Registration No. 333-1837
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 2
To
FORM S-3
Registration Statement
Under
The Securities Act of 1933
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FIRST BANK CORPORATE CARD MASTER TRUST
(Issuer with respect to the Certificates)
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FIRST BANK OF SOUTH DAKOTA
(NATIONAL ASSOCIATION)
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
United States 46-0168855
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
141 North Main Avenue
Sioux Falls, South Dakota 57117
(605) 339-8600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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Lee R. Mitau
Corporate Secretary and General Counsel
First Bank System, Inc.
601 Second Avenue South
Minneapolis, Minnesota 55402
(612) 973-0363
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
Charles F. Sawyer, Esq. Susan M. Curtis, Esq.
Dorsey & Whitney LLP Skadden, Arps, Slate, Meagher & Flom LLP
220 South Sixth Street 919 Third Avenue
Minneapolis, Minnesota 55402 New York, New York 10022
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maxi- Proposed
Amount mum Offering Maximum
Title of Each Class of Securities to be to be Price Aggregate Amount of
Registered Registered Per Unit(1) Offering Price(1) Registration Fee(2)
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<S> <C> <C> <C> <C>
Class A Asset Backed Certificates $500,000 100% $500,000 $172.41
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Class B Asset Backed Certificates $500,000 100% $500,000 $172.42
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TOTAL $1,000,000 100% $1,000,000 $344.83
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) $344.83 of which was previously paid.
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Preliminary Prospectus Subject to Completion dated _______ __, 1997
First Bank Corporate Card Master Trust
Issuer
$ ____________________ Class A ___% Asset Backed Certificates, Series 1997-1
$ ____________________ Class B ___% Asset Backed Certificates, Series 1997-1
First Bank of South Dakota (National Association)
Transferor
FBS Card Services, Inc.
Servicer
Each Class A __% Asset Backed Certificate, Series 1997-1 (collectively, the
"Class A Certificates") and each Class B __% Asset Backed Certificate, Series
1997-1 (collectively, the "Class B Certificates" and, together with the Class A
Certificates, the "Certificates") will represent an undivided interest in the
First Bank Corporate Card Master Trust (the "Trust") governed by a Pooling and
Servicing Agreement among First Bank of South Dakota (National Association), as
transferor, FBS Card Services, Inc., as servicer, and Citibank, N.A., as
trustee. In addition, a Collateral Investor Interest (as defined herein) having
an initial principal balance of $______ will be issued as part of Series 1997-1,
and will be subordinated to the Certificates as described herein.
(cover continued on following page)
There currently is no secondary market for the Certificates, and there is no
assurance that one will develop. Potential investors should consider, among
other things, the information set forth in "Risk Factors" on page 21.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR RECOURSE OBLIGATIONS OF FIRST BANK OF SOUTH DAKOTA (NATIONAL
ASSOCIATION), FIRST BANK SYSTEM, INC., FBS CARD SERVICES, INC. OR ANY AFFILIATE
THEREOF. A CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE CERTIFICATES NOR THE
UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Price to Underwriting Proceeds to
public (1) discount the Transferor (1)(2)
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Per Class A Certificate % % %
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Per Class B Certificate % % %
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Total $ $ $
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(1) Plus accrued interest, if any, calculated from ________,1997.
(2) Before deducting expenses estimated to be $_____________.
The Certificates are offered by the Underwriters when, as, and if issued by the
Trust and accepted by the Underwriters and subject to their right to reject
orders in whole or in part. The Underwriters reserve the right to withdraw,
cancel or modify such offer. It is expected that the Certificates will be
delivered in book-entry form through the facilities of The Depository Trust
Company, Cedel Bank, societe anonyme and the Euroclear System on or about
_________ __, 1997 against payment therefor in immediately available funds.
Underwriters of the Class A Certificates
J.P. Morgan & Co.
Underwriters of the Class B Certificates
J.P. Morgan & Co.
_________ __, 1997
<PAGE>
The Collateral Investor Interest is not offered hereby. The property of the
Trust will include receivables (the "Receivables") generated from time to time
in a portfolio of designated VISA(R) charge card accounts originated under First
Bank's Corporate Card or Purchasing Card programs (the "Accounts"), all monies
due in payment of the Receivables, all proceeds of the Receivables, any
Enhancement (as defined herein), all monies on deposit in certain bank accounts
of the Trust and the right to receive certain amounts of Net Interchange
allocable to the Certificates, as described herein. Certain capitalized terms
used herein are defined elsewhere in this Prospectus. A listing of the pages on
which such terms are defined is found in the "Index of Terms" on page 83. First
Bank initially will own the remaining undivided interest in the Trust not
represented by the Certificates, by the Collateral Investor Interest, by other
investor certificates issued by the Trust and by the interests of Enhancement
providers, if any. Series 1997-1 is the first Series issued by the Trust. First
Bank may from time to time offer and sell other Series that evidence undivided
interests in certain assets of the Trust, which may have terms significantly
different from the Certificates.
Interest will accrue on the Class A Certificates at the rate of __% per
annum. Interest will accrue on the Class B Certificates at the rate of __% per
annum. Interest will accrue on the Certificates from ______ __, 1997 and is
payable semi-annually on ________ and _________ (or, if any such day is not a
business day, on the next succeeding business day) commencing ________, 1997
and, with respect to each Class, on the Expected Final Payment Date for such
Class, or in the event an Early Amortization Event shall have occurred, monthly
on or about the __ day of each month. Principal on the Class A Certificates is
scheduled to be distributed on the _______ Distribution Date, but may be paid
earlier or later under certain limited circumstances described herein. Principal
on the Class B Certificates is scheduled to be distributed on the _______
Distribution Date, but may be paid earlier or later under certain limited
circumstances described herein. See "Maturity Considerations."
The Class B Certificates will be subordinated to the Class A Certificates
to the extent necessary to fund payments on the Class A Certificates as
described herein. The Collateral Investor Interest will be subordinated to the
Class A Certificates and the Class B Certificates as described herein.
AVAILABLE INFORMATION
This Prospectus (the "Prospectus"), which forms a part of the Registration
Statement, omits certain information contained in such Registration Statement
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "Commission"). For further information, reference is made to the
Registration Statement (including any amendments thereof and exhibits thereto)
and any reports and other documents incorporated herein by reference as
described below under "Incorporation of Certain Documents by Reference," which
are available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a public access site on the Internet through
the World Wide Web at which the Registration Statement (including any amendments
thereof and exhibits thereto) and any reports and other documents incorporated
herein by reference may be viewed. The Internet address of such World Wide Web
site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer, on behalf of the
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of
1934, as amended (the "Exchange Act") subsequent to the date of this Prospectus
and prior to the termination of the offering of the Certificates shall be deemed
to be incorporated by reference into this Prospectus and to be part hereof. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Servicer will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to First Bank System, Inc., 601 Second Avenue South, Minneapolis,
Minnesota 55402, Attention: Investor Relations ((602) 973-2263).
2
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Transferor or any agent or Underwriter. This Prospectus does not constitute an
offer or solicitation by anyone in any state in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Transferor or the Receivables or the
Accounts since the date hereof or that the information contained or incorporated
by reference herein is correct as of any time subsequent to its date.
Until ________ __, 1997 (90 days after the date of this Prospectus), all
dealers effecting transactions in the Certificates, whether or not participating
in this distribution, may be required to deliver a Prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a Prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions. Upon receipt of a request by an investor or his or her
representative within the period during which there is a Prospectus delivery
obligation, the Transferor or the Underwriters will transmit or cause to be
transmitted promptly, without charge, and in addition to any such delivery
requirements, a paper copy of a Prospectus, or a Prospectus encoded in an
electronic format.
TABLE OF CONTENTS
Page
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Available Information..................................................... 2
Incorporation of Certain Documents by
Reference............................................................... 2
Reports to Certificateholders............................................. 3
Summary................................................................... 4
Risk Factors.............................................................. 21
The Trust................................................................. 25
First Bank's Corporate Card and
Purchasing Card Programs................................................ 25
The Receivables........................................................... 32
Maturity Considerations................................................... 35
Use of Proceeds........................................................... 36
First Bank of South Dakota (National
Association) and First Bank System, Inc..................................36
Description of the Certificates........................................... 36
Certain Legal Aspects of the
Receivables............................................................. 72
Federal Income Tax Consequences........................................... 74
State and Local Tax Consequences.......................................... 80
ERISA Considerations...................................................... 80
Underwriting.............................................................. 81
Legal Matters............................................................. 82
Index of Terms............................................................ 83
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
reports, containing information concerning the Trust and prepared by the
Servicer, will be sent on behalf of the Trust to Cede & Co. ("Cede"), as nominee
of The Depository Trust Company ("DTC") and registered holder of the
Certificates, pursuant to the Agreement. See "Description of the
Certificates--Book-Entry Registration," "--Reports to Certificateholders" and
"--Evidence as to Compliance." Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
The Transferor does not intend to send any of its financial reports to
Certificateholders or to the owners of beneficial interests in the Certificates
("Certificate Owners"). The Servicer will file with the Commission such periodic
reports with respect to the Trust as are required under the Exchange Act and the
rules and regulations of the Commission thereunder so long as the Certificates
are outstanding.
3
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SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain capitalized
terms used in this summary are defined elsewhere in this Prospectus. A listing
of the pages on which such terms are defined is found in the "Index of Terms"
beginning on page 83.
Type of Securities............ Class A __% Asset Backed Certificates, Series
1997-1 (the "Class A Certificates") and Class B
__% Asset Backed Certificates, Series 1997-1
(the "Class B Certificates," and together with
the Class A Certificates, the "Certificates").
Overview of the Transaction... The First Bank Corporate Card Master Trust (the
"Trust") was formed for the purpose of holding
the Receivables and issuing the Certificates
and other similar securities. Each Certificate
will represent the right to receive a portion
of the collections on the Receivables. Such
collections will be used to pay interest and
principal due on such Certificate on the
applicable payment date. The Class A
Certificates will also have the benefits of
certain excess collections, and the
subordination of the Class B Certificates and
the Collateral Investor Interest. The Class B
Certificates will also have the benefits of
certain excess collections not needed to cover
shortfalls in respect of the Class A
Certificates and the subordination of the
Collateral Investor Interest not used for the
benefit of the Class A Certificates. The Class
B Certificates therefore bear a greater risk of
loss of principal and of shortfalls in payments
of interest than the Class A Certificates.
Accordingly, the Class A Certificates will
receive a higher credit rating than the Class B
Certificates. See "Summary--Certificate
Rating." For a description of the subordination
of the Class B Certificates, see
"Summary--Subordination of the Class B
Certificates and the Collateral Investor
Interest" and "Risk Factors--Effect of
Subordination."
Both the Class A Certificates and the Class B
Certificates are subject to repayment earlier
than expected if certain events called Early
Amortization Events occur. See "Description of
the Certificates--Early Amortization Events."
Both the Class A Certificates and the Class B
Certificates are also subject to potential
delayed repayment if the payment rate on the
Receivables decreases. See "Risk
Factors--Timing of Payments and Maturity" and
"Maturity Considerations." In no event,
however, will principal be paid on the Class B
Certificates prior to the payment in full of
the Class A Certificates.
For a discussion of other risk factors
applicable to the Certificates, see "Risk
Factors."
Trust ........................ The Trust will be governed by a pooling and
servicing agreement (the "Agreement"), among
First Bank of South Dakota (National
Association) ("First Bank" or the "Bank"), as
transferor, FBS Card
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Services, Inc., as servicer, and Citibank,
N.A., as trustee (the "Trustee"). The Trust was
created as a master trust under which one or
more series (each, a "Series") may be issued
pursuant to a series supplement to the
Agreement (each, a "Series Supplement"). The
Certificates will be issued pursuant to the
Agreement, as supplemented by the Series
Supplement relating to the Certificates (the
"Series 1997-1 Supplement") (the term
"Agreement," unless the context requires
otherwise, refers to the Agreement as
supplemented by the Series 1997-1 Supplement).
An interest referred to as the "Collateral
Investor Interest" and deemed to be a class of
investor certificates will also be issued as
part of Series 1997-1 and will be subordinated
to the Certificates as described herein. The
Collateral Investor Interest is not offered
hereby. As used in this Prospectus, the term
"Certificateholders" refers to holders of the
Certificates, the term "Class A
Certificateholders" refers to holders of the
Class A Certificates, the term "Class B
Certificateholders" refers to holders of the
Class B Certificates, the term "Collateral
Interest Holder" refers to the holder of the
Collateral Investor Interest and the term
"Series 1997-1" refers to the Series issued
pursuant to the Agreement, as supplemented by
the Series 1997-1 Supplement. The Collateral
Interest Holder will not be an affiliate of
First Bank.
Series 1997-1 is the first Series to be issued
by the Trust. Additional Series consisting of
one or more classes of certificates (each, a
"Class") may be issued from time to time by the
Trust.
The Transferor................ First Bank of South Dakota (National
Association) (the "Transferor"), a national
banking association organized under the laws of
the United States and a wholly-owned subsidiary
of First Bank System, Inc., a Delaware
corporation. The principal offices of the
Transferor are located at 141 North Main
Avenue, Sioux Falls, South Dakota 57117, and
its telephone number is (605) 339-8600.
The Servicer.................. FBS Card Services, Inc. (the "Servicer"), a
Minnesota corporation, and a wholly-owned
subsidiary of First Bank System, Inc.
The Trustee................... Citibank, N.A., a national banking association.
Trust Assets.................. The assets of the Trust will include (i)
receivables (the "Receivables") arising under
certain VISA(R)* charge card accounts (the
"Accounts"), including any Additional Accounts
following their designation, originated under
the Bank's Corporate Card or Purchasing Card
programs and selected from the portfolio of
VISA accounts in such programs owned by the
Bank (the "Bank Portfolio"), (ii) all monies
due in payment of the Receivables (including
recoveries on charged-off Receivables and
amounts, if any, paid by corporate clients as
co-obligors under the Corporate Card pro-
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* VISA(R) is a federally registered servicemark of VISA USA, Inc.
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gram), (iii) all proceeds of the Receivables,
(iv) the right to receive certain amounts of
Net Interchange (as defined herein) allocable
to the Certificates (which right may not be
afforded to other Series issued by the Trust),
(v) all monies on deposit in certain bank
accounts of the Trust (other than investment
earnings on such amounts, except as otherwise
specified herein) and (vi) any Enhancement (as
defined herein) with respect to any particular
Series or Class as described herein. The
Certificateholders will not be entitled to the
benefits of any Enhancement issued with respect
to any Series other than Series 1997-1, and the
holders of certificates of other Series will
not be entitled to the benefits of any
Enhancement issued with respect to Series
1997-1.
On ______ __ (the "Closing Date"), the
Transferor will convey to the Trustee for the
benefit of the Trust all Receivables existing
under certain Accounts that will be selected
from the Bank Portfolio based on criteria
provided in the Agreement as applied on
November 30, 1996 (the "Cut-Off Date") and will
convey to the Trustee all Receivables arising
under the Accounts from time to time thereafter
until the termination of the Trust. In
addition, pursuant to the Agreement, the Bank
may or may be obligated to (subject to certain
limitations and conditions) designate
Additional Accounts for inclusion in the Trust.
See "The Receivables" and "Description of the
Certificates--Addition of Accounts."
Interest and Principal........ Each of the Certificates offered hereby
represents the right to receive certain
payments from the assets of the Trust. The
Trust's assets will be allocated among the
Class A Certificateholders (the "Class A
Investor Interest"), the Class B
Certificateholders (the "Class B Investor
Interest"), the Collateral Interest Holder (the
"Collateral Investor Interest," and together
with the Class A Investor Interest and the
Class B Investor Interest, the "Investor
Interest"), the interest of the holders of
other undivided interests in the Trust issued
pursuant to the Agreement and applicable Series
Supplements, and the Transferor (the
"Transferor Interest"), as described below. The
Collateral Investor Interest constitutes
Enhancement for the Certificates. Allocations
will be made to the Collateral Investor
Interest, and the Collateral Interest Holder
will have voting and certain other rights, as
if the Collateral Investor Interest were a
subordinated class of Certificates. The
Transferor Interest will represent the right to
the assets of the Trust not allocated to the
Class A Investor Interest, the Class B Investor
Interest, the Collateral Investor Interest or
the holders of other undivided interests in the
Trust. The principal balance of the Transferor
Interest will fluctuate as the amount of
Receivables in the Trust changes from time to
time.
Each Class A Certificate represents the right to
receive from the assets of the Trust allocated
to the Class A Certificates payments of (i)
interest at the rate of __% per annum (the
"Class A Certificate Rate"), accruing from
the Closing Date and (ii) principal on
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the _____ ____ Distribution Date (the "Class A
Expected Final Payment Date") or, under certain
limited circumstances, during the Early
Amortization Period, funded from a percentage
of the payments received with respect to the
Receivables and certain other funds (including,
under the circumstances specified herein,
funds, if any, on deposit in the Principal
Funding Account), as described herein.
Each Class B Certificate represents the right to
receive from the assets of the Trust allocated
to the Class B Certificates payments of (i)
interest at the rate of __% per annum (the
"Class B Certificate Rate"), accruing from
the Closing Date and (ii) principal on the
_____ ____ Distribution Date (the "Class B
Expected Final Payment Date") or, under certain
limited circumstances, during the Early
Amortization Period, funded from a percentage
of the payments received with respect to the
Receivables and certain other funds, as
described herein. No principal will be
distributed on the Class B Certificates until
the Class A Invested Amount has been paid in
full. See "Description of the
Certificates--Subordination of the Class B
Certificates and the Collateral Investor
Interest."
The interest in the Trust represented by the
Class A Certificates (the "Class A Invested
Amount") initially will equal $______ (the
"Class A Initial Invested Amount") and will
decline as principal with respect to the Class
A Certificates is paid to the Class A
Certificateholders or as Investor Charge-Offs
allocable to the Class A Certificates occur.
The interest in the Trust represented by the
Class B Certificates (the "Class B Invested
Amount") initially will equal $______ (the
"Class B Initial Invested Amount") and will
decline as principal with respect to the Class
B Certificates is paid to the Class B
Certificateholders, as Principal Collections
allocable to the Class B Certificates are
reallocated for the benefit of the Class A
Certificates or as Investor Charge-Offs
allocable to the Class B Certificates occur.
The interest in the Trust represented by the
Collateral Investor Interest (the "Collateral
Invested Amount" and, together with the Class A
Invested Amount and the Class B Invested
Amount, the "Invested Amount") initially will
equal $______ (the "Collateral Initial Invested
Amount" and, together with the Class A Initial
Invested Amount and the Class B Initial
Invested Amount, the "Initial Invested Amount")
and will decline as principal with respect to
the Collateral Investor Interest is paid to the
Collateral Interest Holder, as Principal
Collections allocable to the Collateral
Investor Interest are reallocated for the
benefit of the Class A Certificates and the
Class B Certificates or as Investor Charge-Offs
allocable to the Collateral Investor Interest
occur.
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During the Accumulation Period, for the sole
purpose of allocating Yield Collections and the
amount of Defaulted Receivables with respect to
each Collection Period, an amount equal to the
amount on deposit in the Principal Funding
Account from time to time will be subtracted
from the Class A Invested Amount (as so
reduced, the "Class A Adjusted Invested Amount"
and together with the Class B Invested Amount
and the Collateral Invested Amount, the
"Adjusted Invested Amount").
The Transferor Interest will initially be held
by the Transferor.
The final payment of principal and interest on
the Certificates will be made no later than the
_______ ____ Distribution Date. Series 1997-1
will terminate on the earliest to occur of (a)
the Distribution Date on which the Invested
Amount is paid in full, (b) the _________ ____
Distribution Date or (c) the Trust Termination
Date (such earliest to occur, the "Series
1997-1 Termination Date"). After the Series
1997-1 Termination Date, the Trust will have no
further obligation to pay principal or interest
on the Certificates.
The Class A Certificates, the Class B
Certificates and the Collateral Investor
Interest will each include the right to receive
(but only to the extent needed to make required
payments under the Agreement) varying
percentages of Yield Collections and Principal
Collections and will be allocated varying
percentages of the amount of Defaulted
Receivables during each calendar month (each, a
"Collection Period"). Yield Collections and the
amount of Defaulted Receivables at all times,
and Principal Collections during the Revolving
Period, will be allocated to the Investor
Interest based on the Floating Allocation
Percentage and will be further allocated among
the Class A Investor Interest, the Class B
Investor Interest and the Collateral Investor
Interest based on the Class A Floating
Percentage, the Class B Floating Percentage and
the Collateral Floating Percentage,
respectively, applicable during the related
Collection Period. Principal Collections during
the Ac cumulation Period and the Early
Amortization Period will be allocated to the
Investor Interest based on the Fixed Allocation
Percentage and will be further allocated
among the Class A Investor Interest, the Class
B Investor Interest and the Collateral Investor
Interest based on the Class A Fixed Percentage,
the Class B Fixed Percentage and the Collateral
Fixed Percentage, respectively. See
"Description of the Certifi cates--Allocation
Percentages" and "--Early Amortization Events."
Receivables................... The Receivables arise in Accounts that have been
selected from the Bank Portfolio based on
criteria provided in the Agreement as applied
on the Cut-Off Date and, with respect to
certain Additional Accounts, if any, on
subsequent dates. The Receivables consist of
amounts charged by cardholders for goods and
services and cash advances plus the related
amounts billed to the Accounts in respect
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of cash advance fees, annual cardholder fees,
late fees, and other fees and charges. In
addition, certain amounts of Net Interchange
attributed to cardholder charges for goods and
services in the Accounts will be allocated to
the Certificates and treated as Yield
Collections. See "First Bank's Corporate Card
and Purchasing Card Programs--Interchange."
The aggregate amount of Receivables in the
Accounts as of the beginning of the day on the
Cut-Off Date was $_______. During the term of
the Trust, all new Receivables arising in the
Accounts will be transferred automatically to
the Trust by the Transferor. The total amount
of Receivables in the Trust will fluctuate from
day to day, because the amount of new
Receivables arising in the Accounts and the
amount of payments collected on existing
Receivables usually differ each day. The
Trustee is not required nor expected to make
any initial or periodic general examination of
the Receivables or any records relating to the
Receivables for the presence or absence of
defects, compliance with the Transferor's
representations and warranties or for any other
purpose.
Pursuant to the Agreement, the Transferor will
have the right (subject to certain limitations
and conditions), and in some circumstances,
will be obligated, to designate additional
eligible VISA charge card accounts originated
under the Bank's Corporate Card or Purchasing
Card programs (the "Additional Accounts") and
to convey to the Trust all of the Receivables
in the Additional Accounts, whether such
Receivables are then existing or thereafter
created. In addition, the Transferor will have
the right (subject to certain limitations and
conditions) to designate certain Accounts and
to accept the reconveyance of all the
Receivables in such Accounts (the "Removed
Accounts"). See "The Receivables" and
"Description of the Certificates--Addition of
Accounts" and "--Removal of Accounts."
Yield Factor; Collections..... The Receivables originated under the Accounts
are not subject to a monthly finance charge,
and therefore, a portion of the collections on
the Receivables received during the preceding
Collection Period will be treated as "yield" to
the Trust. The "Yield Collections" for any
Collection Period will equal the sum of (i) the
aggregate amount of collections on the
Receivables during such Collection Period
(other than Net Interchange, if any) multiplied
by the Yield Factor, and (ii) certain amounts
of Net Interchange attributed to cardholder
charges in the Accounts with respect to such
Collection Period. The remainder of the
aggregate amount of collections on the
Receivables during any Collection Period will
be treated as "Principal Collections." The
"Yield Factor" of the Trust is equal to __%,
and is a means of allocating collections on the
Receivables to the payment of interest and
principal on the Certificates which does not
change the aggregate cash flow available to the
Trust. "Net Interchange" consists of certain
fees received by the Transfer-
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9
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or from VISA as partial compensation for taking
credit risk, absorbing fraud losses and funding
receivables for a limited period prior to
initial billing, net of VISA dues and rebates
to corporate customers and travel agencies. See
"First Bank's Corporate Card and Purchasing
Card Pro grams--Interchange."
Exchanges..................... The Agreement authorizes the Trustee to issue
two types of certificates: (i) one or more
Series of certificates that will be
transferable and have the characteristics
described below and (ii) a certificate that
evidences the Transferor Interest (the
"Exchangeable Transferor Certificate"), which
initially will be held by the Transferor and
which generally will be retained by the
Transferor. Pursuant to any one or more Series
Supplements to the Agreement, the holder of the
Exchangeable Transferor Certificate may tender
the Exchangeable Transferor Certificate or, if
provided in the relevant Series Supplement,
certificates representing any Series issued by
the Trust and the Exchangeable Transferor
Certificate, to the Trustee in exchange for one
or more new Series and a reissued Exchangeable
Transferor Certificate (any such tender, an
"Exchange"). Any such Series may be offered
to the public or other investors under a
prospectus or other disclosure document (a
"Disclosure Document") in offerings pursuant to
this Prospectus or in transactions either
registered under the Securities Act of 1933, as
amended (the "Securities Act") or exempt from
registration thereunder, directly or through
one or more other underwriters or placement
agents, in fixed-price offerings or in
negotiated transactions or otherwise. The
Transferor's ability to make an Exchange is
subject to certain conditions precedent,
including the requirement that each Rating
Agency that has rated any outstanding Series
confirm that the Exchange will not result in
the reduction or withdrawal of its rating on
any outstanding Series. See "Description of
the Certificates--Exchanges."
Denominations................. Beneficial interests in the Certificates will be
offered for purchase in denominations of $1,000
and integral multiples thereof.
Registration of Certificates.. The Certificates initially will be represented
by Certificates registered in the name of Cede,
as the nominee of DTC. No Certificate Owner
will be entitled to receive a Definitive
Certificate, except under the limited
circumstances described herein.
Certificateholders may elect to hold their
Certificates through DTC (in the United States)
or Cedel or Euroclear (in Europe). Transfers
will be made in accordance with the rules and
operating procedures described herein. See
"Description of the Certificates--Definitive
Certificates."
Servicing Fee................. The Servicer will receive a monthly fee as
servicing compensation from the Trust equal to
one-twelfth of the product of __% per annum and
the Adjusted Invested Amount as of the last day
of the second preceding Collection Period (the
"Monthly Investor Servicing Fee"). So long as
FBS Card Services, Inc. or any of its
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10
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affiliates is acting as Servicer under the
Agreement, a portion of the Monthly Investor
Servicing Fee equal to up to one-twelfth of the
product of __% per annum and the Adjusted
Invested Amount as of the last day of the
second preceding Collection Period will be
payable solely from Net Interchange. See
"Description of the Certificates--Servicing
Compensation and Payment of Expenses."
Interest Payments............. Interest will accrue on the unpaid principal
balance of the Class A Certificates at a per
annum rate equal to the Class A Certificate
Rate and will accrue on the unpaid principal
balance of the Class B Certificates at a per
annum rate equal to the Class B Certificate
Rate. Except as otherwise provided herein,
interest will be paid to Certificateholders
semi-annually on _________ and ________ (or, if
any such day is not a business day, on the next
succeeding business day) and on the Class A
Expected Final Payment Date with respect to the
Class A Certificates and on the Class B
Expected Final Payment Date with respect to the
Class B Certificates (each, an "Interest
Payment Date"). If an Early Amortization Period
commences, then thereafter interest will be
distributed to the Certificateholders monthly
on each Special Payment Date. Interest for any
Interest Payment Date or Special Payment Date
due but not paid on such Interest Payment Date
or Special Payment Date will be payable on the
next succeeding Interest Payment Date or
Special Payment Date, together with additional
interest on such amount at the applicable
Certificate Rate (such amount, as applicable,
"Additional Interest"). Interest will be
calculated on the basis of a 360-day year
comprised of twelve 30-day months.
Interest payments on each Interest Payment Date
or Special Payment Date will be funded from the
portion of Yield Collections collected during
the Collection Period or Collection Periods
since the later of the Closing Date or the last
date on which a payment of interest on the
Certificates was made and certain other
available amounts (a) with respect to the Class
A Certificates, allocated to the Class A
Investor Interest, and, if necessary, from
Excess Spread, Shared Excess Yield Collections
and Reallocated Principal Collections (to the
extent available), (b) with respect to the
Class B Certificates, allocated to the Class B
Investor Interest and, if necessary, from
Excess Spread, Shared Excess Yield Collections
and Reallocated Collateral Principal
Collections (to the extent available) and (c)
with respect to the Collateral Investor
Interest, from Excess Spread and Shared Excess
Yield Collections. See "Description of the
Certificates--Reallocation of Cash Flows" and
"--Application of Collections--Payment of
Interest, Fees and Other Items."
If payments of interest on the Certificates
occur less frequently than monthly, amounts
allocable to interest on the Certificates will
be deposited in one or more trust accounts and
will generally be invested in certain Eligible
Investments pending distribution to
Certificateholders. See "Description of the
Certifi cates--Interest Payments."
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11
<PAGE>
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Principal Payments............ Principal on the Class A Certificates is
scheduled to be paid on the _______
Distribution Date (the "Class A Expected Final
Payment-Date"). Principal on the Class B
Certificates is scheduled to be paid on
the_______ Distribution Date (the "Class B
Expected Final Payment Date"). No principal
will be distributed on the Class B Certificates
until the Class A Invested Amount has been paid
in full. Distributions of principal with
respect to the Class A Certificates or the
Class B Certificates may commence earlier than
the Expected Final Payment Date for such Class,
and the final distribution of principal with
respect to the Class A Certificates or the
Class B Certificates may be made later than the
Expected Final Payment Date for such Class, if
an Early Amortization Event occurs and the
Early Amortization Period commences or under
certain other circumstances described herein.
See "Description of the Certificates--Principal
Payments" and "Maturity Considerations."
Record Date................... The last business day of the month immediately
preceding an Interest Payment Date or Special
Payment Date.
Revolving Period.............. No principal will be payable to the Class A
Certificateholders until the Class A Expected
Final Payment Date or, upon the occurrence of
an Early Amortization Event as described
herein, the first Special Payment Date with
respect to the Early Amortization Period. No
principal will be payable to the Class B
Certificateholders until the Class A Invested
Amount has been paid in full. For the period
beginning on the Closing Date and ending with
the commencement of the Accumulation Period
or the Early Amortization Period (the
"Revolving Period"), Principal Collections
otherwise allocable to the Certificateholders
(other than Principal Collections allocated to
the Class B Certificateholders ("Reallocated
Class B Principal Collections") that are used
to pay any deficiency in the Class A Required
Amount remaining after application of
Reallocated Collateral Principal Collections)
will, subject to certain limitations, be
treated as Shared Principal Collections and
applied to cover principal payments due to or
for the benefit of certificateholders of
other Series, if so specified in the Series
Supplements for such other Series, or, subject
to certain limitations, paid to the Transferor
as holder of the Exchangeable Transferor
Certificate or deposited into the Excess
Funding Account or, in certain circumstances,
be paid to the Collateral Interest Holder. See
"Description of the Certificates--Early
Amortization Events" for a discussion of the
events which might lead to the termination of
the Revolving Period prior to the commencement
of the Accumulation Period.
Accumulation Period........... Unless an Early Amortization Event has occurred,
the Revolving Period with respect to the
Certificates is scheduled to end and the
principal accumulation period with respect to
the Certificates (the "Accumulation Period") is
scheduled to commence at the close of business
on the last day of the _________ ____
Collection Period. Subject to the conditions
set forth under "Description of the
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12
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Certificates--Postponement of Accumulation
Period," the day on which the Revolving Period
ends and the Accumulation Period begins may be
delayed to no later than the close of business
on the last day of the ________ ____ Collection
Period. Unless an Early Amortization Event has
occurred, the Accumulation Period will commence
at the close of business on the last day of the
Revolving Period and end on the earliest of (a)
the commencement of the Early Amortization
Period, (b) the payment in full of the Invested
Amount or (c) the Series 1997-1 Termination
Date.
During the Accumulation Period, prior to the
payment of the Class A Invested Amount in full,
amounts equal to the lesser of (a) the Fixed
Allocation Percentage of Principal Collections
with respect to the preceding Collection Period
plus the amount of any Shared Principal
Collections with respect to other Series that
are allocated to Series 1997-1 in accordance
with the Agreement minus the amount of
Reallocated Principal Collections for such
Collection Period, (b) the Controlled Deposit
Amount for the related Transfer Date and (c)
the Class A Adjusted Invested Amount with
respect to such Transfer Date will be deposited
monthly in a trust account established by the
Servicer (the "Principal Funding Account") on
each Transfer Date beginning with the Transfer
Date in the month following the commencement of
the Accumulation Period until the Principal
Funding Account Balance is equal to the Class A
Invested Amount. After the Class A Invested
Amount has been paid in full, on each Transfer
Date during the Accumulation Period, an amount
equal to the lesser of (a) the Fixed Allocation
Percentage of Principal Collections with
respect to the preceding Collection Period plus
the amount of any Shared Principal Collections
with respect to other Series that are allocated
to Series 1997-1 in accordance with the
Agreement minus the amount of Reallocated
Principal Collections for such Collection
Period minus the portion of such amounts
applied to Class A Monthly Principal on such
Transfer Date and (b) the Class B Invested
Amount with respect to such Transfer Date will
be deposited into the Collection Account for
distribution to the Class B Certificateholders
until the Class B Invested Amount has been paid
in full. If, for any Collection Period,
Principal Collections allocable to the
Certificateholders for such Collection Period
exceed the applicable Controlled Deposit
Amount, the amount of such excess will be first
paid to the Collateral Interest Holder to the
extent that the Collateral Invested Amount
exceeds the Required Collateral Invested Amount
and then will be treated as Shared Principal
Collections and allocated to the holders of
other Series of certificates issued and
outstanding, if any, or, subject to certain
limitations, paid to the Transferor as holder
of the Exchangeable Transferor Certificate or
deposited into the Excess Funding Account. If,
for any Collection Period, Principal
Collections allocable to the Certificateholders
for such Collection Period are less than the
applicable Controlled Deposit Amount, the
amount of such deficiency will be the
applicable "Deficit Controlled Accumulation
Amount" for the succeeding
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13
<PAGE>
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Collection Period. See "Description of the
Certificates--Application of Collections."
Unless an Early Amortization Event shall have
occurred, prior to the payment of the Class A
Invested Amount in full, all funds on deposit
in the Principal Funding Account will be
invested at the direction of the Servicer by
the Trustee in certain Eligible Investments.
Investment earnings (net of investment losses
and expenses) on funds on deposit in the
Principal Funding Account (the "Principal
Funding Investment Proceeds") during the
Accumulation Period will be applied as Class A
Available Funds. If, for any Transfer Date, the
Principal Funding Investment Proceeds are less
than the Covered Amount, the amount of such
shortfall (the "Principal Funding Investment
Shortfall") will be funded from Class A
Available Funds or a withdrawal from the
Reserve Account, to the extent available, or
from Reallocated Principal Collections. The
"Covered Amount" shall mean for any Transfer
Date with respect to the Accumulation Period or
the first Special Payment Date of the Early
Amortization Period, an amount equal to
one-twelfth of the product of (i) the Class A
Certificate Rate and (ii) the Principal Funding
Account Balance, if any, as of the Record Date
preceding such Transfer Date.
Funds on deposit in the Principal Funding
Account will be available to pay the Class A
Certificateholders in respect of the Class A
Invested Amount on the Class A Expected Final
Payment Date. If the aggregate principal amount
of deposits made to the Principal Funding
Account is insufficient to pay the Class A
Invested Amount in full on the Class A Expected
Final Payment Date, the Early Amortization
Period will commence as described below.
Although it is anticipated that during the
Accumulation Period prior to the payment of the
Class A Invested Amount in full, funds will be
deposited in the Principal Funding Account in
an amount equal to the applicable Controlled
Deposit Amount on each Transfer Date and that
scheduled principal will be available for
distribution to the Class A Certificateholders
on the Class A Expected Final Payment Date, no
assurance can be given in that regard. See
"Maturity Considerations."
Early Amortization Period..... During the period beginning on the day on which
an Early Amortization Event has occurred and
ending on the earlier of (a) the date on which
the Invested Amount has been paid in full and
(b) the Series 1997-1 Termination Date (the
"Early Amortization Period"), Principal
Collections allocable to the Certificateholders
will be applied to the payment of principal on
the Certificates and will be distributed
monthly on each Special Payment Date, beginning
with the Special Payment Date following the
occurrence of an Early Amortization Event, to
the Class A Certificateholders and, following
payment of the Class A Invested Amount in full,
to the Class B Certificateholders and,
following payment of the Class B Invested
Amount in full, to the Collateral Interest
Holder. The Early
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14
<PAGE>
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Amortization Period is intended to result in
the fastest possible distribution of principal
to Certificateholders following an Early
Amortization Event in order to better ensure
the repayment of principal to
Certificateholders. See "Description of the
Certificates--Early Amortization Events" for
a discussion of the events which might lead to
the commencement of the Early Amortization
Period.
Principal Collections; Certain
Allocations................. Principal Collections for any Collection Period
will be allocated on the basis of varying
percentages. Under the Agreement, such
collections will generally be, (i) during the
Revolving Period, treated as Shared Principal
Collections or distributed to the Transferor as
holder of the Exchangeable Transferor
Certificate or deposited into the Excess
Funding Account; provided that (a) Principal
Collections allocable to the Collateral
Investor Interest may be used to cover
shortfalls in Yield Collections used to pay or
allocate interest and other amounts to the
Class A Certificates and the Class B
Certificates on any Transfer Date, and (b)
Principal Collections allocable to the Class B
Certificates may be used to cover remaining
shortfalls in Yield Collections used to pay or
allocate interest and other amounts to the
Class A Certificates on any Transfer Date; (ii)
during the Accumulation Period, deposited into
the Principal Funding Account in an amount up
to the Controlled Distribution Amount, with any
excess (a) paid to the Collateral Interest
Holder as principal on the Collateral Investor
Interest or (b) after the Collateral Investor
Interest has been paid in full, treated as
Shared Principal Collections or distributed to
the Transferor as holder of the Exchangeable
Transferor Certificate or deposited into the
Excess Funding Account; (iii) on or after the
Class A Expected Final Payment Date or during
any Early Amortization Period, paid to Class A
Certificateholders in respect of the Class A
Invested Amount or (iv) after the Class A
Invested Amount has been paid in full, on or
after the Class B Expected Final Payment Date
or during any Early Amortization Period, paid
to Class B Certificateholders as principal on
the Class B Certificates. See "Description of
the Certificates--Allocation Percentages."
Subordination of the Class B
Certificates and
the Collateral
Investor Interest........... The Class B Certificates and the Collateral
Investor Interest will be subordinated as
described herein to the extent necessary to
fund payments with respect to the Class A
Certificates as described herein. In addition,
the Collateral Investor Interest will be
subordinated as described herein to the extent
necessary to fund certain payments with respect
to the Class B Certificates. If the Class B
Invested Amount and the Collateral Invested
Amount are each reduced to zero, the Class A
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust and thus will
be more likely to suffer a loss.
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15
<PAGE>
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To the extent the Class A Invested Amount is
reduced, the percentage of Yield Collections
allocable to the Class A Certificateholders
with respect to subsequent Collection Periods
will be reduced. Moreover, to the extent the
amount of such reduction in the Class A
Invested Amount is not reimbursed, the amount
of principal distributable to the Class A
Certificateholders will be reduced. If the
Collateral Invested Amount is reduced to zero,
the Class B Certificateholders will bear
directly the credit and other risks associated
with their undivided interest in the Trust and
thus will be more likely to suffer a loss. To
the extent the Class B Invested Amount is
reduced, the percentage of Yield Collections
allocable to the Class B Certificateholders
with respect to subsequent Collection Periods
will be reduced. Moreover, to the extent the
amount of such reduction in the Class B
Invested Amount is not reimbursed, the amount
of principal distributable to the Class B
Certificateholders will be reduced. No
principal will be paid to the Class B
Certificateholders until the Class A Invested
Amount is paid in full. See "Risk
Factors--Effect of Subordination," "Description
of the Certificates--Allocation Percentages,"
"--Subordination of the Class B Certificates
and the Collateral Investor Interest" and
"--Application of Collections."
Additional Amounts Available
to Certificateholders........ With respect to any Transfer Date, Excess Spread
and Shared Excess Yield Collections will be
applied to fund the Class A Required Amount and
the Class B Required Amount, if any. The "Class
A Required Amount" means the amount, if any, by
which the sum of (a) the Class A Monthly
Interest due on the related Distribution Date
and any overdue Class A Monthly Interest and
Class A Addi tional Interest thereon, (b) the
Class A Servicing Fee for the related
Collection Period and any overdue Class A
Servicing Fee and (c) the Class A Investor
Default Amount, if any, for the related
Collection Period exceeds the Class A Available
Funds for the related Collection Period. The
"Class B Required Amount" means the amount, if
any, equal to the sum of (a) the amount, if
any, by which the sum of (i) Class B Monthly
Interest due on the related Distribution Date
and any overdue Class B Monthly Interest and
Class B Additional Interest thereon and (ii)
the Class B Servicing Fee for the related
Collection Period and any overdue Class B
Servicing Fee exceeds the Class B Available
Funds for the related Collection Period and (b)
the amount, if any, by which the Class B
Investor Default Amount for the related
Collection Period exceeds the amount of Excess
Spread and Shared Excess Yield Collections
allocable to Series 1997 -1 available to cover
the ==== Class B Investor Default Amount for
the related Collection Period. "Excess Spread"
for any Transfer Date will equal the sum of (a)
the excess of (i) Class A Available Funds for
the related Collection Period over (ii) the sum
of the amounts referred to in clauses (a), (b)
and (c) in the definition of "Class A Required
Amount" above, (b) the excess of (i) Class B
Available Funds for the related Collection
Period over (ii) the sum of the amounts
referred to in
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16
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clauses (a) (i) and (a) (ii) in the definition
of "Class B Required Amount" above and (c)
Collateral Available Funds for the related
Collection Period not used under certain
circumstances to pay the Collateral Servicing
Fee, as described herein. "Shared Excess Yield
Collections" for any Transfer Date will equal
the aggregate amount of Yield Collections for
the related Collection Period allocable to
other Series in excess of amounts necessary to
make required payments with respect to such
Series, if any.
If, on any Transfer Date, the sum of Excess
Spread and Shared Excess Yield Collections is
less than the Class A Required Amount,
Reallocated Principal Collections allocable
first to the Collateral Investor Interest and
then to the Class B Investor Interest with
respect to the related Collection Period will
be used to fund the remaining Class A Required
Amount. If Reallocated Principal Collections
with respect to such Collection Period are
insufficient to fund the remaining Class A
Required Amount for the related Transfer Date,
then the Collateral Invested Amount (after
giving effect to reductions for any Collateral
Investor Charge-Offs and any Reallocated
Collateral Principal Collections on such
Transfer Date) will be reduced by the amount of
such deficiency (but not by more than the Class
A Investor Default Amount for such Collection
Period). In the event that such reduction would
cause the Collateral Invested Amount to be a
negative number, the Collateral Invested Amount
will be reduced to zero, and the Class B
Invested Amount (after giving effect to
reductions for any Class B Investor Charge-Offs
and any Reallocated Class B Principal
Collections on such Transfer Date) will be
reduced by the amount by which the Collateral
Invested Amount would have been reduced below
zero (but not by more than the excess of the
Class A Investor Default Amount, if any, for
such Collection Period over the amount of such
reduction, if any, of the Collateral Invested
Amount with respect to such Collection Period).
In the event that such reduction would cause
the Class B Invested Amount to be a negative
number, the Class B Invested Amount will be
reduced to zero and the Class A Invested Amount
will be reduced by the amount by which the
Class B Invested Amount would have been reduced
below zero (but not by more than the excess, if
any, of the Class A Investor Default Amount for
such Collection Period over such reductions in
the Collateral Invested Amount and the Class B
Invested Amount with respect to such Collection
Period) (such reduction, a "Class A Investor
Charge-Off"). If the Collateral Invested Amount
and the Class B Invested Amount are reduced to
zero, the Class A Certificateholders will bear
directly the credit and other risks associated
with their undivided interest in the Trust. See
"Description of the Certifi cates--Reallocation
of Cash Flows" and "--Defaulted Receivables;
Rebates and Fraudulent Changes; Investor
Charge-Offs."
If, on any Transfer Date, the sum of Excess
Spread and Shared Excess Yield Collections not
required to pay the Class A Required
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<PAGE>
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Amount and to reimburse Class A Investor
Charge-Offs is less than the Class B Required
Amount, Reallocated Principal Collec tions
allocable to the Collateral Investor Interest
for the related Collection Period not required
to pay the Class A Required Amount will be used
to fund the remaining Class B Required Amount.
If such remaining Reallocated Principal
Collections allocable to the Collateral
Investor Interest with respect to such
Collection Period are insufficient to fund the
remaining Class B Required Amount for the
related Transfer Date, then the Collateral
Invested Amount (after giving effect to
reductions for any Collateral Investor
Charge-Offs and any Reallocated Collateral
Principal Collections and any adjustments made
thereto for the benefit of the Class A
Certificateholders on such Transfer Date) will
be reduced by the amount of such deficiency
(but not by more than the Class B Investor
Default Amount for such Collection Period). In
the event that such reduction would cause the
Collateral Invested Amount to be a negative
number, the Collateral Invested Amount will be
reduced to zero, and the Class B Invested
Amount will be reduced by the amount by which
the Collateral Invested Amount would have been
reduced below zero (but not by more than the
excess, if any, of the Class B Investor Default
Amount for such Collection Period over such
reduction in the Collateral Invested Amount
with respect to such Collection Period) (such
reduction, a "Class B Investor Charge-Off"). In
the event of a reduction of the Class A
Invested Amount, the Class B Invested Amount or
the Collateral Invested Amount, the amounts
available to fund payments of principal and
interest with respect to the Class A
Certificates and the Class B Certificates will
be decreased. See "Description of the
Certificates--Reallocation of Cash Flows" and
"--Defaulted Receivables; Rebates and
Fraudulent Charges; Investor Charge-Offs."
Required Collateral Invested
Amount...................... The "Required Collateral Invested Amount" means,
with respect to any Transfer Date, an amount
equal to __% of the sum of the Class A Adjusted
Invested Amount and the Class B Invested Amount
(after giving effect to any reductions thereof
on such Transfer Date and the related
Distribution Date); provided, however, that if
an Early Amortization Event occurs, then the
Required Collateral Invested Amount shall equal
the Required Collateral Invested Amount on the
Transfer Date immediately preceding the
occurrence of such Early Amortization Event.
With respect to any Transfer Date, if the
Collateral Invested Amount is less than the
Required Collateral Invested Amount, certain
Excess Spread and Shared Excess Yield
Collections allocable to Series 1997-1 will be
used to increase the Collateral Invested Amount
to the extent of such shortfall. If on any
Transfer Date, the Collateral Invested Amount
exceeds the Required Collateral Invested
Amount, such excess may be applied in
accordance with the loan agreement among the
Transferor, the Trustee, the Servicer and the
Collateral Interest Holder (the "Loan
Agreement") and will not be
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available to the Certificateholders. See
"Description of the Certificates--Required
Collateral Invested Amount."
Shared Excess Yield
Collections................. Subject to certain limitations, Shared Excess
Yield Collections, if any, with respect to any
Series may be applied to cover any shortfalls
with respect to amounts payable from Yield
Collections allocable to any other Series, pro
rata based upon the amount of the shortfall, if
any, with respect to each Series. See
"Description of the Certificates--Shared Excess
Yield Collections."
Shared Principal
Collections................. Principal Collections and certain other amounts
otherwise allocable to other Series, to the
extent such collections are not needed to make
payments to or deposits for the benefit of the
certificateholders of such other Series, will
be applied to cover principal payments due to
or for the benefit of the holders of the
Certifi cates. See "Description of the
Certificates--Shared Principal Collections."
Optional Repurchase........... The Invested Amount will be subject to optional
repurchase by the Transferor on any
Distribution Date on or after the Distribution
Date on which the Invested Amount is reduced to
an amount less than or equal to 5% of the
Initial Invested Amount, if certain conditions
set forth in the Agreement are met. The
repurchase price will be equal to the Invested
Amount plus accrued and unpaid interest on the
Certificates and the Collateral Investor
Interest, if any. See "Description of the
Certifi cates--Final Payment of Principal;
Termination."
Tax Status.................... In the opinion of counsel to First Bank, for
federal income tax purposes, the Class A
Certificates and the Class B Certificates will
be characterized as debt and the Trust will not
be characterized as an association or publicly
traded partnership taxable as a corporation.
Under the Agreement, the Transferor, the
Servicer, the Class A Certificateholders and
the Class B Certificateholders will agree to
treat the Class A Certificates and the Class B
Certificates as debt for federal, state and
other tax purposes. See "Federal Income Tax
Consequences" for additional information
concerning the application of federal income
tax laws.
ERISA Considerations.......... Under a regulation issued by the Department of
Labor (the "Plan Assets Regulation"), the
Trust's assets would not be deemed "plan
assets" of any employee benefit plan holding
interests in the Class A Certificates if the
Class A Certificates qualify as "publicly-
offered securities" within the meaning of the
Plan Assets Regula tion. To qualify as
publicly-offered securities, certain conditions
must be met, including that interests in the
Class A Certificates be held by at least 100
independent persons upon completion of the
public offering being made hereby. The Class A
Certificates may be held by at least 100
independent persons at the conclusion of the
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offering, although no assurance can be given,
and no monitoring or other measures will be
taken, to ensure that such condition will be
met. The Transferor anticipates that the other
conditions of the Plan Assets Regulation will
be met with respect to the Class A
Certificates. If the Trust's assets were deemed
to be "plan assets" of such a plan, there is
uncertainty whether existing exemptions from
the "prohibited transaction" rules of the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), would apply to all
transactions involving the Trust's assets.
Accordingly, benefit plan fiduciaries should
consult with counsel before making a purchase
of Class A Certificates. See "ERISA
Considerations."
The Underwriters do not expect that the Class B
Certificates will be held by 100 or more
independent investors and, therefore, do not
expect that the Class B Certificates will
qualify as publicly-offered securities under
the Plan Assets Regulation. Accordingly, the
Class B Certificates may not be acquired by
employee benefit plan investors, including but
not limited to by insurance company general
accounts. Each Certificate Owner of a Class B
Certificate, by its acceptance thereof, will be
deemed to have represented that it is not an
employee benefit plan investor. See "ERISA
Considerations."
Certificate Rating............ It is a condition to the issuance of the Class A
Certificates that they be rated in the highest
rating category by at least one nationally
recognized rating organization selected by the
Transferor (each, a "Rating Agency"). The
rating of the Class A Certificates is based
primarily on the value of the Receivables as
determined by the applicable Rating Agency and
the terms of the Class B Certificates and the
Collateral Investor Interest. See "Description
of the Certificates--Subordination of the Class
B Certificates and the Collateral Investor
Interest" and "Risk Fac tors--Certificate
Rating."
It is a condition to the issuance of the Class B
Certificates that they be rated in one of the
three highest rating categories by at least one
Rating Agency. The rating of the Class B
Certificates is based primarily on the value of
the Receivables as determined by the applicable
Rating Agency and the terms of the Collateral
InvestorInterest. See "Description of the
Certificates--Subordination of the Class B
Certificates and the Collateral Investor
Interest" and "Risk Fac tors--Certificate
Rating."
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RISK FACTORS
Potential investors should consider, among other things, the following
risk factors in connection with the purchase of the Certificates.
Limited Liquidity. It is anticipated that, to the extent permitted, the
Underwriters of the Certificates offered hereby will make a market in the
Certificates, but in no event will any such Underwriter be under an obligation
to do so. There is no assurance that a secondary market will develop with
respect to the Certificates, or if it does develop, that it will provide
Certificateholders with liquidity of investment or that it will continue for the
life of the Certificates.
Non-Recourse Obligation. No Certificateholder will have recourse for
payment of its Certificates to any assets of any of the Transferor, the Servicer
or any affiliates thereof. Consequently, Certificateholders must rely solely
upon payments on the Receivables and the Enhancement for the payment of
principal of and interest on the Certificates. Furthermore, under the Agreement,
the Certificateholders have an interest in the Receivables and collections on
the Receivables only to the extent of the Invested Amount. Should the
Certificates not be paid in full on a timely basis, Certificateholders may not
look to any assets of any of the Transferor, the Servicer or any affiliates
thereof to satisfy their claims.
Potential Priority of Certain Liens. The Transferor warrants in the
Agreement that the transfer of the Receivables to the Trust is either a valid
transfer and assignment of the Receivables to the Trust or the grant to the
Trust of a security interest in the Receivables. The Transferor will take all
actions as are required under applicable law to perfect the Trust's interest in
the Receivables and the Transferor warrants that if the transfer by the
Transferor to the Trust granted the Trust a security interest in the
Receivables, such security interest constitutes a first priority perfected
security interest therein and, to the extent provided under the applicable
Uniform Commercial Code (the "UCC"), in proceeds thereof (except for liens for
local taxes and government charges not due and payable or being contested in
good faith by the Transferor). Nevertheless, if the transfer of the Receivables
to the Trust is deemed to create a security interest therein under the UCC, a
tax or government lien on property of the Transferor arising before Receivables
come into existence may have priority over the Transferor's or the Trust's
interest in such Receivables, and, if the Federal Deposit Insurance Corporation
(the "FDIC") were appointed receiver of the Transferor, the receiver's
administrative expenses may also have priority over the Trust's interest in such
Receivables. In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), cert. denied, 114 S. Ct. 554 (1993), the United States Court of Appeals
for the 10th Circuit suggested that even where a transfer of accounts from a
seller to a buyer constitutes a "true sale," the accounts would nevertheless
constitute property of the seller's estate in a bankruptcy of the seller. If the
Transferor were to be placed into receivership and a court were to follow the
Octagon court's reasoning, Certificateholders might experience delays in payment
or possibly losses in their investment in the Certificates. Counsel to the
Transferor has advised the Transferor that the facts of the Octagon case are
distinguishable from those in the sale transactions between the Transferor and
the Trust and the reasoning of the Octagon case appears to be inconsistent with
established precedent and the UCC. See "Certain Legal Aspects of the
Receivables--Transfer of Receivables" and "--Certain Matters Relating to
Receivership."
Receivership of Transferor. A conservator or receiver would have the power
under the Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") to repudiate contracts of, and to request a stay of up to 90 days of
any judicial action or proceeding involving, the Transferor. However,
notwithstanding the insolvency of, or the appointment of a receiver or
conservator for, the Transferor, subject to certain qualifications a valid
perfected security interest of the Trustee in the Receivables should be
enforceable (to the extent of the Trust's "actual direct compensatory damages"
(as described below)) and payments to the Trust with respect to the Receivables
(up to the amount of such damages) should not be subject to an automatic stay of
payment or to recovery by such a conservator or receiver. If, however, the
conservator or receiver were to assert that the security interest was
unperfected or unenforceable, or were to require the Trustee to establish its
right to those payments by submitting to and completing the administrative
claims procedure established under FIRREA, or the conservator or receiver were
to request a stay of judicial proceedings with respect to the Transferor as
provided under FIRREA, delays in payments on the Certificates and possible
reductions in the amount of those payments could occur. In the
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<PAGE>
event of a repudiation of obligations by a conservator or receiver, FIRREA
provides that a claim for the repudiated obligation is limited to "actual direct
compensatory damages" determined as of the date of the appointment of the
conservator or receiver (which in most cases are expected to include the
outstanding principal on the Certificates plus interest accrued thereon to the
date of payment). The FDIC has not adopted a formal policy statement on payment
of principal and interest on collateralized borrowings of banks which are
repudiated. The Transferor believes that the general practice of the FDIC in
such circumstances is to permit the collateral to be applied to pay the
principal owed plus interest at the contract rate up to the date of payment,
together with the costs of liquidation of the collateral if provided for in the
contract. In one case involving the repudiation by the Resolution Trust
Corporation (the "RTC") of certain secured zero-coupon bonds issued by a savings
association, a United States federal district court held that "actual direct
compensatory damages" in the case of a marketable security meant the value of
the repudiated bonds as of the date of repudiation. If the court's view were
applied to determine the Trust's "actual direct compensatory damages" in the
event a conservator or receiver of the Transferor repudiated its obligations
under the Agreement, the amount paid to Certificateholders could, depending upon
circumstances existing on the date of the repudiation, be less than the
principal of the Certificates and the interest accrued thereon to the date of
payment. See "Certain Legal Aspects of the Receivables--Certain Matters Relating
to Receivership." In the event of a Servicer Default, if a conservator or
receiver is appointed for the Servicer, and no Servicer Default other than such
conservatorship or receivership or insolvency of the Servicer exists, the
conservator or receiver may have the power to prevent either the Trustee or
Certificateholders from effecting a transfer of servicing to a successor
Servicer. If a conservator or receiver were appointed for the Transferor,
pursuant to the Agreement, new Receivables would not be transferred to the Trust
and the Trustee would sell the portion of the Receivables allocable in
accordance with the Agreement to each Series (subject to certain limited rights
of the Certificateholders to instruct otherwise as described under "Description
of the Certificates--Early Amortization Events"), thereby causing an early
termination of the Trust and a pro rata loss to the Certificateholders if the
net proceeds of such sale were insufficient to pay such Certificates in full.
Upon the occurrence of an Early Amortization Event, if a conservator or receiver
were appointed for the Transferor and no Early Amortization Event other than
such conservatorship, receivership or insolvency of the Transferor existed, the
conservator or receiver may have the power to prevent the early sale,
liquidation or disposition of the Receivables and the commencement of the Early
Amortization Period. Such action could cause delays or shortfalls in the amounts
ultimately repaid to Certificateholders. In addition, a conservator or receiver
for the Transferor may have the power to cause the early payment of the
Certificates, which could result in Certificateholders receiving principal
payments earlier than expected. See "Maturity Considerations."
Ability to Change Terms of the Receivables. Pursuant to the Agreement, the
Transferor does not transfer to the Trust the Accounts but only the Receivables
arising in the Accounts. As owner of the Accounts, the Transferor retains the
right to determine the charges and fees which will be applicable from time to
time to the Accounts and to change various other terms with respect to the
Accounts. Under the Agreement, the Transferor will agree not to change the terms
of the Accounts unless the change is also made applicable to the comparable
segment of its portfolio of accounts with characteristics similar to the
Accounts. In servicing the Accounts, the Servicer will be required to exercise
the same care and apply the same policies that it exercises in handling similar
matters for its own and other comparable accounts. Except as specified above,
there will be no restrictions on the Transferor's ability to change the terms of
the Accounts. The Rating Agencies will not be asked to reassess their ratings of
the Certificates in the event the Transferor changes the terms of the Accounts.
There can be no assurance that a change made in the terms of the Accounts would
not result in a downgrade of the ratings of the Certificates. There can be no
assurance that changes in applicable law, changes in the marketplace or prudent
business practice might not result in a determination by the Transferor to take
actions which would change Account terms in a manner adverse to the interests of
Certificateholders.
Effects of Consumer Protection Laws and Litigation. The Accounts and the
related Receivables are subject to numerous federal and state consumer
protection laws which impose requirements on the making and collection of
consumer loans. Such laws, as well as any new laws or rulings which may be
adopted, may adversely affect the Servicer's ability to collect on the
Receivables or maintain previous levels of annual cardholder fees and other
charges and fees, and failure by the Servicer to comply with such requirements
also could adversely affect the Servicer's ability to collect on the
Receivables. Pursuant to the Agreement, the Transferor will represent and
warrant that each Receivable complies with all requirements of applicable law
the failure to comply with which
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<PAGE>
would have a material adverse effect on Certificateholders if such Receivable is
charged off as uncollectible or if the proceeds of such Receivable are not
available to the Trust. The Transferor will also make certain other
representations and warranties relating to the validity and enforceability of
the Accounts and the Receivables. The sole remedy if any such representation or
warranty is breached and such breach continues beyond the applicable cure
period, if any, and such Receivables are charged off as uncollectible or the
proceeds of such Receivables are not available to the Trust will be the
assignment of a balance of zero to all affected Receivables for purposes of
determining the Trust Principal Component. In addition, in the event of a breach
of certain representations and warranties, the Servicer may be obligated to
accept the assignment and transfer of the affected Receivables or the Transferor
may be obligated to accept the reassignment of all the Receivables in the Trust.
Such Receivables will be assigned or reassigned without any cost, direct or
indirect, incurred by Certificateholders, except that realization of amounts due
with respect to such Receivables will depend upon the ability of the Servicer or
the Transferor to accept such assignment or reassignment, respectively. See
"Description of the Certificates--Representations and Warranties" and
"--Servicer Covenants" and "Certain Legal Aspects of the Receivables--Consumer
Protection Laws."
Effects of Debtor Relief Laws. Application of federal and state bankruptcy
and debtor relief laws would affect the interests of the Certificateholders in
the Receivables, if such laws result in any Receivables being written off as
uncollectible when there are no funds available from any Enhancement or other
sources to cover any resulting shortfalls in amounts payable to
Certificateholders. See "Description of the Certifi cates--Defaulted
Receivables; Rebates and Fraudulent Charges; Investor Charge-Offs."
Competition in the Corporate Card/Purchasing Card Industry. The corporate
charge card/purchasing card industry is experiencing increased competition.
Although First Bank is currently one of the dominant issuers in the corporate
card/purchasing card industry, as new charge card issuers enter the market and
all issuers seek to expand their share of the market, there is increased use of
advertising, target marketing and pricing competition. The Trust will be
dependent upon the Transferor's continued ability to generate new Receivables.
If the rate at which new Receivables are generated declines significantly and
the Transferor is unable to designate Additional Accounts with respect to the
Trust, an Early Amortization Event could occur, in which case the Early
Amortization Period would commence. Certificateholders might then receive
principal payments earlier than expected. See "Maturity Considerations."
Timing of Payments and Maturity. The Receivables may be paid at any time
and there is no assurance that there will be additional Receivables created in
the Accounts or that any particular pattern of cardholder repayments will occur.
The commencement and continuation of the Accumulation Period will be dependent
upon the continued generation of new Receivables to be conveyed to the Trust. A
significant decline in the amount of Receivables generated could result in the
occurrence of an Early Amortization Event and commencement of the Early
Amortization Period. Certificateholders might then receive principal payments
earlier than expected. See "Maturity Considerations." Certificateholders should
be aware that the Transferor's ability to continue to compete in the current
industry environment will affect the Transferor's ability to generate new
Receivables to be conveyed to the Trust and may also affect payment patterns. A
significant decrease in the monthly payment rate could slow the return or
accumulation of principal payable to Certificateholders during the Early
Amortization Period or Accumulation Period. No assurance can be given that
payments of principal to the Certificateholders will be made as expected during
the Early Amortization Period or, with respect to an Accumulation Period, on the
applicable Expected Final Payment Date.
Effect of Subordination. The Class B Certificates and the Collateral
Investor Interest will be subordinated to the extent necessary to fund certain
payments with respect to the Class A Certificates. In addition, the Collateral
Investor Interest will be subordinated to the extent necessary to fund certain
payments with respect to the Class B Certificates. Certain principal payments
otherwise allocable to the Class B Certificateholders may be reallocated to
cover amounts in respect of the Class A Certificates and the Class B Invested
Amount may be reduced if the Collateral Invested Amount is equal to zero.
Similarly, certain principal payments allocable to the Collateral Investor
Interest may be reallocated to cover amounts in respect of the Class A
Certificates and the Class B Certificates and the Collateral Invested Amount may
be reduced. To the extent the Class B Invested Amount is
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<PAGE>
reduced, the percentage of Yield Collections allocated to the Class B
Certificates in subsequent Collection Periods will be reduced. Moreover, to the
extent the amount of such reduction in the Class B Invested Amount is not
reimbursed, the amount of principal and interest distributable to the Class B
Certificateholders will be reduced.
Certificate Rating. Any rating assigned to the Class A Certificates or the
Class B Certificates by a Rating Agency will reflect such Rating Agency's
assessment of the likelihood that Class A Certificateholders or Class B
Certificateholders will receive the payments of interest and principal required
to be made under the Agreement and will be based primarily on the value of the
Receivables in the Trust and the availability of the Enhancement. However, any
such rating will not address the likelihood that the principal of the Class A
Certificates or the Class B Certificates will be paid on a scheduled date. In
addition, any such rating will not address the possibility of the occurrence of
an Early Amortization Event or the possibility of the imposition of United
States withholding tax with respect to non-U.S. Certificateholders. The rating
will not be a recommendation to purchase, hold or sell either the Class A
Certificates or the Class B Certificates, and such rating will not comment as to
the marketability of such Certificates, any market price or suitability for a
particular investor. There is no assurance that any rating will remain for any
given period of time or that any rating will not be lowered or withdrawn
entirely by a Rating Agency if in such Rating Agency's judgment circumstances so
warrant. The Transferor will request a rating of each Class of the Certificates
by at least one Rating Agency. There can be no assurance as to whether any
rating agency not requested to rate the Certificates will nonetheless issue a
rating with respect to the Certificates or either Class thereof, and, if so,
what such rating would be. A rating assigned to the Certificates or either Class
thereof by a rating agency that has not been requested by the Transferor to do
so may be lower than the rating assigned by a Rating Agency pursuant to the
Transferor's request.
Limited Enhancement. The amount of Enhancement available to the
Certificateholders will be limited. If the amount of the Collateral Invested
Amount is reduced to zero, the Class B Certificateholders will bear directly the
credit and other risks associated with their undivided interest in the Trust and
thus will be more likely to suffer a loss. If the Class B Invested Amount is
reduced to zero, the Class A Certificateholders will bear directly the credit
and other risks associated with their undivided interest in the Trust and thus
will be more likely to suffer a loss. See "Description of the
Certificates--Required Collateral Invested Amount."
Master Trust Considerations. The Trust, as a master trust, may issue
Series from time to time. While the principal terms of any Series (the
"Principal Terms") will be specified in a Series Supplement, the provisions of a
Series Supplement and, therefore, the terms of any additional Series, will not
be subject to the prior review by, or consent of, holders of the certificates of
any previously issued Series. Such Principal Terms may include methods for
determining applicable invested percentages and allocating collections,
provisions creating different or additional security or other Enhancement,
provisions subordinating such Series to another Series or other Series (if the
Series Supplement relating to such Series so permits) to such Series, and any
other amendment or supplement to the related Agreement which is made applicable
only to such Series. It will be a condition precedent to the issuance of any
additional Series by the Trust that each Rating Agency that has rated any
outstanding Series deliver written confirmation to the Trustee that the Exchange
will not result in such Rating Agency reducing or withdrawing its rating on any
outstanding Series. There can be no assurance, however, that the Principal Terms
of any other Series, including any Series issued from time to time hereafter,
might not have an impact on the timing and amount of payments received by a
Certificateholder or otherwise adversely affect Series 1997-1. See "Description
of the Certificates--Exchanges."
Effect of Addition of Trust Assets on Credit Quality. The Transferor
expects, and in some cases will be obligated, to designate Additional Accounts,
the Receivables in which will be conveyed to the Trust. Such Additional Accounts
may include accounts originated using criteria different from those which were
applied to the Accounts designated on the Cut-Off Date related to the Trust or
to previously-designated Additional Accounts, because such accounts were
originated at a different date. Consequently, there can be no assurance that
Additional Accounts designated in the future will be of the same credit quality
as previously-designated Accounts. The designation of Additional Accounts will
be subject to the satisfaction of certain conditions described herein under
"Description of the Certificates--Addition of Accounts."
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Control of Action Under Agreement. Subject to certain exceptions, the
Certificateholders may take certain actions, or direct certain actions to be
taken, under the Agreement or the Series 1997-1 Supplement. However, the
Agreement and Series 1997-1 Supplement provide that under certain circumstances
the consent or approval of a specified percentage of the aggregate Invested
Amount or of the invested amount of each Series will be required to direct
certain actions, including amending the Agreement in certain circumstances.
Certificateholders of such other Series may have interests which do not coincide
in any way with the interests of the Certificateholders. In addition, Class A
Certificateholders and Class B Certificateholders may have interests which do
not coincide. In such instances, it may be difficult for the Certificateholders
of either Class to achieve the results from the vote that they desire.
Social, Legal and Economic Factors. Changes in use of credit and payment
patterns by customers may result from a variety of social, legal and economic
factors. Social factors include the prevalence and popularity of charge cards as
a means of payment for businesses. Legal factors include legislative and
judicial developments affecting the enforceability of various fees and charges
and the remedies available to lenders on credit and charge card receivables.
Economic factors include the rate of inflation, unemployment levels and relative
interest rates. Cardholders whose accounts are included in the Bank Portfolio
have addresses in __ states and the District of Columbia. The Transferor,
however, is unable to determine and has no basis to predict whether, or to what
extent, social, legal or economic factors will affect use of credit or repayment
patterns.
Effects of Book-Entry Registration. The Class A Certificates and the Class
B Certificates initially will each be represented by one or more Certificates
registered in the name of Cede, as nominee for DTC, and will not be registered
in the names of the Certificate Owners or their nominees. Unless and until
Definitive Certificates are issued, Certificate Owners will not be recognized by
the Trustee as Certificateholders, as that term is used in the Agreement. Hence,
until such time, Certificate Owners will only be able to exercise the rights of
Certificateholders indirectly through DTC, Cedel or Euroclear and their
participating organizations. Because DTC can only act on behalf of individuals
who are Participants in DTC's system (or participate indirectly through a
Participant), the ability of a Certificate Owner to pledge its Certificates to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such Certificates, may be limited due to the lack of a
physical certificate representing such Certificates. See "Description of the
Certificates--Book-Entry Registration" and "--Definitive Certificates."
THE TRUST
The Trust will be formed in accordance with the laws of the State of New
York pursuant to the Agreement. The Trust will not engage in any activity other
than acquiring and holding Receivables, issuing Series of Certificates and the
related Exchangeable Transferor Certificate, making payments thereon and
engaging in related activities (including, with respect to any Series, obtaining
any Enhancement and entering into an Enhancement agreement relating thereto). As
a consequence, the Trust is not expected to have any need for additional capital
resources other than the assets of the Trust.
FIRST BANK'S CORPORATE CARD AND PURCHASING CARD PROGRAMS
General
The Receivables conveyed or to be conveyed by First Bank to the Trust
arise under certain charge card accounts originated under First Bank's Corporate
Card or Purchasing Card programs. These accounts were generated under the VISA
USA, Inc. ("VISA") program and are owned by First Bank.
First Bank's Corporate Card and Purchasing Card programs differ
significantly from revolving credit plan products. The Corporate Card program is
designed as a means of payment for company-related travel and entertainment
expenses incurred by employees. The Purchasing Card program is designed as a
means of reducing
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the administrative and processing costs associated with a company's frequent
small-dollar purchases. Accounts generated under either program are not intended
to be used as a method of financing purchases. Under each program, an account's
full balance is billed at least monthly and is due within 30 days or less of the
date the bill is printed. As a result of these payment requirements, Corporate
Card and Purchasing Card account balances turn over rapidly relative to their
charge volume when compared to revolving credit plan products. Under each
program, the account balance is not subject to finance charge assessments.
First Bank's Corporate Card Program
Origination of Accounts. Corporate Card accounts are originated by First
Bank primarily through direct solicitation of managers who have responsibility
for and control over employee travel and entertainment expenses. First Bank
focuses its marketing effort on corporations with a large number of employees,
requiring a substantial number of corporate charge cards. First Bank competes in
this market primarily with American Express and Diners Club.
First Bank offers three liability plans for Corporate Card customers:
Individual, Joint & Several, or Corporate. Under the Individual liability plan,
the individual employee is responsible for payment of all charges while the
employer agrees to reimburse the cardholder for legitimate travel and
entertainment expenses. If the individual fails to pay, however, the company
does not have an obligation to pay First Bank provided the company notifies
First Bank promptly in the event the individual's employment is terminated.
Under the Joint & Several liability plan, the company is not liable for any
charges on the individual employee's account unless the account becomes 90 days
past due. Under the Corporate liability plan, the company is directly
responsible for payment of all charges and fees. As of ______ __, ___, the
percentage of Corporate Card account balances outstanding under each liability
plan was: Individual liability plan, __%; Joint & Several liability plan, __%;
and Corporate liability plan, __%.
Once the company submits an application for a Corporate Card account, a
First Bank credit analyst reviews financial statements and other credit
information regarding the company. Even if the company has chosen the Individual
liability plan, First Bank considers it essential to review the company's credit
because the company's ability to offer the cardholder stable employment and to
reimburse the cardholder for legitimate charges will directly affect the
cardholder's willingness and ability to make payment on the account. The credit
review of the company will focus on the company's current and expected financial
condition, the maximum receivables balance the company is expected to have
outstanding at any one time, and the aggregate exposure of First Bank and its
affiliates to the company and any related borrowers. An aggregate credit limit
for all company-related accounts is established based upon such credit review.
If the company has chosen the Individual liability plan, a review of each
proposed cardholder is performed based upon credit scores obtained from credit
bureaus. Credit scores are based on a variety of factors including payment
performance on other loans and credit facilities, stability of employment,
length of time at current address and amount of recent usage of other credit
sources. The company also specifies certain categories of card purchases that
are deemed pre-approved (i.e., legitimate travel and entertainment expenses).
First Bank does not establish spending limits for individual cardholders with
respect to legitimate travel and entertainment expenses, but does establish
spending limits for other categories of purchases, based on First Bank's review
of the cardholder's credit history and the anticipated level of usage by the
cardholder.
First Bank monitors the performance of the company's accounts, and
periodically updates its analysis of the company's financial strength. The
frequency, scope and depth of these reviews depend on First Bank's assessment of
the company's financial strength, First Bank's aggregate credit exposure to the
company, and the performance of the company's accounts. Credit limits are
adjusted accordingly as a result of such reviews.
Billing and Fees. Statements are sent to each Cardholder if the company
chose the Individual or Joint & Several liability plan, while statements are
sent directly to the company if the company chose the Corporate liability plan.
Companies can also choose to have certain charges, such as annual fees or
airline tickets, centrally billed to the company. Unlike a revolving credit
card, the entire balance on a charge card issued under the Corporate Card
program (a "Corporate Card") is due 30 days after the statement is printed.
Payments may be made by check or,
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for centrally billed accounts, via electronic funds transfer. Annual fees, late
fees and cash advance fees vary among Accounts, but are not expected to
represent a significant portion of Yield Collections on the Receivables.
First Bank's Purchasing Card Program
Origination of Accounts. First Bank markets its Purchasing Card program
directly to large corporations. Charge cards under the Purchasing Card program
("Purchasing Cards") are issued directly to individual corporate employees whose
job responsibilities require them to make small-dollar purchases. The Purchasing
Card can eliminate much of the administrative and processing costs associated
with processing a company's traditional purchase orders.
Once the company submits an application for a Purchasing Card account, the
credit approval process is similar to that for a Corporate Card account issued
under the Corporate liability plan. A First Bank credit analyst reviews
financial statements and other credit information regarding the company. The
credit review of the company will focus on the company's current and expected
financial condition, the maximum receivables balance the company is expected to
have outstanding at any one time, and the aggregate exposure of First Bank and
its affiliates to the company and any related borrowers. First Bank monitors the
performance of the company's accounts, and periodically updates its analysis of
the company's financial strength. The frequency, scope and depth of these
reviews will depend on the company's perceived financial strength, First Bank's
aggregate credit exposure to the company, and the performance of the company's
accounts. Credit limits are adjusted accordingly as a result of such reviews.
Billing and Fees. Statements are sent to the company at least monthly and
balances are generally due 14 days after the statement is printed. The company
has the choice of making payments by check or via electronic funds transfer.
Annual fees, late fees and cash advance fees vary among Accounts, but are not
expected to represent a significant portion of Yield Collections on the
Receivables.
Collection Efforts
Corporate Cards with Individual or Joint & Several Liability. First Bank
considers a Corporate Card account delinquent when a customer fails to make a
payment 30 days after the billing statement is printed. Efforts to collect
account balances that are delinquent less than 60 days are made by First Bank's
Technical Collections Services group, through a combination of mailed notices
and telephone calls. First Bank generally suspends any account that becomes 30
days delinquent, denying authorization of any further purchases, and generally
closes any account that becomes 60 days delinquent. Once an account becomes 60
days delinquent, responsibility for collection is transferred to First Bank's
Corporate Card Collections Department, where a more individualized effort at
collection is made. If the account was registered under the Joint & Several
liability plan, First Bank charges the corporate customer for amounts due when
the account becomes 90 days delinquent. First Bank generally charges off
Corporate Card account balances at the end of the month in which the account
becomes 150 days delinquent (although charge-offs may be made earlier in some
circumstances), and transfers collection responsibility to a separate unit of
First Bank System responsible for collection of charged-off accounts of all
First Bank System consumer credit products. First Bank's collection and
charge-off practices may change over time in accordance with its business
judgment and applicable law.
Purchasing Cards and Corporate Cards with Corporate Liability. The
collections process for Purchasing Cards and for Corporate Cards with corporate
liability is conducted by First Bank's Relationship Management Department. First
Bank generally considers a Purchasing Card account delinquent when the company
fails to make a payment 14 days after the billing statement is printed, and
generally considers a Corporate Card account with corporate liability delinquent
when the company fails to make a payment 30 days after the billing statement is
printed. Following the sending of notices, a National Account Manager will
contact the company when the account becomes 15 days past due and will seek to
determine the reason for the delinquency and work to resolve any discrepancy.
The account will generally be suspended when it becomes 30 days past due, and
the account will generally be closed when it becomes 60 days past due. First
Bank typically charges off corporate liability account
27
<PAGE>
balances at the end of the month in which the account becomes 150 days past due.
As of ______ __, ___, no one company accounted for more than __% of total
Corporate Card and Purchasing Card account balances.
The Servicer - FBS Card Services, Inc.
First Bank retains FBS Card Services, Inc. ("Card Services"), a wholly
owned subsidiary of First Bank System, located in Minneapolis, to perform
various data processing and administrative functions associated with servicing
the Corporate Card and Purchasing Card accounts, as well as First Bank's retail
credit card accounts. Pursuant to the Agreement, Card Services will be retained
to service the Receivables on behalf of the Trust. In processing payments on
First Bank's credit and charge card accounts, Card Services utilizes both
proprietary systems and a variety of services provided by Total System Services,
Inc., a third-party provider of credit and charge card processing services to
numerous credit and charge card issuers.
Interchange
Creditors participating in the VISA association receive interchange as
partial compensation for taking credit risk, absorbing fraud losses and funding
receivables for a limited period of time prior to initial billing. Under the
VISA system, a portion of this interchange in connection with cardholder charges
for goods and services is conveyed through the VISA system from banks which
clear the transactions for merchants to card issuing banks. Interchange revenue
is based on the number of VISA card transactions and the amount charged per
transaction. The Transferor will be required, pursuant to the terms of the
Agreement, to transfer to the Trust a percentage of Net Interchange attributed
to cardholder charges for goods and services in the Accounts. Net Interchange
arising under the Accounts will be allocated to the Certificates on the basis of
the percentage equivalent of the ratio which the amount of the Floating
Allocation Percentage of cardholder charges for goods and services in the
Accounts bears to the total amount of cardholder charges for goods and services
in the accounts in the Bank Portfolio. VISA may from time to time change the
amount of interchange reimbursed to banks issuing VISA cards. Net Interchange
will be treated as Yield Collections for the purposes of allocating Yield
Collections to Certificateholders.
Bank Portfolio Experience
The following tables set forth the historical receivable turnover rate,
monthly payment rate, periodic yield computation, loss experience, and
delinquency experience for each of the periods shown for the entire Bank
Portfolio.
Because the Accounts are only a portion of the Bank Portfolio, actual
experience with respect to the Accounts may have been different from that of the
Bank Portfolio. Because the Accounts have been selected from the Bank Portfolio
in a manner not adverse to Certificateholders and represent a sizable portion of
the Bank Portfolio, the Transferor believes that the performance of the Bank
Portfolio reflected in the following tables is indicative of the historical
performance of the Accounts. There can be no assurance that the future
performance of the Accounts will be similar to that of the Bank Portfolio in the
past or in the future.
Receivable Turnover Rate and Payment Rate Experience. The accounts are
designed for use as a method of payment for the purchase of merchandise and
services and for cash advances. Account balances are due in full each billing
cycle. Therefore, accounts cannot be used by cardholders for the purpose of
financing these purchases or cash advances. In contrast to revolving credit plan
products which do not require payment in full each month, the requirement that
account balances be paid in full each month creates a high monthly payment rate
and Account balances which turn over rapidly relative to charge volume. The
following two tables illustrate this product characteristic based on the
historical Bank Portfolio experience.
28
<PAGE>
Receivable Turnover Rates for the Bank Portfolio
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Charge Volume and Fees(1) $3,750,340 $2,958,263 $4,057,496 $2,745,798 $1,583,650
Average Net Receivables(2) $ 543,528 $ 439,038 $ 461,162 $ 317,324 $ 193,169
Receivable Turnover Rate(3) 9.20(4) 8.98(4) 8.80 8.65 8.20
</TABLE>
- ----------
(1) Charge Volume and Fees is the sum of (a) amounts charged by cardholders
for merchandise, services and cash advances for each period shown and (b)
all annual, late and other fees billed to Accounts for each period shown.
Charge Volume and Fees is shown net of adjustments made to accounts due to
returned goods, customer disputes or certain other miscellaneous
adjustments.
(2) Average Net Receivables is the arithmetic average of the daily Bank
Portfolio balances for each period shown.
(3) Receivable Turnover Rate is calculated by dividing Charge Volume and Fees
by Average Net Receivables for each period shown.
(4) Annualized rate.
Monthly Payment Rates for the Bank Portfolio(1)
Nine Months Ended
September 30, Year Ended December 31,
--------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Monthly Average Rate.... 75.31% 72.54% 72.62% 70.67% 69.93%
Highest Month........... 79.22% 78.78% 78.28% 75.13% 77.08%
Lowest Month............ 70.42% 67.36% 67.36% 61.49% 59.98%
- ----------
(1) Monthly Payment Rate is calculated by dividing total collections received
(excluding recoveries on charged-off receivables and excluding Net
Interchange, if any) during each month by such month's opening balance.
There can be no assurance that the Receivable Turnover Rate and the
Monthly Payment Rate for Receivables in the Accounts, and thus the rate at which
Certificateholders can expect principal to accumulate in the Principal Funding
Account or to be paid on the Class A Expected Final Payment Date or Class B
Expected Final Payment Date, as applicable, or during any Early Amortization
Period, will be similar to the historical Bank Portfolio experience set forth
above.
Periodic Yield Computation. Receivables originated under the Accounts,
consisting of amounts charged by cardholders for goods and services, cash
advances, annual, late and other fees, are not subject to a monthly finance
charge. As a result, a portion of the collections on the Receivables received
during the preceding Collection Period will be treated as "yield" to the Trust.
Such yield will equal the product of the aggregate amount of such collections
(excluding Net Interchange, if any) and the Yield Factor. Such collections, plus
certain amounts of Net Interchange attributed to cardholder charges in the
Accounts, will be treated as Yield Collections. The remainder of such
collections will be treated as Principal Collections.
The dollar amounts representing Computed Yield in the table below have
been derived by applying a Yield Factor of __% (which is the Yield Factor under
the Agreement) to historical monthly collections of receivables (excluding
recoveries on charged-off receivables and excluding Net Interchange, if any) in
the accounts in the Bank Portfolio for each period shown. Each of those dollar
amounts is divided by Charge Volume and Fees for the appropriate period to
produce a Computed Yield for the Bank Portfolio. To the extent
29
<PAGE>
that Charge Volume and Fees did not equal collections for any given period,
there is a difference between the Computed Yield as a Percentage of Charge
Volume and Fees and the assumed Yield Factor of __%.
Periodic Yield Computation for the Bank Portfolio
Assuming a __% Yield Factor
(Dollars in Thousands)
Nine Months Ended
September 30, Year Ended December 31,
--------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Computed Yield(1)......... $ $ $ $ $
Computed Yield
as a Percentage
of Charge Volume and Fees (2) % % % % %
Net Interchange(3)........ $ $ $ $ $
Net Interchange
as a Percentage
of Charge Volume and Fees % % % % %
Computed Yield and Net ...
Interchange as a Percentage
of Charge Volume and Fees % % % % %
- ----------
(1) Computed Yield is the dollar amount equal to the product of the __%
assumed Yield Factor and collections (excluding recoveries on charged-off
receivables and excluding Net Interchange, if any) for each period shown.
(2) Computed Yield as a Percentage of Charge Volume and Fees may not equal the
__% assumed Yield Factor because Charge Volume and Fees may not equal
collections (excluding recoveries on charged-off receivables and excluding
Net Interchange, if any) for the periods shown.
(3) The amount of Net Interchange for each of the periods indicated above has
been estimated. Net Interchange is equal to gross interchange reduced by
VISA dues and rebates to corporate customers and travel agencies.
There can be no assurance that the yield experience for Receivables in the
Accounts will be similar to the periodic yield computation for the Bank
Portfolio set forth in the table. The actual yield experience will vary month to
month due to variations in Receivable Turnover Rates, Monthly Payment Rates and
cardholder charge activity. Changes in the amount of Net Interchange will also
affect actual yield experience. VISA may from time to time change the amount of
interchange reimbursed to banks issuing VISA cards, including the Bank.
Reductions in the amount of Net Interchange would reduce the actual yield
experience.
Loss Experience. The following table sets forth the Bank Portfolio's
historical gross loss, recovery and net loss experience for the periods shown.
Due to the Bank Portfolio's Receivable Turnover Rate and Monthly Payment Rate,
Gross Losses, Recoveries and Net Losses are expressed as a percentage of Charge
Volume and Fees.
Loss Experience for the Bank Portfolio
(Dollars in Thousands)
Nine Months Ended
September 30, Year Ended December 31,
--------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Gross Losses(1).......... $4,769 $4,827 $6,629 $4,682 $3,589
Gross Losses as a
Percentage of
Charge Volume and Fees. 0.13% 0.16% 0.16% 0.17% 0.23%
Recoveries............... $1,880 $1,932 2,810 $1,404 $1,161
30
<PAGE>
Recoveries as a
Percentage of
Charge Volume and Fees. 0.05% 0.07% 0.07% 0.05% 0.07%
Net Losses............... $2,889 $2,895 $3,819 $3,278 $2,428
Net Losses as a
Percentage of
Charge Volume and Fees. 0.08% 0.10% 0.09% 0.12% 0.15%
- ----------
(1) Gross Losses are charge-offs before recoveries and do not include the
amount of any reductions in receivables balances due to fraud, returned
goods, customer disputes or certain other miscellaneous adjustments.
(2) Gross Losses minus Recoveries may not equal Net Losses due to rounding.
There can be no assurance that the loss experience for the Accounts in the
future will be similar to the historical Bank Portfolio experience set forth
above.
Periodic Net Yield Computation. Computed Net Yield is the dollar amount
equal to Computed Yield minus Net Losses. Computed Net Yield and Net Interchange
is the dollar amount equal to Computed Yield plus an estimate of the amount of
Net Interchange received during the period minus Net Losses. The table below
sets forth the Computed Net Yield and the Computed Net Yield and Net Interchange
for the periods shown.
Periodic Net Yield Computation for
the Bank Portfolio Assuming a __% Yield Factor
(Dollars in Thousands)
Nine Months Ended
September 30, Year Ended December 31,
--------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Computed Net Yield........ $ $ $ $ $
Computed Net Yield
as a Percentage of
Charge Volume and Fees % % % % %
Computed Net Yield
and Net Interchange..... $ $ $ $ $
Computed Net Yield and
Net Interchange as
a Percentage
of Charge Volume and Fees % % % % %
- ----------
The ability of the Trust to generate sufficient yield to pay interest to
Certificateholders and to pay the Servicing Fee depends upon the Monthly Payment
Rate, the Yield Factor, Net Losses, the amount of Net Interchange and the
generation of new Receivables. Based on the Bank Portfolio experience described
in the foregoing tables, the following example illustrates how these variables
would interact to produce yield to the Trust. For the year ended December 31,
1995, the Computed Net Yield as a Percentage of Charge Volume and Fees was ____%
and the Receivable Turnover Rate (total Charge Volume and Fees divided by
Average Net Receivables) was ____. The product of these two variables results in
a net yield as a percentage of Average Net Receivables of ____% for the year
ended December 31, 1995. There can be no assurance that the experience for the
Accounts in the future will be similar to the historical Bank Portfolio
experience set forth above.
Delinquency Experience. The table below sets forth the Bank Portfolio's
delinquency experience for the periods shown.
31
<PAGE>
Delinquency Experience for the Bank Portfolio
(Dollars in Thousands)
<TABLE>
<CAPTION>
Average of Nine Months Average of Twelve Months
Ended September 30, Ended December 31,
--------------------------------------------- ----------------------------------------------------------------
1996 1995 1995 1994 1993
--------------------- --------------------- --------------------- -------------------- -------------------
Number of Days Delinquent Percent- Delinquent Percent- Delinquent Percent- Delinquent Percent- Delinquen Percent-
Delinquent(1) Amount(2) age(3) Amount(2) age(3) Amount(2) age(3) Amount(2) age(3) Amount(2) age(3)
- ------------- --------- ------ --------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 to 59 days.. $19,875 3.61% $15,824 3.54% $16,869 3.66% $12,898 4 .04% $ 8,021 4.28%
60 to 89 days.. 4,383 0.79 3,492 0.78 3,681 0.80 2,242 0.70 1,747 0.93
90 to 119 days. `1,560 0.28 1,412 .032 1,511 0.33 1,032 0.32 623 0.33
120 or more days 926 0.17 842 0.19 871 0.19 642 0.20 382 0.20
Total(4).. $26,744 4.85% $21,570 4.83% $22,932 4.97% $16,814 5.26% $10,773 5.78%
</TABLE>
- ----------
(1) Delinquency is measured as the number of days after a charge is first
included within an unpaid "Previous Balance" on any monthly billing
statement.
(2) Delinquent amounts are the arithmetic average of the month-end billed
delinquencies by category for the appropriate period.
(3) Delinquency percentage is the arithmetic average of the month-end
percentages equal to ending net receivables by category divided by the
aggregate ending net receivables balance.
(4) Columns may not total due to rounding.
THE RECEIVABLES
The Receivables conveyed to the Trust will arise in VISA accounts
originated under the Bank's Corporate Card or Purchasing Card programs and
selected from the portfolio of VISA accounts in such programs owned by the Bank
on the basis of criteria set forth in the Agreement as applied on the Cut-Off
Date and, with respect to Additional Accounts, as of the related date of their
designation (the "Trust Portfolio"). The Transferor will have the right (subject
to certain limitations and conditions set forth therein), and in some
circumstances will be obligated, to designate from time to time Additional
Accounts and to transfer to the Trust all Receivables of such Additional
Accounts, whether such Receivables are then existing or thereafter created. Any
Additional Accounts designated pursuant to the Agreement must be Eligible
Accounts as of the date the Transferor designates such accounts as Additional
Accounts. The Transferor will also have the right (subject to certain
limitations and conditions) to designate certain Accounts as Removed Accounts
and to require the Trustee to reconvey all Receivables in such Removed Accounts
to the Transferor. Throughout the term of the Trust, the Accounts from which the
Receivables arise will be the Accounts designated by the Transferor on the
Cut-Off Date plus any Additional Accounts minus any Removed Accounts. See
"Description of the Certificates--Addition of Accounts" and "--Removal of
Accounts."
The Receivables included in the Trust Portfolio, as of the Cut-Off Date,
had an aggregate balance of $______. The Accounts originated under the Corporate
Card program had an aggregate balance of $_____, an average balance of $_____
and an average age of approximately __ months. The Accounts originated under the
Purchasing Card program had an aggregate balance of $_____, an average balance
of $_____ and an average age of approximately __ months. As of ________, 1995,
cardholders whose Accounts are to be included in the Trust Portfolio had billing
addresses in __ States, the District of Columbia and certain U.S. territories.
The Receivables included in the Trust Portfolio, as of the Cut-Off Date,
represent aggregate Trust principal (the "Trust Principal Component") of
$______. The Trust Principal Component as of any date is an amount equal to the
product of the total amount of Receivables in the Trust as of such date and one
minus the Yield Factor.
The following tables summarize the Trust Portfolio by various criteria as
of the Cut-Off Date. Because the future composition of the Trust Portfolio will
change over time, these tables are not necessarily indicative of the composition
of the Trust Portfolio at any subsequent date.
32
<PAGE>
Composition by Account Balance
Trust Portfolio
Percentage
of Total Percentage
Number of Number of of Total
Account Balance Accounts Accounts Receivables Receivables
- --------------- -------- -------- ----------- -----------
Credit Balance...................... % $ %
No Balance..........................
$0.01 - $500.00.....................
$500.01 - $1,000.00.................
$1,000.01 - $2,000.00...............
$2,000.01 - $3,000.00...............
$3,000.01 - $4,000.00...............
$4,000.01 - $5,000.00...............
$5,000.01 - $6,000.00...............
$6,000.01 - $7,000.00...............
$7,000.01 - $8,000.00...............
$8,000.01 - $9,000.00...............
$9,000.01 - $10,000.00..............
$10,000.01 or More..................
TOTAL...........................
Composition by Period of Delinquency
Trust Portfolio
Percentage
of Total Percentage
Period of Delinquency Number of Number of of Total
(Days Contractually Delinquent) Accounts Accounts Receivables Receivables
- ------------------------------- -------- -------- ----------- -----------
Not Delinquent...................... % $ %
Up to 30 Days.......................
31 to 60 Days.......................
61 to 90 Days.......................
91 to 120 Days......................
121 or more Days....................
TOTAL...........................
Composition by Account Age
Trust Portfolio
Percentage
of Total Percentage
Number of Number of of Total
Account Age Accounts Accounts Receivables Receivables
- ----------- -------- -------- ----------- -----------
Not More than 6 Months.............. % $ %
Over 6 Months to 12 Months..........
Over 12 Months to 24 Months.........
Over 24 Months to 36 Months.........
Over 36 Months to 48 Months.........
Over 48 Months to 60 Months.........
Over 60 Months to 72 Months.........
Over 72 Months......................
TOTAL...........................
33
<PAGE>
Geographic Distribution of Corporate Card Accounts
Issued Under the Individual Liability Plan or Joint & Several Liability Plan
in Trust Portfolio(1)
Percentage
of Total Percentage
Number of Number of of Total
State(2) Accounts Accounts Receivables Receivables
- -------- -------- -------- ----------- -----------
% $ %
TOTAL 100.00% $ 100.00%
====== ======
- ----------
(1) Includes only Corporate Card accounts issued under either the Individual
liability plan or the Joint & Several liability plan in the Trust
Portfolio. See "--First Bank's Corporate Card Program."
(2) Based on individual cardholders' current billing addresses.
Geographic Distribution of Purchasing Card Accounts and
Corporate Card Accounts Issued Under the Corporate Liability Plan
in Trust Portfolio(1)
Percentage
of Total Percentage
Number of Number of of Total
State(2) Accounts Accounts Receivables Receivables
-------- -------- -------- ----------- -----------
% $ %
TOTAL 100.00% $ 100.00%
====== ======
- ----------
(1) Includes only Purchasing Card accounts and Corporate Card accounts issued
under the Corporate liability plan in the Trust Portfolio. See "--First
Bank's Purchasing Card Program" and "--First Bank's Corporate Card
Program."
(2) Based on the current billing addresses of the relevant Corporate Card and
Purchasing Card accounts.
34
<PAGE>
MATURITY CONSIDERATIONS
The Agreement provides that the Class A Certificateholders will not
receive payments of principal until the Class A Expected Final Payment Date, or
earlier in the event of an Early Amortization Event which results in the
commencement of the Early Amortization Period. Class A Certificateholders will
receive payments of principal on each Special Payment Date following the
Collection Period in which an Early Amortization Event occurs until the Class A
Invested Amount has been paid in full or the Series 1997-1 Termination Date has
occurred. The Agreement provides that the Class B Certificateholders will not
receive payments of principal until the Class B Expected Final Payment Date, or
earlier in the event of an Early Amortization Event which results in the
commencement of the Early Amortization Period; provided, however, that the Class
B Certificateholders will in no event begin to receive payments of principal
until the final principal payment on the Class A Certificates has been made.
Should an Early Amortization Event occur with respect to the Certificates
and the Early Amortization Period commence, any amount on deposit in the
Principal Funding Account will be paid to the Class A Certificateholders on the
first Special Payment Date with respect to the Early Amortization Period.
Thereafter, Certificateholders will be entitled to receive Principal Collections
allocable to Series 1997-1 on each Special Payment Date with respect to such
Early Amortization Period, until the Series 1997-1 Termination Date occurs. See
"Description of the Certificates--Early Amortization Events."
The ability of Certificateholders to receive payments of principal on the
applicable Expected Final Payment Date depends, among other factors, on the rate
of repayment on the Receivables, the timing of the receipt of such repayments,
the amount of outstanding Receivables, the Yield Factor, delinquencies and
charge-offs on the Accounts, the potential issuance by the Trust of additional
Series and the availability of Shared Principal Collections. Monthly payment
rates on the Receivables may vary due to seasonal purchasing and payment habits
of cardholders and to changes in any terms of discount programs in which
cardholders participate. The Transferor cannot predict, and no assurance can be
given, as to the cardholder monthly payment rates that will actually occur in
any future period, as to the actual rate of payment of principal of the
Certificates or whether the terms of any subsequently issued Series might have
an impact on the amount or timing of any such payment of principal.
Certificateholders should consider, in the case of Certificates purchased at a
discount, the risk that a slower than anticipated rate of payment of principal
on the Certificates could result in an actual yield that is less than the
anticipated yield and, in the case of Certificates purchased at a premium, the
risk that a faster than anticipated rate of payment of principal on the
Certificates could result in an actual yield that is less than the anticipated
yield.
The amount of collections of Receivables may vary from month to month due
to seasonal variations, general economic conditions and payment habits of
cardholders. There can be no assurance that Principal Collections with respect
to the Trust Portfolio, and thus the rate at which Certificateholders could
expect to receive payments of principal on their Certificates during the Early
Amortization Period or the rate at which the Principal Funding Account could be
funded during the Accumulation Period, will be similar to the historical
experience set forth herein.
The Trust, as a master trust, may issue additional Series from time to
time, and there can be no assurance that the terms of any such Series might not
have an impact on the timing or amount of payments received by
Certificateholders. Further, if an Early Amortization Event occurs, the average
life and maturity of the Class A Certificates and Class B Certificates,
respectively, could be significantly reduced.
For the reasons set forth above, there can be no assurance that deposits
in the Principal Funding Account will be made in accordance with the applicable
Controlled Deposit Amount or that the Class A Certificates and the Class B
Certificates will be paid in full on their respective Expected Final Payment
Dates. Any reinvestment risks resulting from the payment of principal on the
Certificates earlier or later than expected will be borne entirely by the
Certificateholders. Such reinvestment risks include the risk that interest rates
may be lower at the time such holders receive payments of principal on their
Certificates than interest rates would
35
<PAGE>
otherwise have been had such payments of principal not been made or had such
payments of principal been made at a different time.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Transferor. The Transferor will use such proceeds for its general corporate
purposes.
FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION)
AND FIRST BANK SYSTEM, INC.
First Bank of South Dakota (National Association) is a national banking
association organized under the laws of the United States. First Bank provides a
broad range of products and services to its customers in the areas of credit,
treasury management, leasing, trust, mortgage, insurance, investment and other
financial services. First Bank markets these services through seventeen branches
located primarily in regional trade centers, including Sioux Falls and Rapid
City. First Bank is a wholly-owned subsidiary of First Bank System, Inc. ("First
Bank System"). First Bank System is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, with its principal assets being
the stock of its banking and non-banking subsidiaries. Through its banking
subsidiaries and various non-banking subsidiaries, First Bank System provides
domestic banking and banking related services primarily throughout the Midwest
and Rocky Mountain regions. As of September 30, 1996, First Bank had assets of
$2.01 billion and shareholder's equity of $175.1 million, determined in
accordance with regulatory accounting principles (which differ, in certain
instances, from generally accepted accounting principles). As of June 30, 1996,
First Bank System had assets of $36.18 billion and shareholders' equity of $3.19
billion, determined in accordance with generally accepted accounting principles.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement and the Series
1997-1 Supplement, copies of the forms of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part. Pursuant to the
Agreement, the Transferor and the Trustee may execute further Series Supplements
in order to issue additional Series. The following summary of the Certificates
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all of the provisions of the Agreement and the Series
1997-1 Supplement.
General
The Certificates will represent undivided interests in the Trust,
including the right to receive varying percentages of all collections received
with respect to the Receivables in the Trust up to (but not in excess of)
amounts required to make payments of, with respect to the Class A Certificates,
interest at the Class A Certificate Rate and the Class A Invested Amount on the
Class A Expected Final Payment Date and, with respect to the Class B
Certificates, interest at the Class B Certificate Rate and the Class B Invested
Amount on the Class B Expected Final Payment Date. See "--Allocation
Percentages." The property of the Trust consists of the Receivables generated
under the Accounts and any Additional Accounts subsequently designated to the
Trust, all monies due or to become due in payment of the Receivables (including
recoveries on charged-off Receivables and amounts, if any, paid by corporate
clients as co-obligors under the Corporate Card program), all proceeds of the
Receivables, the right to receive certain amounts of Net Interchange allocable
to the Certificates and all monies on deposit in certain bank accounts of the
Trust (other than investment earnings on such amounts, except as otherwise
specified herein), and any Enhancement with respect to any particular Series or
Class as described herein. Monies on deposit in bank accounts of the Trust that
are established for the
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benefit of any other Series and the drawing on or payment of Enhancements issued
with respect to any other Series will not be available to Certificateholders.
The Trust will not include the Receivables from any Removed Accounts. On the
Closing Date, the Trustee will authenticate the Class A Certificates and the
Class B Certificates and deliver such Certificates to the Transferor which will
in turn deliver them to the Underwriters against payment of the net proceeds of
the sale of the Certificates. The Trustee will also deliver the Collateral
Investor Interest and the Exchangeable Transferor Certificate to the Transferor.
The Transferor intends to sell the Collateral Investor Interest pursuant to the
Loan Agreement to one or more third-party investors which will not be affiliates
of the Transferor. The Collateral Investor Interest is not offered hereby. The
Class A Initial Invested Amount will equal $______, the Class B Initial Invested
Amount will equal $______ and the Collateral Initial Invested Amount will equal
$______.
The Transferor initially will own the Exchangeable Transferor Certificate.
The Exchangeable Transferor Certificate will represent the undivided interest in
the Trust not represented by the Certificates, by the Collateral Investor
Interest, by other investor certificates issued by the Trust and by the
interests of Enhancement providers. The holder of the Exchangeable Transferor
Certificate will have the right to a percentage (the "Transferor Percentage") of
all collections on the Receivables in the Trust. The Transferor Percentage as of
any date of determination will equal 100% minus the sum of the applicable
allocation percentages for all Series outstanding as of the date on which such
determination is being made. See "--Allocation Percentages."
During the Revolving Period, the Invested Amount will remain constant
except under certain limited circumstances. See "--Defaulted Receivables;
Rebates and Fraudulent Charges; Investor Charge-Offs." The amount of Principal
Collections in the Trust, however, will vary each day as new Receivables are
created and others are paid. The amount of the Transferor Interest will
fluctuate each day, therefore, to reflect the changes in the amount of the
Receivables in the Trust. When a Series is amortizing, the invested amount of
such Series will generally decline as payments of principal are distributed to
the Certificateholders or accumulated in a principal funding account. As a
result, the Transferor Interest will generally increase each month during the
amortization period with respect to a Series to reflect the reductions in the
invested amount of such Series and will also change to reflect the variations in
the amount of Principal Collections. The Transferor Interest may also be reduced
as the result of an Exchange. See "--Exchanges."
The Class A Certificates and the Class B Certificates initially will be
represented by certificates registered in the name of the nominee of DTC
(together with any successor depository selected by the Transferor, the
"Depository") except as set forth below. Beneficial interests in the
Certificates will be available for purchase in minimum denominations of $1,000
and integral multiples thereof in book-entry form only. The Transferor has been
informed by DTC that DTC's nominee will be Cede. Accordingly, Cede is expected
to be the holder of record of the Certificates. No Certificate Owner acquiring
an interest in the Certificates will be entitled to receive a certificate
representing such person's interest in the Certificates unless Definitive
Certificates are issued. Unless and until Definitive Certificates are issued
under the limited circumstances described herein, all references herein to
actions by Certificateholders shall refer to actions taken by DTC upon
instructions from its Participants (as defined below), and all references herein
to distributions, notices, reports and statements to Certificateholders shall
refer to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Certificates, as the case may be, for distribution to
Certificate Owners in accordance with DTC procedures. See "--Book-Entry
Registration" and "--Definitive Certificates."
Book-Entry Registration
Certificateholders may hold their Certificates through DTC (in the United
States) or Cedel or Euroclear (in Europe), which in turn hold through DTC, if
they are participants of such systems, or indirectly through organizations that
are participants in such systems.
Cede, as nominee for DTC, will hold the global Certificates. Cedel and
Euroclear will hold omnibus positions on behalf of the Cedel Participants and
the Euroclear Participants, respectively, through customers'
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securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participating
organizations ("Participants") and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers (who may include the Underwriters), banks, trust companies and clearing
corporations and may include certain other organizations. Indirect access to the
DTC system also is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (the "Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Participants or Euroclear Participants, on the other, will be
effected in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Participants and Euroclear Participants may not deliver instructions directly to
the Depositaries.
Because of time-zone differences, credits or securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interest
in, Certificates may do so only through Participants and Indirect Participants.
In addition, Certificate Owners will receive all distributions of principal of
and interest on the Certificates from the Trustee through the Participants who
in turn will receive them from DTC. Under a book-entry format, Certificate
Owners may experience some delay in their receipt of payments, since such
payments will be forwarded by the Trustee to Cede, as nominee for DTC. DTC will
forward such payments to its Participants which thereafter will forward them to
Indirect Participants or Certificate Owners. It is anticipated that the only
"Certificateholder" will be Cede, as nominee of DTC. Certificate Owners will not
be recognized by the Trustee as Certificateholders, as such term is used in the
Agreement, and Certificate Owners will only be permitted to exercise the rights
of Certificateholders indirectly through the Participants who in turn will
exercise the rights of Certificateholders through DTC.
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Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Certificates and is required to
receive and transmit distributions of principal and interest on the
Certificates. Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Certificates similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess Certificates, Certificate Owners will receive payments and will
be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Certificate
Owner to pledge Certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such Certificates, may
be limited due to the lack of a physical certificate for such Certificates.
DTC has advised the Transferor that it will take any action permitted to
be taken by a Certificateholder under any related Agreement only at the
direction of one or more Participants to whose account with DTC the Certificates
are credited. Additionally, DTC has advised the Transferor that it will take
such actions with respect to specified percentages of the Invested Amount only
at the direction of and on behalf of Participants whose holdings include
undivided interests that satisfy such specified percentages. DTC may take
conflicting actions with respect to other undivided interests to the extent that
such actions are taken on behalf of Participants whose holdings include such
undivided interests.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled by Cedel in any of 28 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulations by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters. Indirect
access to Cedel is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Cedel Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of certificates and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in any of 27 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
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The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Cedel or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Certificateholder under the Agreement on behalf of a
Cedel Participant or a Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to effect
such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Certificates among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
In the event that any of DTC, Cedel or Euroclear should discontinue its
services, the Transferor would seek an alternative depository (if available) or
cause the issuance of Definitive Certificates to Certificate Owners or their
nominees in the manner described under "--Definitive Certificates."
Definitive Certificates
The Certificates will be issued in fully registered, certificated form to
Certificate Owners or their nominees ("Definitive Certificates"), rather than to
DTC or its nominee, only if (i) the Transferor advises the Trustee in writing
that DTC is no longer willing or able to discharge properly its responsibilities
as Depository with respect to the Certificates, and the Trustee or the
Transferor is unable to locate a qualified successor, (ii) the Transferor, at
its option, advises the Trustee in writing that it elects to terminate the
book-entry system through DTC or (iii) after the occurrence of a Servicer
Default, Certificate Owners representing not less than 50% of the Invested
Amount advise the Trustee and DTC through Participants in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the best interest of the Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificate representing the Certificates and instructions for
re-registration, the Trustee will issue the Certificates as Definitive
Certificates, and thereafter the Trustee will recognize the holders of such
Definitive Certificates as holders under the Agreement ("Holders").
Distribution of principal and interest on the Certificates will be made by
the Trustee directly to Holders of Definitive Certificates in accordance with
the procedures set forth herein and in the Agreement. Interest payments on each
Interest Payment Date and interest and principal payments on the Expected Final
Payment Date of each Class (or, if an Early Amortization Event occurs, on each
Special Payment Date) will be made to Holders in whose names the Definitive
Certificates were registered at the close of business on the related
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Record Date. Distributions will be made by check mailed to the address of such
Holder as it appears on the register maintained by the Trustee. The final
payment on any Certificate (whether Definitive Certificates or the Certificates
registered in the name of Cede representing the Certificates), however, will be
made only upon presentation and surrender of such Certificate at the office or
agency specified in the notice of final distribution to Certificateholders. The
Trustee will provide such notice to registered Certificateholders not later than
the fifth day of the month of such final distributions.
Definitive Certificates will be transferable and exchangeable at the
offices of the Transfer Agent and Registrar, which shall initially be the
Trustee. No service charge will be imposed for any registration of transfer or
exchange, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
Interest Payments
Interest on the principal balance of the Class A Certificates and the
principal balance of the Class B Certificates will accrue from the Closing Date
at the Class A Certificate Rate and Class B Certificate Rate, respectively.
Interest will be distributed on each Interest Payment Date, commencing _______,
1997, to Certificateholders in whose names the Certificates were registered at
the close of business on the last day of the calendar month preceding the date
of such payment (a "Record Date"). Interest for any Interest Payment Date will
include interest at the Class A Certificate Rate or the Class B Certificate
Rate, as applicable, accrued from and including the ___ day of the calendar
month in which the preceding Interest Payment Date occurred or, in the case of
the first Interest Payment Date, from and including the Closing Date, to but
excluding the ___ day of the calendar month in which such Interest Payment Date
occurs. Interest on the Certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
On each Transfer Date, Class A Monthly Interest and Class B Monthly
Interest will be deposited in a trust account in the name of the Trustee
maintained with an Eligible Institution which initially shall be the Trustee
(the "Interest Funding Account"). Funds on deposit in the Interest Funding
Account generally will be invested in certain Eligible Investments described
under "--Collection Account." Although such Eligible Investments are highly
rated, Certificateholders will bear the risk of losses on such Eligible
Investments to the extent that losses exceed any earnings thereon. Any earnings
(net of losses and investment expenses) on funds in the Interest Funding Account
will be paid monthly to the Transferor. If an Early Amortization Event occurs
and an Early Amortization Period commences, then thereafter Class A Monthly
Interest or Class B Monthly Interest, as the case may be, will be distributed to
the Class A Certificateholders or the Class B Certificateholders monthly on each
Special Payment Date and any amounts on deposit in the Interest Funding Account
will be distributed to the Class A Certificateholders and the Class B
Certificateholders on the first Special Payment Date.
Interest due but not paid on any Interest Payment Date or Special Payment
Date will be due on the next succeeding Interest Payment Date or Special Payment
Date with, to the extent permitted by applicable law, additional interest on
such amount at the Class A Certificate Rate or the Class B Certificate Rate, as
applicable.
Payments of interest in respect of the Class A Certificates on any
Distribution Date will be funded from Class A Available Funds for the related
Collection Period. To the extent Class A Available Funds are insufficient to pay
such interest, Excess Spread and Shared Excess Yield Collections allocated to
Series 1997-1 and Reallocated Principal Collections will be used to make such
payments. "Class A Available Funds" means, with respect to any Collection
Period, an amount equal to the sum of (i) the Class A Floating Percentage of
Yield Collections with respect to such Collection Period (excluding the portion
of Yield Collections attributable to Net Interchange that is allocable to
Servicer Interchange); (ii) if such Collection Period relates to a Distribution
Date that occurs on or prior to the payment in full of the Class A Certificates,
the Principal Funding Investment Proceeds, if any, with respect to the related
Transfer Date; and (iii) amounts, if any, to be withdrawn from the Reserve
Account which are required to be included in Class A Available Funds with
respect to the related Transfer Date as described under "--Reserve Account."
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Payments of interest in respect of the Class B Certificates on any
Distribution Date will be funded from Class B Available Funds for the related
Collection Period. To the extent Class B Available Funds are insufficient to pay
such interest, Excess Spread and Shared Excess Yield Collections allocated to
Series 1997-1 and Reallocated Collateral Principal Collections (in each case
after application of such amounts in respect of the Class A Certificates) will
be used to make such payments. "Class B Available Funds" means, with respect to
any Collection Period, an amount equal to the Class B Floating Percentage of
Yield Collections with respect to such Collection Period (excluding the portion
of Yield Collections attributable to Net Interchange that is allocable to
Servicer Interchange).
Principal Payments
During the Revolving Period (which begins on the Closing Date and ends on
the day before the commencement of the Accumulation Period or, if earlier, the
Early Amortization Period), no principal payments will be made to
Certificateholders. During the Accumulation Period (on or prior to the Class A
Expected Final Payment Date), principal will be deposited in the Principal
Funding Account as described below and on the Class A Expected Final Payment
Date will be distributed to Class A Certificateholders up to the outstanding
principal balance of the Class A Certificates. After the Class A Invested Amount
has been paid in full, principal will be deposited into the Collection Account
as described below and on the Class B Expected Final Payment Date will be
distributed to Class B Certificateholders up to the outstanding principal
balance of the Class B Certificates. During the Early Amortization Period, which
will begin upon the occurrence of an Early Amortization Event, and until the
Series 1997-1 Termination Date occurs, principal will be paid first to the Class
A Certificateholders until the Class A Invested Amount has been paid in full,
and then to the Class B Certificateholders until the Class B Invested Amount has
been paid in full.
On each Transfer Date during the Accumulation Period, the Trustee will
deposit in the Principal Funding Account an amount equal to the lesser of (a)
the Fixed Allocation Percentage of Principal Collections with respect to the
preceding Collection Period plus the amount of any Shared Principal Collections
with respect to other Series that are allocated to Series 1997-1 in accordance
with the Agreement minus the amount of Reallocated Principal Collections for
such Collection Period, (b) for each Transfer Date with respect to the
Accumulation Period prior to the Class A Expected Final Payment Date, the
Controlled Deposit Amount for such Transfer Date and (c) the Class A Adjusted
Invested Amount with respect to such Transfer Date prior to any deposits on such
date. Amounts on deposit in the Principal Funding Account will be paid to the
Class A Certificateholders on the Class A Expected Final Payment Date. After the
Class A Invested Amount has been paid in full, on each Transfer Date during the
Accumulation Period, the Trustee will deposit in the Collection Account an
amount equal to the lesser of (a) the Fixed Allocation Percentage of Principal
Collections with respect to the preceding Collection Period plus the amount of
any Shared Principal Collections with respect to other Series that are allocated
to Series 1997-1 in accordance with the Agreement minus the portion of all such
amounts applied to Class A Monthly Principal on such Transfer Date minus the
amount of Reallocated Principal Collections for such Collection Period and (b)
the Class B Invested Amount with respect to such Transfer Date prior to any
deposits on such date. Such amounts in the Collection Account will be paid to
the Class B Certificateholders on the Class B Expected Final Payment Date. If an
Early Amortization Event occurs with respect to the Certificates during the
Accumulation Period, the Early Amortization Period will commence and any amount
on deposit in the Principal Funding Account will be paid to the Class A
Certificateholders on the first Special Payment Date with respect to the Early
Amortization Period.
On each Special Payment Date during the Early Amortization Period until
the Class A Invested Amount has been paid in full or the Series 1997-1
Termination Date occurs, the Class A Certificateholders will be entitled to
receive Class A Monthly Principal in an amount up to the outstanding principal
balance of the Class A Certificates. After payment in full of Class A
Certificates, the Class B Certificateholders will be entitled to receive on each
Special Payment Date Class B Monthly Principal until the earlier of the date the
Class B Invested Amount is paid in full and the Series 1997-1 Termination Date.
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Postponement of Accumulation Period
Upon written notice to the Trustee, the Transferor may elect to postpone
the commencement of the Accumulation Period, and extend the length of the
Revolving Period, subject to certain conditions including those set forth below.
The Transferor may make such election only if the Accumulation Period Length
(determined as described below) is less than twelve months. On the _____
Determination Date and on each Determination Date thereafter, until the
Accumulation Period begins, the Servicer, on behalf of the Transferor, will
determine the "Accumulation Period Length," which is the number of months
expected to be required to fully fund the Principal Funding Account no later
than the Class A Expected Final Payment Date, based on (a) the expected monthly
Principal Collections expected to be distributable to the certificateholders of
all Series (excluding certain other Series), assuming a rate of payment on the
Receivables no greater than the lowest monthly rate of payment on the
Receivables for the preceding twelve months and (b) the amount of principal
expected to be distributable to certificateholders of all Series (excluding
certain other Series) which are not expected to be in their revolving periods
during the Accumulation Period. If the Accumulation Period Length is less than
twelve months, the Servicer may, at its option, postpone the commencement of the
Accumulation Period such that the number of months included in the Accumulation
Period will be equal to or exceed the Accumulation Period Length. The effect of
the foregoing calculation is to permit the reduction of the length of the
Accumulation Period based on the invested amounts of other Series, if any,
scheduled to be in their revolving periods during the Accumulation Period and on
increases, if any, in the payment rate occurring after the Closing Date. The
length of the Accumulation Period will not be less than one month.
Subordination of the Class B Certificates and
the Collateral Investor Interest
The Class B Certificates and the Collateral Investor Interest will be
subordinated to the extent necessary to fund certain payments with respect to
the Class A Certificates. In addition, the Collateral Investor Interest will be
subordinated to the extent necessary to fund certain payments with respect to
the Class B Certificates. Certain principal payments otherwise allocable to the
Class B Certificateholders may be reallocated to the Class A Certificateholders
and the Class B Invested Amount may be reduced. Similarly, certain principal
payments allocable to the Collateral Investor Interest may be reallocated to the
Class A Certificateholders and the Class B Certificateholders and the Collateral
Invested Amount may be reduced. To the extent the Class B Invested Amount is
reduced, the percentage of Yield Collections allocated to the Class B
Certificateholders in subsequent Collection Periods will be reduced. Moreover,
to the extent the amount of such reduction in the Class B Invested Amount is not
reimbursed, the amount of principal and interest distributable to the Class B
Certificateholders will be reduced. No principal will be paid to the Class B
Certificateholders until the Class A Invested Amount is paid in full. See
"--Allocation Percentages," "--Reallocation of Cash Flows," and "--Application
of Collections--Excess Spread; Shared Excess Yield Collections."
Transfer and Assignment of Receivables
On the Closing Date, the Transferor will transfer and assign to the Trust
all of its right, title and interest in and to Receivables in the Accounts
outstanding as of the Cut-Off Date, all of the Receivables thereafter created
under the Accounts and the proceeds of all of the foregoing.
In connection with the transfer of the Receivables by the Transferor to
the Trust, the Transferor will indicate in its records, including any computer
files, that the Receivables have been transferred from the Transferor to the
Trust. In addition, the Transferor will provide to the Trustee a computer file
or a microfiche list containing a true and complete list showing for each
Account, as of the Cut-Off Date and for each Additional Account as of the date
of its designation for inclusion in the Trust, (i) its account number and (ii)
the amount of Receivables in such Account. Card Services, as initial Servicer,
will retain and will not deliver to the Trustee any other records or agreements
relating to the Accounts or the Receivables. Except as set forth above, the
records and agreements relating to the Accounts and the Receivables will not be
segregated from those relating to other charge card accounts and receivables and
neither the computer files nor the physical
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documentation relating to the Accounts or Receivables will be stamped or marked
to reflect the transfer of Receivables to the Trust. The Trustee will have
reasonable access to such records and agreements as required by applicable law
or to enforce the rights of the Certificateholders. The Transferor will file one
or more UCC-1 financing statements in accordance with applicable law to perfect
the Trust's interest in the Receivables. See "Risk Factors--Potential Priority
of Certain Liens" and "Certain Legal Aspects of the Receivables."
Exchanges
The Agreement will provide for the Trustee to issue two types of
certificates: (i) one or more Series of certificates which are transferable and
have the characteristics described below and (ii) the Exchangeable Transferor
Certificate, a certificate which evidences the Transferor Interest, which will
be held by the Transferor and generally will not be transferable. The Agreement
will also provide that, pursuant to any one or more Series Supplements, the
Transferor may tender the Exchangeable Transferor Certificate, or the
Exchangeable Transferor Certificate and the certificates evidencing 100% of any
Series of certificates, to the Trustee in exchange for one or more newly issued
Series and a reissued Exchangeable Transferor Certificate. This exchange feature
permits the creation of new Series to be issued from an already existing trust.
Under the Agreement, the Transferor may define, with respect to any newly issued
Series: (i) its name or designation, (ii) its initial principal balance (or
method for calculating such balance), (iii) its certificate rate (or formula for
the determination thereof), (iv) the interest payment date or dates and the date
or dates from which interest shall accrue, (v) the method for allocating
collections to certificateholders, (vi) the names of any accounts to be used by
such Series and the terms governing the operation of any such accounts, (vii)
the percentage used to calculate servicing fees, (viii) the minimum Transferor
percentage (the "Minimum Transferor Percentage") and minimum Transferor amount
(the "Minimum Transferor Amount") applicable to such Series, (ix) the applicable
Minimum Trust Principal Component required to be maintained through the
designation by the Transferor of Additional Accounts, (x) the issuer and terms
of any Enhancement with respect thereto, (xi) the base rate for such Series, if
applicable, (xii) the terms on which the certificates of such Series may be
repurchased at the Transferor's option or remarketed to other investors, (xiii)
the stated Series termination date, (xiv) any deposit into any account
maintained for the benefit of certificateholders, (xv) the number of Classes of
such Series, and if more than one Class, the rights and priorities of each such
Class, (xvi) the extent to which the certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depositary for such global certificate or certificates, the terms and
conditions, if any, upon which such global certificate may be exchanged, in
whole or in part, for definitive certificates, and the manner in which any
interest payable on a temporary or global certificate will be paid), (xvii)
whether the certificates of such Series may be issued in bearer form and any
limitations imposed thereon, (xviii) the priority of any Series with respect to
any other Series, if applicable, (xix) the rights of the holder of the
Exchangeable Transferor Certificate that have been transferred to
certificateholders of such Series and (xx) any other relevant terms (all such
terms, the "Principal Terms" of such Series). None of the Transferor, the
Servicer, the Trustee or the Trust is required or intends to obtain the consent
of any Certificateholder to issue any additional Series. However, as a condition
of an Exchange, the Transferor will deliver to the Trustee written confirmation
that the Exchange will not result in the applicable Rating Agency reducing or
withdrawing its rating of any outstanding Series. The Transferor may offer any
Series to the public under a Disclosure Document in transactions either
registered under the Act or exempt from registration thereunder directly,
through one or more underwriters or placement agents, in fixed-price offerings
or in negotiated transactions or otherwise. Any such Series may be issued in
fully registered or book-entry form in minimum denominations determined by the
Transferor.
The Agreement will provide that the Transferor may perform Exchanges and
define Principal Terms such that each Series has a period during which
amortization of the principal balance thereof is intended to occur which may
have a different length and begin on a different date than such period for any
other Series. Further, one or more Series may be in their revolving periods
while other Series are not. Thus, certain Series may not be amortizing, while
other Series are amortizing. Each Series may have the benefits of a form of
Enhancement issued by issuers different from the issuers of the form of
Enhancement with respect to any other Series. Under the Agreement, the Trustee
shall hold any such Enhancement only on behalf of the Series with respect to
which it relates. Likewise, with respect to each such Enhancement, the
Transferor may deliver a
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different form of Enhancement agreement. The Agreement will also provide that
the Transferor may specify different Certificate rates and monthly investor
servicing fees with respect to each Series. The Transferor will also have the
option under the Agreement to vary between Series the terms upon which Series
may be repurchased at the Transferor's option or remarketed to other investors.
Additionally, certain Series may be subordinated to other Series, or Classes
within a Series may have different priorities. There is no limit to the number
of Exchanges that the Transferor may perform under the Agreement. The Trust will
terminate only as provided in the Agreement.
Under the Agreement and pursuant to a Series Supplement, an Exchange may
only occur upon the satisfaction of certain conditions provided in the
Agreement. Under the Agreement, the Transferor may perform an Exchange by
notifying the Trustee at least three business days in advance of the date upon
which the Exchange is to occur. Under the Agreement, the notice will state the
designation of any Series to be issued on the date of the Exchange and, with
respect to each such Series: (i) its initial invested amount (or method for
calculating such amount) and (ii) its certificate rate (or the method for
allocating interest payments or other cash flow to such Series). On the date of
the Exchange, the Trustee will issue any such Series only upon delivery to it of
the following: (i) a Series Supplement specifying the Principal Terms of such
Series, (ii) (a) an opinion of counsel to the effect that, unless otherwise
stated in the related Series Supplement, the certificates of such Series will be
characterized as indebtedness for federal income tax purposes and (b) an opinion
of counsel to the effect that, for federal income tax purposes, (1) such
issuance will not adversely affect the federal and applicable state tax
characterization as debt of certificates of any outstanding Series or Class that
were characterized as debt at the time of their issuance, (2) following such
issuance the Trust will not be classified as an association (or publicly traded
partnership) taxable as a corporation and (3) such issuance will not cause or
constitute an event in which gain or loss would be recognized by any
Certificateholder or the Trust (an opinion of counsel with respect to any matter
to the effect referred to in clause (b) with respect to any action is referred
to herein as a "Tax Opinion"), (iii) if required by the related Series
Supplement, the form of Enhancement and any related agreement, (iv) written
confirmation from each Rating Agency that the Exchange will not result in such
Rating Agency reducing or withdrawing its rating on any then outstanding Series
rated by it, and (v) the existing Exchangeable Transferor Certificate and, if
applicable, the certificates representing the Series to be exchanged. Upon
satisfaction of such conditions, the Trustee will cancel the existing
Exchangeable Transferor Certificate and the certificates of the exchanged
Series, if applicable, and issue the new Series and new Exchangeable Transferor
Certificate.
Representations and Warranties
The Transferor will make representations and warranties to the Trustee for
the benefit of the Certificateholders relating to the Accounts and the
Receivables to the effect, among other things, that (i) each Receivable is an
Eligible Receivable, (ii) each Receivable has been conveyed to the Trust free
and clear of all liens (except such liens as may be permitted by the Agreement)
or in compliance in all material respects with all applicable requirements of
law, (iii) all material information with respect to the Receivables, and the
Accounts related thereto, in the list provided to the Trustee is true and
correct in all material respects, (iv) the Transferor has obtained all consents,
licenses, approvals or authorizations required in connection with the conveyance
of the Receivables to the Trust, or (v) as of the initial Closing Date, and as
of the applicable Additional Account Closing Date with respect to Additional
Accounts, the computer file or list of Accounts or Additional Accounts, as the
case may be, provided by the Transferor to the Trustee is an accurate and
complete listing of all such Accounts in all material respects or the
information contained therein with respect to the identity of such Accounts and
the Receivables existing thereunder is true and correct in all material respects
as of the Cut-Off Date or, with respect to Additional Accounts, as of their date
of designation for inclusion in the Trust. If any representation or warranty of
the Transferor described in this paragraph is not true and correct in any
material respect and, as a result, any Receivables are charged off as
uncollectible or the proceeds of such Receivables are not available to the
Trust, unless cured within 60 days or any longer period agreed upon by the
Trustee (not to exceed an additional 60 days) from the earlier to occur of the
discovery of any such event by the Transferor or the Servicer, or receipt by the
Transferor or the Servicer of written notice of any
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such event given by the Trustee, then such Receivable shall be designated an
"Ineligible Receivable" and shall be assigned a balance of zero for the purpose
of determining the Trust Principal Component on any day.
On and after the date of its designation as an Ineligible Receivable, each
Ineligible Receivable shall not be given credit in determining the Trust
Principal Component used to calculate the Transferor Amount and the allocation
percentages with respect to collections on the Receivables. See "--Allocation
Percentages." In the event that the exclusion of an Ineligible Receivable from
the calculation of the Trust Principal Component would cause the Transferor
Amount to be reduced below the Minimum Transferor Amount, the Transferor shall
make a deposit into the Excess Funding Account in an amount equal to the amount
required to cause the Transferor Amount to equal the Minimum Transferor Amount.
The obligation of the Transferor to make such deposits is the sole remedy with
respect to Ineligible Receivables available to Certificateholders or the Trustee
on behalf of the Certificateholders.
The Transferor will represent and warrant as of the Closing Date, to the
Trustee for the benefit of the Certificateholders, that (i) the Transferor is
duly organized and validly existing in good standing under the laws of the
United States of America, has the full power, authority and legal right to own
its properties and conduct its business as such properties are presently owned
and such business is presently conducted, and to execute, deliver and perform
its obligations under the Agreement and the Series 1997-1 Supplement and to
execute and deliver to the Trustee the Certificates pursuant to the Agreement,
(ii) the Agreement and the Series 1997-1 Supplement constitute legal, valid,
binding and enforceable obligations of the Transferor, and (iii) the Agreement
constitutes a valid transfer to the Trust of all right, title and interest of
the Transferor in and to the Receivables, whether then existing or thereafter
created in the Accounts, and the proceeds thereof, or the grant of a first
priority perfected security interest in such Receivables and, with certain
exceptions made for certain limited time periods, the proceeds thereof, which is
effective as to each Receivable upon the transfer thereof to the Trust or upon
its creation, as the case may be. In the event that (x) any of the
representations and warranties described in clauses (i) through (iii) above are
not true and correct or (y) a material amount of Receivables are not Eligible
Receivables, and in either case such event has a material adverse effect on the
interest of holders of the Certificates (without regard to the amount of any
Enhancement), either the Trustee or the holders of Certificates evidencing
undivided interests in the Trust aggregating more than 50% of the aggregate
invested amount of all Series, by written notice to the Transferor (and to the
Trustee and the Servicer, if given by the certificateholders), may direct the
Transferor to accept reassignment of all Receivables within 60 days of such
notice or any longer period agreed upon by the Trustee (not to exceed an
additional 60 days). The Transferor will be obligated to accept reassignment of
all such Receivables on a Distribution Date occurring within such applicable
period, unless the representations and warranties shall then be true and correct
in all material respects or there shall no longer be a material amount of such
Receivables which are not Eligible Receivables, as the case may be. The price
for such transfer of Receivables shall be equal to the sum of the aggregate
invested amounts of all Series on the Record Date related to the applicable
Distribution Date on which the transfer is scheduled to be made (less the
aggregate principal amount on deposit in any principal funding account) plus an
amount equal to all interest accrued but unpaid on all Series at the applicable
certificate rates through the end of the applicable interest periods of such
Series plus certain amounts payable to Enhancement providers, if applicable. The
payment of such amount into the collection account in immediately available
funds will be considered a prepayment in full of all such Receivables and will
be paid in full to the certificateholders and, if applicable, to Enhancement
providers. The obligations described above shall be the sole remedies respecting
the foregoing representations, warranties and events available to the Trustee or
the certificateholders. The certificateholders will not incur any costs, direct
or indirect, related to the reassignment of Receivables to the Transferor.
An "Eligible Receivable" is defined to mean each Receivable (i) which has
arisen under an Eligible Account, (ii) which was created in compliance with all
applicable requirements of law, and pursuant to a cardholder agreement which
complies with all applicable requirements of law in either case the failure to
comply with which would have a material adverse effect upon Certificateholders,
(iii) with respect to which all material consents, licenses, approvals or
authorizations of, or registrations with, any governmental authority required to
be obtained or given by the Transferor in connection with the creation of such
Receivable or the
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execution, delivery and performance by the Transferor of the related cardholder
agreement have been duly obtained or given and are in full force and effect as
of such date of creation, (iv) as to which at the time of the transfer of such
Receivable to the Trust, the Trust will have good and marketable title, free and
clear of all liens, encumbrances, charges and security interests (except those
permitted by the Agreement), (v) which has been the subject of either a valid
transfer and assignment from the Transferor to the Trust of all of the
Transferor's right, title and interest therein or the grant of a first priority
perfected security interest therein (and in the proceeds thereof), effective
until the termination of the Trust, (vi) which will at all times be the legal,
valid and binding payment obligation of the cardholder thereof enforceable
against such cardholder in accordance with its terms, subject to certain
bankruptcy and equity related exceptions, (vii) which constitutes an "account"
or a "general intangible" under and as defined in Article 9 of the applicable
UCC as then in effect, (viii) which, at the time of its transfer to the Trust,
has not been waived or modified except in accordance with the policies and
procedures of the Transferor relating to the operation of its Corporate Card
program or Purchasing Card program, as applicable, (ix) which is not subject to
any setoff, right of rescission, counterclaim or other defense (including the
defense of usury), other than certain bankruptcy and equity related defenses,
(x) as to which the Transferor has satisfied all obligations to be fulfilled at
the time it is transferred to the Trust and (xi) as to which the Transferor has
done nothing, at the time of its transfer to the Trust, to impair the rights of
the Trust or Certificateholders therein. In order to qualify as an "Eligible
Account," each such Account must, as of the date of its selection, (i) be in
existence and owned by the Transferor, (ii) be payable in United States dollars,
(iii) not have the related card reported lost or stolen or be designated as
fraudulent, (iv) not be identified in the Transferor's computer files as
cancelled due to the obligor's bankruptcy or insolvency, (v) not have the
receivables in such Account written off as uncollectible, (vi) not have the
receivables in such Account assigned, pledged or sold, (vii) have an obligor who
has provided a billing address in the United States or its territories or
possessions and (viii) not be an account with respect to which First Bank or any
affiliate of First Bank is the obligor.
It is not required or anticipated that the Trustee will make any initial
or periodic general examination of the Receivables or any records relating to
the Receivables for the purpose of establishing the presence or absence of
defects, compliance with the Transferor's representations and warranties or for
any other purpose. In addition, it is not anticipated or required that the
Trustee will make any initial or periodic general examination of the Servicer
for the purpose of establishing the compliance by the Servicer with its
representations or warranties or the performance by the Servicer of its
obligations under the Agreement for any other purpose. The Servicer, however, is
required to deliver to the Trustee on or before April 30 of each calendar year,
beginning with April 30, 1998, an opinion of counsel with respect to the
validity of the security interest of the Trust in and to the Receivables.
Addition of Accounts
Subject to the conditions set forth below, the Transferor will have the
right to designate from time to time additional eligible VISA charge card
accounts originated under the Bank's Corporate Card or Purchasing Card programs
(the "Additional Accounts") to be included as Accounts and to convey to the
Trust on designated dates all Receivables in such Additional Accounts (each such
date, an "Additional Account Closing Date"), whether such Receivables are then
existing or thereafter created. In addition, the Transferor will be required to
designate the Receivables of Additional Accounts (to the extent available) and
to transfer the Receivables in such Additional Accounts to the Trust if, as of
the end of any Collection Period, the Trust Principal Component plus the
principal amount, if any, on deposit in the Excess Funding Account minus the sum
of the invested amounts (or adjusted invested amounts) and any Receivables
allocated to Enhancement providers for all Series (the "Transferor Amount") is
less than the Minimum Transferor Amount specified in the Series Supplement for
any Series or if, as of the end of any Collection Period, the Trust Principal
Component plus the principal amount, if any, on deposit in the Excess Funding
Account is less than the minimum amount of the Trust Principal Component (the
"Minimum Trust Principal Component") specified in the Series Supplement for any
Series. Failure to make any such required designation will result in an Early
Amortization Event with respect to the related Series. The Minimum Transferor
Amount applicable to the Certificates is __% of the sum of (i) the Trust
Principal Component as of the end of the preceding Collection Period and (ii)
the principal
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amount, if any, on deposit in the Excess Funding Account as of the end of such
Collection Period; provided, however, that the Transferor may reduce the Minimum
Transferor Amount to not less than __% of the sum of (i) the Trust Principal
Component as of the end of the preceding Collection Period and (ii) the
principal amount, if any, on deposit in the Excess Funding Account and any other
account specified from time to time pursuant to the Agreement or any Series
Supplement as of the end of such Collection Period upon receiving written
confirmation from each Rating Agency that has rated any outstanding Series that
such reduction will not result in the reduction or withdrawal of its rating on
any outstanding Series and upon satisfaction of certain other conditions to be
set forth in the Agreement. The Minimum Trust Principal Component applicable to
the Certificates is the sum of the Invested Amount and the invested amounts (or
other amounts, if applicable) of other Series outstanding from time to time .
The Transferor will in each case convey to the Trust its interest in all
Receivables in such Additional Accounts, whether such Receivables are then
existing or thereafter created, subject to the following conditions, among
others: (i) each such Additional Account at the time of its selection must be an
Eligible Account; (ii) the selection of the Additional Accounts by the
Transferor will be made in a manner which it reasonably believes will not
materially adversely affect the certificateholders' interest; and (iii) the
Transferor shall have delivered prior written notice of the addition to the
applicable Rating Agency, the Trustee and the Servicer, and if required by the
Agreement, shall have been notified in writing that such addition will not
result in a reduction or withdrawal of the rating of any Series of certificates.
The right to designate Additional Accounts and to transfer Receivables in such
Additional Accounts to the Trust permits the Transferor to increase the Trust
Principal Component, thereby permitting the issuance of additional Series or
avoiding the occurrence of certain early amortization events with respect to
existing Series. Certificateholders will not incur any costs, direct or
indirect, as a result of the exercise of this feature.
Although each Additional Account must satisfy certain criteria set forth
in the Agreement at the time of its selection, Additional Accounts may not be of
the same credit quality as the initial Accounts.
Removal of Accounts
Subject to the conditions set forth below, on each Determination Date with
respect to which the Transferor Amount as a percentage of the Trust Principal
Component exceeds the percentage required by the Agreement at the end of the
related Collection Period, the Transferor will have the right to accept removal
of Receivables in certain Accounts designated by the Transferor from the Trust
(the "Removed Accounts") and accept the conveyance of all the Receivables in the
Removed Accounts, without notice to the certificateholders. The Transferor may,
at its sole discretion, accept such offer in an aggregate amount equal to an
amount not greater than the excess of the Transferor Amount over the Minimum
Transferor Percentage of the Trust Principal Component as of the end of the
related Collection Period. This feature is intended to permit the Transferor to
obtain unencumbered ownership of Receivables not needed to support any Series of
certificates. Certificateholders will not incur any costs, direct or indirect,
as a result of the exercise of this feature. The Transferor will be permitted to
designate and require reassignment to it of the Receivables from Removed
Accounts only upon satisfaction of the following conditions: (i) the Transferor
shall have delivered to the Trustee for execution a written instrument of
reassignment and a computer file or microfiche list containing a true and
complete list of all Accounts in the Trust after such removal, the Accounts to
be identified by account number and aggregate amount of Receivables; (ii) the
Transferor shall represent and warrant that no selection procedures adverse to
the interests of the certificateholders or any provider of Enhancement were
utilized by the Transferor in selecting the Removed Accounts; (iii) the removal
of any Receivables of any Removed Accounts shall not, in the reasonable belief
of the Transferor, cause an early amortization event to occur; (iv) the
Transferor shall have delivered prior written notice of the removal to each
Rating Agency which has rated any outstanding Series and prior to the date on
such Receivables are to be removed shall have received notice from each Rating
Agency that such removal will not cause the reduction or withdrawal of its
rating of any Series of certificates; and (v) the Transferor shall have
delivered to the Trustee and each Rating Agency an officer's certificate
confirming the items set forth in clauses (i) through (iv) above.
Collection Account
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The Trustee will establish and maintain or cause to be established and
maintained, in the name of the Trustee, on behalf of the Trust, a segregated
trust account (the "Collection Account") for the benefit of the
Certificateholders with an Eligible Institution. An "Eligible Institution" means
a depositary institution, which may include the Trustee, organized under the
laws of the United States or any one of the States thereof including the
District of Columbia (or any domestic branches of foreign banks), which at all
times has a short-term unsecured debt or certificate of deposit rating of at
least A-1+ and P-1 by the applicable Rating Agency; provided, however, that no
such rating shall be required of an institution which shall have corporate trust
powers and which maintains the Collection Account, any Principal Funding
Account, any Interest Funding Account or any other account maintained for the
benefit of Certificateholders as a fully segregated trust account with the trust
department of such institution. Funds in the Collection Account may be invested,
at the direction of the Servicer, in (i) obligations fully guaranteed by the
United States of America or its agencies, (ii) time deposits, demand deposits,
certificates of deposit or banker's acceptances of certain depository
institutions or trust companies having the highest rating from the applicable
Rating Agency, (iii) commercial paper having, at the time of the Trust's
investment, a rating in the highest rating category from the applicable Rating
Agency, (iv) Eurodollar time deposits having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating in the highest
rating category from the applicable Rating Agency, (v) certain repurchase
agreements transacted with either (a) an entity subject to the United States
federal bankruptcy code or (b) a financial institution insured by the FDIC or
any broker-dealer with "retail customers" that is under the jurisdiction of the
Securities Investors Protection Corp. and (vi) any other investments as may be
approved in writing by the applicable Rating Agency prior to the Trust's
investment therein, provided that such investment will not cause the Trust to be
treated as an investment company within the meaning of the Investment Company
Act of 1940, as amended (collectively, the "Eligible Investments"). Any such
investment shall be held to maturity. Any earnings (net of losses and investment
expenses) on funds in the Collection Account shall be paid monthly to the
Transferor unless an Early Amortization Event occurs, in which event such funds
will remain on deposit in the Collection Account. The Servicer will have the
revocable power to withdraw funds from the Collection Account and to instruct
the Trustee to make withdrawals and payments from the Collection Account for the
purpose of carrying out the Servicer's or the Trustee's duties under the
Agreement. So long as no Servicer Default has occurred and First Bank or an
affiliate of First Bank maintains certain short-term credit ratings, or obtains
written confirmation of the ratings on the Certificates from each Rating Agency,
the Servicer need not deposit funds into the Collection Account until the
business day preceding the following Distribution Date (the "Transfer Date") and
may use such funds for its own purposes. See "--Allocation of Collections;
Deposits in Collection Account."
Allocation of Collections; Deposits in Collection Account
On the date of processing, the Servicer will, subject to certain
exceptions, deposit collections on the Receivables and payments in respect of
Ineligible Receivables made by the Transferor allocable to the
Certificateholders' and Collateral Interest Holder's interests into the
Collection Account except as described below. So long as a Servicer Default has
not occurred, Card Services or another affiliate of First Bank is the Servicer
and First Bank (i) maintains a certificate of deposit rating or meets other
criteria required by the applicable Rating Agency, or (ii) obtains a written
notification from each Rating Agency to the effect that such Rating Agency does
not intend to downgrade or withdraw its then current rating of any outstanding
Series of certificates despite the Servicer's inability to satisfy the rating
requirement specified in clause (i), and for the two business day period
following any reduction of either such rating or failure to satisfy the
conditions of clause (ii), the Servicer need not deposit collections and
payments made by the Transferor allocable to the Certificateholders' and
Collateral Interest Holder's interests into the Collection Account on the date
indicated in the preceding sentence but may use for its own benefit all such
Collections and payments until the business day preceding the Distribution Date
at which time the Servicer must deposit such amounts (net of the Monthly
Investor Servicing Fee and net of any amounts to be distributed to the
Transferor) into the Collection Account. Until such collections and payments are
deposited in the Collection Account, such amounts will not be segregated from
the assets of the Servicer, and the proceeds of any short term investment of
such proceeds will accrue to the Servicer. While the Servicer holds collections
and payments in respect of Ineligible Receivables made by the Transferor and is
permitted to use such collections and payments for its own benefit, the
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Certificateholders are subject to risk of loss, including risk resulting from
the insolvency of the Servicer. The Servicer will pay no fee to the Trust or the
Certificateholders for use of such funds. Collections on Receivables allocable
to the Transferor Interest will be remitted by the Servicer on each day to the
Transferor.
Allocation Percentages
Pursuant to the Agreement, the Servicer will allocate among the
Certificates, the certificateholders' interest for all other Series of
certificates issued and outstanding, the interest of any Enhancement providers,
if applicable, and the Transferor Interest all Yield Collections, Principal
Collections and Defaulted Receivables with respect to each Collection Period.
Yield Collections and Defaulted Receivables with respect to any Collection
Period will be allocated to Series 1997-1 based on the Floating Allocation
Percentage. The "Floating Allocation Percentage" means, with respect to any
Collection Period, the sum of the Class A Floating Percentage, the Class B
Floating Percentage and the Collateral Floating Percentage.
The "Class A Floating Percentage" means, with respect to any Collection
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction the numerator of which is equal to the Class A Adjusted Invested
Amount as of the close of business on the last day of the immediately preceding
Collection Period (or the Class A Initial Invested Amount, in the case of the
first Collection Period applicable to Series 1997-1) and the denominator of
which is equal to the greater of (i) the sum of (A) the Trust Principal
Component as of the close of business on the last day of the immediately
preceding Collection Period and (B) the principal amount on deposit in the
Excess Funding Account as of the close of business on such day and (ii) the sum
of the numerators used to calculate the allocation percentages with respect to
Yield Collections and Defaulted Receivables for all Series outstanding as of the
date on which such determination is being made.
The "Class B Floating Percentage" means, with respect to any Collection
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction the numerator of which is equal to the Class B Invested Amount as of
the close of business on the last day of the immediately preceding Collection
Period (or the Class B Initial Invested Amount, in the case of the first
Collection Period applicable to Series 1997-1) and the denominator of which is
equal to the greater of (i) the sum of (A) the Trust Principal Component as of
the close of business on the last day of the immediately preceding Collection
Period and (B) the principal amount on deposit in the Excess Funding Account as
of the close of business on such day and (ii) the sum of the numerators used to
calculate the allocation percentages with respect to Yield Collections and
Defaulted Receivables for all Series outstanding as of the date on which such
determination is being made.
"Collateral Floating Percentage" means, with respect to any Collection
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction the numerator of which is equal to the Collateral Invested Amount as
of the close of business on the last day of the immediately preceding Collection
Period (or the Collateral Initial Invested Amount, in the case of the first
Collection Period applicable to Series 1997-1) and the denominator of which is
equal to the greater of (i) the sum of (A) the Trust Principal Component as of
the close of business on the last day of the immediately preceding Collection
Period and (B) the principal amount on deposit in the Excess Funding Account as
of the close of business on such day and (ii) the sum of the numerators used to
calculate the allocation percentages with respect to Yield Collections and
Defaulted Receivables for all Series outstanding as of the date on which such
determination is being made.
Principal Collections with respect to any Collection Period during the
Revolving Period will be allocated to Series 1997-1 based on the Floating
Allocation Percentage. Principal Collections with respect to any Collection
Period during the Accumulation Period or the Early Amortization Period will be
allocated to Series 1997-1 based on the Fixed Allocation Percentage. The "Fixed
Allocation Percentage" means, with respect to any Collection Period, the sum of
the Class A Fixed Percentage, the Class B Fixed Percentage and the Collateral
Fixed Percentage.
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"Class A Fixed Percentage" means, with respect to any Collection Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction the numerator of which is equal to the Class A Invested Amount as of
the close of business on the last day of the Revolving Period and the
denominator of which is equal to the greater of (i) the sum of (A) the Trust
Principal Component as of the close of business on the last day of the
immediately preceding Collection Period and (B) the principal amount on deposit
in the Excess Funding Account as of the close of business on such day and (ii)
the sum of the numerators used to calculate the allocation percentages with
respect to Principal Collections for all Series outstanding as of the date on
which such determination is being made.
"Class B Fixed Percentage" means, with respect to any Collection Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction the numerator of which is equal to the Class B Invested Amount as of
the close of business on the last day of the Revolving Period and the
denominator of which is equal to the greater of (i) the sum of (A) the Trust
Principal Component as of the close of business on the last day of the
immediately preceding Collection Period and (B) the principal amount on deposit
in the Excess Funding Account as of the close of business on such day and (ii)
the sum of the numerators used to calculate the allocation percentages with
respect to Principal Collections for all Series outstanding as of the date on
which such determination is being made.
"Collateral Fixed Percentage" means, with respect to any Collection
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction the numerator of which is equal to the Collateral Invested Amount as
of the close of business on the last day of the Revolving Period and the
denominator of which is equal to the greater of (i) the sum of (A) the Trust
Principal Component as of the close of business on the last day of the
immediately preceding Collection Period and (B) the principal amount on deposit
in the Excess Funding Account as of the close of business on such day and (ii)
the sum of the numerators used to calculate the allocation percentages with
respect to Principal Collections for all Series outstanding as of the date on
which such determination is being made.
As used herein, the following terms have the meanings indicated:
"Class A Invested Amount" means, on any date of determination, an amount
equal to (a) the Class A Initial Invested Amount, minus (b) the aggregate amount
of principal payments made to the Class A Certificateholders prior to such date,
minus (c) the aggregate amount of unreimbursed Class A Investor ChargeOffs for
all prior Transfer Dates; provided, however, that the Class A Invested Amount
may not be reduced below zero.
"Class A Adjusted Invested Amount" means, on any date of determination,
the Class A Invested Amount on such date of determination minus the Principal
Funding Account Balance on such date.
"Class B Invested Amount" means, on any date of determination, an amount
equal to (a) the Class B Initial Invested Amount, minus (b) the aggregate amount
of principal payments made to the Class B Certificateholders prior to such date,
minus (c) the aggregate amount of Class B Investor Charge-Offs for all prior
Transfer Dates, minus (d) the amount of Reallocated Class B Principal
Collections used to make payments in respect of the Class A Certificates on all
prior Transfer Dates that have not resulted in a reduction of the Collateral
Invested Amount, minus (e) an amount equal to the amount by which the Class B
Invested Amount has been reduced on all prior Transfer Dates to fund the Class A
Investor Default Amount as described under "--Defaulted Receivables; Rebates and
Fraudulent Charges; Investor Charge-Offs", plus (f) the amount of Excess Spread
and Shared Excess Yield Collections allocated and available on all prior
Transfer Dates for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e); provided, however, that the Class B Invested
Amount may not be reduced below zero.
"Collateral Invested Amount" means, on any date of determination, an
amount equal to (a) the Collateral Initial Invested Amount, minus (b) the
aggregate amount of principal payments made to the Collateral Interest Holder
prior to such date, minus (c) the aggregate amount of Collateral Investor
Charge-Offs for all
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prior Transfer Dates, minus (d) the amount of Reallocated Collateral Principal
Collections used to make payments in respect of the Certificates on all prior
Transfer Dates, minus (e) an amount equal to the amount by which the Collateral
Invested Amount has been reduced on all prior Transfer Dates to fund the Class A
Investor Default Amount or the Class B Investor Default Amount as described
under "--Defaulted Receivables; Rebates and Fraudulent Charges; Investor
Charge-Offs," plus (f) the amount of Excess Spread and Shared Excess Yield
Collections allocated and available on all prior Transfer Dates for the purpose
of reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and
(e); provided, however, that the Collateral Invested Amount may not be reduced
below zero.
"Invested Amount" means, on any date of determination, the sum of the
Class A Invested Amount, the Class B Invested Amount and the Collateral Invested
Amount.
"Adjusted Invested Amount" means, on any date of determination, the sum of
the Class A Adjusted Amount, the Class B Invested Amount and the Collateral
Invested Amount.
Principal Funding Account
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, the Principal Funding Account, for the benefit of the
Certificateholders. During the Accumulation Period, the Servicer shall transfer
Principal Collections, Shared Principal Collections allocated to Series 1997-1
and other amounts described herein to be treated in the same manner as Principal
Collections from the Collection Account to the Principal Funding Account as
described under "--Application of Collections." Such collections and amounts
will be retained in the Principal Funding Account and ultimately used to pay
principal of the Class A Certificates on the Class A Expected Final Payment Date
or the first Special Payment Date with respect to the Early Amortization Period,
whichever occurs earlier.
Unless an Early Amortization Event has occurred with respect to the
Certificates, all amounts on deposit in the Principal Funding Account (the
"Principal Funding Account Balance") on any Transfer Date (after giving effect
to any deposits to, or withdrawals from the Principal Funding Account to be made
on such Transfer Date) will be invested in Eligible Investments that mature on
or prior to the following Transfer Date.
On each Transfer Date with respect to the Accumulation Period (on or prior
to the Class A Expected Final Payment Date) the interest and other investment
income (net of investment expenses and losses) earned on such investments (the
"Principal Funding Investment Proceeds") will be withdrawn from the Principal
Funding Account and will be treated as a portion of Class A Available Funds. If
such investments with respect to any such Transfer Date yield less than the
Class A Certificate Rate, the Principal Funding Investment Proceeds with respect
to such Transfer Date will be less than the Covered Amount for the following
Transfer Date. It is intended that any such shortfall (the "Principal Funding
Investment Shortfall") will be funded from Class A Available Funds or a
withdrawal from the Reserve Account as described under "--Reserve Account" or
from Reallocated Principal Collections. The Available Reserve Account Amount at
any time will be limited (and could be zero) and there can be no assurance that
sufficient funds will be available to fund any such shortfall. The "Covered
Amount" shall mean for any Transfer Date with respect to the Accumulation Period
or the first Special Payment Date of the Early Amortization Period, an amount
equal to one-twelfth of the product of (i) the Class A Certificate Rate and (ii)
the Principal Funding Account Balance, if any, as of the Record Date preceding
such Transfer Date.
Reserve Account
Pursuant to the Series 1997-1 Supplement, the Trustee will establish and
maintain with an Eligible Institution the reserve account as a segregated trust
account held for the benefit of the Certificateholders (the "Reserve Account").
The Reserve Account provides a source of funds for the distribution of interest
on the Class A Certificates during the Accumulation Period to the extent the
Principal Funding Investment Proceeds and other Class A Available Funds are
insufficient. On each Transfer Date from and after the Reserve Account
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Funding Date, but prior to the termination of the Reserve Account, the Trustee,
acting pursuant to the Servicer's instructions, will apply Excess Spread and
Shared Excess Yield Collections allocated to the Certificates (to the extent
described under "--Application of Collections--Excess Spread; Shared Excess
Yield Collections") to increase the amount on deposit in the Reserve Account (to
the extent such amount is less than the Required Reserve Account Amount). The
"Reserve Account Funding Date" will be the Transfer Date with respect to the
Collection Period which commences no later than three months prior to the
commencement of the Accumulation Period, or such earlier date as the Servicer
may determine. The "Required Reserve Account Amount" for any Transfer Date on or
after the Reserve Account Funding Date will be equal to (a) 0.5% of the
outstanding principal balance of the Class A Certificates or (b) any other
amount designated by the Transferor, provided that if such designation is of a
lesser amount, the Transferor shall have provided the Servicer, the Collateral
Interest Holder and the Trustee with written confirmation that such designation
will not result in the applicable Rating Agency reducing or withdrawing its
ratings of the Certificates or the certificates of other Series and the
Transferor shall have delivered to the Trustee a certificate of an authorized
officer to the effect that, based on the facts known to such officer at such
time, in the reasonable belief of the Transferor, such designation will not
cause an Early Amortization Event or an event that, after the giving of notice
or the lapse of time, would cause an Early Amortization Event to occur with
respect to Series 1997-1. On each Transfer Date, after giving effect to any
deposit to be made to, and any withdrawal to be made from the Reserve Account on
such Transfer Date, the Trustee will withdraw from the Reserve Account an amount
equal to the excess, if any, of the amount on deposit in the Reserve Account
over the Required Reserve Account Amount and shall distribute such excess to the
Collateral Interest Holder for application in accordance with the terms of the
Loan Agreement.
Provided that the Reserve Account has not terminated as described below,
all amounts on deposit in the Reserve Account on any Transfer Date (after giving
effect to any deposits to, or withdrawals from, the Reserve Account to be made
on such Transfer Date) will be invested to the following Transfer Date by the
Trustee at the direction of the Servicer in Eligible Investments. The interest
and other investment income (net of investment expenses and losses) earned on
such investments will be retained in the Reserve Account (to the extent the
amount on deposit is less than the Required Reserve Account Amount) or deposited
in the Collection Account and treated as Class A Available Funds.
On or before each Transfer Date with respect to the Accumulation Period
and on the first Special Payment Date with respect to the Early Amortization
Period, a withdrawal will be made from the Reserve Account, and the amount of
such withdrawal will be deposited in the Collection Account and included in
Yield Collections to be applied to the payment of the Class A Monthly Interest
for such Transfer Date in an amount equal to the lesser of (a) the Available
Reserve Account Amount with respect to such Transfer Date and (b) the Principal
Funding Investment Shortfall with respect to such Transfer Date; provided, that
the amount of such withdrawal shall be reduced to the extent that funds
otherwise would be available to be deposited in the Reserve Account on such
Transfer Date. On each Transfer Date, the amount available to be withdrawn from
the Reserve Account (the "Available Reserve Account Amount") will be equal to
the lesser of the amount on deposit in the Reserve Account (after taking into
account any interest and other investment income (net of investment expenses and
losses) retained in the Reserve Account on such Transfer Date, but before giving
effect to any deposit to be made to the Reserve Account on such Transfer Date)
and the Required Reserve Account Amount for such Transfer Date.
The Reserve Account will be terminated upon the earlier to occur of (a)
the termination of the Trust pursuant to the Agreement and (b) if the
Accumulation Period has not commenced, the first Transfer Date with respect to
the Early Amortization Period or, if the Accumulation Period has commenced, the
earlier to occur of (i) the first Transfer Date with respect to the Early
Amortization Period and (ii) the Transfer Date immediately preceding the Class A
Expected Final Payment Date. Upon the termination of the Reserve Account, all
amounts on deposit therein (after giving effect to any withdrawal from the
Reserve Account on such date as described above) will be distributed to the
Collateral Interest Holder for application in accordance with the terms of the
Loan Agreement. Any amounts withdrawn from the Reserve Account and distributed
to the Collateral Interest Holder as described above will not be available for
distribution to the Certificateholders.
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Excess Funding Account
If on any date the Transferor Amount would be less than the Minimum
Transferor Amount (after giving effect to any addition of Additional Accounts to
the Trust on such date) if the Servicer were to distribute to the holder of the
Exchangeable Transferor Certificate any Principal Collections that otherwise
would be distributed to the holder of the Exchangeable Transferor Certificate,
the Servicer will not distribute such amounts, but shall instead deposit such
funds in a segregated account established and maintained by the Servicer, in the
name of the Trust, for the benefit of certificateholders of all Series issued by
the Trust, with an Eligible Institution (the "Excess Funding Account"). Funds on
deposit in the Excess Funding Account will be withdrawn and paid to the holder
of the Exchangeable Transferor Certificate on any date to the extent that the
Transferor Amount exceeds the Minimum Transferor Amount on such date; provided,
however, that if an accumulation period or amortization period commences with
respect to any Series other than Series 1997-1, any funds on deposit in the
Excess Funding Account not released to the holder of the Exchangeable Transferor
Certificate will be treated as Shared Principal Collections to the extent needed
to cover principal payments due to or for the benefit of such Series, if the
Series Supplement with respect to such Series so provides. This feature is
intended to avoid or forestall the occurrence of an Early Amortization Event
(and thus certain unexpected prepayments of the certificates) at a time when
adequate Principal Collections are not being generated in the Accounts by
retaining Principal Collections in the Trust for the benefit of
certificateholders. Certificateholders will not incur any costs, direct or
indirect, as a result of the inclusion of this feature.
Funds on deposit in the Excess Funding Account generally will be invested
in certain Eligible Investments described under "--Collection Account." Any
earnings (net of losses and investment expenses) on funds on deposit in the
Excess Funding Account during any Collection Period will be withdrawn from the
Excess Funding Account and treated as Yield Collections with respect to such
Collection Period.
Reallocation of Cash Flows
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class A Required Amount"), if any, by which the sum of (i) Class A Monthly
Interest due on the related Distribution Date, (ii) any Class A Monthly Interest
previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, (iii) any Class A Additional Interest for the related
Distribution Date and any Class A Additional Interest previously due but not
paid to the Class A Certificateholders on a prior Distribution Date, (iv) the
Class A Servicing Fee for the related Collection Period and any unpaid Class A
Servicing Fee for a prior Collection Period and (v) the Class A Investor Default
Amount, if any, for the related Collection Period exceeds the Class A Available
Funds. If the Class A Required Amount is greater than zero, Excess Spread and
Shared Excess Yield Collections allocable to Series 1997-1 and available for
such purpose will be used to fund the Class A Required Amount with respect to
such Transfer Date. If such Excess Spread and Shared Excess Yield Collections
are insufficient to fund the Class A Required Amount, Principal Collections
allocable first to the Collateral Investor Interest ("Reallocated Collateral
Principal Collections") and then to the Class B Certificates ("Reallocated Class
B Principal Collections" and, together with the Reallocated Collateral Principal
Collections, the "Reallocated Principal Collections") for the related Collection
Period will then be used to fund the remaining Class A Required Amount. If such
Reallocated Principal Collections with respect to the related Collection Period
are insufficient to fund the remaining Class A Required Amount, then the
Collateral Invested Amount (after giving effect to reductions for any Collateral
Investor Charge-Offs and any Reallocated Collateral Principal Collections on the
related Transfer Date) will be reduced by the amount of such insufficiency (but
not by more than the Class A Investor Default Amount for such Collection
Period). In the event that such reduction would cause the Collateral Invested
Amount to be a negative number, the Collateral Invested Amount will be reduced
to zero, and the Class B Invested Amount (after giving effect to reductions for
any Class B Investor Charge-Offs and any Reallocated Class B Principal
Collections on such Transfer Date) will be reduced by the amount by which the
Collateral Invested Amount would have been reduced below zero (but not by more
than the excess of the Class A Investor Default Amount, if any, for such
Collection Period over the amount of such reduction, if any, of the Collateral
Invested Amount with respect to such Collection Period). In the event that such
reduction would cause the Class B Invested Amount to be a negative number, the
Class B
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Invested Amount will be reduced to zero, and the Class A Invested Amount will be
reduced by the amount by which the Class B Invested Amount would have been
reduced below zero (but not by more than the excess, if any, of the Class A
Investor Default Amount for such Collection Period over such reductions in the
Collateral Invested Amount and the Class B Invested Amount with respect to such
Collection Period). Any such reduction in the Class A Invested Amount will have
the effect of slowing or reducing the return of principal and interest to the
Class A Certificateholders. In such case, the Class A Certificateholders will
bear directly the credit and other risks associated with their undivided
interest in the Trust. See "--Defaulted Receivables; Rebates and Fraudulent
Charges; Investor Charge-Offs."
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class B Required Amount"), if any, equal to the sum of (a) the amount, if
any, by which the sum of (i) Class B Monthly Interest due on the related
Distribution Date, (ii) any Class B Monthly Interest previously due but not paid
to the Class B Certificateholders on a prior Distribution Date, (iii) any Class
B Additional Interest for the related Distribution Date and any Class B
Additional Interest previously due but not paid to the Class B
Certificateholders on a prior Distribution Date and (iv) the Class B Servicing
Fee for the related Collection Period and any unpaid Class B Servicing Fee for a
prior Collection Period exceeds the Class B Available Funds, and (b) the amount,
if any, by which the Class B Investor Default Amount for the related Collection
Period exceeds the amount of Excess Spread and Shared Excess Yield Collections
allocable to Series 1997 -1 available to cover the Class B Investor Default
Amount on such Transfer Date as specified under "--Application of Collections"
herein. If the Class B Required Amount is greater than zero, Excess Spread and
Shared Excess Yield Collections allocable to Series 1997-1 not required to fund
the Class A Required Amount or reimburse Class A Investor Charge-Offs will be
used to fund the Class B Required Amount with respect to such Transfer Date. If
such Excess Spread and Shared Excess Yield Collections are insufficient to fund
the Class B Required Amount, Reallocated Collateral Principal Collections not
required to fund the Class A Required Amount will then be used to fund the
remaining Class B Required Amount. If such Reallocated Collateral Principal
Collections with respect to the related Collection Period are insufficient to
fund the remaining Class B Required Amount, then the Collateral Invested Amount
(after giving effect to reductions for any Collateral Investor Charge-Offs and
any Reallocated Collateral Principal Collections on such Transfer Date and any
adjustments made thereto for the benefit of Class A Certificateholders on such
Transfer Date) will be reduced by the amount of such insufficiency (but not by
more than the Class B Investor Default Amount for such Collection Period).
In the event that such reduction would cause the Collateral Invested Amount to
be a negative number, the Collateral Invested Amount will be reduced to zero,
and the Class B Invested Amount will be reduced by the amount by which the
Collateral Invested Amount would have been reduced below zero (but not by more
than the excess, if any, of the Class B Investor Default Amount for such
Collection Period over such reduction in the Collateral Invested Amount with
respect to such Collection Period), and the Class B Certificateholders will bear
directly the credit and other risks associated with their undivided interest in
the Trust. See "--Defaulted Receivables; Rebates and Fraudulent Charges;
Investor Charge-Offs."
Reductions of the Class A Invested Amount or Class B Invested Amount will
thereafter be reimbursed and the Class A Invested Amount or Class B Invested
Amount increased to the extent of Excess Spread and Shared Excess Yield
Collections allocable to Series 1997-1 and Reallocated Principal Collections
available for such purposes on each Distribution Date.
With respect to each Transfer Date, the Servicer will determine the amount
(the "Collateral Required Amount"), if any, equal to the sum of (a) the amount,
if any, by which the Collateral Servicing Fee for the related Collection Period
and any unpaid Collateral Servicing Fee for a prior Collection Period exceeds
the Collateral Available Funds, and (b) the amount, if any, by which the
Collateral Default Amount, if any, for the related Collection Period exceeds the
amount of Excess Spread and Shared Excess Yield Collections allocable to Series
1997-1 available on such Transfer Date as specified under "--Application of
Collections" herein. If the Collateral Required Amount is greater than zero,
Excess Spread and Shared Excess Yield Collections allocable to Series 1997-1 not
required to fund the Class A Required Amount or the Class B Required Amount or
reimburse Class A Investor Charge-Offs or Class B Investor Charge-Offs or pay
certain other amounts will be used to fund the Collateral Required Amount with
respect to such Transfer Date. If such
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Excess Spread and Shared Excess Yield Collections are insufficient to fund the
Collateral Required Amount, the Collateral Invested Amount will be reduced by
the amount of such insufficiency (but not by more than the Collateral Default
Amount for such Collection Period).
Application of Collections
Payment of Interest, Fees and Other Items. On each Transfer Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds and Collateral Available Funds in the
following priority:
(a) On each Transfer Date, an amount equal to the Class A Available
Funds with respect to such Transfer Date will be distributed in the
following priority:
(i) an amount equal to Class A Monthly Interest for the
related Distribution Date, plus the amount of any Class A Monthly
Interest previously due but not paid to the Class A
Certificateholders on a prior Interest Payment Date or Special
Payment Date, plus additional interest at the Class A Certificate
Rate with respect to amounts that were due but not paid to Class A
Certificateholders on a prior Interest Payment Date or Special
Payment Date ("Class A Additional Interest"), will be deposited into
the Interest Funding Account;
(ii) an amount equal to the Class A Servicing Fee for the
related Collection Period, plus the amount of any Class A Servicing
Fee previously due but not distributed to the Servicer for a prior
Collection Period, will be distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount
for the related Collection Period will be treated as a portion of
Principal Collections allocable to Series 1997-1 for such Transfer
Date; and
(iv) the balance, if any, will constitute Excess Spread and
shall be allocated and distributed as described under "--Excess
Spread; Shared Excess Yield Collections" below.
(b) On each Transfer Date, an amount equal to the Class B Available
Funds with respect to such Transfer Date will be distributed in the
following priority:
(i) an amount equal to Class B Monthly Interest for the
related Distribution Date, plus the amount of any Class B Monthly
Interest previously due but not paid to the Class B
Certificateholders on a prior Interest Payment Date or Special
Payment Date, plus any additional interest at the Class B
Certificate Rate with respect to amounts that were due but not paid
to Class B Certificateholders on a prior Interest Payment Date or
Special Payment Date ("Class B Additional Interest"), will be
deposited into the Interest Funding Account;
(ii) an amount equal to the Class B Servicing Fee for the
related Collection Period, plus the amount of any Class B Servicing
Fee previously due but not distributed to the Servicer for a prior
Collection Period, will be distributed to the Servicer; and
(iii) the balance, if any, will constitute Excess Spread and
shall be allocated and distributed as described under "--Excess
Spread; Shared Excess Yield Collections" below.
(c) On each Transfer Date, an amount equal to the Collateral
Available Funds with respect to such Transfer Date will be distributed in
the following priority:
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(i) an amount equal to the Collateral Servicing Fee for the
related Collection Period, plus the amount of any Collateral
Servicing Fee previously due but not distributed to the Servicer for
a prior Collection Period, will be distributed to the Servicer; and
(ii) the balance, if any, will constitute Excess Spread and
will be allocated and distributed as described under "--Excess
Spread; Shared Excess Yield Collections" below.
"Class A Monthly Interest" means, with respect to any Distribution Date,
an amount equal to one-twelfth of the product of (i) the Class A Certificate
Rate and (ii) the outstanding principal balance of the Class A Certificates as
of the immediately preceding Record Date; provided, however, with respect to the
first Distribution Date, Class A Monthly Interest will be equal to the interest
accrued on the outstanding principal balance of the Class A Certificates as of
the Closing Date at the Class A Certificate Rate for the period from and
including the Closing Date through the day preceding such Distribution Date.
"Class B Monthly Interest" means, with respect to any Distribution Date,
an amount equal to one-twelfth of the product of (i) the Class B Certificate
Rate and (ii) the outstanding principal balance of the Class B Certificates as
of the immediately preceding Record Date; provided, however, with respect to the
first Distribution Date, Class B Monthly Interest shall be equal to the interest
accrued on the outstanding principal balance of the Class B Certificates as of
the Closing Date at the Class B Certificate Rate for the period from and
including the Closing Date through the day preceding such Distribution Date.
"Collateral Available Funds" means, with respect to any Collection Period,
an amount equal to the Collateral Floating Percentage of the Yield Collections
with respect to such Collection Period (excluding the portion of Yield
Collections attributable to Net Interchange that is allocable to Servicer
Interchange).
"Distribution Date" means the __ day of each month (or, if any such day is
not a business day, on the next succeeding business day), commencing , 1997.
"Excess Spread" means, with respect to any Distribution Date, an amount
equal to the sum of the amounts described in clauses (a)(iv), (b)(iii) and
(c)(ii) above.
"Special Payment Date" means each Distribution Date with respect to any
Early Amortization Period.
Excess Spread; Shared Excess Yield Collections. On each Transfer Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply Excess
Spread and Shared Excess Yield Collections allocable to Series 1997-1 with
respect to the related Collection Period to make the following distributions in
the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date will be used to fund any deficiency pursuant
to clauses (a)(i), (ii) and (iii) above under "--Payment of Interest, Fees
and Other Items," in that order of priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated as a
portion of Principal Collections allocable to Series 1997-1 for such
Transfer Date as described under "--Payments of Principal" below;
(c) an amount up to the Class B Required Amount, if any, with
respect to such Transfer Date will be used to fund any deficiency pursuant
to clauses (b)(i) and (ii) above under "--Payment of Interest, Fees and
Other Items," in that order of priority;
(d) an amount equal to the Class B Investor Default Amount for such
Transfer Date will be treated as a portion of Principal Collections
allocable to Series 1997-1 for such Transfer Date as described under
"--Payments of Principal" below;
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(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of
the definition of "Class B Invested Amount" under "--Allocation
Percentages" above (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be treated as a
portion of Principal Collections allocable to Series 1997-1 for such
Transfer Date as described under "--Payments of Principal" below;
(f) an amount up to the Collateral Required Amount, if any, with
respect to such Transfer Date will be used to fund any deficiency pursuant
to clause (c)(i) above under "--Payment of Interest, Fees and Other
Items";
(g) an amount equal to the Collateral Monthly Interest for such
Transfer Date will be distributed to the Collateral Interest Holder;
(h) an amount equal to the Collateral Default Amount for such
Transfer Date will be treated as a portion of Principal Collections
allocable to Series 1997-1 for such Transfer Date as described under
"--Payments of Principal" below;
(i) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced below the Required Collateral Invested
Amount for reasons other than the payment of principal to the Collateral
Interest Holder (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be treated as a
portion of Principal Collections allocable to Series 1997-1 for such
Transfer Date as described under "--Payments of Principal" below;
(j) on each Transfer Date from and after the Reserve Account Funding
Date, but prior to the date on which the Reserve Account terminates as
described under "--Reserve Account," an amount up to the excess, if any,
of the Required Reserve Account Amount over the Available Reserve Account
Amount shall be deposited into the Reserve Account; and
(k) the balance, if any, will constitute "Shared Excess Yield
Collections" to be applied with respect to other Series in accordance with
the Agreement; provided that if no other Series exists, the balance, if
any, will be distributed to the Transferor.
"Collateral Monthly Interest" means, with respect to any Transfer Date, an
amount equal to the interest payable to the Collateral Interest Holder pursuant
to the Loan Agreement. Collateral Monthly Interest is generally payable at the
Collateral Rate on the outstanding principal balance of the Collateral Investor
Interest. "Collateral Rate" means a rate equal to ____, or such lesser rate
designated pursuant to the Loan Agreement.
"Collateral Default Amount" means, with respect to any Transfer Date, the
product of the Collateral Floating Percentage during the related Collection
Period and the Investor Default Amount for such Collection Period.
Payments of Principal. On each Transfer Date, the Trustee, acting pursuant
to the Servicer's instructions, will distribute Principal Collections allocable
to Series 1997-1 available therefor ("Available Principal Collections") on
deposit in the Collection Account in the following priority:
(a) On each Transfer Date with respect to the Revolving Period, all
such Available Principal Collections, less any portion thereof relating to
Principal Collections allocated at the option of the Transferor as part of
Collateral Monthly Principal to make a payment with respect to the
Collateral Investor Interest (subject to maintaining the Required
Collateral Invested Amount), will be treated as Shared Principal
Collections with respect to other Series and applied as described under
"--Shared Principal Collections;" and
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(b) On each Transfer Date with respect to the Accumulation Period or
the Early Amortization Period, all such Available Principal Collections
will be deposited or distributed in the following priority:
(i) an amount equal to Class A Monthly Principal for such
Transfer Date will, during the Accumulation Period, be deposited in
the Principal Funding Account for payment to the Class A
Certificateholders on the earlier to occur of the Class A Expected
Final Payment Date and the first Special Payment Date with respect
to the Early Amortization Period or, during the Early Amortization
Period, be distributed to the Class A Certificateholders;
(ii) after the Class A Invested Amount has been paid in full
(after taking into account payments to be made on the related
Distribution Date), an amount equal to the Class B Monthly Principal
for such Transfer Date will be distributed to the Class B
Certificateholders;
(iii) an amount equal to Collateral Monthly Principal for such
Transfer Date will be applied in accordance with the Loan Agreement;
and
(iv) the balance, if any, will be treated as Shared Principal
Collections with respect to other Series and applied as described
under "--Shared Principal Collections."
"Class A Monthly Principal" with respect to any Transfer Date relating to
the Accumulation Period or the Early Amortization Period, prior to the payment
in full of the Class A Invested Amount, will equal the lesser of (i) the
Available Principal Collections on deposit in the Collection Account with
respect to such Transfer Date, (ii) for each Transfer Date with respect to the
Accumulation Period and prior to the Class A Expected Final Payment Date, the
applicable Controlled Deposit Amount for such Transfer Date and (iii) the Class
A Adjusted Invested Amount (after giving effect to reductions for any Class A
Investor Charge-Offs) prior to any deposits on such Transfer Date.
"Class B Monthly Principal" with respect to any Transfer Date relating to
the Accumulation Period or the Early Amortization Period, after the Class A
Invested Amount has been paid in full (after taking into account payments to be
made on the related Distribution Date), will equal the lesser of (i) the
Available Principal Collections on deposit in the Collection Account with
respect to such Transfer Date (minus the portion of such Available Principal
Collections applied to Class A Monthly Principal on such Transfer Date) and (ii)
the Class B Invested Amount (after giving effect to reductions for any Class B
Investor Charge-Offs and any Reallocated Class B Principal Collections) on such
Transfer Date.
"Collateral Monthly Principal" means (i) on any Transfer Date prior to the
payment in full of the Class B Invested Amount (after taking into account
payments to be made on the related Distribution Date), either (A) during the
Revolving Period, subject to certain limitations specified in the Loan
Agreement, the excess of the Collateral Invested Amount (after giving effect to
reductions for any Collateral Investor Charge-Offs and any Reallocated
Collateral Principal Collections) over the Required Collateral Invested Amount
(such excess, the "Enhancement Surplus") or any lesser amount (including zero)
as the Transferor may determine, at its option and in its sole discretion, or
(B) during the Accumulation Period, subject to certain limitations specified in
the Loan Agreement, an amount up to the Enhancement Surplus and (ii) beginning
with the Transfer Date on which the Class B Invested Amount has been paid in
full (after taking into account payments to be made on the related Distribution
Date), the Available Principal Collections not applied to Class A Monthly
Principal or Class B Monthly Principal; provided, however, that the amount
determined pursuant to either clause (A) or (B) above shall not exceed the
Available Principal Collections remaining after application to pay Class A
Monthly Principal or Class B Monthly Principal; and provided, further, that
Collateral Monthly Principal may not exceed the Collateral Invested Amount with
respect to any Transfer Date.
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"Controlled Deposit Amount" shall mean, for any Transfer Date with respect
to the Accumulation Period, an amount equal to the sum of the Controlled
Accumulation Amount for such Transfer Date and any Deficit Controlled
Accumulation Amount for the immediately preceding Transfer Date.
"Controlled Accumulation Amount" means (a) for any Transfer Date with
respect to the Accumulation Period prior to the payment in full of the Class A
Invested Amount, $_______; provided, however, that if the commencement of the
Accumulation Period is delayed as described above under "--Postponement of
Accumulation Period," the Controlled Accumulation Amount may be higher, and (b)
for any Transfer Date with respect to the Accumulation Period after the payment
in full of the Class A Invested Amount, an amount equal to the Class B Invested
Amount on such Transfer Date.
"Deficit Controlled Accumulation Amount" means (a) on the first Transfer
Date with respect to the Accumulation Period, the excess, if any, of the
Controlled Accumulation Amount for such Transfer Date over the amount
distributed from the Collection Account as Class A Monthly Principal for such
Transfer Date and (b) on each subsequent Transfer Date with respect to the
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Transfer Date over the amount distributed from the Collection
Account as Class A Monthly Principal for such subsequent Transfer Date.
Enhancement; Required Collateral Invested Amount
The subordination of the Class B Certificates and the Collateral Investor
Interest to fund certain payments with respect to the Class A Certificates, and
the subordination of the Collateral Investor Interest to fund certain payments
with respect to the Class B Certificates will constitute "Enhancement" for the
Class A Certificates and the Class B Certificates, respectively. On each
Transfer Date, the minimum amount of the Collateral Investor Interest will be
the Required Collateral Invested Amount. The "Required Collateral Invested
Amount" means, with respect to any Transfer Date, subject to certain limitations
more fully described herein, an amount equal to __% of the sum of the Class A
Adjusted Invested Amount and the Class B Invested Amount (after giving effect to
deposits into the Principal Funding Account on such Transfer Date and payments
to be made on the related Distribution Date); provided, however, that if an
Early Amortization Event occurs, then the Required Collateral Invested Amount
shall equal the Required Collateral Invested Amount on the Transfer Date
immediately preceding the occurrence of such Early Amortization Event. With
respect to any Transfer Date, if the Collateral Invested Amount is less than the
Required Collateral Invested Amount, certain Excess Spread and Shared Excess
Yield Collections allocable to Series 1997-1 will be used to increase the
Collateral Invested Amount to the extent of such shortfall. If on any Transfer
Date, the Collateral Invested Amount exceeds the Required Collateral Invested
Amount, distributions in respect of such excess may be applied in accordance
with the Loan Agreement and will not be available to the Certificateholders. See
"--Application of Collections." The Collateral Invested Amount is limited and
will not provide protection against all risks of loss. If losses occur which
exceed the amount covered by the Collateral Invested Amount, Certificateholders
will bear their allocable share of deficiencies.
Enhancement with respect to any other Series or Class thereof issued by
the Trust from time to time may include any letter of credit, guaranteed rate
agreement, maturity guaranty facility, liquidity facility, cash collateral
account, cash collateral guaranty, surety bond, insurance policy, interest rate
cap agreement, interest rate swap agreement, spread account, reserve account or
other similar arrangement for the benefit of the certificateholders of such
Series or Class.
Shared Excess Yield Collections
Certificateholders may be entitled to receive all or a portion of Shared
Excess Yield Collections with respect to another Series to cover any shortfalls
with respect to amounts payable from Yield Collections allocable to Series
1997-1. Series 1997-1 is the first Series to be issued by the Trust. The
Transferor may cause the Trust to issue additional Series from time to time but
there can be no assurance that the Transferor will do so.
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Shared Principal Collections
To the extent that Principal Collections and certain other amounts that
are allocated to the invested amount of any Series are not needed to make
payments or deposits with respect to such Series, such collections ("Shared
Principal Collections") will be applied to cover principal payments due to or
for the benefit of certificateholders of another Series. Any such reallocation
will not result in a reduction in the invested amount of the Series to which
such collections were initially allocated. To the extent that Shared Principal
Collections exceed the amount necessary to cover principal payments due to or
for the benefit of certificateholders of other Series, the balance will be paid
to the holder of the Exchangeable Transferor Certificate or, in certain limited
circumstances, deposited into the Excess Funding Account. Series 1997-1 is the
first Series to be issued by the Trust. The Transferor may cause the Trust to
issue additional Series from time to time but there can be no assurance that the
Transferor will do so.
Defaulted Receivables; Rebates and Fraudulent Charges; Investor Charge-Offs
On or before each Transfer Date, the Servicer will calculate the Investor
Default Amount for the preceding Collection Period. The term "Investor Default
Amount" means, for any Collection Period, the product of (i) the Floating
Allocation Percentage with respect to such Collection Period and (ii) the amount
of Defaulted Receivables for such Collection Period. A portion of the Investor
Default Amount will be allocated to the Class A Certificateholders (the "Class A
Investor Default Amount") on each Transfer Date in an amount equal to the
product of the Class A Floating Percentage applicable during the related
Collection Period and the amount of Defaulted Receivables for such Collection
Period. A portion of the Investor Default Amount will be allocated to the Class
B Certificateholders (the "Class B Investor Default Amount") on each Transfer
Date in an amount equal to the product of the Class B Floating Percentage
applicable during the related Collection Period and the amount of Defaulted
Receivables for such Collection Period. The amount of "Defaulted Receivables"
for any Collection Period will be an amount (not less than zero) equal to the
result of (a) the amount of the Receivables that were charged off in such
Collection Period less (b) the amount of recoveries received by the Servicer in
such Collection Period with respect to Receivables previously charged off as
uncollectible and less (c) the full amount of any Defaulted Receivables which
were assigned a balance of zero as a result of their designation as Ineligible
Receivables or as to which the Transferor or the Servicer becomes obligated to
accept reassignment for such Collection Period unless certain events of
bankruptcy, insolvency or receivership have occurred with respect to the
Transferor or the Servicer. Receivables in an Account will be considered charged
off for the purposes of the Agreement on the earlier of (i) the last day of the
month in which such Account becomes 150 days delinquent on a contractual basis
and (ii) the date on which such Account is charged off in accordance with the
customary and usual servicing procedures of the Servicer.
An amount equal to the Class A Investor Default Amount for each Collection
Period will be funded with Class A Available Funds, Excess Spread and Shared
Excess Yield Collections allocable to Series 1997-1 and Reallocated Principal
Collections applied as described above in "--Application of Collections--Payment
of Interest, Fees and Other Items" and "--Reallocation of Cash Flows." An amount
equal to the Class B Investor Default Amount for each Collection Period will be
funded with Class B Available Funds, Excess Spread and Shared Excess Yield
Collections allocable to Series 1997-1 and Reallocated Collateral Principal
Collections applied as described above in "--Application of Collections--Payment
of Interest, Fees and Other Items" and "--Reallocation of Cash Flows."
On each Transfer Date, if the Class A Required Amount for such Transfer
Date exceeds the sum of (a) Excess Spread and Shared Excess Yield Collections
allocable to Series 1997-1 and (b) Reallocated Principal Collections, then the
Collateral Invested Amount (after giving effect to reductions for any Collateral
Investor Charge-Offs and any Reallocated Collateral Principal Collections on
such Transfer Date) will be reduced by the amount of such excess, but not by
more than the Class A Investor Default Amount for such Transfer Date. In the
event that such reduction would cause the Collateral Invested Amount to be a
negative number, the Collateral Invested Amount will be reduced to zero, and the
Class B Invested Amount (after giving effect to reductions for any Class B
Investor Charge-Offs and any Reallocated Class B Principal Collections
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on such Transfer Date) will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero. In the event that such
reduction would cause the Class B Invested Amount to be a negative number, the
Class B Invested Amount will be reduced to zero, and the Class A Invested Amount
will be reduced by the amount by which the Class B Invested Amount would have
been reduced below zero (a "Class A Investor Charge-Off"), which will have the
effect of slowing or reducing the return of principal and interest to the Class
A Certificateholders. If the Class A Invested Amount has been reduced by the
amount of any Class A Investor Charge-Offs, it will thereafter be increased on
any Transfer Date (but not by an amount in excess of the aggregate Class A
Investor Charge-Offs) by the amount of Excess Spread and Shared Excess Yield
Collections allocable to Series 1997-1 and available for such purpose as
described above in "--Application of Collections--Excess Spread; Shared Excess
Yield Collections."
On each Transfer Date, if the Class B Required Amount for such Transfer
Date exceeds the sum of (a) Excess Spread and Shared Excess Yield Collections
allocable to Series 1997-1 not required to pay the Class A Required Amount or
reimburse Class A Investor Charge-Offs and (b) Reallocated Collateral Principal
Collections not required to pay the Class A Required Amount, then the Collateral
Invested Amount (after giving effect to reductions for any Collateral Investor
Charge-Offs and any Reallocated Collateral Principal Collections on such
Transfer Date and after giving effect to any adjustments with respect thereto as
described in the preceding paragraph) will be reduced by the amount of such
excess, but not by more than the Class B Investor Default Amount for such
Distribution Date. In the event that such reduction would cause the Collateral
Invested Amount to be a negative number, the Collateral Invested Amount will be
reduced to zero, and the Class B Invested Amount will be reduced by the amount
by which the Collateral Invested Amount would have been reduced below zero (a
"Class B Investor Charge-Off"). If the Class B Invested Amount has been reduced
by the amount of any Class B Investor Charge-Offs, it will thereafter be
increased on any Transfer Date (but not by an amount in excess of the aggregate
Class B Investor Charge-Offs) by the amount of Excess Spread and Shared Excess
Yield Collections allocable to Series 1997 -1 and available for such purpose as
described above in "--Application of Collections--Excess Spread; Shared Excess
Yield Collections."
On each Transfer Date, if the Collateral Required Amount for such Transfer
Date exceeds the sum of Excess Spread and Shared Excess Yield Collections which
are allocated and available to fund such amount as described under
"--Application of Collections--Excess Spread; Shared Excess Yield Collections,"
the Collateral Invested Amount will be reduced by the amount of such excess, but
not by more than the lesser of the Collateral Default Amount and the Collateral
Invested Amount for such Transfer Date (a "Collateral Investor Charge-Off" and,
together with the Class A Investor Charge-Offs and the Class B Investor Charge-
Offs, the "Investor Charge-Offs"). If the Collateral Invested Amount has been
reduced by the amount of any Collateral Investor Charge-Offs, it will thereafter
be increased on any Transfer Date (but not by an amount in excess of the
aggregate Collateral Investor Charge-Offs) by the amount of Excess Spread and
Shared Excess Yield Collections allocable to Series 1997-1 and available for
such purpose as described above in "--Application of Collections--Excess Spread;
Shared Excess Yield Collections."
If the Servicer makes a downward adjustment of the amount of any
Receivable because of a rebate, refund, unauthorized charge, billing error or
certain other noncash items, or if the Servicer otherwise adjusts downward the
amount of any Receivable without receiving collections therefor or charging off
such amount as uncollectible, or any Receivable is discovered as having been
created through a fraudulent or counterfeit action (each, an "Adjustment"), the
aggregate balance of the Receivables will be reduced by the amount of such
Adjustments. To the extent that such reduction in the aggregate balance of the
Receivables would cause the Transferor Amount to be less than zero, the
Transferor shall deposit an amount sufficient to prevent the Transferor Amount
from being reduced below zero into the Excess Funding Account.
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Final Payment of Principal; Termination
The Certificates will be subject to optional repurchase by the Transferor
on any Distribution Date on or after the Distribution Date on which the Invested
Amount is reduced to an amount less than or equal to 5% of the Initial Invested
Amount, if certain conditions set forth in the Agreement are met. The repurchase
price will be equal to the Invested Amount plus accrued and unpaid interest on
the Certificates and the Collateral Investor Interest.
The Certificates will be retired on the day following the Distribution
Date on which the final payment of principal is made to the Certificateholders,
whether as a result of optional reassignment to the Transferor or otherwise. The
final distribution of principal and interest on the Certificates will be made no
later than the Series 1997-1 Termination Date. If the Invested Amount is greater
than zero on the Series 1997-1 Termination Date, the Trustee will sell or cause
to be sold certain Receivables (in an amount up to 110% of the Invested Amount
and any other amounts specified in the Agreement) in the manner provided in the
Agreement and pay the net proceeds of such sale and any collections on the
Receivables, up to an amount equal to the Invested Amount plus accrued interest
due on the Certificates and any other amounts specified in the Agreement, to the
Certificateholders on such Series 1997-1 Termination Date as final payment of
the Certificates.
Unless the Transferor instructs the Trustee otherwise, the Trust will only
terminate on the earlier to occur of: (a) unless a Trust extension shall have
occurred, the day following the day on which the aggregate invested amounts of
all Series and any amounts payable to Enhancement providers is zero, (b) if a
Trust extension shall have occurred, the date specified in the applicable
notice, (c) ______ __, 20__ or (d) if the Receivables are sold, disposed of or
liquidated following the occurrence of certain events of insolvency,
conservatorship or receivership relating to the Transferor, immediately
following such sale, disposition or liquidation (such date, the "Trust
Termination Date"). Upon the termination of the Trust and the surrender of the
Exchangeable Transferor Certificate, the Trustee shall convey to the Transferor
all right, title and interest of the Trust in and to the Receivables and other
funds of the Trust (other than amounts in the accounts maintained by the Trust
for the final payment of principal and interest to Certificateholders).
Early Amortization Events
An "Early Amortization Event" refers to any of the following events:
(a) failure on the part of the Transferor (i) to make any payment or
deposit on the date required under the Agreement (or within the applicable
grace period) or (ii) duly to observe or perform in any material respect
any other covenants or agreements of the Transferor set forth in the
Agreement or the Series 1997-1 Supplement, which failure in the case of
clause (ii) hereof continues unremedied for a period of 60 days after
written notice thereof and continues to materially and adversely affect
the interests of the Certificateholders for such period;
(b) any representation or warranty made by the Transferor in the
Agreement or any information required to be given by the Transferor to the
Trustee to identify the Accounts proves to have been incorrect in any
material respect when made and continues to be incorrect in any material
respect for a period of 60 days after written notice thereof and as a
result of which the interests of the Certificateholders are materially and
adversely affected and continue to be materially and adversely affected
for such period; provided, however, that an Early Amortization Event
pursuant to this subparagraph (b) shall not be deemed to occur if during
such 60-day period (or such longer period as the Trustee may specify) the
Transferor has accepted designation of the related Receivable or all such
Receivables, if applicable, as Ineligible Receivables or reassignment of
such Receivables in accordance with the provisions of the Agreement;
(c) certain events of insolvency, conservatorship or receivership
relating to the Transferor or any holder of an interest in the
Exchangeable Transferor Certificate (such events include the
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appointment (voluntary or involuntary) of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings relating to the Transferor or all
or substantially all of its property; the Transferor admitting in writing
its inability to pay its debts as they become due, filing a petition to
take advantage of an insolvency or reorganization statute, making an
assignment for the benefit of its creditors or voluntarily suspending
payment of its obligations; and the Transferor being unable to transfer
Receivables to the Trust in accordance with the Agreement);
(d) failure by the Transferor to transfer Receivables in Additional
Accounts to the Trust when required pursuant to the Agreement;
(e) any Servicer Default occurs which would have a material adverse
effect on the Certificateholders;
(f) the Trust becomes an "investment company" within the meaning of
the Investment Company Act of 1940, as amended;
(g) insufficient moneys in the Principal Funding Account to pay the
Class A Invested Amount in full on the Class A Expected Final Payment Date
or in the Collection Account to pay the Class B Invested Amount in full on
the Class B Expected Final Payment Date; or
(h) on any Determination Date the Collateral Invested Amount is less
than the Required Collateral Invested Amount.
In the case of any event described in clause (a), (b) or (e) above, an
Early Amortization Event will be deemed to have occurred with respect to the
Certificates only if, after any applicable grace period, either the Trustee or
Certificateholders (including, for this purpose, the Collateral Interest Holder)
evidencing undivided interests aggregating more than 50% of the Invested Amount,
by written notice to the Transferor and the Servicer (and to the Trustee if
given by the Certificateholders) declare that an Early Amortization Event has
occurred with respect to the Certificates as of the date of such notice. In the
case of any event described in clause (c) or (f), an Early Amortization Event
with respect to all Series then outstanding, and in the case of any event
described in clause (d), (g) or (h), an Early Amortization Event with respect to
only the Certificates, will be deemed to have occurred without any notice or
other action on the part of the Trustee or the Certificateholders or all
certificateholders, as appropriate, immediately upon the occurrence of such
event. On the date on which an Early Amortization Event is deemed to have
occurred, the Early Amortization Period will commence. If, because of the
occurrence of an Early Amortization Event, the Early Amortization Period begins
earlier than the Class A Expected Final Payment Date or the Class B Expected
Final Payment Date, Certificateholders will begin receiving distributions of
principal earlier than they otherwise would have, which may shorten the average
life of the Certificates.
If the only Early Amortization Event to occur is either the insolvency of
the Transferor or the appointment of a receiver or conservator for the
Transferor, the receiver or conservator for the Transferor may have the power to
delay or prevent commencement of the Early Amortization Period.
In addition to the consequences of an Early Amortization Event discussed
above, if the Transferor voluntarily enters liquidation or any person is
appointed a receiver or conservator of the Transferor, on the day of such
liquidation or appointment the Transferor will immediately cease to transfer
Receivables to the Trust and the Transferor will promptly give notice to the
Trustee of such appointment. Within 15 days, the Trustee will publish a notice
of the liquidation or the appointment stating that the Trustee intends to sell,
dispose of or otherwise liquidate the Receivables in a commercially reasonable
manner and to the best of its ability. Unless otherwise instructed within a
specified period by the Certificateholders representing undivided interests
aggregating more than 50% of the invested amount of each Series (or if any
Series has more than one Class, of each Class of such Series) and each
Enhancement Provider, the Trustee will sell, dispose of or otherwise
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liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms. If the Trustee is instructed not to liquidate the
Receivables as described in the preceding sentence, the Trustee will retain the
Receivables and apply collections thereon in accordance with the Agreement;
provided that the Trustee shall nevertheless liquidate any remaining Receivables
no later than three years after the date the Transferor's entry into liquidation
or appointment of a receiver or conservator occurs. The proceeds from the sale,
disposition or liquidation of the Receivables will be treated as collections and
will be applied as provided above in "--Application of Collections." If the
portion of such proceeds allocated to the Invested Amount and the proceeds of
any other amounts allocable to the Certificates under the Agreement are not
sufficient to pay in full the remaining amount due on the Certificates, the
Certificateholders will suffer a corresponding loss. See "Certain Legal Aspects
of the Receivables--Certain Matters Relating to Receivership."
Indemnification
The Agreement provides that the Servicer will indemnify the Trust, for the
benefit of Certificateholders, and the Trustee, including its officers,
directors and employees, from and against any loss, liability, expense, damage
or injury arising out of or relating to any claims, actions or proceedings
brought or asserted by third parties which are suffered or sustained by reason
of any acts or omissions of the Servicer pursuant to the Agreement; provided,
however, that the Servicer shall not indemnify the Trust for the benefit of
Certificateholders or the Trustee or its officers, directors or employees for
any liabilities, costs or expenses with respect to (i) any action taken by the
Trustee at the request of Certificateholders, (ii) any U.S. federal, state or
local income or franchise taxes required to be paid by the Trust, the Trustee or
the Certificateholders or (iii) with respect to the Trustee and its officers,
directors and employees, any wrongful actions taken by or omissions of the
Trustee.
Under the Agreement, the Transferor will be liable directly to an injured
party for the entire amount of any losses, claims, damages or liabilities (other
than those incurred by a Certificateholder in the capacity of an investor in the
Certificates) arising out of or based on the arrangement created by the
Agreement or the actions of the Servicer taken pursuant to the Agreement as
though the Agreement created a partnership under the Uniform Partnership Act.
The Transferor will also pay, indemnify and hold harmless each Certificateholder
for any such losses, claims, damages or liabilities (other than those incurred
by a Certificateholder in the capacity of an investor in the Certificates)
except to the extent that they arise from any action by any Certificateholder.
In the event of a Service Transfer, the successor Servicer will indemnify the
Transferor for any losses, claims, damages and liabilities of the Transferor as
described in this paragraph arising from the actions or omissions of such
successor Servicer.
Except as provided in the preceding paragraph, the Agreement provides that
none of the Transferor, the Servicer or any of their directors, officers,
employees or agents will be under any other liability to the Trust, the Trustee,
the Certificateholders, any Enhancement provider or any other person for any
action taken, or for refraining from taking any action, in good faith pursuant
to the Agreement. However, none of the Transferor, the Servicer or any of their
directors, officers, employees or agents will be protected against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence of any such person in the performance of their duties.
In addition, the Agreement provides that the Servicer is not under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its servicing responsibilities under the Agreement. The Servicer
may, in its sole discretion, undertake any such legal action which it may deem
necessary or desirable for the benefit of Certificateholders with respect to the
Agreement and the rights and duties of the parties thereto and the interest of
the Certificateholders thereunder.
Collection and Other Servicing Procedures
Pursuant to the Agreement, the Servicer, whether acting itself or through
one or more subservicers, will be responsible for servicing, collecting,
enforcing and administering the Receivables in accordance with
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the policies and procedures and the degree of skill and care applied or
exercised with respect to charge card receivables owned by the Servicer or any
subservicer. The Servicer and any subservicer will be required to maintain or
cause to be maintained fidelity bond coverage insuring against losses through
wrongdoing of its officers and employees who are involved in the servicing of
receivables covering such actions and in such amounts as the Servicer believes
to be reasonable from time to time.
Servicing activities performed by the Servicer with respect to the
Accounts include collecting and recording payments, communicating with
cardholders, investigating payment delinquencies, providing billing records to
cardholders and maintaining internal records. Managerial and custodial services
performed by the Servicer on behalf of the Trust include providing assistance in
any inspections of the documents and records relating to the Accounts and
Receivables by the Trustee pursuant to the Agreement, maintaining the
agreements, documents and files relating to the Accounts and Receivables as
custodian for the Trust and providing related data processing and reporting
services for Certificateholders and on behalf of the Trustee.
Servicer Covenants
In the Agreement, the Servicer covenants to the Certificateholders and the
Trustee as to each Receivable and related Account that: (i) it will duly fulfill
all obligations on its part to be fulfilled under or in connection with the
Receivable or Account, and will maintain in effect all qualifications required
in order to service the Receivable or Account and will comply with all
applicable requirements of law in connection with servicing the Receivable and
the Account, the failure to comply with which would have a material adverse
effect on Certificateholders (without regard to the amount of any Enhancement);
(ii) it will not permit any rescission or cancellation of the Receivable, except
as ordered by a court of competent jurisdiction or except in accordance with the
Servicer's usual and customary servicing practices; and (iii) it will do nothing
to impair the rights of the Certificateholders in the Receivables and will not
reschedule, revise or defer payments due on the Receivables, except in
accordance with the Servicer's usual and customary servicing practices.
Under the terms of the Agreement, the Servicer will be obligated to accept
the transfer of any Receivable if it discovers, or receives written notice from
the Trustee, that (i) any covenant of the Servicer set forth above has not been
complied with in respect of such Receivable or (ii) the Servicer has not
complied in all material respects with all applicable requirements of law
applicable to the Receivables or Accounts, and in either case such noncompliance
has not been cured within 60 days thereafter and the Receivable has been charged
off as uncollectible or the proceeds of the Receivables are not available to the
Trust. Such assignment and transfer will be made when the Servicer deposits an
amount equal to the amount of such Receivable into the Collection Account on the
business day preceding the Distribution Date following the Collection Period
during which such obligation arises. The amount of such deposit shall be deemed
a payment in respect of the related Receivable and will be treated under the
Agreement in the same manner as are payments received by the Servicer from
cardholders under the Accounts. Any amounts so paid by the Servicer shall be
allocated in respect of Principal Collections and Yield Collections as provided
in the Agreement. This transfer and assignment to the Servicer constitutes the
sole remedy available to the Certificateholders if such covenant or warranty of
the Servicer is not satisfied and the Trust's interest in any such reassigned
Receivables shall be automatically assigned to the Servicer.
Servicing Compensation and Payment of Expenses
The Servicer's compensation for its servicing activities is a monthly
servicing fee (the "Servicing Fee"). The share of the Servicing Fee allocable to
the Certificateholders with respect to any Transfer Date (the "Monthly Investor
Servicing Fee") will be equal to one-twelfth of the product of (a) __% (the
"Servicing Fee Rate") and (b) the Adjusted Invested Amount as of the last day of
the second preceding Collection Period (the amount calculated pursuant to this
clause (b) is referred to as the "Servicing Base Amount"); provided, however,
with respect to the first Transfer Date, the Monthly Investor Servicing Fee will
be equal to the product of (x) the Servicing Fee Rate, (y) the Initial Invested
Amount and (z) a fraction, the numerator of which is equal to the number of days
in the period from and including the Closing Date through the day
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preceding the initial Distribution Date and the denominator of which is 360. On
each Transfer Date, Servicer Interchange with respect to the related Collection
Period that is on deposit in the Collection Account shall be withdrawn from the
Collection Account and paid to the Servicer in payment of a portion of the
Monthly Investor Servicing Fee with respect to such Collection Period, which
portion shall equal one-twelfth of the product of the Servicing Base Amount and
__%. The "Servicer Interchange" for any Collection Period or portion thereof
during which Card Services or any of its affiliates is acting as Servicer under
the Agreement will be equal to the product of (a) the Floating Allocation
Percentage for such Collection Period and (b) the portion of Yield Collections
with respect to such Collection Period that is attributable to Net Interchange;
provided, however, that Servicer Interchange for a Collection Period shall not
exceed one-twelfth of the product of the Servicing Base Amount and __%. In the
event the Servicer Interchange on deposit in the Collection Account on any
Transfer Date is less than one-twelfth of the product of the Servicing Base
Amount and __%, the Monthly Investor Servicing Fee with respect to such
Collection Period will not be paid to the extent of such insufficiency until the
Transfer Date or Dates with respect to which Servicer Interchange is available
in the Collection Account prior to giving effect to the payment of the portion
of the Monthly Investor Servicing Fee constituting Servicer Interchange for such
Transfer Date or Dates. In no event shall the Trust, the Trustee, the
Certificateholders or the Collateral Interest Holder be liable for the share of
the Servicing Fee to be paid out of Servicer Interchange.
The share of the Monthly Investor Servicing Fee allocable to the Class A
Certificateholders (after giving effect to the distribution of any Servicer
Interchange to the Servicer) with respect to any Transfer Date (the "Class A
Servicing Fee") will be equal to one-twelfth of the product of (a) the Class A
Adjusted Invested Amount as of the last day of the second preceding Collection
Period and (b) __%, or if Card Services or any of its affiliates is not the
Servicer, __% (the "Net Servicing Fee Rate"); provided, however, that with
respect to the first Transfer Date, the Class A Servicing Fee will be equal to
the product of (x) the Class A Initial Invested Amount, (y) the Net Servicing
Fee Rate and (z) a fraction, the numerator of which is equal to the number of
days in the period from and including the Closing Date through the day preceding
the initial Distribution Date and the denominator of which is 360. The share of
the Monthly Investor Servicing Fee allocable to the Class B Certificateholders
(after giving effect to any distribution of Servicer Interchange to the
Servicer) with respect to any Transfer Date (the "Class B Servicing Fee") will
be equal to one-twelfth of the product of (a) the Class B Invested Amount as of
the last day of the second preceding Collection Period and (b) the Net Servicing
Fee Rate; provided, however, that with respect to the first Transfer Date, the
Class B Servicing Fee will be equal to the product of (x) the Class B Initial
Invested Amount, (y) the Net Servicing Fee Rate and (z) a fraction, the
numerator of which is equal to the number of days in the period from and
including the Closing Date through the day preceding the initial Distribution
Date and the denominator of which is 360. The share of the Monthly Investor
Servicing Fee allocable to the Collateral Interest Holder (after giving effect
to the distribution of any Servicer Interchange to the Servicer) with respect to
any Transfer Date (the "Collateral Servicing Fee") will be equal to one-twelfth
the product of (a) the Net Servicing Fee Rate and (b) the Collateral Invested
Amount as of the last day of the second preceding Collection Period; provided,
however, that with respect to the first Transfer Date, the Collateral Servicing
Fee will be equal to the product of (x) the Net Servicing Fee Rate, (y) the
Collateral Initial Invested Amount and (z) a fraction the numerator of which is
equal to the number of days in the period from and including the Closing Date
through the day preceding the initial Distribution Date, and the denominator of
which is 360. The remainder of the Servicing Fee shall be paid by First Bank or
the certificateholders of other Series (as provided in the related Series
Supplements) or, to the extent of any insufficiency of Servicer Interchange as
described above, not be paid and in no event shall the Trust, the Trustee, the
Certificateholders or the Collateral Interest Holder be liable for the share of
the Servicing Fee to be paid by First Bank or the certificateholders of any
other Series or to be paid out of Servicer Interchange. The Class A Servicing
Fee, the Class B Servicing Fee and the Collateral Servicing Fee shall be payable
to the Servicer solely to the extent amounts are available for distribution in
respect thereof as described under "--Payment of Interest, Fees and Other Items"
above.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Accounts and the Receivables
including, without limitation, expenses related to enforcement of the
Receivables, payment of fees and disbursements of the Trustee and independent
accountants and all other
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fees and expenses which are not expressly stated in the Agreement to be payable
by the Trust or the Certificateholders other than federal, state and local
income and franchise taxes, if any, of the Trust.
Certain Matters Regarding the Servicer and the Transferor
The Servicer may not resign from its obligations and duties under the
Agreement, except upon determination that such duties are impermissible under
applicable law, regulation or order and there is no reasonable action which the
Servicer could take to make the performance of its duties permissible. No such
resignation will become effective until the Trustee or a successor to the
Servicer has assumed the Servicer's responsibilities and obligations under the
Agreement.
Card Services, as Servicer, will be permitted under the Agreement to
delegate certain of its servicing obligations. Notwithstanding any such
delegation, Card Services, as Servicer, will continue to be liable for all of
its obligations as Servicer under the Agreement.
Any person into which, in accordance with the Agreement, any of the
Transferor or the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which any of the Transferor or the Servicer
is a party, or any person succeeding to the business of any of the Transferor or
the Servicer, will be the successor to the Transferor or the Servicer, as the
case may be, under the Agreement.
Servicer Default
In the event of any Servicer Default (as defined below), either the
Trustee or Certificateholders evidencing undivided interests aggregating more
than 50% of the aggregate principal balance of all Series, by written notice to
the Servicer (and to the Trustee, if given by the Certificateholders), may
terminate all of the rights and obligations of the Servicer, in its capacity as
servicer under the Agreement, with respect to all of the Receivables held by the
Trust with respect to all Series, and the proceeds thereof, and the Trustee
shall thereafter appoint a new Servicer (a "Service Transfer"). The rights and
interests of the Transferor under the Agreement in the Transferor Interest will
not be affected by any Service Transfer. The Transferor shall have the right,
exercisable at any time within 60 days of the giving of the notice of
termination as described above, to nominate to the Trustee a potential successor
Servicer. The Trustee shall as promptly as possible appoint the entity nominated
by the Transferor if such entity meets certain eligibility criteria set forth in
the Agreement. If the Transferor does not nominate an entity to be successor
Servicer within such 60 day period, the Trustee shall as promptly as possible
appoint a successor Servicer, and if no successor Servicer has been appointed by
the Trustee and has accepted such appointment by the time the Servicer ceases to
act as Servicer, all authority, power and obligations of the Servicer under the
Agreement will pass to, and be vested in, the Trustee. Prior to any Service
Transfer, the Trustee will seek to obtain bids from potential Servicers meeting
certain eligibility requirements set forth in the Agreement to serve as a
successor Servicer for servicing compensation not in excess of the Servicing
Fee. If the Trustee is unable to obtain any bids from eligible Servicers and the
Servicer delivers an officer's certificate to the effect that it cannot in good
faith cure the related Servicer Default, then the Trustee will offer the
Transferor the right to accept the retransfer of all of the Receivables. The
deposit amount of such a retransfer for the Certificates shall be equal to the
sum of the Invested Amount plus accrued and unpaid interest on the Certificates
and Collateral Investor Interest.
A "Servicer Default" refers to any of the following events:
(i) failure by the Servicer to make any payment, transfer or
deposit, or to give instructions to the Trustee to make any withdrawal or
payment, on the date the Servicer is required to do so under the Agreement
or any Series Supplement (upon expiration of a five day grace period),
provided, however, that any such failure caused by a nonwillful act of the
Servicer shall not constitute a Servicer Default if the Servicer promptly
remedies such failure within five business days after receiving notice
thereof;
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(ii) failure on the part of the Servicer duly to observe or perform
any other covenants or agreements of the Servicer in the Agreement or any
Series Supplement which has a material adverse effect on the
certificateholders of any Series issued and outstanding (without regard to
the amount of any Enhancement), which continues unremedied for a period of
60 days after written notice shall have been given to the Servicer by the
Trustee or to the Servicer and the Trustee by certificateholders of any
Series representing undivided interest aggregating not less than 50% of
the invested amount thereof and which continues to materially adversely
affect the rights of such certificateholders, or the Servicer assigns its
duties under the Agreement, except as specifically permitted thereunder;
(iii) any representation, warranty or certification made by the
Servicer in the Agreement or any Series Supplement or in any certificate
delivered pursuant to the Agreement or any Series Supplement proves to
have been incorrect when made, which has a material adverse effect on the
rights of the certificateholders of any Series issued and outstanding
(without regard to the amount of any Enhancement), and continues to be
incorrect in any material respect for a period of 60 days after written
notice shall have been given to the Servicer by the Trustee or to the
Servicer and the Trustee by certificateholders of any Series representing
undivided interest aggregating not less than 50% of the invested amount
thereof and continues to materially adversely affect the rights of such
certificateholders; or
(iv) the occurrence of certain events of bankruptcy or insolvency
relating to the Servicer (such events include the appointment (voluntary
or involuntary) of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings relating to the Servicer or all or substantially all
of its property and the Servicer admitting in writing its inability to pay
its debts as they become due, filing a petition to take advantage of an
insolvency or reorganization statute, making an assignment for the benefit
of its creditors or voluntarily suspending payment of its obligations).
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (i) above for a period of 10 business days after the
applicable grace period or a delay in or failure of performance referred to
under clauses (ii) or (iii) for a period of 60 business days after the
applicable grace period shall not constitute a Servicer Default, if such delay
or failure could not have been prevented by the exercise or reasonable diligence
by the Servicer and such delay or failure was caused by an act of God or other
similar occurrence. Upon the occurrence of any such event, the Servicer shall
not be relieved from using its best reasonable efforts to perform its
obligations in a timely manner in accordance with the terms of the Agreement or
any Series Supplement and the Servicer shall provide the Trustee and the
provider of Enhancement, if any, applicable to any Series, the Transferor and
the certificateholders of each Series issued and outstanding prompt notice of
such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Servicer will immediately notify the Trustee in
writing of any Servicer Default.
Reports to Certificateholders
Prior to each Distribution Date, the Servicer will forward to the Trustee
a statement (the "Monthly Servicer Report") prepared by the Servicer (as
determined on the fifth business day prior to such Distribution Date (the
"Determination Date")) setting forth certain information with respect to the
Trust and the Certificates, including: (a) the aggregate amount of collections,
the aggregate amount of Yield Collections and the aggregate amount of Principal
Collections processed during the immediately preceding Collection Period; (b)
the applicable allocation percentages with respect to Yield Collections and
Principal Collections for such Collection Period; (c) the total amount to be
deposited in the Principal Funding Account; (d) the aggregate outstanding
balance of the Accounts which were delinquent by 30 days, 60 days, 90 days and
120 days or more as of the billing date for each such Account occurring in the
Collection Period immediately preceding such Distribution Date; (e) the Investor
Default Amount for the Collection Period immediately preceding such Distribution
Date; (f) the amount of Investor Charge-Offs and the amount of reimbursements
thereof for the Collection Period immediately preceding such Distribution Date;
(g) the amount of the Monthly Investor Servicing Fee for the
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Collection Period immediately preceding such Distribution Date; (h) the
aggregate amount of Receivables in the Trust at the close of business on the
last day of the Collection Period preceding such Distribution Date; (i) the
Invested Amount at the close of business on the last day of the Collection
Period immediately preceding such Distribution Date; and (j) whether an Early
Amortization Event shall have occurred. The Trustee will make such statement
available to the Certificateholders or Certificate Owners upon request.
On each Interest Payment Date (including the Class A Expected Final
Payment Date and the Class B Expected Final Payment Date) or Special Payment
Date, as the case may be, the Paying Agent, on behalf of the Trustee, will
forward to each Certificateholder of record a statement (the "Payment Date
Statement") prepared by the Servicer setting forth the information with respect
to the Certificates set forth in the Monthly Servicer Report supplied to the
Trustee as described in the preceding paragraph since the immediately preceding
Interest Payment Date or Special Payment Date, as the case may be, and the
following additional information (which, in the case of (a), (b) and (c) below,
will be stated on the basis of an original principal balance of $1,000 per
Certificate): (a) the total amount distributed; (b) the amount of such
distribution allocable to principal; (c) the amount of such distribution
allocable to interest; (d) the amount, if any, by which the principal balance of
the Certificates exceeds the Invested Amount as of the Record Date with respect
to such Interest Payment Date or Special Payment Date; and (e) the "series
factor" as of the end of the Record Date with respect to such Interest Payment
Date or Special Payment Date (consisting of an eight-digit decimal expressing
the Invested Amount as of such Record Date (determined after taking into account
any increase or decrease in the Invested Amount which will occur on the
following Interest Payment Date or Special Payment Date) as a proportion of the
Initial Invested Amount).
The fiscal year of the Trust ends on December 31 in each year. On or
before January 31 of each calendar year, beginning with January 31, 1997, the
Paying Agent, on behalf of the Trustee, will furnish or cause to be furnished to
each person who at any time during the preceding calendar year was a
Certificateholder of record (or, if so provided in applicable Treasury
regulations, made available to Certificate Owners) a statement prepared by the
Servicer containing the information required to be provided by an issuer of
indebtedness under the Code for such calendar year or the applicable portion
thereof during which such person was a Certificateholder, together with such
other customary information as the Servicer deems necessary or desirable to
enable the Certificateholders to prepare their tax returns.
Evidence as to Compliance
The Agreement will provide that on or before April 30 of each calendar
year, beginning on April 30, 1998, the Servicer will cause a firm of nationally
recognized independent accountants to furnish a report to the effect that such
firm has applied procedures, as agreed upon between such firm and the Servicer,
to certain documents and records relating to the servicing of the Receivables
and that, based upon such agreed-upon procedures, no matters came to their
attention that caused them to believe that such servicing was not conducted in
compliance with certain applicable terms and conditions set forth in the
Agreement except for such exceptions or errors as shall be set forth in such
statement. In addition, on or before April 30 of each calendar year, beginning
with April 30, 1998, such accountants will compare the mathematical calculations
of the amounts contained in the Monthly Servicer Reports and other certificates
delivered during the preceding calendar year with the computer reports of the
Servicer and statements of any agents engaged by the Servicer to perform
servicing activities which were the source of such amounts and deliver a
certificate to the Trustee stating that such amounts are in agreement except for
such exceptions which shall be set forth in such report.
The Agreement will provide for delivery to the Trustee on or before April
30 of each calendar year, beginning with April 30, 1998, of a statement signed
by an officer of the Servicer to the effect that the Servicer has, or has caused
to be, fully performed its obligations in all material respects under the
Agreement throughout the preceding year or, if there has been a default in the
performance of any such obligation, specifying the nature and status of the
default.
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Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by a request in writing delivered to the Trustee. See
"--The Trustee."
Amendments
The Agreement may be amended by the Transferor, the Servicer and the
Trustee, without Certificateholder consent, to cure any ambiguity, to correct or
supplement any provision therein which may be inconsistent with any other
provision therein , to add any other provisions with respect to matters or
questions arising under the Agreement which are not inconsistent with the
provisions of the Agreement and to enable the Trust or a portion thereof to
elect to qualify for federal income tax purposes as a "financial asset
securitization investment trust" or comparable tax entity for the securitization
of financial assets. In addition, the Agreement may be amended from time to time
by the Transferor, the Servicer and the Trustee, without Certificateholder
consent, for the purpose of adding any provisions to, changing in any manner or
eliminating any of the provisions of the Agreement or of modifying in any manner
the rights of certificateholders of any Series then issued and outstanding
provided that (i) the Servicer must provide an opinion of counsel to the Trustee
to the effect that such amendment will not materially and adversely affect the
interests of the certificateholders of any outstanding Series, which opinion of
counsel may rely as to any rated Series solely on the rating confirmation
referred to in clause (iii) below (or 100% of the Class of certificateholders so
affected shall have consented), (ii) such amendment shall not, as evidenced by
an opinion of counsel, cause the Trust to be characterized for federal income
tax purposes as an association taxable as a corporation or otherwise have any
material adverse impact on the federal income tax status of any outstanding
Series of certificates or the federal income taxation of any certificate owner
and (iii) the applicable Rating Agency shall confirm that such amendment shall
not cause a reduction or withdrawal of the rating of any outstanding Series of
certificates. Any Series Supplement and any amendments regarding the addition or
removal of Receivables from the Trust will not require Certificateholder consent
under the provisions of the Agreement.
The Agreement may also be amended by the Transferor, the Servicer and the
Trustee with the consent of the holders of certificates evidencing undivided
interests aggregating not less than 66-2/3% of the principal balance of all
Series adversely affected for the purpose of adding any provisions to, changing
in any manner or eliminating any of the provisions of the Agreement or of
modifying in any manner the rights of certificateholders of any Series then
issued and outstanding. Any such amendment shall require that the applicable
Rating Agency confirm that such amendment will not cause a reduction or
withdrawal of the rating of any outstanding Series of certificates. No such
amendment, however, may (i) reduce in any manner the amount of, or delay the
timing of, distributions required to be made on such Series, (ii) change the
definition or the manner of calculating the invested amount, the invested
percentage, the applicable available amount under any Enhancement or the
investor default amount of such Series, or (iii) reduce the aforesaid percentage
of undivided interests the holders of which are required to consent to any such
amendment, in each case without the consent of all certificateholders of all
Series adversely affected.
Promptly following the execution of any amendment to the Agreement, the
Trustee will furnish written notice of the substance of such amendment to each
certificateholder of all Series (or with respect to an amendment of a Series
Supplement, to the applicable Series).
List of Certificateholders
Upon written request of any certificateholder or group of
certificateholders of record representing undivided interests in the Trust
aggregating not less than 10% of the invested amount of a Series, the Trustee
will afford such certificateholders access during business hours to the current
list of Certificateholders of the Trust for purposes of communicating with other
certificateholders with respect to their rights under the Agreement.
The Agreement generally does not provide for any annual or other meetings
of certificateholders.
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The Trustee
Citibank, N.A. will be Trustee under the Agreement. The Transferor, the
Servicer and their respective affiliates may from time to time enter into normal
banking and trustee relationships with the Trustee and its affiliates. The
Trustee, the Transferor, the Servicer and any of their respective affiliates may
hold Certificates in their own names; however, any Certificates so held shall
not be entitled to participate in any decisions made or instructions given to
the Trustee by the Certificateholders as a group. The Trustee's Corporate Trust
Office is located at 120 Wall Street, New York, New York 10043.
For purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to appoint a co-trustee or
separate trustees of all or any part of the Trust. In the event of such
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee will be conferred or imposed upon and exercised or performed by
the Trustee and such separate trustee or co-trustee jointly, or, in any
jurisdiction in which the Trustee will be incompetent or unqualified to perform
certain acts, singly upon such separate trustee or co-trustee, who shall
exercise and perform such rights, powers, duties and obligations solely at the
direction of the Trustee.
The Trustee may resign at any time, in which event a successor Trustee
will be appointed as provided in the Agreement. The Servicer may also remove the
Trustee, if the Trustee ceases to be eligible to continue as such under the
Agreement or if the Trustee becomes insolvent. In such circumstances, a
successor Trustee will be appointed as provided in the Agreement. Any
resignation or removal of the Trustee and appointment of a successor Trustee
does not become effective until acceptance of the appointment by the successor
Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Transfer of Receivables
The Transferor will covenant and warrant that the transfer of Receivables
by it to the Trust constitutes either a valid transfer and assignment to the
Trust of all right, title and interest of the Transferor in and to the
Receivables, except for the interest of the Transferor as holder of the
Exchangeable Transferor Certificate, or a grant of a security interest to the
Trust in and to the Receivables. The Transferor will also covenant and warrant
to the Trust in the Agreement that, in the event the transfer of Receivables by
the Transferor to the Trust is deemed to create a security interest under the
UCC and assuming that the Transferor is not at the time the subject of any
insolvency proceedings, there exists a valid, subsisting and enforceable first
priority perfected security interest in the Receivables in existence since the
time of the formation of the Trust in favor of the Trust and a valid, subsisting
and enforceable first priority perfected security interest in the Receivables
created thereafter and, with certain exceptions, and for certain limited time
periods, the proceeds thereof, in favor of the Trust on and after their
creation.
The Receivables are "accounts" or "general intangibles" as defined in
Article 9 of the UCC. The absolute transfer of accounts and the transfer of
accounts and general intangibles as security for an obligation are treated under
Article 9 of the UCC as creating a security interest therein and are subject to
its provisions, including the filing of financing statements to perfect the
Trust's security interest. Financing statements covering the Receivables will be
filed under the applicable UCC to protect the Trust. The absolute transfer of
general intangibles is not governed by Article 9 of the UCC but by applicable
state law.
There are certain limited circumstances under the UCC in which prior or
subsequent transferees of Receivables coming into existence after the date on
which such Receivables are transferred to the Trust could have an interest in
such Receivables with priority over the Trust's interest. A tax or other
government lien on property of the Transferor arising prior to the time a
Receivable comes into existence may also have priority over the interest of the
Trust in such Receivables. In addition, if the FDIC were appointed as receiver
of the Transferor, certain administrative expenses of the receiver may also have
priority over the interest of the Trust
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in such Receivables. Under the Agreement, the Transferor will represent and
warrant that it transferred the Receivables to the Trust free and clear of the
lien of any third party, except certain permitted tax liens. In addition, the
Transferor will covenant that it will not sell, pledge, assign, transfer or
grant any lien on any Receivable (or any interest therein) other than to the
Trust.
Unless continuation statements are filed within the time specified in the
UCC in respect of the security interest of the Trust in the Receivables, the
perfection of such interest will lapse.
As set forth under "Description of the Certificates--Allocation of
Collections; Deposits in Collection Account," cash collections of Receivables
will, except in certain circumstances, be available for use by the Servicer
until deposited into the Collection Account on the business day preceding each
Distribution Date. In the event of insolvency or receivership of the Servicer
or, in certain circumstances, the lapse of certain time periods, the Trust may
not have a perfected interest in such cash collections.
Certain Matters Relating to Receivership
The Federal Deposit Insurance Act ("FDIA"), as amended by the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), which
became effective August 9, 1989, sets forth certain powers that the FDIC could
exercise if it were appointed as receiver or conservator of the Transferor.
Among other things, the FDIA grants such a conservator or receiver the power to
repudiate contracts of, and to request a stay of up to 90 days of any judicial
action or proceeding involving, the Transferor.
To the extent that (i) the Transferor granted a security interest in the
Receivables to the Trust, (ii) the interest was validly perfected before the
Transferor's insolvency, (iii) the interest was not taken or granted in
contemplation of the Transferor's insolvency or with the intent to hinder, delay
or defraud the Transferor or its creditors, (iv) the Agreement is continuously a
record of the Bank, and (v) the Agreement represents a bona fide and arm's
length transaction undertaken for adequate consideration in the ordinary course
of business and that the Trustee is the secured party and is not an insider or
affiliate of the Transferor, such valid perfected security interest of the
Trustee would be enforceable (to the extent of the Trust's "actual direct
compensatory damages") notwithstanding the insolvency of, or the appointment of
a receiver or conservator for, the Transferor and payments to the Trust with
respect to the Receivables (up to the amount of such damages) should not be
subject to an automatic stay of payment or to recovery by the FDIC as
conservator or receiver of the Transferor. If, however, the FDIC were to assert
that the security interest was unperfected or unenforceable or were to require
the Trustee to establish its right to those payments by submitting to and
completing the administrative claims procedure established under FIRREA, or the
conservator or receiver were to request a stay of proceedings with respect to
the Transferor as provided under FIRREA, delays in payments on the Certificates
and possible reductions in the amounts of those payments could occur. The FDIA
does not define the term "actual direct compensatory damages." On April 10,
1990, the RTC, formerly a sister agency of the FDIC, adopted a statement of
policy (the "RTC Policy Statement") with respect to the payment of interest on
collateralized borrowings. The RTC Policy Statement states that interest on such
borrowings will be payable at the contract rate up to the date of the redemption
or payment by the conservator, receiver, or the trustee of an amount equal to
the principal owed plus the contract rate of interest up to the date of such
payment or redemption, plus any expenses of liquidation if provided for in the
contract, to the extent secured by the collateral. In a 1993 case involving
zero-coupon bonds, however, a federal district court held that the RTC was
instead obligated to pay bondholders the fair market value of repudiated bonds
as of the date of repudiation. The FDIC itself has not adopted a policy
statement on payment of interest on collateralized borrowings.
The Agreement will provide that, upon the appointment of a receiver or
conservator for the Transferor, the Transferor will promptly give notice thereof
to the Trustee, and an Early Amortization Event with respect to all Series will
occur. Under the Agreement no new Receivables will be transferred to the Trust
and, unless otherwise instructed within a specified period by the holders of
certificates representing undivided interests aggregating more than 50% of the
aggregate principal balance of each Class of each Series and, if specified in
the related Prospectus Supplement, the Enhancement provider with respect to such
Series, or unless otherwise
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required by the receiver or conservator for the Transferor, the Trustee will
proceed to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds from the sale of the Receivables would then be treated by the Trustee
as collections on the Receivables. If the only Early Amortization Event to occur
is either the insolvency of the Transferor or the appointment of a receiver or
conservator for the Transferor, such receiver or conservator may have the power
to require the Transferor to continue to transfer new Receivables to the Trust,
and to prevent the early sale, liquidation or disposition of the Receivables and
the commencement of the Early Amortization Period.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
cert. denied, 114 S. Ct. 554 (1993), the United States Court of Appeals for the
10th Circuit suggested that even where a transfer of accounts from a seller to a
buyer constitutes a "true sale," the accounts would nevertheless constitute
property of the seller's estate in a bankruptcy of the seller. If the Transferor
were to be placed into receivership and a court were to follow the Octagon
court's reasoning, Certificateholders might experience delays in payment or
possibly losses in their investment in the Certificates. Counsel has advised the
Transferor that the facts of the Octagon case are distinguishable from those in
the sale transactions between the Transferor and the Trust and that the
reasoning of the Octagon case appears to be inconsistent with established
precedent and the UCC. In addition, because the Transferor, the Trust and the
transactions governed by the Agreement do not have any particular link to the
10th Circuit, it is unlikely that the Transferor would be subject to a
receivership proceeding in the 10th Circuit. Accordingly, the Octagon case
should not be binding precedent on a court in a receivership proceeding.
Consumer Protection Laws
The relationship between the cardholder and charge card issuer is
extensively regulated by federal and state consumer protection statutes. With
respect to charge cards issued by the Transferor the most significant federal
laws include the federal Truth-In-Lending and Equal Credit Opportunity Acts.
These statutes and certain state laws impose disclosure requirements before and
when an Account is opened, at the end of monthly billing cycles and at year-end
and, in addition, limit cardholder liability for unauthorized use, prohibit
certain discriminatory practices in extending credit, impose certain limitations
on the type of account-related charges that may be issued and regulate
collection practices. In addition, cardholders are entitled under these laws to
have payments and credits applied to the charge card account promptly and to
require billing errors to be resolved promptly. The Trust may be liable for
certain violations of consumer protection laws that apply to the Receivables,
either as assignee from the Transferor with respect to obligations arising
before transfer of the Receivables to the Trust or as the party directly
responsible for obligations arising after the transfer. In addition, a
cardholder may be entitled to assert such violations by way of set off against
the obligation to pay the amount of Receivables owing. The Transferor has agreed
to accept the designation as Ineligible Receivables of all Receivables that have
been charged off and that were not created in compliance in all material
respects with the requirements of such laws. The Servicer has also agreed in the
Agreement to indemnify the Trust, among other things, for any liability arising
from such violations. For a discussion of the Trust's rights if the Receivables
were not created in compliance in all material respects with applicable laws,
see "Description of the Certificates--Representations and Warranties."
Application of federal and state bankruptcy and debtor relief laws would
affect the interests of the Certificateholders, if such laws result in any
Receivables being charged off as uncollectible when there are not funds
available under any Enhancement. See "Description of the Certificates--Defaulted
Receivables; Rebates and Fraudulent Charges; Investor Charge-Offs."
FEDERAL INCOME TAX CONSEQUENCES
General
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Set forth below is a discussion of the material federal income tax
consequences to Certificate Owners. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
regulations promulgated thereunder, and judicial or ruling authority, all of
which are subject to change (which may be retroactive). Dorsey & Whitney LLP,
counsel to First Bank ("Counsel"), is delivering its opinion regarding certain
federal income tax matters discussed below. The opinion of Counsel specifically
addresses only those issues specifically identified below as being covered by
such opinion; however, the opinion of Counsel also states that the additional
discussion set forth below accurately sets forth Counsel's advice with respect
to material tax issues. No ruling on any of the issues discussed below will be
sought from the Internal Revenue Service (the "IRS"). This discussion does not
deal with all aspects of federal income taxation that may be relevant to
Certificate Owners in light of their personal investment circumstances, nor to
certain types of owners subject to special treatment under the federal income
tax laws (e.g., banks, life insurance companies and tax-exempt organizations).
Prospective investors are encouraged to consult their own tax advisors with
regard to the federal income tax consequences specific to such investor of
owning and disposing of the Certificates, as well as the tax consequences
specific to such investor arising under the laws of any applicable state,
foreign country or other jurisdiction.
Treatment of the Certificates as Indebtedness of the Transferor
The Transferor and the holders of Certificates will express in the
Agreement the intent that, for federal, state and local income and franchise tax
purposes, the Certificates will be indebtedness secured by the Receivables and
any other Trust assets allocable to the Certificates. The Transferor, by
entering into the Agreement, and each Certificate Owner, by the acceptance of an
interest in a Certificate, will agree to treat the Certificates as indebtedness
for federal, state and local income and franchise tax purposes. The Agreement
generally will refer to the transfer of the related Receivables as a "sale,"
however, and since different criteria are used in determining the nontax
accounting treatment of the transaction, the Transferor will treat the
Agreement, for certain nontax purposes, as effecting a transfer of an ownership
interest in the Receivables and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance
of a transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its economic
substance. In appropriate circumstances, the courts have allowed taxpayers, as
well as the IRS, to treat a transaction in accordance with its economic
substance, as determined under federal income tax law, even though the
participants in the transaction have characterized it differently for nontax
purposes.
The determination of whether the economic substance of a property transfer
is a sale or a loan secured by the transferred property has been made by the IRS
and the courts on the basis of numerous factors designed to determine whether
the transferor has relinquished (and the transferee has obtained) substantial
incidents of ownership in the property. Among those factors, the primary factors
examined are whether the transferee has the opportunity to gain if the property
increases in value and bears the risk of loss if the property decreases in
value. Based upon an analysis of such factors, Counsel's opinion provides that
for federal income tax purposes the Certificates will be characterized as
indebtedness secured by the Receivables and any other Trust assets, and the
Trust will not be characterized as an "association" or "publicly traded
partnership" taxable as a corporation.
Interest Income to Certificate Owners
Assuming the Certificates are debt obligations for federal income tax
purposes, interest on the Certificates will be taxable as ordinary interest
income when received by Certificate Owners utilizing the cash-basis method of
accounting and when accrued by Certificate Owners utilizing the accrual method
of accounting. Under the applicable regulations, the Certificates would be
considered issued with original issue discount ("OID") if the "stated redemption
price at maturity" of a Certificate (generally equal to its principal balance as
of the date of issuance plus all interest other than "qualified stated interest"
payable prior to or at maturity) exceeds the original issue price (in this case,
the initial offering price at which a substantial amount of the
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Certificates are sold to the public). Any OID would be considered de minimis
under the regulations if it does not exceed 1/4% of the stated redemption price
at maturity of a Certificate multiplied by the number of full years until its
maturity date. It is anticipated that the Certificates will not be considered
issued with more than de minimis OID. Under the OID regulations, an owner of a
Certificate issued with a de minimis amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Certificate.
While it is not anticipated that the Certificates will be issued at a
greater than de minimis OID, under applicable Treasury regulations (the
"Regulations") the Certificates may nevertheless be deemed to have been issued
with OID. This could be the case, for example, if interest payments on the
Certificates are not treated as "qualified stated interest" because the IRS
determines that (i) no reasonable legal remedies exist to compel timely payment
and (ii) the Certificates do not have terms and conditions that make the
likelihood of late payment (other than a late payment that occurs within a
reasonable grace period) or nonpayment a remote contingency. Applicable
regulations provide that, for purposes of the foregoing test, the possibility of
non-payment due to default, insolvency, or similar circumstances, is ignored.
Although this provision does not directly apply to the Certificates (because
they have no actual default provisions), the Transferor intends to take the
position that, because nonpayment can occur only as a result of events beyond
its control (principally, loss rates and payment delays on the Receivables
substantially in excess of those anticipated), nonpayment is a remote
contingency. Based on the foregoing, the Transferor intends to take the position
that interest payments on the Certificates constitute qualified stated interest.
If, however, interest payments on the Certificates were not classified as
qualified stated interest, all of the taxable income to be recognized with
respect to the Certificates would be includible in income as OID but would not
be includible again when the interest is actually received. If the yield on a
Class of Certificates were not materially different from its coupon, this
treatment would have no significant effect on Certificate Owners using the
accrual method of accounting. However, cash method Certificate Owners may be
required to report income in respect to the Certificates in advance of the
receipt of cash attributable to such income.
A Certificate Owner must include OID in income as interest over the term
of the Certificate under a constant yield method. In general, OID must be
included in income in advance of the receipt of cash representing that income.
Each Certificate Owner should consult its own tax advisor regarding the impact
of the OID rules if the Certificates are issued with OID.
A Certificate Owner who purchases a Certificate at a discount may be
subject to the "market discount" rules of the Code. These rules provide, in
part, for the treatment of gain attributable to accrued market discount as
ordinary income upon the receipt of partial principal payments or on the sale or
other disposition of the Certificate, and for the deferral of interest
deductions with respect to debt incurred to acquire or carry the market discount
Certificate. A Certificate Owner who purchases a Certificate at a premium may
elect to amortize and deduct this premium over the remaining term of the
Certificate in accordance with rules set forth in Section 171 of the Code.
As an alternative to the above treatments, accrual method Certificate
Owners may elect to include in gross income all interest with respect to a
Certificate, including stated interest, acquisition discount, OID, de minimis
OID, market discount, de minimis market discount, and unstated interest, as
adjusted by any amortizable bond premium or acquisition premium, using the
constant yield method.
Disposition of Certificates
Generally, gain or loss will be recognized on a sale or other taxable
disposition of Certificates in an amount equal to the difference between the
amount realized and the seller's tax basis in the Certificates. A Certificate
Owner's tax basis in a Certificate will generally equal the cost thereof
increased by any OID, market discount and gain previously included by such
Certificate Owner in income with respect to the Certificate and decreased by any
bond premium previously amortized and any principal payments previously received
by such Certificate Owner with respect to the Certificate. Any such gain or loss
will be capital gain or loss if the Certificate was held as a capital asset,
except for gain representing accrued interest and accrued market discount
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not previously included in income. Capital gain or loss will be long-term if the
Certificate was held by the holder for more than one year and otherwise will be
short-term. Any capital losses realized generally may be used by a corporate
taxpayer only to offset capital gains, and by an individual taxpayer only to the
extent of capital gains plus $3,000 of other income.
Information Reporting and Backup Withholding
The Trustee will be required to report annually to the IRS, and to each
Certificateholder of record, the amount of interest paid on the Certificates
(and the amount of interest withheld for federal income taxes, if any) for each
calendar year, except as to exempt holders (generally, holders that are
corporations, tax-exempt organizations, qualified pension and profit-sharing
trusts, individual retirement accounts, or nonresident aliens who provide
certification of their status as nonresidents). As long as the only
"Certificateholder" of record is Cede, as nominee for DTC, Certificate Owners
and the IRS will receive tax and other information only from Participants and
Indirect Participants rather than from the Trustee. Each nonexempt Certificate
Owner will be required to provide, under penalties of perjury, a certificate on
IRS Form W-9 containing the Certificate Owner's name, address, federal taxpayer
identification number and a statement that such Certificate Owner is not subject
to backup withholding. Should a nonexempt Certificate Owner fail to provide the
required certification, the Trustee (or the Participants or Indirect
Participants) will be required to withhold (or cause to be withheld) 31% of the
interest (and principal) otherwise payable to the Certificate Owner, and remit
the withheld amounts to the IRS as a credit against the Certificate Owner's
federal income tax liability.
Possible Classification of the Trust as a Partnership or Association
As described above, it is the opinion of Counsel that for federal income
tax purposes the Certificates will be characterized as debt and the Trust will
not be characterized as an association or publicly traded partnership taxable as
a corporation. However, this opinion is not binding on the IRS and no assurance
can be given that this characterization will be sustained.
If the IRS were to contend successfully that any class of Certificates is
not debt for federal income tax purposes, the Trust might be classified for
federal income tax purposes as a partnership, an association taxable as a
corporation, or a publicly traded partnership taxable as a corporation. In the
opinion of Counsel, if the IRS were to contend successfully that the Collateral
Investor Interest were not debt for federal income tax purposes (assuming that
neither the Class A Certificates or Class B Certificates, nor certificates of
any other outstanding Series, were also recharacterized), the arrangement
between the Transferor and the Collateral Interest Holder would be classified as
a partnership for federal income tax purposes and would not be treated as a
publicly traded partnership because of an exception for (i) an entity whose
income is interest income that is not derived in the conduct of a financial
business or (ii) partnership interests that are privately placed. In such case,
the partnership would not be subject to federal income tax. If the Class A
Certificates or Class B Certificates are treated as equity interests in a
partnership, the partnership would in all likelihood be treated as a publicly
traded partnership. A publicly traded partnership is, in general, taxable as a
corporation. If the partnership were nevertheless not taxable as a corporation
because of an exception for an entity whose income is interest income that is
not derived in the conduct of a financial business, it would not be subject to
federal income tax. Rather, each item of income, gain, loss, deduction and
credit generated through the ownership of the Receivables by the partnership
would be passed through to the partners in the partnership (including the
Certificate Owners) according to their respective interests therein.
The income reportable by the Certificate Owners as partners in such a
partnership could differ from the income reportable by them as holders of debt.
However, except as provided below, it is not expected that such differences
would be material. If the Certificate Owners were treated as partners, a
cash-basis Certificate Owner might be required to report income when it accrues
to the partnership rather than when it is received by the Certificate Owner.
Moreover, if the Certificates are interests in a partnership, an individual
Certificate Owner's share of expenses of the partnership would be miscellaneous
itemized deductions that might not be deductible in whole or in part, causing
the Certificate Owner to be taxable on a greater amount of income than
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the stated interest on the Certificates. Finally, if any Class of Certificates
is treated as equity in a partnership in which other Certificates are debt, all
or part of a tax-exempt Certificate Owner's share of income from Certificates
treated as equity would be treated as unrelated debt-financed income taxable to
the Certificate Owner.
Alternatively, if the Trust were treated as either an association taxable
as a corporation or a publicly traded partnership taxable as a corporation, the
resulting entity would be subject to federal income taxes at corporate tax rates
on its taxable income generated by ownership of the Receivables. Distributions
by the entity (other than interest distributions on Classes of Certificates
properly characterized as debt) would probably not be deductible in computing
the entity's taxable income. Such an entity-level tax could result in reduced
distributions to Certificate Owners, and the Certificate Owners could be liable
for a share of such a tax. Moreover, all or part of the distributions on
Certificates treated as equity would probably be treated as dividend income to
the recipients, although such dividends might, under certain circumstances, be
eligible for the dividends received deduction under the Code.
Since the Transferor will treat the Certificates as indebtedness for
federal income tax purposes, the Trustee (and Participants and Indirect
Participants) will not comply with the tax reporting requirements that would
apply under these alternative characterizations of the Certificates and the
arrangement created by the Agreement.
Foreign Investors
If, in accordance with the opinion of counsel, the Certificates are
classified as debt for federal income tax purposes, the following information
describes the federal income tax treatment of investors that are not U.S.
persons (each a "Foreign Person"). The term "Foreign Person" means any person
other than (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity organized in or under the laws of the United States
or any political subdivision thereof or (iii) an estate or trust the income of
which is includible in gross income for U.S. federal income tax purposes,
regardless of its source.
(A) Interest paid or accrued to a Foreign Person would be exempt
from U.S. withholding taxes (including backup withholding taxes); provided
that the Foreign Person complies with applicable identification
requirements (and does not actually or constructively own 10% or more of
the voting stock of First Bank or, upon the issuance of an interest in the
Trust that is treated as a partnership interest, does not actually or
constructively own such interest, and is not a controlled foreign
corporation with respect to First Bank or the holder of such interest).
Applicable identification requirements will be satisfied if there is
delivered to a securities clearing organization (or bank or other
financial institution that holds the Certificates on behalf of the
customer in the ordinary course of its trade or business) (i) IRS Form W-8
signed under penalties of perjury by the beneficial owner of the
Certificates stating that the owner is not a U.S. person and providing the
owner's name and address, (ii) IRS Form 1001 (or other appropriate
successor form thereto) signed by the beneficial owner of a Certificate or
the owner's agent, claiming exemption from withholding under an applicable
tax treaty, (iii) IRS Form 4224 (or other appropriate successor form
thereto) signed by the beneficial owner of the Certificates or the owner's
agent claiming exemption from withholding of tax on income connected with
the conduct of a trade or business in the United States; provided that in
any such case (x) the applicable form is delivered pursuant to applicable
procedures and is properly transmitted to the United States entity
otherwise required to withhold tax and (y) none of the entities receiving
the form has actual knowledge that the owner is a U.S. person or that any
certification on the form is false.
(B) An owner of a Certificate who is a Foreign Person will not be
subject to United States federal income tax on gain realized on the sale,
exchange or redemption of the Certificate; provided that (i) the gain is
not effectively connected to a trade or business carried on in the United
States, (ii) in the case of an owner who is an individual, the owner is
not present in the United States for 183 days or more during the taxable
year in which the sale, exchange or redemption occurs, (iii)
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in the case of gain representing accrued interest, the conditions
described in paragraph (A) above are satisfied, and (iv) the Certificate
was held as a capital asset.
(C) If the interest, gain or income on a Certificate held by a
Foreign Person is effectively connected with the conduct of a trade or
business in the United States by the Foreign Person (which
characterization could occur if the interests of owners of certificates of
a Series are reclassified as interests in a partnership (not taxable as a
corporation)), the holder (although exempt from the withholding tax
previously discussed if an appropriate statement is furnished) generally
will be subject to United States federal income tax on the interest, gain
or income at regular federal income tax rates and, additionally, will be
required to file a federal income tax return. In addition, if the Foreign
Person is a foreign corporation, it may be subject to a branch profits tax
equal to 30 percent of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for
certain items, unless it qualifies for a lower rate under an applicable
tax treaty.
(D) A Certificate owned by an individual who at the time of death is
a nonresident alien will not be subject to United Sates federal estate tax
as a result of the owner's death if, immediately before his death, (i) the
decedent did not actually or constructively own 10% or more of the voting
stock of First Bank and (ii) the ownership of the Certificate was not
effectively connected with the conduct by the decedent of a trade or
business in the United States.
If the IRS were to contend successfully that the Certificates are equity
interests in a partnership (not taxable as a corporation), a Certificate Owner
that is a Foreign Person might be required to file a U.S. income tax return and
pay tax on its share of partnership income at regular U.S. rates, including, in
the case of a corporation, the branch profits tax (and would be subject to
withholding tax on its share of partnership income). If the Certificates are
recharacterized as equity interests in an association taxable as a corporation
or a publicly traded partnership taxable as a corporation, an owner who is a
Foreign Person would generally be taxed (and be subject to withholding) on the
gross amount of the distributions on the Certificates, to the extent they are
treated as dividends, at the rate of 30% (unless the rate is reduced by
applicable treaty).
Recently proposed Treasury regulations (the "Proposed Regulations") could
affect the procedures to be followed by a Foreign Person in complying with
United States Federal backup withholding and information reporting rules. The
Proposed Regulations are not currently effective but, if finalized in their
current form, would be effective for payments made after December 31, 1997.
Prospective investors are urged to consult their tax advisors regarding the
effect, if any, of the Proposed Regulations on the purchase, ownership, and
disposition of the Certificates.
FASIT Provisions
Recently enacted provisions of the Code provide for the creation of a new
type of entity for federal income tax purposes, the "financial asset
securitization investment trust" ("FASIT"). However, these provisions are not
effective until September 1, 1997, and many technical issues concerning FASITs
must be addressed by Treasury regulations that have yet to be drafted. Although
transition rules permit an entity in existence on August 31, 1997, such as the
Trust, to elect FASIT status, at the present time it is not clear how
outstanding interests of such an entity would be treated subsequent to such an
election. In particular, it is not clear whether Certificates of any Series
outstanding on August 31, 1997, would be treated as "regular interests" in a
FASIT if the Transferor were to elect FASIT status for the Trust after that
date.
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STATE AND LOCAL TAX CONSEQUENCES
In addition to the federal income tax consequences described above,
potential investors should consider the state and local tax consequences of the
acquisition, ownership, and disposition of the Certificates. State and local tax
law may differ substantially from the corresponding federal law, and the
discussion above does not purport to describe any aspect of the tax laws of any
state or locality. Therefore, potential investors should consult their own tax
advisers with respect to the various state and local tax consequences of an
investment in the Certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain restrictions on (a) employee benefit plans (as
defined in Section 3(3) of ERISA), (b) plans described in Section 4975(e)(1) of
the Code, including individual retirement accounts and Keogh Plans, (c) any
entities whose underlying assets include plan assets by reason of a plan's
investment in such entities (each of (a), (b) and (c) a "Plan") and (d) persons
who have certain specified relationships to such Plans ("Parties in Interest"
under ERISA and "Disqualified Persons" under the Code). Moreover, based on the
reasoning of the United States Supreme Court in John Hancock Life Ins. Co. v.
Harris Trust and Sav. Bank, 114 S. Ct. 517 (1993), an insurance company's
general account may be deemed to include assets of the Plans investing in the
general account (e.g., through the purchase of an annuity contract), and the
insurance company might be treated as a Party in Interest with respect to such
Plans by virtue of such investment. ERISA also imposes certain duties on persons
who are fiduciaries of Plans, and both ERISA and the Code prohibit certain
transactions involving "plan assets" between a Plan and Parties in Interest or
Disqualified Persons with respect to such Plans. Violation of these rules may
result in the imposition of an excise tax or penalty. Thus, a Plan fiduciary
considering an investment in Certificates should consider, among other things,
whether such an investment might constitute or give rise to a prohibited
transaction under ERISA or the Code.
Neither ERISA nor the Code defines the term "plan assets." Under Section
2510.3-101 of the United States Department of Labor ("DOL") regulations (the
"Plan Assets Regulation"), a Plan's assets may be deemed to include an interest
in the underlying assets of an entity (such as a trust) for certain purposes,
including the prohibited transaction provisions of ERISA and the Code, if the
Plan acquires an "equity interest" in such entity. Accordingly, an investment in
Certificates by a Plan might result in the assets of the Trust being deemed to
constitute Plan assets, which in turn could have the consequence that certain
aspects of such investment, including the operation of the Trust, might give
rise to or result in prohibited transactions under ERISA and the Code.
Class A Certificates
The Plan Assets Regulation contains an exception to the plan asset rules
that provides that if a Plan acquires a "publicly-offered security," the issuer
of the security is not deemed to hold plan assets, regardless of the fact that
the security might otherwise represent an equity interest in the issuer. A
publicly-offered security is a security that is (i) freely transferable, (ii)
part of a class of securities that is "widely-held," i.e., owned by 100 or more
investors independent of the issuer and of one another and (iii) either is (A)
part of a class of securities registered under Section 12(b) or 12(g) of the
Exchange Act or (B) sold to a Plan as part of an offering of securities to the
public pursuant to an effective registration statement under the Securities Act
and the class of securities of which such security is a part is registered under
the Exchange Act within 120 days (or such later time as may be allowed by the
Commission) after the end of the fiscal year of the issuer during which the
offering of such securities to the public occurred. Under the Plan Assets
Regulation, a class of securities will not fail to be widely-held solely because
subsequent to the initial offering the number of independent investors falls
below 100 as a result of events beyond the control of the issuer.
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The Class A Certificates may be held by at least 100 independent investors
at the conclusion of the offering, although no assurances can be given, and no
monitoring or other measures will be taken, to ensure that such condition will
be met. The Transferor anticipates that the other conditions of the Plan Assets
Regulation will be met with respect to the Class A Certificates. If the Trust's
assets were deemed to be "plan assets" of a Plan investor, there is uncertainty
whether existing exemptions from the "prohibited transaction" rules of ERISA,
would apply to all transactions involving the Trust's assets. Accordingly, Plan
fiduciaries should consult with counsel before making a purchase of Class A
Certificates.
Class B Certificates
The Underwriters do not expect that the Class B Certificates will be held
by 100 or more independent investors. Accordingly, the Class B Certificates may
not be purchased by Plans.
Each Certificate Owner of a Class B Certificate (including but not limited
to any insurance company general account) will be deemed to have represented
that it is neither a Plan nor acquiring the Class B Certificates on behalf of or
using the assets of any Plan.
General Investment Considerations
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code and the potential consequences of
making an investment in the Class A Certificates with respect to their specific
circumstances. Moreover, each Plan fiduciary should take into account, among
other considerations, whether the fiduciary has the authority to make the
investment; the composition of the Plan's portfolio with respect to
diversification by type of asset; the Plan's funding objectives; the tax effects
of the investment; and whether under the general fiduciary standards of
investment procedure and diversification an investment in the Class A
Certificates is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement (the "Underwriting Agreement") between the Transferor and the
underwriters named below (the "Underwriters"), the Transferor has agreed to sell
to the Underwriters, and each of the Underwriters has severally agreed to
purchase, the principal balance of the Class A Certificates and Class B
Certificates set forth opposite its name.
Principal Balance
Underwriters of Class A Certificates
- ------------ -----------------------
J.P. Morgan Securities Inc............................ $ __________
...................................................... __________
...................................................... __________
...................................................... __________
Total............................................. $
=============
Principal Balance
of Class B Certificates
-----------------------
J.P. Morgan Securities Inc............................ $ __________
...................................................... __________
...................................................... __________
...................................................... __________
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Total............................................. $
=============
In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Certificates
offered hereby if any of the Certificates are purchased.
The Underwriters propose initially to offer the Class A Certificates to
the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of ___% of the principal
balance of the Class A Certificates. The Underwriters may allow, and such
dealers may reallow, concessions not in excess of ___% of the principal balance
of the Class A Certificates to certain brokers and dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the Underwriters.
The Underwriters propose initially to offer the Class B Certificates to
the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of___% of the principal
balance of the Class B Certificates. The Underwriters may allow, and such
dealers may reallow, concessions not in excess of ___% of the principal balance
of the Class B Certificates to certain brokers and dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the Underwriters.
Each Underwriter has represented and agreed that (a) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Certificates to a person who
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on, (b) it has complied and
will comply with all applicable provisions of the Financial Services Act 1986 of
Great Britain with respect to anything done by it in relation to the
Certificates in, from or otherwise involving the United Kingdom and (c) if that
Underwriter is an authorized person under the Financial Services Act 1986, it
has only promoted and will only promote (as that term is defined in Regulation
1.02 of the Financial Services (Promotion of Unregulated Schemes) Regulations
1991) to any person in the United Kingdom the scheme described herein if that
person is of a kind described either in Section 76(2) of the Financial Services
Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991.
The Transferor will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the Underwriters may be required to make in respect thereof.
In the ordinary course of business, the Underwriters and their affiliates
have engaged and may engage in investment banking and/or commercial banking
transactions with First Bank, its affiliates and the Trust.
LEGAL MATTERS
Certain legal matters and federal income tax matters relating to the
issuance of the Certificates will be passed upon for First Bank by Dorsey &
Whitney LLP. Certain legal matters relating to the issuance of the Certificates
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher & Flom
LLP.
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INDEX OF TERMS
Term Page
- ---- ----
Accounts .......................................................... 2, 5
Accumulation Period..................................................... 12
Accumulation Period Length.............................................. 43
Additional Account Closing Date......................................... 47
Additional Accounts.................................................. 9, 47
Additional Interest..................................................... 11
Adjusted Invested Amount............................................. 8, 52
Adjustment ............................................................ 62
Agreement .......................................................... 4, 5
Available Principal Collections......................................... 58
Available Reserve Account Amount........................................ 53
Bank ............................................................. 4
Bank Portfolio........................................................... 5
Card Services........................................................... 28
Cede ............................................................. 3
Cedel ............................................................ 39
Cedel Participants...................................................... 39
Certificateholders....................................................... 5
Certificate Owners....................................................... 3
Certificates.......................................................... 1, 4
Class ............................................................. 5
Class A Additional Interest............................................. 56
Class A Adjusted Invested Amount..................................... 8, 51
Class A Available Funds................................................. 41
Class A Certificateholders............................................... 5
Class A Certificate Rate................................................. 6
Class A Certificates.................................................. 1, 4
Class A Expected Final Payment Date................................. 7, 12
Class A Fixed Percentage................................................ 51
Class A Floating Percentage............................................. 50
Class A Initial Invested Amount.......................................... 7
Class A Invested Amount............................................. 7, 51
Class A Investor Charge-Off........................................ 17, 62
Class A Investor Default Amount......................................... 61
Class A Investor Interest................................................ 6
Class A Monthly Interest................................................ 57
Class A Monthly Principal............................................... 59
Class A Required Amount............................................ 16, 54
Class A Servicing Fee................................................... 67
Class B Additional Interest............................................. 56
Class B Available Funds................................................. 42
Class B Certificateholders............................................... 5
Class B Certificate Rate................................................. 7
Class B Certificates.................................................. 1, 4
Class B Expected Final Payment Date................................. 7, 12
Class B Fixed Percentage................................................ 51
Class B Floating Percentage............................................. 50
Class B Initial Invested Amount.......................................... 7
Class B Invested Amount............................................. 7, 51
83
<PAGE>
Term Page
- ---- ----
Class B Investor Charge-Off....................................... 18, 62
Class B Investor Default Amount........................................ 61
Class B Investor Interest............................................... 6
Class B Monthly Interest............................................... 57
Class B Monthly Principal.............................................. 59
Class B Required Amount........................................... 16, 55
Class B Servicing Fee.................................................. 67
Closing Date............................................................ 6
Code .......................................................... 75
Collateral Available Funds............................................. 57
Collateral Default Amount.............................................. 58
Collateral Fixed Percentage............................................ 51
Collateral Floating Percentage......................................... 50
Collateral Initial Invested Amount...................................... 7
Collateral Interest Holder.............................................. 5
Collateral Invested Amount.......................................... 7, 51
Collateral Investor Charge-Off......................................... 62
Collateral Investor Interest............................................ 5
Collateral Monthly Interest............................................ 58
Collateral Monthly Principal........................................... 59
Collateral Rate........................................................ 58
Collateral Required Amount............................................. 55
Collateral Servicing Fee............................................... 67
Collection Account..................................................... 49
Collection Period....................................................... 8
Commission ............................................................ 2
Controlled Accumulation Amount......................................... 60
Controlled Deposit Amount.............................................. 60
Cooperative ........................................................... 39
Corporate Card......................................................... 26
Counsel................................................................ 75
Covered Amount..................................................... 14, 52
Cut-Off Date............................................................ 6
Defaulted Receivables.................................................. 61
Deficit Controlled Accumulation Amount............................ 13, 60
Definitive Certificates................................................ 40
Depositaries........................................................... 38
Depository ........................................................... 37
Determination Date..................................................... 69
Disclosure Document.................................................... 10
Disqualified Persons................................................... 80
Distribution Date...................................................... 57
DOL ........................................................... 80
DTC ....................................................... 3, A-1
Early Amortization Event............................................... 63
Early Amortization Period.............................................. 14
Eligible Account....................................................... 47
Eligible Institution................................................... 49
Eligible Investments................................................... 49
Eligible Receivable.................................................... 46
Enhancement ........................................................... 60
84
<PAGE>
Term Page
- ---- ----
Enhancement Surplus.................................................... 59
ERISA ....................................................... 20, 80
Euroclear ........................................................... 39
Euroclear Operator..................................................... 39
Euroclear Participants................................................. 39
Euroclear System....................................................... 39
Excess Funding Account................................................. 54
Excess Spread..................................................... 16, 57
Exchange ........................................................... 10
Exchange Act............................................................ 2
Exchangeable Transferor Certificate.................................... 10
FASIT ........................................................... 79
FDIA ........................................................... 73
FDIC ........................................................... 21
FIRREA ...................................................... 21, 73
First Bank ............................................................ 4
First Bank System...................................................... 36
Fixed Allocation Percentage............................................ 50
Floating Allocation Percentage......................................... 50
Foreign Person......................................................... 78
Global Securities..................................................... A-1
Holders ........................................................... 40
Indirect Participants.................................................. 38
Ineligible Receivable.................................................. 46
Initial Invested Amount................................................. 7
Interest Funding Account............................................... 41
Interest Payment Date.................................................. 11
Invested Amount.................................................... 7, 52
Investor Charge-Offs................................................... 62
Investor Default Amount................................................ 61
Investor Interest....................................................... 6
IRS ........................................................... 75
Loan Agreement......................................................... 18
Minimum Transferor Amount.............................................. 44
Minimum Transferor Percentage.......................................... 44
Minimum Trust Principal Component...................................... 47
Monthly Investor Servicing Fee.................................... 10, 66
Monthly Servicer Report................................................ 69
Net Interchange......................................................... 9
Net Servicing Fee Rate................................................. 67
OID ........................................................... 75
Participants........................................................... 38
Parties in Interest.................................................... 80
Payment Date Statement................................................. 70
Plan.................................................................. 80
Plan Assets Regulation............................................. 19, 80
Principal Collections................................................... 9
Principal Funding Account.............................................. 13
Principal Funding Account Balance...................................... 52
Principal Funding Investment Proceeds.............................. 14, 52
Principal Funding Investment Shortfall............................. 14, 52
85
<PAGE>
Term Page
- ---- ----
Principal Terms..................................................... 24, 44
Proposed Regulations.................................................... 79
Prospectus ............................................................. 2
Purchasing Cards........................................................ 27
Rating Agency........................................................... 20
Reallocated Class B Principal Collections........................... 12, 54
Reallocated Collateral Principal Collections............................ 54
Reallocated Principal Collections....................................... 54
Receivables .......................................................... 2, 5
Record Date ............................................................ 41
Regulations............................................................ 76
Removed Accounts..................................................... 9, 48
Required Collateral Invested Amount................................ 18, 60
Required Reserve Account Amount......................................... 53
Reserve Account......................................................... 52
Reserve Account Funding Date............................................ 53
Revolving Period........................................................ 12
RTC..................................................................... 22
RTC Policy Statement.................................................... 73
Securities Act.......................................................... 10
Series ........................................................ 5, A-1
Series 1997-1........................................................... 5
Series 1997-1 Supplement................................................ 5
Series 1997-1 Termination Date.......................................... 8
Series Supplement........................................................ 5
Service Transfer........................................................ 68
Servicer ............................................................. 5
Servicer Default........................................................ 68
Servicer Interchange.................................................... 67
Servicing Base Amount................................................... 66
Servicing Fee........................................................... 66
Servicing Fee Rate..................................................... 66
Shared Excess Yield Collections..................................... 17, 58
Shared Principal Collections............................................ 61
Special Payment Date.................................................... 57
Tax Opinion ............................................................ 45
Terms and Conditions.................................................... 40
Transfer Date........................................................... 49
Transferor ............................................................. 5
Transferor Amount....................................................... 47
Transferor Interest...................................................... 6
Transferor Percentage................................................... 37
Trust .......................................................... 1, 4
Trust Portfolio......................................................... 32
Trust Principal Component............................................... 32
Trust Termination Date.................................................. 63
Trustee ............................................................. 5
U.S. Person ........................................................... A-4
UCC ............................................................ 21
Underwriters............................................................ 81
Underwriting Agreement.................................................. 81
VISA ............................................................ 25
Yield Collections........................................................ 9
Yield Factor............................................................. 9
86
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered First Bank
Corporate Card Master Trust Asset Backed Certificates (the "Global Securities")
to be issued in Series from time to time (each, a "Series") will be available
only in book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedel or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
A-1
<PAGE>
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The Global Securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedel or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
A-2
<PAGE>
charges incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date. Finally, day traders that use Cedel or
Euroclear and that purchase Global Securities from DTC Participants for delivery
to Cedel Participants or Euroclear Participants should note that these trades
would automatically fail on the sale side unless affirmative action were taken.
At least three techniques should be readily available to eliminate this
potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Certificates that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing in
a country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Certificate
Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing
A-3
<PAGE>
agency). Form W-8 and Form 1001 are effective for three calendar years and Form
4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisers for specific tax advice concerning their holding and disposing of the
Global Securities.
A-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Registration Fee......................... $344.83
Printing and Engraving................... $ *
Trustee's Fee............................ $ *
Legal Fees and Expenses.................. $ *
Blue Sky Fees and Expenses............... $ *
Accountants' Fees and Expenses........... $ *
Rating Agency Fees....................... $ *
Miscellaneous Fees and Expenses.......... $ *
------
Total Expenses...................... $ *
======
- ----------
* To be supplied by amendment.
Item 15. Indemnification of Directors and Officers
Article Twelve of the Amended and Restated Articles of Association of
First Bank of South Dakota (National Association) provides as follows:
TWELFTH. Any person, such person's heirs, executors, or administrators,
may be indemnified or reimbursed by the Association for reasonable expenses
actually incurred in connection with any action, suit or proceeding, whether
civil, criminal, or administrative, to which such person or such person's heirs,
executors, or administrators shall be made a party by reason of such person
being or having been a director, advisory director, officer, employee, or agent
of the Association or of any firm, corporation, or organization which such
person served in any such capacity at the request of the Association. Provided,
however, that no such person shall be so indemnified or reimbursed in relation
to any matter in such action, suit, or proceeding: (1) as to which such person
shall finally be adjudged to have been guilty of or liable for gross negligence,
willful misconduct, or criminal acts in the performance of such person's duties
to the Association, or (2) which has been made the subject of a compromise
settlement except with the approval of a court of competent jurisdiction, or the
holders of record of a majority of outstanding shares of the Association, or the
board of directors acting by vote of directors not parties to the same or
substantially the same action, suit or proceeding constituting a majority of the
whole number of directors, or (3) against expenses, penalties, or other payments
incurred in an administrative proceeding or action instituted by an appropriate
bank regulatory agency, which proceeding or action results in a final order
assessing civil money penalties or requiring affirmative action by such person
in the form of payment to the Association. The foregoing right of
indemnification or reimbursement shall not be exclusive of other rights to which
such person, such person's heirs, executors, or administrators, may be entitled
as a matter of law.
Such expenses actually incurred by such person in connection with such
action, suit, or proceeding may be paid by the Association in advance of the
final disposition of such action, suit, or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Association. Prior to the advancement of any such expenses, the board of
directors shall determine in writing that all of the following conditions are
met: (1) such person has a substantial likelihood of prevailing on the merits,
(2) in the event such person does not prevail, such person will have the
financial capability to reimburse the Association, and (3) payment of such
expenses by the Association will not adversely affect the safety and soundness
of the Association. If at any time the board of directors believes, or should
reasonably believe, that any of the above conditions are not met, the
II-1
<PAGE>
Association shall cease paying such expenses. Further, the Association shall
enter into a written agreement with such person specifying the conditions under
which such person shall reimburse the Association.
The Association may, upon the affirmative vote of a majority of its board
of directors, purchase insurance for the purpose of indemnifying such directors,
advisory directors, officers, employees, or agents to the extent that such
indemnification is allowed in this Article Twelfth. Such insurance shall not
provide coverage of liability for any formal order issued by a regulatory
authority assessing civil money penalties against a director, advisory director,
officer, employee, or agent. Further, such insurance may, but need not be, for
the benefit of all such directors, advisory directors, officers, employees, or
agents.
[End of Article Twelve]
The effect of any such insurance described above would be to reduce the
risk to shareholders and depositors of First Bank that any such indemnification
payments might have a material adverse effect on the financial condition of
First Bank. First Bank System, Inc., the holding company of First Bank, has
purchased directors' and officers' liability insurance, which policy extends to
directors and officers of First Bank.
Item 16. Exhibits
Number Description
- ------ -----------
1.1 -- Form of Underwriting Agreement
3.1 -- Amended and Restated Articles of Association of the
Transferor**
3.2 -- Bylaws of the Transferor**
4.1 -- Form of Pooling and Servicing Agreement among the
Transferor, the Servicer and the Trustee
4.2 -- Form of Series 1997-1 Supplement to the Pooling and
Servicing Agreement among the Transferor, the
Servicer and the Trustee
4.3 -- Form of Class A Certificate (contained in Exhibit
4.2)
4.4 -- Form of Class B Certificate (contained in Exhibit
4.2)
5.1 -- Opinion of Dorsey & Whitney LLP re Legality*
8.1 -- Opinion of Dorsey & Whitney LLP re Tax Matters*
23.1 -- Consent of Dorsey & Whitney LLP (contained in
Exhibit 5.1)*
23.2 -- Consent of Dorsey & Whitney LLP (contained in
Exhibit 8.1)*
24 -- Powers of Attorney**
- ----------
* To be filed by amendment.
** Previously filed.
II-2
<PAGE>
(b) Financial Statement Schedules
Not applicable.
Item 17. Undertakings
The undersigned Registrant hereby undertakes as follows:
(a) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(b) To provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered
in such names as required by the Underwriter to permit prompt delivery to
each purchaser.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or con trolling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b) (1) or (4) or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this Registration Statement as of the time it was
declared effective.
(e) For the purpose of determining any liability under the
Securities Act of 1933, each post effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sioux Falls, State of South Dakota, on
December 20, 1996.
FIRST BANK CORPORATE CARD MASTER
TRUST
By FIRST BANK OF SOUTH DAKO TA
(NATIONAL ASSOCIATION)
By /s/ Daniel P Murphy*
---------------------
Daniel P. Murphy
Director and President
*By /s/ David J. Parrin
-------------------
(David J. Parrin, Attorney in Fact)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sioux Falls, State of South Dakota, on
December 20, 1996.
FIRST BANK OF SOUTH DAKOTA
(NATIONAL ASSOCIATION)
By /s/ Daniel P Murphy*
---------------------
Daniel P. Murphy
Director and President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Daniel P Murphy* Director and President December 20, 1996
- ------------------------ (principal executive officer)
Daniel P. Murphy
/s/ Susan E. Lester* Executive Vice President and December 20, 1996
- ------------------------ Chief Financial Officer
Susan E. Lester (principal financial officer)
/s/ David J. Parrin* Senior Vice President and December 20, 1996
- ------------------------ Controller (principal
David J. Parrin accounting officer)
/s/ Thomas J. Flynn* Director December 20, 1996
- ------------------------
Thomas J. Flynn
/s/ Barry L. Martin* Director December 20, 1996
- ------------------------
Barry L. Martin
/s/ Craig A. Johnson* Director December 20, 1996
- ------------------------
Craig A. Johnson
/s/ Philip G. Heasley* Director December 20, 1996
- ------------------------
Philip G. Heasley
*By /s/ David J. Parrin
---------------------------------------
(David J. Parrin, Attorney in Fact)
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ------------
1.1 Form of Underwriting Agreement
3.1 Amended and Restated Articles of Association of
the Transferor**
3.2 Bylaws of the Transferor**
4.1 Form of Pooling and Servicing Agreement among
the Transferor, the Servicer and the Trustee
4.2 Form of Series 1997-1 Supplement to the Pooling
and Servicing Agreement among the Transferor, the
Servicer and the Trustee
4.3 Form of Class A Certificate (contained in Exhibit
4.2)
4.4 Form of Class B Certificate (contained in Exhibit
4.2)
5.1 Opinion of Dorsey & Whitney LLP re Legality*
8.1 Opinion of Dorsey & Whitney LLP re Tax Matters*
23.1 Consent of Dorsey & Whitney LLP (contained in
Exhibit 5.1)*
23.2 Consent of Dorsey & Whitney LLP (contained in
Exhibit 8.1)*
24 Powers of Attorney**
- ----------
* To be filed by amendment.
** Previously filed.
$__________________
FIRST BANK CORPORATE CARD MASTER TRUST
$_____ Class A __% Asset Backed Certificates, Series 1997-1
$_____ Class B __% Asset Backed Certificates, Series 1997-1
FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION)
(Transferor)
FBS CARD SERVICES, INC.
(Servicer)
UNDERWRITING AGREEMENT
January __, 1997
J.P. Morgan Securities Inc.
As Representative of the
Several Underwriters Listed
in Schedule I
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
First Bank of South Dakota (National Association), a national
banking association (the "Transferor"), proposes to sell, transfer and convey
receivables (the "Receivables") generated from time to time from certain VISA(R)
charge card accounts and other rights to First Bank Corporate Card Master Trust
(the "Trust"), and the Transferor proposes to cause the Trust to issue to the
Transferor $____________ principal amount of its Class A __% Asset Backed
Certificates, Series 1997-1 (the "Class A Certificates") and $____________
principal amount of its Class B __% Asset Backed Certificates, Series 1997-1
(the "Class B Certificates," and together with the Class A Certificates, the
"Certificates"), which the Transferor proposes to sell to the several
Underwriters listed in Schedule I hereto (the "Underwriters"), for whom you are
acting as representative (the "Representative"), pursuant to the terms hereof.
The Receivables will be transferred from the Transferor to the Trust pursuant to
(a) the Pooling and Servicing Agreement among the Transferor, FBS Card Services,
Inc., as servicer (the "Servicer"), and Citibank, N.A., as trustee (the
"Trustee"), to
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be dated as of January __, 1997 (the "Pooling and Servicing Agreement") and (b)
the Series 1997-1 Supplement to the Pooling and Servicing Agreement, to be dated
as of January __, 1997 (the "Supplement"), among the Transferor, the Servicer
and the Trustee. Each Certificate represents an undivided interest in the Trust.
The Trust will be formed for the purpose of holding the Receivables and
issuing the Certificates and other similar securities. The property of the Trust
will include Receivables generated from time to time in a portfolio of
designated VISA(R) charge card accounts originated under the Transferor's
Corporate Card or Purchasing Card programs, all monies due in payment of the
Receivables, all proceeds of the Receivables, any Enhancement (as defined in the
Prospectus), all monies on deposit in certain bank accounts of the Trust and the
right to receive certain amounts of Net Interchange (as defined in the
Prospectus) allocable to the Certificates. Each Certificate will represent the
right to receive a portion of the collections and certain other amounts with
respect to the Receivables. Such collections and other amounts will be used to
pay interest and principal due on such Certificate on the applicable payment
date. The Class A Certificates will also have the benefits of certain excess
collections, and the subordination of the Class B Certificates and the
Collateral Investor Interest. The Class B Certificates will also have the
benefits of certain excess collections not needed to cover shortfalls in respect
of the Class A Certificates and the subordination of the Collateral Investor
Interest (as defined in the Prospectus) not used for the benefit of the Class A
Certificates.
The Transferor initially will own the remaining undivided interest in the
Trust not represented by the Certificates, by the Collateral Investor Interest,
by other investor certificates issued by the Trust and by the interests of
Enhancement providers, if any. Series 1997-1 is the first Series issued by the
Trust. The Transferor may from time to time offer and sell other Series that
evidence undivided interests in certain assets of the Trust, which may have
terms significantly different from the Certificates.
The Transferor has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-3 (No. 333-1837), including a prospectus, relating to the
Certificates. The registration statement as amended at the time when it shall
become effective, or, if a post-effective amendment is filed with respect
thereto, as amended by such post-effective amendment at the time of its
effectiveness, including in each case information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act, is referred to in this Agreement as the "Registration
Statement", and the prospectus in the form first used to confirm sales of
Securities is referred to in this Agreement as the "Prospectus". Any reference
in this Agreement to the Registration Statement, any preliminary prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference
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therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the
effective date of the Registration Statement or the date of such preliminary
prospectus or the Prospectus, as the case may be, and any reference to "amend"
"amendment" or "supplement" with respect to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") that are deemed to be incorporated by
reference therein.
When used in this Agreement, "Basic Documents" shall mean the Pooling and
Servicing Agreement, the Supplement, the Certificates, and the Loan Agreement,
and any other contract, agreement or instrument which is or is to be entered
into by the Transferor on the Closing Date or otherwise in connection with any
of the foregoing or this Agreement. To the extent not defined herein,
capitalized terms used herein have the meanings assigned to such terms in the
Prospectus.
The Transferor and the Servicer hereby agree with the Underwriters as
follows:
1. Purchase and Sale. The Transferor agrees to sell the Certificates to
the several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Transferor the respective principal amount of Class A Certificates and
Class B Certificates, respectively, set forth opposite such Underwriter's name
in Schedule I hereto at a price equal to ______% of their principal amount for
the Class A Certificates and _____ % of their principal amount for the Class B
Certificates, in each case plus accrued interest, if any, on the principal
amount thereof at the Class A Certificate Rate and the Class B Certificate Rate,
respectively, from ______________, 1997 to the date of payment and delivery.
2. Offering. The Transferor understands that the Underwriters intend (i)
to make a public offering of their respective portions of the Certificates as
soon after the parties hereto have executed and delivered this Agreement as in
the judgment of the Representative is advisable and (ii) initially to offer the
Certificates upon the terms set forth in the Prospectus.
3. Delivery and Payment. Payment for the Certificates shall be made by
wire transfer in immediately available funds to the account specified by the
Transferor (which account shall be specified to the Representative no later than
noon the Business Day (as defined below) prior to the Closing Date (as defined
below)), at 10:00 A.M., New York City time on January , 1997, or at such other
time on the same or such other date, not later than the fifth Business Day
thereafter, as the Representative and the Transferor may agree upon in writing.
The time and date of such payment are referred to herein as the "Closing Date".
As used herein, the term "Business Day" means any day other than a day on which
banks are permitted or required to be closed in New York City.
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Payment for the Certificates shall be made against delivery to the nominee
of The Depository Trust Company for the account of the Representative for the
respective accounts of the several Underwriters of one or more global
certificates (the "Global Certificate") representing the Class A Certificates
and the Class B Certificates, with any transfer taxes payable in connection with
the transfer to the Underwriters of the Certificates duly paid by the
Transferor. The Global Certificates will be made available for inspection by the
Representative at the office of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022 not later than 1:00 P.M., New York City
time, on the Business Day prior to the Closing Date.
4. Representations and Warranties of the Transferor. The Transferor
represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary
prospectus filed as part of the Registration Statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with
the Securities Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Transferor in writing by such
Underwriter through the Representative expressly for use therein;
(b) the Registration Statement has been declared effective by the
Commission under the Securities Act or if a post-effective amendment is
required to be filed under the Securities Act, such post-effective
amendment has been declared effective by the Commission under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose
has been instituted or, to the knowledge of the Transferor, threatened by
the Commission; and the Registration Statement and Prospectus (as amended
or supplemented if the Transferor shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any amendment
or supplement thereto, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and the Prospectus, as
amended or supplemented, if applicable, at the Closing Date will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; except that
the
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foregoing representations and warranties shall not apply to statements or
omissions in the Registration Statement or the Prospectus made in reliance
upon and in conformity with information relating to any Underwriter
furnished to the Transferor in writing by such Underwriter through the
Representative expressly for use therein;
(c) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or results
of operations of the Transferor as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(d) the documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such
documents contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
any further documents so filed and incorporated by reference in the
Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act,
and will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(e) the Transferor has been duly organized, is validly existing as a
national banking association in good standing under the laws of the United
States and has the power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so
qualified or in good standing would not have a material adverse effect on
the transactions contemplated herein or in the Basic Documents;
(f) this Agreement has been duly authorized, executed and delivered
by the Transferor;
(g) the Certificates have been duly and validly authorized and, when
such Certificates are duly and validly executed and authenticated by the
Trustee and delivered in accordance with the Pooling and Servicing
Agreement and delivered and paid for pursuant to this Agreement, will be
validly issued and outstanding and
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entitled to the benefits and security afforded by the Pooling and
Servicing Agreement; each of the Basic Documents has been duly authorized
by the Transferor and, when executed and delivered by the Transferor and
the other parties thereto, each of the Basic Documents will constitute a
legal, valid and binding obligation of the Transferor enforceable against
the Transferor in accordance with its terms, subject as to enforceability
to applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation or other similar laws affecting the enforcement
of creditors rights generally and to general equitable principles; and the
Certificates and the Basic Documents each will conform to the descriptions
thereof in the Prospectus;
(h) the Transferor is not, nor with the giving of notice or lapse of
time or both would be, in violation of or in default under, its articles
of association or bylaws or any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Transferor is a
party or by which it or any of its properties is bound, except for
violations and defaults which individually and in the aggregate would not
have a material adverse effect on the transactions contemplated herein or
in the Basic Documents; the issue and sale of the Certificates and the
performance by the Transferor of all of the provisions of its obligations
under the Securities Act, the Basic Documents and this Agreement and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Transferor is
a party or by which the Transferor is bound or to which any of the
property or assets of the Transferor is subject, nor will any such action
result in any violation of the provisions of the articles of association
or bylaws of the Transferor or any applicable law or statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Transferor, or any of its properties; and no
consent, approval, authorization, order, license, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Certificates or the consummation by
the Transferor of the transactions contemplated by this Agreement or the
Basic Documents, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as have been obtained under the
Securities Act, and as may be required under state securities or Blue Sky
Laws in connection with the purchase and distribution of the Certificates
by the Underwriters and the filing of any financing statements required to
perfect the Trust's interest in the Receivables and the Transferor has
full power and authority to sell, and establish the Trust that will issue,
the Certificates as contemplated by this Agreement and to enter into this
Agreement, the Loan Agreement, the Pooling and Servicing Agreement and the
Supplement;
(i) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental investigations, actions, suits or proceedings
pending, or to the
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knowledge of the Transferor, threatened against or affecting the
Transferor or its properties, or to which the Transferor is or may be a
party or to which the Transferor or any property of the Transferor is or
may be the subject, (i) asserting the invalidity of this Agreement or of
any of the Basic Documents, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated
by this Agreement or any of the Basic Documents, (iii) that may adversely
affect the federal or state income, excise, franchise or similar tax
attributes of the Certificates, (iv) that could materially and adversely
affect the Transferor's performance of its obligations under, or the
validity or enforceability of, this Agreement or any of the Basic
Documents, (v) could individually or in the aggregate reasonably be
expected to have a material adverse effect on the general affairs,
business, prospects, management, financial position, stockholder's equity
or results of operations of the Transferor or (vi) which could
individually or in the aggregate reasonably be expected to have a material
adverse effect on the interests of the holders of the Certificates or the
marketability of the Certificates; and there are no statutes, regulations,
contracts or other documents that are required to be filed as an exhibit
to the Registration Statement or required to be described in or
incorporated by reference into the Registration Statement or the
Prospectus which are not filed, described or incorporated by reference as
required;
(j) the computer tape with respect to the Receivables to be sold to
the Trust created as of the Cutoff Date and made available to the
Underwriters by the Transferor was complete and accurate in all material
respects as of the date hereof; the Transferor has good and marketable
title to the Receivables free and clear of all liens, encumbrances and
defects, except such as are described or referred to in to Prospectus, and
by assignment and delivery of each of the Receivables to the Trust as of
the Closing Date, the Transferor will transfer title in the Receivables to
the Trust, subject to no prior lien, mortgage, security interest, pledge,
adverse claim, change or encumbrance;
(k) the representations and warranties of the Transferor contained
in the Basic Documents are true and correct in all material respects;
(l) Ernst & Young LLP are independent public accountants with
respect to the Transferor within the meaning of the Securities Act;
(m) the Transferor owns, possesses or has obtained all licenses,
permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities (including
foreign regulatory agencies), all self-regulatory organizations and all
courts and other tribunals, domestic or foreign, necessary to own the
Receivables and to perform its obligations under this Agreement and the
Basic
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Documents, and the Transferor has not received any actual notice of any
proceeding relating to revocation or modification of any such license,
permit, certificate, consent, order, approval or other authorization; and
the Transferor is in compliance with all laws and regulations necessary
for the performance of its obligations under this Agreement and the Basic
Documents;
(n) the Transferor has delivered to you complete and correct copies
of publicly available portions of the Consolidated Reports of Condition
and Income of the Transferor for the three most recent years for which
such reports are available, as submitted to the Comptroller of the
Currency; except as set forth in or contemplated in the Registration
Statement and the Prospectus, there has been no material adverse change in
the condition (financial or otherwise) of the Transferor since the last
such report;
5. Representations and Warranties of the Servicer. The Servicer represents
and warrants to each Underwriter that:
(a) the Servicer has been duly incorporated and is validly existing
as a corporation in good standing under the laws of State of Minnesota and
has full corporate power, authority and legal right to own its properties
and conduct its charge card servicing business as such properties are
presently owned and as such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement, the
Pooling and Servicing Agreement, the Supplement and the Loan Agreement;
(b) the Servicer is not required to qualify nor register as a
foreign corporation in any state in order to service the Receivables as
required by this Agreement and has obtained all licenses and approvals
necessary in order to so service the Receivables as required under federal
and Minnesota law. If the Servicer shall be required by any applicable law
or statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Servicer, or any of its
properties to so qualify or register or obtain such license or approval,
then it shall do so;
(c) the execution, delivery, and performance of this Agreement, the
Pooling and Servicing Agreement, the Supplement and the Loan Agreement
have been duly authorized by the Servicer by all necessary corporate
action on the part of the Servicer and this Agreement will remain, from
the time of its execution, an official record of the Servicer;
(d) this Agreement has been duly authorized, executed and delivered
by the Servicer;
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(e) the Pooling and Servicing Agreement, the Supplement and the Loan
Agreement constitute legal, valid and binding obligations of the Servicer,
enforceable in accordance with their terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereinafter in effect, affecting
the enforcement of creditors' rights in general or by general equity
principles;
(f) the execution and delivery of this Agreement, the Pooling and
Servicing Agreement, the Supplement and the Loan Agreement by the
Servicer, and the performance of the transactions contemplated by this
Agreement or the Basic Documents and the fulfillment of the terms hereof
or thereof applicable to the Servicer, will not conflict with, violate,
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 applicable law or statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Servicer, or any of its properties or any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which the Servicer is a
party or by which it is bound;
(g) there are no proceedings or investigations pending or, to the
best knowledge of the Servicer, threatened against the Servicer before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or the Basic Documents,
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 the Basic Documents to
which the Servicer is a party, or seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of
this Agreement or the Basic Documents to which the Servicer is a party;
and
(h) the Servicer shall duly satisfy all obligations on its part to
be fulfilled under or in connection with each Receivable and the related
Account, will maintain in effect all qualifications required under any
applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Servicer, or any
of its properties in order to service properly each Receivable and the
related Account and will comply in all material respects with any
applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Servicer, or any
of its properties, in connection with servicing each Receivable and the
related Account the failure to comply with which would have a material
adverse effect on the Certificateholders or any Enhancement Provider (as
defined in the Pooling and Servicing Agreement).
6. Covenants and Agreements. The Transferor covenants and agrees with each
of
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the several Underwriters as follows:
(a) if required, to file the final Prospectus with the Commission
within the time periods specified by Rule 424(b) and Rule 430A under the
Securities Act, and to furnish copies of the Prospectus to the
Underwriters in New York City prior to 10:00 a.m., New York City time, on
the Business Day next succeeding the date of this Agreement in such
quantities as the Representative may reasonably request;
(b) to deliver, at the expense of the Transferor, to the
Representative, two signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits and documents incorporated by reference therein, and to each
other Underwriter a conformed copy of the Registration Statement (as
originally filed) and each amendment thereto, in each case without
exhibits but including the documents incorporated by reference therein
and, during the period mentioned in paragraph (e) below, to each of the
Underwriters as many copies of the Prospectus (including all amendments
and supplements thereto and documents incorporated by reference therein)
as the Representative may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Representative
a copy of the proposed amendment or supplement for review and not to file
any such proposed amendment or supplement to which the Representative
reasonably objects;
(d) to advise the Representative promptly, and to confirm such
advice in writing, (i) when the Registration Statement has become
effective, (ii) when any amendment to the Registration Statement has been
filed or becomes effective, (iii) when any supplement to the Prospectus or
any amendment to the Prospectus has been filed and to furnish the
Representative with copies thereof, (iv) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for any additional information, (v) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the Prospectus or the initiation or
threatening of any proceeding for that purpose, (vi) of the occurrence of
any event, within the period referenced in paragraph (e) below, as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light
of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, and (vii) of the receipt by the Transferor of any notification
with respect to any suspension of the qualification of the Certificates
for offer and sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and to use its best
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efforts to prevent the issuance of any such stop order, or of any order
preventing or suspending the use of any preliminary prospectus or the
Prospectus, or of any order suspending such qualification of the
Certificates, or notification of any such order thereof and, if issued, to
obtain as soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the
public offering of the Certificates as in the opinion of counsel for the
Underwriters a prospectus relating to the Certificates is required by law
to be delivered in connection with sales by an Underwriter or a dealer,
any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with law, forthwith to prepare and furnish, at
the expense of the Transferor, to the Underwriters and to the dealers
(whose names and addresses the Representative will furnish to the
Transferor) to which Certificates may have been sold by the Representative
on behalf of the Underwriters and to any other dealers upon request, such
amendments or supplements to the Prospectus as may be necessary so that
the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Certificates for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and to continue such qualification
in effect so long as reasonably required for distribution of the
Certificates; provided that the Transferor shall not be required to file a
general consent to service of process in any jurisdiction;
(g) to make generally available to the holders of the Certificates
and to the Representative as soon as practicable an earnings statement
covering a period of at least twelve months beginning with the first
fiscal quarter of the Trust occurring after the effective date of the
Registration Statement, which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Commission promulgated
thereunder;
(h) so long as the Certificates are outstanding, to furnish to the
Representative (i) copies of each certificate, the annual statements of
compliance and the annual independent certified public accountant's
servicing reports furnished to the Trustee pursuant to the Pooling and
Servicing Agreement by first class mail as soon as practicable after such
statements and reports are furnished to the Trustee, (ii) copies of each
amendment to any of the Basic Documents, (iii) on each Determination Date
or as soon thereafter as practicable, notice by telex or facsimile to the
Representative of the "series factor" as of the related Record Date, (iv)
copies of all reports or other
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communications (financial or other) furnished to holders of the
Certificates, and copies of any reports and financial statements furnished
to or filed with the Commission, any governmental or regulatory authority
or any national securities exchange, and (v) from time to time such other
information concerning the Trust or the Transferor as the Representative
may reasonably request;
(i) during the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any securities which are substantially similar to the
Certificates;
(j) to the extent, if any, that the ratings provided with respect to
the Certificates by the Rating Agencies are conditional upon the
furnishing of documents or the taking of any other action by the
Transferor, the Transferor shall use its best efforts to furnish such
documents and take any other such action;
(k) to use the net proceeds received by the Transferor from the sale
of the Certificates pursuant to this Agreement in the manner specified in
the Prospectus under the caption "Use of Proceeds";
(l) if required, to register the Certificates timely pursuant to the
Exchange Act of 1934; and
(m) whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all fees, costs and expenses incident to the performance of its
obligations hereunder, including without limiting the generality of the
foregoing, all fees, costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of the Certificates,
including any fees, costs and expenses of the Trustee or any transfer
agent, (ii) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any
preliminary prospectus (including in each case all exhibits, amendments
and supplements thereto), (iii) incurred in connection with the
registration or qualification and determination of eligibility for
investment of the Certificates under the laws of such jurisdictions as the
Underwriters may designate (including fees of counsel for the Underwriters
and their disbursements with respect thereto), (iv) in connection with the
listing of the Certificates on any stock exchange, (v) related to any
filing with the National Association of Securities Dealers, Inc., (vi) in
connection with the printing (including word processing and duplication
costs) and delivery of this Agreement, the Basic Documents, the Blue Sky
Survey and any Legal Investment Survey and the furnishing to Underwriters
and dealers of copies of the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided, (vii) of the
Transferor's counsel and accountants and to the extent previously agreed
with the Representative, of the Underwriters'
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counsel, (viii) any expenses incurred by the Transferor in connection with
any "roadshow" presentation to potential investors and (ix) payable to
rating agencies in connection with the rating of the Certificates.
7. Conditions to the Obligations of the Underwriters. The several
obligations of the Underwriters hereunder are subject to the performance by the
Transferor of its obligations hereunder and to the following additional
conditions:
(a) if a post-effective amendment is required to be filed under the
Securities Act, such post-effective amendment shall have become effective,
not later than 5:00 P.M., New York City time, on the date hereof; and no
stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment shall be in effect, and no proceedings for
such purpose shall be pending before or threatened by the Commission; the
Prospectus shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Securities Act and in accordance with
Section 6(a) hereof; and all requests for additional information shall
have been complied with to the satisfaction of the Representative;
(b) the representations and warranties of the Transferor contained
herein are true and correct on and as of the Closing Date as if made on
and as of the Closing Date and the representations and warranties of the
Transferor and the Servicer in the Pooling and Servicing Agreement will be
true and correct on the Closing Date; and the Transferor shall have
complied with all agreements and all conditions on its part to be
performed or satisfied hereunder and under the Basic Documents at or prior
to the Closing Date;
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change that does not indicate
an improvement, in the rating accorded any securities of the Transferor by
any "nationally recognized statistical rating organization", as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act or any
public announcement that any such organization has under surveillance or
review its rating of any such securities (other than an announcement with
positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating);
(d) since the date hereof there shall not have been any material
adverse change or any development involving a prospective material adverse
change, in or affecting the general affairs, business, prospects,
management, financial position, stockholder's equity or results of
operations of the Transferor or the Servicer,
<PAGE>
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otherwise than as set forth or contemplated in the Prospectus, the effect
of which in the judgment of the Representative makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Certificates on the Closing Date on the terms and in the manner
contemplated in the Prospectus;
(e) the Representative shall have received on and as of the Closing
Date a certificate of an executive officer of the Transferor with specific
knowledge about the Transferor's financial matters, satisfactory to the
Representative to the effect set forth in subsections (a) through (d) of
this Section;
(f) Dorsey & Whitney LLP, counsel for the Transferor and Servicer,
shall have furnished to the Representative their written opinion, dated
the Closing Date, in form and substance satisfactory to the
Representative, to the effect that:
(i) the Transferor has been duly organized and is validly
existing as a national banking association in good standing under
the laws of the United States, with power and authority (corporate
and other) to own its properties and conduct its business as
described in the Prospectus;
(ii) the Transferor has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on the
Transferor or the transactions contemplated herein or in the Basic
Documents;
(iii) the Servicer is duly incorporated and is validly
existing in good standing under the laws of the state of Minnesota,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus;
(iv) the Servicer has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on the
Servicer or the transactions contemplated herein or in the Basic
Documents;
(v) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings
<PAGE>
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pending or, to the best of such counsel's knowledge, threatened
against or affecting the Transferor or the Servicer or any of its
properties, or to which the Transferor or Servicer is or may be a
party or to which any property of the Transferor or Servicer is or
may be the subject (i) that are required to be disclosed in the
Registration Statement or the Prospectus, (ii) asserting the
invalidity of this Agreement or of any of the Basic Documents, (iii)
seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this
Agreement or any of the Basic Documents, (iv) that may adversely
affect the federal or state income, excise, franchise or similar tax
attributes of the Certificates, (v) that could materially and
adversely affect the performance by the Transferor or the Servicer
of its obligations under this Agreement or any of the Basic
Documents or (vi) which, if determined adversely to the Transferor
or the Servicer, could individually or in the aggregate reasonably
be expected to have a material adverse effect on the general
affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Transferor or
the Servicer taken as a whole or that would reasonably be expected
to materially adversely affect the interests of the holders of the
Certificates;
(vi) such counsel does not know of any statutes, regulations,
contracts or other documents that are required to be described in or
incorporated by reference into the Registration Statement or the
Prospectus or required to be filed as an exhibit to the Registration
Statement that are not described, filed or incorporated by reference
as required;
(vii) this Agreement has been duly authorized, executed and
delivered by the Transferor and the Servicer;
(viii) the Certificates have been duly and validly authorized
and, when such Certificates are duly and validly executed and
authenticated by the Trustee and delivered in accordance with the
Pooling and Servicing Agreement and delivered and paid for pursuant
to this Agreement, will be validly issued and outstanding and
entitled to the benefits and security afforded by the Pooling and
Servicing Agreement;
(ix) each of the Basic Documents has been duly authorized,
executed and delivered by the Transferor and the Servicer, as
applicable, and constitutes a valid and binding obligation of each
of the Transferor and the Servicer enforceable against each of the
Transferor and the Servicer in accordance with their terms, subject
as to enforceability to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation or other
similar laws affecting the enforcement of creditors rights generally
and to general equitable
<PAGE>
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principles;
(x) each of the Transferor and the Servicer is not, nor with
the giving of notice or lapse of time or both would be, in violation
of or in default under, its articles of association or by laws or
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Transferor or the Servicer is a party or by which it or any of its
properties is bound, except for violations and defaults which
individually and in the aggregate are not material to the Transferor
or the Servicer and its subsidiaries taken as a whole or to the
holders of the Certificates; the issue and sale of the Certificates
and the execution, delivery and performance by the Transferor or the
Servicer, as applicable, of the Certificates, the Basic Documents
and this Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which the
Transferor or the Servicer is a party or by which the Transferor or
the Servicer is bound or to which any of the property or assets of
the Transferor or the Servicer is subject, nor will any such action
result in any violation of the provisions of the articles of
association, or the bylaws of the Transferor or the Servicer or any
applicable law or statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Transferor or the Servicer, or any of its properties;
(xi) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental
agency or body is required for the issue and sale of the
Certificates or the consummation of the other transactions
contemplated by this Agreement or the Basic Documents, except such
consents, approvals, authorizations, orders, licenses, registrations
or qualifications as have been obtained under the Securities Act,
and as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Certificates by
the Underwriters and the filing of any financing statements required
to perfect the Trust's interest in the Receivables;
(xii) the statements in the Prospectus under "Description of
Certificates" insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal
matters, documents or proceedings; the statements in the
Registration Statement and the Prospectus under the headings
"Federal Income Tax Consequences", "State and Local
<PAGE>
-17-
Tax Consequences", "ERISA Considerations", "Certain Legal Aspects of
the Receivables" and "Legal Matters", to the extent they constitute
descriptions of matters of law or legal conclusions with respect
thereto, have been prepared or reviewed by such counsel and are
correct in all material respects;
(xiii) the Registration Statement has become effective under
the Securities Act and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the Securities Act and no proceedings for that purpose
have been instituted or threatened by the Commission; such counsel
is of the opinion that the Registration Statement and the Prospectus
and any amendments and supplements thereto (other than any
accounting, statistical or financial data included therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act; and
nothing has come to such counsel's attention that would cause it to
believe that (other than the accounting, statistical or financial
data included therein, as to which such counsel need express no
belief) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective and
at the Closing Date contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and that the Prospectus, as amended or supplemented, if applicable,
contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading;
(xiv) the documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by
the Transferor prior to the Closing Date (other than any accounting,
statistical or financial data included therein, as to which such
counsel need express no opinion), when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and such counsel has no reason to believe that any of
such documents, when such documents were so filed, contained an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made when such documents
were so filed, not misleading;
(xv) the Transferor and Servicer possess or have obtained all
licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and have made all declarations and
filings with, all federal, state, local
<PAGE>
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and other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and
other tribunals, domestic or foreign, necessary to own or lease, as
the case may be, and to operate its properties and to carry on its
business as conducted as of the date hereof, and neither the
Transferor nor the Servicer has received any actual notice of any
proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement and
the Prospectus; and each of the Transferor and Servicer is in
compliance with all laws and regulations relating to the conduct of
its business as conducted as of the date of the Prospectus;
(xvi) the Transferor has full power and authority to sell and
assign the Receivables to the Trust pursuant to the Pooling and
Servicing Agreement and has duly authorized such sale and assignment
to the Trust by all necessary corporate action;
(xvii) immediately prior to the transfer of the Receivables by
the Transferor pursuant to the Pooling and Servicing Agreement, the
Transferor was the sole owner of all right, title and interest in
and to the Receivables and the other property to be transferred by
it to the Trust;
(xviii) by assignment and delivery of each of the Receivables
to the Trust as of the Closing Date, the Transferor will transfer
title in the Receivables to the Trust, subject to no prior lien,
mortgage, security interest, pledge, adverse claim, change or
encumbrance;
(xix) the Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended, and
the Trust is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended;
(xx) the Receivables are either "accounts" or "general
intangibles" as defined in the UCC;
(xxi) all filings necessary under applicable law to perfect
the transfer of the Receivables by the Transferor to the Trustee as
Trustee of the Trust pursuant to the Pooling and Servicing Agreement
have been made and, no other filings (other than the filing of
continuation statements) need be made to maintain the perfection of
the transfer of the Receivables to the Trustee as Trustee of the
Trust pursuant to the Pooling and Servicing Agreement;
(xxiii) the Certificates, this Agreement, the Pooling and
Servicing
<PAGE>
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Agreement and the Supplement each conform in all material respects
with the descriptions thereof contained in the Registration
Statement and Prospectus.
(g) on the date hereof and also on the Closing Date, Ernst & Young
LLP shall have furnished to you letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you;
(h) the Representative shall have received on and as of the Closing
Date an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to
the Underwriters, with respect to the validity of the Pooling and
Servicing Agreement and the Certificates and with respect to the
Registration Statement, the Prospectus and other related matters as the
Representative may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(i) Dorsey & Whitney LLP, counsel for the Transferor, shall have
furnished to the Representative their written opinion, dated the Closing
Date, with respect to certain federal income tax matters, in form and
substance satisfactory to the Representative, to the effect that:
(i) the statements in the Registration Statement under the
heading "Federal Income Tax Consequences" and the summary thereof
under the heading "Summary-Tax Status," to the extent they
constitute matters of federal law or legal conclusions with respect
thereto, have been reviewed by such counsel and are correct in all
material respects; and
(ii) for federal income tax purposes, the Certificates will be
characterized as indebtedness secured by the Receivables and any
other Trust assets, and the Trust will not be characterized as an
"association" or "publicly traded partnership" taxable as a
corporation;
(iii) assuming that the Certificates are treated as debt for
federal income tax purposes, (x) the Certificates will be treated as
debt for South Dakota and Minnesota state income tax purposes and
(y) Holders of Certificate not otherwise subject to taxation in
South Dakota or Minnesota would not become subject to taxation in
South Dakota or Minnesota solely because of a Holder's ownership of
a Certificate; and
(iv) assuming further that the Trust will not be characterized
as an "association" or "publicly traded partnership" taxable as a
corporation for federal income tax purposes, it will not be subject
to South Dakota or Minnesota state tax at the entity level.
<PAGE>
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(j) the Representative shall have received an opinion of counsel to
the Trustee, dated the Closing Date, in form and substance satisfactory to
the Representative to the effect that:
(i) the Trustee has been duly organized and is validly
existing as a national banking association in good standing under
the laws of the United States and has the power and authority to
enter into and to perform all actions required of it under the
Pooling and Servicing Agreement, the Supplement and the Loan
Agreement;
(ii) each of the Pooling and Servicing Agreement, the
Supplement and the Loan Agreement has been duly authorized, executed
and delivered by the Trustee, and constitutes a legal, valid binding
obligation of the Trustee, enforceable against the Trustee in
accordance with its terms except as such enforceability may be
limited by (A) bankruptcy, insolvency, liquidation, reorganization,
moratorium, conservatorship, receivership or other similar laws now
or hereafter in effect relating to the enforcement of creditors'
rights in general, as such laws would apply in the event of a
bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or similar occurrence affecting the
Trustee, and (B) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law) as well as concepts of reasonableness, good faith and fair
dealing;
(iii) the Certificates have been duly authenticated and
delivered by the Trustee;
(iv) the execution and delivery of the Pooling and Servicing
Agreement, the Supplement and the Loan Agreement by the Trustee and
the performance by the Trustee of their respective terms do not
conflict with or result in a violation of (A) any law or regulation
of the United States or the State of New York governing the banking
or trust powers of the Trustee, or (B) the articles of incorporation
or articles of association or bylaws of the Trustee; and
(v) no approval, authorization or other action by, or filing
with, any governmental authority of the United States or the State
of New York having jurisdiction over the banking or trust powers of
the Trustee is required in connection with the execution and
delivery by the Trustee of the Pooling and Servicing Agreement, the
Supplement and the Loan Agreement or the performance by the Trustee
thereunder;
<PAGE>
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(k) the Representative shall have received a letter or letters from
each counsel delivering any written opinion to any Rating Agency in
connection with the transaction described herein which is not otherwise
described in this Agreement allowing the Representative to rely on such
opinion as if it were addressed to the Representative;
(l) the Representative shall have received copies of letters from:
(i) Standard & Poor's Ratings Group stating that the
Class A Certificates shall have been rated AAA and that the
Class B Certificates shall have been rated at least A;
(ii) Moody's Investors Service, Inc. stating that the
Class A Certificates shall have been rated Aaa and that the
Class B Certificates shall have been rated at least A; and
(iii) Fitch Investors Service, L.P. stating that the
Collateral Investor Interest shall have been rated at least
BBB;
(m) on the Closing Date, the representations and warranties of the
Transferor and the Servicer in the Pooling and Servicing Agreement will be
true and correct;
(n) any taxes, fees and other governmental charges which are due and
payable in connection with the execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, the Loan Agreement, the
Supplement and the Certificates shall have been paid by the Transferor at
or prior to the Closing Date; and
(o) the purchaser of the Collateral Investor Interest shall have
furnished to the Representative the favorable written opinions of counsel
to the purchaser of the Collateral Investor Interest, as to the due
authorization, execution and delivery of the Loan Agreement by the
purchaser of the Collateral Investor Interest and the enforceability of
the Loan Agreement in form and substance satisfactory to the
Representative and its counsel; and
(p) Dorsey & Whitney LLP, counsel for the Transferor, shall have
furnished to the Representative their written opinion, dated the Closing
Date, in form and substance satisfactory to the Representative, with
respect to the effect of the Transferor's insolvency or receivership on
the Trust's interests in the Receivables;
<PAGE>
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(q) on or prior to the Closing Date the Transferor shall have
furnished to the Representative such further certificates and documents as
the Representative shall reasonably request.
8. (a) Indemnification and Contribution. The Transferor and the Servicer
agree to jointly and severally indemnify and hold harmless each Underwriter,
each affiliate of an Underwriter which assists such Underwriter in the
distribution of the Certificates and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Transferor shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Transferor in writing by such Underwriter through the Representative expressly
for use therein;
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Transferor and the Servicer, their directors, their officers
who signed the Registration Statement, and each person who controls the
Transferor or the Servicer within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Transferor and the Servicer to each Underwriter, but only
with reference to information relating to such Underwriter furnished to the
Transferor in writing by such Underwriter through the Representative expressly
for use in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any preliminary prospectus;
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to Subsections
(a) or (b) above, such person (the "Indemnified Person") shall promptly notify
the person against whom such indemnity may be sought (the "Indemnifying Person")
in writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such
<PAGE>
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Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person
shall have mutually agreed to the contrary, (ii) the Indemnifying Person has
failed within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters
and such control persons of Underwriters shall be designated in writing by J.P.
Morgan Securities Inc. and any such separate firm for the Transferor or the
Servicer, its directors, its officers who sign the Registration Statement, and
such control persons of the Transferor and the Servicer shall be designated in
writing by the Transferor or the Servicer, respectively. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by the
third sentence of this subsection (c), the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding;
(d) If the indemnification provided for in subsections (a) or (b) above is
unavailable to an Indemnified Person in respect of any losses, claims, damages
or liabilities referred to therein, then each Indemnifying Person under such
subsection, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Transferor and the
Servicer on the one hand and the Underwriters on the other hand from the
offering of the Certificates or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Transferor and the Servicer on the one hand
<PAGE>
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and the Underwriters on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Transferor and the Servicer on the one hand and the Underwriters on the other
shall be deemed to be in the same respective proportions as the net proceeds
from the offering (before deducting expenses) received by the Transferor and the
total underwriting discounts and the commissions received by the Underwriters
bear to the aggregate public offering price of the Certificates. The relative
fault of the Transferor and the Servicer on the one hand and the Underwriters on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Transferor and the Servicer or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Transferor, the Servicer and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in this subsection (d) shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total price at which
the Certificates underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8 are several in proportion to the respective principal
amount of Certificates set forth opposite their names in Schedule I hereto, and
not joint.
The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity;
(e) The indemnity and contribution agreements contained in this Section 8
and the representations and warranties of the Transferor and the Servicer set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person
<PAGE>
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controlling any Underwriter or by or on behalf of the Transferor or the
Servicer, their officers or directors or any other person controlling the
Transferor or the Servicer and (iii) acceptance of and payment for any of the
Certificates.
9. Termination. Notwithstanding anything herein contained, this Agreement
may be terminated in the absolute discretion of the Representative, by notice
given to the Transferor, if after the execution and delivery of this Agreement
and prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange or the American Stock Exchange, (ii) trading of any securities of or
guaranteed by the Transferor shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York or South Dakota shall have been declared by either
federal or New York or South Dakota State authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Representative,
is material and adverse and which, in the judgment of the Representative, makes
it impracticable to market the Certificates on the terms and in the manner
contemplated in the Prospectus.
10. Effectiveness of Agreement; Default of Underwriters. This Agreement
shall become effective upon the later of (x) execution and delivery hereof by
the parties hereto and (y) release of notification of the effectiveness of the
Registration Statement (or, if applicable, any post-effective amendment) by the
Commission.
If on the Closing Date any one or more of the Underwriters shall fail or
refuse to purchase Certificates which it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Certificates which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of that
Class of Certificates to be purchased on such date, the other Underwriters of
the Class shall be obligated severally in the proportions that the principal
amount of Certificates set forth opposite their respective names in Schedule I
bears to the aggregate principal amount of Certificates set forth opposite the
names of all such non-defaulting Underwriters, or in such other proportions as
the Representative may specify, to purchase the Certificates which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the principal amount of
Certificates that any Underwriter has agreed to purchase pursuant to Section 1
be increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of Certificates of that Class without the written consent
of such Underwriter. If on the Closing Date any Underwriter or Underwriters
shall fail or refuse to purchase Certificates which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Certificates with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Certificates of that Class to be purchased on
such date, and arrangements satisfactory to the Representative and the
Transferor for the purchase
<PAGE>
-26-
of such Certificates are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Transferor. In any such case either the Representative or the
Transferor shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
11. Expenses Upon Termination. If this Agreement shall be terminated by
the Underwriters, or any of them, because of any failure or refusal on the part
of the Transferor to comply with the terms or to fulfill any of the conditions
of this Agreement, or if for any reason the Transferor shall be unable to
perform its obligations under this Agreement or any condition of the
Underwriters' obligations cannot be fulfilled, the Transferor agrees to
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and expenses of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
12. Successors. This Agreement shall inure to the benefit of and be
binding upon the Transferor, the Servicer, the Underwriters, any controlling
persons referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Certificates from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
13. Actions by Representative; Notices. Any action by the Underwriters
hereunder may be taken by J.P. Morgan Securities Inc. alone on behalf of the
Underwriters, and any such action taken by J.P. Morgan Securities Inc. alone
shall be binding upon the Underwriters. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be given to the Representative c/o J.P. Morgan Securities
Inc., 60 Wall Street, New York, New York 10060-0060 (Facsimile No.: (212)
648-5909); Attention: Syndicate Desk. Notices to the Transferor shall be given
to it at ______________, _____________, ___________, (Facsimile No.:______);
Attention:__________.
14. Counterparts; Applicable Law. This Agreement may be signed in
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws provisions thereof.
<PAGE>
-27-
If the foregoing is in accordance with your understanding, please sign and
return the enclosed counterparts hereof.
Very truly yours,
FIRST BANK OF SOUTH DAKOTA
(NATIONAL ASSOCIATION), as Transferor
By:_______________________
Name:
Title:
FBS CARD SERVICES, INC, as Servicer
By:_______________________
Name:
Title:
Accepted: January __, 1997
By: J.P. Morgan Securities Inc.
Acting on behalf of itself and the
several Underwriters listed in
Schedule I hereto.
By:___________________________
Name:
Title:
<PAGE>
-28-
SCHEDULE I
PRINCIPAL AMOUNT OF CLASS A
CERTIFICATES TO BE PURCHASED
----------------------------
Underwriter
J.P. Morgan Securities Inc............
[Co-Manager]..........................
Total...............====================
PRINCIPAL AMOUNT OF CLASS B
CERTIFICATES TO BE PURCHASED
----------------------------
Underwriter
J.P. Morgan Securities Inc............
[Co-Manager]..........................
Total...............====================
FIRST BANK OF SOUTH DAKOTA,
as Transferor,
FBS CARD SERVICES, INC.,
as Servicer,
and
CITIBANK, N.A.,
as Trustee
on behalf of the Certificateholders
of the First Bank Corporate Card Master Trust
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS................................................. 1
Section 1.1 Definitions................................................. 1
Section 1.2 Other Definitional Provisions............................... 26
ARTICLE II CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES.................................... 28
Section 2.1 Conveyance of Receivables................................... 28
Section 2.2 Acceptance by Trustee....................................... 30
Section 2.3 Representations and Warranties of the
Transferor............................................... 31
Section 2.4 Representations and Warranties of the
Transferor Relating to the Agreement
and the Receivables...................................... 33
Section 2.5 Covenants of the Transferor................................. 41
Section 2.6 Addition of Accounts........................................ 44
Section 2.7 Removal of Accounts......................................... 49
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES................. 53
Section 3.1 Acceptance of Appointment and Other
Matters Relating to the Servicer......................... 53
Section 3.2 Servicing Compensation...................................... 56
Section 3.3 Representations and Warranties of the
Servicer................................................. 56
Section 3.4 Reports and Records for the Trustee......................... 58
Section 3.5 Annual Servicer's Certificate............................... 59
Section 3.6 Annual Independent Accountants'
Servicing Report......................................... 60
Section 3.7 Tax Treatment............................................... 61
Section 3.8 Notices to the Transferor................................... 62
Section 3.9 Reports to the Commission................................... 62
i
<PAGE>
Page
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS ............... 63
Section 4.1 Rights of Certificateholders. .............................. 63
Section 4.2 Establishment of Accounts................................... 63
Section 4.3 Collections and Allocations................................. 67
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE
SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO ANY SERIES] .................................. 71
ARTICLE VI THE CERTIFICATES ........................................... 72
Section 6.1 The Certificates............................................ 72
Section 6.2 Authentication of Certificates.............................. 73
Section 6.3 Registration of Transfer and Exchange
of Certificates.......................................... 73
Section 6.4 Mutilated, Destroyed, Lost or Stolen
Certificates............................................. 77
Section 6.5 Persons Deemed Owners....................................... 78
Section 6.6 Appointment of Paying Agent................................. 79
Section 6.7 Access to List of Certificateholders'
Names and Addresses...................................... 80
Section 6.8 Authenticating Agent........................................ 81
Section 6.9 Tender of Transferor Certificate............................ 83
Section 6.10 Book-Entry Certificates..................................... 86
Section 6.11 Notices to Clearing Agency.................................. 87
Section 6.12 Definitive Certificates..................................... 87
Section 6.13 Global Certificate; Euro-Certificate
Exchange Date............................................ 88
Section 6.14 Meetings of Certificateholders.............................. 89
ARTICLE VII OTHER MATTERS RELATING
TO THE TRANSFEROR ....................................... 90
Section 7.1 Liability of the Transferor................................. 90
Section 7.2 Merger or Consolidation of, or
Assumption of the Obligations of,
the Transferor........................................... 90
Section 7.3 Limitation on Liability..................................... 91
Section 7.4 Liabilities................................................. 92
ii
<PAGE>
Page
----
ARTICLE VIII OTHER MATTERS RELATING TO THE
SERVICER ........................................... 94
Section 8.1 Liability of the Servicer.............................. 94
Section 8.2 Merger or Consolidation of, or
Assumption of the Obligations of,
the Servicer........................................ 94
Section 8.3 Limitation on Liability of the
Servicer and Others................................. 95
Section 8.4 Servicer Indemnification of the Trust
and the Trustee..................................... 96
Section 8.5 The Servicer Not to Resign............................. 96
Section 8.6 Access to Certain Documentation and
Information Regarding the Receivables............... 97
Section 8.7 Delegation of Duties................................... 97
Section 8.8 Examination of Records................................. 98
ARTICLE IX PAY OUT EVENTS ........................................ 99
Section 9.1 Pay Out Events......................................... 99
Section 9.2 Additional Rights Upon the Occurrence
of Certain Events................................... 100
ARTICLE X SERVICER DEFAULTS...................................... 102
Section 10.1 Servicer Defaults...................................... 102
Section 10.2 Trustee to Act; Appointment of
Successor........................................... 105
Section 10.3 Notification to Certificateholders. ................... 107
Section 10.4 Waiver of Past Defaults................................ 108
ARTICLE XI THE TRUSTEE ........................................... 109
Section 11.1 Duties of Trustee...................................... 109
Section 11.2 Certain Matters Affecting the
Trustee............................................. 111
Section 11.3 Trustee Not Liable for Recitals in
Certificates........................................ 113
Section 11.4 Trustee May Own Certificates. ......................... 113
Section 11.5 The Servicer to Pay Trustee's Fees
and Expenses........................................ 113
Section 11.6 Eligibility Requirements for
Trustee............................................. 114
iii
<PAGE>
Page
----
Section 11.7 Resignation or Removal of
Trustee............................................. 115
Section 11.8 Successor Trustee...................................... 115
Section 11.9 Merger or Consolidation of
Trustee. ........................................... 116
Section 11.10 Appointment of Co-Trustee or Separate
Trustee............................................. 116
Section 11.11 Tax Returns............................................ 118
Section 11.12 Trustee May Enforce Claims without
Possession of Certificates.......................... 119
Section 11.13 Suits for Enforcement.................................. 119
Section 11.14 Rights of Certificateholders to
Direct Trustee...................................... 119
Section 11.15 Representations and Warranties of
Trustee............................................. 120
Section 11.16 Maintenance of Office or Agency. ...................... 120
ARTICLE XII TERMINATION............................................ 121
Section 12.1 Termination of Trust................................... 121
Section 12.2 Optional Purchase...................................... 122
Section 12.3 Final Payment with Respect to any
Series.............................................. 123
Section 12.4 Termination Rights of Holder of
Transferor Certificate.............................. 125
Section 12.5 Defeasance............................................. 126
ARTICLE XIII MISCELLANEOUS PROVISIONS ........................... 128
Section 13.1 Amendment.............................................. 128
Section 13.2 Protection of Right, Title and
Interest to Trust................................... 129
Section 13.3 Limitation on Rights of Certificateholders............. 131
Section 13.4 Governing Law.......................................... 132
Section 13.5 Notices................................................ 132
Section 13.6 Severability of Provisions............................. 133
Section 13.7 Assignment............................................. 133
Section 13.8 Certificates Non-Assessable and
Fully Paid.......................................... 133
Section 13.9 Further Assurances..................................... 134
Section 13.10 No Waiver; Cumulative Remedies. ....................... 134
Section 13.11 Counterparts........................................... 134
iv
<PAGE>
Page
----
Section 13.12 Third-Party Beneficiaries.............................. 134
Section 13.13 Actions by Certificateholders.......................... 134
Section 13.14 Rule 144A Information.................................. 135
Section 13.15 Merger and Integration................................. 135
Section 13.16 Headings............................................... 135
v
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of January 1, 1997 by and
between FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION), a national banking
association, as Transferor, FBS CARD SERVICES, INC., a Minnesota corporation, as
Servicer, and CITIBANK, N.A., a national banking association, as Trustee.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties and the
Certificateholders:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Account" shall mean each VISA(R)* charge card account established
pursuant to a Corporate Card Agreement or Purchasing Card Agreement between the
Transferor and any Person identified by its customer account number and by the
Receivable balance as of the Cut Off Date and as of each Addition Date in each
computer file or microfiche list delivered to the Trustee by the Transferor
pursuant to Section 2.1 or 2.6. The definition of Account shall include each
Transferred Account. The term "Account" shall be deemed to refer to an
Additional Account only from and after the Addition Date with respect thereto
and shall be deemed to refer to any Removed Account only prior to the Removal
Date with respect thereto.
"Account Information" shall have the meaning specified in subsection
2.2(b).
"Accumulation Period" shall mean, with respect to any Series, or any
Class within a Series, a period following the Revolving Period, which shall be
the accumulation or other period in which Principal Collections are accumulated
in an account for the benefit of the Investor Certificateholders of such Series,
or a class
- --------
* VISA(R) is a registered trademark of
VISA U.S.A., Inc.
<PAGE>
within such Series, in each case as defined with respect to such Series in the
related Supplement.
"Addition Date" shall mean each date as of which Additional Accounts
will be included as Accounts pursuant to Section 2.6.
"Additional Accounts" shall have the meaning specified in subsection
2.6(a).
"Adjustment" shall have the meaning specified in subsection 4.3(c).
"Affiliate" of any Person shall mean any other Person controlling,
controlled by or under common control with such Person.
"Aggregate Invested Amount" shall mean, as of any date of
determination, the sum of the Invested Amounts (or adjusted Invested Amounts, as
specified in any Supplement) of all Series of Investor Certificates issued and
outstanding on such date of determination.
"Aggregate Investor Percentage" with respect to Principal
Collections, Yield Collections and Defaulted Receivables, as the case may be,
shall mean, as of any date of determination, the sum of such Investor
Percentages of all Series of Certificates issued and outstanding on such date of
determination; provided, however, that the Aggregate Investor Percentage shall
not exceed 100%.
"Agreement" shall mean this Pooling and Servicing Agreement and all
amendments hereof and supplements hereto, including any Supplement.
"Amortization Period" shall mean, with respect to any Series, or any
Class within a Series, a period following the Revolving Period during which
principal is distributed to Investor Certificateholders, which shall be the
controlled amortization period, the principal amortization period, the early
amortization period or other amortization period, in each case as defined with
respect to such Series in the related Supplement.
"Applicants" shall have the meaning specified in Section 6.7.
2
<PAGE>
"Appointment Day" shall have the meaning specified in subsection
9.2(a).
"Assignment" shall have the meaning specified in subsection 2.6
(c)(ii).
"Authorized Newspaper" shall mean the Wall Street Journal or a
newspaper (or newspapers) of general circulation in the Borough of Manhattan,
The City of New York and the City of Sioux Falls, South Dakota printed in the
English language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Bank Portfolio" shall mean the VISA accounts established pursuant
to a Corporate Card Agreement or Purchasing Card Agreement and owned by the
Transferor.
"Bearer Certificates" shall have the meaning specified in Section
6.1.
"Bearer Rules" shall mean the provisions of the Internal Revenue
Code, in effect from time to time, governing the treatment of bearer
obligations, including sections 163(f), 871, 881, 1441, 1442 and 4701, and any
regulations thereunder including, to the extent applicable to any Series,
Proposed or Temporary Regulations.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC.
"Book-Entry Certificates" shall mean certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.10; provided, however, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer authorized and
Definitive Certificates are to be issued to the Certificate Owners, such
certificates shall no longer be "Book-Entry Certificates."
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in New York, New York, Sioux Falls, South
Dakota or Minneapolis, Minnesota (or, with respect to any Series, any additional
city specified in the related Supplement)
3
<PAGE>
are authorized or obligated by law or executive order to be closed.
"Cash Advance Fees" shall have the meaning specified in the
Corporate Card Agreement or Purchasing Card Agreement applicable to each Account
for cash advance fees or similar terms.
"CEDEL" shall mean Cedel Bank, societe anonyme.
"Certificate" shall mean any one of the Investor Certificates of
any Series or the Transferor Certificate.
"Certificateholder" or "Holder" shall mean the Person in whose name
a Certificate is registered in the Certificate Register and, if applicable, the
holder of any Bearer Certificate or Coupon, as the case may be or such other
Person deemed to be a "Certificateholder" or "Holder" in any related Supplement.
"Certificate Interest" shall mean interest payable in respect of the
Investor Certificates of any Series pursuant to Article IV of the Supplement for
such Series.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as may be reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly or
as an indirect participant, in accordance with the rules of such Clearing
Agency).
"Certificate Principal" shall mean principal payable in respect of
the Investor Certificates of any Series pursuant to Article IV of this
Agreement.
"Certificate Rate" shall mean, with respect to any Series of
Certificates (or, for any Series with more than one Class, for each Class of
such Series), the rate (or formula on the basis of which such rate shall be
determined) stated in the related Supplement.
"Certificate Register" shall mean the register maintained pursuant
to Section 6.3, providing for the
4
<PAGE>
registration of the Certificates and transfers and exchanges thereof.
"Class" shall mean, with respect to any Series, any one of the
classes of Certificates of that Series as specified in the related Supplement.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency or Foreign Clearing Agency effects book-entry transfers and
pledges of securities deposited with the Clearing Agency or Foreign Clearing
Agency.
"Closing Date" shall mean, with respect to any Series, the date of
issuance of such Series of Certificates, as specified in the related Supplement.
"Collateral Invested Amount" shall have the meaning, with respect to
any Series, specified in the related Supplement.
"Collateral Investor Interest" shall have the meaning, with respect
to any Series, specified in the related Supplement.
"Collection Account" shall have the meaning specified in subsection
4.2(a).
"Collection Period" shall mean, unless otherwise defined in any
Supplement, the period from and including the first day of a calendar month to
and including the last day of a calendar month.
"Collections" shall mean all payments (including recoveries on
charged-off Receivables, amounts, if any, paid by corporate clients as
co-obligors under Corporate Card Agreements and Insurance Proceeds) received by
the Servicer in respect of the Receivables, in the form of cash, checks, wire
transfers, ATM transfers or other form of payment in accordance with the
Corporate Card Agreement or Purchasing Card Agreement in effect from time to
time on any Receivables. A Collection
5
<PAGE>
processed on an Account in excess of the aggregate amount of Receivables in such
Account as of the Date of Processing of such Collection shall be deemed to be a
Principal Collection to the extent of such excess. Collections with respect to
any Collection Period shall include the amount of Net Interchange (if any)
allocable to any Series of Certificates pursuant to any Supplement with respect
to such Collection Period (to the extent received by the Trust and deposited
into the Collection Account or any Series Account, as the case may be, on the
Transfer Date following such Collection Period) to be applied as if such amount
were Yield Collections for all purposes.
"Corporate Card" shall mean a VISA Corporate Card issued pursuant to
a Corporate Card Agreement.
"Corporate Card Agreement" shall mean the First Bank VISA Corporate
Card Program Agreement and, if applicable, Federal Truth in Lending Statement
for VISA Corporate Card accounts between any Obligor and First Bank of South
Dakota (National Association), as such agreements may be amended, modified or
otherwise changed from time to time.
"Corporate/Purchasing Card Guidelines" shall mean the Transferor's
policies and procedures relating to the operation of its Corporate Card or
Purchasing Card businesses, including, without limitation, the policies and
procedures for determining the creditworthiness of Corporate Card or Purchasing
Card customers, the extension of credit to Corporate Card or Purchasing Card
customers, and relating to the maintenance of Corporate Card or Purchasing Card
accounts and collection of Corporate Card or Purchasing Card receivables, as
such policies and procedures may be amended from time to time.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at ____________________________________________.
"Coupon" shall have the meaning specified in Section 6.1.
"Cut Off Date" shall mean November 30, 1996.
6
<PAGE>
"Date of Processing" shall mean, with respect to any transaction,
the date on which such transaction is first recorded on the Servicer's computer
master file of VISA Corporate Card or Purchasing Card accounts (without regard
to the effective date of such recordation).
"Default Amount" shall mean, for any Collection Period and with
respect to any Defaulted Account, the amount of Receivables (other than
Ineligible Receivables) in such Defaulted Account on the day such Account became
a Defaulted Account during such Collection Period minus Recoveries, if any,
received in such Collection Period.
"Defaulted Account" shall mean each Account with respect to which,
in accordance with the Corporate/Purchasing Card Guidelines or the Servicer's
customary and usual servicing procedures for servicing charge card receivables
comparable to the Receivables, the Servicer has charged-off the Receivables in
such Account as uncollectible; an Account shall become a Defaulted Account on
the day on which such Receivables are recorded as charged off as uncollectible
on the Servicer's computer master file of VISA Corporate Card or Purchasing Card
accounts. Notwithstanding any other provision hereof, any Receivables in a
Defaulted Account that are Ineligible Receivables shall be treated as Ineligible
Receivables rather than Receivables in Defaulted Accounts.
"Defaulted Receivables" shall mean, as of any date of determination,
the Receivables in Defaulted Accounts as of such date.
"Definitive Certificate" shall have the meaning specified in Section
6.10.
"Depository" shall have the meaning specified in Section 6.10.
"Depository Agreement" shall mean, with respect to a Series having
Book-Entry Certificates, the agreement among the Transferor, the Trustee and the
Clearing Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean, unless otherwise specified in the
related Series Supplement, the fourth Business Day prior to each Transfer Date.
7
<PAGE>
"Distribution Date" shall mean, with respect to each Series, the
dates specified in the related Supplement.
"Dollars," "$" or "U.S. $" shall mean United States dollars.
"Early Amortization Commencement Date" shall mean, (a) with respect
to each Series, the date on which a Trust Early Amortization Event is deemed to
occur pursuant to Section 9.1 or (b) with respect to any Series, the date on
which a Series Early Amortization Event is deemed to occur pursuant to the
Supplement for such Series.
"Early Amortization Event" shall mean, with respect to each Series,
a Trust Pay Out Event or a Series Pay Out Event.
"Eligible Account" shall mean, as of the Cut Off Date (or, with
respect to Additional Accounts, as of the relevant Addition Date) (i) is an
Account and was in existence and owned by the Transferor at the close of
business on the Cut Off Date or Addition Date, as applicable, (ii) is payable in
United States dollars, (iii) the charge card or cards related to which have not
been reported lost or stolen or designated fraudulent, (iv) has not been
identified by the Transferor in its computer files as having been cancelled due
to the Obligor's bankruptcy or insolvency, (v) the receivables in which have not
been written off as uncollectible prior to the Cut Off Date or Addition Date, as
applicable, in accordance with the Account Guidelines, (vi) the receivables in
which have not been assigned, pledged or sold (other than pursuant to this
Agreement), (vii) the obligor of which has provided, as its most recent billing
address, an address in the United States or its territories or possessions and
(viii) is not an account with respect to which the Transferor or any Affiliate
of the Transferor is the Obligor.
"Eligible Institution" shall mean a depository institution, which
may include the Trustee, organized under the laws of the United States or any
one of the States thereof including the District of Columbia, the deposits in
which are insured by the FDIC and which at all times has a short-term unsecured
debt rating of at
8
<PAGE>
least A-1+ or P-1 by each Rating Agency; provided, however, that an institution
which shall have corporate trust powers and which maintains the Collection
Account, any principal funding account, any interest funding account or any
other account maintained for the benefit of Certificateholders as a fully
segregated trust account with the trust department of such institution shall not
be required to meet the foregoing rating requirements, and need only at all
times have a long-term unsecured debt rating of at least Baa3 by Moody's so long
as Moody's is a Rating Agency.
"Eligible Investments" shall mean, unless otherwise provided in the
Supplement with respect to any Series, (a) book-entry securities or negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence (i) obligations of or fully guaranteed by the United States
of America; (ii) time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United States of
America or any state thereof (or domestic branches of foreign depository
institutions or trust companies) and subject to supervision and examination by
federal or state banking or depository institution authorities; provided,
however, that at the time of the Trust's investment or contractual commitment to
invest therein, the certificates of deposit or short-term deposits of such
depository institution or trust company shall have a credit rating from Moody's
and Standard & Poor's of P-1 and A-l+, respectively; (iii) commercial paper
having, at the time of the Trust's investment or contractual commitment to
invest therein, a rating from Moody's and Standard & Poor's of P-1 and A-1+,
respectively; (iv) bankers' acceptances issued by any depository institution or
trust company described in clause (a)(ii) above; and (v) repurchase agreements
transacted with either (A) an entity subject to the United States Bankruptcy
Code or (B) a financial institution insured by the FDIC or a broker-dealer with
retail customers that is under the jurisdiction of the Securities Investors
Protection Corp., in each case having a short-term unsecured rating of A-1+ by
Standard & Poor's and P-1 by Moody's; (b) demand deposits in the name of the
Trust or the Trustee in any depository institution or trust company referred to
in clause (a)(ii) above; (c) any other investment if each Rating Agency confirms
in writing that such investment will not adversely affect its then cur-
9
<PAGE>
rent rating of the Investor Certificates, provided that such investment will not
cause the Trust to be treated as an "investment company" within the meaning of
the Investment Company Act.
"Eligible Receivable" shall mean each Receivable:
(i) which has arisen under an Eligible Account;
(ii) which was created in compliance with all applicable
requirements of law and pursuant to an agreement which complies with all
applicable requirements of law in either case the failure to comply with
which would have a material adverse effect upon Certificateholders;
(iii) with respect to which all material consents,
licenses, approvals or authorizations of, or registrations with, any
governmental authority required to be obtained or given by the Transferor
in connection with the creation of such Receivable or the execution,
delivery and performance by the Transferor of the related agreement have
been duly obtained or given and are in full force and effect as of such
date of creation;
(iv) as to which at the time of the transfer of such
Receivable to the Trust, the Trust will have good and marketable title,
free and clear of all liens, encumbrances, charges and security interests
(except those permitted by subsection 2.5(b));
(v) which has been the subject of either a valid
transfer and assignment from the Transferor to the Trust of all of the
Transferor's right, title and interest therein or the grant of a first
priority perfected security interest therein (and in the proceeds thereof
to the extent set forth in Section 9-306 of the UCC as in effect in the
Relevant UCC State), effective until the termination of the Trust;
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(vi) which will at all times be the legal, valid and
binding payment obligation of the Obligor thereof enforceable against such
Obligor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws, now or hereafter in effect, affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
(vii) which constitutes either an "account" or a
"general intangible" under and as defined in Article 9 of the UCC as then
in effect in the Relevant UCC State;
(viii) which, at the time of its transfer to the Trust,
has not been waived or modified except as permitted hereunder;
(ix) which is not subject to any setoff, right of
rescission, counterclaim or other defense (including the defense of
usury), other than defenses arising out of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general;
(x) as to which the Transferor has satisfied all
obligations to be fulfilled at the time it is transferred to the Trust;
and
(xi) as to which the Transferor has done nothing, at the
time of its transfer to the Trust, to impair the rights of the Trust or
Certificateholders therein.
"Eligible Servicer" shall mean the initial Servicer hereunder, the
Trustee, or Affiliate of the Transferor or the Trustee, or an entity which, at
the time of its appointment as Servicer, (a) is servicing a portfolio of
revolving credit card accounts or other charge accounts, (b) is legally
qualified and has the capacity to service the Accounts, (c) is qualified (or
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licensed) to use the software that the Servicer is then currently using to
service the Accounts or obtains the right to use, or has its own, software which
is adequate to perform its duties under this Agreement, (d) has, in the
reasonable judgment of the Trustee, demonstrated the ability to professionally
and competently service a portfolio of similar accounts in accordance with
customary standards of skill and care and (e) has a net worth of at least
$50,000,000 as of the end of its most recent fiscal quarter.
"Enhancement" shall mean, with respect to any Series, the
subordination, the cash collateral guaranty or account, collateral investor
interest, letter of credit, surety bond, insurance policy, spread account,
reserve account, cross-support feature or any other contract, agreement or
arrangement for the benefit of the Certificateholders of such Series (or
Certificateholders of a Class within such Series) as designated in the
applicable Supplement.
"Enhancement Invested Amount" shall have the meaning, with respect
to any Series, specified in the related Supplement.
"Enhancement Provider" shall mean, with respect to any Series, the
Person, if any, designated as such in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, as operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in
subsection 4.2(b).
"Excess Funding Amount" shall mean, as of any date of determination,
the principal amount on deposit in the Excess Funding Account.
"Exchange" shall mean either of the procedures described under
Section 6.9.
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"Exchangeable Transferor Certificate" shall mean the certificate
executed by the Transferor and authenticated by the Trustee, substantially in
the form of Exhibit A and exchangeable as provided in Section 6.9; provided,
however, that at any time there shall be only one Exchangeable Transferor
Certificate.
"Exchange Date" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in Section 6.9.
"Exchange Notice" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in Section 6.9.
"Extended Trust Termination Date" shall have the meaning specified
in subsection 12.1(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Fitch" shall mean Fitch Investors Service, L.P.
"Floating Allocation Percentage" shall have the meaning specified in
the related Supplement.
"Foreign Clearing Agency" shall mean CEDEL and the Euroclear
Operator.
"Global Certificate" shall have the meaning specified in Section
6.13.
"Governmental Authority" shall mean the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Ineligible Receivable" shall have the meaning specified in
subsection 2.4(d)(iii).
"Initial Closing Date" shall mean January __, 1997.
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"Initial Invested Amount" shall mean, with respect to any Series of
Certificates, the amount stated in the related Supplement.
"Insolvency Event" shall have the meaning specified in subsection
9.1(a).
"Insolvency Proceeding" shall have the meaning specified in
subsection 9.1(a).
"Insurance Proceeds" shall mean any amounts recovered by the
Servicer pursuant to any credit insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Invested Amount" shall mean, with respect to any Series, the
meaning specified in the applicable Supplement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended from time to time.
"Investor Account" shall mean each of the Collection Account and the
Excess Funding Account.
"Investor Certificate" shall mean any one of the certificates
(including, without limitation, the Bearer Certificates, the Registered
Certificates or the Global Certificates) issued by the Trust, executed by the
Transferor and authenticated by the Trustee substantially in the form (or forms
in the case of a Series with multiple Classes) of the investor certificate
attached to the related Supplement or such other interest in the Trust deemed to
be an "Investor Certificate" in any related Supplement.
"Investor Certificateholder" shall mean the holder of record of an
Investor Certificate.
"Investor Charge-Off" shall have, with respect to each Series, the
meaning specified in the applicable Supplement.
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"Investor Default Amount" shall have, with respect to any Series of
Certificates, the meaning stated in the related Supplement.
"Investor Exchange" shall have the meaning specified in subsection
6.9(b).
"Investor Interest" shall have, with respect to any Series of
Certificates, the meaning stated in the related Supplement.
"Investor Percentage" shall have, with respect to Principal
Receivables, Yield Receivables and Defaulted Receivables, and any Series of
Certificates, the meaning
stated in the related Supplement.
"Investor Servicing Fee" shall have, with respect to each Series,
the meaning specified in Section 3.2.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, participation or equity interest, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the UCC (other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing; provided, however, that any assignment pursuant to Section 7.2 or
transfer of an interest in the Exchangeable Transferor Certificate in accordance
with subsection 6.3(b) shall not be deemed to constitute a Lien.
"Master File" shall mean the file on the Transferor's computer
system that identifies VISA Corporate Card or Purchasing Card accounts of the
Transferor, which file is designated by the Transferor as its "Master File" or
any other file or record in replacement thereof.
"Minimum Trust Principal Component" shall mean the aggregate of the
amounts set forth in each Supplement
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for each outstanding Series as the "Minimum Trust Principal Component" for
such Series.
"Minimum Transferor Amount" shall mean the product of (i) the
Minimum Transferor Percentage and (ii) the sum of the Trust Principal Component
for the preceding Collection Period plus the Excess Funding Amount plus the
amount on deposit on any Series Accounts or other accounts specified in a
Supplement as of the end of such Collection Period; provided, however, that the
Transferor may reduce the Minimum Transferor Amount upon (w) delivery to the
Trustee of a Tax Opinion with respect to such reduction, (x) 30 day's prior
notice to the Trustee, each Rating Agency and any Enhancement Provider entitled
to receive such notice pursuant to the relevant Supplement, (y) written
confirmation from the Rating Agency that such reduction will not result in the
reduction or withdrawal of the respective ratings of each Rating Agency for any
Series outstanding and (z) delivery to the Trustee and each such Enhancement
Provider of an Officer's Certificate stating that the Transferor reasonably
believes that such reduction will not, based on the facts known to such officer
at the time of such certification, then or thereafter cause an Early
Amortization Event to occur with respect to any Series; provided further that
the Minimum Transferor Amount shall not at any time be less than __% of the sum
of the Trust Principal Component for the preceding Collection Period plus the
Excess Funding Amount plus the amount on deposit on any Series Accounts or other
accounts specified in a Supplement as of the end of such Collection Period.
"Minimum Transferor Percentage" shall mean the highest percentage
specified as the "Minimum Transferor Percentage" in any Supplement for any
outstanding Series.
"Monthly Servicer Report" shall mean, a report substantially in the
form attached as Exhibit C to this Agreement, with such changes as the Servicer
may determine to be necessary or desirable; provided, however, that no such
change shall serve to exclude information required by the Agreement or any
Supplement.
"Moody's" shall mean Moody's Investors Service, Inc.
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"Net Interchange" shall mean interchange fees payable to the
Transferor, in its capacity as charge card or credit card issuer, through VISA
U.S.A., Inc. reduced by VISA dues and rebates to corporate customers and travel
agencies. The aggregate amount of Net Interchange allocable to the Trust each
Collection Period shall be equal to the product of (i) the total amount of Net
Interchange paid or payable to the Transferor with respect to such Collection
Period and (ii) a fraction the numerator of which is the aggregate amount of
cardholder charges for goods and services in the Accounts with respect to such
Collection Period and the denominator of which is the aggregate amount of
cardholder charges for goods and services in the Accounts and in the accounts
owned by the Transferor and originated under the Transferor's Corporate Card or
Purchasing Card programs, each with respect to such Collection Period.
"Notice Date" shall have the meaning specified in subsection
2.6(c)(i).
"Obligor" shall mean, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account, including any
guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any Vice
President or more senior officer of the Transferor or Servicer and delivered to
the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may be counsel for or an employee of the Person providing the opinion, and who
shall be reasonably acceptable to the Trustee; provided, however, that any Tax
Opinion or other opinion relating to federal income tax matters shall be an
opinion of nationally recognized tax counsel.
"Participations" shall have the meaning specified in subsection
2.6(a)(ii).
"Paying Agent" shall mean any paying agent appointed pursuant to
Section 6.6 and shall initially be the Trustee.
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"Person" shall mean any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of similar nature.
"Principal Collections" shall mean the amount of Collections other
than (i) Yield Collections and (ii) Collections with respect to Defaulted
Receivables.
"Principal Shortfalls" shall mean, with respect to a Transfer Date,
the aggregate amount for all outstanding Series that the related Supplements
specify are "Series Principal Shortfalls" for such Transfer Date.
"Principal Terms" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in subsection 6.9(c).
"Purchasing Card" shall mean a VISA Corporate Card issued pursuant
to a Purchasing Card Agreement.
"Purchasing Card Agreement" shall mean the First Bank VISA
Purchasing Card Agreement and, if applicable, Federal Truth in Lending Statement
for VISA Purchasing Card accounts between any Obligor and First Bank of South
Dakota (National Association), as such agreements may be amended, modified or
otherwise changed from time to time.
"Rating Agency" shall mean, with respect to each Series, the rating
agency or agencies, if any, selected by the Transferor to rate the Certificates,
as specified in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any action,
that each Rating Agency shall have notified the Transferor or the Trustee in
writing that such action will not result in a withdrawal or reduction of its
rating of any outstanding Series of Certificates with respect to which it is a
Rating Agency.
"Reassignment" shall have the meaning specified in subsection
2.7(b)(ii).
"Reassignment Date" shall have the meaning specified in subsection
2.4(e).
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"Receivable" shall mean any amount owing by the Obligors under an
Account (including Defaulted Amounts) from time to time, including, without
limitation, amounts owing for the payment of merchandise and services, cash
advances and cash advance fees, access checks, annual cardholder fees, credit
insurance premiums, late fees, overlimit fees, return check fees and all other
fees and charges. A Receivable shall be deemed to have been created at the end
of the day on the Date of Processing of such Receivable. In calculating the
aggregate amount of Receivables on any day, the amount of Receivables shall be
reduced by the aggregate amount of credit balances, and other adjustments stated
in Section 4.3 hereof, in the Accounts on such day. Any Receivables which the
Transferor is unable to transfer as provided in subsection 2.5(d) shall not be
included in calculating the aggregate amount of Receivables.
"Record Date" shall mean, with respect to any Distribution Date, the
last Business Day of the preceding Collection Period.
"Registered Certificates" shall have the meaning specified in
Section 6.1.
"Relevant UCC State" shall mean all jurisdictions where UCC filing
is required to perfect and maintain the security interest of the Trustee.
"Removal Date" shall mean the date on which Receivables in certain
designated Removed Accounts will be reassigned by the Trustee to the Transferor.
"Removal Notice Date" shall have the meaning specified in Section
2.7(a).
"Removed Accounts" shall have the meaning specified in subsection
2.7(a).
"Requirements of Law" for any Person shall mean the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether federal, state or local (including, without
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limitation, usury laws, the federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System).
"Responsible Officer" shall mean any officer within the Corporate
Trust Office (or any successor group of the Trustee), including any Vice
President, any Assistant Secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any person who at
the time shall be an above-designated officer and also, with respect to a
particular officer to whom any corporate trust matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Revolving Period" shall have, with respect to each Series, the
meaning specified in the related Supplement.
"SAIF" shall mean the Savings Association Insurance Fund
administered by the FDIC.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series" shall mean any series of Investor Certificates, which may
include within any such Series a Class or Classes of Investor Certificates
subordinate to another such Class or Classes of Investor Certificates.
"Series Account" shall mean any account or accounts established
pursuant to a Supplement for the benefit of such Series.
"Series Early Amortization Event" shall have, with respect to any
Series, the meaning specified pursuant to the Supplement for the related Series.
"Series Servicing Fee Rate" shall mean, with respect to any Series,
the amount specified in the related Supplement.
"Series Termination Date" shall mean, with respect to any Series of
Certificates, the date stated in the related Supplement.
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"Servicer" shall mean initially FBS Card Services, Inc., a Minnesota
corporation, and its permitted successors and assigns, and thereafter any Person
appointed as successor as herein provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section 10.1.
"Servicing Fee" shall have the meaning specified in Section 3.2.
"Servicing Officer" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers furnished to the Trustee by
the Servicer, as such list may from time to time be amended.
"Shared Excess Yield Collections" shall mean, with respect to any
Transfer Date, the aggregate amount for all outstanding Series that the related
Supplements specify are to be treated as "Shared Excess Yield Collections" for
such Transfer Date.
"Shared Principal Collections" shall mean, with respect to any
Transfer Date, the aggregate amount for all outstanding Series that the related
Supplements specify are to be treated as "Shared Principal Collections" for such
Transfer Date.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
Division of The McGraw-Hill Companies, Inc. (by whatever variant appellation it
may be known from time to time).
"Successor Servicer" shall have the meaning specified in subsection
10.2(a).
"Supplement" or "Series Supplement" shall mean, with respect to any
Series, a supplement to this Agreement complying with the terms of Section 6.9
of this Agreement, executed in conjunction with any issuance of any Series of
Certificates (or, in the case of the issuance of Certificates on the Initial
Closing Date, the supplement executed in connection with the issuance of such
Certificates).
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"Tax Opinion" shall mean with respect to any action, an Opinion of
Counsel to the effect that, for federal income tax purposes, (a) such action
will not adversely affect the tax characterization as debt of Investor
Certificates of any outstanding Series or Class that were characterized as debt
at the time of their issuance, (b) following such action the Trust will not be
deemed to be an association (or publicly traded partnership) taxable as a
corporation and (c) such action will not cause or constitute an event in which
gain or loss would be recognized by any Investor Certificateholder or the Trust.
"Termination Notice" shall have, with respect to any Series, the
meaning specified in subsection 10.1(d).
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.3 and shall initially be the Trustee's Corporate Trust Office.
"Transfer Date" shall mean, unless otherwise specified in the
related Supplement, with respect to any Series, the Business Day immediately
prior to each Distribution Date.
"Transferor" shall mean First Bank of South Dakota (National
Association), a national banking association, and its successors in interest and
permitted assigns.
"Transferor Amount" shall mean, on any date of determination, the
Trust Principal Component plus, the Excess Funding Amount and the principal
amount on deposit in any Principal Funding Account (as defined in any
Supplement) plus the amount on deposit in any Series Account specified in a
Supplement, at the end of the day immediately prior to such date of
determination, minus the Aggregate Invested Amount at the end of such day, minus
the aggregate Enhancement Invested Amounts not included in the Aggregate
Invested Amount, if any, for each Series outstanding at the end of such day,
minus the aggregate Collateral Invested Amounts not included in the Aggregate
Invested Amounts, if any, for each Series outstanding at the end of such day.
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"Transferor Exchange" shall have the meaning specified in subsection
6.9(b).
"Transferor Participation" shall mean any participation interest or
other similar interest in the Exchangeable Transferor Certificate that is
granted or sold by the Transferor.
"Transferor Percentage" shall mean, on any date of determination,
when used with respect to Principal Collections, Yield Collections and Defaulted
Receivables, a percentage equal to 100% minus the Aggregate Investor Percentage
with respect to such categories of Receivables.
"Transferor Servicing Fee" shall have the meaning specified in
Section 3.2.
"Transferred Account" shall mean an Account with respect to which a
new customer account number has been issued by the Servicer or the Transferor
under circumstances resulting from a lost or stolen charge card or from the
transfer from one program to another program and not requiring standard
application and credit evaluation procedures under the Corporate/Purchasing Card
Guidelines, and which in either case can be traced or identified in the Master
File as a Transferred Account into which an Account has been transferred by
reference to or by way of the computer files or microfiche lists delivered to
the Trustee pursuant to Section 2.1 or 2.6.
"Trust" shall mean the trust created by this Agreement, the corpus
of which shall consist of the Receivables now existing or hereafter created and
arising in connection with the Accounts, all monies due or to become due with
respect to the Receivables, all proceeds (as defined in Section 9-306 of the UCC
as in effect in the Relevant UCC State) of the Receivables and Insurance
Proceeds relating to the Receivables, the right to receive certain amounts paid
or payable as Net Interchange (if provided for in any Supplement), such funds as
from time to time are deposited in the Collection Account, the Excess Funding
Account and any Series Account and the rights to any Enhancement with respect to
any Series.
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"Trust Early Amortization Event" shall have, with respect to each
Series, the meaning specified in Section 9.1.
"Trustee" shall mean Citibank, N.A., a national banking association,
and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee appointed as herein provided.
"Trust Extension" shall have the meaning specified in subsection
12.1(a).
"Trust Principal Component" shall mean, for any Collection Period,
the product of the aggregate amount of Receivables at the end of the prior
Collection Period and one minus the Yield Factor or, for any other date of
determination, the product of the aggregate amount of Receivables as of the date
so specified in this Agreement and one minus the Yield Factor.
"Trust Termination Date" shall mean the earliest to occur of (i)
unless a Trust Extension shall have occurred, the first Business Day after the
Distribution Date on which the Investor Interest, the Collateral Investor
Interest, and any other interest issued by the Trust, as applicable, for each
Series is zero, (ii) if a Trust Extension shall have occurred, the Extended
Trust Termination Date, (iii) _________ __, 20__ and (iv) the date of any
termination pursuant to Section 9.2(b).
"UCC" shall mean the Uniform Commercial Code, as amended from time
to time, as in effect in any specified jurisdiction.
"Undivided Interest" shall mean the undivided interest in the Trust
evidenced by an Investor Certificate.
"Yield Collections" shall mean with respect to any Collection
Period, the sum of (i) the amount of Collections (other than Net Interchange)
for such Collection Period multiplied by the Yield Factor and (ii) the amount of
Net Interchange (if any) allocable to any Series of Certificates pursuant to any
Supplement with respect to such Collection Period (to the extent received by the
Trust and deposited into the Collection Account or any
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Series Account, as the case may be, on the Transfer Date following such
Collection Period).
"Yield Factor" shall mean ______%.
Section 1.2 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partially defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles or regulatory accounting principles, as
applicable. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under generally accepted accounting
principles or regulatory accounting principles, the definitions contained herein
shall control.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to any Supplement or this
Agreement as a whole and not to any particular provision of this Agreement or
any Supplement; and Section, subsection, Schedule and Exhibit references
contained in this Agreement or any Supplement are references to Sections,
subsections, Schedules and Exhibits in or to this Agreement or any Supplement
unless otherwise specified.
[End of Article I]
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ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Receivables. The Transferor does hereby
transfer, assign, set-over, and otherwise convey to the Trust for the benefit of
the Certificateholders, without recourse, all of its right, title and interest
in and to the Receivables now existing and hereafter created and arising in
connection with the Accounts, all monies due or to become due with respect to
such Receivables (including recoveries on any charged-off Receivables and
amounts, if any, paid by corporate clients as co-obligors under Corporate Card
Agreements), all proceeds of such Receivables, Insurance Proceeds relating to
such Receivables and the proceeds thereof.
In connection with such transfer, assignment, set-over and
conveyance, the Transferor agrees to record and file, at its own expense, a
financing statement (including any continuation statements with respect to such
financing statement when applicable) with respect to the Receivables now
existing and hereafter created meeting the requirements of applicable state law
in such manner and in such jurisdictions as are necessary to perfect the
assignment of the Receivables to the Trust, and to deliver a file-stamped copy
of such financing statement or continuation statement or other evidence of such
filing (which may, for purposes of this Section 2.1, consist of telephone
confirmation of such filing) to the Trustee on or prior to the date of issuance
of the Certificates, and in the case of any continuation statements filed
pursuant to this Section 2.1, as soon as practicable after receipt thereof by
the Transferor. The foregoing transfer, assignment, set-over and conveyance to
the Trust shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such transfer, assignment, set-over and
conveyance shall be construed accordingly.
In connection with such transfer, the Transferor agrees, at its own
expense, on or prior to the Initial Closing Date (i) to indicate in the Master
File maintained in its computer files that Receivables created in connection
with the Accounts (other than any Additional Accounts) have been transferred to
the Trust pursuant to
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this Agreement for the benefit of the Certificateholders by identifying such
Accounts in the Master File with the designation "____" and (ii) to deliver to
the Trustee a computer file or microfiche list containing a true and complete
list of all such Accounts, identified by account number and setting forth the
Receivable balance as of the Cut Off Date. Such file or list shall be marked as
Schedule 1 to this Agreement, delivered to the Trustee as confidential and
proprietary, and is hereby incorporated into and made a part of this Agreement.
The Transferor further agrees not to alter the file designation referenced in
clause (i) of this paragraph with respect to any Account during the term of this
Agreement unless and until such Account becomes a Removed Account. The
Transferor further agrees to deliver to the Trustee as promptly as possible
after the Trustee may at any time request, a computer file or microfiche list
containing a true and complete list of all Accounts (including any Additional
Accounts), each identified by account number, and to deliver to the Trustee as
promptly as possible after the Trustee may at any time request tracing
information with respect to Transferred Accounts. The Transferor shall hold such
information with respect to the Accounts and Transferred Accounts, prior to
delivery thereof to the Trustee, in trust for the benefit of the Trustee, on
behalf of the Trust.
The parties intend that if, and to the extent that, the transfer set
forth above is not deemed to be a sale, the Transferor shall be deemed hereunder
to have granted, and the Transferor does hereby grant, to the Trustee a first
priority perfected security interest in all of the Transferor's right, title and
interest in, to and under the Receivables now existing and hereafter created and
arising in connection with the Accounts, all moneys due or to become due with
respect to such Receivables (including recoveries on any charged-off Receivables
and amounts, if any, paid by corporate clients as co-obligors under Corporate
Card Agreements), all proceeds of such Receivables and all Insurance Proceeds
relating to such Receivables and all proceeds thereof to secure the payment of
the Investor Certificates of each Series, and that this Agreement shall
constitute a security agreement under applicable law.
Pursuant to the request of the Transferor, the Trustee shall cause
Certificates in authorized denomina-
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tions evidencing the entire interest in the Trust to be duly authenticated and
delivered to or upon the order of the Transferor pursuant to Section 6.2.
Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf of the
Trust, of all right, title and interest to the property now existing and
hereafter created, conveyed to the Trust pursuant to Section 2.1, and declares
that it shall maintain such right, title and interest, upon the Trust herein set
forth, for the benefit of all Certificateholders. The Trustee further
acknowledges that, prior to or simultaneously with the execution and delivery of
this Agreement, the Transferor delivered to the Trustee the computer file or
microfiche list described in the third paragraph of Section 2.1.
(b) The Trustee hereby agrees not to disclose to any Person any of
the account numbers or other information contained in the computer files or
microfiche lists delivered to the Trustee by the Transferor pursuant to Sections
2.1, 2.6 and 2.7 ("Account Information") except as is required in connection
with the performance of its duties hereunder or in enforcing the rights of the
Certificateholders or to a Successor Servicer appointed pursuant to Section
10.2, as mandated pursuant to any Requirement of Law applicable to the Trustee
or as requested by any Person in connection with financing statements filed with
the Trust. The Trustee agrees to take such measures as shall be reasonably
requested by the Transferor to protect and maintain the security and
confidentiality of such information, and, in connection therewith, shall allow
the Transferor to inspect the Trustee's security and confidentiality
arrangements from time to time during normal business hours. In the event that
the Trustee is required by law to disclose any Account Information, the Trustee
shall provide the Transferor with prompt written notice, unless such notice is
prohibited by law, of any such request or requirement so that the Transferor may
request a protective order or other appropriate remedy. The Trustee shall make
best efforts to provide the Transferor with written notice no later than five
days prior to any disclosure pursuant to this subsection 2.2(b).
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(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3 Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trust as of the Initial Closing
Date:
(a) Organization and Good Standing. The Transferor is a national
banking association duly organized and validly existing in good standing under
the laws of the United States and has full corporate power, authority and legal
right to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement and to execute and
deliver to the Trustee the Certificates pursuant hereto.
(b) Due Qualification. The Transferor is duly qualified to do
business and is in good standing (or is exempt from such requirement) in any
state required in order to conduct its business, and has obtained all necessary
licenses and approvals with respect to the Transferor required under federal and
South Dakota law, in each case to the extent required of a national banking
association; provided, however, that no representation or warranty is made with
respect to any qualifications, licenses or approvals which the Trustee would
have to obtain to do business in any state in which the Trustee seeks to enforce
any Receivable.
(c) Due Authorization. The execution and delivery of this Agreement
and the execution and delivery to the Trustee of the Certificates by the
Transferor and the consummation of the transactions provided for in this
Agreement have been duly authorized by the Transferor by all necessary corporate
action on its part and this Agreement is, at the time of its execution, an
official record of the Transferor.
(d) No Conflict. The execution and delivery of this Agreement and
the Certificates, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict with, result
in any breach of any of the material terms
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and provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which the Transferor is a party or by
which it or any of its properties are bound.
(e) No Violation. The execution and delivery of this Agreement and
the Certificates, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict with or
violate any Requirements of Law applicable to the Transferor.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Transferor, threatened against the
Transferor before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) asserting the invalidity of this
Agreement or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or the Certificates, (iii) seeking any determination or ruling that,
in the reasonable judgment of the Transferor, would materially and adversely
affect the performance by the Transferor of its obligations under this
Agreement, (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or the
Certificates or (v) seeking to affect adversely the income tax attributes of the
Trust.
(g) Eligibility of Accounts. As of the Cut Off Date, each Account
was an Eligible Account and no selection procedures adverse to the Investor
Certificateholders have been employed by the Transferor in selecting the
Accounts from among the Eligible Accounts in the Bank Portfolio.
(h) All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery of this Agreement and the
Certificates, the performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof have been obtained.
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For the purposes of the representations and warranties contained in
this Section 2.3 and made by the Transferor on the Initial Closing Date,
"Certificates" shall mean the Certificates issued on the Initial Closing Date.
The representations and warranties set forth in this Section 2.3 shall survive
the transfer and assignment of the respective Receivables to the Trust, and
termination of the rights and obligations of the Servicer pursuant to Section
10.1. The Transferor hereby represents and warrants to the Trust, with respect
to any Series of Certificates, as of its Closing Date, unless otherwise stated
in such Supplement, that the representations and warranties of the Transferor
set forth in Section 2.3 are true and correct as of such date (for the purposes
of such representations and warranties, "Certificates" shall mean the
Certificates issued on the related Closing Date). Upon discovery by the
Transferor, the Servicer or the Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the others.
Section 2.4 Representations and Warranties of the Transferor
Relating to the Agreement and the Receivables.
(a) Binding Obligation; Valid Transfer and Assignment. The
Transferor hereby represents and warrants to the Trust that, as of the Initial
Closing Date:
(i) This Agreement constitutes a legal, valid and binding obligation
of the Transferor, enforceable against the Transferor in accordance with
its terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
in general and the rights of creditors of national banking associations,
and (B) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(ii) This Agreement constitutes either (A) a valid transfer,
assignment, set-over and conveyance to the Trust of all right, title and
interest of the Transferor in and to the Receivables now existing
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and hereafter created and arising in connection with the Accounts (other
than Receivables in Additional Accounts), all proceeds of such Receivables
and Insurance Proceeds relating thereto, and such Receivables and all
proceeds thereof and Insurance Proceeds relating thereto will be held by
the Trust free and clear of any Lien of any Person claiming through or
under the Transferor or any of its Affiliates except for (x) Liens
permitted under subsection 2.5(b), (y) the interest of the Transferor as
Holder of the Exchangeable Transferor Certificate (z) the Transferor's
right, if any, to interest accruing on, and investment earnings, if any,
in respect of any Series Account, as provided in this Agreement or any
related Supplement or (B) a grant of a security interest (as defined in
the UCC as in effect in the State of South Dakota) in such property to the
Trust, which is enforceable with respect to the existing Receivables
(other than Receivables in Additional Accounts), the proceeds thereof and
Insurance Proceeds relating thereto upon execution and delivery of this
Agreement, and which will be enforceable with respect to such Receivables
hereafter created, the proceeds thereof and Insurance Proceeds relating
thereto, upon such creation. If this Agreement constitutes the grant of a
security interest to the Trust in such property, upon the filing of the
financing statement described in Section 2.1 and in the case of the
Receivables hereafter created and proceeds thereof and Insurance Proceeds
relating thereto, upon such creation, the Trust shall have a first
priority perfected security interest in such property (subject to Section
9-306 of the UCC as in effect in the State of South Dakota), except for
Liens permitted under subsection 2.5(b). Neither the Transferor nor any
Person claiming through or under the Transferor shall have any claim to or
interest in any Series Account, except for the Transferor's rights to
receive interest accruing on, and investment earnings in respect of any
Series Account as provided in any Supplement and, if this Agreement
constitutes the grant of a security interest in such property, except for
the interest of the Transferor in such property as a debtor for purposes
of the UCC as in effect in the State of South Dakota.
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(b) Eligibility of Receivables. The Transferor hereby represents and
warrants to the Trust as of the Initial Closing Date and as of the Addition Date
with respect to an Additional Account, as the case may be, that:
(i) Each Receivable is an Eligible Receivable as of the Cut Off Date
or the Addition Date, as applicable.
(ii) Each Receivable then existing has been conveyed to the Trust
free and clear of any Lien of any Person claiming through or under the
Transferor or any of its Affiliates (other than Liens permitted under
subsection 2.5(b)) and in compliance, in all material respects, with all
Requirements of Law applicable to the Transferor.
(iii) With respect to each Receivable then existing, all consents,
licenses, approvals or authorizations of or registrations or declarations
with any Governmental Authority required to be obtained, effected or given
by the Transferor in connection with the conveyance of such Receivable to
the Trust have been duly obtained, effected or given and are in full force
and effect.
(iv) On each day on which any new Receivable is created, the
Transferor shall be deemed to represent and warrant to the Trust that (A)
each Receivable created on such day is an Eligible Receivable, (B) each
Receivable created on such day has been conveyed to the Trust in
compliance, in all material respects, with all Requirements of Law
applicable to the Transferor, (C) with respect to each such Receivable,
all consents, licenses, approvals or authorizations of or registrations or
declarations with, any Governmental Authority required to be obtained,
effected or given by the Transferor in connection with the conveyance of
such Receivable to the Trust have been duly obtained, effected or given
and are in full force and effect and (D) the representations and
warranties set forth in subsection 2.4(a) are true and correct with
respect to each Receivable created on such day as if made on such day.
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(v) As of the Initial Closing Date, Schedule 1 to this Agreement,
and as of the applicable Addition Date with respect to Additional
Accounts, the related computer file or microfiche list referred to in
Section 2.6, is an accurate and complete listing in all material respects
of all the Accounts as of the Cut Off Date, or with respect to Additional
Accounts, as of the applicable Addition Date, and the information
contained therein with respect to the identity of such Accounts and the
Receivables existing thereunder is true and correct in all material
respects as of the Cut Off Date or such applicable Addition Date. As of
the Cut Off Date, the aggregate amount of Receivables in all the Accounts
was $_____________, of which $_____________ constituted Trust Principal
Component.
(c) Notice of Breach. The representations and warranties set forth
in this Section 2.4 shall survive the transfer and assignment of the respective
Receivables to the Trust. Upon discovery by the Transferor, the Servicer or the
Trustee of a breach of any of the representations and warranties set forth in
this Section 2.4, the party discovering such breach shall give prompt written
notice to the other parties mentioned above. The Transferor agrees to cooperate
with the Servicer and the Trustee in attempting to cure any such breach.
(d) Reassignment of Ineligible Receivables.
(i) Automatic Reassignment. In the event of a breach with respect to
a Receivable of any representations and warranties set forth in subsection
2.4(b)(ii), or in the event that a Receivable is not an Eligible
Receivable, and any of the following three conditions is met: (A) as a
result of such breach or event such Receivable is charged off as
uncollectible or the Trust's rights in, to or under such Receivable or its
proceeds are impaired or the proceeds of such Receivable are not available
for any reason to the Trust free and clear of any Lien; (B) the Lien upon
the subject Receivable (1) arises in favor of the United States of America
or any State or any agency or instrumentality thereof and involves taxes
or liens arising under Title IV of ERISA or (2) has been consented to by
the Transferor; or (C) the unsecured short-term debt rating of
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the Transferor is not at least P-1 by Moody's and the Lien upon the
subject Receivable ranks prior to the Lien created pursuant to this
Agreement; then, upon the earlier to occur of the discovery of such breach
or event by the Transferor or the Servicer or receipt by the Transferor of
written notice of such breach or event given by the Trustee, each such
Receivable shall be automatically reassigned from the Trust on the terms
and conditions set forth in subsection 2.4(d)(iii).
(ii) Reassignment After Cure Period. In the event of a breach of any
of the representations and warranties set forth in subsection 2.4(b) other
than a breach or event as set forth in clause (d)(i) above, and as a
result of such breach the related Account becomes a Defaulted Account or
the Trust's rights in, to or under the Receivable or its proceeds are
impaired or the proceeds of such Receivable are not available for any
reason to the Trust free and clear of any Lien, then, upon the expiration
of 60 days (or such longer period as may be agreed to by the Trustee in
its sole discretion, but in no event later than 120 days) from the earlier
to occur of the discovery of any such event by either the Transferor or
the Servicer, or receipt by the Transferor of written notice of any such
event given by the Trustee, each such Receivable shall be reassigned from
the Trust on the terms and conditions set forth in subsection 2.4(d)(iii);
provided, however, that no such reassignment shall be required to be made
if, on any day within such applicable period, such representations and
warranties with respect to such Receivable shall then be true and correct
in all material respects as if such Receivable had been created on such
day.
(iii) Procedures for Reassignment. When the provisions of subsection
2.4(d)(i) or (ii) above require reassignment of a Receivable, then such
Receivable shall be designated an "Ineligible Receivable" and shall be
assigned a balance of zero for the purpose of determining the Trust
Principal Component on any day. On and after the date of its designation
as an Ineligible Receivable, each Ineligible Receivable shall not be given
credit in determining the Trust Principal Component used to calcu-
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late the Transferor Amount, and the Floating Allocation Percentage and the
Fixed Allocation Percentage applicable to any Series. If, following the
exclusion of such Ineligible Receivables from the calculation of the Trust
Principal Component, the Transferor Amount would be less than the Minimum
Transferor Amount, the Transferor shall make a deposit into the Excess
Funding Account in immediately available funds prior to the next
succeeding Business Day in an amount equal to the amount by which the
Transferor Amount would otherwise be less than the Minimum Transferor
Amount. The payment of such deposit amount in immediately available funds
shall otherwise be considered payment in full of all of the Ineligible
Receivables.
The obligation of the Transferor to make the deposits, if any,
required to be made to the Excess Funding Account as provided in this Section,
shall constitute the sole remedy respecting the event giving rise to such
obligation available to Certificateholders (or the Trustee on behalf of the
Certificateholders) or any Enhancement Provider.
(iv) Proceeds Held by Servicer. For the purposes of subsections
2.4(d)(i) and (ii) above, proceeds of a Receivable shall not be deemed to
be impaired hereunder solely because such proceeds are held by the
Servicer (if the Servicer is the Transferor) for more than the applicable
period under Section 9-306(3) of the UCC as in effect in the Relevant UCC
State.
(e) Reassignment of Trust Portfolio. In the event of a breach of any
of the representations and warranties set forth in subsection 2.4(a), either the
Trustee or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Invested Amount, by notice then given
in writing to the Transferor (and to the Trustee and the Servicer, if given by
the Investor Certificateholders), may direct the Transferor to accept
reassignment of the Receivables within 60 days of such notice (or within such
longer period as may be specified in such notice), and the Transferor shall be
obligated to accept reassignment of such Receivables on a Distribution Date
specified by the Transferor (such Distribution Date, the "Reassignment
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Date") occurring within such applicable period on the terms and conditions set
forth below; provided, however, that no such reassignment shall be required to
be made if, at any time during such applicable period, the representations and
warranties contained in subsection 2.4(a) shall then be true and correct in all
material respects. The Transferor shall deposit on the Transfer Date (in New
York Clearing House, next day funds) preceding the Reassignment Date an amount
equal to the reassignment deposit amount for such Receivables in the Collection
Account or Series Account, as provided in the related Supplement, for
distribution to the Investor Certificateholders pursuant to Article XII. The
reassignment deposit amount with respect to each Series for such reassignment,
unless otherwise stated in the related Supplement, shall be equal to (i) the
Invested Amount of such Series at the end of the day on the last day of the
Collection Period preceding the Reassignment Date, less the amount, if any,
previously allocated for payment of principal to such Certificateholders on the
related Distribution Date in the Collection Period in which the Reassignment
Date occurs, plus (ii) an amount equal to all interest accrued but unpaid on the
Investor Certificates of such Series at the applicable Certificate Rate through
the Reassignment Date, less the amount, if any, previously allocated for payment
of interest to the Certificateholders of such Series on the related Distribution
Date in the Collection Period in which the Reassignment Date occurs. Payment of
the reassignment deposit amount with respect to each Series, and all other
amounts in the Collection Account or the applicable Series Account in respect of
the preceding Collection Period, shall be considered a prepayment in full of the
Receivables represented by the Investor Certificates. On the Distribution Date
following the Transfer Date on which such amount has been deposited in full into
the Collection Account or the applicable Series Account, the Receivables and all
monies due or to become due with respect to such Receivables and all proceeds of
the Receivables and Insurance Proceeds relating to such Receivables and Net
Interchange (if any) allocated to the Receivables pursuant to any Supplement
shall be released to the Transferor after payment of all amounts otherwise due
hereunder on or prior to such dates and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be prepared by and as are reasonably
requested by the Transferor to vest in the Transfer-
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or, or its designee or assignee, all right, title and interest of the Trust in
and to the Receivables, all monies due or to become due with respect to such
Receivables and all proceeds of the Receivables and Insurance Proceeds relating
to such Receivables and Net Interchange (if any) allocated to the Receivables
pursuant to any Supplement. If the Trustee or the Investor Certificateholders
give notice directing the Transferor to accept reassignment as provided above,
the obligation of the Transferor to accept reassignment of the Receivables and
pay the reassignment deposit amount pursuant to this subsection 2.4(e) shall
constitute the sole remedy respecting a breach of the representations and
warranties contained in subsection 2.4(a) available to the Investor
Certificateholders or the Trustee on behalf of the Investor Certificateholders.
Section 2.5 Covenants of the Transferor. The Transferor hereby
covenants that:
(a) Receivables to be Accounts. The Transferor will take no action
to cause any Receivable to be evidenced by any instrument (as defined in the UCC
as in effect in the Relevant UCC State). Each Receivable shall be payable
pursuant to a contract which does not create a Lien on any goods purchased
thereunder. The Transferor will take no action to cause any Receivable to be
anything other than an "account" or a "general intangible" (as defined in the
UCC as in effect in the Relevant UCC State).
(b) Security Interests. Except for the conveyances hereunder, the
Transferor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Receivable,
whether now existing or hereafter created, or any interest therein; the
Transferor will immediately notify the Trustee of the existence of any Lien on
any Receivable; and the Transferor shall defend the right, title and interest of
the Trust in, to and under the Receivables, whether now existing or hereafter
created, against all claims of third parties claiming through or under the
Transferor; provided, however, that nothing in this subsection 2.5(b) shall
prevent or be deemed to prohibit the Transferor from suffering to exist upon any
of the Receivables any Liens for municipal or other local taxes if such taxes
shall not at the time be due and payable or
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if the Transferor shall currently be contesting the validity thereof in good
faith by appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto.
(c) Corporate Card Agreements, Purchasing Card Agreements and
Corporate/Purchasing Card Guidelines. The Transferor shall comply with and
perform its obligations under the Corporate Card Agreements or Purchasing Card
Agreements, as the case may be, relating to the Accounts and the
Corporate/Purchasing Card Guidelines and all applicable rules and regulations of
VISA U.S.A., Inc., except insofar as any failure to comply or perform would not
materially and adversely affect the rights of the Trust or the
Certificateholders hereunder or under the Certificates. The Transferor may
change the terms and provisions of the Corporate Card Agreements, Purchasing
Card Agreements or Corporate/Purchasing Card Guidelines in any respect
(including, without limitation, the reduction of the required minimum monthly
payment, the calculation of the amount, or the timing, of charge offs and the
fees and charges to be assessed thereon) only if such change (i) would not, in
the reasonable belief of the Transferor, cause an Early Amortization Event to
occur and (ii) is made applicable to the comparable segment of the charge card
accounts owned and serviced by the Transferor which have characteristics the
same as, or substantially similar to, the Accounts that are the subject of such
change, except as otherwise restricted by an endorsement, sponsorship, or other
agreement between the Transferor and an unrelated third party or by the terms of
the Corporate Card Agreements or Purchasing Card Agreements.
(d) Account Allocations.
(i) In the event that the Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of
this Agreement (including, without limitation, by reason of the
application of the provisions of Section 9.2 or an order by any federal
governmental agency having regulatory authority over the Transferor or any
court of competent jurisdiction that the Transferor not transfer any
additional Receivables to the Trust) then, in any such event, (A) the
Transferor agrees to allocate and pay to the Trust, after the
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date of such inability, all Principal Collections, and all amounts which
would have constituted Principal Collections but for the Transferor's
inability to transfer such Receivables (up to an aggregate amount equal to
the amount of Receivables in the Trust on such date); (B) the Transferor
agrees to have such amounts applied as Collections in accordance with
Article IV; and (C) for only so long as all Collections and all amounts
which would have constituted Collections are allocated and applied in
accordance with clauses (A) and (B) above, Receivables (and all amounts
which would have constituted Receivables but for the Transferor's
inability to transfer Receivables to the Trust) that are written off as
uncollectible in accordance with this Agreement shall continue to be
allocated in accordance with Article IV, and all amounts that would have
constituted Receivables but for the Transferor's inability to transfer
Receivables to the Trust shall be deemed to be Receivables for the purpose
of calculating (i) the applicable Investor Percentage with respect to any
Series and (ii) the Aggregate Investor Percentage thereunder. If the
Transferor is unable pursuant to any Requirement of Law to allocate
Collections as described above, the Transferor agrees that it shall in any
such event allocate, after the occurrence of such event, payments on each
Account with respect to the balance of such Account first to the oldest
Receivables in such Account and to have such payments applied as
Collections in accordance with Article IV.
(ii) In the event that, pursuant to subsection 2.4(d), the
Transferor accepts reassignment of an Ineligible Receivable as a result of
a breach of the representations and warranties in subsection 2.4(b)
relating to such Receivable, then, in any such event, the Transferor
agrees to account for payments received with respect to such Ineligible
Receivable separately from its accounting for Collections on Receivables
retained by the Trust. If payments received from or on behalf of an
Obligor are not specifically applicable either to an Ineligible Receivable
of such Obligor reassigned to the Transferor or to the Receivables of such
Obligor retained in the Trust, then the Transferor agrees to allocate
payments proportionately based on the total amount
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of Receivables of such Obligor retained in the Trust and the total amount
owing by such Obligor on any Ineligible Receivables reassigned to the
Transferor, and the portion allocable to any Receivables retained in the
Trust shall be treated as Collections and deposited in accordance with the
provisions of Article IV.
(e) Delivery of Collections. The Transferor agrees to pay to the
Servicer all payments received by the Transferor in respect of the Receivables
as soon as practicable after receipt thereof by the Transferor.
(f) Conveyance of Accounts. The Transferor covenants and agrees that
it will not convey, assign, exchange or otherwise transfer the Accounts to any
Person prior to the termination of this Agreement pursuant to Article XII;
provided, however, that the Transferor shall not be prohibited hereby from
conveying, assigning, exchanging or otherwise transferring the Accounts in
connection with a transaction complying with the provisions of Section 7.2.
Section 2.6 Addition of Accounts.
(a) If, (i) as of the end of any Collection Period, the Transferor
Amount as a percentage of the Trust Principal Component is less than the Minimum
Transferor Percentage specified in the Series Supplement for any Series, the
Transferor shall designate additional eligible VISA accounts from the Bank
Portfolio ("Additional Accounts") to be included as Accounts in a sufficient
amount such that the Transferor Amount after giving effect to such addition will
be at least equal to the Minimum Transferor Amount, or (ii) as of the end of any
Collection Period, the sum of the Trust Principal Component and the Excess
Funding Amount is less than the Minimum Trust Principal Component, the
Transferor shall designate Additional Accounts to be included as Accounts in a
sufficient amount such that the sum of the Trust Principal Component and the
Excess Funding Amount will be equal to or greater than the Minimum Trust
Principal Component. Receivables from such Additional Accounts shall be
transferred to the Trust on or before the tenth Business Day following the end
of such Collection Period.
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(b) In addition to its obligation under subsection 2.6(a), the
Transferor may, but shall not be obligated to, designate from time to time
Additional Accounts of the Transferor to be included as Accounts to be included
as property of the Trust, as of the applicable Addition Date.
(c) The Transferor agrees that any designation pursuant to
subsection 2.6(a) or (b) shall satisfy the following conditions (to the extent
provided below):
(i) on or before the fifth Business Day prior to the Addition Date
with respect to additions pursuant to subsection 2.6(a) and on or before
the tenth Business Day prior to the Addition Date with respect to
additions pursuant to subsection 2.6(b) (the "Notice Date"), the
Transferor shall give the Trustee, each Rating Agency and the Servicer
written notice that such Additional Accounts will be included, which
notice shall specify the approximate aggregate amount of the Receivables
to be transferred;
(ii) on or before the Addition Date, the Transferor shall have
delivered to the Trustee a written assignment (including an acceptance by
the Trustee on behalf of the Trust for the benefit of the Investor
Certificateholders) in substantially the form of Exhibit B (the
"Assignment") and the Transferor shall have indicated in its computer
files that the Receivables created in connection with the Additional
Accounts have been transferred to the Trust and, within five Business Days
thereafter, or as otherwise agreed upon between the Transferor and the
Trustee, the Transferor shall have delivered to the Trustee a computer
file or microfiche list containing a true and complete list of all
Additional Accounts and identifying each Account by account number and the
aggregate amount of the Receivables in such Additional Accounts, as of the
Addition Date, which computer file or microfiche list shall be as of the
date of such Assignment incorporated into and made a part of such
Assignment and this Agreement;
(iii) the Transferor shall represent and warrant that (x) with
respect to Additional Accounts,
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each Additional Account is, as of the Addition Date, an Eligible Account,
and each Receivable in such Additional Account is, as of the Addition
Date, an Eligible Receivable, (y) the selection of the Additional Accounts
by the Transferor has been made in a manner which it reasonably believes
will not materially adversely affect the interests of the Investor
Certificateholders, and (z) as of the Addition Date, the Transferor is not
insolvent;
(iv) the Transferor shall represent and warrant that, as of the
Addition Date, the Assignment constitutes either (x) a valid transfer,
assignment, set-over and conveyance to the Trust of all right, title and
interest of the Transferor in and to the Receivables then existing and
thereafter created in connection with the Additional Accounts, all
proceeds (as defined in the UCC as in effect in the State of South Dakota)
of such Receivables and Insurance Proceeds relating thereto, and such
Receivables and all proceeds thereof and Insurance Proceeds relating
thereto will be held by the Trust free and clear of any Lien of any Person
claiming through or under the Transferor or any of its Affiliates, except
for (i) Liens permitted under subsection 2.5(b), (ii) the interest of the
Transferor as Holder of the Exchangeable Transferor Certificate and (iii)
the Transferor's right, if any, to receive interest accruing on, and
investment earnings, if any, in respect of any Account, Series Account, as
provided in any related Supplement or (y) a grant of a security interest
(as defined in the UCC as in effect in the State of South Dakota) in such
property to the Trust, which is enforceable with respect to then existing
Receivables of the Additional Accounts, the proceeds (as defined in the
UCC as in effect in the State of South Dakota) thereof and Insurance
Proceeds relating thereto upon the conveyance of such Receivables to the
Trust, and which will be enforceable with respect to the Receivables
thereafter created in respect of Additional Accounts conveyed on such
Addition Date, the proceeds (as defined in the UCC as in effect in the
State of South Dakota) thereof and Insurance Proceeds relating thereto,
upon such creation; and (z) if the Assignment constitutes the grant of a
security interest to the Trust in such property, upon the filing of a
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financing statement as described in Section 2.1 with respect to such
Additional Accounts and in the case of the Receivables thereafter created
in such Additional Accounts and the proceeds (as defined in the UCC as in
effect in the State of South Dakota) thereof and Insurance Proceeds
relating thereto, upon such creation, the Trust shall have a first
priority perfected security interest in such property (subject to Section
9-306 of the UCC as in effect in the State of South Dakota), except for
Liens permitted under subsection 2.5(b);
(v) the Transferor shall deliver an Officer's Certificate
substantially in the form of Schedule 2 to Exhibit B to the Trustee
confirming the items set forth in paragraphs (ii), (iii) and (iv) above
and that the Transferor has filed (or will file within the time required
by the applicable UCC) any financing statements required under the
applicable UCC with respect to the Receivables in the Additional Accounts;
and
(vi) the Transferor shall deliver an Opinion of Counsel with respect
to the Receivables in the Additional Accounts to the Trustee (with a copy
to each Rating Agency) substantially in the form of Exhibit E.
Section 2.7 Removal of Accounts.
(a) Subject to the conditions set forth below, the Transferor may,
but shall not be obligated to, designate Receivables from Accounts for deletion
and removal ("Removed Accounts") from the Trust. On or before the fifth Business
Day (the "Removal Notice Date") prior to the date on which the designated
Removed Accounts will be reassigned by the Trustee to the Transferor (the
"Removal Date"), the Transferor shall give the Trustee and the Servicer written
notice that the Receivables from such Removed Accounts are to be reassigned to
the Transferor.
(b) The Transferor shall be permitted to designate and require
reassignment to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions:
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(i) the removal of any Receivables of any Removed Accounts on any
Removal Date shall not, in the reasonable belief of the Transferor, (a)
cause an Early Amortization Event to occur, (b) cause the Transferor
Amount to be less than the Minimum Transferor Amount on such Removal Date,
(c) cause the sum of the Trust Principal Component and the Excess Funding
Amount to be less than the Minimum Trust Principal Component, or (d)
result in the failure to make any payment specified in the related
Supplement with respect to any Series;
(ii) on or prior to the Removal Date, the Transferor shall have
delivered to the Trustee for execution a written assignment in
substantially the form of Exhibit G (the "Reassignment") and, within five
Business Days (or as otherwise agreed upon between the Transferor and the
Trustee) thereafter, the Transferor shall have delivered to the Trustee a
computer file or microfiche list containing a true and complete list of
all Removed Accounts identified by account number and the aggregate amount
of the Receivables in such Removed Accounts as of the Removal Date, which
computer file or microfiche list shall as of the Removal Date modify and
amend and be made a part of this Agreement;
(iii) the Transferor shall represent and warrant that no selection
procedures reasonably believed by the Transferor to be materially adverse
to the interests of the Certificateholders or any Enhancement Provider
were utilized in selecting the Removed Accounts to be removed from the
Trust;
(iv) on or before the tenth Business Day prior to the Removal Date,
each Rating Agency shall have received notice of such proposed removal of
the Receivables of such Accounts and the Transferor shall have received
written notice prior to the Removal Date from such Rating Agency that such
proposed removal will not result in a downgrade or withdrawal of its then
current rating of any outstanding Class or Series of the Investor
Certificates; and
(v) the Transferor shall have delivered to the Trustee an Officer's
Certificate confirming the
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items set forth in clauses (i) through (iv) above. The Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon satisfaction of the above conditions, the Trustee shall execute
and deliver the Reassignment to the Transferor, and the Receivables from the
Removed Accounts shall no longer constitute a part of the Trust.
[End of Article II]
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ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to
the Servicer.
(a) FBS Card Securities, Inc. agrees to act as the Servicer under
this Agreement. The Investor Certificateholders of each Series by their
acceptance of the related Certificates consent to FBS Card Services, Inc. acting
as Servicer.
(b) The Servicer shall service and administer the Receivables and
shall collect payments due under the Receivables in accordance with its
customary and usual servicing procedures for servicing charge card receivables
comparable to the Receivables and in accordance with the Corporate/Purchasing
Card Guidelines and shall have full power and authority, acting alone or through
any party properly designated by it hereunder, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing and subject to
Section 10.1, the Servicer is hereby authorized and empowered (i) to make
withdrawals from the Collection Account as set forth in this Agreement, (ii)
unless such power and authority is revoked by the Trustee on account of the
occurrence of a Servicer Default pursuant to Section 10.1, to instruct the
Trustee to make withdrawals and payments, from the Collection Account, the
Excess Funding Account and any Series Account, in accordance with such
instructions as set forth in this Agreement, (iii) unless such power and
authority is revoked by the Trustee on account of the occurrence of a Servicer
Default pursuant to Section 10.1, to give other instructions to the Trustee in
writing, as set forth in this Agreement, (iv) to execute and deliver, on behalf
of the Trust for the benefit of the Certificateholders, any and all instruments
of satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables and (v) to make any
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filings, reports, notices, applications, registrations with, and to seek any
consents or authorizations from the Securities and Exchange Commission and any
state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any federal or state securities or reporting
requirements. Subject to the foregoing, the Trustee agrees that it shall
promptly follow the instructions of the Servicer to withdraw funds from the
Collection Account, the Excess Funding Account or any Series Account and to take
any action required under any Enhancement at such time as required under this
Agreement. The Trustee shall execute at the Servicer's written request such
documents prepared by the Transferor and acceptable to the Trustee as may be
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
(c) In the event that the Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of this
Agreement (including, without limitation, by reason of the application of the
provisions of Section 9.2 or the order of any federal governmental agency having
regulatory authority over the Transferor or any court of competent jurisdiction
that the Transferor not transfer any additional Receivables to the Trust) then,
in any such event, (A) the Servicer agrees to allocate, after such date, all
Principal Collections and all amounts which would have constituted Principal
Collections but for the Transferor's inability to transfer such Receivables (up
to an aggregate amount equal to the aggregate amount of the Trust Principal
Component as of such date) in accordance with subsection 2.5(d); (B) the
Servicer agrees to apply such amounts as Collections in accordance with Article
IV, and (C) for only so long as all Collections and all amounts which would have
constituted Collections are allocated and applied in accordance with clauses (A)
and (B) above, Receivables and all amounts which would have constituted
Receivables but for the Transferor's inability to transfer Receivables to the
Trust that are written off as uncollectible in accordance with this Agreement
shall continue to be allocated in accordance with Article IV and all amounts
which would have constituted Receivables but for the Transferor's inability to
transfer Receivables to the Trust shall be deemed to be Receivables for the
purpose of calculating the applicable Investor Percentage thereunder. If the
Servicer is unable pursuant
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to any Requirement of Law to allocate payments on the Accounts as described
above, the Servicer agrees that it shall in any such event allocate, after the
occurrence of such event, payments on each Account with respect to the balance
of such Account first to the oldest Receivables in such Account and to have such
payments applied as Collections in accordance with Article IV.
(d) In the event that pursuant to subsection 2.4(d), the Transferor
accepts reassignment of an Ineligible Receivable as a result of a breach of the
representations and warranties in subsection 2.4(b) relating to such Receivable,
then, in any such event, the Servicer agrees to account for payments received
with respect to such Ineligible Receivable separately from its accounting for
Principal Collections retained by the Trust. If payments received from or on
behalf of an Obligor are not specifically applicable either to an Ineligible
Receivable of such Obligor reassigned to the Transferor or to Receivables of
such Obligor retained in the Trust, then the Servicer agrees to allocate
payments proportionately based on the total amount of Receivables of such
Obligor retained in the Trust and the total amount owing by such Obligor on any
Ineligible Receivables purchased by the Transferor, and the portion allocable to
any Receivables retained in the Trust shall be treated as Collections and
deposited in accordance with the provisions of Article IV.
(e) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other charge card or credit card receivables.
(f) The Servicer shall maintain or cause to be maintained fidelity
bond coverage insuring against losses through wrongdoing of its officers and
employees who are involved in the servicing of charge card receivables covering
such actions and in such amounts as the Servicer believes to be reasonable from
time to time.
Section 3.2 Servicing Compensation. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set forth
in the immediately following paragraph, the Servicer shall be enti-
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tled to receive a servicing fee (the "Servicing Fee") prior to the termination
of the Trust pursuant to Section 12.1. The Servicing Fee shall be payable, with
respect to each Series, at the times and in the amounts set forth in the related
Supplement. The Servicing Fee shall be allocated between the Investor
Certificates (the "Investor Servicing Fee") and the Holder of the Transferor
Certificate (the "Transferor Servicing Fee") as specified in the related
Supplements.
The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.5 and the reasonable fees and disbursements of
independent public accountants and all other expenses incurred by the Servicer
in connection with its activities hereunder; provided, however, that the
Servicer shall not be liable for any liabilities, costs or expenses of the
Trust, the Investor Certificateholders or the Certificate Owners arising under
any tax law, including without limitation any federal, state or local income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith). The Servicer shall be required to pay such expenses for its own
account and shall not be entitled to any payment therefor other than the
Servicing Fee.
Section 3.3 Representations and Warranties of the Servicer. FBS Card
Services, Inc., as initial Servicer, hereby makes, and any Successor Servicer by
its appointment hereunder shall make (with appropriate modifications to Section
3.3(a) to reflect the Successor Servicer's organization) the following
representations, warranties and covenants on which the Trustee has relied in
accepting the Receivables in trust and in authenticating the Certificates:
(a) Organization and Good Standing. The Servicer have been duly
incorporated and is validly existing as a corporation in good standing under the
laws of State of Minnesota and has full corporate power, authority and legal
right to own its properties and conduct its charge card business as such
properties are presently owned and as such business is presently conducted, and
to execute, deliver and perform its obligations under this Agreement.
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(b) Due Qualification. The Servicer is not required to qualify nor
register as a foreign corporation in any state in order to service the
Receivables as required by this Agreement and has obtained all licenses and
approvals necessary in order to so service the Receivables as required under
federal and Minnesota law. If the Servicer shall be required by any Requirement
of Law to so qualify or register or obtain such license or approval, then it
shall do so.
(c) Due Authorization. The execution, delivery, and performance of
this Agreement have been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer and this Agreement will remain,
from the time of its execution, an official record of the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereinafter
in effect, affecting the enforcement of creditors' rights in general or by
general equity principles.
(e) No Violation. The execution and delivery of this Agreement by
the Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the Servicer,
will not conflict with, violate, 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 Requirement of Law applicable to the Servicer or
any indenture, contract, agreement, mortgage, deed of trust or other instrument
to which the Servicer is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the consummation of
any of the transactions contemplated by this Agreement, seeking any
determination or ruling that, in the reasonable judgment of the Servicer, would
materially and adversely affect the performance by
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the Servicer of its obligations under this Agreement, or seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement.
(g) Compliance with Requirements of Law. The Servicer shall duly
satisfy all obligations on its part to be fulfilled under or in connection with
each Receivable and the related Account, will maintain in effect all
qualifications required under Requirements of Law in order to service properly
each Receivable and the related Account and will comply in all material respects
with all other Requirements of Law in connection with servicing each Receivable
and the related Account the failure to comply with which would have a material
adverse effect on the Certificateholders or any Enhancement Provider.
Section 3.4 Reports and Records for the Trustee.
(a) Daily Reports. On each Business Day, the Servicer shall, upon
reasonable prior notice, and during normal business hours, prepare and make
available at the office of the Servicer for inspection by the Trustee a record
setting forth (i) the aggregate amount of Collections processed by the Servicer
on the preceding Business Day and (ii) the aggregate amount of Receivables as of
the close of business on the preceding Business Day.
(b) Monthly Servicer's Certificate. Unless otherwise stated in the
related Supplement with respect to any Series, on each Determination Date the
Servicer shall forward, as provided in Section 13.5, to the Trustee, the Paying
Agent, any Enhancement Provider and each Rating Agency, a certificate of a
Servicing Officer in the form of Exhibit C (which includes the Schedule thereto
specified as such in each Supplement) setting forth (i) the aggregate amount of
Collections processed during the preceding Collection Period, (ii) the aggregate
amount of the applicable Investor Percentage of Yield Collections processed by
the Servicer pursuant to Article IV during the preceding Collection Period with
respect to each Series then outstanding, (iii) the aggregate amount of the
applicable Investor Percentage of Principal Collections for the preceding
Collection Period with respect to each Series then outstanding, (iv) the
aggregate
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amount of Receivables processed as of the end of the last day of the preceding
Collection Period, (v) the balance on deposit in the Collection or any Series
Account applicable to any Series then outstanding on such Determination Date
with respect to Collections processed by the Servicer during the preceding
Collection Period, (vi) the aggregate amount, if any, of withdrawals, drawings
or payments under any Enhancement, if any, for each Series then outstanding
required to be made with respect to the previous Collection Period in the manner
provided in the related Supplement, (vii) the sum of all amounts payable to the
Investor Certificateholders of each Series (or for a Series of more than one
Class, each such Class) on the succeeding Distribution Date in respect of
Certificate Principal and Certificate Interest with respect to such preceding
Collection Period and (viii) such other matters as are set forth in Exhibit C.
Section 3.5 Annual Servicer's Certificate. On or before April 30 of
each calendar year, beginning with April 30, 1998, the Servicer will deliver, as
provided in Section 13.5, to the Trustee, any Enhancement Provider and the
Rating Agency, an officer's Certificate substantially in the form of Exhibit D
stating that (a) a review of the activities of the Servicer during the preceding
calendar year under this Agreement was made under the supervision of the officer
signing such certificate and (b) to the best of such officer's knowledge, based
on such review, the Servicer has fully performed all its obligations under this
Agreement throughout such period, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such certificate may be
obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
Section 3.6 Annual Independent Accountants' Servicing Report.
(a) On or before April 30 of each calendar year, beginning with
April 30, 1998, the Servicer shall cause a firm of nationally recognized
independent certified public accountants (who may also render other services to
the Servicer or the Transferor) to furnish, as provided in Section 13.5, a
report to the Trustee, any Enhancement Provider and the Rating Agency, to the
effect
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that such firm has made a study and evaluation, in accordance with generally
accepted auditing standards, of the Servicer's internal accounting controls with
respect to the servicing of Accounts under this Agreement, and that, on the
basis of such study and evaluation, such firm is of the opinion (assuming the
accuracy of any reports generated by the Servicer's third party agents) that the
system of internal accounting controls in effect on the date set forth in such
report, relating to servicing procedures performed by the Servicer, taken as a
whole, was sufficient for the prevention and detection of errors and
irregularities in amounts that would be material to the financial statements of
the Servicer and that such servicing was conducted in compliance with the
sections of this Agreement during the preceding calendar year, except for such
exceptions, errors or irregularities as such firm shall believe to be immaterial
to the financial statements of the Servicer and such other exceptions, errors or
irregularities as shall be set forth in such report. Unless otherwise provided
with respect to any Series in the related Supplement, a copy of such report may
be obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
(b) On or before April 30 of each calendar year, beginning with
April 30, 1998, the Servicer shall cause a firm of nationally recognized
independent certified public accountants (who may also render other services to
the Servicer or the Transferor) to furnish, as provided in Section 13.5, a
report, prepared using generally accepted auditing standards, to the Trustee and
the Rating Agency to the effect that they have compared the mathematical
calculations of each amount set forth in the monthly certificates forwarded by
the Servicer pursuant to subsection 3.4(c) during the preceding calendar year
with the Servicer's computer reports which were the source of such amounts and
that on the basis of such comparison, such firm is of the opinion that such
amounts are in agreement, except for such exceptions as it believes to be
immaterial to the financial statements of the Servicer and such other exceptions
as shall be set forth in such report. A copy of such report may be obtained by
any Investor Certificateholder by a request in writing to the Trustee addressed
to the Corporate Trust Office.
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Section 3.7 Tax Treatment. The Transferor has structured this
Agreement, the Investor Certificates and any Collateral Investor Interest with
the intention that the Investor Certificates and any Collateral Investor
Interest will qualify under applicable federal, state, local and foreign tax law
as indebtedness of the Transferor secured by the Receivables. The Transferor,
the Servicer, the Holder of the Exchangeable Transferor Certificate or any
interest therein, each Investor Certificateholder, each Certificate Owner, and
each owner of any Collateral Investor Interest or interest therein agree to
treat and to take no action inconsistent with the treatment of the Investor
Certificates and any Collateral Investor Interest (or beneficial interest
therein) as such indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by income.
Each Investor Certificateholder and the Holder of the Exchangeable Transferor
Certificate or any interest therein, by acceptance of its Certificate or
interest therein, each Certificate Owner, by acquisition of a beneficial
interest in a Certificate, and any owner of any Collateral Investor Interest or
interest therein, by acquisition of such interest therein, agree to be bound by
the provisions of this Section 3.7. Each Certificateholder agrees that it will
cause any Certificate Owner acquiring an interest in a Certificate through it,
and each owner of any Collateral Investor Interest or any interest therein
agrees that it will cause any Person acquiring any such interest, to comply with
this Agreement as to treatment as indebtedness under applicable tax law, as
described in this Section 3.7. Notwithstanding this Section 3.7, if the
treatment of any Collateral Investor Interest or interest therein as
indebtedness is challenged by any governmental authority, the Holder of the
Exchangeable Transferor Certificate and any owner of such interest do not intend
to be foreclosed from adopting as a secondary tax position that such interest
constitutes equity in a partnership.
Section 3.8 Notices to the Transferor. In the event that the
Transferor is no longer acting as Servicer, any Successor Servicer appointed
pursuant to Section 10.2 shall deliver or make available to the Transferor each
certificate and report required to be prepared, forwarded or delivered
thereafter pursuant to Sections 3.4, 3.5 and 3.6.
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Section 3.9 Reports to the Commission. The Servicer shall, on behalf
of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of 1934
and the rules and regulations of the Commission thereunder. The Transferor
shall, at the expense of the Servicer, cooperate in any reasonable request of
the Servicer in connection with such filings.
[End of Article III]
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ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders. Each Series of Investor
Certificates shall represent Undivided Interests in the Trust, including the
benefits of any Enhancement issued with respect to such Series and the right to
receive the Collections and other amounts at the times and in the amounts
specified in this Article IV to be deposited in the Investor Accounts and any
other Series Account (if so specified in the related Supplement) or to be paid
to the Investor Certificateholders of such Series; provided, however, that the
aggregate interest represented by such Certificates at any time in the Principal
Receivables shall not exceed an amount equal to the Invested Amount at such
time. The Exchangeable Transferor Certificate shall represent the remaining
undivided interest in the Trust not allocated to the Investor Certificates and
the other interests issued by the Trust, including the right to receive the
Collections and other amounts at the times and in the amounts specified in this
Article IV to be paid to the Holder of the Transferor Certificate; provided,
however, that the aggregate interest represented by such Exchangeable Transferor
Certificate at any time in the Principal Receivables shall not exceed the
Transferor Amount at such time and such Certificate shall not represent any
interest in the Investor Accounts, except as provided in this Agreement, or the
benefits of any Enhancement issued with respect to any Series.
Section 4.2 Establishment of Accounts.
(a) The Collection Account. The Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, a non-interest bearing segregated account (the "Collection
Account") bearing a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Certificateholders, or shall
cause such Collection Account to be established and maintained, with an office
or branch of (i) the Transferor (so long as the Transferor or First Bank System,
Inc. shall have and maintain a certificate of deposit or commercial paper rating
of P-1 by Moody's and of A-1 by
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Standard & Poor's) or (ii) an Eligible Institution; provided, however, that upon
the insolvency of the Transferor, the Collection Account shall not be permitted
to be maintained with the Transferor. Pursuant to authority granted to it
pursuant to subsection 3.1(b), the Servicer shall have the revocable power to
withdraw funds from the Collection Account for the purposes of carrying out its
duties hereunder.
(b) The Excess Funding Account. The Trustee, for the benefit of the
Investor Certificateholders, shall establish and maintain with the Trustee, or
cause to be established and maintained with an Eligible Institution, in the name
of the Trust, a segregated trust account (the "Excess Funding Account") bearing
a designation clearly indicating that the funds therein are held for the benefit
of the Investor Certificateholders. The Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Excess Funding
Account and in all proceeds thereof. The Excess Funding Account shall be under
the sole dominion and control of the Trustee for the benefit of the Investor
Certificateholders. If, at any time, the institution holding the Excess Funding
Account ceases to be an Eligible Institution, the Trustee shall notify the
Rating Agency and within 10 Business Days establish a new Excess Funding Account
meeting the conditions specified above with an Eligible Institution, and shall
transfer any cash or any investments to such new Excess Funding Account. From
the date such new Excess Funding Account is established, it shall be the "Excess
Funding Account." Pursuant to authority granted to it hereunder, the Servicer
shall have the revocable power to instruct the Trustee to withdraw funds from
the Excess Funding Account for the purpose of carrying out the Servicer's duties
hereunder. The Trustee at all times shall maintain accurate records reflecting
each transaction in the Excess Funding Account and that funds held therein shall
at all times be held in trust for the benefit of the Investor
Certificateholders.
(c) Series Accounts. If so provided in the related Supplement, the
Trustee, for the benefit of the Investor Certificateholders, shall cause to be
established and maintained in the name of the Trust, one or more Series
Accounts. Each such Series Account shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Inves-
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tor Certificateholders of such Series. Each such Series Account will be a trust
account, if so provided in the related Supplement and will have the other
features and be applied as set forth in the related Supplement.
(d) Administration of the Collection Account and Excess Funding
Account. Funds on deposit in the Collection Account and the Excess Funding
Account shall at all times be invested in Eligible Investments. Any such
investment shall mature and such funds shall be available for withdrawal on or
prior to the Transfer Date related to the Collection Period in which such funds
were processed for collection, or if so specified in the related supplement,
immediately preceding a Distribution Date. The Trustee shall maintain for the
benefit of the Investor Certificateholders possession of the negotiable
instruments or securities evidencing the Eligible Investments described in
clause (a) of the definition thereof from the time of purchase thereof until the
time of sale or maturity; provided, however, that no such investment shall be
disposed of prior to its maturity date. All interest and earnings (net of losses
and investment expenses) on funds on deposit in the Collection Account with
respect to each Collection Period shall be deposited by the Trustee in a
separate deposit account with an Eligible Institution in the name of the
Servicer, or a Person designated in writing by the Servicer, which shall not
constitute a part of the Trust, or shall otherwise be turned over by the Trustee
to the Servicer not less frequently than monthly, and all interest and earnings
(net of losses and investment expenses) on funds on deposit in the Excess
Funding Account with respect to each Collection Period shall be deposited by the
Trustee in the Collection Account on the following Transfer Date for application
as Yield Collections. Subject to the restrictions set forth above, the Servicer,
or a Person designated in writing by the Servicer, of which the Trustee shall
have received written notification thereof, shall have the authority to instruct
the Trustee with respect to the investment of funds on deposit in the Collection
Account and the Excess Funding Account. For purposes of determining the
availability of funds or the balances in the Collection Account and, except as
provided in the second preceding sentence, the Excess Funding Account for any
reason under this Agreement, all investment earnings on such funds shall be
deemed not to be available or on deposit.
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Section 4.3 Collections and Allocations.
(a) Collections. Except as provided below, the Servicer shall
deposit all Collections in the Collection Account as promptly as possible after
the Date of Processing of such Collections, but in no event later than the
second Business Day following such Date of Processing. In the event of the
insolvency of the Transferor, then, immediately upon the occurrence of such
event and thereafter, the Servicer shall deposit all Collections into the
Collection Account which shall be established and maintained with an Eligible
Institution other than the Transferor in accordance with subsection 4.2(a), and
in no such event shall the Servicer deposit any Collections thereafter into any
account established, held or maintained with the Transferor.
The Servicer shall allocate such amounts to each Series of Investor
Certificates and to the Holder of the Exchangeable Transferor Certificate in
accordance with this Article IV and shall withdraw amounts from the Collection
Account in accordance with this Article IV, as modified by any Supplement. The
Servicer shall make such deposits or payments on the date indicated therein by
wire transfer or as otherwise provided in the Supplement for any Series of
Certificates with respect to such Series.
Notwithstanding anything in this Agreement to the contrary, for so
long as, and only so long as, FBS Card Services, Inc. or other Affiliate of the
Transferor shall remain the Servicer hereunder, and (a)(i) the Servicer provides
to the Trustee a letter of credit or other credit support that satisfies the
Rating Agency Condition or (b) the Transferor or First Bank System, Inc. shall
have and maintain a certificate of deposit or commercial paper rating of P-1 by
Moody's and of A-1 by Standard & Poor's, the Servicer need not deposit
Collections into the Collection Account, the Excess Funding Account or any
Series Account, as provided in any Supplement, or make payments to the Holder of
the Exchangeable Transferor Certificate, on a daily basis as provided in Article
IV, but may make such deposits, payments and withdrawals on each Transfer Date
in an amount equal to the net amount of such deposits, payments and withdrawals
which would have been made but for the provisions of this paragraph. If at any
time the Servicer shall qualify to
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make deposits on the Transfer Date as provided in this paragraph (or shall cease
to be so qualified) the Servicer shall deliver an Officer's Certificate to the
Trustee stating that the criteria set forth in (a) or (b) of this paragraph have
been satisfied (or have ceased to be satisfied). The Trustee may rely on such
Officer's Certificate without investigation or inquiry.
Notwithstanding anything else in this Agreement to the contrary,
with respect to any Collection Period, whether the Servicer is required to make
monthly or daily deposits into the Collection Account, the Excess Funding
Account or any Series Account, as provided in any Supplement, (i) the Servicer
will only be required to deposit Collections from the Collection Account into
the Excess Funding Account or any Series Account up to the required amount to be
deposited into any such account or, without duplication, distributed on or prior
to the related Distribution Date to Investor Certificateholders or to any
Enhancement Provider pursuant to the terms of any Supplement or agreement
relating to such Enhancement and (ii) if at any time prior to such Distribution
Date the amount of Collections deposited in the Collection Account exceeds the
amount required to be deposited pursuant to clause (i) above, the Servicer will
be permitted to withdraw the excess from the Collection Account.
(b) Allocations for the Exchangeable Transferor Certificate.
Throughout the existence of the Trust, unless otherwise stated in any
Supplement, the Servicer shall allocate to the Holder of the Exchangeable
Transferor Certificate an amount equal to the product of (A) the Transferor
Percentage and (B) the aggregate amount of Principal Collections and Yield
Collections, respectively, in respect of each Collection Period. Notwithstanding
anything in this Agreement to the contrary, unless otherwise stated in any
Supplement, the Servicer need not deposit this amount or any other amounts so
allocated to the Exchangeable Transferor Certificate pursuant to any Supplement
into the Collection Account and shall pay, or be deemed to pay, such amounts as
collected to the Holder of the Exchangeable Transferor Certificate.
(c) Adjustments for Miscellaneous Credits and Fraudulent Charges.
The Servicer shall be obligated to reduce on a net basis each Collection Period
the aggregate amount of Principal Receivables used to calculate
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the Transferor Amount as provided in this subsection 4.3(c) (an "Adjustment")
with respect to any Principal Receivable (i) which was created in respect of
merchandise refused or returned by the Obligor thereunder or as to which the
Obligor thereunder has asserted a counterclaim or defense, (ii) which is reduced
by the Servicer by any rebate, refund, charge-back or adjustment (including
Servicer errors, but excluding any rebates or refunds relating to any
reward-type program) or (iii) which was created as a result of a fraudulent or
counterfeit charge.
In the event that the inclusion of the amount of an Adjustment in
the calculation of the Transferor Amount would cause the Transferor Amount to be
an amount less than zero, the Transferor shall make a deposit, no later than the
Business Day following the Date of Processing of such Adjustment, in the
Collection Account in immediately available funds in an amount equal to the
amount by which such Adjustment would cause the Transferor Amount to be less
than zero on such Date of Processing.
(d) Operation of Excess Funding Account. On each Determination Date
on which one or more Series is in its Amortization Period or Accumulation
Period, the Servicer shall determine the aggregate amount of Principal
Shortfalls, if any, with respect to each such Series, and the Servicer shall
instruct the Trustee to withdraw such amount (up to the Excess Funding Amount)
from the Excess Funding Account on the next succeeding Transfer Date and deposit
such amount in the Collection Account for allocation among each such Series as
Shared Collections as specified in each related Supplement. On any Business Day
on which the Transferor Amount exceeds the Minimum Transferor Amount, the
Servicer shall instruct the Trustee to withdraw the amount of such excess (up to
the Excess Funding Amount) from the Excess Funding Account on such day and pay
such amount to the Holder of the Exchangeable Transferor Certificate.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL BE SPECIFIED IN
ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
[End of Article IV]
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ARTICLE V
[ARTICLE V IS RESERVED AND SHALL
BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES]
[End of Article V]
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ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. Subject to Sections 6.10 and 6.13, the
Investor Certificates of each Series and any Class thereof may be issued in
bearer form (the "Bearer Certificates") with attached interest coupons and a
special coupon (collectively, the "Coupons") or in fully registered form (the
"Registered Certificates"), and shall be substantially in the form of the
exhibits with respect thereto attached to the related Supplement. The
Exchangeable Transferor Certificate shall be substantially in the form of
Exhibit A. The Investor Certificates and the Exchangeable Transferor Certificate
shall, upon issue pursuant hereto or to Section 6.9 or Section 6.10, be executed
and delivered by the Transferor to the Trustee for authentication and redelivery
as provided in Sections 2.1 and 6.2. Any Investor Certificate shall be issuable
in a minimum denomination of $1,000 Undivided Interest and integral multiples
thereof, unless otherwise specified in any Supplement. The Exchangeable
Transferor Certificate shall be issued as a single certificate. Each Certificate
shall be executed by manual or facsimile signature on behalf of the Transferor
by its President or any Vice President. Certificates bearing the manual or
facsimile signature of the individual who was, at the time when such signature
was affixed, authorized to sign on behalf of the Transferor or the Trustee shall
not be rendered invalid, notwithstanding that such individual has ceased to be
so authorized prior to the authentication and delivery of such Certificates or
does not hold such office at the date of such Certificates. Unless otherwise
provided in the related supplement, no Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for herein, executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication except Bearer
Certificates which shall be dated the applicable Issuance Date as provided in
the related Supplement.
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Section 6.2 Authentication of Certificates. Contemporaneously with
the initial assignment and transfer of the Receivables, whether now existing or
hereafter created (other than Receivables in Additional Accounts) and the other
components to the Trust, the Trustee shall authenticate and deliver the initial
Series of Investor Certificates, upon the written order of the Transferor,
against payment to the Transferor of the Initial Invested Amount (net of any
discount applicable to the purchase thereof). Upon the receipt of such payment
and the issuance of the Investor Certificates, such Investor Certificates shall
be fully paid and non-assessable. The Trustee shall authenticate and deliver the
Exchangeable Transferor Certificate to the Transferor simultaneously with its
delivery to the Transferor of the initial Series of Investor Certificates. Upon
an Exchange as provided in Section 6.9 and the satisfaction of certain other
conditions specified therein, the Trustee shall authenticate and deliver the
Investor Certificates of additional Series (with the designation provided in the
related Supplement), upon the order of the Transferor, to the Persons designated
in such Supplement. Upon the order of the Transferor, the Certificates of any
Series shall be duly authenticated by or on behalf of the Trustee, in authorized
denominations. If specified in the related Supplement for any Series, the
Trustee shall authenticate and deliver outside the United States the Global
Certificate that is issued upon original issuance thereof, upon the written
order of the Transferor, to the Depository against payment of the purchase price
therefor. If specified in the related Supplement for any Series, the Trustee
shall authenticate Book-Entry Certificates that are issued upon original
issuance thereof, upon the written order of the Transferor, to a Clearing Agency
or its nominee as provided in Section 6.10 against payment of the purchase price
thereof.
Section 6.3 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or agency to be
maintained by a transfer agent and registrar (the "Transfer Agent and
Registrar"), in accordance with the provisions of Section 11.16, a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Transfer Agent and Registrar shall provide for the
registration of
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the Investor Certificates of each Series (unless otherwise provided in the
related Supplement) and of transfers and exchanges of the Investor Certificates
as herein provided. The Trustee is hereby initially appointed Transfer Agent and
Registrar for the purposes of registering the Investor Certificates and
transfers and exchanges of the Investor Certificates as herein provided. If any
form of Investor Certificate is issued as a Global Certificate, the Trustee may,
or if and so long as any Series of Investor Certificates are listed on the
Luxembourg Stock Exchange and such exchange shall so require, the Trustee shall
appoint a co-transfer agent and co-registrar in Luxembourg or another European
city. Any reference in this Agreement to the Transfer Agent and Registrar shall
include any co-transfer agent and co-registrar unless the context otherwise
requires. The Trustee shall be permitted to resign as Transfer Agent and
Registrar upon 30 days' written notice to the Servicer. In the event that the
Trustee shall no longer be the Transfer Agent and Registrar, the Trustee shall
appoint a successor Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Certificate at
any office or agency of the Transfer Agent and Registrar, the Transferor shall
execute, subject to the provisions of subsection 6.3(c), and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of like
aggregate Undivided Interests; provided, however, that the provisions of this
paragraph shall not apply to Bearer Certificates.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates of the same Series
in authorized denominations of like aggregate Undivided Interests, upon
surrender of the Investor Certificates to be exchanged at any such office or
agency. At the option of any Holder of Registered Certificates, Registered
Certificates may be exchanged for other Registered Certificates of the same
Series in authorized denominations of like aggregate Undivided Interests in the
Trust, upon surrender of the Registered Certificates to be exchanged at any
office or agency of the Transfer Agent and Registrar maintained for such
purpose. At the option of a Bearer Certificateholder, subject to applicable laws
and regulations (including
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without limitation, the Bearer Rules), Bearer Certificates may be exchanged for
other Bearer Certificates or Registered Certificates of the same Series in
authorized denominations of like aggregate Undivided Interests in the Trust, in
the manner specified in the Supplement for such Series, upon surrender of the
Bearer Certificates to be exchanged at an office or agency of the Transfer Agent
and Registrar located outside the United States. Each Bearer Certificate
surrendered pursuant to this Section 6.3 shall have attached thereto (or be
accompanied by) all unmatured Coupons, provided that any Bearer Certificate so
surrendered after the close of business on the Record Date preceding the
relevant Distribution Date after the related Series Termination Date need not
have attached the Coupons relating to such Distribution Date.
Whenever any Investor Certificates of any Series are so surrendered
for exchange, the Transferor shall execute, and the Trustee shall authenticate
and (unless the Transfer Agent and Registrar is different than the Trustee, in
which case the Transfer Agent and Registrar shall) deliver, the Investor
Certificates of such Series which the Certificateholder making the exchange is
entitled to receive. Every Investor Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee and the Transfer
Agent and Registrar duly executed by the Certificateholder thereof or his
attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding, the
Trustee or the Transfer Agent and Registrar, as the case may be, shall not be
required to register the transfer of or exchange any Investor Certificate of any
Series for a period of 15 days preceding the due date for any payment with
respect to the Investor Certificates of such Series.
Unless otherwise provided in the related Supplement, no service
charge shall be made for any registration of transfer or exchange of
Certificates, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
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All Investor Certificates (together with any Coupons attached to
Bearer Certificates) surrendered for registration of transfer and exchange shall
be canceled by the Transfer Agent and Registrar and disposed of in a manner
satisfactory to the Trustee. The Trustee shall cancel and destroy the Global
Certificates upon its exchange in full for Definitive Certificates and shall
deliver a certificate of destruction to the Transferor. Such certificate shall
also state that a certificate or certificates of each Foreign Clearing Agency to
the effect referred to in Section 6.13 was received with respect to each portion
of the Global Certificate exchanged for Definitive Certificates.
The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement and the
Certificates.
(b) Except as provided in Section 6.9 or 7.2 or in any Supplement
(and except upon the Exchange and cancellation of an Exchangeable Transferor
Certificate and the issuance of a reissued Exchangeable Transferor Certificate,
on each Exchange Date), in no event shall the Exchangeable Transferor
Certificate or any interest therein be transferred hereunder, in whole or in
part, unless the Transferor shall have consented in writing to such transfer and
unless the Trustee shall have received (1) confirmation in writing from each
Rating Agency that such transfer will not result in a lowering or withdrawal of
its then existing rating of any Series of Investor Certificates, and (2) an
Opinion of Counsel that such transfer does not adversely affect the conclusions
reached in any of the federal income tax opinions dated the applicable Closing
Date issued in connection with the original issuance of any Series of Investor
Certificates; provided, however, that unless the consent of Holders of Investor
Certificates evidencing more than 50% of the Aggregate Invested Amount is
obtained for such transfer, the Holder of the Exchangeable Transferor
Certificate shall be permitted to transfer the Exchangeable Transferor
Certificate only if the Holder of the Exchangeable Transferor Certificate shall
have provided the Trustee with an Opinion of Counsel to the effect that the
contem-
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plated transfer would be treated as a financing and not as a sale for federal
income tax purposes.
(c) Unless otherwise provided in the related Supplement,
registration of transfer of Registered Certificates containing a legend relating
to the restrictions on transfer of such Registered Certificates (which legend
shall be set forth in the Supplement relating to such Investor Certificates)
shall be effected only if the conditions set forth in such related Supplement
are satisfied.
Whenever a Registered Certificate containing the legend set forth in
the related Supplement is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall promptly seek
instructions from the Servicer regarding such transfer. The Transfer Agent and
Registrar and the Trustee shall be entitled to receive written instructions
signed by a Servicing Officer prior to registering any such transfer or
authenticating new Registered Certificates, as the case may be. The Servicer
hereby agrees to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by them in reliance on any such written
instructions furnished pursuant to this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, the City of New York (and subject to this Section 6.3,
if specified in the related Supplement for any Series, any other city designated
in such Supplement) an office or offices or an agency or agencies where Investor
Certificates of such Series may be surrendered for registration of transfer or
exchange.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons, if any, appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer
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Agent and Registrar and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Transferor shall execute and the Trustee shall authenticate and (unless the
Transfer Agent and Registrar is different from the Trustee, in which case the
Transfer Agent and Registrar shall) deliver (in compliance with applicable law),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and aggregate Undivided Interest.
In connection with the issuance of any new Certificate under this Section 6.4,
the Trustee or the Transfer Agent and Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Transfer Agent and Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 6.4 shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat a
Certificateholder as the owner of the related Certificate for the purpose of
receiving distributions pursuant to Article V (as described in any Supplement)
and for all other purposes whatsoever, and neither the Trustee, the Paying
Agent, the Transfer Agent and Registrar nor any agent of any of them shall be
affected by any notice to the contrary; provided, however, that in determining
whether the holders of Investor Certificates evidencing the requisite Undivided
Interests have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Investor Certificates owned by the Transferor, the
Servicer or any Affiliate thereof shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Investor Certificates which a Responsible Officer in the
Corporate Trust Office of the Trustee knows to be so
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owned shall be so disregarded. Investor Certificates so owned that have been
pledged in good faith shall not be disregarded as outstanding, if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Investor Certificates and that the pledgee is not the
Transferor, the Servicer or an Affiliate thereof.
In the case of a Bearer Certificate, the Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may treat the
holder of a Bearer Certificate or Coupon as the owner of such Bearer Certificate
or Coupon for the purpose of receiving distributions pursuant to Article IV and
Article XII and for all other purposes whatsoever, and neither the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary. Certificates so owned which
have been pledged in good faith shall not be disregarded and may be regarded as
outstanding, if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Investor Certificates and that
the pledgee is not the Transferor, the Servicer or an Affiliate thereof.
Section 6.6 Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Investor
Certificateholders from the appropriate account or accounts maintained for the
benefit of Certificateholders as specified in this Agreement or the related
Supplement for any Series pursuant to Articles IV and V hereof. Any Paying Agent
shall have the revocable power to withdraw funds from such appropriate account
or accounts for the purpose of making distributions referred to above. The
Trustee (or the Servicer if the Trustee is the Paying Agent) may revoke such
power and remove the Paying Agent, if the Trustee (or the Servicer if the
Trustee is the Paying Agent) determines in its sole discretion that the Paying
Agent shall have failed to perform its obligations under this Agreement in any
material respect or for other good cause. The Trustee (or the Servicer if the
Trustee is the Paying Agent) shall notify Moody's and Standard & Poor's of the
removal of any Paying Agent. The Paying Agent, unless the Supplement with
respect to any Series states otherwise, shall initially be the Trustee. If any
form of Investor
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Certificate is issued as a Global Certificate, or if and so long as any Series
of Investor Certificates are listed on the Luxembourg Stock Exchange and such
exchange shall so require, the Trustee shall appoint a co-paying agent in
Luxembourg or another European city. The Trustee shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Servicer. In the event that the
Trustee shall no longer be the Paying Agent, the Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company). The
provisions of Sections 11.1, 11.2 and 11.3 shall apply to the Trustee also in
its role as Paying Agent, for so long as the Trustee shall act as Paying Agent.
Any reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long as
the Investor Certificates of such Series are outstanding, the Transferor shall
maintain a co-paying agent in New York City (for Registered Certificates only)
or any other city designated in such Supplement which, if and so long as any
Series of Investor Certificates is listed on the Luxembourg Stock Exchange or
other stock exchange and such exchange so requires, shall be in Luxembourg or
the location required by such other stock exchange.
(b) The Trustee shall cause the Paying Agent (other than itself) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums, if any,
held by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree, and if the Trustee is the Paying Agent it
hereby agrees, that it shall comply with all requirements of the Internal
Revenue Code regarding the withholding by the Trustee of payments in respect of
federal income taxes due from Certificate Owners.
Section 6.7 Access to List of Certificateholders' Names and
Addresses.
The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent, within five Business
Days after receipt by the Trustee of a request therefor from
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the Servicer or the Paying Agent, respectively, in writing, a list in such form
as the Servicer or the Paying Agent may reasonably require, of the names and
addresses of the Investor Certificateholders as of the most recent Record Date
for payment of distributions to Investor Certificateholders. Unless otherwise
provided in the related Supplement, holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 10% of the Invested Amount of the
Investor Certificates of any Series (the "Applicants") may apply in writing to
the Trustee, and if such application states that the Applicants desire to
communicate with other Investor Certificateholders of any Series with respect to
their rights under this Agreement or under the Investor Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Certificateholders held by the Trustee and
shall give the Servicer notice that such request has been made, within five
Business Days after the receipt of such application. Such list shall be as of a
date no more than 45 days prior to the date of receipt of such Applicants'
request. Every Certificateholder, by receiving and holding a Certificate, agrees
with the Trustee that neither the Trustee, the Transfer Agent and Registrar, nor
any of their respective agents shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was obtained.
Section 6.8 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents with
respect to the Certificates which shall be authorized to act on behalf of the
Trustee in authenticating the Certificates in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an authenticating agent and a certificate of authentication executed
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on behalf of the Trustee by an authenticating agent. Each authenticating agent
must be acceptable to the Transferor.
(b) Any institution succeeding to the corporate agency business of
an authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Transferor. The Trustee may at
any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Transferor. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an authenticating agent shall cease to be acceptable to the Trustee or the
Transferor, the Trustee promptly may appoint a successor authenticating agent.
Any successor authenticating agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an authenticating agent.
No successor authenticating agent shall be appointed unless acceptable to the
Trustee and the Transferor.
(d) The Trustee agrees to pay each authenticating agent from time to
time reasonable compensation for its services under this Section 6.8, and the
Trustee shall be entitled to be reimbursed and the Servicer shall reimburse the
Trustee for such reasonable payments actually made, subject to the provisions of
section 11.5.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
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This is one of the certificates described in the Pooling and
Servicing Agreement.
______________________________________________
as Authenticating Agent
for the Trustee,
By:___________________________________________
Authorized Officer
Section 6.9 Tender of Exchangeable Transferor Certificate.
(a) Upon any Exchange, the Trustee shall issue to the Holder of the
Exchangeable Transferor Certificate under Section 6.1, for execution and
redelivery to the Trustee for authentication under Section 6.2, one or more new
Series of Investor Certificates. Any such Series of Investor Certificates shall
be substantially in the form specified in the related Supplement and shall bear,
upon its face, the designation for such Series to which it belongs, as selected
by the Transferor. Except as specified in any Supplement for a related Series,
all Investor Certificates of any Series shall rank pari passu and be equally and
ratably entitled as provided herein to the benefits hereof (except that the
Enhancement provided for any Series shall not be available for any other Series)
without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Agreement and the related Supplement.
(b) The Holder of the Exchangeable Transferor Certificate may tender
the Exchangeable Transferor Certificate to the Trustee in exchange for (i) one
or more newly issued Series of Investor Certificates and (ii) a reissued
Exchangeable Transferor Certificate (any such tender, a "Transferor Exchange").
In addition, the Transferor may tender 100% of the Investor Certificates of a
Series and the Exchangeable Transferor Certificate to the Trustee pursuant to
the terms and conditions set forth in such Supplement in exchange for (i) one or
more newly issued Series of Investor Certificates and (ii) a reissued
Exchangeable Transferor Certificate (an "Investor Exchange"). The Transferor
Exchange and Investor Exchange are referred to collectively herein as an "Ex-
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change." The Holder of the Exchangeable Transferor Certificate may perform an
Exchange by notifying the Trustee, in writing at least three business days in
advance (an "Exchange Notice") of the date upon which the Exchange is to occur
(an "Exchange Date"). Any Exchange Notice shall state the designation of any
Series (and Class thereof, if applicable) to be issued on the Exchange Date and,
with respect to each such Series: (a) its initial Investor Interest (or the
method for calculating such Initial Investor Interest) and (b) its Certificate
Rate (or the method for allocating interest payments or other cash flows to such
Series), if any. On the Exchange Date, the Trustee shall authenticate and
deliver any such Series of Investor Certificates only upon delivery to it of the
following: (a) a Supplement satisfying the criteria set forth in subsection
6.9(c) executed by the Transferor and the Servicer and specifying the Principal
Terms of such Series, (b) the applicable Enhancement, if any, (c) the agreement,
if any, pursuant to which the Enhancement Provider agrees to provide the
Enhancement, if any, (d) (i) an Opinion of Counsel to the effect that, unless
otherwise stated in the related Supplement, the newly issued Series of Investor
Certificates will be treated as debt for federal income tax purposes and (ii) a
Tax Opinion with respect to the issuance of such Series, (e) written
confirmation from each Rating Agency that the Exchange will not result in such
Rating Agency's reducing or withdrawing its rating on any then outstanding
Series as to which it is a Rating Agency, and (f) the existing Exchangeable
Transferor Certificate or applicable Investor Certificates, as the case may be.
Upon satisfaction of such conditions, the Trustee shall cancel the existing
Exchangeable Transferor Certificate or applicable Investor Certificates, as the
case may be, and issue, as provided above, such Series of Investor Certificates
and a new Exchangeable Transferor Certificate, dated the Exchange Date. There is
no limit to the number of Exchanges that may be performed under the Agreement.
(c) In conjunction with an Exchange, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect to any
newly issued Series of Investor Certificates, which may include without
limitation: (i) its name or designation, (ii) an Initial Invested Amount or the
method of calculating the Initial Invested Amount, (iii) the method of
determining
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any adjusted Invested Amount, if applicable, (iv) the Certificate Rate (or
formula for the determination thereof), (v) the Closing Date, (vi) each rating
agency rating such Series, (vii) the name of the Clearing Agency, if any, (viii)
the rights of the Holder of the Exchangeable Transferor Certificate that have
been transferred to the Holders of such Series pursuant to such Exchange
(including any rights to allocations of Yield Collections and Principal
Collections), (ix) the interest payment date or dates and the date or dates from
which interest shall accrue, (x) the periods during which or dates on which
principal will be paid or accrued, (xi) the method of allocating Principal
Collections with respect to such Series and, if applicable, with respect to
other Series and the method by which the principal amount of Investor
Certificates of such Series shall amortize or accrete and the method for
allocating Yield Collections and Defaulted Receivables, (xii) any other
Collections with respect to Receivables or other amounts available to be paid
with respect to such Series, (xiii) the names of any accounts to be used by such
Series and the terms governing the operation of any such account and use of
moneys therein, (xiv) the Series Servicing Fee and the Series Servicing Fee
Rate, (xv) the applicable Minimum Transferor Amount and, the Series Termination
Date, (xvi) the terms of any Enhancement with respect to such Series, and the
Enhancement Provider, if applicable, (xvii) the terms on which the Certificates
of such Series may be repurchased or remarketed to other investors, (xviii) any
deposit into any account provided for such Series, (xix) the number of Classes
of such Series, and if more than one Class, the rights and priorities of each
such Class, (xx) whether Net Interchange or other fees will be included in the
funds available to be paid for such Series, (xxi) the priority of any Series
with respect to any other Series, (xxii) the applicable Minimum Trust Principal
Component and (xxiii) any other relevant terms of such Series (including whether
or not such Series will be pledged as collateral for an issuance of any other
securities, including commercial paper) (all such terms, the "Principal Terms"
of such Series). The terms of such Supplement may modify or amend the terms of
this Agreement solely as applied to such new Series. If on the date of the
issuance of such Series there is issued and outstanding one or more Series of
Investor Certificates and no Series of Investor Certificates is currently rated
by a Rating Agency, then as a condition to such Exchange a nationally
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recognized investment banking firm or commercial bank shall also deliver to the
Trustee an officer's certificate stating, in substance, that the Exchange will
not have an adverse effect on the timing or distribution of payments to such
other Series of Investor Certificates then issued and outstanding.
Section 6.10 Book-Entry Certificates. Unless otherwise provided in
any related Supplement, the Investor Certificates, upon original issuance, shall
be issued in the form of typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the depository specified in such Supplement
(the "Depository") which shall be the Clearing Agency or Foreign Clearing
Agency, by or on behalf of such Series. The Investor Certificates of each Series
shall, unless otherwise provided in the related Supplement, initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency or Foreign Clearing Agency. No Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
related Series of Investor Certificates, except as provided in Section 6.12.
Unless and until definitive, fully registered Investor Certificates of any
Series ("Definitive Certificates") have been issued to Certificate Owners
pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full force and
effect with respect to each such Series;
(ii) the Transferor, the Servicer, the Paying Agent, the Transfer
Agent and Registrar and the Trustee may deal with the Clearing Agency and
the Clearing Agency Participants for all purposes (including the making of
distributions on the Investor Certificates of each such Series) as the
authorized representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.10
conflict with any other provisions of this Agreement, the provisions of
this Section 6.10 shall control with respect to each such Series; and
(iv) the rights of Certificate Owners of each such Series shall be
exercised only through the
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Clearing Agency or Foreign Clearing Agency and the applicable Clearing
Agency Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency or
Foreign Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Depository Agreement applicable to a Series, unless and until
Definitive Certificates of such Series are issued pursuant to Section
6.12, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Investor Certificates to such Clearing
Agency Participants.
Section 6.11 Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate owners
pursuant to Section 6.12, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Investor
Certificates to the Clearing Agency or Foreign Clearing Agency for distribution
to Holders of Investor Certificates.
Section 6.12 Definitive Certificates. If (i) (A) the Transferor
advises the Trustee in writing that the Clearing Agency or Foreign Clearing
Agency is no longer willing or able to discharge properly its responsibilities
under the applicable Depository Agreement, and (B) the Trustee or the Transferor
is unable to locate a qualified successor, (ii) the Transferor, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or Foreign Clearing Agency with respect to any
Series of Certificates or (iii) after the occurrence of a Servicer Default,
Certificate Owners of a Series representing beneficial interests aggregating not
less than 50% of the Investor Interest of such Series advise the Trustee and the
applicable Clearing Agency or Foreign Clearing Agency through the applicable
Clearing Agency Participants in writing that the continuation of a book-entry
system through the applicable Clearing Agency or Foreign Clearing Agency is no
longer in the best interests of the Certificate Owners, the Trustee shall notify
all Certificate Owners of such Series, through the applicable Clearing Agency
Participants, of the occurrence of any such
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event and of the availability of Definitive Certificates to Certificate Owners
of such Series requesting the same. Upon surrender to the Trustee of the
Investor Certificates of such Series by the applicable Clearing Agency or
Foreign Clearing Agency, accompanied by registration instructions from the
applicable Clearing Agency or Foreign Clearing Agency for registration, the
Trustee shall issue the Definitive Certificates of such Series. Neither the
Transferor nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates of such Series
all references herein to obligations imposed upon or to be performed by the
applicable Clearing Agency or Foreign Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with respect
to such Definitive Certificates, and the Trustee shall recognize the Holders of
the Definitive Certificates of such Series as Certificateholders of such Series
hereunder.
Section 6.13 Global Certificate; Euro-Certificate Exchange Date. If
specified in the related Supplement for any Series, the Investor Certificates
may be initially issued in the form of a single temporary Global Certificate
(the "Global Certificate") in bearer form, without interest coupons, in the
denomination of the Initial Invested Amount and substantially in the form
attached to the related Supplement. Unless otherwise specified in the related
Supplement, the provisions of this Section 6.13 shall apply to such Global
Certificate. The Global Certificate will be authenticated by the Trustee upon
the same conditions, in substantially the same manner and with the same effect
as the Definitive Certificates. The Global Certificate may be exchanged in the
manner described in the related Supplement for Registered or Bearer Certificates
in definitive form.
Section 6.14 Meetings of Certificateholders. To the extent provided
by the Supplement for any Series issued in whole or in part in Bearer
Certificates, the Servicer of the Trustee may at any time call a meeting of the
Certificateholders of such Series, to be held at such time and at such place as
the Servicer or the Trustee, as the case may be, shall determine, for the
purpose of approving a modification of or amendment to, or obtaining a waiver
of, any covenant or condition set forth in this
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Agreement with respect to such Series or in the Certificates of such Series,
subject to Section 13.1 of the Agreement.
[End of Article VI]
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ARTICLE VII
OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.1 Liability of the Transferor. The Transferor shall be
liable in accordance herewith to the extent of the obligations specifically
undertaken by the Transferor.
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor.
(a) The Transferor shall not consolidate with or merge into
any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which
the Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Transferor substantially as an
entirety shall be, if the Transferor is not the surviving entity,
organized and existing under the laws of the United States of America or
any State or the District of Columbia, and shall be a national banking
association, state banking corporation or other entity which is not
subject to the bankruptcy laws of the United States of America or, subject
to the Rating Agency Condition, any other type of entity, and shall assume
the performance of every covenant and obligation of the Transferor, as
applicable hereunder, and shall benefit from all the rights granted to the
Transferor, as applicable hereunder. To the extent that any right,
covenant or obligation of the Transferor, as applicable hereunder, is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity. In
furtherance hereof, in applying this Section 7.2 to a successor entity,
Section 9.2 hereof shall be applied by reference to events of involuntary
liquidation, receivership or conservatorship applicable to such successor
entity as shall be set forth in the officer's certificate described in
subsection 7.2(a)(ii);
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(ii) the Transferor shall have delivered to the Trustee an
Officer's Certificate signed by a Vice President (or any more senior
officer) of the Transferor stating that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply with this
Section 7.2 and that all conditions precedent herein provided for relating
to such transaction have been complied with and an Opinion of Counsel that
such supplemental agreement is legal, valid and binding; and
(iii) the Transferor shall have delivered notice to each
Rating Agency of such consolidation, merger, conveyance or transfer.
(b) The obligations of the Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Transferor
hereunder except for mergers, consolidations, assumptions or transfers in
accordance with the provisions of the foregoing paragraph.
Section 7.3 Limitation on Liability. The directors, officers,
employees or agents of the Transferor shall not be under any liability to the
Trust, the Trustee, the Certificateholders, any Enhancement Provider or any
other Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
any Supplement and the issuance of the Certificates; provided, however, that
this provision shall not protect the officers, directors, employees, or agents
of the Transferor against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. Except as provided in Section 7.4, the Transferor shall not be under
any liability to the Trust, the Trustee, the Certificateholders, any Enhancement
Provider or any other Person for any action taken or for refraining from the
taking of any action in its capacity as Transferor pursuant to this Agreement or
any Supplement whether arising from express or implied duties under this
Agreement or any Supplement; provided, however, that this provision shall not
protect the Transferor against any liability which would otherwise be
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imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Transferor and any director, officer, employee or agent
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
Section 7.4 Liabilities. Notwithstanding Section 7.3 (and
notwithstanding Sections 3.2, 8.3, 8.4 and 11.11), or any other provision
herein, the Transferor by entering into this Agreement, and any holder of an
interest in the Exchangeable Transferor Certificate by its acceptance thereof,
agree to be liable, directly to the injured party, for the entire amount of any
losses, claims, damages or liabilities (other than those that would be incurred
by an Investor Certificateholder if the Investor Certificates were notes secured
by the Receivables, for example, as a result of the performance of the
Receivables, market fluctuations, a shortfall or failure to make payment under
any Enhancement or other similar market or investment risks associated with
ownership of the Investor Certificates) arising out of or based on the
arrangement created by this Agreement (to the extent that, if the Trust assets
at the time the claim is made were used to pay in full all outstanding
Certificates of all Series, the Trust assets that would remain after the
Investor Certificateholders and Enhancement Providers, if any, were paid in full
would be insufficient to pay any such losses, claims, damages or liabilities) as
though this Agreement created a partnership under the Uniform Partnership Law in
which the Transferor and such holder of an interest in the Exchangeable
Transferor Certificate were general partners. The rights created by this Section
7.4 shall run directly to and be enforceable by the injured party subject to the
limitations hereof. To the extent provided in Section 8.4, the Servicer will
(from its own assets and not from the assets of the Trust) indemnify and hold
harmless the Transferor and each holder of an interest in the Exchangeable
Transferor Certificate against and from certain losses, claims, damages and
liabilities of the Transferor as described in this Section arising from the
actions or omissions of the Servicer.
[End of Article VII]
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ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.
Section 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and
shall be a state or national banking association or other entity which is
not subject to the bankruptcy laws of the United States of America or,
subject to the Rating Agency Condition, any other type of entity, and, if
the Servicer is not the surviving entity, shall assume the performance of
every covenant and obligation of the Servicer hereunder (to the extent
that any right, covenant or obligation of the Servicer, as applicable
hereunder, is inapplicable to the successor entity, such successor entity
shall be subject to such covenant or obligation, or benefit from such
right, as would apply, to the extent practicable, to such successor
entity);
(ii) the Servicer shall have delivered to the Trustee an
Officer's Certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8.2 and
that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that such
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supplemental agreement is legal, valid and binding with respect to the
Servicer; and
(iii) the Servicer shall have delivered notice to the Rating
Agency of such consolidation, merger, conveyance or transfer.
Section 8.3 Limitation on Liability of the Servicer and Others. The
directors, officers, employees or agents of the Servicer shall not be under any
liability to the Trust, the Trustee, the Certificateholders, any Enhancement
Provider or any other Person hereunder or pursuant to any document delivered
hereunder, it being expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the execution
of this Agreement and any Supplement and the issuance of the Certificates;
provided, however, that this provision shall not protect the directors,
officers, employees and agents of the Servicer against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Except as provided in Section 8.4 with respect
to the Trust and the Trustee, its officers, directors, employees and agents, the
Servicer shall not be under any liability to the Trust, the Trustee, its
officers, directors, employees and agents, the Certificateholders or any other
Person for any action taken or for refraining from the taking of any action in
its capacity as Servicer pursuant to this Agreement or any Supplement; provided,
however, that this provision shall not protect the Servicer against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of its
reckless disregard of its obligations and duties hereunder or under any
Supplement. The Servicer may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Receivables in accordance with this Agreement which in its
reasonable opinion may involve it in any expense or liability.
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Section 8.4 Servicer Indemnification of the Trust and the Trustee.
The Servicer shall indemnify and hold harmless the Trust and the Trustee, its
officers, directors, employees and agents, from and against any reasonable loss,
liability, expense, damage or injury suffered or sustained by reason of any acts
or omissions of the Servicer with respect to activities of the Trust or the
Trustee pursuant to this Agreement or any Supplement, including, but not limited
to any judgment, award, settlement, reasonable attorneys' fees and other costs
or expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided, however, that the Servicer shall not
indemnify the Trustee if such acts or omissions constitute or are caused by
fraud, negligence, or willful misconduct by the Trustee; provided further, that
the Servicer shall not indemnify the Trust, the Investor Certificateholders or
the Certificate Owners for any liabilities, costs or expenses of the Trust with
respect to any action taken by the Trustee at the request of the Investor
Certificateholders; provided further, that the Servicer shall not indemnify the
Trust, the Investor Certificateholders or the Certificate Owners as to any
losses claims or damages incurred by any of them in their capacities as
investors, including without limitation losses incurred as a result of Defaulted
Receivables; and provided further, that the Servicer shall not indemnify the
Trust, the Investor Certificateholders or the Certificate Owners for any
liabilities, costs or expenses of the Trust, the Investor Certificateholders or
the Certificate Owners arising under any tax law, including without limitation,
any federal, state, local or foreign income or franchise taxes or any other tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
the Trust, the Investor Certificateholders or the Certificate Owners in
connection herewith to any taxing authority. Any such indemnification shall not
be payable from the assets of the Trust. The provisions of this indemnity shall
run directly to and be enforceable by an injured party subject to the
limitations hereof and shall survive the termination of this Agreement and the
registration and removal of the Trustee.
Section 8.5 The Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that (i)
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the performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which the Servicer could
take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (i) above by an Opinion of Counsel and
as to clause (ii) by an Officer's Certificate, each to such effect delivered to
the Trustee. No such resignation shall become effective until the Trustee or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.2 hereof. If the Trustee is unable
within 120 days of the date of such determination to appoint a Successor
Servicer, the Trustee shall serve as Successor Servicer hereunder.
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of the
Investor Certificateholders, or by applicable statutes or regulations, to review
such documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to the
Servicer's normal security and confidentiality procedures and (iv) at offices
designated by the Servicer. Nothing in this Section 8.6 shall derogate from the
obligation of the Trustee, the Transferor or the Servicer to observe any
applicable law prohibiting disclosure of information regarding the obligors and
the failure of the Servicer to provide access as provided in this Section 8.6 as
a result of such obligations shall not constitute a breach of this Section 8.6.
Section 8.7 Delegation of Duties. It is understood and agreed by the
parties hereto that the Servicer may delegate certain of its duties hereunder to
Total Systems Services, Inc. ("TSYS"). In the ordinary course of business, the
Servicer may at any time delegate any duties hereunder to any Person who agrees
to conduct such duties in accordance with the Corporate/Purchasing Card
Guidelines. Any such delegations shall not relieve the Servicer of its liability
and responsibility with respect to such duties, and shall not constitute a
resig-
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nation within the meaning of Section 8.5 hereof. If any such delegation is to a
party other than TSYS, notification thereof shall be given to each Rating
Agency.
Section 8.8 Examination of Records. The Servicer shall clearly and
unambiguously identify each Account (including any Additional Account designated
pursuant to Section 2.6) in its computer or other records to reflect that the
Receivables arising in such Account have been conveyed to the Trust pursuant to
this Agreement. The Servicer shall, prior to the sale or transfer to a third
party of any receivable held in its custody, examine its computer and other
records to determine that such receivable is not a Receivable.
[End of Article VIII]
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ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the following events
(each, a "Trust Early Amortization Event") shall occur:
(a) the Transferor or any holder of an interest in the
Exchangeable Transferor Certificate shall file a petition to take advantage of
any applicable insolvency or reorganization statute or consent to the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Transferor or any holder of an interest in the
Exchangeable Transferor Certificate or all or substantially all of their
respective property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Transferor or any holder of an interest in the Exchangeable Transferor
Certificate (an "Insolvency Proceeding"); or the Transferor or any holder of an
interest in the Exchangeable Transferor Certificate shall admit in writing its
inability to pay its debts generally as they become due, make an assignment for
the benefit of its creditors or voluntarily suspend payment of its obligations
(any such event, including an Insolvency Proceeding, an "Insolvency Event");
(b) the Transferor shall become unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of this
Agreement; or
(c) the Trust shall become subject to regulation by the
Securities and Exchange Commission as an "investment company" within the meaning
of the Investment Company Act;
then an Early Amortization Event with respect to all Series of Certificates
shall occur without any notice or other action on the part of the Trustee or the
Investor
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Certificateholders immediately upon the occurrence of such event.
Section 9.2 Additional Rights Upon the Occurrence of Certain Events.
(a) If an Insolvency Event occurs with respect to the
Transferor or any holder of an interest in the Exchangeable Transferor
Certificate, the Transferor shall on the day of such Insolvency Event (the
"Appointment Day") immediately cease to transfer Receivables to the Trust and
shall promptly give notice to the Trustee thereof. Notwithstanding any cessation
of the transfer to the Trust of additional Receivables, Receivables transferred
to the Trust prior to the occurrence of such Insolvency Event and Collections in
respect of such Receivables shall continue to be a part of the Trust, and shall
continue to be allocated and paid in accordance with Article IV. Within 15 days
of the Appointment Day, the Trustee shall (i) publish a notice in an Authorized
Newspaper that an Insolvency Event has occurred, that the Trust has dissolved
and that the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables on commercially reasonable terms and in a commercially reasonable
manner and (ii) send written notice to (w) any Holder of the Exchangeable
Transferor Certificate and any holder of an interest in the Exchangeable
Transferor Certificate with respect to which the Insolvency Event has not
occurred, (x) the Investor Certificateholders, (y) each Enhancement Provider, if
any, and (z) any other Person entitled thereto pursuant any Supplement
describing the provisions of this Section 9.2. Unless within 75 days from the
day notice pursuant to clause (i) above is first published the Trustee shall
have received written instructions from Holders of Investor Certificates
evidencing more than 50% of the Investor Interest of each Series issued and
outstanding (or, if any such Series has two or more Classes, each Class) and
from each person described in (ii)(w), (ii)(y) and (ii)(z) to the effect that
such Persons disapprove of the liquidation of the Receivables, the Trustee shall
promptly sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids. In the event that, in accordance
with the result of the voting procedures set forth above, the Receivables are
not sold at the time of dissolution, the Trustee shall
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retain the Receivables (and no Receivables shall thereafter be added to the
Trust) and apply Collections thereon in accordance with the provisions in
Article IV. Notwithstanding the foregoing, the Trustee shall cause any remaining
Receivables and Participations to be disposed of in a manner so that the Trust
is liquidated on or prior to the date that is three (3) years after the
Appointment Date. The Trustee may obtain a prior determination from any
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions of
Sections 9.1 and 9.2 shall not be deemed to mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of
the Receivables pursuant to subsection (a) above shall be treated as Collections
on the Receivables and shall be allocated and deposited in accordance with the
provisions of Article IV. On the day following the Distribution Date on which
the proceeds from any sale, disposition or liquidation of the Receivables are
distributed to the Investor Certificateholders of each Series pursuant to
Article IV, the Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with
its responsibilities pursuant to this Article IX with respect to competitive
bids.
[End of Article IX]
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ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Trustee pursuant to Article
IV or to instruct the Trustee to make any required withdrawal or payment on or
before the date occurring five days after the date such payment, transfer,
deposit, withdrawal or drawing or such instruction or notice is required to be
made or given, as the case may be, under the terms of this Agreement or any
applicable Supplement; provided, however, that any such failure caused by a
nonwillful act of the Servicer shall not constitute a Servicer Default if the
Servicer promptly remedies such failure within five business days after
receiving notice thereof;
(b) failure on the part of the Servicer duly to observe or
perform in any respect any other covenants or agreements of the Servicer set
forth in this Agreement or any Supplement, which has a material adverse effect
on the Investor Certificateholders of any Series (without regard to the amount
of any Enhancement) and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 50% of the Invested Amount of any
Series adversely affected thereby and continues to materially adversely affect
such Investor Certificateholders for such period; or the Servicer shall delegate
its duties under this Agreement, except as permitted by Section 8.7;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Investor Certificateholders of any Series (without regard
to the amount of any Enhancement) and which continues to be incorrect in any
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material respect for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by the Holders of
Investor Certificates evidencing Undivided Interests aggregating not less than
50% of the Invested Amount of any Series adversely affected thereby and
continues to materially adversely affect such Investor Certificateholders for
such period; or
(d) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer, and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or the Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
then, so long as such Servicer Default shall not have been remedied, either the
Trustee, or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Invested Amount, by notice then given
in writing to the Servicer (and to the Trustee if given by the Investor
Certificateholders) (a "Termination Notice"), may terminate all of the rights
and obligations of the Servicer as Servicer under this Agreement. After receipt
by the Servicer of such Termination Notice, and on the date that a Successor
Servicer shall have been appointed by the Trustee pursuant to Section 10.2, all
authority and power of the Servicer under this Agreement shall pass to and be
vested in a Successor Servicer; and, without limitation, the Trustee is hereby
authorized and empowered (upon the failure of the Servicer to cooperate) to
execute and
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deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such transfer of
servicing rights and obligations. The Servicer agrees to cooperate with the
Trustee and such Successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder
including, without limitation, the transfer to such Successor Servicer of all
authority of the Servicer to service the Receivables provided for under this
Agreement, including, without limitation, all authority over all Collections
which shall on the date of transfer be held by the Servicer for deposit, or
which have been deposited by the Servicer, in the Collection Account, the Excess
Funding Account and any Series Account, or which shall thereafter be received
with respect to the Receivables, and in assisting the Successor Servicer and in
enforcing all rights to Insurance Proceeds and Net Interchange (if any)
applicable to the Trust. The Servicer shall promptly transfer its electronic
records or electronic copies thereof relating to the Receivables to the
Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. To the extent that compliance with this
Section 10.1 shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer reasonably deems to be confidential,
the Successor Servicer shall be required to enter into such customary licensing
and confidentiality agreements as the Servicer shall deem necessary to protect
its interests. The Servicer shall, on the date of any servicing transfer,
transfer all of its rights and obligations under the Enhancement with respect to
any Series to the Successor Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under subsection 10.1(a) for a period of ten (10) Business Days
after the applicable grace period or under subsection 10.1(b) or (c) for a
period of sixty (60) Business Days after the
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applicable grace period shall not constitute a Servicer Default if such delay or
failure could not be prevented by the exercise of reasonable diligence by the
Servicer and such delay or failure was caused by an act of God or the public
enemy, acts of declared or undeclared war, public disorder, rebellion, riot or
sabotage, epidemics, landslides, lightning, fire, hurricanes, tornadoes,
earthquakes, nuclear disasters or meltdowns, floods, power outages or similar
causes. The preceding sentence shall not relieve the Servicer from using its
best reasonable efforts to perform its obligations in a timely manner in
accordance with the terms of this Agreement and the Servicer shall provide the
Trustee, any Enhancement Provider, the Transferor and the Holders of Investor
Certificates with an Officer's Certificate giving prompt notice of such failure
or delay by it, together with a description of the cause of such failure or
delay and its efforts so to perform its obligations.
Section 10.2 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.1, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Trustee in writing or, if no
such date is specified in such Termination Notice, or otherwise specified by the
Trustee, until a date mutually agreed upon by the Servicer and Trustee (not to
exceed 90 days from the date of delivery of such notice). The Trustee shall as
promptly as possible after the giving of a Termination Notice appoint a
successor servicer (the "Successor Servicer"), with the consent of any
Enhancement Provider, and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Trustee, the Transferor and
any Enhancement Provider. The Transferor shall have the right to nominate to the
Trustee the name of a potential successor servicer which nominee shall be
selected by the Trustee as the Successor Servicer, subject to the consent of any
Enhancement Provider. The Trustee may obtain bids from any potential successor
servicer. If the Trustee is unable to obtain any bids from any potential
successor servicer and the Servicer delivers an Officer's Certificate to the
effect that it cannot in good faith cure the Servicer Default
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which gave rise to a transfer of servicing, then the Trustee shall offer the
Transferor the right to accept reassignment of all the Receivables; provided,
however, that no such reassignment shall occur unless the Transferor shall
deliver to the Trustee and the Rating Agencies an Opinion of Counsel reasonably
acceptable to the Trustee that such reassignment would not constitute a
fraudulent conveyance by the Transferor. The reassignment deposit amount for
such a reassignment shall be equal to the Aggregate Invested Amount (less the
aggregate principal amount on deposit in any principal funding account), plus
(i) an amount equal to all accrued but unpaid interest on the Certificates of
all Series at the applicable Certificate Rates through the end of the applicable
interest accrual periods of such Series and (ii) any unpaid amounts payable to
any Enhancement Provider under the applicable Enhancement agreement. In the
event that a Successor Servicer has not been appointed and has not accepted its
appointment at the time when the Servicer ceases to act as Servicer, the Trustee
(as trustee hereunder) without further action shall automatically be appointed
the Successor Servicer. Notwithstanding the above, the Trustee shall, if it is
legally unable so to act, petition a court of competent jurisdiction to appoint
any established financial institution having a net worth of not less than
$50,000,000 and whose regular business includes the servicing of charge card or
revolving credit receivables as the Successor Servicer hereunder.
Notwithstanding anything to the contrary in this Agreement, the entire amount of
the reassignment deposit amount shall be distributed to the Investor
Certificateholders of the related Series on the subsequent Distribution Date for
such Series pursuant to Section 12.3 (except for amounts payable to any
Enhancement Provider under the applicable Enhancement Agreement, which amounts
shall be distributed to such Enhancement Provider.)
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer; provided, however, that, the outgoing
Servicer shall not be relieved of any liability hereunder for its actions prior
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to the transfer of servicing hereunder; and provided further, that, (i) the
outgoing Servicer shall not indemnify the Trust or the Trustee under Section 8.4
for acts, omissions or alleged acts or omissions by a Successor Servicer and
(ii) the outgoing Servicer shall not pay or reimburse the Trustee pursuant to
Section 11.5 for any expense, disbursement or advance of the Trustee related to
or arising as a result of the negligence or bad faith of the Successor Servicer.
Any Successor Servicer, by its acceptance of its appointment, will automatically
agree to be bound by the terms and provisions of any applicable Enhancement
agreement.
(c) In connection with such appointment and assumption, the Trustee
shall be entitled to such compensation, or may make such arrangements for the
compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of the Monthly Servicing Fee permitted to the Servicer
pursuant to Section 3.2.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.1 and shall pass to and be vested in the Transferor
and, without limitation, the Transferor is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Transferor in effecting the termination of the responsibilities and rights
of the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Transferor in such electronic form as the Transferor may reasonably request
and shall transfer all other records, correspondence and documents to the
Transferor in the manner and at such times as the Transferor shall reasonably
request. To the extent that compliance with this Section 10.2 shall require the
Successor Servicer to disclose to the Transferor information of any kind which
the Successor Servicer deems to be confidential, the Transferor shall be
required to enter into such customary licensing and
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confidentiality agreements as the Successor Servicer shall deem necessary to
protect its interests.
Section 10.3 Notification to Certificateholders. Within two Business
Days after the Servicer becomes aware of any Servicer Default, the Servicer
shall give prompt written notice thereof to the Trustee, each Rating Agency and
any Enhancement Provider, and the Trustee shall give notice to the Investor
Certificateholders at their respective addresses appearing in the Certificate
Register. Upon any termination or appointment of a Successor Servicer pursuant
to this Article X, the Trustee shall give prompt written notice thereof to
Investor Certificateholders at their respective addresses appearing in the
Certificate Register.
Section 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66-2/3% of
the Invested Amount of each Series adversely affected by any default by the
Servicer or Transferor may, on behalf of all Certificateholders of such Series,
waive any default by the Servicer or Transferor in the performance of its
obligations hereunder and its consequences, except a default relating to the
failure to make any required deposits or payments of interest or principal
relating to such Series pursuant to Article IV which default does not result
from the failure of the Paying Agent to perform its obligations to make any
required deposits or payments of interest and principal in accordance with
Article IV. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
[End of Article X]
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ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of any Servicer Default and
after the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Responsible Officer has received written notice that a Servicer
Default has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
(c) Subject to subsection 11.1(a), no provision of this Agreement
shall be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act or its own misconduct; provided,
however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing Undivided Interests aggregating more than 50% of the Invested
Amount of any Series relating to the time, method and place of
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conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee in relation to
such Series, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any failure
by the Servicer referred to in clauses (a) and (b) of Section 10.1 unless
a Responsible Officer of the Trustee obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from the
Servicer or any Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 10% of the Invested Amount of any
Series adversely affected thereby.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provision contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Servicer under this Agreement, except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of the
Trust in any Receivable now existing or hereafter created or to impair the value
of any Receivable now existing or hereafter created.
(f) Except as provided in this subsection 11.1(f), the Trustee shall
have no power to vary the corpus of the Trust including, without limitation, the
power to (i) accept any substitute obligation for a Receivable initially
assigned to the Trust under Section 2.1 or 2.6 hereof, (ii) add any other
investment, obligation or security to the Trust, except for an addition
permitted under Section 2.6 or (iii) withdraw from the
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Trust any Receivables, except for a withdrawal permitted under Sections 2.7,
9.2, 10.2, 12.1 or 12.2 or subsections 2.4(d), 2.4(e) or Article IV.
(g) Subject to subsection 11.1(d) above, in the event that the
Paying Agent or the Transfer Agent and Registrar (if other than the Trustee)
shall fail to perform any obligation, duty or agreement in the manner or on the
day required to be performed by the Paying Agent or the Transfer Agent and
Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated promptly to perform such obligation, duty or agreement in the manner
so required.
(h) If the Transferor has agreed to transfer any of its charge card
receivables (other than the Receivables) to another Person, upon the written
request of the Transferor, the Trustee will enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary to identify separately the rights, if any, of the Trust and such other
Person in the Transferor's charge card receivables; provided, however, that the
Trust shall not be required to enter into any intercreditor agreement which
could adversely affect the interests of the Certificateholders and, upon the
request of the Trustee, the Transferor will deliver an Opinion of Counsel on any
matters relating to such intercreditor agreement, reasonably requested by the
Trustee.
Section 11.2 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.1:
(a) the Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accord with, any assignment of Receivables in
Additional Accounts, the initial report, the monthly Servicer's certificate, the
annual Servicer's certificate, the monthly payment instructions and notification
to the Trustee, the monthly Certificateholder's statement, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented to it pursuant to this Agreement by the proper
party or parties;
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(b) the Trustee may consult with counsel of its selection, and any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or any Enhancement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders or any
Enhancement Provider, pursuant to the provisions of this Agreement, unless such
Certificateholders or Enhancement Provider shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities,
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligations, upon the occurrence of any
Servicer Default (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement and any Enhancement, and to use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into
the facts of matters stated in any assignment of Receivables in Additional
Accounts, the initial report, the monthly Servicer's certificate, the annual
Servicer's certificate, the monthly payment instructions and notification to the
Trustee, the monthly Certificateholder's statement, any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing so to do
by Holders of Investor Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series;
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(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder; and
(g) except as may be required by subsection 11.1(a), the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the
Transferor with its representations and warranties or for any other purpose.
Section 11.3 Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
in this Agreement and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor or to the holder of the
Exchangeable Transferor Certificate in respect of the Receivables or deposited
in or withdrawn from the Collection Account or any Series Account by the
Servicer.
Section 11.4 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the Trustee.
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution
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of the Trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and, subject to Section 8.4, the
Servicer will pay or reimburse the Trustee (without reimbursement from any
Investor Account, any Series Account or otherwise) upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement except any such
expense, disbursement or advance as may arise from its own negligence or bad
faith and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.2, the provisions of this
Section 11.5 shall not apply to expenses, disbursements and advances made or
incurred by the Trustee in its capacity as Successor Servicer.
The obligations of the Servicer under this Section 11.5 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or any state thereof authorized under
such laws to exercise corporate trust powers, having a long-term unsecured debt
rating of at least Baa3 by Moody's and BBB by Standard & Poor's having, in the
case of an entity that is subject to risk-based capital adequacy requirements,
risk-based capital of at least $50,000,000 or, in the case of an entity that is
not subject to risk-based capital adequacy requirements, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 11.6, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.6, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.7.
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Section 11.7 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the
Trust hereby created by giving written notice thereof to the Servicer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted within thirty (30) days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to resign
after written request therefor by the Transferor, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Transferor may, but shall not be required to, remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.8 hereof and any liability of the Trustee arising
hereunder shall survive such appointment of a successor trustee.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.7
hereof shall execute, acknowledge and deliver to the Transferor and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor
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Trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as Trustee herein. The predecessor Trustee shall deliver to the
successor trustee all documents and statements held by it hereunder, and the
Transferor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section 11.8 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 11.6 hereof and shall be an
Eligible Servicer, and, if Standard & Poor's is then a Rating Agency, unless
Standard & Poor's shall have consented to such appointment.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.8, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown in
the Certificate Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.6 hereof, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust may at the time be located, the Trustee
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shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the trust, or any part thereof, and, subject to the other provisions of
this Section 11.10, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 11.6 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any laws of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee as its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect to
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 11.11 Tax Returns. In the event the Trust shall be required
to file tax returns, the Trustee, as soon as practicable after it is made aware
of such requirement, shall prepare or cause to be prepared any tax returns
required to be filed by the Trust and, to the extent possible, shall file such
returns at least five days before such returns are due to be filed. The Trustee
is hereby authorized to sign any such return on behalf of the Trust. The
Servicer shall prepare or shall cause to be prepared all tax information
required by law to be distributed to Certificateholders and shall deliver such
information to the Trustee at least five days prior to the date it is required
by law to be distributed to Certificateholders. The Servicer, upon request, will
furnish the Trustee with all such information known to the Servicer as may be
reasonably required in connection with the preparation of all tax returns of the
Trust. In no event shall the Trustee or the Servicer be liable for
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any liabilities, costs or expenses of the Trust, the Investor Certificateholders
or the Certificate Owners arising under any tax law, including without
limitation federal, state, local or foreign income or excise taxes or any other
tax imposed on or measured by income (or any interest or penalty with respect
thereto or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims without Possession of
Certificates. All rights of action and claims under this Agreement or any Series
of Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of any Series of Certificateholders in respect of which such
judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default shall
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 10.1 and 11.14, proceed to protect and enforce its rights
and the rights of any Series of Certificateholders under this Agreement by a
suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the execution of any power granted in this Agreement or for the
enforcement cement of any other legal, equitable or other remedy as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce any
of the rights of the Trustee or any Series of Certificateholders.
Section 11.14 Rights of Certificateholders to Direct Trustee.
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Aggregate Invested Amount (or, with respect to any remedy, trust
or power that does not relate to all Series, 50% of the Aggregate Invested
Amount of the Investor Certificates of all Series to which such remedy, trust or
power relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
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any trust or power conferred on the Trustee; provided, however, that, subject to
Section 11.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; and provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction of such Holders of Investor
Certificates.
Section 11.15 Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(i) the Trustee is a banking corporation organized, existing and
authorized to engage in the business of banking under the laws of the
United States;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement;
and
(iii) this Agreement has been duly executed and delivered by the
Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will
maintain at its expense in the Borough of Manhattan, the City of New York an
office or offices, or agency or agencies, where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served. The
Trustee's Corporate Trust Office at 120 Wall Street, New York, New York 10043
shall initially be such office. The Trustee will give prompt written notice to
the Servicer and to Certificateholders (or in the case of Holders of Bearer
Certificates, in the manner provided for in the related Supplement) of any
change in the location of the Certificate Register or any such office or agency.
[End of Article XI]
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ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust.
(a) The respective obligations and responsibilities of the
Transferor, the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Certificateholders as hereafter
set forth) shall terminate, except with respect to the duties described in
Section 8.4, Section 11.5 and subsections 2.4(c) and 12.3(b), on the Trust
Termination Date; provided, however, that the Trust shall not terminate on the
date specified in clause (i) of the definition of "Trust Termination Date" if
each of the Servicer and the Holder of the Exchangeable Transferor Certificate
notify the Trustee in writing, not later than five Business Days preceding such
date, that they desire that the Trust not terminate on such date, which notice
(such notice, a "Trust Extension") shall specify the date on which the Trust
shall terminate (such date, the "Extended Trust Termination Date"); provided,
however, that the Extended Trust Termination Date shall be not later than
__________ __, 20__. The Servicer and the Holder of the Exchangeable Transferor
Certificate may, on any date following the Trust Extension, so long as no Series
of Certificates is outstanding, deliver a notice in writing to the Trustee
changing the Extended Trust Termination Date.
(b) All principal and interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in a
Supplement, in the event that the Invested Amount of any Series of Certificates
is greater than zero on its Series Termination Date (after giving effect to all
transfers, withdrawals, deposits and drawings to occur on such date and the
payment of principal to be made on such Series on such date), the Trustee will
sell or cause to be sold, and pay the proceeds first, to all Certificateholders
of such Series in accordance with the priority for each Class within such Series
as provided in the related Supplement, in final payment of all principal of and
accrued interest on such Series of Certificates, and second, as provided in the
related Supplement, an amount
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of Receivables (or interests therein) up to 110% of the sum of the Invested
Amount of such Series plus the Collateral Invested Amount (if not included in
the Invested Amount) of such Series, if any, at the close of business on such
date (but not more than an amount of Receivables equal to the sum of (1) the
product of (A) the Transferor Amount divided by the aggregate amount of Trust
Principal Component plus any Excess Funding Amount, (B) the aggregate amount of
the Trust Principal Component plus any Excess Funding Amount, and (C) a fraction
the numerator of which is the applicable Investor Percentage with respect to
Yield Collections and the denominator of which is the sum of all Investor
Percentages with respect to Yield Collections and (2) the Invested Amount of
such Series plus the Collateral Invested Amount (if not included in the Invested
Amount) of such Series). The Trustee shall notify each Enhancement Provider of
the proposed sale of such Receivables and shall provide each Enhancement
Provider an opportunity to bid on such Receivables. The Transferor shall be
permitted to purchase such Receivables in such case and shall have a right of
first refusal with respect thereto. Any proceeds of such sale in excess of such
principal and interest paid and such other amounts paid pursuant to the related
Supplement shall be paid to the Holder of the Exchangeable Transferor
Certificate. Upon such Series Termination Date with respect to the applicable
Series of Certificates, final payment of all amounts allocable to any Investor
Certificates of such Series shall be made in the manner provided in Section
12.3.
Section 12.2 Optional Purchase. (a) If so provided in any
Supplement, the Transferor may, but shall not be obligated to, cause a final
distribution to be made in respect of the related Series of Certificates on a
Distribution Date specified in such Supplement by depositing into the Collection
Account or the applicable Series Account, not later than the Transfer Date
preceding such Distribution Date, for application in accordance with Section
12.3, the amount specified in such Supplement; provided, however that if the
short-term deposits or long-term unsecured debt obligations of the Transferor
(or, if neither such deposits nor such obligations of the Transferor are rated
by Moody's, then the short-term deposits or long-term unsecured debt obligations
of the holding company of the Transferor so long as such holding company is
First Bank System, Inc.) are not rated at the
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time of such purchase of Receivables at least P-3 or Baa3, respectively, by
Moody's, no such event shall occur unless the Transferor shall deliver an
Opinion of Counsel reasonably acceptable to the Trustee that such deposit into
the Collection Account or any Series Account as provided in the related
Supplement would not constitute a fraudulent conveyance of the Transferor.
(b) The amount deposited pursuant to subsection 12.2(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Section 12.3 on the related Distribution Date following the date of such
deposit. All Certificates of a Series which are purchased by the Transferor
pursuant to subsection 12.2(a) shall be delivered by the Transferor upon such
purchase to, and be canceled by, the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the Transferor. The
Invested Amount of each Series which is purchased by the Transferor pursuant to
subsection 12.2(a) shall, for the purposes of the definition of "Transferor
Amount," be deemed to be equal to zero on the Distribution Date following the
making of the deposit, and the Transferor Amount shall thereupon be deemed to
have been increased by the Invested Amount of such Series.
Section 12.3 Final Payment with Respect to any Series.
(a) Written notice of any termination, specifying the Distribution
Date upon which the Investor Certificateholders of any Series may surrender
their Certificates for payment of the final distribution with respect to such
Series and cancellation, shall be given (subject to at least two Business Days'
prior notice from the Servicer to the Trustee) by the Trustee to Investor
Certificateholders of such Series mailed not later than the fifth day of the
month of such final distribution (or in the manner provided by the Supplement
relating to such Series) specifying (i) the Distribution Date (which shall be
the Distribution Date in the month (x) in which the deposit is made pursuant to
subsection 2.4(e), 9.2(b), 10.2(a), or subsection 12.2(a) of the Agreement or
such other section as may be specified in the related Supplement, or (y) in
which the related Series Termination Date occurs) upon which final payment of
such Investor Certificates will be made upon presentation and surrender of
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such Investor Certificates at the office or offices therein designated (which,
in the case of Bearer Certificates, shall be outside the United States), (ii)
the amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Investor Certificates at the office or
offices therein specified. The Servicer's notice to the Trustee in accordance
with the preceding sentence shall be accompanied by an Officer's Certificate
setting forth the information specified in Article V of this Agreement covering
the period during the then current calendar year through the date of such notice
and setting forth the date of such final distribution. The Trustee shall give
such notice to the Transfer Agent and Registrar and the Paying Agent at the time
such notice is given to such Investor Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 12.1(a) or the occurrence of the Series Termination Date with respect
to any Series, all funds then on deposit in the Collection Account or any Series
Account applicable to the related Series shall continue to be held in trust for
the benefit of the Certificateholders of the related Series and the Paying Agent
or the Trustee shall pay such funds to the Certificateholders of the related
Series upon surrender of their Certificates (which surrenders and payments, in
the case of Bearer Certificates, shall be made only outside the United States).
In the event that all of the Investor Certificateholders of any Series shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice (or, in the case of Bearer Certificates, publication notice) to
the remaining Investor Certificateholders of such Series upon receipt of the
appropriate records from the Transfer Agent and Registrar to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one and one-half years after the second notice with respect
to a Series, all the Investor Certificates of such Series shall not have been
surrendered for cancellation, the Trustee may take appropriate steps or may
appoint an agent to take appropriate steps, to contact the remaining Investor
Certificateholders of such Series concerning surrender of their Certificates,
and the cost thereof
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shall be paid out of the funds in the Collection Account or any Series Account
held for the benefit of such Investor Certificateholders. The Trustee and the
Paying Agent shall pay to the Transferor upon request any monies held by them
for the payment of principal or interest which remains unclaimed for two years.
After such payment to the Transferor, Investor Certificateholders entitled to
any of such monies must look to the Transferor for payment as general creditors
unless an applicable abandoned property law designates another Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.
Section 12.4 Termination Rights of Holder of Transferor Certificate.
Upon the termination of the Trust pursuant to Section 12.1, and after payment of
all amounts due hereunder on or prior to such termination and the surrender of
the Exchangeable Transferor Certificate, the Trustee shall execute a written
reconveyance substantially in the form of Exhibit H pursuant to which it shall
reconvey to the Holder of the Exchangeable Transferor Certificate (without
recourse, representation or warranty) all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, all moneys due
or to become due with respect to such Receivables and all proceeds of such
Receivables and Insurance Proceeds relating to such Receivables and Net
Interchange (if any) allocable to the Trust pursuant to any Supplement, except
for amounts held by the Trustee pursuant to subsection 12.3(b). The Trustee
shall execute and deliver such instruments of transfer and assignment, in each
case without recourse, as shall be reasonably requested by the Holder of the
Exchangeable Transferor Certificate to vest in such Holder all right, title and
interest which the Trust had in the Receivables.
Section 12.5 Defeasance.
Notwithstanding anything to the contrary in this Agreement or any
Supplement:
(a) The Transferor may at its option be discharged from its
obligations with respect to all of the
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Investor Certificates issued by the Trust or any specified Series thereof on the
date the applicable conditions set forth in Section 12.5(c) are satisfied
("Defeasance"); provided, however, that the following rights, obligations,
powers, duties and immunities shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of Investor Certificates of the
Trust or any specified Series thereof to receive, solely from the trust fund
provided for in Section 12.5(c), payments in respect of principal of and
interest on such Investor Certificates when such payments are due; (B) the
Transferor's obligations with respect to such Series of Certificates under
Sections 6.3, 6.4 and 12.3; (C) the rights, powers, trusts, duties and
immunities of the Trustee, the Paying Agent and the Transfer Agent and Registrar
hereunder; and (D) this Section 12.5.
(b) Subject to section 12.5(c), the Transferor at its option may use
Collections to purchase Eligible Investments rather than additional Receivables
for transfer to the Trust until such time as no Receivables remain in the Trust.
(c) The following shall be the conditions to Defeasance under
Section 12.5(a): (1) the Transferor irrevocably shall have deposited or caused
to be deposited with the Trustee, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, as trust funds in
trust for making the payments described below (A) Dollars in an amount, or (B)
Eligible Investments which through the scheduled payment or principal and
interest in respect thereof will provide, not later than the due date of payment
thereon, money in an amount, or (C) a combination thereof, in each case
sufficient to pay and discharge, and, which shall be applied by the Trustee to
pay and discharge, all remaining scheduled interest and principal payments on
all outstanding Investor Certificates of the Trust or any specified Series
thereof on the dates scheduled for such payments in this Agreement and the
applicable Supplements and all amounts owed to the Enhancement Provider for any
Series if so provided in the related Supplements or agreements with such
Enhancement Provider; (2) prior to its first exercise of its right to substitute
money or Eligible Investments for Receivables, the Transferor shall deliver to
the Trustee (x) an Opinion of Counsel to the effect that such deposit and
termination of obligations will not
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result in the Trust being required to register as an "investment company" within
the meaning of the Investment Company Act and (y) a Tax Opinion with respect to
such deposit and termination; and (3) such deposit and termination of
obligations will not result in an Early Amortization Event for any Series.
[End of Article XII]
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
(a) This Agreement or any Supplement may be amended in writing from
time to time by the Servicer, the Transferor and the Trustee without the consent
of any of the Certificateholders, for the purpose of curing any ambiguity,
correcting or supplementing any provision therein which may be inconsistent with
any other provision therein or adding any other provisions with respect to
matters or questions arising under the Agreement which are not inconsistent with
the provisions of the Agreement and enabling the Trust or a portion thereof to
elect to qualify as a financial asset securitization investment trust (or
comparable tax entity for the securitization of financial assets) in accordance
with the Internal Revenue Code; provided, however, that (i) such action shall
not, in the reasonable belief of the Transferor, as evidenced by an Officer's
Certificate, adversely affect in any material respect the interests of any
Investor Certificateholders; (ii) the Transferor shall have delivered a Tax
Opinion to the Trustee and (iii) each Rating Agency shall have notified the
Transferor, the Servicer and the Trustee in writing (which writing need only be
addressed to any one of the Transferor, the Servicer or the Trustee) that such
action will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class to which it is a Rating Agency.
(b) This Agreement or any Supplement may also be amended in writing
from time to time by the Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Invested Amount of each outstanding
Series adversely affected by such amendment for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or any Supplement or modifying in any manner the rights of
Investor Certificateholders of any Series then issued and outstanding; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, distributions which are required to be made on any
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Investor Certificates of such Series without the consent of each Investor
Certificateholder of such Series, (ii) change the definition of or the manner of
calculating the Invested Amount, the Investor Percentage or the Investor Default
Amount of such Series without the consent of each Investor Certificateholder of
such Series or (iii) reduce the aforesaid percentage required to consent to any
such amendment, without the consent of each Investor Certificateholder of all
Series adversely affected. The Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Trustee's rights, duties or immunities
under this Agreement or otherwise.
(c) Notwithstanding anything in this Section 13.1 to the contrary, a
Supplement with respect to any Series may be amended on the terms in accordance
with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment, the Trustee
shall furnish notification of the substance of such amendment to each Investor
Certificateholder of each Series affected and to each Rating Agency providing a
rating for such Series.
(e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.1 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(f) Any Series Supplement executed and delivered pursuant to Section
6.9 and any amendments regarding the addition to or removal of Receivables or
Participations from the Trust as provided in Sections 2.6 and 2.7, executed in
accordance with the provisions hereof, shall not be considered amendments to
this Agreement for the purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, the Trustee may request an
Opinion of Counsel from the Transferor or Servicer to the effect that the
amendment complies with all requirements of this Agreement.
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Section 13.2 Protection of Right, Title and Interest to Trust.
(a) The Servicer shall cause this Agreement, all amendments hereto
and/or all financing statements and continuation statements and any other
necessary documents covering the Certificateholders and the Trustee's right,
title and interest to the Trust to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Certificateholders or the Trustee, as the case
may be, hereunder to all property comprising the Trust. The Servicer shall
deliver to the Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recordings registration or filing. The Transferor shall cooperate
fully with the Servicer in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the intent of
this subsection 13.2(a).
(b) Within thirty (30) days after the Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-402(7) of the UCC as in
effect in the Relevant UCC State, the Transferor shall give the Trustee notice
of any such change and shall file such financing statements or amendments as may
be necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof.
(c) Each of the Transferor and the Servicer will give the Trustee
prompt written notice of any relocation of any office from which it services
Receivables or keeps records concerning the Receivables or of its principal
executive office and whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. Each of the Trans-
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feror and the Servicer will at all times maintain each office from which it
services Receivables and its principal executive office within the United States
of America.
(d) The Servicer will deliver to the Trustee on or before
_____________ __ of each year, beginning with _____________ __, 1998, an Opinion
of Counsel, substantially in the form of Exhibit F.
Section 13.3 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor shall such death or
incapacity entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except with
respect to the Investor Certificateholders as provided in Section 13.1 hereof)
or in any manner otherwise control the operation and management of the Trust, or
the obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given written notice to the Trustee, and
unless the Holders of Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series which may be adversely
affected but for the institution of such suit, action or proceeding, shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and
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shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby,
and the Trustee, for sixty (60) days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Certificateholders shall
have the right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Certificateholders of any other of the Certificates, or to
obtain or seek to obtain priority over or preference to any other such
Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 13.3, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 13.4 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 13.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at, sent by facsimile to, sent by courier at or mailed by
registered mail, return receipt requested, to (a) in the case of the Transferor,
to (b) in the case of the Servicer, to (c) in the case of the Trustee, to the
Corporate Trust Office, (d) in the case of the Enhancement Provider for a
particular Series, the address, if any, specified in the Supplement relating to
such Series and (e) in the case of the Rating Agency for a particular Series,
the address, if any, specified in the Supplement relating to such Series; or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party. Unless otherwise provided with respect to
any Series in the related Supplement any notice required or permitted to be
mailed to
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a certificateholder shall be given by first class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register, or with
respect to any notice required or permitted to be made to the Holders of Bearer
Certificates, by publication in the manner provided in the related Supplement.
If and so long as any Series or Class is listed on the Luxembourg Stock Exchange
and such Exchange shall so require, any Notice to Investor Certificateholders
shall be published in an authorized newspaper of general circulation in
Luxembourg within the time period prescribed in this Agreement. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 13.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders thereof.
Section 13.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.2, this Agreement may not be
assigned by the Servicer without the prior consent of Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66 2/3% of
the Invested Amount of each Series.
Section 13.8 Certificates Non-Assessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the Undivided Interests
represented by the Certificates shall be non-assessable for any losses or
expenses of the Trust or for any reason whatsoever, and that Certificates upon
authentication thereof by the Trustee pursuant to Sections 2.1 and 6.2 are and
shall be deemed fully paid.
Section 13.9 Further Assurances. The Transferor and the Servicer
agree to do and perform, from time
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to time, any and all acts and to execute any and all further instruments
required or reasonably requested by the Trustee more fully to effect the
purposes of this Agreement, including, without limitation, the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee, any Enhancement Provider
or the Investor Certificateholders, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
Section 13.11 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Certificateholders
and, to the extent provided in the related Supplement, to the Enhancement
Provider named therein, and their respective successors and permitted assigns.
Except as otherwise provided in this Article XIII and Section 7.4 hereof, no
other Person will have any right or obligation hereunder.
Section 13.13 Actions by Certificateholders.
(a) Wherever in this Agreement a provision is made that an action
may be taken or a notice, demand or instruction given by Investor
Certificateholders, such action, notice or instruction may be taken or given by
any Investor Certificateholder, unless such provision requires a specific
percentage of Investor Certificateholders.
125
<PAGE>
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind such Certificateholder and
every subsequent holder of such Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by the Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
Section 13.14 Rule 144A Information. For so long as any of the
Investor Certificates of any Series or any Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, each of the
Transferor, the Servicer, the Trustee and the Enhancement Provider for such
Series agree to cooperate with each other to provide to any Investor
Certificateholders of such Series or Class and to any prospective purchaser of
such Investor Certificates designated by such an Investor Certificateholder upon
the request of such Investor Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Securities Act.
Section 13.15 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.16 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
[End of Article XIII]
126
<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers as
of the day and year first above written.
FIRST BANK OF SOUTH DAKOTA
(NATIONAL ASSOCIATION)
Transferor
By:________________________
Name:
Title:
FBS CARD SERVICES, INC.
Servicer
By:________________________
Name:
Title:
CITIBANK, N.A.
Trustee
By:________________________
Name:
Title:
127
================================================================================
FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION)
Transferor
FBS CARD SERVICES, INC.
Servicer
and
CITIBANK, N.A.
Trustee
on behalf of the Certificateholders
---------------------------------------
Series 1997-1 SUPPLEMENT
Dated as of January __, 1997
to
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1997
---------------------------------------
FIRST BANK CORPORATE CARD MASTER TRUST
Series 1997-1
---------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Designation; Minimum Transferor Percentage
and Minimum Trust Principal Component.............. 1
SECTION 2. Definitions........................................... 2
SECTION 3. Servicing Compensation and Assignment
of Net Interchange................................. 21
SECTION 4. Reassignment and Transfer Terms....................... 23
SECTION 5. Delivery and Payment for the Investor
Certificates....................................... 23
SECTION 6. Depository; Form of Delivery of Investor
Certificates....................................... 24
SECTION 7. Article IV of Agreement............................... 24
SECTION 4.4 Rights of Certificateholders.................... 24
SECTION 4.5 Allocations......................................25
SECTION 4.6 Determination of Monthly Interest................28
SECTION 4.7 Determination of Monthly Principal.............. 30
SECTION 4.8 Coverage of Required Amount......................32
SECTION 4.9 Monthly Allocations..............................34
SECTION 4.10 Investor Charge-Offs.............................40
SECTION 4.11 Excess Spread and
Shared Excess Yield Collections..................42
SECTION 4.12 Reallocated Principal Collections............... 44
SECTION 4.13 Shared Principal Collections.....................45
SECTION 4.14 Shared Excess Yield Collections..................46
SECTION 4.15 Interest Funding Account.........................46
SECTION 4.16 Principal Funding Account........................46
SECTION 4.17 Reserve Account..................................48
SECTION 4.18 Transferor's or Servicer's Failure
to Make a Deposit or Payment..................50
SECTION 8. Article V of the Agreement............................ 51
SECTION 5.1 Distributions....................................51
SECTION 5.2 Monthly Series 1997-1
Certificateholders' Statement.................52
SECTION 9. Early Amortization Events............................. 54
SECTION 10. Series 1997-1 Termination............................. 56
SECTION 11. Counterparts.......................................... 56
SECTION 12. Governing Law......................................... 56
SECTION 13. No Petition........................................... 57
i
<PAGE>
SECTION 14. Tax Representation and Covenant....................... 57
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT B Form of Monthly Payment Instructions
and Notification to the Trustee
EXHIBIT C Form of Series 1997-1 Certificateholders'
Statement
ii
<PAGE>
Series 1997-1 SUPPLEMENT, dated as of January __, 19976 (this
"Series Supplement"), among FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION), a
national banking association, as Transferor, FBS CARD SERVICES, INC., a
Minnesota corporation, as Servicer, and CITIBANK, N.A., as Trustee under the
Pooling and Servicing Agreement, dated as of January 1, 1997, among First Bank
of South Dakota (National Association), FBS Card Services, Inc.
and the Trustee (the "Agreement").
Pursuant to this Series Supplement, the Transferor and the Trust
shall create a Series of Investor Certificates and shall specify the Principal
Terms thereof.
SECTION 1. Designation; Minimum Transferor Percentage and Minimum
Trust Principal Component. (a) There is hereby created a Series of Investor
Certificates to be issued in two Classes pursuant to the Agreement and this
Series Supplement and to be known together as the "Series 1997-1 Certificates."
The two Classes shall be designated the Class A __% Asset Backed Certificates,
Series 1997-1 (the "Class A Certificates") and the Class B __% Asset Backed
Certificates, Series 1997-1 (the "Class B Certificates"). The Class A
Certificates and the Class B Certificates shall be substantially in the form of
Exhibits A-1 and A-2 hereto, respectively. In addition, there is hereby created
a third Class of an uncertificated interest in the Trust which shall be deemed
to be an "Investor Certificate" for all purposes under the Agreement and this
Series Supplement, except as expressly provided herein, and which shall be known
as the Collateral Investor Interest, Series 1997-1 (the "Collateral Investor
Interest").
(b) The Collateral Interest Holder, as holder of an "Investor
Certificate" under the Agreement, shall be entitled to the benefits of the
Agreement and this Series Supplement upon payment by the Collateral Interest
Holder of amounts owing on the Closing Date pursuant to the Loan Agreement.
Notwithstanding the foregoing, except as expressly provided herein, the
provisions of Article VI and Article XII of the Agreement relating to the
registration, authentication, delivery, presentation, cancellation and surrender
of Registered Certificates and the Opinion of Counsel described in Section
6.9(b)(d)(i)
<PAGE>
shall not be applicable to the Collateral Investor Interest.
(c) The Minimum Transferor Percentage applicable to Series 1997-1 shall
be __%. The Minimum Trust Principal Component with respect to the Series 1997-1
shall be $_______.
SECTION 2. Definitions.
In the event that any term or provision contained herein shall
conflict with or be inconsistent with any provision contained in the Agreement,
the terms and provisions of this Series Supplement shall govern. All Article,
Section or subsection references herein shall mean Articles, Sections or
subsections of the Agreement, except as otherwise provided herein. All
capitalized terms not otherwise defined herein are defined in the Agreement.
Each capitalized term defined herein shall relate only to the Investor
Certificates and no other Series of Certificates issued by the Trust.
"Accumulation Period" shall mean, unless an Early Amortization Event
shall have occurred prior thereto, the period commencing at the close of
business on the last day of the ______ ____ Collection Period, or such later
date as is determined in accordance with subsection 4.9(f) and ending on the
first to occur of (a) the commencement of the Early Amortization Period, (b) the
payment in full of the Invested Amount or (c) the Series 1997-1 Termination
Date.
"Accumulation Period Factor" shall mean, for each Collection Period,
a fraction, the numerator of which is equal to the sum of the initial invested
amounts (or other amounts specified in the applicable Supplement) of all
outstanding Series, and the denominator of which is equal to the sum of (a) the
Initial Invested Amount, (b) the initial invested amounts (or other amounts
specified in the applicable Supplement) of all outstanding Series (other than
Series 1997-1) which are not expected to be in their revolving periods, and (c)
the initial invested amounts (or other amounts specified in the applicable
Supplement) of all other outstanding Series which are not allocating Shared
Principal Collections to other Series and are in their revolving periods.
2
<PAGE>
"Accumulation Period Length" shall have the meaning assigned such
term in subsection 4.9(f).
"Adjusted Invested Amount" shall mean, with respect to any date of
determination, an amount equal to the sum of (a) the Class A Adjusted Invested
Amount and (b) the Class B Invested Amount and (c) the Collateral Invested
Amount.
"Available Investor Principal Collections" shall mean with respect
to any Collection Period, an amount equal to (a) the Investor Principal
Collections for such Collection Period, minus (b) the amount of Reallocated
Principal Collections with respect to such Collection Period which pursuant to
Section 4.12 are required to fund the Class A Required Amount and the Class B
Required Amount, plus (c) the amount of any Shared Principal Collections that
are allocated to Series 1997-1 in accordance with subsection 4.13(b).
"Available Reserve Account Amount" shall mean, with respect to any
Transfer Date, the lesser of (a) the amount on deposit in the Reserve Account on
such date (after taking into account any interest and earnings retained in the
Reserve Account pursuant to subsection 4.16(b) on such date, but before giving
effect to any deposit made or to be made pursuant to subsection 4.11(j) to the
Reserve Account on such date) and (b) the Required Reserve Account Amount.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.6(a).
"Class A Adjusted Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Class A Invested Amount on such
date of determination minus the Principal Funding Account Balance
on such date of determination.
"Class A Available Funds" shall mean, with respect to any Collection
Period, an amount equal to the sum of (a) the Class A Floating Percentage of
Yield Collections (including net investment earnings on funds on deposit in the
Excess Funding Account) deposited in the Collection Account for such Collection
Period (or to be deposited in the Collection Account on the related Transfer
Date with respect to the preceding Collection
3
<PAGE>
Period pursuant to the third paragraph of subsection 4.3(a) of the Agreement and
subsection 3(b) of this Series Supplement), excluding the portion of Yield
Collections attributable to Net Interchange that is allocable to Servicer
Interchange, (b) if such Collection Period relates to a Distribution Date that
occurs on or prior to the payment in full of the Class A Invested Amount, the
Principal Funding Investment Proceeds arising pursuant to subsection 4.16(b), if
any, with respect to the related Transfer Date and (c) amounts, if any, to be
withdrawn from the Reserve Account which will be deposited into the Collection
Account on the related Transfer Date pursuant to subsections 4.17(b) and
4.17(d).
"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
"Class A Certificate Rate" shall mean a per annum rate equal to
_____% per annum. Interest with respect to the Class A Certificates shall be
computed on the basis of a 360-day year consisting of twelve 30-day months for
all purposes of this Series Supplement and the Agreement.
"Class A Certificates" shall mean any of the certificates executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
"Class A Deficiency Amount" shall have the meaning specified in
subsection 4.6(a).
"Class A Expected Final Payment Date" shall mean the
________________ Distribution Date.
"Class A Fixed Percentage" shall mean, with respect to any
Collection Period following the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Class A Invested Amount as of the close of business on the last day of
the Revolving Period and the denominator of which is equal to the greater of (i)
the Trust Principal Component as of the close of business on the last day of the
immediately preceding Collection Period and (ii) the sum of the numerators used
to calculate the allocation percentages with respect to Principal
4
<PAGE>
Collections for all Series outstanding as of the date on which such
determination is being made.
"Class A Floating Percentage" shall mean, with respect to any
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Class A Adjusted
Invested Amount as of the close of business on the last day of the immediately
preceding Collection Period (or, with respect to the first Collection Period
applicable to Series 1997-1, the Class A Initial Invested Amount) and the
denominator of which is equal to the greater of (i) the Trust Principal
Component as of the close of business on the last day of the immediately
preceding Collection Period and (ii) the sum of the numerators used to calculate
the allocation percentages with respect to Yield Collections and Defaulted
Receivables for all Series outstanding as of the date on which such
determination is being made.
"Class A Initial Invested Amount" shall mean the aggregate initial
principal balance of the Class A Certificates, which is $___________.
"Class A Invested Amount" shall mean, on any date of determination,
an amount equal to (a) the Class A Initial Invested Amount, minus (b) the
aggregate amount of principal payments made to the Class A Certificateholders
prior to such date, minus (c) the aggregate amount of unreimbursed Class A
Investor Charge-Offs for all prior Transfer Dates; provided, however, that the
Class A Invested Amount may not be reduced below zero.
"Class A Investor Charge-Offs" shall have the meaning specified in
subsection 4.10(a).
"Class A Investor Default Amount" shall mean, with respect to each
Transfer Date, an amount equal to the product of (a) the Investor Default Amount
for the related Collection Period and (b) the Class A Floating Percentage
applicable during the related Collection Period.
"Class A Investor Percentage" shall mean, with respect to any
Collection Period, (a) with respect to Yield Collections and Defaulted
Receivables at any time and Principal Collections during the Revolving Period,
5
<PAGE>
the Class A Floating Percentage and (b) with respect to Principal Collections
during the Accumulation Period or the Early Amortization Period, the Class A
Fixed Percent-
age.
"Class A Monthly Interest" shall mean the monthly interest
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.6(a).
"Class A Monthly Principal" shall mean the monthly principal
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.7(a).
"Class A Required Amount" shall have the meaning specified in
subsection 4.8(a).
"Class A Servicing Fee" shall have the meaning specified in
subsection 3(a).
"Class B Additional Interest" shall have the meaning specified in
subsection 4.6(b).
"Class B Available Funds" shall mean, with respect to any Collection
Period, an amount equal to the Class B Floating Percentage of Yield Collections
(including net investment earnings on funds on deposit in the Excess Funding
Account) deposited in the Collection Account for such Collection Period (or to
be deposited in the Collection Account on the related Transfer Date with respect
to the preceding Collection Period pursuant to the third paragraph of subsection
4.3(a) of the Agreement and subsection 3(b) of this Series Supplement),
excluding the portion of Yield Collections attributable to Net Interchange that
is allocable to Servicer Interchange.
"Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate is registered in the Certificate Register.
"Class B Certificate Rate" shall mean a per annum rate equal to
_____% per annum. Interest with respect to the Class B Certificates shall be
computed on the basis of a 360-day year consisting of twelve 30-day months for
all purposes of this Series Supplement and the Agreement.
6
<PAGE>
"Class B Certificates" shall mean any of the certificates executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"Class B Deficiency Amount" shall have the meaning specified in
subsection 4.6(b).
"Class B Expected Final Payment Date" shall mean the
_________________ Distribution Date.
"Class B Fixed Percentage" shall mean, with respect to any
Collection Period following the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Class B Invested Amount as of the close of business on the last day of
the Revolving Period and the denominator of which is equal to the greater of (i)
the Trust Principal Component as of the close of business on the last day of the
immediately preceding Collection Period and (ii) the sum of the numerators used
to calculate the allocation percentages with respect to Principal Collections
for all Series outstanding as of the date on which such determination is being
made.
"Class B Floating Percentage" shall mean, with respect to any
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Class B Invested
Amount as of the close of business on the last day of the immediately preceding
Collection Period (or, with respect to the first Collection Period applicable to
Series 1997-1, the Class B Initial Invested Amount) and the denominator of
which is equal to the greater of (i) the Trust Principal Component as of the
close of business on the last day of the immediately preceding Collection Period
and (ii) the sum of the numerators used to calculate allocation percentages with
respect to Yield Collections and Defaulted Receivables for all Series
outstanding as of the date on which such determination is being made.
"Class B Initial Invested Amount" shall mean the aggregate initial
principal balance of the Class B Certificates, which is $__________.
"Class B Invested Amount" shall mean, on any date of determination,
an amount equal to (a) the Class B
7
<PAGE>
Initial Invested Amount, minus (b) the aggregate amount of principal payments
made to the Class B Certificateholders prior to such date, minus (c) the
aggregate amount of Class B Investor Charge-Offs for all prior Transfer Dates,
minus (d) the amount of the Reallocated Class B Principal Collections allocated
pursuant to subsection 4.12(a) on all prior Transfer Dates for which the
Collateral Invested Amount has not been reduced, minus (e) an amount equal to
the amount by which the Class B Invested Amount has been reduced on all prior
Transfer Dates pursuant to subsection 4.10(a), plus (f) the aggregate amount of
Excess Spread and Shared Excess Yield Collections allocated and available on all
prior Transfer Dates pursuant to subsection 4.11(e), for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
provided, however, that the Class B Invested Amount may not be reduced below
zero.
"Class B Investor Charge-Offs" shall have the meaning specified in
subsection 4.10(b).
"Class B Investor Default Amount" shall mean, with respect to each
Transfer Date, an amount equal to the product of (a) the Investor Default Amount
for the related Collection Period and (b) the Class B Floating Percentage
applicable during the related Collection Period.
"Class B Investor Percentage" shall mean, with respect to any
Collection Period, (a) with respect to Yield Collections and Defaulted
Receivables at any time or Principal Collections during the Revolving Period,
the Class B Floating Percentage and (b) with respect to Principal Collections
during the Accumulation Period or the Early Amortization Period, the Class B
Fixed Percentage.
"Class B Monthly Interest" shall mean the monthly interest
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.6(b).
"Class B Monthly Principal" shall mean the monthly principal
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.7(b).
8
<PAGE>
"Class B Required Amount" shall have the meaning specified in
subsection 4.8(b).
"Class B Servicing Fee" shall have the meaning specified in
subsection 3(a).
"Closing Date" shall mean January __, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Available Funds" shall mean, with respect to any
Collection Period, an amount equal to the Collateral Floating Percentage of
Yield Collections (including net investment earnings on funds on deposit in the
Excess Funding Account) deposited in the Collection Account for such Collection
Period (or to be deposited in the Collection Account on the related Transfer
Date with respect to the preceding Collection Period pursuant to the third
paragraph of subsection 4.3(a) of the Agreement and subsection 3(b) of this
Series Supplement), excluding the portion of Yield Collections attributable to
Net Interchange that is allocable to Servicer Interchange.
"Collateral Charge-Offs" shall have the meaning specified in
subsection 4.10(c).
"Collateral Default Amount" shall mean, with respect to any Transfer
Date, an amount equal to the product of (a) the Investor Default Amount for the
related Collection Period and (b) the Collateral Floating Percentage applicable
during the related Collection Period.
"Collateral Fixed Percentage" shall mean, with respect to any
Collection Period following the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Collateral Invested Amount as of the close of business on the last day of
the Revolving Period and the denominator of which is equal to the greater of (i)
the Trust Principal Component as of the close of business on the last day of the
immediately preceding Collection Period and (ii) the sum of the numerators used
to calculate the allocation percentages with respect to Principal Collections
for all Series outstanding as of the date on which such determination is being
made.
9
<PAGE>
"Collateral Floating Percentage" shall mean, with respect to any
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Invested
Amount as of the close of business on the last day of the immediately preceding
Collection Period (or, with respect to the first Collection Period applicable to
Series 1997-1, the Collateral Initial Invested Amount) and the denominator of
which is equal to the greater of (i) the Trust Principal Component as of the
close of business on the last day of the immediately preceding Collection Period
and (ii) the sum of the numerators used to calculate the allocation percentages
with respect to Yield Collections and Defaulted Receivables for all Series
outstanding as of the date on which such determination is being made.
"Collateral Initial Invested Amount" shall mean the aggregate
initial principal balance of the Collateral Investor Interest, which is
$__________.
"Collateral Interest Holder" shall mean the entity so designated in
the Loan Agreement.
"Collateral Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Collateral Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Collateral
Interest Holder prior to such date, minus (c) the aggregate amount of Collateral
Charge-Offs for all prior Transfer Dates, minus (d) the amount of Reallocated
Collateral Principal Collections allocated pursuant to subsections 4.12(a) and
(b) on all prior Transfer Dates, minus (e) an amount equal to the amount by
which the Collateral Invested Amount has been reduced on all prior Transfer
Dates pursuant to subsections 4.10(a) and (b), and plus (f) the aggregate amount
of Excess Spread and Shared Excess Yield Collections allocated and available on
all prior Transfer Dates pursuant to subsection 4.11(i) for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
provided, however, that the Collateral Invested Amount may not be reduced below
zero.
"Collateral Investor Interest" shall have the meaning specified in
the recitals hereto.
10
<PAGE>
"Collateral Investor Record Date" shall mean, with respect to any
Distribution Date, the last Business Day of the calendar month immediately
preceding such Distribution Date.
"Collateral Monthly Interest" shall mean the monthly interest
distributable in respect of the Collateral Investor Interest as calculated in
accordance with subsection 4.6(c).
"Collateral Monthly Principal" shall mean the monthly principal
distributable in respect of the Collateral Investor Interest as calculated in
accordance with subsection 4.7(c).
"Collateral Percentage" shall mean, with respect to any Collection
Period, (a) with respect to Yield Collections and Defaulted Receivables at any
time or Principal Collections during the Revolving Period, the Collateral
Floating Percentage and (b) with respect to Principal Collections during the
Accumulation Period or the Early Amortization Period, the Collateral Fixed
Percentage.
"Collateral Rate" shall mean, for any Interest Period, the rate
specified in the Loan Agreement. Interest with respect to the Collateral
Investor Interest shall be computed on the basis of a 360-day year consisting of
twelve 30-day months for all purposes of this Series Supplement, the Agreement
and the Loan Agreement.
"Collateral Servicing Fee" shall have the meaning specified in
subsection 3(a).
"Collection Period" shall have the meaning specified in the
Agreement, except that the first Collection Period with respect to the Investor
Certificates shall begin on and include the Closing Date and shall end on and
include December 31, 1996.
"Controlled Accumulation Amount" shall mean (a) for any Transfer
Date with respect to the Accumulation Period prior to the payment in full of the
Class A Invested Amount, $[1/2 of the Class A Initial Invested Amount];
provided, however, that if the Accumulation Period Length is determined to be
less than two (2) months pursuant to subsection 4.9(f), the Controlled
11
<PAGE>
Accumulation Amount for each Transfer Date with respect to the Accumulation
Period prior to the payment in full of the Class A Invested Amount will be equal
to $[the Class A Initial Invested Amount], and (b) for any Transfer Date with
respect to the Accumulation Period after payment in full of the Class A Invested
Amount, an amount equal to the Class B Invested Amount on such Transfer Date.
"Controlled Deposit Amount" shall mean, for any Transfer Date with
respect to the Accumulation Period, an amount equal to the sum of the Controlled
Accumulation Amount for such Transfer Date and any Deficit Controlled
Accumulation Amount for the immediately preceding Transfer Date.
"Covered Amount" shall mean, for any Transfer Date with respect to
the Accumulation Period or the first Special Payment Date of the Early
Amortization Period, an amount equal to one-twelfth (1/12) of the product of (a)
the Class A Certificate Rate and (b) the Principal Funding Account Balance, if
any, as of the Record Date preceding such Transfer Date.
"Cumulative Series Principal Shortfall" shall mean the sum of the
Series Principal Shortfalls (as such term is defined in each of the related
Series Supplements) for each Series.
"Cumulative Series Yield Shortfall" shall mean the sum of the Series
Yield Shortfalls (as such term is defined in each of the related Supplements,
including this Series Supplement) for each Series.
"Daily Principal Shortfall" shall mean, on any date of
determination, the excess of the Monthly Principal Payment for the Collection
Period relating to such date over the month to date amount of Principal
Collections processed for such Collection Period allocable to investor
certificates of all outstanding Series, not subject to reallocation, which are
on deposit or to be deposited in the Collection Account on such date.
"Deficiency Amount" shall mean, at any time of determination, the
sum of the Class A Deficiency Amount and the Class B Deficiency Amount.
12
<PAGE>
"Deficit Controlled Accumulation Amount" shall mean (a) on the first
Transfer Date with respect to the Accumulation Period, the excess, if any, of
the Controlled Accumulation Amount for such Transfer Date over the amount
distributed from the Collection Account pursuant to subsection 4.9(e)(i) with
respect to the Class A Certificates for such Transfer Date and (b) on each
subsequent Transfer Date with respect to the Accumulation Period, the excess, if
any, of the Controlled Deposit Amount for such subsequent Transfer Date over the
amount distributed from the Collection Account pursuant to subsection 4.9(e)(i)
with respect to the Class A Certificates for such subsequent Transfer Date.
"Distribution Date" shall mean January __, 1997 and the ___ of each
calendar month thereafter, or if any such ____ day is not a Business Day, the
next succeeding Business Day.
"Early Amortization Commencement Date" shall mean the date on which
a Trust Early Amortization Event is deemed to occur pursuant to Section 9.1 of
the Agreement or a Series Early Amortization Event is deemed to occur pursuant
to Section 9 hereof.
"Early Amortization Period" shall mean the Amortization Period
commencing on the Early Amortization Commencement Date and ending on the earlier
of (a) the date on which the Invested Amount has been paid in full and (b) the
Series 1997-1 Termination Date.
"Enhancement" shall mean (a) with respect to the Class A
Certificates, the subordination of the Class B Certificates and the Collateral
Investor Interest, and (b) with respect to the Class B Certificates the
subordination of the Collateral Investor Interest.
"Enhancement Provider" shall mean the Collateral Interest Holder.
"Enhancement Surplus" shall have the meaning set forth in subsection
4.7(c)(i).
"Excess Principal Funding Investment Proceeds" shall mean, with
respect to each Transfer Date relating to the Accumulation Period, the amount,
if any, by which
13
<PAGE>
the Principal Funding Investment Proceeds for such Transfer Date exceeds the
Covered Amount determined on such Transfer Date.
"Excess Spread" shall mean, with respect to any Transfer Date, the
sum of the amounts with respect to such Transfer Date, if any, specified
pursuant to subsections 4.9(a)(iv), 4.9(b)(iii) and 4.9(c)(ii).
"Fixed Allocation Percentage" shall mean, with respect to any
Collection Period, the sum of the Class A Fixed Percentage, the Class B Fixed
Percentage and the Collateral Fixed Percentage for such Collection Period.
"Floating Allocation Percentage" shall mean, with respect to any
Collection Period, the sum of the Class A Floating Percentage, the Class B
Floating Percentage and the Collateral Floating Percentage for such Collection
Period.
"Initial Invested Amount" shall mean $_______________.
"Interest Funding Account" shall have the meaning set forth in
subsection 4.15(a).
"Interest Payment Date" shall mean the ___ day of June and December
of each year, commencing June __, 1997 (or, if any such day is not a Business
Day, the next succeeding Business Day) and the Class A Expected Final Payment
Date with respect to the Class A Certificates and the Class B Expected Final
Payment Date with respect to the Class B Certificates.
"Interest Period" shall mean, (i) with respect to any Interest
Payment Date or the first Special Payment Date, the period from and including
the ___ day of the calendar month in which the previous Interest Payment Date
occurred through the day preceding the ___ day of the calendar month in which
such Interest Payment Date or first Special Payment Date occurs, except that the
initial Interest Period shall be the period from and including the Closing Date
through the day preceding the earlier of the first Interest Payment Date or the
first Special Payment Date and (ii) with respect to any other Special Payment
Date, the period from and including the ___ day of the calendar month in which
the previous
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Special Payment Date occurred through the day preceding the ___ day of the
calendar month in which such Special Payment Date occurs.
"Invested Amount" shall mean, on any date of determination, an
amount equal to the sum of (a) the Class A Invested Amount, (b) the Class B
Invested Amount and (c) the Collateral Invested Amount, each as of such date.
"Investor Certificateholder" shall mean (a) with respect to the
Class A Certificates, the holder of record of a Class A Certificate, (b) with
respect to the Class B Certificates, the holder of record of a Class B
Certificate and (c) with respect to the Collateral Investor Interest, the
Collateral Interest Holder.
"Investor Certificates" shall mean the Class A Certificates, the
Class B Certificates and the Collateral Investor Interest.
"Investor Default Amount" shall mean, with respect to any Collection
Period, an amount equal to the product of (a) the Floating Allocation Percentage
with respect to such Collection Period and (b) the amount of Defaulted
Receivables for such Collection Period.
"Investor Percentage" shall mean for any Collection Period, (a) with
respect to Yield Collections and Defaulted Receivables at any time and Principal
Collections during the Revolving Period, the Floating Allocation Percentage and
(b) with respect to Principal Collections during the Accumulation Period or the
Early Amortization Period, the Fixed Allocation Percentage.
"Investor Principal Collections" shall mean, with respect to any
Collection Period, the sum of (a) the aggregate amount deposited into the
Collection Account for such Collection Period pursuant to subsections
4.5(a)(ii), (iii) and (iv), 4.5(b)(ii), (iii) and (iv) or 4.5(c)(ii), in each
case, as applicable to such Collection Period and (b) the aggregate amount to be
treated as Investor Principal Collections pursuant to subsections 4.9(a)(iii)
and 4.11(a) (to the extent allocable to the Class A Investor Default Amount),
(b), (d), (e), (h) and (i) for such Collection Period (other than such amount
paid from Reallocated Principal Collections).
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"Loan Agreement" shall mean the agreement among the Transferor, the
Trustee, the Servicer and the Collateral Interest Holder, dated as of January
__, 1997, as amended or modified from time to time.
"Monthly Investor Servicing Fee shall have the meaning specified in
subsection 3(a).
"Monthly Principal Payment" shall mean with respect to any
Collection Period, for all Series (including Series 1997-1) which are in an
Amortization Period or Accumulation Period (as such terms are defined in the
related Supplements for all Series), the sum of (a) the Controlled Distribution
Amount for the related Transfer Date for any Series in its Controlled
Amortization Period (as such terms are defined in the related Supplements for
all Series), (b) the Controlled Deposit Amount for the related Transfer Date for
any Series in its Accumulation Period, if applicable (as such terms are defined
in the related Supplements for all Series), (c) the Invested Amount as of the
end of the prior Collection Period taking into effect any payments to be made on
the following Distribution Date for any Series in its Principal Amortization
Period or Early Amortization Period (as such terms are defined in the related
Supplements for all Series), (d) the excess of the Collateral Invested Amount as
of the Transfer Date occurring in such Collection Period over the Required
Collateral Invested Amount for the related Transfer Date, assuming no Deficit
Controlled Accumulation Amount and (e) such other amounts as may be specified in
the related Supplements for all Series.
"Net Servicing Fee Rate" shall mean (a) so long as the Transferor or
an Affiliate thereof is the Servicer, [1]% per annum and (b) if the Transferor
or an Affiliate thereof is no longer the Servicer, [2]% per annum.
"Principal Funding Account" shall have the meaning set forth in
subsection 4.16(a).
"Principal Funding Account Balance" shall mean, with respect to any
date of determination, the principal amount, if any, of funds on deposit in the
Principal Funding Account on such date of determination.
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"Principal Funding Investment Proceeds" shall mean, with respect to
each Transfer Date, the investment earnings on funds in the Principal Funding
Account (net of investment expenses and losses) for the period from and
including the immediately preceding Transfer Date to but excluding such Transfer
Date.
"Principal Funding Investment Shortfall" shall mean, with respect to
each Transfer Date relating to the Accumulation Period, the amount, if any, by
which the Principal Funding Investment Proceeds for such Transfer Date is less
than the Covered Amount determined as of
such Transfer Date.
"Rating Agency" shall mean Moody's, Standard & Poor's and Fitch.
"Rating Agency Condition" shall mean the notification in writing by
each Rating Agency that an action will not result in any Rating Agency reducing
or withdrawing its then existing rating of the investor certificates of any
outstanding Series or class of a Series with respect to which it is a Rating
Agency.
"Reallocated Class B Principal Collections" shall mean, with respect
to any Transfer Date, Principal Collections applied in accordance with
subsection 4.12(a) in an amount not to exceed the product of (a) the Class B
Investor Percentage with respect to the Collection Period relating to such
Transfer Date and (b) the amount of Principal Collections with respect to the
Collection Period relating to such Transfer Date; provided however, that such
amount shall not exceed the Class B Invested Amount after giving effect to any
Class B Investor Charge-Offs for such Transfer Date.
"Reallocated Collateral Principal Collections" shall mean, with
respect to any Transfer Date, Principal Collections applied in accordance with
subsections 4.12(a) and (b) in an amount not to exceed the product of (a) the
Collateral Percentage with respect to the Collection Period relating to such
Transfer Date and (b) the amount of Principal Collections with respect to the
Collection Period relating to such Transfer Date; provided however, that such
amount shall not exceed the Collateral Invested Amount after giving effect to
any Collateral Charge-Offs for such Transfer Date.
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"Reallocated Principal Collections" shall mean the sum of (a)
Reallocated Class B Principal Collections and (b) Reallocated Collateral
Principal Collections.
"Record Date" shall mean, with respect to any Interest Payment Date
or Special Payment Date, the last Business Day of the calendar month immediately
preceding such Interest Payment Date or Special Payment Date.
"Required Accumulation Factor Number" shall be equal to a fraction,
rounded upwards to the nearest whole number, the numerator of which is one and
the denominator of which is equal to the lowest monthly principal payment rate
on the Accounts, expressed as a decimal, for the twelve (12) months preceding
the date of such calculation.
"Required Collateral Invested Amount" shall mean, with respect to
any Transfer Date, an amount equal to ___% of the sum of the Class A Adjusted
Invested Amount and the Class B Invested amount as of such Transfer Date (after
giving effect to deposits into the Principal Funding Account on such Transfer
Date and payments to be made on the related Distribution Date); provided, that
from and after the occurrence of an Early Amortization Event, the Required
Collateral Invested Amount shall equal the Required Collateral Invested Amount
on the Transfer Date immediately preceding the occurrence of such Early
Amortization Event.
"Required Reserve Account Amount" shall mean, with respect to any
Transfer Date on or after the Reserve Account Funding Date, an amount equal to
(a) 0.5% of the outstanding principal balance of the Class A Certificates or (b)
any other amount designated by the Transferor, provided that if such designation
is of a lesser amount, the Transferor shall (i) provide the Servicer, the
Collateral Interest Holder and the Trustee with written confirmation that the
Rating Agency Condition shall have been satisfied and (ii) deliver to the
Trustee a certificate of an authorized officer to the effect that, based on the
facts known to such officer at such time, in the reasonable belief of the
Transferor, such designation will not cause an Early Amortization Event or an
event that, after the giving of notice or the lapse of time, would cause an
Early Amortization Event to occur with respect to Series 1997-1.
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"Reserve Account" shall have the meaning specified in subsection
4.17(a).
"Reserve Account Funding Date" shall mean the Transfer Date with
respect to the Collection Period which commences no later than three (3) months
prior to the commencement of the Accumulation Period, or such earlier date as
the Servicer may determine.
"Reserve Account Surplus" shall mean, as of any Transfer Date
following the Reserve Account Funding Date, the amount, if any, by which the
amount on deposit in the Reserve Account exceeds the Required Reserve Account
Amount.
"Reserve Draw Amount" shall have the meaning specified in subsection
4.17(c).
"Revolving Period" shall mean the period from and including the
Closing Date to, but not including, the earlier of (a) the day the Accumulation
Period commences and (b) the Early Amortization Commencement Date.
"Series 1997-1" shall mean the Series of the First Bank Corporate
Card Master Trust represented by the Investor Certificates.
"Series 1997-1 Certificateholders" shall mean the holder of record
of a Series 1997-1 Certificate.
"Series 1997-1 Certificates" shall mean the Class A Certificates and
the Class B Certificates.
"Series 1997-1 Termination Date" shall mean the earliest to occur of
(a) the Distribution Date on which the Invested Amount is paid in full, (b) the
______ ____ Distribution Date and (c) the Trust Termination Date.
"Series Early Amortization Events" shall mean the Early Amortization
Events specified in Section 9 of this Series Supplement.
"Series Principal Shortfall" shall mean with respect to any Transfer
Date, the excess, if any, of (a) (i) with respect to any Transfer Date relating
to the Accumulation Period, the sum of (A) the Controlled Deposit Amount for
such Transfer Date and (B) the excess, if
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any, of the Collateral Invested Amount for such Transfer Date over the Required
Collateral Invested Amount for such Transfer Date and (ii) with respect to any
Transfer Date during the Early Amortization Period, the Adjusted Invested Amount
over (b) the Investor Principal Collections minus the Reallocated Principal
Collections for such Transfer Date.
"Series Servicing Fee Rate" shall mean [2]%.
"Series Yield Shortfall" shall mean, with respect to any Transfer
Date, the excess, if any, of the amount distributable pursuant to subsections
4.11(a)-(j) over Excess Spread.
"Servicer Interchange" shall mean, for any Collection Period, the
portion of Yield Collections allocated to the Investor Certificates and
deposited in the Collection Account with respect to such Collection Period that
is attributable to Net Interchange; provided, however, that Servicer Interchange
for a Collection Period shall not exceed one-twelfth (1/12) of the product of
(i) the Servicing Base Amount and (ii) [1]%.
"Servicing Base Amount" shall mean, with respect to any Transfer
Date, the Adjusted Invested Amount as of the last day of the second preceding
Collection Period.
"Shared Excess Yield Collections" shall mean, with respect to any
Transfer Date, either (a) the amount described in subsection 4.11(k) allocated
to the Investor Certificates but available to cover shortfalls in amounts
payable from Yield Collections allocated to other Series, if any, or (b) the
aggregate amount of Yield Collections allocable to other Series in excess of the
amounts necessary to make required payments with respect to such Series, if any,
and available to cover shortfalls with respect to the Investor Certificates in
accordance with subsection 4.14(b).
"Shared Principal Collections" shall mean, with respect to any
Transfer Date, either (a) the amount allocated to the Investor Certificates
which may be applied to the Series Principal Shortfall with respect to other
outstanding Series or (b) the sum of the Excess Funding Amount, with respect to
any Transfer Date, and the aggre-
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gate amounts allocated to the investor certificates of other Series which the
applicable Supplements for such Series specify are to be treated as "Shared
Principal Collections" and which may be applied to cover the Series Principal
Shortfall with respect to the Investor Certificates.
"Special Payment Date" shall mean each Distribution Date from and
after the occurrence of an Early Amortization Event.
SECTION 3. Servicing Compensation and Assignment of Net Interchange.
(a) The share of the Servicing Fee allocable to Series 1997-1 with respect to
any Transfer Date (the "Monthly Investor Servicing Fee") shall be equal to
one-twelfth (1/12) of the product of (i) the Series Servicing Fee Rate and (ii)
the Adjusted Invested Amount as of the last day of the second preceding
Collection Period; provided, however, that with respect to the first Transfer
Date, the Monthly Investor Servicing Fee shall be equal to the product of (x)
the Series Servicing Fee Rate, (y) the Initial Invested Amount and (z) a
fraction, the numerator of which is equal to the number of days in the period
from and including the Closing Date through the day preceding the initial
Distribution Date and the denominator of which is 360. On each Transfer Date for
which the Transferor or an Affiliate thereof is the Servicer, a portion of Net
Interchange with respect to the related Collection Period that is on deposit in
the Collection Account shall be withdrawn from the Collection Account and paid
to the Servicer in payment of a portion of the Monthly Investor Servicing Fee
with respect to such Collection Period ("Servicer Interchange"). Should the
Servicer Interchange on deposit in the Collection Account on any Transfer Date
with respect to the related Collection Period be less than one-twelfth (1/12) of
1% of the Adjusted Invested Amount as of the last day of the second preceding
Collection Period, the Monthly Investor Servicing Fee with respect to such
Collection Period will not be paid to the extent of such insufficiency of
Servicer Interchange on deposit in the Collection Account, until the Transfer
Date or Transfer Dates with respect to which Servicer Interchange is available
in the Collection Account (prior to giving effect to the payment of the portion
of the Monthly Investor Servicing Fee constituting Servicer Interchange for such
Transfer Date or Transfer Dates). The share of the Monthly Inve-
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stor Servicing Fee allocable to the Class A Invested Amount with respect to any
Transfer Date (the "Class A Servicing Fee") shall be equal to one-twelfth (1/12)
of the product of (i) the Net Servicing Fee Rate and (ii) the Class A Adjusted
Invested Amount as of the last day of the second preceding Collection Period;
provided, however, that with respect to the first Transfer Date, the Class A
Servicing Fee shall be equal to the product of (x) the Class A Initial Invested
Amount, (y) the Net Servicing Fee Rate and (z) a fraction, the numerator of
which is equal to the number of days in the period from and including the
Closing Date through the day preceding the initial Distribution Date and the
denominator of which is 360. The share of the Monthly Investor Servicing Fee
allocable to the Class B Invested Amount with respect to any Transfer Date (the
"Class B Servicing Fee") shall be equal to one-twelfth (1/12) of the product of
(i) the Net Servicing Fee Rate and (ii) the Class B Invested Amount as of the
last day of the second preceding Collection Period; provided, however, that with
respect to the first Transfer Date, the Class B Servicing Fee shall be equal to
the product of (x) the Class B Initial Invested Amount, (y) the Net Servicing
Fee Rate and (z) a fraction, the numerator of which is equal to the number of
days in the period from and including the Closing Date through the day preceding
the initial Distribution Date and the denominator of which is 360. The share of
the Monthly Investor Servicing Fee allocable to the Collateral Investor Interest
with respect to any Transfer Date (the "Collateral Servicing Fee") shall be
equal to one-twelfth (1/12) of the product of (i) the Net Servicing Fee Rate and
(ii) the Collateral Invested Amount as of the last day of the second preceding
Collection Period; provided, however, that with respect to the first Transfer
Date, the Collateral Interest Servicing Fee shall be equal to the product of (x)
the Collateral Initial Invested Amount, (y) the Net Servicing Fee Rate and (z) a
fraction, the numerator of which is equal to the number of days in the period
from and including the Closing Date through the day preceding the initial
Distribution Date and the denominator of which is 360. Except as specifically
provided above, the Servicing Fee shall be paid by the cash flows from the Trust
allocated to the Transferor or the certificateholders of other Series (as
provided in the related Supplements) and in no event shall the Trust, the
Trustee or the Investor Certificateholders be liable therefor. The Class A
Servic-
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<PAGE>
ing Fee shall be payable to the Servicer solely to the extent amounts are
available for distribution in respect thereof pursuant to subsections 4.9(a)(ii)
and 4.11(a). The Class B Servicing Fee shall be payable solely to the extent
amounts are available for distribution in respect thereof pursuant to
subsections 4.9(b)(ii) and 4.11(c). The Collateral Interest Servicing Fee shall
be payable solely to the extent amounts are available for distribution in
respect thereof pursuant to subsections 4.9(c)(i) and 4.11(f).
(b) On or before each Transfer Date, the Transferor shall notify the
Servicer of the amount of Net Interchange to be included as Yield Collections
and allocable to the Investor Certificateholders with respect to the preceding
Collection Period. On each Transfer Date, the Transferor shall pay to the
Servicer, and the Servicer shall deposit into the Collection Account, in
immediately available funds, the amount of Net Interchange to be so included as
Yield Collections allocable to the Investor Certificates with respect to the
preceding Collection Period. The Transferor hereby assigns, sets over, conveys,
pledges and grants a security interest and lien to the Trustee for the benefit
of the Investor Certificateholders in Net Interchange and the proceeds of Net
Interchange, as set forth in this subsection 3(b). In connection with the
foregoing grant of a security interest, this Series Supplement shall constitute
a security agreement under applicable law. To the extent that a Supplement for a
related Series, other than Series 1997-1, assigns, sets over, conveys, pledges
or grants a security interest in Net Interchange allocable to the Trust, all
investor certificates of any such Series (except as otherwise specified in any
such Supplement) and the Investor Certificates shall rank pari passu and be
equally and ratably entitled as provided herein to the benefits of such Net
Interchange without preference or priority on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Series Supplement and other related Supplements.
SECTION 4. Reassignment and Transfer Terms. The Investor
Certificates shall be subject to repurchase by the Transferor at its option, in
accordance with the terms specified in subsection 12.2(a) of the Agreement, on
any Distribution Date on or after the Distribution
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Date on which the Invested Amount is reduced to an amount less than or equal to
5% of the Initial Invested Amount. The deposit required in connection with any
such purchase shall include the amount, if any, on deposit in the Principal
Funding Account and will be equal to the sum of (a) the Invested Amount and (b)
accrued and unpaid interest on the Investor Certificates through the day
preceding the Distribution Date on which the repurchase occurs.
SECTION 5. Delivery and Payment for the Investor Certificates. The
Transferor shall execute and deliver the Series 1997-1 Certificates to the
Trustee for authentication in accordance with Section 6.1 of the Agreement. The
Trustee shall deliver such Certificates when authenticated in accordance with
Section 6.2 of the Agreement.
SECTION 6. Depository; Form of Delivery of Investor Certificates.
(a) The Class A Certificates and the Class B Certificates shall be
delivered as Book-Entry Certificates as provided in Sections 6.1 and 6.10 of the
Agreement.
(b) The Depository for Series 1997-1 shall be The Depository Trust
Company, and the Class A Certificates and Class B Certificates shall be
initially registered in the name of Cede & Co., its nominee.
SECTION 7. Article IV of Agreement. Sections 4.1, 4.2 and 4.3 of the
Agreement shall be read in their entirety as provided in the Agreement. Article
IV (except for Sections 4.1, 4.2 and 4.3 thereof) of the Agreement shall be read
in its entirety as follows and shall be applicable only to the Investor
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4 Rights of Certificateholders. The Investor Certificates
shall represent undivided interests in the Trust, consisting of the right to
receive, to the extent necessary to make the required payments with
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respect to such Investor Certificates at the times and in the amounts specified
in this Agreement, (a) the Floating Allocation Percentage and Fixed Allocation
Percentage (as applicable from time to time) of Collections received with
respect to the Receivables and (b) funds on deposit in the Collection Account,
the Excess Funding Account, the Interest Funding Account, the Principal Funding
Account and the Reserve Account. The Collateral Investor Interest shall be
subordinate to the Class A Certificates and the Class B Certificates. The Class
B Certificates shall be subordinate to the Class A Certificates. The
Exchangeable Transferor Certificate shall not represent any interest in the
Collection Account, the Excess Funding Account, the Interest Funding Account,
the Principal Funding Account or the Reserve Account, except as specifically
provided in this Article IV.
SECTION 4.5 Allocations.
(a) Allocations During the Revolving Period. During the Revolving
Period, the Servicer shall, prior to the close of business on the day any
Collections are deposited in the Collection Account, allocate to the Investor
Certificateholders or the Holder of the Exchangeable Transferor Certificate the
following amounts for application as set forth below:
(i) An amount equal to the product of (A) the Floating Allocation
Percentage on the Date of Processing of such Collections and (B) the
aggregate amount of Yield Collections processed on such Date of Processing
shall be applied in accordance with Section 4.9.
(ii) An amount equal to the product of (A) the Collateral Floating
Percentage on the Date of Processing of such Collections and (B) the
aggregate amount of Principal Collections processed on such Date of
Processing shall be applied first in accordance with Section 4.12 and then
in accordance with subsection 4.9(d).
(iii) An amount equal to the product of (A) the Class B Floating
Percentage on the Date of Processing of such Collections and (B) the
aggregate amount of Principal Collections processed on such Date of
Processing shall be applied first in accor-
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dance with Section 4.12 and then in accordance with subsection 4.9(d).
(iv) (A) An amount equal to the product of (1) the Class A Floating
Percentage on the Date of Processing of such Collections and (2) the
aggregate amount of Principal Collections processed on such Date of
Processing shall be applied in accordance with subsection 4.9(d);
provided, however, that the amount so applied shall not exceed the Daily
Principal Shortfall, and (B) pay to the Holder of the Exchangeable
Transferor Certificate an amount equal to the excess, if any, identified
in the proviso to clause (A) above; provided, however, that the amount to
be paid to the Holder of the Exchangeable Transferor Certificate pursuant
to this subsection 4.5(a)(iv)(B) with respect to any Date of Processing
shall be paid to the Holder of the Exchangeable Transferor Certificate
only if the Transferor Amount on such Date of Processing is greater than
the Minimum Transferor Amount (after giving effect to the inclusion in the
Trust of all Receivables created on or prior to such Date of Processing
and the application of payments referred to in subsection 4.3(b)) and
otherwise shall be deposited into the Excess Funding Account to the extent
necessary to ensure that the Transferor Amount is at least equal to the
Minimum Transferor Amount.
(b) Allocations During the Accumulation Period. During the
Accumulation Period, the Servicer shall, prior to the close of business on the
day any Collections are deposited in the Collection Account, allocate to the
Investor Certificateholders or the Holder of the Exchangeable Transferor
Certificate the following amounts for application as set forth below:
(i) An amount equal to the product of (A) the Floating Allocation
Percentage on the Date of Processing of such Collections and (B) the
aggregate amount of Yield Collections processed on such Date of Processing
shall be applied in accordance with Section 4.9.
(ii) An amount equal to the product of (A) the Collateral Fixed
Percentage on the Date of Processing of such Collections and (B) the
aggregate amount
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of Principal Collections processed on such Date of Processing shall be
applied first in accordance with Section 4.12 and then in accordance with
subsection 4.9(e).
(iii) An amount equal to the product of (A) the Class B Fixed
Percentage on the Date of Processing of such Collections and (B) the
aggregate amount of Principal Collections processed on such Date of
Processing shall be applied first in accordance with Section 4.12 and then
in accordance with subsection 4.9(e).
(iv) (A) An amount equal to the product of (1) the Class A Fixed
Percentage on the Date of Processing of such Collections and (2) the
aggregate amount of Principal Collections processed on such Date of
Processing shall be applied in accordance with subsection 4.9(e);
provided, however, that the amount so applied shall not exceed the Daily
Principal Shortfall, and (B) pay to the Holder of the Exchangeable
Transferor Certificate an amount equal to the excess, if any, identified
in the proviso to clause (A) above; provided, however, that the amount to
be paid to the Holder of the Exchangeable Transferor Certificate pursuant
to this subsection 4.5(b)(iv)(B) with respect to any Date of Processing
shall be paid to the Holder of the Exchangeable Transferor Certificate
only if the Transferor Amount on such Date of Processing is greater than
the Minimum Transferor Amount (after giving effect to the inclusion in the
Trust of all Receivables created on or prior to such Date of Processing
and the application of payments referred to in subsection 4.3(b)) and
otherwise shall be deposited into the Excess Funding Account to the extent
necessary to ensure that the Transferor Amount is at least equal to the
Minimum Transferor Amount.
(c) Allocations During the Early Amortization Period. During the
Early Amortization Period, the Servicer shall, prior to the close of business on
the day any Collections are deposited in the Collection Account, allocate to the
Investor Certificateholders the following amounts for application as set forth
below:
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(i) An amount equal to the product of (A) the Floating Allocation
Percentage on the Date of Processing of such Collections and (E) the
aggregate amount of Yield Collections processed on such Date of Processing
shall be applied in accordance with Section 4.9.
(ii) (A) An amount equal to the product of (1) the Fixed Allocation
Percentage on the Date of Processing of such Collections and (2) the
aggregate amount of Principal Collections processed on such Date of
Processing shall be applied in accordance with subsection 4.9(e);
provided, however, that the amount so applied shall not exceed the sum of
(x) the Invested Amount as of the close of business on the last day of the
prior Collection Period (after taking into account any payments to be made
on the Distribution Date relating to such prior Collection Period and
deposits and any adjustments to be made to the Invested Amount to be made
on the Transfer Date relating to such Collection Period) and (y) any
Reallocated Principal Collections relating to the Collection Period in
which such deposit is made, and (B) pay to the Holder of the Exchangeable
Transferor Certificate an amount equal to the excess, if any, identified
in the proviso to clause (A) above; provided, however, that the amount to
be paid to the Holder of the Exchangeable Transferor Certificate pursuant
to this subsection 4.5(c)(ii)(B) with respect to any Date of Processing
shall be paid to the Holder of the Exchangeable Transferor Certificate
only if the Transferor Amount on such Date of Processing is greater than
the Minimum Transferor Amount (after giving effect to the inclusion in the
Trust of all Receivables created on or prior to such Date of Processing
and the application of payments referred to in subsection 4.3(b)) and
otherwise shall be deposited into the Excess Funding Account to the extent
necessary to ensure that the Transferor Amount is at least equal to the
Minimum Transferor Amount.
(d) Limitation on Required Deposits. For so long as the Servicer
shall (i) satisfy the conditions specified in the third paragraph of subsection
4.3(a) of the Agreement and (ii) be making deposits to the Collection Account
on a monthly basis, all requirements herein
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<PAGE>
to deposit amounts on a daily basis shall be deemed to be satisfied to the
extent that the required monthly deposit is made and all references to amounts
on deposit in such accounts shall be deemed to include amounts which would
otherwise have been deposited therein on a daily basis.
SECTION 4.6 Determination of Monthly Interest.
(a) The amount of interest allocable monthly to the Class A
Certificates for payment on the following Interest Payment Date or Special
Payment Date shall be an amount equal to one-twelfth (1/12) of the product of
(i) the Class A Certificate Rate and (ii) the outstanding principal balance of
the Class A Certificates determined as of the Record Date preceding the related
Transfer Date (the "Class A Monthly Interest"); provided, however, that with
respect to the first Distribution Date, Class A Monthly Interest will be an
amount equal to the interest accrued on the outstanding principal balance of the
Class A Certificates as of the Closing Date at the Class A Certificate Rate for
the period from and including the Closing Date through the day preceding such
Distribution Date; and provided further, that in addition to Class A Monthly
Interest an amount equal to the amount of any unpaid Class A Deficiency Amounts,
as defined below, plus an amount equal to one-twelfth (1/12) of the product of
(A) the Class A Certificate Rate and (B) the amount of any unpaid Class A
Deficiency Amounts as of the Transfer Date immediately preceding the later of
the prior Interest Payment Date or the prior Special Payment Date (the "Class A
Additional Interest") shall also be allocable to the Class A Certificates, and
on such Transfer Date the Trustee shall withdraw such funds, to the extent
available, from the Collection Account and deposit such funds into the Interest
Funding Account. The "Class A Deficiency Amount" for any Transfer Date shall be
equal to the excess, if any, of the aggregate amount of interest allocable to
the Class A Certificates pursuant to this subsection 4.6(a) on the prior
Transfer Date over the amount actually transferred on such Transfer Date to the
Interest Funding Account.
(b) The amount of interest allocable monthly to the Class B
Certificates for payment on the following Interest Payment Date or Special
Payment Date shall be an amount equal to one-twelfth (1/12) of the product of
(i) the Class B Certificate Rate and (ii) the outstanding
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principal balance of the Class B Certificates determined as of the Record Date
preceding the related Transfer Date (the "Class B Monthly Interest"); provided,
however, that with respect to the first Distribution Date, Class B Monthly
Interest will be an amount equal to the interest accrued on the outstanding
principal balance of the Class B Certificates as of the Closing Date at the
Class B Certificate Rate for the period from and including the Closing Date
through the day preceding such Distribution Date; and provided further, that in
addition to the Class B Monthly Interest an amount equal to the amount of any
unpaid Class B Deficiency Amounts, as defined below, plus an amount equal to the
product of one-twelfth (1/12) of (A) the Class B Certificate Rate and (B) the
amount of any unpaid Class B Deficiency Amounts as of the Transfer Date
immediately preceding the later of the prior Interest Payment Date or the prior
Special Payment Date (the "Class B Additional Interest") shall also be allocable
to the Class B Certificates, and on such Transfer Date the Trustee shall
withdraw such funds, to the extent available, from the Collection Account and
deposit such funds into the Interest Funding Account. The "Class B Deficiency
Amount" for any Transfer Date shall be equal to the excess, if any, of the
aggregate amount of interest allocable to the Class B Certificates pursuant to
this subsection 4.6(b) on the prior Transfer Date over the amount actually
transferred to the Interest Funding Account on such Transfer Date.
(c) The amount of interest distributable monthly to the Collateral
Investor Interest shall be an amount equal to the product of (i)(A) a fraction,
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Collateral Rate in
effect with respect to the related Interest Period, and (ii) the Collateral
Invested Amount determined as of the Collateral Investor Record Date preceding
such Transfer Date (the "Collateral Monthly Interest").
SECTION 4.7 Determination of Monthly Principal.
(a) The amount of monthly principal allocable to the Class A
Certificates on each Transfer Date prior to the payment in full of the Class A
Invested Amount ("Class A Monthly Principal"), beginning with the Transfer Date
in the month following the month in which the
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Accumulation Period or, if earlier, the Early Amortization Period, begins, shall
be equal to the lesser of (i) the Available Investor Principal Collections on
deposit in the Collection Account with respect to such Transfer Date, (ii) for
each Transfer Date with respect to the Accumulation Period prior to the Class A
Expected Final Payment Date, the Controlled Deposit Amount for such Transfer
Date and (iii) the Class A Adjusted Invested Amount (after taking into account
any adjustment to be made on such Transfer Date pursuant to Section 4.10) on
such Transfer Date prior to any deposit into the Principal Funding Account to be
made on such Transfer Date.
(b) The amount of monthly principal allocable to the Class B
Certificates on each Transfer Date (the "Class B Monthly Principal") relating to
the Accumulation Period or the Early Amortization Period, beginning with the
Transfer Date immediately preceding the Distribution Date on which the Class A
Invested Amount has been paid in full, shall be an amount equal to the lesser of
(i) the Available Principal on deposit in the Collection Account with respect to
such Transfer Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal on such Transfer Date) and (ii)
the Class B Invested Amount (after taking into account any adjustments to be
made on such Transfer Date pursuant to Sections 4.10 and 4.12) on such Transfer
Date.
(c) The amount of monthly principal (the "Collateral Monthly
Principal") allocable to the Collateral Investor Interest on each Transfer Date
shall be:
(i) with respect to any Transfer Date prior to the payment in full
of the Class B Invested Amount (after taking into account payments to be
made on the related Distribution Date), during the Revolving Period or the
Accumulation Period, subject to the limitations specified in the Loan
Agreement, the excess of the Collateral Invested Amount (after taking into
account any adjustments to be made on such Transfer Date pursuant to
Sections 4.10 and 4.12) over the Required Collateral Invested Amount (such
excess, the "Enhancement Surplus") or any lesser amount (including zero)
as the Transferor may determine, at its option and in
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its sole discretion; provided, however, that such amount shall not exceed
the Available Investor Principal Collections remaining after the
application thereof to pay the Class A Monthly Principal and Class B
Monthly Principal on such Transfer Date; and
(ii) with respect to any Transfer Date after the Class B Invested
Amount has been paid in full (after taking into account payments to be
made on the related Distribution Date), the Available Investor Principal
Collections remaining after the application thereof to pay the Class A
Monthly Principal and Class B Monthly Principal on such Transfer Date;
provided, however, that Collateral Monthly Principal shall not exceed the
Collateral Invested Amount (after taking into account any adjustments to be made
on such Transfer Date pursuant to Sections 4.10 and 4.12) on such Transfer Date.
SECTION 4.8 Coverage of Required Amount. (a) On or before each
Transfer Date, the Servicer shall determine the amount (the "Class A Required
Amount"), if any, by which the sum of (i) the Class A Monthly Interest for such
Transfer Date, plus (ii) the Class A Deficiency Amount, if any, for such
Transfer Date, plus (iii) the Class A Additional Interest, if any, for such
Transfer Date, plus (iv) the Class A Servicing Fee for the prior Collection
Period, plus (v) the Class A Servicing Fee, if any, due but not paid on any
prior Transfer Date, plus (vi) the Class A Investor Default Amount, if any, for
the prior Collection Period, exceeds the Class A Available Funds for the related
Collection Period. In the event that the Class A Required Amount for such
Transfer Date is greater than zero, the Servicer shall give written notice to
the Trustee of such positive Class A Required Amount on the date of computation
and all or a portion of the Excess Spread and Shared Excess Yield Collections
allocable to Series 1997-1 with respect to the related Collection Period in an
amount equal to the Class A Required Amount for such Transfer Date shall be
distributed from the Collection Account on such Transfer Date pursuant to
Section 4.11(a). In the event that the Class A Required Amount for such Transfer
Date exceeds the amount of the Excess Spread and Shared Excess Yield Collections
allocable to Series 1997-1 with respect to the
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related Collection Period, all or a portion of the Reallocated Principal
Collections with respect to such Collection Period in an amount equal to such
excess shall be distributed from the Collection Account on such Distribution
Date pursuant to Section 4.12(a).
(b) On or before each Transfer Date, the Servicer shall determine
the amount (the "Class B Required Amount"), if any, equal to the sum of (i) the
amount, if any, by which the sum of (A) the Class B Monthly Interest for such
Transfer Date, plus (B) the Class B Deficiency Amount, if any, for such Transfer
Date, plus (C) the Class B Additional Interest, if any, for such Transfer Date,
plus (D) the Class B Servicing Fee for the prior Collection Period, plus (E) the
Class B Servicing Fee, if any, due but not paid on any prior Transfer Date,
exceeds the Class B Available Funds for the related Collection Period, and (ii)
the amount, if any, by which the Class B Investor Default Amount for the related
Collection Period exceeds the amount available to make payments with respect
thereto pursuant to Section 4.11(d). In the event that the Class B Required
Amount for such Transfer Date is greater than zero, the Servicer shall give
written notice to the Trustee of such positive Class B Required Amount on the
date of computation and all or a portion of Excess Spread and Shared Excess
Yield Collections allocable to Series 1997-1 (other than Excess Spread and
Shared Excess Yield Collections applied to fund the Class A Required Amount or
reimburse Class A Investor Charge-Offs with respect to such Transfer Date) with
respect to the related Collection Period shall be distributed from the
Collection Account on such Transfer Date pursuant to Sections 4.11(c) and (d).
In the event that the Class B Required Amount for such Transfer Date exceeds the
amount of the Excess Spread and Shared Excess Yield Collections allocable to
Series 1997-1 with respect to the related Collection Period and not used to fund
the Class A Required Amount or reimburse Class A Investor Charge-Offs, all or a
portion of the Reallocated Collateral Principal Collections with respect to such
Collection Period (other than the portion of the Reallocated Collateral
Principal Collections applied to fund the Class A Required Amount) in an amount
equal to such excess shall be distributed from the Collection Account on such
Distribution Date pursuant to Section 4.12(b).
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(c) On or before each Transfer Date, the Servicer shall determine
the amount (the "Collateral Required Amount"), if any, equal to the sum of (i)
the amount, if any, by which the sum of (A) the Collateral Servicing Fee for the
prior Collection Period, plus (B) the Collateral Servicing Fee, if any, due but
not paid on any prior Transfer Date, exceeds the Collateral Available Funds, and
(ii) the amount, if any, by which the Collateral Default Amount, if any, for the
related Collection Period exceeds the amount available to make payments with
respect thereto pursuant to Section 4.11(h). In the event that the Collateral
Required Amount for such Transfer Date is greater than zero, the Servicer shall
give written notice to the Trustee of such positive Collateral Required Amount
on the date of computation and all or a portion of the Excess Spread and Shared
Excess Yield Collections allocable to Series 1997-1 (other than Excess Spread
and Shared Excess Yield Collections applied to fund the Class A Required Amount
or Class B Required Amount, reimburse Class A Investor Charge-Offs or Class B
Investor Charge-Offs, and pay certain other amounts as specified in Section
4.11) with respect to the related Collection Period shall be distributed from
the Collection Account on such Transfer Date pursuant to Section 4.11(f).
SECTION 4.9 Monthly Allocations. On or before each Transfer Date,
the Servicer shall instruct the Trustee in writing (which writing shall be
substantially in the form of Exhibit B hereto) to allocate or withdraw and the
Trustee, acting in accordance with such instructions, shall allocate or withdraw
on such Transfer Date or the related Distribution Date, as applicable, to the
extent of available funds, the amounts required to be allocated or withdrawn
from the Collection Account, the Interest Funding Account and the Principal
Funding Account as follows:
(a) An amount equal to the Class A Available Funds deposited into
the Collection Account for the related Collection Period shall be distributed on
each Transfer Date in the following priority:
(i) an amount equal to Class A Monthly Interest for such Transfer
Date, plus the amount of any Class A Deficiency Amount for such Transfer
Date, plus the amount of any Class A Additional Interest
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for such Transfer Date, shall be deposited by the Servicer or the Trustee
into the Interest Funding Account for payment to the Class A
Certificateholders on the next Interest Payment Date or Special Payment
Date;
(ii) an amount equal to the Class A Servicing Fee for such Transfer
Date plus the amount of any Class A Servicing Fee due but not paid to the
Servicer on any prior Transfer Date shall be distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount, if
any, for the preceding Collection Period shall be treated as a portion of
Investor Principal Collections and retained in the Collection Account; and
(iv) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed as set forth in Section 4.11.
(b) An amount equal to the Class B Available Funds deposited into
the Collection Account for the related Collection Period shall be distributed on
each Transfer Date in the following priority:
(i) an amount equal to the Class B Monthly Interest for such
Transfer Date, plus the amount of any Class B Deficiency Amount for such
Transfer Date, plus the amount of any Class B Additional Interest for such
Transfer Date, shall be deposited by the Servicer or the Trustee into the
Interest Funding Account for payment to the Class B Certificateholder on
the next Interest Payment Date or Special Payment Date;
(ii) an amount equal to the Class B Servicing Fee for such Transfer
Date, plus the amount of any Class B Servicing Fee due but not paid to the
Servicer on any prior Transfer Date shall be distributed to the Servicer;
and
(iii) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed as set forth in Section 4.11.
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(c) An amount equal to the Collateral Available Funds deposited into
the Collection Account for the related Collection Period shall be distributed on
each Transfer Date in the following priority:
(i) an amount equal to the Collateral Servicing Fee for such
Transfer Date plus the amount of any Collateral Servicing Fee due but not
paid to the Servicer on any prior Transfer Date shall be distributed to
the Servicer; and
(ii) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed as set forth in Section 4.11.
(d) During the Revolving Period, an amount equal to the Available
Investor Principal Collections deposited into the Collection Account for the
related Collection Period shall be distributed on each Transfer Date in the
following priority:
(i) an amount equal to the Collateral Monthly Principal for such
Transfer Date shall be distributed to the Collateral Interest Holder in
accordance with the Loan Agreement;
(ii) an amount equal to the lesser of (A) the product of (1) a
fraction, the numerator of which is equal to the Available Investor
Principal Collections remaining after the application specified in
subsection 4.9(d)(i) above and the denominator of which is equal to the
sum of the Available Investor Principal Collections available for sharing
as specified in the related Supplement for each Series and (2) the
Cumulative Series Principal Shortfall and (B) Available Investor Principal
Collections shall remain in the Collection Account to be treated as Shared
Principal Collections and applied to other Series; and
(iii) an amount equal to the excess, if any, of (A) the Available
Investor Principal Collections for such Transfer Date over (B) the
applications specified in subsections 4.9(d)(i) and (ii) above shall be
paid to the Holder of the Exchangeable Transferor Certificate; provided,
however, that the amount to be paid to the Holder of the Exchangeable
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Transferor Certificate pursuant to this subsection 4.9(d)(iii) with
respect to such Transfer Date shall be paid to the Holder of the
Exchangeable Transferor Certificate only if the Transferor Amount on such
Date of Processing is greater than the Minimum Transferor Amount (after
giving effect to the inclusion in the Trust of all Receivables created on
or prior to such Transfer Date and the application of payments referred to
in subsection 4.3(b)) and otherwise shall be deposited into the Excess
Funding Account to the extent necessary to ensure that the Transferor
Amount is at least equal to the Minimum Transferor Amount.
(e) During the Accumulation Period or the Early Amortization Period,
an amount equal to the Available Investor Principal Collections deposited into
the Collection Account for the related Collection Period shall be distributed on
each Transfer Date in the following priority:
(i) an amount equal to the Class A Monthly Principal for such
Transfer Date, shall be (A) during the Accumulation Period, deposited into
the Principal Funding Account for payment to the Class A
Certificateholders on the earlier to occur of the Class A Expected Final
Payment Date and the first Special Payment Date with respect to the Early
Amortization Period, and (B) during the Early Amortization Period,
distributed to the Paying Agent for payment to the Class A
Certificateholders on the next Special Payment Date;
(ii) after giving effect to the distribution referred to in clause
(i) above and after the Class A Invested Amount has been paid in full
(after taking into account payments to be made on the related Distribution
Date), an amount equal to the Class B Monthly Principal for such Transfer
Date shall be distributed to the Paying Agent for payment to the Class B
Certificateholders on the next Distribution Date;
(iii) for each Transfer Date (other than the Transfer Date
immediately preceding the Series 1997-1 Termination Date, in which case
on the Series 1997-1 Termination Date) after giving effect to the
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distributions referred to in clauses (i) and (ii) above, an amount equal
to the Collateral Monthly Principal for such Transfer Date shall be
distributed to the Collateral Interest Holder in accordance with the Loan
Agreement;
(iv) an amount equal to the lesser of (A) the product of (1) a
fraction, the numerator of which is equal to the Available Investor
Principal Collections remaining after the application specified in
subsections 4.9(e)(i), (ii) and (iii) above and the denominator of which
is equal to the sum of the Available Investor Principal Collections
available for sharing as specified in the related Supplement for each
Series and (2) the Cumulative Series Principal Shortfall and (B) the
Available Investor Principal Collections shall remain in the Collection
Account to be treated as Shared Principal Collections and applied to other
Series; and
(v) an amount equal to the excess, if any, of (A) the Available
Investor Principal Collections over (B) the applications specified in
subsections 4.9(e)(i) through (iv) above shall be paid to the Holder of
the Exchangeable Transferor Certificate; provided, however, that the
amount to be paid to the Holder of the Exchangeable Transferor Certificate
pursuant to this subsection 4.9(e)(v) with respect to such Transfer Date
shall be paid to the Holder of the Exchangeable Transferor Certificate
only if the Transferor Amount on such Date of Processing is greater than
the Minimum Transferor Amount (after giving effect to the inclusion in the
Trust of all Receivables created on or prior to such Transfer Date and the
application of payments referred to in subsection 4.3(b)) and otherwise
shall be deposited into the Excess Funding Account to the extent necessary
to ensure that the Transferor Amount is at least equal to the Minimum
Transferor Amount.
(f) The Accumulation Period is scheduled to commence at the close of
business on _____________ __, ____; provided, however, that, if the Accumulation
Period Length (determined as described below) is less than 2 months, the date on
which the Accumulation Period actually commences will be delayed to the close of
business on _____________ __, ____ and, as a result, the number of
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Collection Periods in the Accumulation Period will equal one. On the
Determination Date immediately preceding the ___________, __ ____ Distribution
Date, and each Determination Date thereafter until the Accumulation Period
begins, the Servicer will determine the "Accumulation Period Length" which will
equal the number of whole months such that the sum of the Accumulation Period
Factors for each month during such period will be equal to or greater than the
Required Accumulation Factor Number; provided, however, that the Accumulation
Period Length will not be determined to be less than one month.
SECTION 4.10 Investor Charge-Offs.
(a) On or before each Transfer Date, the Servicer shall calculate
the Class A Required Amount. If on any Transfer Date, the Class A Required
Amount for the prior Collection Period exceeds the sum of the amounts allocated
with respect thereto pursuant to subsection 4.11(a) and Section 4.12 with
respect to such Collection Period, the Collateral Invested Amount (after giving
effect to reductions for any Collateral Investor Charge-Offs and any Reallocated
Collateral Principal Collections on such Transfer Date) will be reduced by the
amount of such excess, but not by more than the Class A Investor Default Amount
for such Transfer Date. In the event that such reduction would cause the
Collateral Invested Amount to be a negative number, the Collateral Invested
Amount will be reduced to zero, and the Class B Invested Amount (after giving
effect to reductions for any Class B Investor Charge-Offs and any Reallocated
Class B Principal Collections on such Transfer Date) will be reduced by the
amount by which the Collateral Invested Amount would have been reduced below
zero. In the event that such reduction would cause the Class B Invested Amount
to be a negative number, the Class B Invested Amount will be reduced to zero,
and the Class A Invested Amount will be reduced by the amount by which the Class
B Invested Amount would have been reduced below zero, but not by more than the
Class A Investor Default Amount for such Transfer Date (a "Class A Investor
Charge-Off"). If the Class A Invested Amount has been reduced by the amount of
any Class A Investor Charge-Offs, it will be reimbursed on any Transfer Date
(but not by an amount in excess of the aggregate Class A Investor Charge-Offs)
by the amount of Excess Spread and Shared Excess Yield Collections
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allocable to Series 1997-1 and available for such purpose pursuant to subsection
4.11(b).
(b) On or before each Transfer Date, the Servicer shall calculate
the Class B Required Amount. If on any Transfer Date, the Class B Required
Amount for the prior Collection Period exceeds the amounts allocated with
respect thereto pursuant to subsection 4.11(c) and (d) and Section 4.12 with
respect to such Collection Period, the Collateral Invested Amount (after giving
effect to reductions for any Collateral Investor Charge-Offs and any Reallocated
Collateral Principal Collections on such Transfer Date and any adjustments with
respect thereto as described in subsection 4.10(a) above) will be reduced by the
amount of such excess but not by more than the Class B Investor Default Amount
for such Transfer Date. In the event that such reduction would cause the
Collateral Invested Amount to be a negative number, the Collateral Invested
Amount shall be reduced to zero and the Class B Invested Amount shall be reduced
by the amount by which the Collateral Invested Amount would have been reduced
below zero, but not by more than the Class B Investor Default Amount for such
Transfer Date (a "Class B Investor Charge-Off"). The Class B Invested Amount
will also be reduced by the amount of Reallocated Class B Principal Collections
in excess of the Collateral Invested Amount pursuant to Section 4.12 and the
amount of any portion of the Class B Invested Amount allocated to the Class A
Certificates to avoid a reduction in the Class A Invested Amount pursuant to
subsection 4.10(a) above. Any such reduction in the Class B Invested Amount will
thereafter be reimbursed (but not to an amount in excess of the unpaid principal
balance of the Class B Certificates) on any Transfer Date by the amount of
Excess Spread and Shared Excess Yield Collections allocable to Series 1997-1
allocated and available for that purpose as described under subsection 4.11(e).
(c) On or before each Transfer Date, the Servicer shall calculate
the Collateral Required Amount. If on any Transfer Date, the Collateral Required
Amount for the prior Collection Period exceeds the amounts allocated with
respect thereto pursuant to subsection 4.11(f), the Collateral Invested Amount
will be reduced by the amount of such excess but not by more than the lesser of
the Collateral Default Amount and the Collateral Invested Amount for such
Transfer Date (a "Collateral
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Investor Charge-Off"). The Collateral Invested Amount will also be reduced by
the amount of Reallocated Principal Collections pursuant to Section 4.12 and the
amount of any portion of the Collateral Invested Amount allocated to the Class A
Certificates or the Class B Certificates to avoid a reduction in the Class A
Invested Amount, pursuant to subsection 4.10(a), or the Class B Invested Amount,
pursuant to subsection 4.10(b), respectively. Any such reduction in the
Collateral Invested Amount will thereafter be reimbursed on any Transfer Date by
the amount of the Excess Spread and Shared Excess Yield Collections allocable to
Series 1997-1 allocated and available for that purpose as described under
subsection 4.11(i).
SECTION 4.11 Excess Spread and Shared Excess Yield Collections. On
or before each Transfer Date, the Servicer shall instruct the Trustee in writing
(which writing shall be substantially in the form of Exhibit B hereto) to apply,
Excess Spread with respect to the related Collection Period, and to the extent
of the Series Yield Shortfall, any Shared Excess Yield Collections with respect
to other Series allocable to Series 1997-1, to make the following distributions
on each Transfer Date in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date shall be used to fund any deficiency pursuant to
subsections 4.9(a)(i), (ii) and (iii), in that order of priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed shall be treated as a
portion of Investor Principal Collections and applied in accordance with
subsections 4.9(d) and (e);
(c) an amount up to the Class B Required Amount, if any, with
respect to such Transfer Date shall be used to fund any deficiency pursuant to
subsections 4.9(b)(i) and (ii), in that order of priority;
(d) an amount equal to the Class B Investor Default Amount shall be
treated as a portion of Investor Principal Collections and applied in accordance
with subsections 4.9(d) and (e);
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(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of the
definition of "Class B Invested Amount" (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed) shall be
treated as a portion of Investor Principal Collections and applied in accordance
with subsections 4.9(d) and (e);
(f) an amount up to the Collateral Required Amount, if any, with
respect to such Transfer Date shall be used to fund any deficiency pursuant to
subsections 4.9(c)(i);
(g) an amount equal to the Collateral Monthly Interest plus the
amount of any past due Collateral Monthly Interest for such Transfer Date shall
be paid to the Collateral Interest Holder in accordance with the Loan Agreement;
(h) an amount equal to the Collateral Default Amount shall be
treated as a portion of Investor Principal Collections and applied in accordance
with subsections 4.9(d) and (e);
(i) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced below the Required Collateral Invested Amount
for reasons other than the payment of principal to the Collateral Interest
Holder (but not in excess of the aggregate amount of such reductions which have
not been previously reimbursed) shall be treated as a portion of Investor
Principal Collections and applied in accordance with subsections 4.9(d) and (e);
(j) on each Transfer Date from and after the Reserve Account Funding
Date, but prior to the date on which the Reserve Account terminates as described
in Section 4.17(f), an amount up to the excess, if any, of the Required Reserve
Account Amount over the Available Reserve Account Amount shall be deposited into
the Reserve Account; and
(k) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (j) above shall constitute "Shared Excess
Yield Collections" with respect to other Series; provided that if no
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other Series exists, the balance, if any, will be distributed to the Collateral
Interest Holder and applied in accordance with the Loan Agreement.
SECTION 4.12 Reallocated Principal Collections. On or before each
Transfer Date, the Servicer shall instruct the Trustee in writing (which writing
shall be substantially in the form of Exhibit B hereto) to withdraw from the
Collection Account and apply Reallocated Principal Collections (applying all
Reallocated Collateral Principal Collections in accordance with subsections
4.12(a) and (b) prior to applying any Reallocated Class B Principal Collections
in accordance with subsection 4.12(a) for any amounts still owing after the
application of Reallocated Collateral Principal Collections) with respect to
such Transfer Date, to make the following distributions on each Transfer Date in
the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Transfer Date over (ii) the amount
of Excess Spread and Shared Excess Yield Collections with respect to the related
Collection Period, shall be used to fund any deficiency pursuant to subsections
4.9(a)(i), (ii) and (iii), in that order of priority; and
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Transfer Date over (ii) the amount
of Excess Spread and Shared Excess Yield Collections allocated and available to
the Class B Certificates pursuant to subsection 4.11(c) on such Transfer Date
shall be used to fund any deficiency pursuant to subsections 4.9(b)(i) and (ii),
in that order of priority.
SECTION 4.13 Shared Principal Collections.
(a) The portion of Shared Principal Collections on deposit in the
Collection Account equal to the amount of Shared Principal Collections allocable
to Series 1997-1 on any Transfer Date shall be applied as an Available
Principal Collection pursuant to Section 4.9.
(b) Shared Principal Collections allocable to Series 1997-1 with
respect to any Transfer Date shall mean an amount equal to the Series Principal
Shortfall,
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if any, with respect to Series 1997-1 for such Transfer Date; provided, however,
that if the aggregate amount of Shared Principal Collections for all Series for
such Transfer Date (including the Excess Funding Amount) is less than the
Cumulative Series Principal Shortfall for such Transfer Date, then Shared
Principal Collections allocable to Series 1997-1 on such Transfer Date shall
equal the product of (i) Shared Principal Collections for all Series for such
Transfer Date (including the Excess Funding Amount) and (ii) a fraction, the
numerator of which is the Series Principal Shortfall with respect to Series
1997-1 for such Transfer Date and the denominator of which is the aggregate
amount of Cumulative Series Principal Shortfall for all Series for such Transfer
Date.
SECTION 4.14 Shared Excess Yield Collections.
(a) The portion of Shared Excess Yield Collections on deposit in the
Collection Account equal to the amount of Shared Excess Yield Collections
allocable to Series 1997-1 on any Transfer Date shall be applied pursuant to
Section 4.11.
(b) Shared Excess Yield Collections allocable to Series 1997-1 with
respect to any Transfer Date shall mean an amount equal to the Series Yield
Shortfall, if any, with respect to Series 1997-1 for such Transfer Date;
provided, however, that if the aggregate amount of Shared Excess Yield
Collections for all Series for such Transfer Date is less than the Cumulative
Series Yield Shortfall for such Transfer Date, the Shared Excess Yield
Collections allocable to Series 1997-1 on such Transfer Date shall equal the
product of (i) Shared Excess Yield Collections for all Series for such Transfer
Date and (ii) a fraction, the numerator of which is the Series Yield Shortfall
with respect to Series 1997-1 for such Transfer Date and the denominator of
which is the aggregate amount of the Cumulative Series Yield Shortfall for all
Series on such Transfer Date.
SECTION 4.15 Interest Funding Account.
(a) The Trustee shall establish and maintain with a Qualified
Institution, which may be the Trustee, in the name of the Trust, on behalf of
the Trust, for the benefit of the Investor Certificateholders, a segregated
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trust account (the "Interest Funding Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Investor Certificateholders. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Interest Funding
Account and in all proceeds thereof. The Interest Funding Account shall be under
the sole dominion and control of the Trustee for the benefit of the Investor
Certificateholders. If at any time the institution holding the Interest Funding
Account ceases to be a Qualified Institution, the Transferor shall notify the
Trustee, and the Trustee upon being notified (or the Servicer on its behalf)
shall, within 10 Business Days, establish a new Interest Funding Account meeting
the conditions specified above with a Qualified Institution, and shall transfer
any cash or any investments to such new Interest Funding Account. The Trustee,
at the direction of the Servicer, shall (i) make withdrawals from the Interest
Funding Account from time to time, in the amounts and for the purposes set forth
in this Series Supplement, and (ii) on each Transfer Date make deposits into the
Interest Funding Account in the amounts specified in, and otherwise in
accordance with, subsections 4.9(a) and (b).
(b) Funds on deposit in the Interest Funding Account shall be
invested at the direction of the Servicer by the Trustee in Eligible
Investments. Funds on deposit in the Interest Funding Account on any Transfer
Date, after giving effect to any withdrawals from the Interest Funding Account
on such Transfer Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Transfer Date. The Trustee shall maintain for the benefit of the Investor
Certificateholders possession of the negotiable instruments or securities, if
any, evidencing such Eligible Investments. No Eligible Investment shall be
disposed of prior to its maturity. On each Transfer Date, all interest and
earnings (net of losses and investment expenses) accrued since the preceding
Transfer Date on funds on deposit in the Interest Funding Account shall be paid
to the Transferor. All interest and earnings (including reinvested interest) on
funds on deposit in the Interest Funding Account shall not be considered part of
the amounts on deposit in the Interest Funding Account for purposes of this
Series Supplement.
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SECTION 4.16 Principal Funding Account.
(a) The Trustee shall establish and maintain with a Qualified
Institution, which may be the Trustee, in the name of the Trust, on behalf of
the Trust, for the benefit of the Investor Certificateholders, a segregated
trust account (the "Principal Funding Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Investor Certificateholders. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Principal Funding
Account and in all proceeds thereof. The Principal Funding Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Investor Certificateholders. If at any time the institution holding the
Principal Funding Account ceases to be a Qualified Institution, the Transferor
shall notify the Trustee, and the Trustee upon being notified (or the Servicer
on its behalf) shall, within 10 Business Days, establish a new Principal Funding
Account meeting the conditions specified above with a Qualified Institution, and
shall transfer any cash or any investments to such new Principal Funding
Account. The Trustee, at the direction of the Servicer, shall (i) make
withdrawals from the Principal Funding Account from time to time, in the amounts
and for the purposes set forth in this Series Supplement, and (ii) on each
Transfer Date (from and after the commencement of the Accumulation Period) prior
to termination of the Principal Funding Account make a deposit into the
Principal Funding Account in the amount specified in, and otherwise in
accordance with, subsection 4.9(e).
(b) Funds on deposit in the Principal Funding Account shall be
invested at the direction of the Servicer by the Trustee in Eligible
Investments. Funds on deposit in the Principal Funding Account on any Transfer
Date, after giving effect to any withdrawals from the Principal Funding Account
on such Transfer Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Transfer Date. The Trustee shall maintain for the benefit of the Investor
Certificateholders possession of the negotiable instruments or securities, if
any, evidencing such Eligible Investments. No Eligible Investment shall be
disposed of prior to its maturity.
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On the Transfer Date occurring in the month following the
commencement of the Accumulation Period and on each Transfer Date thereafter
with respect to the Accumulation Period, the Trustee, acting at the Servicer's
direction given on or before such Transfer Date, shall transfer from the
Principal Funding Account to the Collection Account the Principal Funding
Investment Proceeds on deposit in the Principal Funding Account, but not in
excess of the Covered Amount, for application as Class A Available Funds to be
applied pursuant to subsection 4.9(a)(i).
Any Excess Principal Funding Investment Proceeds shall be paid to
the Transferor on each Transfer Date. An amount equal to any Principal Funding
Investment Shortfall shall be deposited into the Collection Account on each
Transfer Date from the Reserve Account to the extent funds are available
pursuant to subsection 4.17(d). Principal Funding Investment Proceeds (including
reinvested interest) shall not be considered part of the amounts on deposit in
the Principal Funding Account for purposes of this Series Supplement.
SECTION 4.17 Reserve Account.
(a) The Trustee shall establish and maintain with a Qualified
Institution, which may be the Trustee, in the name of the Trust, on behalf of
the Trust, for the benefit of the Investor Certificateholders, a segregated
trust account (the "Reserve Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Investor
Certificateholders. The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Reserve Account and in all
proceeds thereof. The Reserve Account shall be under the sole dominion and
control of the Trustee for the benefit of the Investor Certificateholders. If at
any time the institution holding the Reserve Account ceases to be a Qualified
Institution, the Transferor shall notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall, within 10 Business Days,
establish a new Reserve Account meeting the conditions specified above with a
Qualified Institution, and shall transfer any cash or any investments to such
new Reserve Account. The Trustee, at the direction of the Servicer, shall (i)
make withdrawals from the Reserve Account from time to time in an amount
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up to the Available Reserve Account Amount at such time, for the purposes set
forth in this Series Supplement, and (ii) on each Transfer Date (from and after
the Reserve Account Funding Date) prior to termination of the Reserve Account
make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.11(j).
(b) Funds on deposit in the Reserve Account shall be invested at the
direction of the Servicer by the Trustee in Eligible Investments. Funds on
deposit in the Reserve Account on any Transfer Date, after giving effect to any
withdrawals from the Reserve Account on such Transfer Date, shall be invested in
such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. The Trustee shall
maintain for the benefit of the Investor Certificateholders possession of the
negotiable instruments or securities, if any, evidencing such Eligible
Investments. No Eligible Investment shall be disposed of prior to its maturity.
On each Transfer Date, all interest and earnings (net of losses and investment
expenses) accrued since the preceding Transfer Date on funds on deposit in the
Reserve Account shall be retained in the Reserve Account (to the extent that the
Available Reserve Account Amount is less than the Required Reserve Account
Amount) and the balance, if any, shall be deposited into the Collection Account
and included in Class A Available Funds for such Transfer Date. For purposes of
determining the availability of funds or the balance in the Reserve Account for
any reason under this Series Supplement, except as otherwise provided in the
preceding sentence, investment earnings on such funds shall be deemed not to be
available or on deposit.
(c) On or before each Transfer Date with respect to the Accumulation
Period prior to the payment in full of the Class A Invested Amount and on or
before the first Transfer Date with respect to the Early Amortization Period,
the Servicer shall calculate the "Reserve Draw Amount" which shall be equal to
the Principal Funding Investment Shortfall with respect to each Transfer Date
with respect to the Accumulation Period or the first Transfer Date with respect
to the Early Amortization Period; provided, however, that such amount will be
reduced to the extent that funds otherwise would be
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available for deposit in the Reserve Account under Section 4.11(j) with respect
to such Transfer Date.
(d) In the event that for any Transfer Date the Reserve Draw Amount
is greater than zero, the Reserve Draw Amount, up to the Available Reserve
Account Amount, shall be withdrawn from the Reserve Account on such Transfer
Date by the Trustee (acting in accordance with the instructions of the
Servicer), deposited into the Collection Account and included in Class A
Available Funds for such Transfer Date.
(e) In the event that the Reserve Account Surplus on any Transfer
Date, after giving effect to all deposits to and withdrawals from the Reserve
Account with respect to such Transfer Date, is greater than zero, the Trustee,
acting in accordance with the instructions of the Servicer, shall withdraw from
the Reserve Account, and pay in accordance with the Loan Agreement, an amount
equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article XII of the Agreement, (ii) if the Accumulation Period has
not commenced, the first Transfer Date relating to the Early Amortization Period
and (iii) if the Accumulation Period has commenced, the earlier of the first
Transfer Date with respect to the Early Amortization Period and the Transfer
Date immediately preceding the Class A Expected Final Payment Date, the Trustee,
acting in accordance with the instructions of the Servicer, after the prior
payment of all amounts owing to the Series 1997-1 Certificateholders that are
payable from the Reserve Account as provided herein, shall withdraw from the
Reserve Account and pay in accordance with the Loan Agreement, all amounts, if
any, on deposit in the Reserve Account and the Reserve Account shall be deemed
to have terminated for purposes of this Series Supplement.
SECTION 4.18 Transferor's or Servicer's Failure to Make a Deposit or
Payment. If the Servicer or the Transferor fails to make, or give instructions
to make, any payment or deposit (other than as required by subsections 2.4(d)
and (e) and 12.2(a) or Sections 10.2 and 12.1) required to be made or given by
the Servicer or the Transferor, respectively, at the time specified in the
Agreement (including applicable grace periods), the
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Trustee shall make such payment or deposit from the applicable Investor Account,
Interest Funding Account, Principal Funding Account or Reserve Account without
instruction from the Servicer or Transferor. The Trustee shall be required to
make any such payment, deposit or withdrawal hereunder only to the extent that
the Trustee has sufficient information to allow it to determine the amount
thereof; provided, however, that the Trustee shall in all cases be deemed to
have sufficient information to determine the amount of interest payable to the
Series 1997-1 Certificateholders on each Distribution Date. The Servicer shall,
upon request of the Trustee, promptly provide the Trustee with all information
necessary to allow the Trustee to make such payment, deposit or withdrawal. Such
funds or the proceeds of such withdrawal shall be applied by the Trustee in the
manner in which such payment or deposit should have been made by the Transferor
or the Servicer, as the case may be.
SECTION 8. Article V of the Agreement. Article V of the Agreement
shall read in its entirety as follows and shall be applicable only to the
Investor Certificateholders:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
SECTION 5.1 Distributions. (a) On each Interest Payment Date, each
Special Payment Date, the Class A Expected Final Payment Date and the Series
1997-1 Termination Date, the Paying Agent shall distribute (in accordance with
the certificate delivered on or before the related Transfer Date by the Servicer
to the Trustee pursuant to subsection 3.4(b)) to each Class A Certificateholder
of record on the immediately preceding Record Date (other than as provided in
subsection 2.4(e) or Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided Interests
represented by Class A Certificates held by such Certificateholder) of amounts
as are payable to the Class A Certificateholders pursuant to Section 4.9 by
check mailed to each Class A Certificateholder (at such Certificateholder's
address as it appears in the Certificate Register), except that with respect to
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Class A Certificates registered in the name of the nominee of a Clearing Agency,
such distribution shall be made in immediately available funds.
(b) On each Interest Payment Date, each Special Payment Date, the
Class B Expected Final Payment Date and the Series 1997-1 Termination Date, the
Paying Agent shall distribute (in accordance with the certificate delivered on
or before the related Transfer Date by the Servicer to the Trustee pursuant to
subsection 3.4(b)) to each Class B Certificateholder of record on the
immediately preceding Record Date (other than as provided in subsection 2.4(e)
or Section 12.3 respecting a final distribution) such Certificateholder's pro
rata share (based on the aggregate Undivided Interests represented by Class B
Certificates held by such Certificateholder) of amounts as are payable to the
Class B Certificateholders pursuant to Section 4.9 by check mailed to each Class
B Certificateholder (at such Certificateholder's address as it appears in the
Certificate Register), except that with respect to Class B Certificates
registered in the name of the nominee of a Clearing Agency, such distribution
shall be made in immediately available funds.
SECTION 5.2 Series 1997-1 Certificateholders' Statement. On or
before each Interest Payment Date (including the Class A Expected Final Payment
Date and the Class B Expected Final Payment Date) or Special Payment Date, the
Paying Agent on behalf of the Trustee shall forward to each Series 1997-1
Certificateholder, each Rating Agency and the Collateral Interest Holder a
statement substantially in the form of Exhibit C to this Series Supplement
prepared by the Servicer, delivered to the Trustee and setting forth certain
information relating to the Trust and the Certificates.
On or before January 31 of each calendar year, beginning with
calendar year 1998, the Trustee shall distribute to each Person who at any time
during the preceding calendar year was a Series 1997-1 Certificateholder, a
statement prepared by the Servicer containing the information required to be
contained in the regular monthly report to Series 1997-1 Certificateholders,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 1997-1 Certificateholder, together with such other
customary information (consistent with the treatment of the
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Certificates as debt) as the Servicer deems necessary or desirable to enable the
Series 1997-1 Certificateholders to prepare their tax returns. Such obligations
of the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Internal Revenue Code as from time to time in effect.
SECTION 9. Early Amortization Events. If any one of the following
events shall occur with respect to the Investor Certificates:
(a) failure on the part of the Transferor (i) to make any payment or
deposit required by the terms of (A) the Agreement or (B) this Series
Supplement, on or before the date occurring five days after the date such
payment or deposit is required to be made herein or (ii) duly to observe or
perform in any material respect any covenants or agreements of the Transferor
set forth in the Agreement or this Series Supplement, which failure has a
material adverse effect on the Series 1997-1 Certificateholders (which
determination shall be made without reference to the amount of the Collateral
Investor Interest) and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 50% of the Invested Amount of this
Series 1997-1, and continues to affect materially and adversely the interests of
the Series 1997-1 Certificateholders (which determination shall be made without
reference to the amount of the Collateral Investor Interest) for such period;
(b) any representation or warranty made by the Transferor in the
Agreement or this Series Supplement, or any information contained in a computer
file or microfiche list required to be delivered by the Transferor pursuant to
Section 2.1 or 2.6, (i) shall prove to have been incorrect in any material
respect when made or when delivered, which continues to be incorrect in any
material respect for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Transferor by the Trustee, or to the Transferor and the Trustee by
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the Holders of Investor Certificates evidencing Undivided Interests aggregating
not less than 50% of the Invested Amount of this Series 1997-1, and (ii) as a
result of which the interests of the Series 1997-1 Certificateholders are
materially and adversely affected (which determination shall be made without
reference to the amount of the Collateral Investor Interest) and continue to be
materially and adversely affected for such period; provided, however, that an
Early Amortization Event with respect to Series 1997-1 pursuant to this
subsection 9(b) shall not be deemed to have occurred hereunder if the Transferor
has accepted reassignment of the related Receivable, or all of such Receivables,
if applicable, during such period in accordance with the provisions of the
Agreement;
(c) the Transferor shall fail to convey Receivables arising under
Additional Accounts, or Participations, to the Trust, as required by subsection
2.6(a);
(d) any Servicer Default shall occur which would have a material
adverse effect on the Series 1997-1 Certificateholders;
(e) the Class A Invested Amount shall not be paid in full on the
Class A Expected Final Payment Date or the Class B Invested Amount shall not be
paid in full on the Class B Expected Final Payment Date; or
(f) on any Determination Date, the Collateral Invested Amount is
less than the Required Collateral Invested Amount;
then, in the case of any event described in subsection 9(a), (b) or (d) hereof,
after the applicable grace period set forth in such subparagraphs, either the
Trustee or Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Invested Amount of this Series 1997-1 by
notice then given in writing to the Transferor and the Servicer (and to the
Trustee if given by the Certificateholders) may declare that an Early
Amortization Event has occurred with respect to Series 1997-1 as of the date of
such notice, and in the case of any event described in subsection 9(c), (e) or
(f) hereof, an Early Amortization Event with respect to Series 1997-1 shall
occur without any
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notice or other action on the part of the Trustee or the Investor
Certificateholders immediately upon the occurrence of such event.
SECTION 10. Series 1997-1 Termination. The right of the Investor
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series 1997-1 Termination Date.
SECTION 11. Counterparts. This Series Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 12. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13. No Petition. The Transferor, the Servicer and the
Trustee, by entering into this Series Supplement and each Investor
Certificateholder, by accepting a Series 1997-1 Certificate hereby covenant and
agree that they will not at any time institute against the Trust, or join in any
institution against the Trust of, any bankruptcy proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Investor Certificateholders, the Agreement or this
Series Supplement.
SECTION 14. Tax Representation and Covenant. Any holder of an
interest in the Trust acquired pursuant to Section 12.1(b) in respect of the
Series 1997-1 Certificates shall be required to represent and covenant in
connection with such acquisition that (x) it has neither acquired, nor will it
sell, trade or transfer any interest in the Trust or cause any interest in the
Trust to be marketed on or through either (i) an "established securities market"
within the meaning of Code section 7704(b)(1), including without limitation an
interdealer quotation system that regularly disseminates firm buy or sell
quotations by identified brokers or dealers by electronic means or otherwise or
(ii) a "secondary mar-
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ket" within the meaning of Code section 7704(b)(2), including a market wherein
interests in the Trust are regularly quoted by any person making a market in
such interests and a market wherein any person regularly makes available bid or
offer quotes with respect to interests in the Trust and stands ready to effect
buy or sell transactions at the quoted prices for itself or on behalf of others,
(y) unless the Transferor consents otherwise, such holder (i) is properly
classified as, and will remain classified as, a "corporation" as described in
Code section 7701(a)(3) and (ii) is not, and will not become, an S corporation
as described in Code section 1361, and (z) it will (i) cause any participant
with respect to such interest otherwise permitted hereunder to make similar
representations and covenants for the benefit of the Transferor and the Trust
and (ii) forward a copy of such representations and covenants to the Trustee.
Each such holder shall further agree in connection with its acquisition of such
interest that, in the event of any breach of its (or its participant's)
representation and covenant that it (or its participant) is and shall remain
classified as a corporation other than an S corporation, the Transferor shall
have the right to procure a replacement investor to replace such holder (or its
participant), and further that such holder shall take all actions necessary to
permit such replacement investor to succeed to its rights and obligations as a
holder (or to the rights of its participant).
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IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee
have caused this Series 1997-1 Supplement to be duly executed by their
respective officers as of the day and year first above written.
FIRST BANK OF SOUTH DAKOTA
(NATIONAL ASSOCIATION)
Transferor
By:_____________________________
Name:
Title:
FBS CARD SERVICES, INC.
Servicer
By:_____________________________
Name:
Title:
CITIBANK, N.A.
Trustee
By:_____________________________
Name:
Title:
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EXHIBIT A-1
FORM OF CERTIFICATE
CLASS A
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to First Bank of South Dakota (National
Association) or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
No.__ $_______
CUSIP NO. ________
FIRST BANK CORPORATE CARD MASTER TRUST
CLASS A __%
ASSET BACKED CERTIFICATE, SERIES 1997-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of VISA(R)(1) charge card receivables generated or acquired by First
Bank of South Dakota (National Association) and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement described
below.
(Not an interest in or obligation of
First Bank of South Dakota (National Association)
or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Certificateholder") is
the registered owner of an Undivided Interest in a trust (the "Trust"), the
corpus of which consists of a portfolio of receivables (the "Receivables") now
existing and hereafter created and arising in connection with selected VISA
charge card
- --------
(1) VISA(R) is a federally registered servicemark of Visa U.S.A., Inc.
<PAGE>
accounts (the "Accounts") of First Bank of South Dakota (National Association),
a national banking association, all monies due or to become due in payment of
the Receivables (including all recoveries on any charged-off Receivables and
amounts, if any, paid by corporate clients as co-obligors under Corporate Card
Agreements), the right to certain amounts received as Net Interchange, the
benefits of the Collateral Investor Interest, all proceeds of the foregoing and
the other assets and interests constituting the Trust pursuant to a Pooling and
Servicing Agreement dated as of January 1, 1997, as supplemented by the Series
1997-1 Supplement dated as of January __, 1997 (collectively, as amended from
time to time, the "Pooling and Servicing Agreement"), by and among First Bank of
South Dakota (National Association), as Transferor (the "Transferor"), FBS Card
Services, Inc., as Servicer (the "Servicer"), and Citibank, N.A., as Trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth herein. To the extent not defined herein, capitalized terms used
herein have the respective meanings assigned to them in the Pooling and
Servicing Agreement.
A portion of the Collections on the Receivables received in any
Collection Period equal to the product of the aggregate amount of such
Collections and the Yield Factor will be treated as Yield Collections. The
remainder of such Collections will be treated as Principal Collections. The
Yield Factor will be equal to __%. Yield Collections will also include certain
amounts of Net Interchange attributed to cardholder charges in the Accounts
during each Collection Period.
The Series 1997-1 Certificates are issued in two classes, the Class
A Certificates (of which this certificate is one) and the Class B Certificates,
which are subordinated to the Class A Certificates in certain rights of payment
as described herein and in the Pooling and Servicing Agreement.
The Transferor has structured the Pooling and Servicing Agreement
and the Series 1997-1 Certificates with the intention that the Series 1997-1
Certificates will qualify under applicable tax law as indebtedness, and each of
the Transferor, the Holder of the Exchangeable Transferor Certificate, the
Servicer and each Series 1997-1 Certificateholder (or Series 1997-1 Certificate
Owner) by acceptance of its Series 1997-1 Certificate (or in the case of a
Series 1997-1 Certificate Owner, by virtue of such Series 1997-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1997-1 Certificates
(or any beneficial interest therein) as indebtedness for purposes of federal,
state, local and foreign income or franchise taxes and any other tax imposed on
or measured by income. Each Series 1997-1 Certificateholder agrees that it will
cause any Series 1997-1 Certificate Owner acquiring an interest in a Series
1997-1 Certificate through it to comply with the Pooling and Servicing
A-1-2
<PAGE>
Agreement as to treatment of the Series 1997-1 Certificates as indebtedness for
certain tax purposes.
This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the Class A
Certificateholder by virtue of the acceptance hereof assents and by which the
Class A Certificateholder is bound. This Class A Certificates is one of a duly
authorized Series of Investor Certificates entitled "First Bank Corporate Card
Master Trust Class A __% Asset Backed Certificates, Series 1997-1" (the "Class A
Certificates"), each of which represents an Undivided Interest in the Trust,
including the right to receive the Collections and other amounts allocated to
the Class A Certificates at the times and in the amounts specified in the
Pooling and Servicing Agreement and to be deposited in the Investor Accounts,
the Principal Funding Account, the Interest Funding Account and the Reserve
Account or paid to the Class A Certificateholders.
Also issued under the Pooling and Servicing Agreement are the "First
Bank Corporate Card Master Trust Class B __% Asset Backed Certificates, Series
1997-1" (the "Class B Certificates"), which represent an Undivided Interest in
the Trust subordinate to the Class A Certificates, and the "First Bank Corporate
Card Master Trust Collateral Investor Interest, Series 1997-1" (the "Collateral
Investor Interest" and, collectively with the Class A Certificates and the Class
B Certificates, the "Investor Certificates"), which is an undivided interest in
the Trust subordinated to the Class A Certificates and Class B Certificates. The
subordination of the Class B Certificates and the subordination of the
Collateral Investor Interest to the Class A Certificates shall constitute the
Credit Enhancement for the Class A Certificates.
The aggregate interest represented by the Class A Certificates and
the Class B Certificates at any time in the assets of the Trust shall not exceed
an amount equal to the Class A Invested Amount and the Class B Invested Amount,
respectively, at such time. As of the Closing Date, the Class A Initial Invested
Amount is $___________, the Class B Initial Invested Amount is $__________ and
the Collateral Initial Invested Amount is $_____________. The Class A Invested
Amount on any date of determination will be an amount equal to (a) the Class A
Initial Invested Amount minus (b) the aggregate amount of principal payments
made to the Class A Certificateholders prior to such date, minus (c) the
aggregate amount of unreimbursed Class A Investor Charge-Offs for all prior
Transfer Dates; provided, however, that the Class A Invested Amount may not be
reduced below zero.
For the purpose of allocating Yield Collections and Defaulted
Receivables for each Collection Period during the
A-1-3
<PAGE>
Accumulation Period, the Class A Invested Amount will be reduced (such reduced
amount, the "Class A Adjusted Invested Amount") by the aggregate principal
amount of funds on deposit in the Principal Funding Account. The Class A
Invested Amount together with the aggregate interest represented by the Class B
Certificates in the assets of the Trust (the "Class B Invested Amount") and the
aggregate interest represented by the Collateral Invested Amount in the assets
of the Trust are sometimes collectively referred to herein as the "Invested
Amount."
In addition to the Class A Certificates, the Class B Certificates
and the Collateral Investor Interest, an Exchangeable Transferor Certificate
representing an undivided interest in the Trust will be issued to the Transferor
pursuant to the Pooling and Servicing Agreement. The Exchangeable Transferor
Certificate will represent the interest in the assets of the Trust not
represented by all of the Series of Investor Certificates issued by the Trust.
The Exchangeable Transferor Certificate may be exchanged by the Transferor
pursuant to the Pooling and Servicing Agreement for a newly issued Series of
Investor Certificates and a reissued Exchangeable Transferor Certificate upon
the conditions set forth in the Pooling and Servicing Agreement.
Interest will accrue on the Class A Certificates at a per annum rate
equal to __% per annum (the "Class A Certificate Rate"), and, except as
otherwise provided herein, will be distributed to Class A Certificateholders
semiannually on the __th day of _______ and _______ of each year (or, if any
such day is not a Business Day, on the next succeeding Business Day) and on the
Class A Expected Final Payment Date (each, an "Interest Payment Date"),
commencing ______ __, 1997. If an Early Amortization Event occurs, then
thereafter interest will be distributed to the Class A Certificateholders
monthly on each Special Payment Date. Interest for any Interest Payment Date
will include accrued interest at the Class A Certificate Rate from and including
the Closing Date (in the case of the first Interest Payment Date) or from and
including the __th day of the sixth calendar month preceding the calendar month
in which such Interest Payment Date occurs, to but excluding the __th day of the
calendar month in which such Interest Payment Date occurs. Interest for any
Interest Payment Date or Special Payment Date due but not paid on an Interest
Payment Date or Special Payment Date will be due on the next succeeding Interest
Payment Date or Special Payment Date together with, to the extent permitted by
applicable law, additional interest on such overdue interest at the Class A
Certificate Rate. Interest will be calculated on the basis of a 360-day year of
twelve 30-day months.
During the Early Amortization Period, in addition to monthly
payments of interest, Class A Monthly Principal will be distributed to the Class
A Certificateholders on each Special
A-1-4
<PAGE>
Payment Date until the Class A Invested Amount has been paid in full. With
respect to the Accumulation Period, in addition to semiannual payments of
interest, the amount on deposit in the Principal Funding Account will be
distributed as principal to the Class A Certificateholders on the ______ ____
Distribution Date (the "Class A Expected Final Payment Date"), unless
distributed earlier as a result of the occurrence of an Early Amortization Event
in accordance with the Pooling and Servicing Agreement.
On or before each Transfer Date, the Servicer shall instruct the
Trustee in writing to withdraw and the Trustee, acting in accordance with such
instructions, shall withdraw on such Transfer Date, from the Collection Account
to the extent of funds on deposit therein (i) from Yield Collections processed
as of the end of the preceding Collection Period which have been allocated to
the Series 1997-1 Certificates, (ii) with respect to the Class A Certificates,
from other amounts constituting Class A Available Funds, and (iii) with respect
to the Class B Certificates, from other amounts constituting Class B Available
Funds, the following amounts: (x) an amount equal to one-twelfth (1/12) of the
product of (i) the Class A Certificate Rate and (ii) the outstanding principal
balance of the Class A Certificates as of the last Business Day of the preceding
calendar month ("Class A Monthly Interest"); provided, however, that with
respect to the first Distribution Date, Class A Monthly Interest shall be equal
to the interest accrued on the outstanding principal balance of the Class A
Certificates as of the Closing Date at the Class A Certificate Rate for the
period from and including the Closing Date through the day preceding such
Distribution Date; and (y) amounts up to the Class B Monthly Interest followed
by the Collateral Monthly Interest, in the actual amounts and manner described
in the Pooling and Servicing Agreement. The Trustee shall deposit the amounts
withdrawn from the Collection Account in respect of Class A Monthly Interest and
Class B Monthly Interest into the Interest Funding Account on such Transfer
Date.
On each Transfer Date, the Trustee shall allocate the Class A
Available Funds on deposit in the Collection Account, as required by the Pooling
and Servicing Agreement, in the following order of priority: (i) an amount equal
to the Class A Monthly Interest for such Transfer Date, plus the amount of any
Class A Deficiency Amount for such Transfer Date, plus the amount of any Class A
Additional Interest for such Transfer Date, (ii) an amount equal to the Class A
Servicing Fee for the prior Collection Period plus the amount of any Class A
Servicing Fee due but not paid on any prior Transfer Date and (iii) an amount
equal to the Class A Investor Default Amount, if any, for the prior Collection
Period. The Trustee on each Transfer Date shall allocate the Class B Available
Funds on deposit in the Collection Account, as required by the Pooling and
Servicing Agreement, in the following order of priority: (i) the Class B Monthly
Interest for such Transfer Date, plus the amount of any Class B
A-1-5
<PAGE>
Deficiency Amount for such Transfer Date, plus the amount of any Class B
Additional Interest for such Transfer Date, and (ii) the Class B Servicing Fee
for the prior Collection Period plus the amount of any Class B Servicing Fee due
but not paid on any prior Transfer Date. The balance of the amount allocated
from the Collection Account to the Series 1997-1 Certificates, if any, after
giving effect to the applications above and payments in respect of the
Collateral Servicing Fee shall constitute "Excess Spread."
On or before the Transfer Date immediately succeeding the Collection
Period in which the Accumulation Period or the Early Amortization Period
commences and on or before each Transfer Date thereafter, the Servicer shall
instruct the Trustee in writing to withdraw, and the Trustee, acting in
accordance with such instructions, shall withdraw on such Transfer Date from the
Collection Account an amount equal to the Available Investor Principal
Collections on deposit in the Collection Account and from such amounts, (A)
deposit or distribute, as the case may be, an amount equal to Class A Monthly
Principal (i) during the Accumulation Period, into the Principal Funding
Account, and (ii) during the Early Amortization Period, to the Paying Agent for
payment to the Class A Certificateholders on the next Special Payment Date, (B)
after the Class A Invested Amount has been paid in full, distribute an amount
equal to Class B Monthly Principal to the Paying Agent for payment to the Class
B Certificateholders on the next Distribution Date, and (C) any remaining
Available Investor Principal Collections shall be used for payment of Collateral
Monthly Principal.
On the earlier to occur of the first Transfer Date with respect to
the Early Amortization Period or the Transfer Date immediately preceding the
Class A Expected Final Payment Date, the Servicer shall instruct the Trustee to
withdraw, and the Trustee shall withdraw from the Principal Funding Account the
amount on deposit therein and distribute such amount to the Paying Agent for
payment to the Class A Certificateholders on the first Special Payment Date with
respect to the Early Amortization Period or the Class A Expected Final Payment
Date, as applicable.
On the Class A Expected Final Payment Date or on each Special
Payment Date with respect to an Early Amortization Period, the Trustee shall pay
from amounts on deposit in the Collection Account an amount equal to the lesser
of the Class A Invested Amount and the amount of Available Investor Principal
Collections on deposit in the Collection Account with respect to the related
Collection Period, and after the Class A Invested Amount has been paid in full
(after taking into account distributions to be made on the related Distribution
Date), Available Investor Principal Collections shall be applied to the Class B
Certificates and Collateral Investor Interest as specified in the Pooling and
Servicing Agreement.
A-1-6
<PAGE>
On each Interest Payment Date or Special Payment Date, the Trustee
shall pay to the Class A Certificateholders and the Class B Certificateholders
the amounts deposited on the related Transfer Date or Transfer Dates into the
Interest Funding Account in respect of Class A Monthly Interest and Class B
Monthly Interest, respectively. On each Transfer Date, the Trustee shall pay to
the Collateral Interest Holder the Collateral Monthly Interest, to the extent
funds are available. Distributions with respect to this Series 1997-1
Certificate will be made by the Trustee by, except as otherwise provided in the
Pooling and Servicing Agreement, check mailed to the address of each Series
1997-1 Certificateholder of record appearing in the Certificate Register and
except for the final distribution in respect of this Series 1997-1 Certificate,
without the presentation or surrender of this Series 1997-1 Certificate or the
making of any notation thereon; provided, however, that with respect to Series
1997-1 Certificates registered in the name of the nominee of a Clearing Agency,
distributions will be made by wire transfer of immediately available funds.
This Class A Certificate represents an interest in only the First
Bank Corporate Card Master Trust. This Class A Certificate does not represent an
obligation of, or an interest in, the Transferor or the Servicer, and neither
the Series 1997-1 Certificates nor the Accounts or Receivables are insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. This Series 1997-1 Certificate is limited in right of
payment to certain collections and other amounts in respect of the Receivables,
all as more specifically set forth herein and in the Pooling and Servicing
Agreement.
The transfer of this Class A Certificate shall be registered in the
Certificate Register upon surrender of this agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class A Certificateholder or such Class A Certificateholder's
attorney-in-fact duly authorized in writing, and thereupon one or more new Class
A Certificates of authorized denominations and for the same aggregate Undivided
Interests will be issued to the designated transferee or transferees.
The Servicer, the Trustee and the Transfer Agent and Registrar, and
any agent of any of them, may treat the Person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer, the Trustee, the Paying Agent, the Transfer Agent and Registrar, nor
any agent of any of them or of any such agent shall be affected by notice to the
contrary except in certain circumstances described in the Pooling and Servicing
Agreement.
A-1-7
<PAGE>
The Pooling and Servicing Agreement provides that the right of the
Series 1997-1 Certificateholders to receive payment from the Trust will
terminate on the first Business Day following the Series 1997-1 Termination
Date. Upon the termination of the Trust pursuant to Section 12.1 of the Pooling
and Servicing Agreement, the Trustee shall assign and convey to the Holder of
the Exchangeable Transferor Certificate (without recourse, representation or
warranty) all right, title and interest of the Trust in the Receivables, whether
then existing or thereafter created, and all proceeds of such Receivables and
Insurance Proceeds relating to such Receivables. The Trustee shall execute and
deliver such instruments of transfer and assignment, in each case without
recourse, as shall be prepared by the Servicer reasonably requested by the
Holder of the Exchangeable Transferor Certificate to vest in such Holder all
right, title and interest which the Trustee had in the Receivables.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class A Certificate shall
not be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
A-1-8
<PAGE>
IN WITNESS WHEREOF, First Bank of South Dakota (National
Association) has caused this Class A certificate to be duly executed by a duly
authorized officer.
By:__________________________________
Authorized Officer
Date:___________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
CITIBANK, N.A.,
Trustee
By:______________________________________
Authorized Signatory
A-1-9
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE
CLASS B
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to First Bank of South Dakota (National
Association) or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
No.__ $_______
CUSIP NO. ________
FIRST BANK CORPORATE CARD MASTER TRUST
CLASS B __%
ASSET BACKED CERTIFICATE, SERIES 1997-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of VISA(R)(1) charge card receivables generated or acquired by First
Bank of South Dakota (National Association) and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement described
below.
(Not an interest in or obligation of
First Bank of South Dakota (National Association)
or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class B Certificateholder") is
the registered owner of an Undivided Interest in a trust (the "Trust"), the
corpus of which consists of a portfolio of receivables (the "Receivables") now
existing and hereafter created and arising in connection with selected VISA
charge card
- --------
(1) VISA(R) is a federally registered servicemark of Visa U.S.A., Inc.
<PAGE>
accounts (the "Accounts") of First Bank of South Dakota (National Association),
a national banking association, all monies due or to become due in payment of
the Receivables (including all recoveries on any charged-off Receivables and
amounts, if any, paid by corporate clients as co-obligors under Corporate Card
Agreements), the right to certain amounts received as Net Interchange, the
benefits of the Collateral Investor Interest, all proceeds of the foregoing and
the other assets and interests constituting the Trust pursuant to a Pooling and
Servicing Agreement dated as of January 1, 1997 as supplemented by the Series
1997-1 Supplement dated as of January __, 1997 (collectively, as amended from
time to time, the "Pooling and Servicing Agreement"), by and among First Bank of
South Dakota (National Association), as Transferor (the "Transferor"), FBS Card
Services, Inc. as Servicer (the "Servicer"), and Citibank, N.A., as Trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth herein. To the extent not defined herein, capitalized terms used herein
have the respective meanings assigned to them in the Pooling and Servicing
Agreement.
A portion of the Collections on the Receivables received in any
Collection Period equal to the product of the aggregate amount of such
Collections and the Yield Factor will be treated as Yield Collections. The
remainder of such Collections will be treated as Principal Collections. The
Yield Factor will be equal to __%. Yield Collections will also include certain
amounts of Net Interchange attributed to cardholder charges in the Accounts
during each Collection Period.
The Series 1997-1 Certificates are issued in two classes, the Class
A Certificates and the Class B Certificates (of which this certificate is one),
which are subordinated to the Class A Certificates in certain rights of payment
as described herein and in the Pooling and Servicing Agreement.
The Transferor has structured the Pooling and Servicing Agreement
and the Series 1997-1 Certificates with the intention that the Series 1997-1
Certificates will qualify under applicable tax law as indebtedness, and each of
the Transferor, the Holder of the Exchangeable Transferor Certificate, the
Servicer and each Series 1997-1 Certificateholder (or Series 1997-1 Certificate
Owner) by acceptance of its Series 1997-1 Certificate (or in the case of a
Series 1997-1 Certificate Owner, by virtue of such Series 1997-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1997-1 Certificates
(or any beneficial interest therein) as indebtedness for purposes of federal,
state, local and foreign income or franchise taxes and any other tax imposed on
or measured by income. Each Series 1997-1 Certificateholder agrees that it will
cause any Series 1997-1 Certificate Owner acquiring an interest in a Series
1997-1 Certificate through it to comply with the Pooling and Servicing
A-2-2
<PAGE>
Agreement as to treatment of the Series 1997-1 Certificates as indebtedness for
certain tax purposes.
This Class B Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the Class B
Certificateholder by virtue of the acceptance hereof assents and by which the
Class B Certificateholder is bound. This Class B Certificates is one of a duly
authorized Series of Investor Certificates entitled "First Bank Corporate Card
Master Trust Class B __% Asset Backed Certificates, Series 1997-1" (the "Class B
Certificates"), each of which represents an Undivided Interest in the Trust,
including the right to receive the Collections and other amounts allocated to
the Class B Certificates at the times and in the amounts specified in the
Pooling and Servicing Agreement and to be deposited in the Investor Accounts,
the Principal Funding Account, the Interest Funding Account and the Reserve
Account or paid to the Class B Certificateholders.
Also issued under the Pooling and Servicing Agreement are the "First
Bank Corporate Card Master Trust Class A __% Asset Backed Certificates, Series
1997-1" (the "Class A Certificates"), which represent an Undivided Interest in
the Trust, and the "First Bank Corporate Card Master Trust Collateral Investor
Interest, Series 1997-1" (the "Collateral Investor Interest" and, collectively
with the Class A Certificates and the Class B Certificates, the "Investor
Certificates"), which is an undivided interest in the Trust subordinated to the
Class A Certificates and Class B Certificates. The subordination of the
Collateral Investor Interest to the Class B Certificates shall constitute the
Credit Enhancement for the Class B Certificates. The Class B Certificates are
subordinated to the Class A Certificates.
The aggregate interest represented by the Class A Certificates and
the Class B Certificates at any time in the assets of the Trust shall not exceed
an amount equal to the Class A Invested Amount and the Class B Invested Amount,
respectively, at such time. As of the Closing Date, the Class A Initial Invested
Amount is $__________, the Class B Initial Invested Amount is $_____________ and
the Collateral Initial Invested Amount is $____________. The Class B Invested
Amount on any date of determination will be an amount equal to (a) the Class B
Initial Invested Amount, minus (b) the aggregate amount of principal payments
made to the Class B Certificateholders prior to such date, minus (c) the
aggregate amount of Class B Investor Charge-Offs for all prior Transfer Dates,
minus (d) the amount of Reallocated Class B Principal Collections allocated
pursuant to subsection 4.12(a) of the Pooling and Servicing Agreement on all
prior Transfer Dates for which the Collateral Invested Amount has not been
reduced, minus (e) an amount equal to the amount by which the Class B Invested
Amount has been reduced on all prior
A-2-3
<PAGE>
Transfer Dates pursuant to subsection 4.10(a) of the Pooling and Servicing
Agreement and plus (f) the aggregate amount of Excess Spread and Shared Excess
Yield Collections allocated and available on all prior Transfer Dates pursuant
to subsection 4.11(d) of the Pooling and Servicing Agreement, for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
provided, however, that the Class B Invested Amount may not be reduced below
zero.
The Class B Invested Amount together with the Class A Invested
Amount and the aggregate interest represented by the Collateral Invested Amount
in the assets of the Trust are sometimes collectively referred to herein as the
"Invested Amount."
In addition to the Class A Certificates, the Class B Certificates
and the Collateral Investor Interest, an Exchangeable Transferor Certificate
representing an undivided interest in the Trust will be issued to the Transferor
pursuant to the Pooling and Servicing Agreement. The Exchangeable Transferor
Certificate will represent the interest in the assets of the Trust not
represented by all of the Series of Investor Certificates issued by the Trust.
The Exchangeable Transferor Certificate may be exchanged by the Transferor
pursuant to the Pooling and Servicing Agreement for a newly issued Series of
Investor Certificates and a reissued Exchangeable Transferor Certificate upon
the conditions set forth in the Pooling and Servicing Agreement.
Interest will accrue on the Class B Certificates at a per annum rate
equal to __% per annum (the "Class B Certificate Rate"), and, except as
otherwise provided herein, will be distributed to Class B Certificateholders
semiannually on the __th day of _______ and _______ of each year (or, if any
such day is not a Business Day, on the next succeeding Business Day) and on the
Class B Expected Final Payment Date (each, an "Interest Payment Date"),
commencing ______ __, 1997. If an Early Amortization Event occurs, then
thereafter interest will be distributed to the Class B Certificateholders
monthly on each Special Payment Date. Interest for any Interest Payment Date
will include accrued interest at the Class B Certificate Rate from and including
the Closing Date (in the case of the first Interest Payment Date) or from and
including the __th day of the sixth calendar month preceding the calendar month
in which such Interest Payment Date occurs, to but excluding the __th day of the
calendar month in which such Interest Payment Date occurs. Interest for any
Interest Payment Date or Special Payment Date due but not paid on an Interest
Payment Date or Special Payment Date will be due on the next succeeding Interest
Payment Date or Special Payment Date together with, to the extent permitted by
applicable law, additional interest on such overdue interest at the Class B
Certificate Rate. Interest will be calculated on the basis of a 360-day year of
twelve 30-day months.
A-2-4
<PAGE>
During the Early Amortization Period, in addition to monthly
payments of interest, following payment in full of the Class A Invested Amount,
Class B Monthly Principal will be distributed to the Class B Certificateholder
on each Special Payment Date until the Class B Invested Amount has been paid in
full. With respect to the Accumulation Period following payment in full of the
Class A Invested Amount, Class B Monthly Principal will be distributed to the
Class B Certificateholders on the ______ ____ Distribution Date (the "Class B
Expected Final Payment Date"), unless distributed earlier as a result of the
occurrence of an Early Amortization Event in accordance with the Pooling and
Servicing Agreement.
On or before each Transfer Date, the Servicer shall instruct the
Trustee in writing to withdraw and the Trustee, acting in accordance with such
instructions, shall withdraw on such Transfer Date, from the Collection Account
to the extent of funds on deposit therein (i) from Yield Collections processed
as of the end of the preceding Collection Period which have been allocated to
the Series 1997-1 Certificates, (ii) with respect to the Class A Certificates,
from other amounts constituting Class A Available Funds, and (iii) with respect
to the Class B Certificates, from other amounts constituting Class B Available
Funds, the following amounts: (x) amounts up to the Class A Monthly Interest;
(y) an amount equal to one-twelfth (1/12) of the product of (i) the Class B
Certificate Rate and (ii) the outstanding principal balance of the Class B
Certificates as of the last Business Day of the preceding calendar month ("Class
B Monthly Interest"), provided, however, that with respect to the first
Distribution Date, Class B Monthly Interest shall be equal to the interest
accrued on the outstanding principal balance of the Class B Certificates as of
the Closing Date at the Class B Certificate Rate for the period from and
including the Closing Date through the day preceding such Distribution Date; and
(z) amounts up to the Collateral Monthly Interest, in the actual amounts and
manner described in the Pooling and Servicing Agreement. The Trustee shall
deposit the amounts withdrawn from the Collection Account in respect of Class A
Monthly Interest and Class B Monthly Interest into the Interest Funding Account.
On each Transfer Date, the Trustee shall allocate the Class A
Available Funds on deposit in the Collection Account, as required by the Pooling
and Servicing Agreement, in the following order of priority: (i) an amount equal
to the Class A Monthly Interest for such Transfer Date, plus the amount of any
Class A Deficiency Amount for such Transfer Date, plus the amount of any Class A
Additional Interest for such Transfer Date, (ii) an amount equal to the Class A
Servicing Fee for the prior Collection Period plus the amount of any Class A
Servicing Fee due but not paid on any prior Transfer Date and (iii) an amount
equal to the Class A Investor Default Amount, if any, for the prior Collection
Period. The Trustee on each Transfer Date shall
A-2-5
<PAGE>
allocate the Class B Available Funds on deposit in the Collection Account, as
required by the Pooling and Servicing Agreement, in the following order of
priority: (i) the Class B Monthly Interest for such Transfer Date, plus the
amount of any Class B Deficiency Amount for such Transfer Date, plus the amount
of any Class B Additional Interest for such Transfer Date, and (ii) the Class B
Servicing Fee for the prior Collection Period plus the amount of any Class B
Servicing Fee due but not paid on any prior Transfer Date. The balance of the
amount allocated from the Collection Account to the Series 1997-1 Certificates,
if any, after giving effect to the applications above and payments in respect of
the Collateral Servicing Fee shall constitute "Excess Spread."
On or before the Transfer Date immediately succeeding the Collection
Period in which the Accumulation Period or the Early Amortization Period
commences and on or before each Transfer Date thereafter, the Servicer shall
instruct the Trustee in writing to withdraw, and the Trustee, acting in
accordance with such instructions, shall withdraw on such Transfer Date from the
Collection Account an amount equal to the Available Investor Principal
Collections on deposit in the Collection Account and from such amounts, (A)
deposit or distribute, as the case may be, an amount equal to Class A Monthly
Principal (i) during the Accumulation Period, into the Principal Funding
Account, and (ii) during the Early Amortization Period, to the Paying Agent for
payment to the Class A Certificateholders on the next Special Payment Date, (B)
after the Class A Invested Amount has been paid in full, distribute an amount
equal to Class B Monthly Principal to the Paying Agent for payment to the Class
B Certificateholders on the next Distribution Date, and (C) any remaining
Available Investor Principal Collections shall be used for payment of Collateral
Monthly Principal.
On the Class B Expected Final Payment Date or on each Distribution
Date with respect to an Early Amortization Period, the Trustee shall pay from
amounts on deposit in the Collection Account an amount equal to the lesser of
the Class B Invested Amount and the amount of Available Investor Principal
Collections on deposit in the Collection Account with respect to the related
Collection Period after payment of any Class A Monthly Principal, and after the
Class B Invested Amount has been paid in full (after taking into account
distributions to be made on the related Distribution Date), Available Investor
Principal Collections shall be applied to the Collateral Investor Interest as
specified in the Pooling and Servicing Agreement.
On each Interest Payment Date or Special Payment Date, the Trustee
shall pay to the Class A Certificateholders and the Class B Certificateholders
the amounts deposited on the related Transfer Date or Transfer Dates into the
Interest Funding Account in respect of Class A Monthly Interest and Class B
Monthly
A-2-6
<PAGE>
Interest, respectively. On each Transfer Date, the Trustee shall pay to the
Collateral Interest Holder the Collateral Monthly Interest, to the extent funds
are available. Distributions with respect to this Series 1997-1 Certificate will
be made by the Trustee by, except as otherwise provided in the Pooling and
Servicing Agreement, check mailed to the address of each Series 1997-1
Certificateholder of record appearing in the Certificate Register and except for
the final distribution in respect of this Series 1997-1 Certificate, without the
presentation or surrender of this Series 1997-1 Certificate or the making of any
notation thereon; provided, however, that with respect to Series 1997-1
Certificates registered in the name of the nominee of a Clearing Agency,
distributions will be made by wire transfer of immediately available funds.
This Class B Certificate represents an interest in only the First
Bank Corporate Card Master Trust. This Class B Certificate does not represent an
obligation of, or an interest in, the Transferor or the Servicer, and neither
the Series 1997-1 Certificates nor the Accounts or Receivables are insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. This Series 1997-1 Certificate is limited in right of
payment to certain collections and other amounts in respect of the Receivables,
all as more specifically set forth herein and in the Pooling and Servicing
Agreement.
The transfer of this Class B Certificate shall be registered in the
Certificate Register upon surrender of this agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class B Certificateholder or such Class B Certificateholder's
attorney-in-fact duly authorized in writing, and thereupon one or more new Class
B Certificates of authorized denominations and for the same aggregate Undivided
Interests will be issued to the designated transferee or transferees.
The Servicer, the Trustee and the Transfer Agent and Registrar, and
any agent of any of them, may treat the Person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer, the Trustee, the Paying Agent, the Transfer Agent and Registrar, nor
any agent of any of them or of any such agent shall be affected by notice to the
contrary except in certain circumstances described in the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement provides that the right of the
Series 1997-1 Certificateholders to receive payment from the Trust will
terminate on the first Business Day following the Series 1997-1 Termination
Date. Upon the termination of the Trust pursuant to Section 12.1 of the Pooling
and Servicing Agreement, the Trustee shall assign and convey to the Holder of
A-2-7
<PAGE>
the Exchangeable Transferor Certificate (without recourse, representation or
warranty) all right, title and interest of the Trust in the Receivables, whether
then existing or thereafter created, and all proceeds of such Receivables and
Insurance Proceeds relating to such Receivables. The Trustee shall execute and
deliver such instruments of transfer and assignment, in each case without
recourse, as shall be prepared by the Servicer reasonably requested by the
Holder of the Exchangeable Transferor Certificate to vest in such Holder all
right, title and interest which the Trustee had in the Receivables.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class B Certificate shall
not be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
A-2-8
<PAGE>
IN WITNESS WHEREOF, First Bank of South Dakota (National
Association) has caused this Class B Certificate to be duly executed by a duly
authorized officer.
By:__________________________________
Authorized Officer
Date:__________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
CITIBANK, N.A.
Trustee
By:___________________________________
Authorized Signatory
9
<PAGE>
EXHIBIT B
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND NOTIFICATION
TO THE TRUSTEE
CITIBANK, N.A.
FIRST BANK CORPORATE CARD MASTER TRUST SERIES 1997-1
Collection Period ENDING __________ __, ____
Capitalized terms used in this notice have their respective meanings set forth
in the Pooling and Servicing Agreement. References herein to certain sections
and subsections are references to the respective sections and subsections of the
Pooling and Servicing Agreement as supplemented by the Series 1997-1 Supplement.
This notice is delivered pursuant to Section 4.9.
A) FBS Card Services, Inc. is the Servicer under the Pool-
ing and Servicing Agreement.
B) The undersigned is a Servicing Officer.
C) The date of this notice is on or before the related
Transfer Date under the Pooling and Servicing Agree-
ment.
I. INSTRUCTION TO MAKE A WITHDRAWAL
Pursuant to Section 4.9, the Servicer does hereby instruct the Trustee (i) to
make withdrawals or allocations, as the case may be, from the Collection
Account, the Principal Funding Account and the Distribution Account on
___________ __, ____, which date is a Transfer Date under the Pooling and
Servicing Agreement, in aggregate amounts set forth below in respect of the
following amounts and (ii) to apply the proceeds of such withdrawals in
accordance with accordance with subsection 3(a) of the Series 1997-1 Supplement
and Section 4.9 of the Pooling and Servicing Agreement:
A. Pursuant to subsection 3(a) of the Series
1997-1 Supplement:
1. Servicer Interchange $________________
B. Pursuant to subsection 4.9(a)(i):
1. Class A Monthly Interest at the Class
A Certificate Rate on the Class A In-
vested Amount $________________
2. Class A Deficiency Amount
$________________
3. Class A Additional Interest $________________
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C. Pursuant to subsection 4.9(a)(ii):
1. Class A Servicing Fee $________________
2. Accrued and unpaid Class A Servicing
Fee $________________
D. Pursuant to subsection 4.9(a)(iii):
1. Class A Investor Default Amount $________________
E. Pursuant to subsection 4.9(a)(iv):
1. Portion of Excess Spread from Class A
Available Funds to be allocated and
distributed as provided in Section
4.11 $________________
F. Pursuant to subsection 4.9(b)(i):
1. Class B Monthly Interest at the Class
B Certificate Rate on the Class B In-
vested Amount $________________
2. Class B Deficiency Amount $________________
3. Class B Additional Interest $________________
G. Pursuant to subsection 4.9(b)(ii):
1. Class B Servicing Fee $________________
2. Accrued and unpaid Class B Servicing
Fee $________________
H. Pursuant to subsection 4.9(b)(iii):
1. Portion of Excess Spread from Class B
Available Funds to be allocated and
distributed as provided in Section
4.11 $________________
I. Pursuant to subsection 4.9(c)(i):
1. Collateral Interest Servicing Fee, if
applicable $________________
2. Accrued and unpaid Collateral Interest
Servicing Fee, if applicable $________________
J. Pursuant to subsection 4.9(c)(ii):
1. Portion of Excess Spread from Collat-
eral Available Funds to be allocated
and distributed as provided in Section
4.11 $________________
Total $================
B-2
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Page
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K. Pursuant to subsection 4.9(d)(i):
1. Collateral Monthly Principal, if any,
applied in accordance with the Loan
Agreement $________________
L. Pursuant to subsection 4.9(d)(ii):
1. Amount to be treated as Shared Prin-
cipal Collections $________________
M. Pursuant to subsection 4.9(d)(iii):
1. Amount to be paid to the Holder of the
Exchangeable Transferor Certificate $________________
2. Amount to be deposited in the Excess
Funding Account $________________
N. Pursuant to subsection 4.9(e)(i):
1. Class A Monthly Principal $________________
O. Pursuant to subsection 4.9(e)(ii):
1. Class B Monthly Principal $________________
P. Pursuant to subsection 4.9(e)(iii):
1. Collateral Monthly Principal to be
applied in accordance with the Loan
Agreement $________________
Q. Pursuant to subsection 4.9(e)(iv):
1. Amount to be treated as Shared Prin-
cipal Collections $________________
R. Pursuant to subsection 4.9(e)(v):
1. Amount to be paid to the Holder of the
Exchangeable Transferor Certificate $________________
2. Amount to be deposited in the Excess
Funding Account $________________
Total $================
S. Pursuant to subsection 4.9(f):
1. Amount to be withdrawn from the Prin-
cipal Funding Account and deposited
into the Distribution Account
$________________
B-3
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II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 4.9, the Servicer does hereby instruct the Trustee to pay in
accordance with Section 5.1 from the Distribution Account on __________ __,
____, which date is a Distribution Date under the Pooling and Servicing
Agreement, amounts so deposited in the Distribution Account pursuant to Section
4.9 as set forth below:
A. Pursuant to subsection 4.9(g):
1. Amount to be distributed to Class A
Certificateholders $________________
2. Amount to be distributed to Class B
Certificateholders $________________
B. Pursuant to subsection 4.9(h)(i):
1. Amount to be distributed to the Class
A Certificateholders $________________
C. Pursuant to subsection 4.9(h)(ii):
1. Amount to be distributed to the Class
B Certificateholders
$________________
III. APPLICATION OF EXCESS SPREAD
Pursuant to Section 4.11, the Servicer does hereby instruct the Trustee to apply
the Excess Spread with respect to the related Collection Period and to make the
following distributions in the following priority:
A. The amount equal to the Class A Required
Amount, if any, which will be used to fund
the Class A Required Amount and be applied
in accordance with, and in the priority set
forth in, subsection 4.9(a) $________________
B. The amount equal to the aggregate amount of
Class A Investor Charge-Offs which have not
been previously reimbursed which will be
treated as a portion of Investor Principal
Collections and retained in the Collection
Account $________________
B-4
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Page
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C. The amount equal to the Class B Required
Amount, if any, which will be used to fund
the Class B Required Amount and be applied
in accordance with, and in the priority set
forth in, subsection 4.9(b)
D. The amount equal to the Class B Investor
Default Amount shall be treated as a por-
tion of Investor Principal Collections and
retained in the Collection Account $________________
E. The amount equal to the aggregate amount by
which the Class B Invested Amount has been
reduced below the initial Class B Invested
Amount for reasons other than the payment
of principal to the Class B Certificate-
holders (but not in excess of the aggregate
amount of such reductions which have not
been previously reimbursed) which will be
treated as a portion of Investor Principal
Collections and retained in the Collection
Account $________________
F. The amount equal to the Collateral Monthly
Interest plus the amount of any past due
Collateral Monthly Interest which will be
paid to the Collateral Interest Holder for
application in accordance with the Loan
Agreement $________________
G. The amount equal to the aggregate amount of
accrued but unpaid Collateral Interest Ser-
vicing Fees which will be paid to the
Servicer if the Transferor an Affiliate
thereof, Citibank, N.A. or an Affiliate
thereof is the Servicer $________________
H. The amount equal to the Collateral Default
Amount, if any, for the prior Collection
Period which will be treated as a portion
of Investor Principal Collections and re-
tained in the Collection Account $________________
B-5
<PAGE>
Page
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I. The amount equal to the aggregate amount by
which the Collateral Invested Amount has
been reduced below the Required Collateral
Interest for reasons other than the payment
of principal to the Collateral Invested
Amount Holder (but not in excess of the ag-
gregate amount of such reductions have not
been previously reimbursed) will be treated
as a portion of Investor Principal Collec-
tions and retained in the Collection Ac-
count $________________
J. On each Transfer Date from and after the
Reserve Account Funding Date, but prior to
the date on which the Reserve Account
terminates as described in subsection
4.17(f), the amount up to the excess, if any,
of the Required Reserve Account Amount over
the Available Reserve Account Amount which
shall be deposited into the Reserve Account $________________
K. The balance, if any, after giving effect to
the payments made pursuant to subparagraphs
(a) through (j) above which shall consti-
tute "Shared Excess Yield Collections" with
respect to other Series.
$________________
IV. REALLOCATED PRINCIPAL COLLECTIONS
Pursuant to Section 4.12, the Servicer does hereby instruct the Trustee to
allocate from the Collection Account Reallocated Principal Collections pursuant
to Section 4.12 with respect to the related Collection Period in the following
amounts:
A. Reallocated Collateral Principal Collec-
tions
B. Reallocated Class B Principal Collections
$________________ $________________
- --------------------------------------------------------------------------------
V. ACCRUED AND UNPAID AMOUNTS
After giving effect to the withdrawals and transfers to be made in accordance
with this notice, the following amounts will be accrued and unpaid with respect
to all Collection Periods preceding the current calendar month
B. Subsection 4.9(a)(i) and (b)(i):
1. The aggregate amount of the Class A
Deficiency Amount $________________
2. The aggregate amount of Class B Defi-
ciency Amount $________________
C. Subsections 4.9(a)(ii) and (b)(ii):
B-6
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The aggregate amount of all accrued and
unpaid Investor Monthly Servicing Fees $________________
D. Section 4.10:
The aggregate amount of all unreimbursed
Investor Charge Offs $________________
B-7
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this ____ day of __________, ____.
FBS Card Services, Inc.
Servicer
By:_________________________________
Name:
Title:
B-8
<PAGE>
EXHIBIT C
FORM OF SERIES 1997-1 CERTIFICATEHOLDERS' STATEMENT
FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION)
FIRST BANK CORPORATE CARD MASTER TRUST
The information which is required to be prepared with respect to the
distribution date of ___________ __, ____ and with respect to the performance of
the Trust during the related Collection Period.
Capitalized terms used in this Statement have their respective
meanings set forth in the Pooling and Servicing Agreement.
A. Information Regarding the Current Monthly Distribution
(Stated on the Basis of $1,000 Original Certificate
Principal Balance)
1. The amount of the current monthly
distribution in respect of Class A
Monthly Principal.................................$_________
2. The amount of the currently monthly
distribution in respect of Class B
Monthly Principal.................................$_________
3. The amount of the currently monthly
distribution in respect of Collateral
Monthly Principal.................................$_________
4. The amount of the currently monthly
distribution in respect of Class A
Monthly Interest..................................$_________
5. The amount of the currently monthly
distribution in respect of Class A
Deficiency Amounts................................$_________
6. The amount of the currently monthly
distribution in respect of Class A
Additional Interest...............................$_________
<PAGE>
7. The amount of the currently monthly
distribution in respect of Class B
Monthly Interest..................................$_________
8. The amount of the currently monthly
distribution in respect of Class B
Deficiency Amounts................................$_________
9. The amount of the currently monthly
distribution in respect of Class B
Additional Interest...............................$_________
10. The amount of the currently monthly
distribution in respect of Collateral
Monthly Interest..................................$_________
11. The amount of the currently monthly
distribution in respect of any
accrued and unpaid Collateral
Monthly Interest..................................$_________
B. Information Regarding the Performance of the Trust
12. Principal Collection
(a) The aggregate amount of
Principal Collections processed during
the related Collection Period
which were allocated in respect
of the Class A Certificates.................$_________
(b) The aggregate amount of
Principal Collections processed during
the related Collection Period
which were allocated in respect
of the Class B Certificates.................$_________
(c) The aggregate amount of Principal
Collections processed during
the related Collection Period which
were allocated in respect of the
Collateral Investor Interest................$_________
13. Trust Principal Component
(a) The Trust Principal Component as of
the end of the day on the last day
of the related Collection Period............$_________
C-2
<PAGE>
(b) The amount of Principal
Receivables in the Trust
represented by the Investor
Interest of Series 1997-1
as of the end of the day on
the last day of the related
Collection Period...........................$_________
(c) The amount of Principal
Receivables in the Trust
represented by the Series
1997-1 Adjusted Investor
Interest as of the end of
the day on the last day of
the related Collection Period...............$_________
(d) The amount of Principal
Receivables in the Trust
represented by the Class A
Invested Amount as of the
end of the day on the last
day of the related Monthly
Period......................................$_________
(e) The amount of Principal Receivables in the
Trust represented by the Class A Adjusted
Invested Amount as of the end of day
on the last day of the related Monthly
Period......................................$_________
(f) The amount of Principal
Receivables in the Trust
represented by the Class B
Invested Amount as of the
end of the day on the last
day of the related Monthly
Period......................................$_________
(g) The amount of Principal
Receivables in the Trust
represented by the Collateral
Interest as of the end of
the date on the last day of
the related Collection Period...............$_________
(h) The Floating Allocation Percentage
with respect to the related
Collection Period...........................$_________
C-3
<PAGE>
(i) The Class A Floating Percentage
with respect to the related
Collection Period.............................._____%
(j) The Class B Floating Percentage
with respect to the related
Collection Period.............................._____%
(k) The Collateral Floating Percentage
with respect to the related
Collection Period.............................._____%
(l) The Fixed Allocation Percentage
with respect to the related
Collection Period.............................._____%
(m) The Class A Fixed Percentage
with respect to the related
Collection Period.............................._____%
(n) The Class B Fixed Percentage
with respect to the related
Collection Period.............................._____%
(o) The Collateral Fixed Percentage
with respect to the related
Collection Period.............................._____%
14. Delinquent Balances
The aggregate amount of outstanding balances in the Accounts which
were delinquent as of the end of the day on the last day of the
related Collection Period:
Aggregate Percentage
Account of Total
Balance Receivables
------- -----------
(a) 31 - 60 days: . . $___________ ____%
(b) 61 - 90 days: . . $___________ ____%
(c) 91 - 120 days:. . $___________ ____%
(d) 121 - or more days: $___________ ____%
Total: $___________ ____%
C-4
<PAGE>
15. Investor Default Amount
(a) The Aggregate Investor Default
Amount for the related Monthly
Period......................................$_________
(b) The Class A Investor Default
Amount for the related Monthly
Period......................................$_________
(c) The Class B Investor Default
Amount for the related Monthly
Period......................................$_________
(d) The Collateral Default Amount
for the related Collection Period...........$_________
16. Investor Charge Offs
(a) The aggregate amount of
Class A Investor Charge-Offs
for the related Collection Period...........$_________
(b) The aggregate amount of
Class A Investor Charge-Offs
set forth in 5(a) above per
$1,000 of original Certificate
principal balance...........................$_________
(c) The aggregate amount of Class B
Investor Charge-Offs for the re-
lated Collection Period.....................$_________
(d) The aggregate amount of Class B Investor
Charge-Offs set forth in 5(c) above per
$1,000 of original certificate principal
amount......................................$_________
(e) The aggregate amount of
Collateral Charge-Offs for the
related Collection Period...................$_________
(f) The aggregate amount of
Collateral Charge-Offs set
forth in 5(e) above per $1,000
of original certificate principal
amount......................................$_________
C-5
<PAGE>
(g) The aggregate amount of Class A
Investor Charge-Offs reimbursed
on the Transfer Date immediately
preceding this Distribution Date............$_________
(h) The aggregate amount of Class A Investor
Charge-Offs set forth in 5(g) above per
$1,000 original certificate principal
balance reimbursed on the Transfer Date
immediately preceding this Distribution
Date........................................$_________
(i) The aggregate amount of Class B
Investor Charge-Offs reimbursed
on the Transfer Date immediately
preceding this Distribution Date............$_________
(j) The aggregate amount of Class B Investor
Charge-Offs set forth in 5(i) above per
$1,000 original certificate principal
balance reimbursed on the Transfer Date
immediately preceding this Distribution
Date........................................$_________
(k) The aggregate amount of
Collateral Charge-Offs reimbursed
on the Transfer Date immediately
preceding this Distribution Date............$_________
(l) The aggregate amount of Collateral
Charge-Offs set forth in 5(k) above per
$1,000 original certificate principal amount
reimbursed on the Transfer Date immediately
preceding Distribution Date.................$_________
17. Monthly Investor Servicing Fee
(a) The amount of the Class A
Servicing Fee payable by the
Trust to the Servicer for
the related Collection Period...............$_________
(b) The amount of the Class B
Servicing Fee payable by the
Trust to the Servicer for
C-6
<PAGE>
the related Collection Period...............$_________
(c) The amount of the Collateral
Interest Servicing Fee payable
by the Trust to the Servicer for
the related Collection Period...............$_________
18. Reallocations
(a) The amount of Reallocated
Collateral Principal
Collections with respect to
this Distribution Date......................$_________
(b) The amount of Reallocated
Class B Principal Collections
with respect to this Distri-
bution Date.................................$_________
(c) The Collateral Invested Amount as
of the close of business on
this Distribution Date......................$_________
(d) The Class B Invested Amount
as of the close of business
on this Distribution Date...................$_________
19. Yield Collections
(a) The aggregate amount of Yield Collections
processed during the related Collection
Period which were allocated in respect of
the Class A Certificate.....................$_________
(b) The aggregate amount of Yield Collections
processed during the related Collection
Period which were allocated in respect of
the Class B Certificates....................$_________
(c) The aggregate amount of Yield Collections
processed during the related Collection
Period which were allocated in respect of
the Collateral Investor Interest............$_________
C-7
<PAGE>
20. Principal Funding Amount
(a) The principal amount on
deposit in the Principal
Funding Account on the
related Transfer Date.......................$_________
(b) The Deficit Controlled Accumulation Amount
with respect to the related
Collection Period...........................$_________
(c) The Principal Funding In-
vestment Proceeds deposited
in the Collection Account
on the related Transfer Date................$_________
(d) The amount of all or the portion
of the Reserve Draw Amount deposited
in the Collection Account on the
related Transfer Date from
the Reserve Account.........................$_________
21. Reserve Draw Amount...............................$_________
22. Available Funds
(a) The amount of Class A
Available Funds on deposit
in the Collection Account
on the related Transfer Date................$_________
(b) The amount of Class B
Available Funds on deposit
in the Collection Account
on the related Transfer Date................$_________
(c) The amount of Collateral
Available Funds on deposit in
the Collection Account on
the related Transfer Date...................$_________
FBS CARD SERVICES, INC.
Servicer
By: __________________________
Name:
Title:
C-8
<PAGE>
SCHEDULE TO EXHIBIT C
SCHEDULE TO MONTHLY SERVICER'S CERTIFICATE
COLLECTION PERIOD ENDING _________ __, ____
FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION)
FIRST BANK CORPORATE CARD MASTER TRUST Series 1997-1
1. The aggregate amount of the Investor
Percentage of Principal Collections.....................$_________
2. The aggregate amount of the Investor
Percentage of Yield Collections (excluding Inter
change).................................................$_________
3. The aggregate amount of the Investor
Percentage of Net Interchange...........................$_________
4. The aggregate amount of Servicer
Interchange.............................................$_________
5. The aggregate amount of funds on de-
posit in Collection Account
allocable to the Series 1997-1
Certificates............................................$_________
6. The aggregate amount of funds on
deposit in the Principal Funding
Account allocable to the Series 1997-1
Certificates............................................$_________
7. The aggregate amount to be withdrawn
from the Collection Account and
paid in accordance with the Loan
Agreement pursuant to Section 4.11......................$_________
8. The excess, if any, of the Required
Collateral Invested Amount over the
Collateral Invested Amount..............................$_________
9. The Collateral Invested Amount on the Transfer
Date of the current calendar month,
after giving effect to the deposits and
withdrawals on such Transfer Date is
equal to................................................$_________
10. The amount of Monthly Interest,
Deficiency Amounts and Additional
Interest payable to the
(i) Class A Certificateholders..........................$_________
<PAGE>
(ii) Class B Certificateholders.........................$_________
(iii) Collateral Interest Holder........................$_________
11. The amount of principal payable to the
(i) Class A Certificateholders..........................$_________
(ii) Class B Certificateholders.........................$_________
(iii) Collateral Interest Holder........................$_________
12. The sum of all amounts payable to the
(i) Class A Certificateholders..........................$_________
(ii) Class B Certificateholders.........................$_________
(iii) Collateral Interest Holder........................$_________
13. To the knowledge of the undersigned, no
Early Amortization Event has occurred except as
described below:
None
S-2
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Certificate this ___th day of _________________, ____.
FBS CARD SERVICES, INC.
By: __________________________
Name:
Title:
S-3
