Office" means the office of the Administrator at 200

Park Avenue, New York, New York 10166 or such other address as shall be

designated by the Administrator in writing to Seller and Purchaser.

"Affected Party" means each of (i) the Administrator, (ii) the

Purchaser, (iii) each Liquidity Bank, (iv) any permitted assignee or

participant of Purchaser or any Liquidity Bank, and (v) any corporation

controlling any of the foregoing.

"Affiliate" when used with respect to a Person means any other Person

controlling, controlled by, or under common control with, such Person.

"Agreement" means this Receivables Purchase Agreement, as amended,

restated or otherwise modified from time to time.

"Alternate Base Rate" means, on any date, a fluctuating rate of

interest per annum equal to the higher of

(a) the rate of interest most recently announced by Barclays Bank PLC

at its principal office located in New York City, New York, as its prime

commercial lending rate; and

(b) the Federal Funds Rate (as defined below) most recently determined

by the Liquidity Agent plus 0.50% per annum.

The Alternate Base Rate is not necessarily intended to be the lowest rate of

interest determined by Barclays Bank PLC in connection with extensions of

credit.

<PAGE>

"Applicable Margin" is defined in the Program Fee Letter.

"Asset Interest" means an undivided ownership interest determined from

time to time as provided in Section 1.04(b) in all Pool Assets.

"Available Funds" means, with respect to a Settlement Date, the sum of

(x) the Purchaser's Share of Collections received, or deemed received

pursuant to Section 3.02, during the immediately preceding Due Period, plus

(y) the amount of any Cap Payments received by the Seller during the

immediately preceding Settlement Period, plus (z) investment earnings

included in Available Funds for such Settlement Date pursuant to Section

3.08(a).

"Average Dilution Percentage" means, for any Settlement Date, the

average of the Dilution Percentages for the two immediately preceding Due

Periods.

"Average Excess Spread Percentage" means, for any Settlement Date, the

average of the Portfolio Excess Spread Percentages for the two immediately

preceding Due Periods.

"Average Monthly Principal Payment Rate Percentage" means, for any

Settlement Date, the average of the Monthly Principal Payment Rate for the

two immediately preceding Due Periods.

"Bank Rate" means, for any day falling in any Settlement Period (or

portion thereof), an interest rate per annum equal to the LIBOR Rate for

that Settlement Period (or portion thereof) plus the Applicable Margin,

except that the Bank Rate shall equal the Alternate Base Rate plus the

Applicable Margin (i) as to any day falling in any Settlement Period if the

Administrator does not receive notice or determine, by no later than 12:00

noon (New York City time) on the third Business Day prior to such day that

the Bank Rate shall apply on such day, (ii) as to any day falling in any

Settlement Period, if the Administrator has determined that for any reason

it is not legally permissible or commercially practicable for any Liquidity

Bank to fund its investment in the Asset Interest by purchasing dollar

deposits in the London interbank market, or (iii) as to any day falling in

any Settlement Period to the extent that the portion of the Asset Interest

to be funded at the Bank Rate on such day is less than $1,000,000.

"Barclays" has the meaning set forth in the preamble.

"Benchmark Amount" means, at any time, the sum of the Discounted

Principal Receivables Balance and the Excess Cash Collateral.

"BIF" shall mean the Bank Insurance Fund administered by the FDIC.

"Business Day" means a day on which both (a) the Administrator at its

principal office in New York City, New York is open for business and (b)

commercial banks in Milfred, Ohio and Philadelphia, Pennsylvania are not

authorized or required to be closed for business.

<PAGE>

"Cap Agreement" means (a) the interest rate cap agreement, dated on or

prior to the Initial Funding Date, between Seller and the Cap Provider in

substantially the form attached hereto as Exhibit B and (b) any Replacement

Cap Agreement.

"Cap Payment" means, with respect to a Settlement Date, the payment,

if any, received from the Cap Provider on the day preceding such Settlement

Date, as determined pursuant to the Cap Agreement.

"Cap Provider" means, with respect to any Cap Agreement, the initial

counterparty under the Cap Agreement, or any successor or assign thereto

appointed as provided in the Cap Agreement, in its individual capacity

pursuant to the Cap Agreement.

"Cap Replacement Event" means (i) (x) any Cap Provider shall fail to

make any payment required to be made by it pursuant to the Cap Agreement

and such failure shall continue for three Business Days, (y) the withdrawal

of or reduction below A-1 in the senior unsecured, unguaranteed, short-term

debt rating of a Cap Provider by S&P or a withdrawal of or reduction below

P-1 of the unsecured, unguaranteed, short-term debt rating of a Cap

Provider by Moody's, or (z) any Cap Agreement shall terminate or shall not

be extended in connection with the extension of the Purchase Termination

Date and (ii) the Servicer shall fail to enter into a Replacement Interest

Rate Cap within 30 days of the occurrence of any event described in clause

(i).

"Cash Collateral Account" has the meaning set forth in Section

3.07(a).

"Cash Collateral Shortfall" means, as of any date, the excess, if any,

of the Required Cash Collateral Amount over the amount then on deposit in

the Cash Collateral Account (exclusive of earnings on the investment of

such amount).

"Change in Control" means as to Seller, Transferor, Servicer or

Originator, any person or group of related persons (excluding Charming

Shoppes, Inc., a Pennsylvania corporation, and its Affiliates) gains

beneficial ownership of a majority in voting interest of the outstanding

voting stock or membership interests, as applicable, of Seller, Transferor,

Servicer or Originator, as applicable, or has caused to be elected a

majority of the Board of Directors of Seller, Transferor, Servicer or

Originator.

"Charged-Off Receivable" means (a) any Receivable that is more than

180 days past due, and (b) any Receivable arising in an Account (i) the

Obligor of which is known by the Servicer to be the subject of a bankruptcy

proceeding, or (ii) that has been either written off or, consistent with

the Credit and Collection Policy, should have been written off from the

Originator's books as uncollectible.

"Closing Date" means May 18, 2005.

"Collection Account" has the meaning set forth in Section 3.05.

"Collections" means all funds which (a) are received by any Seller,

Transferor or Servicer from or on behalf of the related Obligors in payment

of any amounts owed (including, without limitation, purchase prices,

finance charges, interest and all other

iii

<PAGE>

charges) in respect of Receivables, or applied to such amounts owed by such

Obligors (including, without limitation, insurance payments that Originator

or Servicer applies in the ordinary course of its business to amounts owed

in respect of Receivables, net proceeds of sale or other disposition of

Receivables and recoveries in respect of Charged-Off Receivables), or (b)

are deemed to have been received by Seller or any other Person as a

Collection pursuant to Section 3.02.

"Commercial Paper Notes" means short-term promissory notes issued or

to be issued by Purchaser to fund its investments in accounts receivable or

other financial assets.

"Contract" means a contract between Originator and any Person pursuant

to or under which such Person establishes an Account pursuant to which

indebtedness may arise for the purchase of goods and services from time to

time, provided that such agreement is substantially in a form used by

Originator prior to the Closing Date, subject to such changes as (i) the

Servicer determines in good faith are required by law, or (ii) are not

reasonably expected to have a Material Adverse Effect. A "related" Contract

with respect to the Receivables means a Contract under which Receivables in

the Receivables Pool arise or which is relevant to the collection or

enforcement of such Receivables.

"CP Rate" for any period means a rate per annum calculated by the

Administrator equal to the sum of (i) the rate or, if more than one rate,

the weighted average of the rates, determined by converting to an

interest-bearing equivalent rate per annum the discount rate (or rates) at

which Commercial Paper Notes on each day during such period have been sold

by the commercial paper placement agents selected by the Administrator,

plus (ii) the commissions and charges charged by such commercial paper

placement agents with respect to such Commercial Paper Notes, expressed as

a percentage of such face amount and converted to an interest-bearing

equivalent rate per annum.

"Credit and Collection Policy" means those credit and collection

policies and practices relating to Contracts, Accounts, and Receivables, as

modified from time to time; provided that no modification shall be

implemented after the Closing Date unless (i) the Servicer determines in

good faith that such modification is required by law, or (ii) such

modification is not reasonably expected to have a Material Adverse Effect.

"Dilution Percentage" means, for any Due Period, the percentage

equivalent of (i) the aggregate amount of credits, adjustments, rebates,

refunds and setoffs with respect to Receivables granted or allowed by

Seller or any Affiliate of Seller during such Due Period divided by (ii)

the aggregate Unpaid Balance of all Receivables as of the last day of the

immediately precedi

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