<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 1998
REGISTRATION NO. 333-
=======================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------------
BANK OF AMERICA NATIONAL ASSOCIATION
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME AS SPECIFIED IN REGISTRANT'S CHARTER)
BA MASTER CREDIT CARD TRUST
(ISSUER OF THE CERTIFICATES)
<TABLE>
<S> <C> <C>
UNITED STATES 6025 86-0645265
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
1825 EAST BUCKEYE ROAD
PHOENIX, ARIZONA 85034
(602) 597-3738
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
ROBERT W. LONG, JR.
BANKAMERICA CORPORATION
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-2389
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
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<S> <C> <C>
MARK R. LEVIE, ESQ. ANDREA B. GOLDENBERG, ESQ. JASON H.P. KRAVITT, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE, LLP BANK OF AMERICA NATIONAL MAYER, BROWN & PLATT
OLD FEDERAL RESERVE BANK BUILDING TRUST AND SAVINGS ASSOCIATION 190 SOUTH LASALLE STREET
400 SANSOME STREET 555 SOUTH FLOWER STREET SUITE 3900
SAN FRANCISCO, CALIFORNIA 94111-3143 LOS ANGELES, CALIFORNIA 90071 CHICAGO, ILLINOIS 60603
(415) 392-1122 (213) 228-5678 (312) 782-0600
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this registration statement becomes
effective as determined by market conditions.
If the only securities registered on this form are to be 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. /X/
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, 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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- - - - --------------------------------------------------------------------------------------------------------------------------
Title of each class of Amount to Proposed maximum Proposed maximum Amount of
securities to be registered be offering price per aggregate offering registration
registered certificate* price* fee
- - - - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Certificates........................ $1,000,000 100% $1,000,000 $295
- - - - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Estimated solely for the purpose of calculating the registration fee.
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.
<PAGE> 2
Prospectus
BA MASTER CREDIT CARD TRUST
Issuer
BANK OF AMERICA NATIONAL ASSOCIATION
Transferor and Servicer
ASSET BACKED CERTIFICATES
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 10 IN THIS PROSPECTUS.
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.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of Bank of America or any of its
affiliates.
This prospectus may be used to offer and sell any series of certificates only if
accompanied by the prospectus supplement for that series.
THE TRUST --
- - - - - may periodically issue asset backed certificates in one or more series
with one or more classes; and
- - - - - will own --
- receivables in a portfolio of consumer revolving credit card
accounts;
- payments due on those receivables; and
- other property described in this prospectus and in the
accompanying prospectus supplement.
THE CERTIFICATES --
- - - - - will represent interests in the trust and will be paid only from the
trust assets;
- - - - - offered with this prospectus will be rated in one of the four highest
rating categories by at least one nationally recognized rating
organization;
- - - - - may have one or more forms of enhancement; and
- - - - - will be issued as part of a designated series which may include one or
more classes of certificates and enhancement.
THE CERTIFICATEHOLDERS --
- - - - - will receive interest and principal payments from a varying percentage
of credit card account collections.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________ __, 199__
<PAGE> 3
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents: (a) this prospectus, which provides general information, some of
which may not apply to a particular series of certificates, including your
series, and (b) the accompanying prospectus supplement, which will describe the
specific terms of your series of certificates, including:
- the timing of interest and principal payments;
- financial and other information about the receivables;
- information about enhancement for each class;
- the ratings for each class; and
- the method for selling the certificates.
IF THE TERMS OF A PARTICULAR SERIES OF CERTIFICATES VARY BETWEEN THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN
THE PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus and
the accompanying prospectus supplement including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted. We do not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this prospectus and in the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus are defined under the caption "Index of Terms for Prospectus"
beginning on page 60 in this prospectus.
-----------------
2
<PAGE> 4
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY................................. 5
The Trust And The Trustee........................ 5
Trust Assets..................................... 5
Information About The Receivables................ 5
Collections By The Servicer...................... 6
Allocation Of Trust Assets....................... 6
Interest Payments On The Certificates............ 6
Principal Payments On The Certificates........... 7
Revolving Period............................... 7
Controlled Accumulation Period................. 7
Controlled Amortization Period................. 7
Principal Amortization Period.................. 8
Rapid Accumulation Period...................... 8
Rapid Amortization Period...................... 8
Pay Out Events................................. 8
Shared Excess Finance Charge Collections......... 8
Shared Excess Principal Collections.............. 9
Credit Enhancement............................... 9
Optional Repurchase.............................. 9
Tax Status....................................... 9
ERISA Considerations............................. 9
Certificate Ratings.............................. 9
RISK FACTORS....................................... 10
THE TRUST.......................................... 14
BANK OF AMERICA'S CREDIT CARD ACTIVITIES........... 14
General.......................................... 14
Originations and Underwriting.................... 15
Customer Service................................. 16
Interchange...................................... 16
Competition in the Credit Card Industry.......... 16
THE RECEIVABLES.................................... 17
MATURITY ASSUMPTIONS............................... 17
USE OF PROCEEDS.................................... 18
BANKAMERICA CORPORATION, BANK OF
AMERICA AND BANK OF AMERICA
NATIONAL TRUST AND SAVINGS
ASSOCIATION ..................................... 18
DESCRIPTION OF THE CERTIFICATES.................... 19
General.......................................... 19
Book-Entry Registration.......................... 20
Definitive Certificates.......................... 23
The Transferor Certificate; Additional
Transferors.................................... 24
Interest Payments................................ 24
Principal Payments............................... 25
Transfer and Assignment of Receivables........... 25
New Issuance..................................... 26
Representations and Warranties................... 27
Addition of Trust Assets......................... 29
Removal of Accounts.............................. 30
Collection and Other Servicing Procedures........ 31
Discount Option.................................. 31
Trust Accounts................................... 31
Funding Period................................... 32
Investor Percentage and Transferor
Percentage..................................... 33
Application of Collections....................... 33
Groups of Series................................. 35
Shared Excess Finance Charge Collections......... 35
Shared Excess Principal Collections.............. 36
Paired Series.................................... 36
Defaulted Receivables; Rebates and Fraudulent
Charges; Investor Charge-Offs ................. 36
Defeasance....................................... 37
Final Payment of Principal; Termination.......... 37
Pay Out Events................................... 38
Servicing Compensation and Payment
of Expenses.................................... 39
Certain Matters Regarding the Transferor and the
Servicer ...................................... 40
Servicer Default................................. 41
Reports to Certificateholders.................... 42
Evidence as to Compliance........................ 42
Amendments....................................... 43
List of Certificateholders....................... 44
The Trustee...................................... 44
Certificateholders Have Limited Control
of Actions..................................... 44
CREDIT ENHANCEMENT AND ENHANCEMENT................. 44
General.......................................... 44
Subordination.................................... 45
Letter of Credit................................. 45
Cash Collateral Guaranty or Account.............. 46
Collateral Interest.............................. 46
Surety Bond or Insurance Policy.................. 46
Spread Account................................... 46
Reserve Account.................................. 47
Interest Rate Swaps and Related Caps, Floors and
Collars ....................................... 47
CERTIFICATE RATINGS................................ 47
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES........... 48
Transfer of Receivables.......................... 48
Certain Matters Relating to Receivership......... 49
Consumer Protection Laws......................... 50
FEDERAL INCOME TAX CONSEQUENCES.................... 50
General.......................................... 50
Treatment of the Certificates as Debt............ 51
Treatment of the Trust........................... 51
3
<PAGE> 5
TABLE OF CONTENTS
(continued)
Page
----
Taxation of Interest Income of U.S. Certificate
Owners ........................................ 53
Sale or Exchange of Certificates................. 54
Non-U.S. Certificate Owners...................... 54
Information Reporting and Backup
Withholding.................................... 55
New Withholding Regulations...................... 55
State and Local Taxation......................... 55
ERISA CONSIDERATIONS............................... 55
PLAN OF DISTRIBUTION............................... 57
LEGAL MATTERS...................................... 58
REPORTS TO CERTIFICATEHOLDERS...................... 58
WHERE YOU CAN FIND MORE
INFORMATION...................................... 58
INDEX OF TERMS FOR PROSPECTUS...................... 60
ANNEX I: GLOBAL CLEARANCE,
SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES ...................................... A-1
4
<PAGE> 6
PROSPECTUS SUMMARY
- - - - - THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES
NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING
YOUR INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF AN OFFERING OF
THE CERTIFICATES, READ CAREFULLY THIS ENTIRE DOCUMENT AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT.
- - - - - THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS AND
OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL
DESCRIPTION OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN
THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
THE TRUST AND THE TRUSTEE
The BA Master Credit Card Trust was formed on July 19, 1996 under an agreement
between Bank of America National Association, as transferor and as servicer, and
U.S. Bank National Association, as trustee. The trust is a master trust under
which one or more series will be issued through a series supplement to the
agreement. Any class or series may not be offered by this prospectus; for
example, they may be offered in a private placement. The trust may engage only
in the following activities:
- - - - - acquiring and holding specified assets;
- - - - - issuing and making payments on the certificates and other interests in the
trust; and
- - - - - engaging in related activities.
TRUST ASSETS
Bank of America has transferred to the trust the receivables in certain
MasterCard(R) and VISA(R)* revolving credit card accounts. All new receivables
generated in the accounts will be transferred automatically to the trust. The
total amount of receivables in the trust will fluctuate daily as new receivables
are generated and payments are received on existing accounts. Additional similar
assets may be transferred to the trust. See "The Receivables" and "Description
of the Certificates -- Addition of Trust Assets" in this prospectus.
The trust assets also include payments due on the receivables and other proceeds
of the receivables and of related credit insurance policies including payments
made, or amounts received, on receivables charged-off as uncollectible.
Additional trust assets may include:
- - - - - rights to certain fees Bank of America receives through VISA and
MasterCard, called interchange;
- - - - - monies deposited in certain of the trust's bank accounts and investments
of those monies; and
- - - - - enhancements, including any credit enhancement, guaranteed rate agreement,
maturity liquidity facility, interest rate cap agreement, interest rate
swap agreement, currency swap agreement, or other similar arrangement.
Bank of America may remove, subject to certain limitations and conditions,
receivables that it transferred to the trust. See "Description of the
Certificates -- Removal of Accounts" in this prospectus.
INFORMATION ABOUT THE RECEIVABLES
The receivables arise in accounts selected from Bank of America's credit card
portfolio based on criteria established in the agreement and applied on the date
of their selection.
The receivables consist of both principal receivables and finance charge
receivables.
- - - - --------
* MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and Visa U.S.A., Inc., respectively.
5
<PAGE> 7
Principal receivables are, generally, amounts charged by cardholders for (a)
goods and services and (b) cash advances.
Finance charge receivables are the related finance charges and credit card fees.
Interchange fees collected through MasterCard and VISA and annual membership
fees collected from cardholders generally are treated as collections of finance
charge receivables. See Bank of America's Credit Card Activities -- Interchange"
in this prospectus.
COLLECTIONS BY THE SERVICER
Bank of America services the receivables under the agreement. In limited cases,
Bank of America may resign or be removed and either the trustee or a third party
may be appointed as the new servicer. Bank of America, or any new servicer, is
called the servicer. The servicer receives a servicing fee from the trust for
each series. See "BankAmerica Corporation, Bank of America and Bank of America
National Trust and Savings Association" in this prospectus.
The servicer receives collections on the receivables, deposits those collections
in an account and keeps track of those collections for finance charge
receivables and principal receivables. The servicer then allocates those
collections as summarized below.
ALLOCATION OF TRUST ASSETS
The trust assets will be allocated to the holders of certificates and other
interests of each series. The transferor certificate represents the remaining
interest in the assets of the trust not represented by the certificates and
other interests issued by the trust. If there is more than one class in a
series, there may be a further allocation of trust assets among each class.
The servicer will allocate (a) collections of finance charge receivables and
principal receivables and (b) receivables in accounts charged-off as
uncollectible, to each series based on a varying percentage, called the investor
percentage, as described in the accompanying prospectus supplement.
The aggregate amount of principal receivables allocated to a series establishes
that series's investor interest. The transferor interest will be the aggregate
amount of principal receivables in the trust not allocated to each series.
Certificateholders are only entitled to amounts allocated to their series equal
to the interest and principal payments on their certificates. See "Description
of the Certificates -- General" and "--Investor Percentage and Transferor
Percentage" in this prospectus.
INTEREST PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
interest as described in the accompanying prospectus supplement. If a series of
certificates consists of one or more classes, each class may differ in, among
other things, priority of payments, payment dates, interest rates, method for
computing interest, and rights to enhancement.
Each class of certificates may have a fixed, floating or any other type of
interest rate. Generally, interest will be paid monthly, quarterly,
semi-annually or on other scheduled dates over the life of the certificates,
each called a distribution date.
If interest is paid less frequently than monthly, collections of finance charge
receivables may be deposited monthly in one or more trust accounts and invested
under guidelines established by the rating agencies until paid to
certificateholders. Interest payments for any series of certificates will be
funded from collections of finance charge receivables allocated to the series,
any applicable enhancement and, if and to the extent specified in the
accompanying prospectus supplement, monies earned while collections were
invested pending payment to certificateholders. See "Description of the
Certificates -- Application of Collections," "-- Shared Excess Finance Charge
Collections" and "Credit Enhancement and Enhancement" in this prospectus.
6
<PAGE> 8
PRINCIPAL PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
principal as described in the accompanying prospectus supplement. If a series of
certificates consists of one or more classes, each class may differ in, among
other things, the amounts allocated for principal payments, priority of
payments, payment dates, maturity, and rights to enhancement.
REVOLVING PERIOD
Each class of certificates will begin with a period called a revolving period
during which the trust will not pay, or accumulate, principal for the related
certificateholders. The trust will usually pay available principal to the holder
of the transferor certificate but may pay amounts due to holders of certificates
of other series. The revolving period for a class starts on the date that class
is issued and ends at the start of an amortization period or an accumulation
period.
Following the revolving period, each class of certificates will have one or a
combination of the following periods in which:
- - - - - principal is accumulated in specified amounts and paid on a scheduled date
(this occurs during a controlled accumulation period);
- - - - - principal is paid in fixed amounts at scheduled intervals (this occurs
during a controlled amortization period);
- - - - - principal is paid in varying amounts at scheduled intervals (this occurs
during a principal amortization period);
- - - - - principal is accumulated in varying amounts following certain adverse
events and paid on a scheduled date (this occurs during a rapid
accumulation period);
- - - - - principal is paid in varying amounts each month following certain adverse
events (this occurs during a rapid amortization period).
CONTROLLED ACCUMULATION PERIOD
If a class of certificates has a controlled accumulation period, the trust is
expected to pay available principal to those certificateholders on a date
specified in the accompanying prospectus supplement called the scheduled payment
date. If the series has more than one class, each class may have a different
priority for payment. For a period of time prior to the scheduled payment date,
the trust is scheduled to deposit available principal in a trust account in
specified amounts plus any specified amounts not previously deposited. If
amounts sufficient to pay the investor interest for a class have not been
accumulated by the scheduled payment date for that class, a pay out event will
occur and the rapid amortization period will begin. The controlled accumulation
period for a class starts on a date specified in the accompanying prospectus
supplement and ends when any one of the following occurs:
- - - - - the investor interest for the class is paid in full;
- - - - - a rapid amortization period or, if it applies, a rapid accumulation period
starts; or
- - - - - the latest date by which principal and interest for the series of
certificates can be paid, called the series termination date.
CONTROLLED AMORTIZATION PERIOD
If a class of certificates has a controlled amortization period, the trust will
pay available principal to those certificateholders on each distribution date
during the controlled amortization period in a fixed amount plus any amounts
scheduled but not previously paid. If the series has more than one class, each
class may have a different priority for payment. The controlled amortization
period for a class starts on the date specified in the accompanying prospectus
supplement and ends when any one of the following occurs:
- - - - - the investor interest for the class is paid in full;
- - - - - a rapid amortization period starts; or
- - - - - the series termination date.
7
<PAGE> 9
PRINCIPAL AMORTIZATION PERIOD
If a class of certificates has a principal amortization period, the trust will
pay available principal to those certificateholders on each distribution date
during the principal amortization period on which such certificateholders are
scheduled to receive it. If a series has more than one class, each class may
have a different priority and schedule for payment. The principal amortization
period for a class starts on the date specified in the accompanying prospectus
supplement and ends when any one of the following occurs:
- - - - - the investor interest for the class is paid in full;
- - - - - a rapid amortization period starts; or
- - - - - the series termination date.
RAPID ACCUMULATION PERIOD
If a class of certificates has a controlled accumulation period, it may also
have a rapid accumulation period. During a rapid accumulation period, the trust
will periodically deposit available principal in a trust account prior to the
scheduled payment date. The rapid accumulation period for a class starts as
specified in the accompanying prospectus supplement on a day on or after a
designated pay out event has occurred, but in no event later than the scheduled
payment date, and ends when any one of the following occurs:
- - - - - the investor interest for the class is paid in full;
- - - - - a rapid amortization period starts; or
- - - - - the scheduled payment date.
RAPID AMORTIZATION PERIOD
If a class of certificates is in a rapid amortization period, the trust will pay
available principal to those certificateholders on each distribution date. If
the series has more than one class, each class may have a different priority for
payment. For a class without a rapid accumulation period, the rapid amortization
period starts on the day a pay out event occurs. For a class with a rapid
accumulation period, the rapid amortization period starts as specified in the
accompanying prospectus supplement on a day on or after a pay out event occurs,
but in no event later than the scheduled payment date for that class. The rapid
amortization period ends when any of the following occurs:
- - - - - the investor interest for the class is paid in full;
- - - - - the series termination date; or
- - - - - the trust termination date.
PAY OUT EVENTS
A pay out event for any series of certificates will include certain adverse
events described in the accompanying prospectus supplement, including the
following:
- - - - - certain events of insolvency or receivership relating to the transferor;
- - - - - the transferor is unable to transfer receivables to the trust as required
under the agreement; or
- - - - - The trust becomes an "investment company" under the Investment Company Act
of 1940.
See "Description of the Certificates -- Pay Out Events" in this prospectus.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any series may be included in a shared excess finance charge collections group.
If specified in the accompanying prospectus supplement, to the extent that
collections of finance charge receivables allocated to any series are not needed
for that series, those collections may be applied to certain shortfalls of
another series in the same shared excess finance charge collections group. See
"Description of the Certificates -- Shared Excess Finance Charge Collections"
"-- Application of Collections" and "--Defaulted Receivables; Rebates and
Fraudulent Charges; Investor Charge-Offs" in this prospectus.
8
<PAGE> 10
SHARED EXCESS PRINCIPAL COLLECTIONS
If specified in the accompanying prospectus supplement, to the extent that
collections of principal receivables and certain other amounts that are
allocated to the investor interest for any series are not needed for that
series, those collections may be applied to cover principal payments for another
series in the same group. Any reallocation for this purpose will not reduce the
investor interest for the series to which those collections were initially
allocated. See "Description of the Certificates -- Shared Excess Principal
Collections" in this prospectus.
CREDIT ENHANCEMENT
Each class of a series may be entitled to credit enhancement. Credit enhancement
provides additional payment protection to investors in each class of
certificates that has credit enhancement.
Credit enhancement for the certificates of any class may take the form of one or
more of the following:
- - - - - subordination
- - - - - collateral interest
- - - - - insurance policy
- - - - - cash collateral guaranty or account
- - - - - letter of credit
- - - - - surety bond
- - - - - spread account
- - - - - reserve account
The type, characteristics and amount of any credit enhancement will be:
- - - - - based on several factors, including the characteristics of the receivables
and accounts at the time a series of certificates is issued and
- - - - - established based on the requirements of each rating agency rating one or
more classes of the certificates of that series.
See "Credit Enhancement and Enhancement" and "Certificate Ratings" in this
prospectus.
OPTIONAL REPURCHASE
Bank of America has the option to repurchase any series of certificates once the
investor interest for the series is reduced to 5% or less of the initial
investor interest. See "Description of the Certificates -- Final Payment of
Principal; Termination" in this prospectus.
TAX STATUS
For information concerning the application of the federal income tax laws,
including whether the certificates will be characterized as debt for federal
income tax purposes, see "Federal Income Tax Consequences" in this prospectus
and "Summary of Terms -- Tax Status" in the accompanying prospectus supplement.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus and in the accompanying prospectus supplement, Bank of America
anticipates that the Class A certificates will be eligible for purchase by
persons investing assets of employee benefit plans or individual retirement
accounts.
For reasons discussed under "ERISA Considerations" in this prospectus and the
accompanying prospectus supplement, the Class B certificates are not eligible
for purchase by persons investing assets of employee benefit plans or individual
retirement accounts.
CERTIFICATE RATINGS
Any certificate offered by this prospectus and the accompanying prospectus
supplement will be rated at issuance in one of the four highest rating
categories, excluding subcategory designations, by at least one nationally
recognized rating organization. Any nationally recognized rating organization
selected by the transferor to rate any series is a rating agency.
A rating is not a recommendation to buy, sell or hold securities and may be
revised or withdrawn at any time by the assigning rating agency. Each rating
should be evaluated independently of any other rating.
See "Certificate Ratings" in this prospectus.
9
<PAGE> 11
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the certificates.
LIMITED ABILITY TO
RESELL YOUR CERTIFICATES The underwriters may assist in resales of the
certificates but they are not required to do
so. A secondary market for any certificates
may not develop. If a secondary market does
develop, it might not continue or it might
not be sufficiently liquid to allow you to
resell any of your certificates.
LIMITED OBLIGATIONS The certificates will represent interests in
the trust only and will not represent
interests in or obligations of the
transferor or any affiliate of the
transferor. The transferor's obligations
with respect to the certificates and the
receivables are limited to (i) any
obligations as transferor created pursuant
to the transferor's representations and
warranties with respect to the receivables
and (ii) any obligations as servicer under
the agreement. The certificates are not
deposits and neither the certificates nor
the underlying accounts or receivables are
insured or guaranteed by the Federal Deposit
Insurance Corporation (the "FDIC") or any
other governmental agency. Proceeds of the
assets included in the trust (including the
receivables and any enhancement) will be the
only source of payments on the certificates,
and there will be no recourse to the
transferor or any other entity in the event
that such proceeds are insufficient or
otherwise unavailable to make payments on
the certificates.
POTENTIAL PRIORITY OF
CERTAIN LIENS The transferor has transferred the receivables
to the trust. However, a court could
conclude that the transferor still owns the
receivables and that the trust holds only a
security interest. The transferor has taken
steps to give the trustee a "first priority
perfected security interest" in the
receivables in the event a court concludes
the transferor still owns the receivables.
The holder of a tax or government lien (or
other lien permitted under the law without
the consent of the transferor) on the
transferor's property that attaches before
new receivables come into existence, may
have priority over the trust's interest in
such new receivables. Also, if the
transferor becomes insolvent or enters
bankruptcy and the FDIC is appointed
conservator or receiver of the transferor,
the FDIC's administrative expenses might be
paid from the receivables before the trust
receives any payments on the receivables.
See "Certain Legal Aspects of the
Receivables -- Transfer of Receivables" and
"Description of the Certificates --
Representations and Warranties" in this
prospectus.
POSSIBLE EFFECTS OF INSOLVENCY
OR BANKRUPTCY OF THE TRANSFEROR,
OTHER HOLDER OF TRANSFEROR
CERTIFICATE OR THE SERVICER The FDIC has stated that a security interest
granted by a bank should be respected by the
FDIC where --
- the security interest (a) is validly
perfected before the transferor's
insolvency and (b) was not taken in
contemplation of the transferor's
insolvency or with the intent to hinder,
delay or defraud the transferor or its
creditors.
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FDIC staff positions taken prior to the
passage of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989
("FIRREA") do not suggest that the FDIC
would interrupt the timely transfer to the
trust of payments collected on the
receivables. If the FDIC were to assert a
different position, your payments of
outstanding principal and interest could be
delayed and possibly reduced. For example,
under the Federal Deposit Insurance Act (the
"FDIA"), the FDIC could --
- require the trustee to go through an
administrative claims procedure to
establish its right to those payments;
- request a stay of proceedings with respect
to the transferor; or
- reject the transferor's sales contract and
limit the trust's resulting claim to
"actual direct compensatory damages."
If a conservator or receiver were appointed
for the transferor, then a pay out event
could occur on all outstanding series. Under
the terms of the agreement, new principal
receivables would not be transferred to the
trust and the trustee would sell the
receivables (unless holders of more than 50%
of the investor interest of each class of
outstanding certificates, and anyone else
authorized to vote on those matters in a
series supplement, gave the trustee other
instructions). The trust would then
terminate earlier than was planned and you
could have a loss if the sale of the
receivables produced insufficient net
proceeds to pay you in full. However, the
conservator or receiver may have the
power --
- regardless of the terms of the agreement (a)
to prevent the beginning of a rapid
amortization period (or, if applicable,
rapid accumulation period), (b) to prevent
the early sale of the receivables and
termination of the trust or (c) to require
new principal receivables to continue
being transferred to the trust; or
- regardless of the instructions of those
authorized to direct the trustee's actions
under the agreement (a) to require the
early sale of the receivables, (b) to
require termination of the trust and
retirement of the certificates or (c) to
prohibit the continued transfer of
principal receivables to the trust.
In addition, if a servicer default occurs
solely because a conservator or receiver is
appointed for the servicer, the conservator
or receiver might have the power to prevent
either the trustee or the certificateholders
from appointing a new servicer under the
agreement. See "Certain Legal Aspects of the
Receivables -- Certain Matters Relating to
Receivership" in this prospectus.
TRANSFEROR'S ABILITY TO CHANGE
TERMS OF THE ACCOUNTS AND
POSSIBLE EFFECT ON
CERTIFICATEHOLDERS The transferor transfers the receivables to
the trust but continues to own the accounts.
As owner of the accounts, the transferor
retains the right to change various account
terms (including finance charges and other
fees it charges and the required monthly
minimum payment). A pay out event could
occur if the transferor reduces the finance
charges and other fees it charges and a
corresponding decrease in the collection of
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<PAGE> 13
finance charges and fees results. In
addition, changes in the account terms may
alter payment patterns. If payment rates
decrease significantly at a time when you
are scheduled to receive principal, you
might receive principal more slowly than
planned.
The transferor will not reduce the interest
rate it charges on the receivables or other
fees if that action would result in a pay
out event unless the transferor is required
by law or determines it is necessary to
maintain its credit card business, based on
its good faith assessment of its business
competition.
The transferor will not change the terms of
the accounts or its servicing practices
(including the reduction of the required
minimum monthly payment and the calculation
of the amount or the timing of finance
charges, other fees and charge-offs) unless
the transferor reasonably believes a pay out
event would not occur for any series and
takes the same action on its other
substantially similar accounts, to the
extent permitted by those accounts.
The transferor has no restrictions on its
ability to change the terms of the accounts
except as described above or in the
accompanying prospectus supplement. Changes
in relevant law, changes in the marketplace
or prudent business practices could cause
the transferor to change account terms.
EFFECTS OF CONSUMER PROTECTION
LAWS ON CERTIFICATEHOLDERS Federal and state consumer protection laws
regulate the creation and enforcement of
consumer loans. Congress and the states
could further regulate the credit card and
consumer credit industry in ways that make
it more difficult for the servicer to
collect payments on the receivables or that
reduce the finance charges and other fees
that the transferor can charge on credit
card account balances. For example, if the
transferor were required to reduce its
finance charges and other fees, resulting in
a corresponding decrease in the accounts'
effective yield, this could lead to a pay
out event, resulting in the payment of
principal sooner than expected. See
"Description of the Certificates -- Pay Out
Events" in this prospectus.
The transferor makes representations and
warranties relating to the validity and
enforceability of the receivables. Subject
to certain conditions described under
"Description of the Certificates --
Representations and Warranties" in this
prospectus, the transferor must accept
reassignment of each receivable that does
not comply in all material respects with all
requirements of applicable law. However, we
do not anticipate that the trustee will make
any examination of the receivables or the
related records for the purpose of
determining the presence or absence of
defects, compliance with representations and
warranties, or for any other purpose. The
only remedy if any representation or
warranty is violated, and the violation
continues beyond the period of time the
transferor has to correct the violation, is
that the transferor must accept reassignment
of the receivables affected by the violation
(subject to certain conditions described
under "Description of the Certificates --
Representations and Warranties" in this
prospectus). See also "Certain Legal Aspects
of the Receivables -- Consumer Protection
Laws" in this prospectus.
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<PAGE> 14
If a cardholder sought protection under
federal or state bankruptcy or debtor relief
laws, a court could reduce or discharge
completely the cardholder's obligations to
repay amounts due on its Account and, as a
result, the related receivables would be
charged-off as uncollectible. The
certificateholders could suffer a loss if
insufficient funds are available from credit
enhancement or other sources. See
"Description of the Certificates --
Defaulted Receivables; Rebates and
Fraudulent Charges; Investor Charge-Offs" in
this prospectus.
TIMING OF PRINCIPAL PAYMENTS The receivables may be paid at any time. We
cannot assure the creation of additional
receivables in the accounts or that any
particular pattern of cardholder payments
will occur. The commencement and
continuation of a revolving period, a
controlled amortization period, a principal
amortization period or a controlled
accumulation period for a series or class of
that series depend 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 a pay out event for one
or more series and the commencement of the
rapid amortization period or, if applicable,
the rapid accumulation period for each of
those series. If a pay out event occurs, you
could receive payment of principal sooner
than expected. The transferor's ability to
compete in the current industry environment
will affect its ability to generate new
receivables and might also affect payment
patterns on the receivables. In addition,
changes in finance charges can alter the
monthly payment rates of cardholders. A
significant decrease in monthly payment
rates could slow the return or accumulation
of principal during an amortization period
or accumulation period. See "Maturity
Assumptions" in this prospectus.
EFFECT OF SUBORDINATION ON
SUBORDINATED CERTIFICATEHOLDERS Where one or more classes in a series are
subordinated, principal payments on the
subordinated class or classes generally will
not begin until the senior class or classes
are repaid. Additionally, if collections of
finance charge receivables allocated to a
series are insufficient to cover amounts due
for that series's senior certificates, the
investor interest for the subordinated
certificates might be reduced. This would
reduce the amount of the collections of
finance charge receivables available to the
subordinated certificates in future periods
and could cause a possible delay or
reduction in principal and interest payments
on the subordinated certificates. If
receivables had to be sold, the net proceeds
of that sale available to pay principal
would be paid first to senior
certificateholders and any remaining net
proceeds would be paid to the subordinated
certificateholders.
RISKS RELATING TO RECEIVABLES IN
DEFAULTED ACCOUNTS Each class of certificates will be allocated a
portion of the receivables charged-off as
uncollectible. See "Description of the
Certificates -- Allocation Percentages" and
"Bank of America's Credit Card Activities --
Delinquency and Loss Experience" in the
accompanying prospectus supplement. If the
amounts of receivables charged-off as
uncollectible that are allocated to any
certificates exceed the amounts available to
cover them, which could occur if the limited
amount of credit enhancement is reduced to
zero, those certificateholders may not
receive the full amount of principal and
interest due to them. See "Description of
the Certificates -- Reallocation of Cash
Flows,"
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<PAGE> 15
"-- Application of Collections"
and "-- Defaulted Receivables; Investor
Charge-Offs" in the accompanying
prospectus supplement.
BASIS RISK Some accounts may have finance charges set at
a variable rate based on a designated index
(for example, the prime rate). A series of
certificates may bear interest either at a
fixed rate or at a floating rate based on a
different index. If the rate charged on the
accounts declines, collections of finance
charge receivables may be reduced without a
corresponding reduction in the amounts
payable as interest on the certificates and
other amounts paid from collections of
finance charge receivables.
EFFECTS ON CERTIFICATEHOLDERS OF
ISSUANCE OF ADDITIONAL SERIES
BY THE TRUST The trust has issued other series of
certificates and is expected to issue
additional series from time to time. The
trust may issue additional series with terms
that are different from your series without
the prior review or consent of any
certificateholders. It is a condition to the
issuance of each new series that each rating
agency that has rated an outstanding series
confirm in writing that the issuance of the
new series will not result in a reduction or
withdrawal of its then current rating of
such outstanding series. However, the terms
of a new series could affect the timing and
amounts of payments on any other outstanding
series.
THE TRUST
The BA Master Credit Card Trust (the "Trust") has been formed in
accordance with the laws of the State of New York pursuant to the Agreement. The
Trust will not engage in any business activity other than acquiring and holding
Receivables, issuing Series (each, a "Series") of asset backed certificates (the
"Certificates"), Supplemental Certificates and the Transferor Certificate,
making payments thereon and engaging in related activities (including, with
respect to any Series, obtaining any Enhancement, including any Credit
Enhancement, guaranteed rate agreement, maturity liquidity facility, interest
rate cap agreement, interest rate swap agreement, currency swap agreement, or
other similar arrangement ("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 and
there is no reasonable potential for such need to develop. Furthermore, no such
additional capital resources will be available.
BANK OF AMERICA'S CREDIT CARD ACTIVITIES
GENERAL
On December 1, 1994, Bank of America National Trust and Savings
Association ("Bank of America NT&SA") transferred its credit card accounts and
certain related assets to Bank of America National Association ("Bank of
America"). A selected portion of these transferred accounts initially
constituted the accounts within the Trust. The receivables (the "Receivables")
which Bank of America has conveyed and will convey to the Trust pursuant to the
pooling and servicing agreement (as amended from time to time, the "Agreement")
between Bank of America, as transferor (the "Transferor") and as servicer (the
"Servicer"), and U.S. Bank National Association (formerly known as First Bank
National Association), as Trustee (the "Trustee"), have been generated from
transactions made by cardholders of VISA Classic and VISA Gold credit card
accounts and Standard MasterCard and Gold MasterCard credit card accounts. Bank
of America is a member of VISA U.S.A. Inc. and of MasterCard International
Incorporated.
The following discussion relates to the accounts in the Identified Pool
from which the Accounts were selected. The Eligible Accounts from which the
Accounts were selected do not necessarily represent the Identified Pool. In
addition, Additional Accounts may consist of Eligible Accounts which are not
currently in existence and which may
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<PAGE> 16
be selected using different criteria from those used in selecting the Accounts
already included in the Trust. See "Description of the Certificates - Addition
of Trust Assets." Consequently, actual loss and delinquency, revenue and monthly
payment rate experience with respect to the Eligible Accounts may be different
from that experienced by the Trust Portfolio and the Identified Pool described
in the Prospectus Supplement.
The VISA and MasterCard credit card accounts may be used, and amounts
charged by cardholders for goods and services and cash advances ("Principal
Receivables") may be created, in four types of transactions: credit card
purchases, cash advances, overdraft protection, and in certain cases,
consolidation of outstanding balances of other credit card accounts.
Each cardholder is subject to an agreement with Bank of America governing
the terms and conditions of the related VISA or MasterCard credit card account.
Pursuant to each such agreement, Bank of America reserves the right, subject to
such notice to the cardholder as may be required by law, to add to or change the
terms of its VISA or MasterCard credit card accounts at any time, including,
without limitation, increasing or decreasing the periodic finance charges, or
other charges, or the minimum monthly payment requirements.
The credit evaluation, collection, and charge-off policies and servicing
practices of Bank of America, as well as the terms and conditions governing
cardholder agreements in effect as of the date hereof, are under continuous
review by Bank of America and may change at any time in accordance with Bank of
America's business judgment, applicable law and guidelines established by
regulatory authorities.
Transactions creating the Receivables through the use of the credit cards
are processed through the VISA and MasterCard systems. If either system
materially curtails its activities, or if Bank of America ceases to be a member
of VISA or MasterCard, for any reason, a Pay Out Event could occur, and delays
in payments on the Receivables and possible reductions in the amounts thereof
could occur.
The Accounts within the Trust are currently serviced by Bank of America.
However, Bank of America has delegated the data processing services relating to
all of the Accounts, to Total System Services, Inc ("TSYS") in Columbus,
Georgia. TSYS is a credit, debit and private-label card processing company.
Under this delegation, TSYS provides a variety of data processing services to
Bank of America, including processing credit slips (drafts), cash advances and
accountholder purchases for merchants. Additionally, TSYS stores customer's data
files, updates master files daily, and provides master file tapes monthly, makes
billing statement calculations, creates statement files, handles the daily
posting of transactions to the accounts and handles the daily settlements with
MasterCard and VISA.
ORIGINATIONS AND UNDERWRITING
Credit card accounts are generated by Bank of America principally through:
(1) applications made available to prospective cardholders through a network of
branches operated by Bank of America's affiliated banks; (2) direct-mail
solicitations on a non-prescreened basis; (3) applications mailed to customers
of Bank of America's affiliates; (4) pre-approved direct-mail solicitations of
individuals who were prescreened at credit bureaus on the basis of criteria
furnished by Bank of America; (5) consumer-initiated requests; and (6) the
acquisition of credit card portfolios from other financial institutions.
When originating accounts, Bank of America is subject to the Corporation's
credit policy guidelines which govern lending activities at all Corporation
subsidiaries. The Corporation's credit policy has addressed guiding principles,
basic rules, policies, and special requirements to which all Corporation
subsidiaries have been held accountable. Bank of America's ongoing compliance
with the Corporation's credit policy and governing laws and regulations is
frequently reviewed by internal compliance specialists, the Corporation's
auditors and external auditors, and regulatory agency personnel.
Bank of America's national direct-mail solicitation process begins with a
prescreening review to identify creditworthy consumers for a credit card
account. As part of the prescreening process, Bank of America provides a set of
credit history criteria to credit reporting agencies, which in turn generate a
list of prospective cardholders with desired attributes. Bank of America further
refines the list by applying its internal underwriting criteria. These
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<PAGE> 17
additional criteria are applied using risk analysis and other statistical models
designed to predict the potential credit risk of prospective cardholders.
In the case of an application which is not pre-approved, the credit risk
of the applicant is evaluated with a credit scoring system, intended to provide
a general indication, based on the information available, of the applicant's
willingness and ability to repay his or her obligations. Each application is
scored and evaluated based jointly on information reported on the application
and by independent credit reporting agencies.
Before purchasing a portfolio of credit card accounts from another
financial institution, Bank of America reviews the historical performance and
seasoning of the portfolio and the policies and practices of the other financial
institution. Bank of America, however, does not requalify individual accounts
within the acquired portfolio. There can be no assurance, therefore, that
accounts so acquired have been originated in a manner consistent with Bank of
America's policies or that the underwriting and qualification of such accounts
conformed with prudent underwriting and qualification standards. However,
following the acquisition of a portfolio of credit card accounts, Bank of
America services and maintains such acquired accounts consistent with Bank of
America's policies and practices.
The initial credit line of any account originated by Bank of America is
based on, among other things, each consumer's credit profile, level of existing
and potential indebtedness relative to assumed income and estimated income, and
demographic data. Cardholder requests for credit line increases are evaluated by
Bank of America based on current credit bureau reports, updated application
data, and prior account performance. In addition, Bank of America periodically
increases and decreases credit lines for cardholders meeting specific criteria.
Each Account is subject to an agreement governing the terms and conditions
of the Accounts. In that agreement, Bank of America reserves the right to change
or terminate any terms, conditions, services or features of an Account
(including, without limitation, increasing or decreasing monthly periodic
finance charges, other fees or minimum payments).
CUSTOMER SERVICE
Customer service representatives are available seven days a week.
Technologies, such as voice-response units for incoming calls, together with
multiple tracking and reporting systems, are employed as part of Bank of
America's effort to ensure that service standards are achieved and maintained.
INTERCHANGE
Creditors participating in the VISA and MasterCard associations receive
certain fees from VISA and MasterCard ("Interchange") as partial compensation
for taking credit risk, absorbing fraud losses and funding receivables for a
limited period prior to initial billing. Under the VISA and MasterCard systems,
a portion of this Interchange, in connection with cardholder charges for goods
and services, is passed from banks which clear the transactions for merchants to
credit card issuing banks. Interchange fees are set annually by MasterCard and
VISA and are based on the number of credit card transactions and the amount
charged per transaction. The Transferor may be required, as described in the
accompanying Prospectus Supplement (the "Prospectus Supplement"), to transfer to
the Trust a percentage of the Interchange attributable to cardholder charges for
goods and services in the related Accounts. If so required to be transferred,
Interchange arising under the Accounts will be allocated to the related
Certificates of any Series in the manner provided in the accompanying Prospectus
Supplement, and, unless otherwise provided in the accompanying Prospectus
Supplement, will be treated as collections of Finance Charge Receivables and
will be used to pay required monthly payments including interest on the related
Series of Certificates, and, in some cases, to pay all or a portion of the fee
(the "Servicing Fee") paid to the Servicer as servicing compensation.
COMPETITION IN THE CREDIT CARD INDUSTRY
The credit card industry is highly competitive. As new credit card
companies enter the market and all companies try to expand their market share,
effective advertising, target marketing and pricing strategies grow in
importance. Bank of America's ability to compete in this industry environment
will affect its ability to generate new Receivables and might also affect
payment patterns on the Receivables. If the rate at which Bank of America
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<PAGE> 18
generates new Receivables declines significantly, Bank of America might be
unable to designate additional Accounts to the Trust and a Pay Out Event could
occur, resulting in payment of principal sooner than expected. If the rate at
which Bank of America generates new Receivables decreases significantly at a
time when Certificateholders are scheduled to receive principal,
Certificateholders might receive principal more slowly than planned.
THE RECEIVABLES
The Receivables conveyed to the Trust will arise in the credit card
accounts (the "Accounts`") selected from a sub-set of MasterCard and VISA
accounts identified by the Transferor (such sub-set as identified from time to
time, the "Identified Pool") from among all MasterCard and VISA accounts owned
by the Transferor (the "Bank Portfolio"). The Accounts were selected on the
basis of criteria set forth in the Agreement as applied on the date (the
"Cut-Off Date") specified in the accompanying Prospectus Supplement and, with
respect to Additional Accounts, as of the date of their designation
(collectively, 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
eligible revolving credit card accounts to be included as Accounts (the
"Additional Accounts") and to transfer to the Trust all Receivables of such
Additional Accounts, whether such Receivables are then existing or thereafter
created, or to transfer to the Trust, Participations in lieu of such Receivables
or in addition thereto. Any Additional Accounts designated pursuant to the
Agreement must be Eligible Accounts as of the date the Transferor designates
such accounts as Additional Accounts. Furthermore, pursuant to the Agreement,
the Transferor has the right (subject to certain limitations and conditions) to
designate certain Accounts and to require the Trustee to reconvey all
Receivables in such Accounts (the "Removed Accounts") to the Transferor, whether
such Receivables are then existing or thereafter created. Throughout the term of
the Trust, the related Accounts from which the Receivables arise will be the
Accounts designated by the Transferor on the relevant Cut-Off Date plus any
Additional Accounts minus any Removed Accounts. With respect to each Series of
Certificates, the Transferor will represent and warrant to the Trust that, as of
the date of issuance of the related Series (the "Closing Date") and the date
Receivables are conveyed to the Trust, such Receivables meet certain eligibility
requirements. See "Description of the Certificates -- Representations and
Warranties" in this Prospectus.
The Prospectus Supplement relating to each Series of Certificates will
provide certain information about the Trust Portfolio as of the date specified.
Such information will include, but not be limited to, the amount of Principal
Receivables, the amount of related charges and credit card fees ("Finance Charge
Receivables"), the range of principal balances of the Accounts and the average
thereof, the range of credit limits of the Accounts and the average thereof, the
range of ages of the Accounts and the average thereof, the geographic
distribution of the Accounts, the types of Accounts and delinquency statistics
relating to the Accounts.
MATURITY ASSUMPTIONS
For each Series, following the Revolving Period, collections of Principal
Receivables are expected to be distributed to the holders of each Class of
Certificates (the "Certificateholders") of such Series or any specified class
(each, a "Class") thereof on each specified distribution date (each, a
"Distribution Date") during either a period called the "Controlled Amortization
Period" or a period called the "Principal Amortization Period", or are expected
to be accumulated for payment to Certificateholders of such Series or any
specified Class thereof during a period called the "Controlled Accumulation
Period" and, under certain limited circumstances if so specified in the
accompanying Prospectus Supplement, a period called the "Rapid Accumulation
Period" (each, an "Accumulation Period") and distributed on a payment date
specified in the accompanying Prospectus Supplement (a "Scheduled Payment
Date"); provided, however, that, if the Rapid Amortization Period commences,
collections of Principal Receivables will be paid to Certificateholders in the
manner described in this Prospectus and in the accompanying Prospectus
Supplement. The accompanying Prospectus Supplement specifies when the Controlled
Amortization Period, the Principal Amortization Period or an Accumulation
Period, as applicable, will commence, the principal payments expected or
available to be received or accumulated during such Controlled Amortization
Period, Principal Amortization Period or Accumulation Period, or on the
Scheduled Payment Date, as applicable, the manner and priority of principal
accumulations and payments among the Classes of a Series of Certificates, the
payment rate assumptions on which such expected principal accumulations and
payments are based and the Pay Out
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Events which, if any were to occur, would lead to the commencement of a Rapid
Amortization Period or, if so specified in the accompanying Prospectus
Supplement, a Rapid Accumulation Period.
No assurance can be given, however, that the Principal Receivables
allocated to be paid to Certificateholders or the holders of any specified Class
thereof will be available for distribution or accumulation for payment to
Certificateholders on each Distribution Date during the Controlled Amortization
Period, the Principal Amortization Period or an Accumulation Period, or on the
Scheduled Payment Date, as applicable. In addition, the Transferor can give no
assurance that the payment rate assumptions for any Series will prove to be
correct. The accompanying Prospectus Supplement will provide certain historical
data relating to payments by cardholders, total charge-offs and other related
information relating to the Identified Pool and the Trust Portfolio, as
applicable. There can be no assurance that future performance will be consistent
with such historical data.
Cardholders' use of credit and payment patterns may change due to seasonal
variations, the payment habits of individual cardholders, and in response to a
variety of social, technological, legal and economic factors. As a result, the
amount of collections of Receivables may vary from month to month. Relevant
economic factors include the rate of inflation, unemployment levels and relative
interest rates. While the addresses of the cardholders in the portfolio suggest
a wide geographic distribution, the Transferor is unable to determine the extent
to which these factors may affect future credit use or payment patterns. There
can be no assurance that collections of Principal Receivables with respect to
the Trust Portfolio, and thus the rate at which the related Certificateholders
could expect to receive or accumulate payments of principal on their
Certificates during an Amortization Period or Accumulation Period, or on any
Scheduled Payment Date, as applicable, will be similar to any historical
experience set forth in the accompanying Prospectus Supplement. If a Pay Out
Event occurs and the Rapid Amortization Period commences, the average life and
maturity of such Series of Certificates could be significantly reduced.
Because, for any Series of Certificates, there may be a slowdown in the
payment rate below the payment rate used to determine the amount of collections
of Principal Receivables scheduled or available to be distributed or accumulated
for later payment to Certificateholders or any specified Class thereof during a
Controlled Amortization Period, a Principal Amortization Period or a Rapid
Amortization Period (each, an "Amortization Period") or an Accumulation Period
or on any Scheduled Payment Date, as applicable, or a Pay Out Event may occur
which could initiate the Rapid Amortization Period, there can be no assurance
that the actual number of months elapsed from the date of issuance of such
Series of Certificates to the final Distribution Date with respect to the
Certificates will equal the expected number of months.
USE OF PROCEEDS
The net proceeds from the sale of each Series of Certificates offered hereby
will be paid to the Transferor. The Transferor will use such proceeds for its
general corporate purposes or for such other purpose specified in the
accompanying Prospectus Supplement.
BANKAMERICA CORPORATION, BANK OF AMERICA AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
BankAmerica Corporation (the "Corporation") is a multi-bank holding
company formed in connection with the merger of NationsBank Corporation, a North
Carolina corporation ("NationsBank") and the former BankAmerica Corporation, a
Delaware corporation ("BAC") pursuant to an Agreement and Plan of Reorganization
dated as of April 10, 1998 (the "Merger Agreement"). Pursuant to the Merger
Agreement, (i) NationsBank formed a new Delaware subsidiary ("NationsBank (DE)")
and merged (the "Reincorporation Merger") with and into NationsBank (DE), with
NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and
(ii) BAC thereafter merged (the "Merger," and together with the Reincorporation
Merger, the "Reorganization") with and into NationsBank (DE), with NationsBank
(DE) as the surviving Corporation in the Merger. The Merger was consummated on
September 30, 1998. Through its subsidiaries, the Corporation provides diverse
banking and other financial services to individuals, businesses and corporate,
institutional and governmental clients across the United States and around the
world.
Bank of America is a wholly-owned subsidiary of the Corporation. Bank
of America was formed in 1989 and is headquartered in Phoenix, Arizona. Bank of
America is a national bank organized under the laws of the
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United States and regulated primarily by the Office of the Comptroller of the
Currency. Bank of America's activities are primarily related to credit card
lending.
Bank of America NT&SA, a wholly-owned subsidiary of the Corporation,
was formed in 1904. On December 1, 1994, Bank of America NT&SA transferred its
credit card accounts and certain related assets to Bank of America. A selected
portion of these transferred accounts initially constituted the Accounts within
the Trust.
The Prospectus Supplement for each Series of Certificates contains
additional information, including financial information, relating to the
Corporation and Bank of America.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued in Series. Each Series will represent an
interest in the Trust other than the interests represented by any other Series
of Certificates issued by the Trust (which may include Series offered pursuant
to this Prospectus) and the Transferor Certificate. The "Transferor Certificate"
represents the remaining interest in the assets of the Trust not represented by
the Certificates and other interests issued by the Trust. Each Series will be
issued pursuant to the Agreement entered into by Bank of America and the Trustee
and a series supplement to the Agreement (a "Series Supplement"), a copy of the
form of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The following summaries describe certain provisions common
to each Series of Certificates. The summaries do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of the
provisions of the Agreement and Series Supplement.
GENERAL
The Certificates of each Series will represent interests in certain assets
of the Trust, including the right to the applicable "Investor Percentage," as
described in the accompanying Prospectus Supplement, of all cardholder payments
on the Receivables in the Trust. For each Series of Certificates, the aggregate
amount of Principal Receivables allocated to such Series establishes that
Series' "Investor Interest." The Investor Interest on any date generally will be
equal to the initial Investor Interest as of the related Closing Date for such
Series (increased by the principal balance of any Certificates of such Series
issued after the Closing Date for such Series) minus the amount of principal
paid to the related Certificateholders prior to such date and minus the amount
of unreimbursed Investor Charge-Offs with respect to such Certificates prior to
such date, except that the Investor Interest of any pre-funded Series may
increase upon the transfer of additional Principal Receivables to the Trust or
the reduction of the Investor Interest or the Adjusted Investor Interest of
another Series. If so specified in the Prospectus Supplement relating to any
Series of Certificates, under certain circumstances the Investor Interest may be
further adjusted by the amount of principal allocated to Certificateholders, the
funds on deposit in any specified account, and any other amount specified in the
accompanying Prospectus Supplement.
Each Series of Certificates may consist of one or more Classes, one or more
of which may be Senior Certificates ("Senior Certificates") and one or more of
which may be Subordinated Certificates ("Subordinated Certificates"). Each Class
of a Series will evidence the right to receive a specified portion of each
distribution of principal or interest or both. The Investor Interest with
respect to a Series with more than one Class will be allocated among the Classes
as described in the accompanying Prospectus Supplement. The Certificates of a
Class may differ from Certificates of other Classes of the same Series in, among
other things, the amounts allocated to principal payments, maturity date,
interest rate per annum ("Certificate Rate") and the availability of
Enhancement.
For each Series of Certificates, payments or deposits of interest and
principal will be made on Distribution Dates specified in the accompanying
Prospectus Supplement to Certificateholders in whose names the Certificates were
registered on the record dates (each, a "Record Date") or otherwise as specified
in the accompanying Prospectus Supplement. Interest will be distributed to
Certificateholders in the amounts, for the periods and on the dates specified in
the accompanying Prospectus Supplement.
For each Series of Certificates, the Transferor initially will own the
Transferor Certificate. The Transferor Certificate will represent the undivided
interest in the Trust not represented by the Certificates issued and outstanding
under the Trust or the rights, if any, of any Credit Enhancement Providers to
receive payments from the Trust. The holder of the Transferor Certificate will
have the right to a percentage (the "Transferor Percentage") of all
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cardholder payments from the Receivables in the Trust. If provided in the
Agreement and the accompanying Prospectus Supplement, the Transferor Certificate
may be transferred in whole or in part subject to certain limitations and
conditions set forth therein. See "-- Certain Matters Regarding the Transferor
and the Servicer" in this Prospectus.
Unless otherwise specified in the accompanying Prospectus Supplement, with
respect to each Series of Certificates, during the period beginning on the
Closing Date and ending with the commencement of an Amortization Period or an
Accumulation Period (the "Revolving Period"), the amount of the Investor
Interest in the Trust will remain constant except under certain limited
circumstances. See "Description of the Certificates -- Defaulted Receivables;
Rebates and Fraudulent Charges; Investor Charge-Offs" in this Prospectus. The
amount of Principal Receivables in the Trust, however, will vary each day as new
Principal Receivables are created and others are paid. The "Transferor Interest"
is the aggregate amount of Principal Receivables in the Trust not allocated to
each Series. The amount of the Transferor Interest will fluctuate each day,
therefore, to reflect the changes in the amount of the Principal Receivables in
the Trust. When a Series is amortizing, the Investor Interest of such Series
will decline as customer payments of Principal Receivables are collected and
distributed to or accumulated for distribution to the Certificateholders. As a
result, the Transferor Interest will generally increase to reflect reductions in
the Investor Interest for such Series and will also change to reflect the
variations in the amount of Principal Receivables in the Trust. The Transferor
Interest in the Trust may also be reduced as the result of a new issuance of a
Series of Certificates (a "New Issuance"). See "-- New Issuance" in this
Prospectus.
Unless otherwise specified in the accompanying Prospectus Supplement,
Certificates of each Series initially will be represented by certificates
registered in the name of the nominee of The Depository Trust Company "DTC"
(together with any successor depository selected by the Transferor, the
"Depository") except as set forth below. Unless otherwise specified in the
accompanying Prospectus Supplement, with respect to each Series of Certificates,
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. & Co. ("Cede") Accordingly, Cede is expected to be the holder of record of
each Series of Certificates. No owner of beneficial interests in the
Certificates (a "Certificate Owner") acquiring an interest in the Certificates
will be entitled to receive a certificate representing such person's interest in
the Certificates. Unless and until Definitive Certificates are issued for any
Series under the limited circumstances described in this Prospectus, all
references in this Prospectus to actions by Certificateholders shall refer to
actions taken by DTC upon instructions from its Participants (as defined below).
In addition, unless and until Certificates in fully registered, certificated
form ("Definitive Certificates") are issued for any Series. The Trustee will not
consider a Certificate Owner to be a Certificateholder (as that term is used in
the Agreement) and all references in this Prospectus 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. Therefore, until such time, a Certificate Owner
will only be able to exercise its rights as a Certificateholder, indirectly
through DTC, Cedel Bank, societe anonyme ("Cedel") or the Euroclear System and
their participating organizations. See "-- Book-Entry Registration" and
"-- Definitive Certificates" in this Prospectus.
If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Certificates of such Series, or all or a
portion of any Class thereof, on the Luxembourg Stock Exchange or any other
specified exchange.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the accompanying Prospectus Supplement, with
respect to each Series of Certificates, Certificateholders may hold their
Certificates through DTC (in the United States) or Cedel or Euroclear (in
Europe) 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' securities accounts
in Cedel's and Euroclear's names on the books of their respective depositaries
(collectively, the "Depositaries")
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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 Securities
Exchange Act of 1934, as amended (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 Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers (who may include the underwriters of any Series),
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").
DTC management is aware that some computer applications and systems used for
processing data were written using two digits rather than four to define the
applicable year, and therefore may not recognize a date using "00" as the Year
2000. This could result in the inability of these systems to properly process
transactions with dates in the Year 2000 and thereafter. DTC has developed and
is implementing a program to address this problem so that its applications and
systems relating to the payment of distributions (including principal and income
payments) to securityholders, book-entry deliveries and settlement of trades
within DTC continue to function properly. This program includes a technical
assessment and a remediation plan, each of which is complete. DTC plans to
implement a testing phase of this program which is expected to be completed
within appropriate time frames.
In addition, DTC is contacting (and will continue to contact) third party
vendors that provide services to DTC to determine the extent of their Year 2000
compliance, and DTC will develop contingency plans as it deems appropriate to
address failures in Year 2000 compliance on the part of third party vendors.
However, there can be no assurance that the systems of third party vendors will
be timely converted and will not adversely affect the proper functioning of
DTC's services.
The information set forth in the preceding two paragraphs has been provided
by DTC for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind. The Transferor
makes no representations as to the accuracy or completeness of such information.
Transfers between 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, 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 of securities in Cedel or
Euroclear as a result of a transaction with a 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.
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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 Participants which thereafter will forward them to
Indirect Participants or Certificate Owners. It is anticipated that the only
holder of the Certificates (a "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.
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 the 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 Investor Interest only at the direction
of and on behalf of Participants whose holdings include interests that satisfy
such specified percentages. DTC may take conflicting actions with respect to
other interests to the extent that such actions are taken on behalf of
Participants whose holdings include such interests.
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 in Cedel in any of 34
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 regulation 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 of any Series of Certificates.
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 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 34 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in more than 25 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, Societe Cooperative, 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
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Cooperative. The Cooperative Board establishes policy for the Euroclear System.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include the underwriters of any Series of Certificates. Indirect access to the
Euroclear System is also available to other firms that maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
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 (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.
See "Federal Income Tax Consequences" in this Prospectus. 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
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" in this
Prospectus.
DEFINITIVE CERTIFICATES
Unless otherwise specified in the accompanying Prospectus Supplement, the
Certificates of each Series will be issued as Definitive Certificates in fully
registered, certificated form to Certificate Owners or their nominees rather
than to DTC or its nominee, only if (i) the Transferor advises the Trustee for
such Series in writing that DTC is no longer willing or able to discharge
properly its responsibilities as Depository with respect to such Series of
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% (or such other percentage specified in the accompanying Prospectus
Supplement) of the Investor Interest 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 in this Prospectus and in the Agreement. Interest
payments and any principal payments on each Distribution Date will be made to
Holders in whose names the
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Definitive Certificates were registered at the close of business on the related
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, except that
distributions made with respect to Certificates registered in the name of the
nominee of a clearing agency will be made in immediately available funds. 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. The
Transfer Agent and Registrar shall not be required to register the transfer or
exchange of Definitive Certificates for a period of fifteen days preceding the
due date for any payment with respect to such Definitive Certificates.
THE TRANSFEROR CERTIFICATE; ADDITIONAL TRANSFERORS
The Agreement provides that the Transferor may instruct the Trustee to issue
one or more additional certificates (each, a "Supplemental Certificate") which,
together with the Transferor Certificate, will represent the Transferor
Interest. Each Supplemental Certificate will be issued to a person designated by
the Transferor upon the execution and delivery of a supplement to the Agreement
(which supplement will be subject to the amendment section of the Agreement to
the extent that it amends any of the terms of the Agreement; see "-- Amendments"
in this Prospectus); provided, however, that (a) the Transferor shall have given
written notice to each nationally recognized rating organization selected by the
Transferor to rate any Series (each, a "Rating Agency") of the issuance of such
Supplemental Certificate, (b) the Transferor Interest (excluding the interest
represented by any Supplemental Certificate) shall not be less than 2% of the
total amount of Principal Receivables as of the date of, and after giving effect
to, such issuance and (c) if any Series of Certificates are outstanding that
were characterized as debt at the time of their issuance, the Transferor shall
have delivered to the Trustee and each Rating Agency an opinion of counsel,
dated the date of such transfer, to the effect that such transfer does not
adversely affect the conclusions reached in any of the Tax Opinions delivered in
connection with the issuance of any applicable Series of Certificates. Any
transfer of a Supplemental Certificate is subject to the condition set forth in
clause (b) above.
Bank of America may designate affiliates of Bank of America to be included
as a Transferor (each, an "Additional Transferor") under the Agreement (by means
of an amendment to the Agreement that will not require the consent of any
Certificateholder; see "-- Amendments" in this Prospectus) and, in connection
with such designation, the Transferor shall surrender the Transferor Certificate
to the Trustee in exchange for a newly issued Transferor Certificate modified to
reflect such Additional Transferor's interest in the Transferor Interest;
provided, however, that (i) the conditions set forth in the preceding paragraph
with respect to the issuance of a Supplemental Certificate shall have been
satisfied with respect to such designation and exchange and (ii) any applicable
condition described in "-- Addition of Trust Assets" in this Prospectus shall
have been satisfied with respect to the transfer of Receivables or
Participations by any Additional Transferor to the Trust. Following the
inclusion of an Additional Transferor, the Additional Transferor will be treated
in the same manner as a Transferor and each Additional Transferor generally will
have the same obligations and rights as a Transferor described in this
Prospectus.
The Transferor Certificate (or any interest therein) may be transferred to a
Person which is a member of the "affiliated group" of which the Corporation is
the "common parent" (as such terms are defined in Section 1504(a) of the Code);
provided, however, that (i) if any Series of Certificates are outstanding that
were characterized as debt at the time of their issuance, the Transferors shall
have delivered to the Trustee and each Rating Agency a Tax Opinion, dated the
date of such transfer, with respect thereto, and (ii) any such transferee shall
be deemed to be a "Transferor" for certain purposes including for purposes of
the discussion under "-- Pay Out Events" in this Prospectus.
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INTEREST PAYMENTS
For each Series of Certificates and Class thereof, interest will accrue from
the relevant Closing Date on the applicable Investor Interest at the applicable
Certificate Rate, which may be a fixed, floating or other type of rate as
specified in the accompanying Prospectus Supplement. Interest will be
distributed to Certificateholders on the Distribution Dates specified in the
accompanying Prospectus Supplement. Interest payments on any Distribution Date
will be funded from collections of Finance Charge Receivables allocated to the
Investor Interest during the preceding monthly period or periods (each, a
"Monthly Period") and may be funded from certain investment earnings on funds
held in accounts of the Trust and from any applicable Credit Enhancement, if
necessary, or certain other amounts as specified in the accompanying Prospectus
Supplement. If the Distribution Dates for payment of interest for a Series or
Class occur less frequently than monthly, such collections or other amounts (or
the portion thereof allocable to such Class) may be deposited in one or more
trust accounts (each, an "Interest Funding Account") pending distribution to the
Certificateholders of such Series or Class, as described in the accompanying
Prospectus Supplement. If a Series has more than one Class of Certificates, each
such Class may have a separate Interest Funding Account. The Prospectus
Supplement relating to each Series of Certificates and each Class thereof
describes the amounts and sources of interest payments to be made, the
Certificate Rate, and, for a Series or Class thereof bearing interest at a
floating Certificate Rate, the dates and the manner for determining subsequent
Certificate Rates, and the formula, index or other method by which such
Certificate Rates are determined.
PRINCIPAL PAYMENTS
Except in the circumstances specified in the accompanying Prospectus
Supplement, during the Revolving Period for each Series of Certificates (which
begins on the Closing Date relating to such Series and ends on the day before an
Amortization Period or Accumulation Period begins), no principal payments will
be made to the Certificateholders of such Series. During the Controlled
Amortization Period or Principal Amortization Period, as applicable, which will
be scheduled to begin on the date specified in, or determined in the manner
specified in, the accompanying Prospectus Supplement, and during the Rapid
Amortization Period, which will begin upon the occurrence of a Pay Out Event or,
if so specified in the accompanying Prospectus Supplement, the Rapid
Accumulation Period, principal will be paid to the Certificateholders in the
amounts and on Distribution Dates specified in the accompanying Prospectus
Supplement. During an Accumulation Period, principal will be accumulated in a
trust account established for the benefit of such Certificateholders (a
"Principal Funding Account") for later distribution to Certificateholders on the
Scheduled Payment Date in the amounts specified in the accompanying Prospectus
Supplement. Principal payments for any Series or Class thereof will be funded
from collections of Principal Receivables received during the related Monthly
Period or Periods as specified in the accompanying Prospectus Supplement and
allocated to such Series or Class and from certain other sources specified in
the accompanying Prospectus Supplement. In the case of a Series with more than
one Class of Certificates, the Certificateholders of one or more Classes may
receive payments of principal at different times. The accompanying Prospectus
Supplement describes the manner, timing and priority of payments of principal to
Certificateholders of each Class.
Funds on deposit in any Principal Funding Account applicable to a Series may
be subject to a guaranteed rate agreement or guaranteed investment contract or
other arrangement specified in the accompanying Prospectus Supplement intended
to assure a minimum rate of return on the investment of such funds. In order to
enhance the likelihood of the payment in full of the principal amount of a
Series of Certificates or Class thereof at the end of an Accumulation Period,
such Series of Certificates or Class thereof may be subject to a principal
guaranty or other similar arrangement specified in the accompanying Prospectus
Supplement.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
With respect to the Trust, the Transferor assigned, at the time of formation
of the Trust, all of its right, title and interest in and to the Receivables in
the related Accounts and all Receivables thereafter created in such Accounts.
In connection with each transfer of Receivables to the Trust, the Transferor
will indicate in its computer files that the related Receivables have been
conveyed to the Trust. In addition, the Transferor will provide to the Trustee,
with respect to the Trust, computer files or microfiche lists, containing a true
and complete list showing each related
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Account, identified by account number and by total outstanding balance on the
date such accounts were designated for inclusion in the Trust. The Transferor
will not deliver to the Trustee any other records or agreements relating to the
Accounts or the Receivables, except in connection with additions or removals of
Accounts. Except as stated above, the records and agreements relating to the
Accounts and the Receivables maintained by the Transferor or the Servicer are
not and will not be segregated by the Transferor or the Servicer from other
documents and agreements relating to other credit card accounts and receivables
and are not and will not be stamped or marked to reflect the transfer of the
Receivables to the Trust, but the computer records of the Transferor are and
will be required to be marked to evidence such transfer. The Transferor will
file, with respect to the Trust, Uniform Commercial Code financing statements
with respect to the Receivables meeting the requirements of applicable state
law. See "Risk Factors -- Potential Priority of Certain Liens" and "Certain
Legal Aspects of the Receivables" in this Prospectus.
NEW ISSUANCE
The Agreement provides for the Trustee to issue three types of certificates:
(i) one or more Series of Certificates which are transferable and have the
characteristics described below, (ii) the Transferor Certificate, a certificate
which, together with the Supplemental Certificates outstanding, if any,
evidences the Transferor Interest, which Transferor Certificate initially will
be held by the Transferor and will be transferable only as provided in the
Agreement and (iii) one or more Supplemental Certificates, which if issued,
would relate to the Transferor Interest in that they would be entitled to a
portion of amounts allocable to the Transferor Interest and would be
transferable as provided in the Agreement. Pursuant to the Agreement, the holder
of the Transferor Certificate may define, with respect to any newly issued
Series of Certificates, all principal terms of such new Series (the "Principal
Terms"). Upon the issuance of an additional Series of Certificates, none of the
Transferor, the Servicer, the Trustee or the Trust will be required or will
intend to obtain the consent of any Certificateholder of any other Series
previously issued by the Trust. However, as a condition of a New Issuance, the
holder of the Transferor Certificate will deliver to the Trustee written
confirmation that the New Issuance will not result in the reduction or
withdrawal by any Rating Agency of its rating of any outstanding Series. The
Transferor may offer any Series 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, through one
or more other underwriters or placement agents, in fixed-price offerings or in
negotiated transactions or otherwise.
The holder of the Transferor Certificate may permit a New Issuance and
define Principal Terms such that each Series issued under the Trust has a period
during which amortization or accumulation of the principal amount 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 amortization or accumulation periods while other Series are not.
Moreover, each Series may have the benefit of a Credit Enhancement which is
available only to such Series. Under the Agreement, the Trustee shall hold any
such form of Credit Enhancement only on behalf of the Series with respect to
which it relates. Likewise, with respect to each such form of Credit
Enhancement, the holder of the Transferor Certificate may deliver a different
form of Credit Enhancement agreement. The holder of the Transferor Certificate
may specify different certificate rates and monthly servicing fees with respect
to each Series (or a particular Class within such Series). The holder of the
Transferor Certificate will also have the option under the Agreement to vary
between Series the terms upon which a Series (or a particular Class within such
Series) may be repurchased by the Transferor or remarketed to other investors.
Additionally, certain Series may be subordinated to other Series, or Classes
within a Series may have different priorities. There will be no limit to the
number of New Issuances that may be performed under the Agreement.
A New Issuance may only occur upon the satisfaction of certain conditions
provided in the Agreement. Under the Agreement, the holder of the Transferor
Certificate may permit a New Issuance by notifying the Trustee at least 3 days
in advance of the date upon which the New Issuance is to occur. Under the
Agreement, the notice will state the designation of any Series to be issued on
the date of the New Issuance and, with respect to each such Series: (i) its
initial principal amount (or method for calculating such amount) which amount
may not be greater than the current principal amount of the Transferor
Certificate, (ii) its certificate rate (or method of calculating such rate) and
(iii) the provider of Credit Enhancement, if any, which is expected to provide
support with respect to it. The Agreement provides that on the date of the New
Issuance the Trustee will authenticate any such Series only upon delivery to it
of the following, among others, (i) a Series Supplement specifying the Principal
Terms of such Series, (ii) an opinion of counsel to the effect that, for federal
income tax purposes, (a) such issuance will not adversely
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affect the tax characterization as debt of Certificates of any outstanding
Series or Class that were characterized as debt at the time of their issuance,
(b) following such issuance the Trust will not be deemed to be an association
(or publicly traded partnership) taxable as a corporation and (c) 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 (ii) with respect to any action is
referred to in this Prospectus as a "Tax Opinion"), (iii) if required by the
related Series Supplement, the form of Credit Enhancement, (iv) if Credit
Enhancement is required by the Series Supplement, an appropriate Credit
Enhancement agreement with respect thereto executed by the Transferor and the
issuer of the Credit Enhancement, (v) written confirmation from each Rating
Agency that the New Issuance will not result in such Rating Agency's reducing or
withdrawing its rating on any then outstanding Series rated by it and (vi) an
officer's certificate of the Transferor to the effect that after giving effect
to the New Issuance the Transferor would not be required to add Additional
Accounts pursuant to the Agreement and the Transferor Interest would be at least
equal to a specified minimum level (the "Minimum Transferor Interest"). Upon
satisfaction of such conditions, the Trustee will authenticate the new Series.
REPRESENTATIONS AND WARRANTIES
The Transferor has made in the Agreement, certain representations and
warranties to the Trust to the effect that, among other things, (a) as of the
Closing Date, the Transferor was duly organized and in good standing and that it
has the authority to consummate the transactions contemplated by the Agreement
and (b) as of the Cut-Off Date (or as of the date of the designation of
Additional Accounts), each Account was an Eligible Account. If so provided in
the accompanying Prospectus Supplement, if (i) any of these representations and
warranties proves to have been incorrect in any material respect when made, and
continues to be incorrect for 60 days after notice to the Transferor by the
Trustee or to the Transferor and the Trustee by the Certificateholders holding
not less than 50% of the Investor Interest of the related Series, and (ii) as a
result the interests of the Certificateholders are materially and adversely
affected, and continue to be materially and adversely affected during such
period, then the Trustee or Certificateholders holding not less than 50% of the
Investor Interest may give notice to the Transferor (and to the Trustee in the
latter instance) declaring that a Pay Out Event has occurred, thereby commencing
the Rapid Amortization Period or, if so specified in the accompanying Prospectus
Supplement, the Rapid Accumulation Period.
The Transferor has made in the Agreement, representations and warranties to
the Trust relating to the Receivables in the Trust to the effect, among other
things, that (a) as of the Closing Date of the initial Series of Certificates
issued by the Trust, each of the Receivables then existing is an Eligible
Receivable and (b) as of the date of creation of any new Receivable, such
Receivable is an Eligible Receivable, and the representation and warranty set
forth in clause (b) in the immediately following paragraph is true and correct
with respect to such Receivable. In the event (i) of a breach of any
representation and warranty set forth in this paragraph within 60 days, or such
longer period as may be agreed to by the Trustee, of the earlier to occur of the
discovery of such breach by the Transferor or Servicer or receipt by the
Transferor of written notice of such breach given by the Trustee, or, with
respect to certain breaches relating to prior liens, immediately upon the
earlier to occur of such discovery or notice and (ii) that as a result of such
breach, the Receivables in the related Accounts are charged-off as
uncollectible, the Trust's rights in, to or under the Receivables or its
proceeds are impaired or the proceeds of such Receivables are not available for
any reason to the Trust free and clear of any lien (except for certain tax,
governmental and other nonconsensual liens), the Transferor shall accept
reassignment of each Principal Receivable as to which such breach relates (an
"Ineligible Receivable") on the terms and conditions set forth below; provided,
however, that no such reassignment shall be required to be made with respect to
such Ineligible Receivable if, on any day within the applicable period (or such
longer period as may be agreed to by the Trustee), the representations and
warranties with respect to such Ineligible Receivable shall then be true and
correct in all material respects. The Transferor shall accept reassignment of
each such Ineligible Receivable by directing the Servicer to deduct the amount
of each such Ineligible Receivable from the aggregate amount of Principal
Receivables used to calculate the Transferor Interest. In the event that the
exclusion of an Ineligible Receivable from the calculation of the Transferor
Interest would cause the Transferor Interest to be a negative number, on the
date of reassignment of such Ineligible Receivable the Transferor shall make a
deposit in the Principal Account in immediately available funds in an amount
equal to the amount by which the Transferor Interest would be reduced below
zero. Any such deduction or deposit shall be considered a repayment in full of
the Ineligible Receivable. The obligation of the Transferor to accept
reassignment of any Ineligible Receivable is the sole remedy respecting any
breach of the representations and warranties set forth in this paragraph
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with respect to such Receivable available to the Certificateholders or the
Trustee on behalf of Certificateholders. Certificateholders will not incur any
costs, direct or indirect, relating to any such reassignment to the Transferor.
The Transferor has made in the Agreement, representations and warranties to
the Trust to the effect, among other things, that as of the Closing Date of the
initial Series of Certificates issued by the Trust (a) the Agreement constitutes
a legal, valid and binding obligation of the Transferor and (b) the transfer of
Receivables by it to the Trust under the Agreement constitutes either a valid
transfer and assignment to the Trust of all right, title and interest of the
Transferor in and to the Receivables, whether then existing or thereafter
created and the proceeds thereof (including amounts in any of the accounts
established for the benefit of Certificateholders) or the grant of a first
priority perfected security interest in such Receivables (except for certain
tax, governmental and other nonconsensual liens) and the proceeds thereof
(including amounts in any of the accounts established for the benefit of
Certificateholders), which is effective as to each such Receivable upon the
creation thereof. In the event of a breach of any of the representations and
warranties described in this paragraph, either the Trustee or the Holders of
Certificates evidencing interests in the Trust aggregating more than 50% of the
aggregate Investor Interest of all Series outstanding under the Trust may direct
the Transferor to accept reassignment of the Trust Portfolio within 60 days of
such notice, or within such longer period specified in such notice. The
Transferor will be obligated to accept reassignment of such Receivables on a
Distribution Date occurring within such applicable period. Such reassignment
will not be required to be made, however, if at any time during such applicable
period, or such longer period, the representations and warranties shall then be
true and correct in all material respects. The deposit amount for such
reassignment will be equal to the Investor Interest and Enhancement Invested
Amount or the Collateral Interest, if any, for each Series outstanding under the
Trust on the last day of the Monthly Period preceding the Distribution Date on
which the reassignment is scheduled to be made less the amount, if any,
previously allocated for payment of principal to such Certificateholders or such
holders of the Enhancement Invested Amount or the Collateral Interest, if any,
on such Distribution Date, plus an amount equal to all accrued and unpaid
interest less the amount, if any, previously allocated for payment of such
interest on such Distribution Date. The payment of the reassignment deposit
amount and the transfer of all other amounts deposited for the preceding month
in the Distribution Account will be considered a payment in full of the Investor
Interest and the Enhancement Invested Amount or the Collateral Interest, if any,
for each such Series required to be repurchased and will be distributed upon
presentation and surrender of the Certificates for each such Series. If the
Trustee or Certificateholders give a notice as provided above, the obligation of
the Transferor to make any such deposit will constitute the sole remedy
respecting a breach of the representations and warranties available to the
Trustee or such Certificateholders. Certificateholders will not incur any costs,
direct or indirect, related to the reassignment of the Trust Portfolio to the
Transferor.
An "Eligible Account" will be defined to mean, as of the relevant Cut-Off
Date (or, with respect to Additional Accounts, as of their date of designation
for inclusion in the Trust), each Account owned by the applicable Transferor (a)
which was in existence and maintained with such Transferor, (b) which is payable
in United States dollars, (c) the customer of which has provided, as his most
recent billing address, an address located in the United States or its
territories or possessions, (d) which has not been classified by such Transferor
as cancelled, counterfeit, bankrupt, fraudulent, stolen or lost and (e) which
has not been charged-off by such Transferor in its customary and usual manner
for charging-off such Account as of the Cut-Off Date and, with respect to
Additional Accounts, as of their date of designation for inclusion in the Trust.
Under the Agreement, the definition of Eligible Account may be changed by
amendment to the Agreement without the consent of the related Certificateholders
if (i) each of the related Transferors delivers to the Trustee a certificate of
an authorized officer to the effect that, in the reasonable belief of such
Transferors, such amendment will not as of the date of such amendment adversely
affect in any material respect the interest of such Certificateholders, and (ii)
such amendment will not result in a withdrawal or reduction of the rating of any
outstanding Series under the Trust.
An "Eligible Receivable" will be defined to mean each Receivable (a) which
has arisen under an Eligible Account, (b) which was created in compliance, in
all material respects, with all requirements of law applicable to the Transferor
that transferred such Receivable to the Trust, and pursuant to a credit card
agreement which complies in all material respects with all requirements of law
applicable to such Transferor, (c) with respect to which all consents, licenses
or authorizations of, or registrations with, any governmental authority required
to be obtained or given by such Transferor in connection with the creation of
such Receivable or the execution, delivery, creation and performance by such
Transferor of the related credit card agreement have been duly obtained or given
and are in full force and effect as of the date of the creation of such
Receivable, (d) as to which, at the time of its creation, such
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Transferor or the Trust had good and marketable title free and clear of all
liens and security interests arising under or through such Transferor (other
than certain tax liens for taxes not then due or which such Transferor is
contesting), (e) which is the legal, valid and binding payment obligation of the
obligor thereon, legally enforceable against such obligor in accordance with its
terms (with certain bankruptcy-related exceptions) and (f) which constitutes an
"account" or a "general intangible" under Article 9 of the applicable Uniform
Commercial Code.
Unless otherwise specified in the Prospectus Supplement relating to a Series
of Certificates, it will not be 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. However, the Servicer will, with respect to
the Trust, deliver to the Trustee on or before March 31 of each year (or such
other date specified in the accompanying Prospectus Supplement) an opinion of
counsel with respect to the validity of the security interest of the Trust in
and to the Receivables and certain other components of the Trust.
ADDITION OF TRUST ASSETS
As described above under "The Receivables," the Transferor will have the
right to designate for the Trust, from time to time, additional Accounts to be
included as Accounts with respect to the Trust ("Designated Additional
Accounts"). In addition, the Transferor will be required to include Designated
Additional Accounts under the circumstances and in the amounts specified in the
accompanying Prospectus Supplement. The Transferor will convey to the Trust its
interest in all Receivables of such Designated Additional Accounts, whether such
Receivables are then existing or thereafter created. This feature permits the
Transferor to increase the amount of Principal Receivables in the Trust over the
amount that would otherwise be included, thereby permitting the issuance of
additional Series or avoiding the occurrence of certain Pay Out Events with
respect to existing Series. Certificateholders will not incur any costs, direct
or indirect, as a result of the exercise of this feature.
The Transferor may from time to time, at its sole discretion, designate that
all Eligible Accounts arising in the Identified Pool (or a specified portion
thereof) during a specified period be included as Accounts ("Automatic
Additional Accounts"), subject to the limitations specified in this paragraph.
Unless each Rating Agency otherwise consents, no Automatic Additional Accounts
may be designated for addition to the Trust if the number of Automatic
Additional Accounts plus the number of Designated Additional Accounts added
voluntarily as specified above, without prior Rating Agency approval, shall (i)
with respect to any three consecutive Monthly Periods, exceed 15% of the number
of Accounts at the end of the ninth Monthly Period preceding the commencement of
such three Monthly Periods (or, the Cut-Off Date, whichever is later) or (ii)
with respect to any twelve Monthly Periods, exceed 20% of the number of Accounts
as of the first day of such twelve Monthly Periods (or, the related Cut-Off
Date, whichever is later) (the "Aggregate Addition Limit"). If the Transferor or
any Additional Transferor includes Automatic Additional Accounts in the Trust,
in each calendar quarter on or before March 31, June 30, September 30 and
December 31 of each calendar year beginning after the initial inclusion of
Automatic Additional Accounts, or more frequently if required by any Rating
Agency, the Transferor shall deliver to the Trustee and each Rating Agency an
opinion of outside counsel with respect to the Automatic Additional Accounts
included as Accounts during the preceding three-month period confirming the
validity and perfection of each transfer of such Automatic Additional Accounts.
If such opinion of counsel with respect to any Automatic Additional Accounts is
not so received, the ability of the Transferor and any Additional Transferor to
designate Automatic Additional Accounts will be suspended until such time as
each Rating Agency otherwise consents in writing or such Accounts are removed
from the Trust. The Transferors may only include as Automatic Additional
Accounts revolving credit card accounts either (i) originated by the Transferor,
any Additional Transferor or any affiliate of the Transferor or any Additional
Transferor and (ii) of a type previously included as Accounts. Additions of
Participations must also comply with such conditions. Automatic Additional
Accounts and Designated Additional Accounts relating to any Addition are
collectively referred to in this Prospectus as "Additional Accounts."
The applicable Transferor will represent that each Additional Account is an
Eligible Account at the time of its designation. However, Additional Accounts
may not be of the same credit quality as the initial Accounts. Additional
Accounts may have been originated by the Transferor using credit criteria
different from those which were applied by the Transferor to the initial
Accounts or may have been acquired by the Transferor from an institution which
may have had different credit criteria.
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If so specified in the Prospectus Supplement relating to a Series, in
addition to or in lieu of Additional Accounts, the Transferor under the
Agreement is permitted to add to the Trust, participations representing
interests in a pool of assets primarily consisting of receivables arising under
consumer revolving credit card accounts owned by the Transferor and collections
thereon ("Participations"). Participations may be evidenced by one or more
certificates of ownership issued under a separate pooling and servicing
agreement or similar agreement (a "Participation Agreement") entered into by the
Transferor which entitles the certificateholder to receive percentages of
collections generated by the pool of assets subject to such Participation
Agreement from time to time and to certain other rights and remedies specified
therein. Participations may have their own credit enhancement, pay out events,
servicing obligations and servicer defaults, all of which are likely to be
enforceable by a separate trustee under the Participation Agreement and may be
different from those specified in this Prospectus. The rights and remedies of
the Trust as the holder of a Participation (and therefore the
Certificateholders) will be subject to all the terms and provisions of the
related Participation Agreement. To the extent that such Participations
encompass previously issued credit-card or other asset-backed securities, such
securities (i) either will have been previously registered under the Securities
Act or will have been held for the "holding period" prescribed by Rule 144(k)
under the Securities Act and (ii) will have been acquired in a bona fide
secondary market transaction, rather than from the issuer thereof or one of such
issuer's affiliates, or such securities will have otherwise been acquired in
compliance with the Securities Act. The Agreement may be amended to permit the
addition of a Participation in the Trust without the consent of the related
Certificateholders if (i) the Transferor delivers to the Trustee a certificate
of an authorized officer to the effect that, in the reasonable belief of the
Transferor, such amendment will not as of the date of such amendment adversely
affect in any material respect the interest of such Certificateholders, and (ii)
such amendment will not result in a withdrawal or reduction of the rating of any
outstanding Series under the Trust.
A conveyance by the Transferor to the Trust of Receivables in Additional
Accounts or Participations is subject to the following conditions, among others
(provided, that the following conditions (other than the delivery of a written
assignment as described in clause (ii) and the making of representations and
warranties in clause (iii)) shall not apply to the transfer to the Trust of
Receivables in Automatic Additional Accounts): (i) the Transferor shall give the
Trustee, each Rating Agency and the Servicer written notice that such Additional
Accounts or Participations will be included, which notice shall specify the
approximate aggregate amount of the Receivables or interests therein to be
transferred; (ii) 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 Certificateholders) as provided in the Agreement relating to
such Additional Accounts or Participations (the "Assignment") and, the
Transferor shall have delivered to the Trustee a computer file or microfiche
list on the date of such Assignment, containing a true and complete list of such
Additional Accounts (other than Automatic Additional Accounts) or
Participations; (iii) the Transferor shall make certain representations and
warranties that (x) each Additional Account is, as of its date of designation
for inclusion in the Trust, an Eligible Account, and each Receivable in such
Additional Account is, as of its date of designation for inclusion in the Trust,
an Eligible Receivable, (y) no selection procedures believed by the Transferor
to be materially adverse to the interests of the related Certificateholders were
utilized in selecting the Additional Accounts from the available Eligible
Accounts from the Identified Pool, and (z) as of the Addition Date, the
Transferor or the applicable Additional Transferor, as the case may be, is not
insolvent; (iv) the Transferor shall deliver certain opinions of counsel with
respect to the transfer of the Receivables in the Additional Accounts or the
Participations to the Trust and (v) under certain circumstances with respect to
Additional Accounts, and in all cases with respect to Participations, the
Transferor shall have received notice from each Rating Agency then rating any
Series of Certificates outstanding under the Trust that the addition of such
Additional Accounts or Participations will not result in the reduction or
withdrawal of its then existing rating of any Series of Certificates outstanding
under the Trust.
In addition to the periodic reports otherwise required to be filed by the
Servicer with the Securities and Exchange Commission (the "SEC") pursuant to the
Exchange Act, the Servicer intends to file, on behalf of the Trust, a Report on
Form 8-K with respect to any addition to the Trust of Receivables in Additional
Accounts or Participations that would have a material effect on the composition
of the assets of the Trust.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in the next succeeding sentence, the
Transferor may, but shall not be obligated to, designate from time to time
(which may be restricted to certain periods if so specified in the accompanying
Prospectus Supplement) certain Accounts to be Removed Accounts, all Receivables
in which shall be subject to
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deletion and removal from the Trust. 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 cost, 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
removal of any Receivables of any Removed Accounts shall not, in the reasonable
belief of the Transferor, cause a Pay Out Event to occur; (ii) the Transferor
shall have delivered to the Trustee for execution a written assignment and 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; (iii) none of (a) the Receivables are more
than 15% delinquent by estimated principal amount and the weighted average
delinquency of such Receivables does not exceed 60 days, (b) the Receivables are
more than 7% delinquent by estimated principal balance and the weighted average
delinquency of such Receivables does not exceed 90 days or (c) the Receivables
are more than the specified percentage delinquent by estimated principal amount
and the weighted average delinquency of such Receivables does not exceed the
number of days specified in the accompanying Prospectus Supplement; (iv) the
Transferor shall represent and warrant that no selection procedures believed by
the Transferor to be materially adverse to the interests of the holders of any
Series of Certificates outstanding under the Trust were utilized in selecting
the Removed Accounts to be removed from the Trust; (v) each Rating Agency then
rating each Series of Certificates outstanding under the Trust shall have
received notice of such proposed removal of Accounts and the Transferor shall
have received notice from each such Rating Agency that such proposed removal
will not result in a downgrade of its then-current rating for any such Series;
(vi) the aggregate amount of Principal Receivables of the Accounts then existing
less the aggregate amount of Principal Receivables of the Removed Accounts shall
not be less than the amount, if any, specified for any period specified; (vii)
the Principal Receivables of the Removed Accounts shall not equal or exceed 5%
(or such other percentage specified in the accompanying Prospectus Supplement)
of the aggregate amount of the Principal Receivables in the Trust at such time;
provided, however, that if any Series has been paid in full, the Principal
Receivables in such Removed Accounts may equal or approximately equal the
Investor Interest as of the last day of the Revolving Period or the aggregate
principal amount of the Certificates of such Series (the "Full Investor
Interest"), as applicable, of such Series; (viii) such other conditions as are
specified in the accompanying Prospectus Supplement; and (ix) the Transferor
shall have delivered to the Trustee an officer's certificate confirming the
items set forth in clauses (i) through (viii) above. Notwithstanding the above,
the Transferor will be permitted to designate as a Removed Account, without the
consent of the Trustee, Certificateholders or Rating Agencies, any Account that
has a zero balance and which the Transferor will remove from its computer file.
COLLECTION AND OTHER SERVICING PROCEDURES
For each Series of Certificates, the Servicer will be responsible for
servicing and administering the Receivables in accordance with the Servicer's
policies and procedures for servicing credit card receivables comparable to the
Receivables. The Servicer 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 credit card
receivables covering such actions and in such amounts as the Servicer believes
to be commercially reasonable from time to time.
DISCOUNT OPTION
The Transferor may at any time designate a specified fixed or variable
percentage (the "Discount Percentage") of the amount of Receivables arising in
certain Additional Accounts, if any, designated on or prior to the related
Addition Date with respect to the Trust on and after the date such option is
exercised that otherwise would have been treated as Principal Receivables to be
treated as Finance Charge Receivables. Such designation will become effective
upon satisfaction of the requirements set forth in the Agreement, including
written confirmation by each Rating Agency of its then-current rating on each
outstanding Series of the Trust. On the date of processing of any collections,
the product of the Discount Percentage and collections of Receivables that arise
in the Accounts on such day on or after the date such option is exercised that
otherwise would be Principal Receivables will be deemed collections of Finance
Charge Receivables and will be applied accordingly, unless otherwise provided in
the accompanying Prospectus Supplement. Such feature is intended to permit the
Transferor to increase the Portfolio Yield and thereby decrease the risk of the
occurrence of a Pay Out Event. The term "Portfolio Yield" will have the meaning
set forth in the accompanying Prospectus Supplement.
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TRUST ACCOUNTS
The Trustee will establish and maintain in the name of the Trust two
separate accounts in a segregated trust account (which need not be a deposit
account), a "Finance Charge Account" and a "Principal Account," for the benefit
of the Certificateholders of all related Series, including any Series offered
pursuant to this Prospectus. The Agreement provides that the Trustee shall have
the power to establish series accounts in Series Supplements, including an
Interest Funding Account, a Principal Funding Account, a Pre-Funding Account or
such other account specified in the related Series Supplement, each of which
series accounts shall be held for the benefit of the Certificateholders of the
related Series and for the purposes set forth in the accompanying Prospectus
Supplement. The Trustee will also establish a "Distribution Account" (a
non-interest bearing segregated demand deposit account established with a
Qualified Institution other than the Transferor). The Servicer will establish
and maintain, in the name of the Trustee, on behalf of the Trust, for the
benefit of Certificateholders of all Series issued thereby including any Series
offered pursuant to this Prospectus, an account established for the purpose of
holding collections of Receivables (a "Collection Account"), which will be a
non-interest bearing segregated account established and maintained with the
Servicer or with a "Qualified Institution," defined as a depository institution
or trust company, 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), which at all times has a short-term unsecured debt rating of P-1 by
Moody's Investors Service, Inc. ("Moody's"), A-1+ by Standard & Poor's Ratings
Services ("Standard & Poor's") and F-1 by Fitch IBCA, Inc. ("Fitch") (if then
rated by Fitch) or, if such depository institution shall have corporate trust
powers and shall maintain the Trust account as a fully segregated trust account
with the trust department, a long-term unsecured debt obligation rating of Baa3
by Moody's or a depository institution, which may include the Trustee, which is
acceptable to the Rating Agencies. Funds in the Principal Account and the
Finance Charge Account for the Trust will be invested, at the direction of the
Servicer, in (i) obligations of or fully guaranteed by the United States of
America, (ii) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies, the certificates of deposit or
short-term deposits of which have the highest rating from Fitch (if rated by
Fitch), Moody's and Standard & Poor's, (iii) commercial paper, bank notes or any
other debt obligation having, at the time of the Trust's investment, a rating in
the highest rating category from Fitch (if rated by Fitch), Moody's and Standard
& Poor's, (iv) bankers' acceptances issued by any depository institution or
trust company described in clause (ii) above and 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 Corporation and (v) any other investment if the
Rating Agency confirms in writing that such investment will not adversely affect
its then current rating or ratings, if any, of the Certificates then
outstanding, 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 (such investments, "Permitted Investments"). Any
earnings (net of losses and investment expenses) on funds in the Finance Charge
Account or the Principal Account will be paid to the Transferor or used for
another purpose if specified in the accompanying Prospectus Supplement. Funds in
any other series account established by a Series Supplement may be invested in
Permitted Investments or otherwise as provided in the accompanying Prospectus
Supplement. 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 Finance Charge Account and the Principal Account for the
purpose of carrying out the Servicer's duties under the Agreement. The Trustee
will initially be the paying agent and will have the revocable power to withdraw
funds from the Distribution Account for the purpose of making distributions to
the Certificateholders.
FUNDING PERIOD
For any Series of Certificates, the accompanying Prospectus Supplement may
specify that for a period beginning on the Closing Date and ending on a
specified date before the commencement of an Amortization Period or Accumulation
Period with respect to such Series (the "Funding Period"), the aggregate amount
of Principal Receivables in the Trust allocable to such Series may be less than
the aggregate principal amount of the Certificates of such Series and that the
amount of deficiency (the "Pre-Funding Amount") will be held in a trust account
established with the Trustee for the benefit of Certificateholders of such
Series (the "Pre-Funding Account") pending the transfer of additional
Receivables to the Trust or pending the reduction of the Investor Interests or
the Adjusted Investor Interests of other Series issued by the Trust. The
accompanying Prospectus Supplement will specify the initial Investor Interest
with respect to such Series, the Full Investor Interest and the date by which
the Investor Interest is expected to equal the Full Investor Interest. The
Investor Interest will increase as Receivables are
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delivered to the Trust or as the Investor Interests or the Adjusted Investor
Interests of other Series of the Trust are reduced. The Investor Interest may
also decrease due to Investor Charge-Offs or the occurrence of a Pay Out Event
with respect to such Series as provided in the accompanying Prospectus
Supplement. See "-- Addition of Trust Assets" in this Prospectus. This feature
is intended to permit the Transferor to issue a new Series of Certificates at an
opportune time, if the Investor Interests or Adjusted Investor Interests of
existing Series are expected to be reduced or additional Receivables are
expected to be included in the Trust at a subsequent time. Certificateholders
will not incur any costs, direct or indirect, as a result of the exercise of
this feature. If the Investor Interest does not equal the Full Investor Interest
by the end of the Funding Period, Certificateholders of the affected Series will
receive principal repayments prior to the expected date of receipt. Any
designation of Additional Accounts (or Participations) during the Funding Period
will be subject to the same conditions and protections applicable at any other
time.
During the Funding Period, funds on deposit in the Pre-Funding Account for a
Series of Certificates will be withdrawn and paid to the Transferor to the
extent of any increases in the Investor Interest. In the event that the Investor
Interest does not for any reason equal the Full Investor Interest by the end of
the Funding Period, any amount remaining in the Pre-Funding Account and any
additional amounts specified in the accompanying Prospectus Supplement will be
payable to the Certificateholders of such Series in the manner and at such time
as set forth in the accompanying Prospectus Supplement. Such payment will reduce
the aggregate principal amount of such Certificates. In addition, if so
specified in the accompanying Prospectus Supplement, a prepayment premium or
penalty or similar amount may be payable to the Certificateholders of such
Series.
Monies in the Pre-Funding Account will be invested by the Trustee in
Permitted Investments and, if so specified in the accompanying Prospectus
Supplement, will be subject to a guaranteed rate or investment agreement or
other similar arrangement, and, in connection with each Distribution Date during
the Funding Period, investment earnings on funds in the Pre-Funding Account
during the related Monthly Period will be withdrawn from the Pre-Funding Account
and deposited, together with any applicable payment under a guaranteed rate or
investment agreement or other similar arrangement, into the Finance Charge
Account for distribution in respect of interest on the Certificates of the
related Series in the manner specified in the accompanying Prospectus
Supplement.
INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
For the Trust, the Servicer will allocate between the Investor Interest of
each Series issued and outstanding by the Trust (and among each outstanding
Class of each Series) and the Transferor Interest, and, in certain
circumstances, the interest of certain Credit Enhancement Providers, all amounts
collected on Finance Charge Receivables, all amounts collected on Principal
Receivables and all Receivables in Accounts which were charged-off as
uncollectible by the Servicer ("Defaulted Accounts"). The Servicer will make
each allocation by reference to the applicable Investor Percentage of each
Series and the Transferor Percentage, and, in certain circumstances, the
percentage interest of certain Credit Enhancement Providers (the "Credit
Enhancement Percentage") with respect to such Series. The Prospectus Supplement
relating to a Series specifies the Investor Percentage and, if applicable, the
Credit Enhancement Percentage (or the method of calculating such percentages)
with respect to the allocations of collections of Principal Receivables, Finance
Charge Receivables and Receivables in Defaulted Accounts during the Revolving
Period, any Amortization Period and any Accumulation Period, as applicable. In
addition, for each Series of Certificates having more than one Class, the
accompanying Prospectus Supplement specifies the method of allocation between
each Class.
The Transferor Percentage will, in all cases, be equal to 100% minus the
aggregate Investor Percentages and, if applicable, the Credit Enhancement
Percentages, for all Series then outstanding.
APPLICATION OF COLLECTIONS
Except as otherwise provided below, the Servicer will deposit into the
Collection Account for the Trust no later than the second business day (or such
other day specified in the accompanying Prospectus Supplement) following the
date of processing, any payment collected by the Servicer on the Receivables. On
the same day as any such deposit is made, the Servicer will make the deposits
and payments to the accounts and parties as indicated below; provided, however,
that for as long as Bank of America remains the Servicer under the Agreement,
and (a)(i) the Servicer provides to the Trustee a letter of credit (or other
credit support) covering risk collection of the Servicer and
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(ii) the Transferor shall have received a notice from each Rating Agency that
such letter of credit would not result in the lowering of such Rating Agency's
then-existing rating of the related Series (and if the Trust has issued more
than one series, any Series of certificates previously-issued and
then-outstanding thereunder), or (b) the Servicer has and maintains a
certificate of deposit or short-term deposit rating of P-1 by Moody's and of A-1
by Standard & Poor's and deposit insurance provided by the FDIC, then the
Servicer may make such deposits and payments on a monthly or other periodic
basis on the business day immediately prior to each Distribution Date or other
business day specified in the accompanying Prospectus Supplement (each, a
"Transfer Date") in an amount equal to the net amount of such deposits and
payments which would have been made had the conditions of this proviso not
applied.
Notwithstanding anything in the Agreement to the contrary, whether the
Servicer is required to make monthly or daily deposits from the Collection
Account into the Finance Charge Account, the Principal Account or any applicable
series account, with respect to any Monthly Period, (i) the Servicer will only
be required to deposit collections from the Collection Account into the Finance
Charge Account, the Principal Account or any series account established by a
related Series Supplement up to the required amount to be deposited into any
such deposit account or, without duplication, distributed on or prior to the
related Distribution Date to Certificateholders or to the provider of
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.
The Servicer will withdraw the following amounts, in the priority indicated,
from the Collection Account for application as indicated unless the accompanying
Prospectus Supplement specifies otherwise:
(a) an amount equal to the Transferor Percentage of the aggregate amount
of such deposits in respect of Principal Receivables and Finance Charge
Receivables, respectively, will be paid or held for payment to the holder of
the Transferor Certificate, or, if applicable, the holder of any
Supplemental Certificate;
(b) an amount equal to the applicable Investor Percentage of the
aggregate amount of such deposits in respect of Finance Charge Receivables
will be deposited into the Finance Charge Account for allocation and
distribution as described in the accompanying Prospectus Supplement;
(c) during the Revolving Period, an amount equal to the applicable
Investor Percentage of the aggregate amount of such deposits in respect of
Principal Receivables will be paid or held for payment to the holder of the
Transferor Certificate, provided that if after giving effect to the
inclusion in the Trust of all Receivables on or prior to such date of
processing and the application of payments referred to in paragraph (a)
above the Transferor Interest is reduced to zero, the excess will be
deposited in the Principal Account or other specified account and will be
used as described in the accompanying Prospectus Supplement, including for
payment to other Series of Certificates issued by the Trust;
(d) during the Controlled Amortization Period, Controlled Accumulation
Period or Rapid Accumulation Period, as applicable, an amount equal to the
applicable Investor Percentage of such deposits in respect of Principal
Receivables up to the amount, if any, as specified in the accompanying
Prospectus Supplement will be deposited in the Principal Account or
Principal Funding Account, as applicable, for allocation and distribution to
Certificateholders as described in the accompanying Prospectus Supplement,
provided that if collections of Principal Receivables exceed the principal
payments which may be allocated or distributed to Certificateholders, the
amount of such excess will be paid to the holder of the Transferor
Certificate until the Transferor Interest is reduced to zero, and thereafter
will be deposited in the Principal Account or other specified account and
will be used as described in the accompanying Prospectus Supplement,
including for payment to other Series of Certificates issued by the Trust;
and
(e) during the Principal Amortization Period, if applicable, and the
Rapid Amortization Period, an amount equal to the applicable Investor
Percentage of such deposits in respect of Principal Receivables will be
deposited into the Principal Account for application and distribution as
provided in the accompanying Prospectus Supplement.
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In the case of a Series of Certificates having more than one Class, the
amounts in the Collection Account will be allocated and applied to each Class in
the manner and order of priority described in the accompanying Prospectus
Supplement.
Any amounts collected in respect of Principal Receivables and not paid to the
Transferor because the Transferor Interest is zero as described above (with
respect to each Series, "Unallocated Principal Collections"), together with any
adjustment payments as described above under "Description of the
Certificates--Representations and Warranties" and below under "--Defaulted
Receivables; Rebates and Fraudulent Charges; Investor Charge-Offs," will be paid
to and held in the Principal Account and paid to the Transferor if and to the
extent that the Transferor Interest is equal to or greater than zero. If an
Amortization Period or Accumulation Period has commenced, Unallocated Principal
Collections will be held for distribution to the Certificateholders on the
related Distribution Date or accumulated for distribution on the Scheduled
Payment Date, as applicable, and distributed to the Certificateholders of each
Class or held for and distributed to the Certificateholders of other Series of
Certificates issued by the Trust in the manner and order of priority specified
in the accompanying Prospectus Supplement.
GROUPS OF SERIES
The Agreement provides that the Transferor may create certain groups of Series
(each a "Group"). These Groups will consist of (a) a single Shared Excess
Principal Collections Group and (b) any number of Shared Excess Finance Charge
Collections Groups. The Certificates of a Series may be designated by the
Transferor to be included in the Shared Excess Principal Collections Group
and/or one of the Shared Excess Finance Charge Collections Groups. That
designation, if any, will be made by the Transferor, at its sole discretion,
prior to the issuance of each Series and if any Series is designated by the
Transferor to be included in any Group or Groups, such designation will be
provided for in the Prospectus Supplement relating to any Series of Certificates
so designated.
To the extent that a Series of Certificates is included in the Shared Excess
Principal Collections Group, Shared Excess Principal Collections with respect to
such Group will be available to such Series, as described below under "--Shared
Excess Principal Collections" and under "Description of the Certificates--Shared
Excess Principal Collections" in the Prospectus Supplement relating to such
Series of Certificates. To the extent that a Series of Certificates is included
in a Shared Excess Finance Charge Collections Group, Shared Excess Finance
Charge Collections with respect to such Group will be available to such Series,
as described below under "--Shared Excess Finance Charge Collections" and under
"Description of the Certificates--Shared Excess Finance Charge Collections" in
the Prospectus Supplement relating to such Series of Certificates.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any Series offered hereby may be included in a Shared Excess Finance Charge
Collections Group. The Prospectus Supplement relating to a Series specifies
whether such Series is included in a Shared Excess Finance Charge Collections
Group and identifies any previously issued Series included in such Shared Excess
Finance Charge Collections Group. If so specified in the accompanying Prospectus
Supplement, the Certificateholders of a Series within a Shared Excess Finance
Charge Collections Group or any Class thereof may be entitled to receive all or
a portion of the Shared Excess Finance Charge Collections (as defined in the
Prospectus Supplement relating to each applicable Series) with respect to all
other Series within such Shared Excess Finance Charge Collections Group to cover
any shortfalls with respect to amounts payable from collections of Finance
Charge Receivables allocable to such Series or Class; provided, however, that
the application of Shared Excess Finance Charge Collections among any Series
within any Shared Excess Finance Charge Collections Group will cease if the
Transferor shall deliver to the Trustee a certificate of an authorized
representative to the effect that, in the reasonable belief of the Transferor,
the continued application of Shared Excess Finance Charge Collections with
respect to any applicable Shared Excess Finance Charge Collections Group would
have adverse regulatory implications with respect to the Transferor. Following
the delivery by the Transferor of any such certificate to the Trustee with
respect to any Shared Excess Finance Charge Collections Group, there will not be
any further sharing of Excess Finance Charge Collections among the Series
included in such Shared Excess Finance Charge Collections Group. In all cases,
any Shared Excess Finance Charge Collections with respect to any Shared Excess
Finance Charge Collections Group remaining after covering any shortfalls with
respect to all outstanding Series within such Shared Excess Finance Charge
Collections Group will be paid to the holder of the Transferor Certificate. The
application of Shared Excess Finance Charge Collections among the Series
included in a Shared Excess Finance Charge Collections Group
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permits amounts with respect to such Series that would otherwise be payable to
the holder of the Transferor Certificate to be used for the benefit of the
Series within the related Shared Excess Finance Charge Collections Group that
would otherwise experience shortfalls, if any, in amounts payable from
collections of Finance Charge Receivables allocable to, or from Enhancement
relating to, such Series. See "Description of the Certificates--Application of
Collections" and "--Defaulted Receivables; Rebates and Fraudulent Charges;
Investor Charge-Offs" in this Prospectus.
While any Series offered hereby may be designated by the Transferor to be
included within a Shared Excess Finance Charge Collections Group, there can be
no assurance that (a) any other Series will be designated by the Transferor to
be included within the same Shared Excess Finance Charge Collections Group, (b)
there will be any Shared Excess Finance Charge Collections with respect to any
other Series within such Shared Excess Finance Charge Collections Group, (c) any
agreement relating to any Enhancement will not be amended in such a manner as to
increase payments to the providers of such Enhancement and thereby decrease the
amount of Shared Excess Finance Charge Collections available from such Series or
(d) the Transferor will not, at any time, deliver a certificate as to adverse
regulatory implications as described above. While the Transferor believes that,
based upon applicable rules and regulations as currently in effect, the
application of Shared Excess Finance Charge Collections among the Series
included within the applicable Shared Excess Finance Charge Collections Group
will not have adverse regulatory implications for it, there can be no assurance
that this will continue to be true in the future.
SHARED EXCESS PRINCIPAL COLLECTIONS
If so specified in the accompanying Prospectus Supplement, to the extent that
collections of Principal Receivables and certain other amounts that are
allocated to the Investor Interest of any Series are not needed to make payments
or deposits with respect to such Series, such collections will constitute Shared
Excess Principal Collections and will be applied to cover principal payments due
to or for the benefit of Certificateholders of other Series. If so specified in
the accompanying Prospectus Supplement, the allocation of Shared Excess
Principal Collections may be among Series within the Shared Excess Principal
Collections Group. Any such reallocation will not result in a reduction in the
Investor Interest of the Series to which such collections were initially
allocated. This feature permits amounts that would otherwise be payable to the
holder of the Transferor Certificate to be used for the benefit of Series of
Certificates that would otherwise experience a shortfall or delay in the payment
of principal thereon.
While any Series offered hereby may be designated by the Transferor to be
included within the Shared Excess Principal Collections Group, there can be no
assurance that (a) any other Series will be designated by the Transferor to be
included within the Shared Excess Principal Collections Group or (b) there will
be any Shared Excess Principal Collections with respect to any other Series
within the Shared Excess Principal Collections Group.
PAIRED SERIES
If so provided in the Prospectus Supplement relating to a Series, each such
Series is subject to being paired with another Series previously or subsequently
issued by the Trust (a "Paired Series"). As the Investor Interest of the Series
having a Paired Series is reduced, the Investor Interest or Adjusted Investor
Interest (as defined in the accompanying Prospectus Supplement), as the case may
be, in the Trust of the Paired Series will increase by an equal amount. If a Pay
Out Event occurs with respect to the Series having a Paired Series or with
respect to the Paired Series when the Series is in a Controlled Amortization
Period or a Controlled Accumulation Period, the percentage used for allocating
collections of Principal Receivables for such Series and for the Paired Series
will be reset as provided in the accompanying Prospectus Supplement. The effects
of this feature will be discussed in the Prospectus Supplement relating to a
Paired Series.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES; INVESTOR CHARGE-OFFS
For each Series of Certificates, on or before the second business day
preceding each Transfer Date (the "Determination Date"), the Servicer will
calculate the Aggregate Investor Default Amount for the preceding Monthly
Period, which will be equal to the aggregate amount of the Investor Percentage
of Principal Receivables (other than Ineligible Receivables) in Defaulted
Accounts; that is, Accounts which in such Monthly Period were charged-off as
uncollectible in accordance with the Servicer's policies and procedures for
servicing credit card
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receivables comparable to the Receivables. In the case of a Series of
Certificates having more than one Class, the Aggregate Investor Default Amount
will be allocated among the Classes in the manner described in the accompanying
Prospectus Supplement. If so provided in the accompanying Prospectus Supplement,
an amount equal to the Aggregate Investor Default Amount for any Monthly Period
may be paid from other amounts, including collections in the Finance Charge
Account or from Credit Enhancement, and applied to pay principal to
Certificateholders or the holder of the Transferor Certificate, as appropriate.
In the case of a Series of Certificates having one or more Classes of
Subordinated Certificates, the accompanying Prospectus Supplement may provide
that all or a portion of amounts otherwise allocable to such Subordinated
Certificates may be paid to the holders of Senior Certificates to make up any
Aggregate Investor Default Amount allocable to such holders of Senior
Certificates.
With respect to each Series of Certificates, the Investor Interest with
respect to such Series will be reduced by the amount of Investor Charge-Offs for
any Monthly Period. Investor Charge-Offs will be reimbursed on any Distribution
Date to the extent amounts on deposit in the Finance Charge Account and
otherwise available therefor exceed such interest, fees and any Aggregate
Investor Default Amount payable on such date. Such reimbursement of Investor
Charge-Offs will result in an increase in the Investor Interest with respect to
such Series. In the case of a Series of Certificates having more than one Class,
the accompanying Prospectus Supplement describes the manner and priority of
allocating Investor Charge-Offs and reimbursements thereof among the Investor
Interests of the several Classes.
If the Servicer adjusts the amount of any Principal Receivable (a) because of
transactions occurring in respect of a rebate or refund or billing error to a
cardholder (including any rebates arising under a rebate program), (b) because
such Principal Receivable was created in respect of merchandise which was
refused or returned by a cardholder or services successfully disputed by a
cardholder or (c) because such Principal Receivable was transferred to a credit
card account outside of the Trust, then the amount of the Transferor Interest in
the Trust will be reduced, on a net basis, by the amount of the adjustment. In
addition, the Transferor Interest in the Trust will be reduced, on a net basis,
as a result of transactions in respect of any Principal Receivable which was
discovered as having been created through a fraudulent or counterfeit charge. In
the event any such reduction would cause the Transferor Interest to be a
negative number, the Transferor shall make a deposit into the Principal Account
in immediately available funds in an amount equal to the deficiency.
DEFEASANCE
If so specified in the Prospectus Supplement relating to a Series, the
Transferor may terminate its substantive obligations in respect of such Series
or the Trust by depositing with the Trustee, from amounts representing, or
acquired with, collections of Receivables, money or Permitted Investments
sufficient to make all remaining scheduled interest and principal payments on
such Series or all outstanding Series of Certificates of the Trust, as the case
may be, on the dates scheduled for such payments and to pay all amounts owing to
any Credit Enhancement Provider with respect to such Series or all outstanding
Series, as the case may be, if such action would not result in a Pay Out Event
for any Series. Prior to its first exercise of its right to substitute money or
Permitted Investments for Receivables, the Transferor will deliver to the
Trustee (i) an opinion of counsel to the effect that such deposit and
termination of obligations will not result in the Trust being required to
register as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended and (ii) an Opinion of Counsel with respect to
such deposit and termination to the effect that it will not cause the Trust or
any portion thereof to be treated as an association or publicly traded
partnership taxable as a corporation. Upon any such deposit, holders of
Certificates of the affected Series could recognize taxable gain for federal
income tax purposes to the extent that the value of the related Certificate
exceeds its tax basis therein, but would in no event be allowed to deduct a
taxable loss for such purposes. See "Federal Income Tax Consequences--Sale or
Exchange of Certificates" in this Prospectus.
FINAL PAYMENT OF PRINCIPAL; TERMINATION
With respect to each Series, the Certificates will be subject to optional
repurchase by the Transferor on any Distribution Date after the total Investor
Interest of such Series and the Enhancement Invested Amount, if any, with
respect to such Series, is reduced to an amount less than or equal to 5% of the
initial Investor Interest, if any (or such other amount specified in the
accompanying Prospectus Supplement), if certain conditions set forth in the
Agreement are met. The repurchase price will be equal to the total Investor
Interest of such Series (less the amount,
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if any, on deposit in any Principal Funding Account with respect to such
Series), plus the Enhancement Invested Amount, if any, with respect to such
Series, plus accrued and unpaid interest on the Certificates and interest or
other amounts payable on the Enhancement Invested Amount or the Collateral
Interest, if any, through the day preceding the Distribution Date on which the
repurchase occurs.
The Certificates of each Series will be retired on the day following the
Distribution Date on which the final payment of principal is scheduled to be
made to the Certificateholders, whether as a result of optional reassignment to
the Transferor or otherwise. Each Prospectus Supplement specifies a date for
such payment (the "Series Termination Date") with respect to the related Series
of Certificates; provided, however, that the Certificates may be subject to
prior termination as provided above. If the Investor Interest is greater than
zero on the Series Termination Date, the Trustee or Servicer may be required to
sell or cause to be sold certain Receivables in the manner provided in the
Agreement and Series Supplement and to pay the net proceeds of such sale and any
collections on the Receivables, in an amount at least equal to the sum of the
Investor Interest and the Enhancement Invested Amount, if any, with respect to
such Series plus accrued interest due thereon.
Unless the Servicer and the holder of the Transferor Certificate instruct the
Trustee otherwise, the Trust will terminate on the earlier of (a) the day after
the Distribution Date on which the aggregate Investor Interest and Enhancement
Invested Amount or Collateral Interest, if any, with respect to each Series
outstanding is zero, (b) June 30, 2026 or (c) if the Receivables are sold,
disposed of or liquidated following the occurrence of an Insolvency Event,
immediately following such sale, disposition or liquidation (such date, the
"Trust Termination Date"). Upon the termination of the Trust and the surrender
of the Transferor Certificate, the Trustee shall convey to the holder of the
Transferor Certificate all right, title and interest of the Trust in and to the
Receivables and other funds of the Trust.
PAY OUT EVENTS
As described above, the Revolving Period will continue through the date
specified in the accompanying Prospectus Supplement unless one or more of
certain adverse events described in the accompanying Prospectus Supplement
(each, a "Pay Out Event") occurs prior to such date. A Pay Out Event occurs with
respect to all Series issued by the Trust upon the occurrence of any of the
following events:
(a) certain events of insolvency, receivership or bankruptcy relating to
the Transferor, an Additional Transferor or another holder of the Transferor
Certificate (each, an "Insolvency Event" with respect to the related
Transferor);
(b) the Transferor or any Additional Transferor is unable for any reason
to transfer Receivables to the Trust in accordance with the provisions of the
Agreement; or
(c) the Trust becomes an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In addition, a Pay Out Event may occur with respect to any Series upon the
occurrence of any other event specified in the accompanying Prospectus
Supplement. On the date on which a Pay Out Event is deemed to have occurred, the
Rapid Amortization Period or, if so specified in the accompanying Prospectus
Supplement, the Rapid Accumulation Period will commence. If, because of the
occurrence of a Pay Out Event, the Rapid Amortization Period begins earlier than
the scheduled commencement of an Amortization Period or prior to a Scheduled
Payment Date, Certificateholders will begin receiving distributions of principal
earlier than they otherwise would have, which may shorten the average life of
the Certificates.
In addition to the consequences of a Pay Out Event discussed above, if a
conservator or receiver were appointed for the Transferor, an Additional
Transferor or another holder of the Transferor Certificate or a bankruptcy or
Insolvency Event were to occur with respect to the Transferor, an Additional
Transferor or another holder of the Transferor Certificate, on the day any such
event occurs the Transferor and any Additional Transferor will immediately cease
to transfer Principal Receivables and discount option receivables to the Trust
and promptly give notice to the Trustee of such event and the Agreement and the
Trust shall terminate, subject to the liquidation, winding-up and dissolution
procedures described in the Agreement. Within 15 days, the Trustee will publish
a
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notice of the termination of the Trust and the liquidation or the appointment
stating that the Trustee intends to sell, dispose of, or otherwise liquidate the
Receivables in a commercially reasonable manner. Unless otherwise instructed
within a specified period by Certificateholders representing interests
aggregating more than 50% of the Investor Interest of each Series (or, with
respect to any Series with more than one Class, of each Class) and the
Transferor, each Additional Transferor (other than the Transferor that is the
subject of such Insolvency Event) and each holder of an interest in the
Transferor Interest (including any holder of a Supplemental Certificate) not
subject to the appointment or Insolvency Event, and any other person designated
by the Transferor or an Additional Transferor in an officer's certificate
delivered to the Trustee prior to the Insolvency Event or specified in the
related Series Supplement, which may include any provider of Enhancement, to the
effect that such Persons disapprove of the liquidation of the Receivables and
wish to reconstitute the Trust pursuant to the terms of the Agreement (as
amended in connection with such reconstitution), the Trustee will promptly sell,
dispose of, or otherwise 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. The proceeds from the sale, disposition or liquidation of the
Receivables and any Participation will be immediately deposited in the related
Collection Account and allocated as specified above in "--Application of
Collections" and in the accompanying Prospectus Supplement. The foregoing
provisions have been included in the Agreement for reasons related to the
possible treatment of the Trust as a partnership for federal income tax
purposes. The IRS has issued proposed regulations that, if adopted as final
regulations, would make the foregoing provisions unnecessary. The amendment
provisions of the Agreement, therefore, allow the Trustee and the Servicer to
amend the Agreement, without the consent of any of the Certificateholders, to
eliminate such provisions upon (i) the adoption of final regulations whose
applicable provisions are substantially the same as the corresponding provisions
of the proposed regulations and (ii) the receipt of an opinion that the deletion
of such provisions will not adversely affect the ability of the Trust to be
characterized as a partnership for federal income tax purposes. The rights of
Certificateholders to vote on whether to continue or dissolve the Trust (or any
Series thereof) upon the insolvency of the Transferor could therefore be
eliminated without Certificateholders having any right to prevent such
elimination.
If the only Pay Out Event to occur is either the insolvency of the Transferor
or an Additional Transferor or the appointment of a conservator or receiver for
the Transferor or an Additional Transferor, the conservator or receiver may have
the power to prevent the early sale, liquidation or disposition of the
Receivables and the commencement of a Rapid Amortization Period or, if
applicable with respect to a Series as specified in the accompanying Prospectus
Supplement, a Rapid Accumulation Period. In addition, a conservator or receiver
may have the power to cause the early sale of the Receivables and the early
retirement of the Certificates. See "Risk Factors--Possible Effects of
Insolvency or Bankruptcy of the Transferor, Other Holder of Transferor
Certificate or the Servicer" and "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Receivership" in this Prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
For each Series of Certificates, the Servicer's compensation for its servicing
activities and reimbursement for its expenses will take the form of the payment
to it of the Servicing Fee payable at the times and in the amounts specified in
the accompanying Prospectus Supplement. The portion of the Servicing Fee
allocated to the Certificates of each Series will be funded from collections of
Finance Charge Receivables allocated to the related Investor Interest and will
be paid each month, or on such other specified periodic basis, from amounts so
allocated and on deposit in the Finance Charge Account (which, if so specified
in the accompanying Prospectus Supplement, may include all or a portion of the
Interchange arising from the Accounts) or, in certain limited circumstances,
from amounts available from Enhancement and other sources, if any. The remainder
of the servicing fee for the Trust will be allocable to the Transferor Interest,
the Investor Interests of any other Series issued by the Trust and the interest
represented by the Enhancement Invested Amount or the Collateral Interest, if
any, with respect to such Series, as described in the accompanying Prospectus
Supplement. Neither the Trust nor the related Certificateholders will have any
obligation to pay the portion of the servicing fee allocable to the Transferor
Interest.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee and independent
certified public accountants and other fees which are not expressly stated in
the Agreement to be payable by the Trust or the related Certificateholders other
than federal, state and local income and franchise taxes, if any, of the Trust.
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CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
With respect to each Series of Certificates, the Servicer may not resign from
its obligations and duties under the Agreement, except upon determination that
performance of its duties is no longer permissible under applicable law. 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.
The Agreement provides that the Servicer will indemnify the Trust and Trustee
from and against any reasonable loss, liability, expense, damage or injury
suffered or sustained by reason of any acts or omissions or alleged acts or
omissions of the Servicer with respect to the activities of the Trust or
Trustee; provided, however, that the Servicer shall not indemnify (a) the
Trustee for liabilities imposed by reason of fraud, negligence, or willful
misconduct by the Trustee in the performance of its duties under the Agreement,
(b) the Trust, the Certificateholders or the Certificate Owners for liabilities
arising from actions taken by the Trustee at the request of Certificateholders,
(c) the Trust, the Certificateholders or the Certificate Owners for any losses,
claims, damages or liabilities incurred by any of them in their capacities as
investors, including without limitation, losses incurred as a result of
defaulted Accounts or Receivables which are charged-off as uncollectible, or (d)
the Trust, the Certificateholders or the Certificate Owners for any liabilities,
costs or expenses of the Trust, the Certificateholders or the Certificate Owners
arising under any tax law, including without limitation, any federal, state or
local income or franchise tax 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 Certificateholders or
the Certificate Owners in connection with the Agreement to any taxing authority.
In addition, the Agreement provides that, subject to certain exceptions, the
Transferor will agree to be liable to an injured party for any losses, claims,
damages or liabilities (other than those incurred by a Certificateholder as an
investor in the Certificates) arising out of or based upon each of the
arrangements created by the Agreement and the actions of the Servicer as though
the Agreement created a partnership under the New York Uniform Partnership Act
in which the Transferor is a general partner.
The Agreement provides that neither the Transferor nor the Servicer nor any of
their respective directors, officers, employees or agents will be under any
other liability to the Trust, Trustee, Certificateholders or any other person
for any action taken, or for refraining from taking any action, in good faith
pursuant to the Agreement. Neither the Transferor, the Servicer, nor any of
their respective 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 the Transferor, the Servicer or
any such person in the performance of its duties or by reason of reckless
disregard of obligations and duties thereunder. 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 and which in its opinion may expose it to
any expense or liability.
The Agreement provides that the Transferor may transfer its interest in all or
a portion of the Transferor Certificate, provided that prior to any such
transfer (a) the Trustee receives written notification from each Rating Agency
that such transfer will not result in a lowering of its then-existing rating of
the Certificates of each outstanding Series rated by it and (b) the Trustee
receives a written opinion of counsel confirming that such transfer would not
adversely affect the treatment of the Certificates of each outstanding Series as
debt for federal income tax purposes.
Any person into which, in accordance with the Agreement, the Transferor or the
Servicer may be merged or consolidated or any person resulting from any merger
or consolidation to which the Transferor or the Servicer is a party, or any
person succeeding to the business of the Transferor or the Servicer, upon
execution of a supplement to the Agreement and delivery of an opinion of counsel
with respect to the compliance of the transaction with the applicable provisions
of the Agreement, will be the successor to the Transferor or the Servicer, as
the case may be, under the Agreement.
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SERVICER DEFAULT
In the event of any Servicer Default, either the Trustee or Certificateholders
representing interests aggregating more than 50% of the Investor Interests for
all Series of Certificates of the Trust, 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 as servicer under the Agreement and in
and to the Receivables and the proceeds thereof and the Trustee may appoint a
new Servicer (a "Service Transfer"). The rights and interest of the Transferor
under the Agreement and in the Transferor Interest will not be affected by such
termination. The Trustee shall as promptly as possible appoint a successor
Servicer. If no such successor Servicer has been appointed 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 shall pass to and be
vested in the Trustee. 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 Servicer Default which gave rise to a transfer
of servicing, and if the Trustee is legally unable to act as successor Servicer,
then the Trustee shall give the Transferor the right of first refusal to acquire
the Receivables on terms equivalent to the best offer as determined by the
Trustee.
"Servicer Default" under the Agreement refers to any of the following events:
(a) failure by the Servicer to make any payment, transfer or deposit, or
to give instructions to the Trustee to make certain payments, transfers or
deposits, on the date the Servicer is required to do so under the Agreement
or any Series Supplement (or within the applicable grace period, which shall
not exceed 10 business days);
(b) failure on the part of the Servicer duly to observe or perform in any
respect any other covenants or agreements of the Servicer which has a
material adverse effect on the Certificateholders of any Series issued and
outstanding under the Trust and which continues unremedied for a period of 60
days after written notice and continues to have a material adverse effect on
such Certificateholders; or the delegation by the Servicer of its duties
under the Agreement, except as specifically permitted thereunder;
(c) any representation, warranty or certification made by the Servicer in
the Agreement, or in any certificate delivered pursuant to the Agreement,
proves to have been incorrect when made which has a material adverse effect
on the Certificateholders of any Series issued and outstanding under the
Trust, and which continues to be incorrect in any material respect for a
period of 60 days after written notice and continues to have a material
adverse effect on such Certificateholders;
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership of the Servicer; or
(e) such other event specified in the accompanying Prospectus Supplement.
Unless otherwise stated in the accompanying Prospectus Supplement,
notwithstanding the foregoing, a delay in or failure of performance referred to
in clause (a) above for a period of 10 business days, or referred to under
clause (b) or (c) for a period of 60 business days, 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 other similar occurrence. Upon the occurrence of any such
event, the Servicer shall not be relieved from using its best efforts to perform
its obligations in a timely manner in accordance with the terms of the
Agreement, and the Servicer shall provide the Trustee, any provider of
Enhancement and/or any issuer of any third-party Credit Enhancement (a "Credit
Enhancement Provider"), the Transferor and the holders of Certificates of each
Series issued and outstanding under the Trust prompt notice of such failure or
delay by it, together with a description of the cause of such failure or delay
and its efforts to perform its obligations.
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 the insolvency of the Servicer exists, the conservator or
receiver may have the power to prevent either the Trustee or the majority of the
Certificateholders from effecting a Service Transfer.
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REPORTS TO CERTIFICATEHOLDERS
Unless otherwise specified in the accompanying Prospectus Supplement, for each
Series of Certificates, on each Distribution Date, or as soon thereafter as is
practicable, as specified in the accompanying Prospectus Supplement, the agent
making payments to the Certificateholders (the "Paying Agent") will forward to
each Certificateholder of record a statement prepared by the Servicer setting
forth, among other things: (a) the amount of the distribution on such
Distribution Date allocable to principal on the Certificates, (b) the amount of
such distribution allocable to interest on the Certificates, (c) the amount of
collections of Principal Receivables processed during the preceding month or
months since the last Distribution Date and allocated in respect of the
Certificates, (d) the aggregate amount of Principal Receivables in the Trust as
of the end of the last day of the preceding Monthly Period or Periods since the
last Distribution Date, (e) the aggregate outstanding balance of Accounts which
are 30 or more days delinquent by class of delinquency as of the end of the last
day of the preceding Monthly Period or Periods since the last Distribution Date,
(f) the Aggregate Investor Default Amount for the preceding Monthly Period or
Periods since the last Distribution Date, (g) the amount of Investor Charge-Offs
for the preceding Monthly Period or Periods since the last Distribution Date and
the amount of reimbursements of previous Investor Charge-Offs for the preceding
Monthly Period or Periods since the last Distribution Date, (h) the amount of
the Servicing Fee allocated to the Certificates for the preceding Monthly Period
or Periods since the last Distribution Date, (i) the amount available under any
Enhancement (including any Credit Enhancement) as of the close of business on
such Distribution Date, (j) the aggregate amount of collections on Finance
Charge Receivables processed during the preceding Monthly Period or Periods
since the last Distribution Date, (k) the Portfolio Yield for the preceding
Monthly Period or Periods since the last Distribution Date, and (l) certain
information relating to the floating or variable Certificate Rates, if
applicable, for each accrual period (each, an "Interest Period") specified in
the accompanying Prospectus Supplement relating to such Distribution Date. In
the case of a Series of Certificates having more than one Class, the statements
forwarded to Certificateholders will provide information as to each Class of
Certificates, as appropriate.
On or before January 31 of each calendar year or such other date as specified
in the accompanying Prospectus Supplement, the Paying Agent will furnish to each
person who at any time during the preceding calendar year was a
Certificateholder of record, a statement prepared by the Servicer containing the
information required to be contained in the regular monthly report to
Certificateholders, as set forth in clauses (a), (b) and (c) above aggregated
for such calendar year or the applicable portion thereof during which such
person was a Certificateholder, together with such other customary information
(consistent with the treatment of the Certificates as debt) as the Trustee or
the Servicer deems necessary or desirable to enable the Certificateholders to
prepare their United States tax returns.
EVIDENCE AS TO COMPLIANCE
The Agreement provides that on or before March 31 of each calendar year or
such other date as specified in the accompanying Prospectus Supplement, the
Servicer will cause a firm of independent certified public accountants to
furnish a report to the effect that such accounting firm has made a study and
evaluation of the Servicer's internal accounting controls relative to the
servicing of the Accounts and that, on the basis of such examination, such firm
is of the opinion that, assuming the accuracy of reports by the Servicer's third
party agents, the system of internal accounting controls in effect on the date
of such statement 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 the Agreement during the period covered by such report (which shall
be the period from January 1 (or for the initial period, the relevant Closing
Date) of the preceding calendar year to and including December 31 of such
calendar year), except for such exceptions or errors as such firm shall believe
to be immaterial and such other exceptions as shall be set forth in such
statement.
The Agreement provides for delivery to the Trustee on or before March 31 of
each calendar year or such other date as specified in the accompanying
Prospectus Supplement, of an annual statement signed by an officer of the
Servicer to the effect that the Servicer has fully performed its obligations
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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AMENDMENTS
The Agreement and any Series Supplement (unless, with respect to a Series
Supplement, otherwise specified in the accompanying Prospectus Supplement) may
be amended by the Transferor, the Servicer and the Trustee, without the consent
of Certificateholders of any Series then outstanding, for any purpose; provided,
however, that (i) the Transferor delivers an officer's certificate to the
Trustee to the effect that such amendment will not adversely affect in any
material respect the interest of such Certificateholders, and (ii) such
amendment will not result in a withdrawal or reduction of the rating of any
outstanding Series under the Trust. The Agreement and any related Series
Supplement may be amended by the Transferor (and, if applicable, any Additional
Transferor being designated), the Servicer and the Trustee, without the consent
of the Certificateholders of any Series then outstanding, to provide for
additional Enhancement or substitute Enhancement with respect to a Series, to
change the definition of Eligible Account, to provide for the designation of an
Additional Transferor, or to provide for the addition to the Trust of a
Participation, provided, that (i) the Transferor (and, if applicable, any
Additional Transferor being designated) delivers to the Trustee a certificate of
an authorized officer to the effect that, in the reasonable belief of the
Transferor (and such Additional Transferor as applicable), such amendment will
not as of the date of such amendment adversely affect in any material respect
the interest of such Certificateholders, and (ii) such amendment will not result
in a withdrawal or reduction of the rating of any outstanding Series under the
Trust.
The Agreement and the related Series Supplement may be amended by the
Transferor, the Servicer and the Trustee with the consent of the holders of
Certificates evidencing interests aggregating not less than 66 2/3 (or such
other percentage specified in the accompanying Prospectus Supplement) of the
Investor Interests for all Series of the Trust, for the purpose of adding any
provisions to, changing in any manner or eliminating any of the provisions of
the Agreement or the related Series Supplement or of modifying in any manner the
rights of Certificateholders of any outstanding Series of the Trust. No such
amendment, however, may (a) reduce in any manner the amount of, or delay the
timing of, distributions required to be made on the related Series or any
Series, (b) change the definition of or the manner of calculating the interest
of any Certificateholder of such Series or any Certificateholder of any other
Series issued by the Trust or (c) reduce the aforesaid percentage of interests
the holders of which are required to consent to any such amendment, in each case
without the consent of all Certificateholders of the related Series and
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. Any Series
Supplement and any amendments regarding the addition or removal of Receivables
or Participations from the Trust will not be considered an amendment requiring
Certificateholder consent under the provisions of the Agreement and any Series
Supplement.
Additionally, the Agreement and any Series Supplement may be amended by the
Servicer and the Trustee at the direction of the Transferor without the consent
of any of the Certificateholders (i) to add, modify or eliminate such provisions
as may be necessary or advisable in order to enable all or a portion of the
Trust to qualify as, and to permit an election to be made to cause all or a
portion of the Trust to be treated as, a "financial asset securitization
investment trust" as described in the provisions of the "Seven Year Balanced
Budget Act of 1995," H.R. 2491, 104th Cong., 1st Sess. (1995), or to enable all
or a portion of the Trust to qualify and an election to be made for similar
treatment under such comparable subsequent federal income tax provisions as may
ultimately be enacted into law, and (ii) in connection with any such election,
to modify or eliminate existing provisions of the Agreement and any Series
Supplement relating to the intended federal income tax treatment of the
Certificates and the Trust in the absence of the election. See "Federal Income
Tax Consequences--Treatment of the Trust--Newly Enacted Legislation." It is a
condition to any such amendment that each Rating Agency will have notified the
Transferor, the Servicer and the Trustee in writing that the amendment will not
result in a reduction or withdrawal of the rating of any outstanding Series or
Class to which it is a Rating Agency. The amendments which the Transferor may
make in connection with any election described above without the consent of
Certificateholders may include, without limitation, the elimination of any sale
of Receivables and termination of the Trust upon the occurrence of an event of
receivership or insolvency with respect to the Transferor, an Additional
Transferor or other holder of the Transferor Certificate. See "Certain Legal
Aspects of the Receivables--Certain Matters Relating to Receivership" in this
Prospectus.
Additionally, the Agreement and any Series Supplement may be amended by the
Servicer and the Trustee at the direction of the Transferor without the consent
of any of the Certificateholders (i) to add, modify or eliminate such provisions
as may be necessary or advisable in order to enable (a) the transfer to the
Trust of all or any portion of the
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Receivables to be derecognized under generally accepted accounting principals
("GAAP") by the Transferor or (b) the Trust to avoid becoming a member of any
Transferor's consolidated group under GAAP, and (ii) in connection with any such
addition, modification or elimination, without limiting the generality of the
foregoing clause (i), to cause the Receivables to be transferred by a Transferor
first to a bankruptcy remote Affiliate and from such Affiliate to the Trust;
provided, however, that it is a condition to any such amendment that (i) the
Transferor delivers an officer's certificate to the Trustee to the effect that
such amendment meets the requirements set forth in this paragraph and (ii) such
amendment will not result in a withdrawal or reduction of the rating of any
outstanding Series under the Trust. In addition, the Agreement may be amended as
described above under "--Pay Out Events."
LIST OF CERTIFICATEHOLDERS
With respect to each Series of Certificates, upon written request of
Certificateholders of record representing interests in the Trust aggregating not
less than 10% (or such other percentage specified in the accompanying Prospectus
Supplement) of the Investor Interest, the Trustee after having been adequately
indemnified by such Certificateholders for its costs and expenses, and having
given the Servicer notice that such request has been made, 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. See
"Description of the Certificates--Book-Entry Registration" and "--Definitive
Certificates" above.
THE TRUSTEE
The Prospectus Supplement for each Series will specify the 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. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee shall 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 by the Agreement shall be conferred or imposed upon the Trustee
and such separate trustee or co-trustee jointly, or, in any jurisdiction in
which the Trustee shall 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 the Transferor will be
obligated to appoint a successor Trustee. The Transferor 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, the
Transferor will be obligated to appoint a successor Trustee. 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.
CERTIFICATEHOLDERS HAVE LIMITED CONTROL OF ACTIONS
Certificateholders of any Series or Class within a Series may need the
consent or approval of a specified percentage of the Investor Interest of other
Series or a Class of such other Series to take or direct certain actions,
including to require the appointment of a successor Servicer after a Servicer
Default, to amend the Agreement in some cases, and to direct a repurchase of all
outstanding Series after certain violations of the Transferor's representations
and warranties. The interests of the Certificateholders of any such Series may
not coincide with yours, making it more difficult for any particular
Certificateholder to achieve the desired results from such vote.
CREDIT ENHANCEMENT AND ENHANCEMENT
GENERAL
For any Series, Credit Enhancement may be provided with respect to one or more
Classes thereof. "Credit Enhancement" may be in the form of the subordination of
one or more Classes of the Certificates of such Series, a letter of credit, the
establishment of a cash collateral guaranty or account, a collateral interest, a
surety bond, an insurance policy, a spread account, a reserve account, the use
of cross support features or another method of Credit
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Enhancement described in the accompanying Prospectus Supplement, or any
combination of the foregoing. If so specified in that accompanying Prospectus
Supplement, any form of Credit Enhancement may be structured so as to be drawn
upon by more than one Class to the extent described in that accompanying
Prospectus Supplement. The initial form of Credit Enhancement, with respect to
any Series of Certificates, will be determined by the Transferor prior to the
issuance of such Certificates, based principally on the alternative costs of the
various forms of Credit Enhancement prevailing at that time.
Unless otherwise specified in the accompanying Prospectus Supplement for a
Series, the Credit Enhancement will not provide protection against all risks of
loss and will not guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur which exceed the amount
covered by the Credit Enhancement or which are not covered by the Credit
Enhancement, Certificateholders will bear their allocable share of deficiencies.
If Credit Enhancement is provided with respect to a Series, the accompanying
Prospectus Supplement includes a description of (a) the amount payable under
such Credit Enhancement, (b) any conditions to payment thereunder not otherwise
described in this Prospectus, (c) the conditions (if any) under which the amount
payable under such Credit Enhancement may be reduced and under which such Credit
Enhancement may be terminated or replaced, (d) any material provision of any
agreement relating to such Credit Enhancement and (e) the allocation (if any) of
Trust assets to the related Credit Enhancement Provider. Additionally, the
accompanying Prospectus Supplement may set forth certain information with
respect to any Credit Enhancement Provider, including (i) a brief description of
its principal business activities, (ii) its principal place of business, place
of incorporation and the jurisdiction under which it is chartered or licensed to
do business, (iii) if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its business and (iv) its
total assets, its stockholders' or policy holders' surplus, if applicable, and
other appropriate financial information as of the date specified in the
Prospectus Supplement. If so specified in the accompanying Prospectus
Supplement, Credit Enhancement with respect to a Series may be available to pay
principal of the Certificates of such Series following the occurrence of certain
Pay Out Events with respect to such Series. In such event, the Credit
Enhancement Provider will have an interest in certain cash flows in respect of
the Receivables to the extent described in such Prospectus Supplement (the
"Enhancement Invested Amount").
SUBORDINATION
If so specified in the accompanying Prospectus Supplement, one or more Classes
of any Series will be subordinated as described in the accompanying Prospectus
Supplement to the extent necessary to fund payments with respect to the Senior
Certificates. The rights of the holders of any such Subordinated Certificates to
receive distributions of principal and/or interest on any Distribution Date for
such Series will be subordinate in right and priority to the rights of the
holders of Senior Certificates, but only to the extent set forth in the
accompanying Prospectus Supplement. If so specified in the accompanying
Prospectus Supplement, subordination may apply only in the event of certain
types of losses not covered by another Credit Enhancement. The accompanying
Prospectus Supplement sets forth any applicable information concerning the
amount of subordination of a Class or Classes of Subordinated Certificates in a
Series, the circumstances in which such subordination will be applicable, the
manner, if any, in which the amount of subordination will decrease over time,
and the conditions under which amounts available from payments that would
otherwise be made to holders of such Subordinated Certificates will be
distributed to holders of Senior Certificates. If collections of Receivables
otherwise distributable to holders of a Subordinated Class of a Series will be
used as support for a Class of another Series, the accompanying Prospectus
Supplement specifies the manner and conditions for applying such a cross-support
feature.
LETTER OF CREDIT
If so specified in the accompanying Prospectus Supplement, support for a
Series or one or more Classes thereof will be provided by one or more letters of
credit. A letter of credit may provide limited protection against certain losses
in addition to or in lieu of other Credit Enhancement. The issuer of the letter
of credit (the "L/C Bank") will be obligated to honor demands with respect to
such letter of credit, to the extent of the amount available thereunder, to
provide funds under the circumstances and subject to such conditions as are
specified in the accompanying Prospectus Supplement.
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The maximum liability of an L/C Bank under its letter of credit will generally
be an amount equal to a percentage specified in the accompanying Prospectus
Supplement of the Initial Investor Interest of a Series or a Class of such
Series. The maximum amount available at any time to be paid under a letter of
credit will be determined in the manner specified therein and in the
accompanying Prospectus Supplement.
CASH COLLATERAL GUARANTY OR ACCOUNT
If so specified in the accompanying Prospectus Supplement, support for a
Series or one or more Classes thereof will be provided by a guaranty (the "Cash
Collateral Guaranty") secured by the deposit of cash or certain permitted
investments in an account (the "Cash Collateral Account") reserved for the
beneficiaries of the Cash Collateral Guaranty or by a Cash Collateral Account
alone. The amount available pursuant to the Cash Collateral Guaranty or the Cash
Collateral Account will be the lesser of amounts on deposit in the Cash
Collateral Account and an amount specified in the accompanying Prospectus
Supplement. The accompanying Prospectus Supplement sets forth the circumstances
under which payments are made to beneficiaries of the Cash Collateral Account or
the Cash Collateral Guaranty, as applicable.
COLLATERAL INTEREST
If so specified in the accompanying Prospectus Supplement, support for a
Series or one or more Classes thereof will be provided initially by an undivided
interest in the Trust (the "Collateral Interest") in an amount initially equal
to a percentage of the Certificates of such Series as specified in the
Prospectus Supplement. Such Series may also have the benefit of a Cash
Collateral Guaranty or Cash Collateral Account with an initial amount on deposit
therein, if any, as specified in the Prospectus Supplement which will be
increased (i) to the extent the Transferor elects, subject to certain conditions
specified in the accompanying Prospectus Supplement, by the application of
collections of Principal Receivables allocable to the Collateral Interest to
decrease the Collateral Interest, (ii) to the extent collections of Principal
Receivables allocable to the Collateral Interest are required to be deposited
into the Cash Collateral Account as specified in the accompanying Prospectus
Supplement and (iii) to the extent excess collections of Finance Charge
Receivables are required to be deposited into the Cash Collateral Account as
specified in the accompanying Prospectus Supplement. The total amount of the
Credit Enhancement available pursuant to the Collateral Interest and, if
applicable, the Cash Collateral Guaranty or Cash Collateral Account will be the
lesser of the sum of the Collateral Interest and the amount on deposit in the
Cash Collateral Account and an amount specified in the accompanying Prospectus
Supplement. The accompanying Prospectus Supplement sets forth the circumstances
under which payments which otherwise would be made to holders of the Collateral
Interest will be distributed to holders of Certificates and, if applicable, the
circumstances under which payment will be made under the Cash Collateral
Guaranty or from the Cash Collateral Account.
SURETY BOND OR INSURANCE POLICY
If so specified in the accompanying Prospectus Supplement, insurance with
respect to a Series or one or more Classes thereof will be provided by one or
more insurance companies. Such insurance will guarantee, with respect to one or
more Classes of the related Series, distributions of interest or principal in
the manner and amount specified in the accompanying Prospectus Supplement.
If so specified in the accompanying Prospectus Supplement, a surety bond will
be purchased for the benefit of the holders of any Series or Class of such
Series to assure distributions of interest or principal with respect to such
Series or Class of Certificates in the manner and amount specified in the
accompanying Prospectus Supplement.
SPREAD ACCOUNT
If so specified in the accompanying Prospectus Supplement, support for a
Series or one or more Classes thereof will be provided by the periodic deposit
of certain available excess cash flow from Trust assets into an account (the
"Spread Account") intended to assist with subsequent distribution of interest
and principal on the Certificates of such Class or Series in the manner
specified in the accompanying Prospectus Supplement.
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RESERVE ACCOUNT
If so specified in the accompanying Prospectus Supplement, support for a
Series or one or more Classes thereof or any Enhancement related thereto will be
provided by the establishment of a reserve account (the "Reserve Account"). The
Reserve Account may be funded, to the extent provided in the accompanying
Prospectus Supplement, by an initial cash deposit, the retention of certain
periodic distributions of principal or interest or both otherwise payable to one
or more Classes of Certificates, including the Subordinated Certificates, or the
provision of a letter of credit, guarantee, insurance policy or other form of
credit or any combination thereof. The Reserve Account will be established to
assist with the subsequent distribution of principal or interest on the
Certificates of such Series or Class thereof or such other amount owing on any
Enhancement thereto in the manner provided in the accompanying Prospectus
Supplement.
INTEREST RATE SWAPS AND RELATED CAPS, FLOORS AND COLLARS
The Trustee on behalf of the Trust may enter into interest rate swaps and
related caps, floors and collars or other forms of derivatives to minimize the
risk to Certificateholders from adverse changes in interest rates (collectively,
"Swaps").
An interest rate Swap is an agreement between two parties ("counterparties")
to exchange a stream of interest payments on an agreed hypothetical or
"notional" principal amount. No principal amount is exchanged between the
counterparties to an interest rate swap. In the typical Swap, one party agrees
to pay a fixed-rate on a notional principal amount, while the counterparty pays
a floating-rate based on one or more reference interest rates such as the London
Interbank Offered Rate ("LIBOR"), a specified bank's prime rate, or U.S.
Treasury Bill rates. Interest rate Swaps also permit counterparties to exchange
a floating-rate obligation based upon one reference interest rate (such as
LIBOR) for a floating-rate obligation based upon another referenced interest
rate (such as U.S. Treasury Bill rates).
The Swap market has grown substantially in recent years with a significant
number of banks and financial service firms acting both as principals and as
agents utilizing standardized Swap documentation. Caps, floors and collars are
more recent innovations, and they may be less liquid than other Swaps. There can
be no assurance that the Trust will be able to enter into or offset Swaps at any
specific time or at prices or on other terms that are advantageous. In addition,
although the terms of a Swap may provide for termination under certain
circumstances, there can be no assurance that the Trust will be able to
terminate or offset a Swap on favorable terms.
CERTIFICATE RATINGS
Any rating of the Certificates by a Rating Agency will indicate:
- its view on the likelihood that Certificateholders will receive
required interest and principal payments; and
- its evaluation of the Receivables and the availability of any Credit
Enhancement for the Certificates.
Among the things a rating will not indicate are:
- the likelihood that interest or principal payments will be paid on a
scheduled date;
- the likelihood that a Pay Out Event will occur;
- the likelihood that a United States withholding tax will be imposed on
non-U.S. Certificateholders;
- the marketability of the Certificates;
- the market price of the Certificates; or
- whether the Certificates are an appropriate investment for any
purchaser.
A rating will not be a recommendation to buy, sell or hold the Certificates.
A rating may be lowered or withdrawn at any time by a Rating Agency.
The Transferor will request a rating of the Certificates offered by this
Prospectus and the accompanying Prospectus Supplement from at least one Rating
Agency. Rating agencies other than those requested could assign a
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rating to the Certificates and such a rating could be lower than any rating
assigned by a Rating Agency chosen by the Transferor.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The Transferor will represent and warrant in the Agreement that the transfer
of Receivables by it to the Trust is either a valid transfer and assignment to
the Trust of all right, title and interest of the Transferor in and to the
related Receivables, except for the interest of the Transferor as holder of the
Transferor Certificate, or the grant to the Trust of a security interest in such
Receivables. The Transferor also will represent and warrant 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 Uniform Commercial Code (the
"UCC"), there will exist a valid, subsisting and enforceable first priority
perfected security interest in such Receivables created thereafter in favor of
the Trust on and after their creation, except for certain tax and other
governmental liens. For a discussion of the Trust's rights arising from a breach
of these warranties, see "Description of the Certificates--Representations and
Warranties" in this Prospectus.
The Transferor will represent as to Receivables to be conveyed, that the
Receivables are "accounts" or "general intangibles" for purposes of the UCC.
Both the sale of accounts and the transfer of accounts 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, and the filing of
appropriate financing statements is required to perfect the security interest of
the Trust. Financing statements covering the Receivables have been and will be
filed with the appropriate governmental authority to protect the interests of
the Trust in the Receivables. If a transfer of general intangibles is deemed to
be a sale, then the UCC is not applicable and perfection of the Trust's interest
in the Receivables and protection of the Receivables from subsequent creditors
or transferees of the Transferor will be determined pursuant to general
principles of common law. Under such common law principles, the Trust's interest
in the Receivables should be superior to the interests of such subsequent
creditors or transferees except to the extent any such creditor or transferee
acts in good faith without knowledge or reason to know of the Trust's interest
in the Receivables and either obtains payment of the Receivables, obtains
judgment against the obligors under the Receivables, enters into a new contract
by novation with the obligors or possesses a writing customarily accepted as a
symbol or evidence of the Receivables. Actions required to be taken by the
Transferor and Trustee pursuant to the Agreement should provide such subsequent
creditor or transferee with knowledge or reason to know of the Trust's interest
in the Receivables.
There are certain limited circumstances under the UCC in which a prior or
subsequent transferee of Receivables coming into existence after a Closing Date
could have an interest in such Receivables with priority over the Trust's
interest. Under the Agreement, however, the Transferor has made a representation
and warranty that it transferred the Receivables to the Trust free and clear of
the lien of any third party. In addition, the Transferor has made a 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. A tax or
government lien or other nonconsensual lien on property of the Transferor
arising prior to the time a Receivable comes into existence may have priority
over the interest of the Trust in such Receivable. In addition, through fraud or
negligence of the Transferor, a subsequent transferee of the Receivables may
also have priority over the interests of the Trust. In addition, if the FDIC
were appointed as conservator or receiver of the Transferor, certain
administrative expenses of the conservator or receiver may also have priority
over the interest of the Trust in such Receivable. If a conservatorship or
receivership proceeding were to be commenced involving the Transferor and the
conservator or receiver of the Transferor were to take the position that the
transfer of the Receivables from the Transferor to the Trust should be
characterized as the grant of a security interest in such Receivables, then
delays in distributions on the Certificates and reductions in such distributions
could result. In addition, while the Transferor is the Servicer, cash
collections held by the Transferor may, subject to certain conditions, be
commingled and used for the benefit of the Transferor prior to the date on which
such collections are required to be deposited in the Finance Charge Account and
Principal Account as described under "Description of Certificates--Application
of Collections" in this Prospectus. In the event of the conservatorship or
receivership of the Transferor or, in certain circumstances, the lapse of
certain time periods, the Trust may not have a perfected interest in such
collections and, in such event, the Trust may suffer a loss of all or part of
such collections which may result in a loss to Certificateholders.
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CERTAIN MATTERS RELATING TO RECEIVERSHIP
The Transferor is chartered as a national banking association and is subject
to regulation and supervision by the Office of the Comptroller of the Currency,
which is authorized to appoint the FDIC as conservator or receiver of the
Transferor upon the occurrence of certain events relating to the Transferor's
financial condition.
The FDIA, as amended by FIRREA, sets forth certain powers that the FDIC in its
capacity as conservator or receiver for the Transferor could exercise. Positions
taken by the FDIC prior to the passage of FIRREA do not suggest that the FDIC,
if appointed as conservator or receiver for the Transferor, would interfere with
the timely transfer to the Trust of payments collected on the Receivables or
interfere with the timely liquidation of such Receivables, as described below.
To the extent that the Transferor has granted a security interest in the
Receivables to the Trust, and that interest was validly perfected before the
Transferor's insolvency and was not taken in contemplation of the insolvency of
the Transferor, or with the intent to hinder, delay or defraud the Transferor or
the creditors of the Transferor, based upon opinions issued by the general
counsel of the FDIC and policy statements of the FDIC, such security interest
should not be subject to avoidance by the FDIC. However, such opinions and
policy statements are not binding on the FDIC and if the FDIC were to assert a
contrary position, or were to require the Trustee to establish its right to
those payments by submitting to and completing the administrative claims
procedure under the FDIA, or were the conservator or receiver to request a stay
of proceedings with respect to the Transferor as provided under the FDIA, delays
in payments on the Certificates and possible reductions in the amount of those
payments could occur. In addition, the FDIC, if appointed, as conservator or
receiver for the Transferor, has the power under the FDIA to repudiate
contracts, including secured contracts of the Transferor. The FDIA provides that
a claim for damages arising from the repudiation of a contract is limited to
"actual direct compensatory damages." In the event the FDIC were to be appointed
as conservator or receiver of the Transferor and were to repudiate the
Agreement, then the amount payable out of available collections to the
Certificateholders could be lower than the outstanding principal and accrued
interest on the Certificates.
If a conservator or receiver were appointed for the Transferor or other holder
of the Transferor Certificate or a bankruptcy or insolvency event were to occur
with respect to the Transferor or other holder of the Transferor Certificate,
then the Transferor will promptly give notice thereof to the Trustee and a Pay
Out Event will occur with respect to all Series then outstanding under the
Trust. Pursuant to the Agreement, newly created Principal Receivables will not
be transferred to the Trust on and after any such appointment or insolvency
event. In addition, the Trustee will proceed to sell, dispose of or otherwise
liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms, unless otherwise instructed within a specified
period by holders of Certificates representing interests aggregating not less
than 50% of the Investor Interest of each Series (or if any Series has more than
one Class, of each Class) and the Transferor and each holder of an interest in
the Transferor Interest not subject to the appointment or insolvency event, and
any other person designated by the Transferor in an officer's certificate
delivered to the Trustee prior to the appointment or insolvency event or
specified in the related Series Supplement, which may include any provider of
Enhancement. Under the Agreement, the proceeds from the sale of the Receivables
would be treated as collections of the Receivables and the Investor Percentage
of such proceeds would be distributed to the Certificateholders or, if so
specified in the accompanying Prospectus Supplement, collected and held for the
benefit of Certificateholders. This procedure could be delayed, as described
above. If the only Pay Out Event to occur is either the appointment of a
conservator or receiver for, or the insolvency of, the Transferor or other
holder of the Transferor Certificate, or a bankruptcy or insolvency event with
respect to the Transferor or other holder of the Transferor Certificate, the
conservator, receiver or bankruptcy trustee (including another holder of the
Transferor Certificate as debtor-in-possession) for the Transferor or other
holder of the Transferor Certificate may have the power to prevent the early
sale, liquidation or disposition of the Receivables and the commencement of a
Rapid Amortization Period or, if applicable with respect to a Series as
specified in the accompanying Prospectus Supplement, a Rapid Accumulation
Period, and may be able to require that new Principal Receivables be transferred
to the Trust. In addition, a conservator, receiver or bankruptcy trustee
(including another holder of the Transferor Certificate as debtor-in-possession)
for the Transferor or other holder of the Transferor Certificate may have the
power to cause the early sale of the Receivables and the early retirement of the
Certificates or to prohibit the continued transfer of Principal Receivables to
the Trust. See "Description of the Certificates--Pay Out Events" in this
Prospectus. In addition, in the event of a Servicer Default relating to the
conservatorship, receivership, or insolvency of the Servicer, if no Servicer
Default other than such conservatorship, receivership, or insolvency exists, the
conservator or receiver for the Servicer may have the power to prevent either
the Trustee or the Certificateholders from appointing a successor Servicer under
the Agreement.
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CONSUMER PROTECTION LAWS
The relationships of the cardholder and credit card issuer and the lender are
extensively regulated by federal and state consumer protection laws. With
respect to credit cards issued by the Transferor, the most significant laws
include the federal Truth-in-Lending, Equal Credit Opportunity, Fair Credit
Reporting, Fair Debt Collection Practice and Electronic Funds Transfer Acts.
These statutes impose disclosure requirements when a credit card account is
advertised, when it is opened, at the end of monthly billing cycles, and at year
end. In addition, these statutes limit customer liability for unauthorized use,
prohibit certain discriminatory practices in extending credit, and impose
certain limitations on the type of account-related charges that may be assessed.
Cardholders are entitled under these laws to have payments and credits applied
to the credit card accounts promptly, to receive prescribed notices 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 related
Receivables, either as assignee from the Transferor with respect to obligations
arising before transfer of the Receivables to the Trust or as a 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
his obligation to pay the amount of Receivables owing. The Transferor will
warrant in the Agreement that all related Receivables have been and will be
created in compliance with the requirements of such laws. The Servicer will also
agree in the Agreement to indemnify the Trust, among other things, for any
liability arising from such violations caused by the Servicer. For a discussion
of the Trust's rights arising from the breach of these warranties, see
"Description of the Certificates--Representations and Warranties" in this
Prospectus.
Certain jurisdictions may attempt to require out-of-state credit card issuers
to comply with such jurisdiction's consumer protection laws (including laws
limiting the charges imposed by such credit card issuers) in connection with
their operations in such jurisdictions. A successful challenge by such a
jurisdiction could have an adverse impact on the Transferor's credit card
operations or the yield on the Receivables in the Trust.
If a cardholder sought protection under federal or state bankruptcy or debtor
relief laws, a court could reduce or discharge completely the cardholder's
obligations to repay amounts due on its Account and, as a result, the related
Receivables would be charged-off as uncollectible. The Certificateholders could
suffer a loss if insufficient funds are available from Credit Enhancement or
other sources. See "Description of the Certificates--Defaulted Receivables;
Rebates and Fraudulent Charges; Investor Charge-Offs" in this Prospectus.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of material federal income tax
consequences relating to the purchase, ownership and disposition of a
Certificate, which is based on the opinion of Orrick, Herrington & Sutcliffe
LLP, counsel to the Transferor ("Special Counsel"). This discussion represents
the opinion of Orrick, Herrington & Sutcliffe LLP, counsel to the Transferor,
subject to the qualifications set forth in this Prospectus. Orrick, Herrington &
Sutcliffe LLP has prepared and reviewed the statements in this Prospectus under
the heading "Federal Income Tax Consequences," and is of the opinion that such
statements are correct in all material respects. Additional federal income tax
considerations relevant to a particular Series may be set forth in the
accompanying Prospectus Supplement. This discussion is based on current law,
which is subject to changes that could prospectively or retroactively modify or
adversely affect the tax consequences summarized below. The discussion does not
address all of the tax consequences relevant to a particular Certificate Owner
in light of that Certificate Owner's circumstances, and some Certificate Owners
may be subject to special tax rules and limitations not discussed below. Each
prospective Certificate Owner is urged to consult its own tax adviser in
determining the federal, state, local and foreign income and any other tax
consequences of the purchase, ownership and disposition of a Certificate.
For purposes of this discussion, "U.S. Person" means a citizen or resident of
the United States, a corporation or partnership organized in or under the laws
of the United States, any state thereof, or any political subdivision of either
(including the District of Columbia), or an estate or trust the income of which
is includible in gross income for U.S. federal income tax purposes regardless of
its source. The term "U.S. Certificate Owner" means any U.S. Person and any
other person to the extent that income attributable to its interest in a
Certificate is effectively connected with
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that person's conduct of a U.S. trade or business. The term "non-U.S.
Certificate Owner" means any person other than a U.S. Certificate Owner.
The discussion assumes that a Certificate is issued in registered form, has
all payments denominated in U.S. dollars and has a term that exceeds one year.
Moreover, the discussion assumes that the interest formula for the Certificate
meets the requirements for "qualified stated interest" under Treasury
regulations (the "OID regulations") relating to original issue discount ("OID"),
and that any OID on the Certificate (i.e., any excess of the principal amount of
the Certificate over its issue price) does not exceed a de minimis amount (i.e.,
0.25 percent of its principal amount multiplied by the number of full years
until its maturity date), all within the meaning of the OID regulations.
Moreover, the discussion assumes that the Certificates are of a type, as set
forth below, which counsel is of the opinion will be debt for federal income tax
purposes. The applicable Prospectus Supplement will set forth a discussion of
any additional material tax consequences with respect to Certificates not
conforming to the foregoing assumptions.
TREATMENT OF THE CERTIFICATES AS DEBT
The Transferor expresses in the Agreement the intent that for federal, state
and local income and franchise tax purposes, the Certificates will be debt
secured by the Receivables. The Transferor, by entering into the Agreement, and
each investor, by the acceptance of a beneficial interest in a Certificate, will
agree to treat the Certificates as debt for federal, state and local income and
franchise tax purposes. However, the Agreement is generally ambiguous in
characterizing the transfer of Receivables, and because different criteria are
used in determining the non-tax accounting treatment of the transaction, the
Transferor will treat the Agreement for certain non-tax accounting purposes as
causing 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 its tax consequences. The form and non-tax
characterization of a transaction, while relevant factors, are not conclusive
evidence of its economic substance. In appropriate circumstances, the courts
have allowed taxpayers as well as the Internal Revenue Service (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 non-tax purposes.
The determination of whether the economic substance of a transfer of an
interest in property is instead 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 ones examined are whether the transferee has the
opportunity to gain if the property increases in value, and has the risk of loss
if the property decreases in value. Based on its analysis of such factors,
Special Counsel is of the opinion that, under current law, although no
transaction closely comparable to that contemplated in this Prospectus has been
the subject of any Treasury regulation, revenue ruling or judicial decision, for
federal income tax purposes the Certificates offered hereby will not constitute
an ownership interest in the Receivables but will properly be characterized as
debt.
TREATMENT OF THE TRUST
General. The Agreement permits the issuance of Certificates and certain other
interests (including any Collateral Interest) in the Trust, each of which may be
treated for federal income tax purposes either as debt or as equity interests in
the Trust. If all of the Certificates and other interests (other than the
Transferor Certificate) in the Trust were characterized as debt, the Trust might
be characterized as a security arrangement for debt collateralized by the
Receivables and issued directly by the Transferor (or other holder of the
Transferor Certificate). Under such a view, the Trust would be disregarded for
federal income tax purposes. Alternatively, if some of the Transferor
Certificate, the Certificates and other interests in the Trust were
characterized as equity therein, the Trust might be characterized as a separate
entity owning the Receivables, issuing its own debt, and jointly owned by the
Transferor (or other holder of the Transferor Certificate) and any other holders
of equity interests in the Trust. However, Special Counsel is of the opinion
that, under current law, any such entity constituted by the Trust will not be an
association or publicly traded partnership taxable as a corporation.
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Possible Treatment of the Trust as a Partnership or a Publicly Traded
Partnership. Although, as described above, Special Counsel is of the opinion
that the Certificates will properly be treated as debt for federal income tax
purposes and that the Trust will not be treated as an association or publicly
traded partnership taxable as a corporation, such opinion does not bind the IRS
and thus no assurance can be given that such treatment will prevail. If the IRS
were to contend successfully that some or all of the Transferor Certificate, the
Certificates or any other interest in the Trust, including any Collateral
Interest, were equity in the Trust for federal income tax purposes, all or a
portion of the Trust could be classified as a publicly traded partnership
taxable as a corporation for such purposes. Because Special Counsel is of the
opinion that the Certificates will be characterized as debt for federal income
tax purposes and because any holder of an interest in a Collateral Interest will
agree to treat that interest as debt for such purposes, no attempt will be made
to comply with any tax reporting requirements that would apply as a result of
such alternative characterizations.
If the Trust were treated in whole or in part as a partnership in which some
or all of the holders of interests in the publicly offered Certificates were
partners, that partnership would be classified as a publicly traded partnership,
and so could be taxable as a corporation. Further, regulations published by the
Treasury Department on December 4, 1995 (the "Regulations") could cause the
Trust to constitute a publicly traded partnership even if all holders of
interests in the publicly offered Certificates are treated as holding debt. The
Regulations generally apply to taxable years beginning after December 31, 1995.
If the Trust were classified as a publicly traded partnership, whether by reason
of the treatment of publicly offered Certificates as equity or by reason of the
Regulations, it would avoid taxation as a corporation if its income was not
derived in the conduct of a "financial business"; however, whether the income of
the Trust would be so classified is unclear and Special Counsel is unable to
opine as to whether the Trust would be so classified.
Under the Code and the Regulations, a partnership will be classified as a
publicly traded partnership if equity interests therein are traded on an
"established securities market," or are "readily tradable" on a "secondary
market" or its "substantial equivalent." The Transferor intends to take measures
designed to reduce the risk that the Trust could be classified as a publicly
traded partnership by reason of interests in the Trust other than the publicly
offered Certificates. Although the Transferor expects such measures will
ultimately be successful, certain of the actions that may be necessary for
avoiding the treatment of such interests as "readily tradable" on a "secondary
market" or its "substantial equivalent" are not fully within the control of the
Transferor. As a result, there can be no assurance that the measures the
Transferor intends to take will in all circumstances be sufficient to prevent
the Trust from being classified as a publicly traded partnership under the
Regulations.
If the Trust were treated as a partnership and nevertheless were not treated
as a publicly traded partnership, that partnership would not be subject to
federal income tax. Rather, each item of income, gain, loss and deduction of the
partnership generated through the ownership of the related Receivables would be
taken into account directly in computing taxable income of the Transferor (or
the holder of the Transferor Certificate) and any Certificate Owners treated as
partners in accordance with their respective partnership interests therein. The
amounts and timing of income reportable by any Certificate Owners treated as
partners would likely differ from that reportable by such Certificate Owners had
they been treated as owning debt. In addition, if the Trust were treated in
whole or in part as a partnership other than a publicly traded partnership,
income derived from the partnership by any Certificate Owner that is a pension
fund or other tax-exempt entity may be treated as unrelated business taxable
income. Partnership characterization also may have adverse state and local
income or franchise tax consequences for a Certificate Owner. If the Trust were
treated in whole or in part as a partnership and the number of holders of
interests in the publicly offered Certificates and other interests in the Trust
treated as partners equaled or exceeded 100, the Transferor may cause the Trust
to elect to be an "electing large partnership." The consequence of such election
to investors could include the determination of certain tax items at the
partnership level and the disallowance of otherwise allowable deductions. No
representation is made as to whether such election will be made.
If the arrangement created by the Agreement were treated in whole or in part
as a publicly traded partnership taxable as a corporation, that entity would be
subject to federal income tax at corporate tax rates on its taxable income
generated by ownership of the related Receivables. That tax could result in
reduced distributions to Certificate Owners. No distributions from the Trust
would be deductible in computing the taxable income of the corporation, except
to the extent that any Certificates were treated as debt of the corporation and
distributions to the related Certificate Owners were treated as payments of
interest thereon. In addition, distributions to Certificate Owners not treated
as holding debt would be dividend income to the extent of the current and
accumulated earnings
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and profits of the corporation (and Certificate Owners may not be entitled to
any dividends received deduction in respect of such income).
Newly Enacted Legislation. The "Small Business Jobs Protection Act of 1996,"
H.R. 3448 (the "Bill"), contains provisions creating a new type of entity for
federal income tax purposes called a "financial asset securitization investment
trust" or "FASIT." Starting in September of 1997, the FASIT provisions of the
Bill generally enable certain arrangements similar to the Trust to elect to be
treated as a FASIT. Under the FASIT provisions of the Bill, a FASIT generally
would avoid federal income taxation and could issue securities substantially
similar to the Certificates, and those securities would be treated as debt for
federal income tax purposes. Upon satisfying certain conditions set forth in the
Agreement, the Transferor will be permitted to amend the Agreement and any
Series Supplement in order to enable all or a portion of the Trust to qualify as
a FASIT and to permit a FASIT election to be made with respect thereto, and to
make such modifications to the Agreement and any Supplement as may be permitted
by reason of the making of such an election. See "Description of the
Certificates--Amendments" in this Prospectus and the accompanying Prospectus
Supplement. However, if such an election is made, it may cause a holder to
recognize gain (but not loss) with respect to its Certificate, even though
Special Counsel is of the opinion that a Certificate will be treated as debt for
federal income tax purposes without regard to the election and the Certificate
would be treated as debt following the election. Additionally, any such election
and any related amendments to the Agreement and any Series Supplement may have
other tax and non-tax consequences to Certificateholders. Accordingly,
prospective Certificateholders should consult their tax advisors with regard to
the effects of any such election and any permitted related amendments on them in
their particular circumstances.
TAXATION OF INTEREST INCOME OF U.S. CERTIFICATE OWNERS
General. Assuming, in accordance with Special Counsel's opinion, that the
Certificates are debt obligations for federal income tax purposes, stated
interest on a beneficial interest in a Certificate will be includible in gross
income in accordance with a U.S. Certificate Owner's method of accounting.
Original Issue Discount. If the Certificates are issued with OID, the
provisions of sections 1271 through 1273 and 1275 of the Internal Revenue Code
of 1986 (the "Code") will apply to the Certificates. Under those provisions, a
U.S. Certificate Owner (including a cash basis holder) generally would be
required to accrue the OID on its interest in a Certificate in income for
federal income tax purposes on a constant yield basis, resulting in the
inclusion of OID in income somewhat in advance of the receipt of cash
attributable to that income. In general, a Certificate will be treated as having
OID to the extent that its "stated redemption price" exceeds its "issue price,"
if such excess is more than 0.25 percent multiplied by the weighted average life
of the Certificate (determined by taking into account only the number of
complete years following issuance until payment is made for any partial
principal payments). Under section 1272(a)(6) of the Code, special provisions
apply to debt instruments on which payments may be accelerated due to
prepayments of other obligations securing those debt instruments. However, no
regulations have been issued interpreting those provisions, and the manner in
which those provisions would apply to the Certificates is unclear. Additionally,
the IRS could take the position based on Treasury Regulations that none of the
interest payable on a Certificate is "unconditionally payable" and hence that
all of such interest should be included in the Certificate's stated redemption
price at maturity. Accordingly, Special Counsel is unable to opine as to whether
interest payable on a Certificate constitutes "qualified stated interest" exempt
from such inclusion. If sustained, such treatment should not significantly
affect tax liabilities for most Certificate Owners, but prospective U.S.
Certificate Owners should consult their own tax advisors concerning the impact
to them in their particular circumstances. The Transferor intends to take the
position that interest on the Certificates constitutes "qualified stated
interest" and that the above consequences do not apply.
Market Discount. A U.S. Certificate Owner who purchases an interest in a
Certificate at a discount that exceeds any unamortized OID may be subject to the
"market discount" rules of sections 1276 through 1278 of the Code. These rules
provide, in part, that gain on the sale or other disposition of a Certificate
and partial principal payments on a Certificate are treated as ordinary income
to the extent of accrued market discount. The market discount rules also provide
for deferral of interest deductions with respect to debt incurred to purchase or
carry a Certificate that has market discount.
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Market Premium. A U.S. Certificate Owner who purchases an interest in a
Certificate at a premium may elect to offset the premium against interest income
over the remaining term of the Certificate in accordance with the provisions of
section 171 of the Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a disposition of an interest in a Certificate, a U.S. Certificate Owner
generally will recognize gain or loss equal to the difference between the amount
realized on the disposition and the U.S. Certificate Owner's adjusted basis in
its interest in the Certificate. A taxable exchange of a Certificate also could
occur as a result of the Transferor's substitution of money or investments for
Receivables; see "Description of the Certificates--Defeasance." The adjusted
basis in the interest in the Certificate will equal its cost, increased by any
OID or market discount included in income with respect to the interest in the
Certificate prior to its disposition and reduced by any principal payments
previously received with respect to the interest in the Certificate and any
amortized premium. Subject to the market discount rules, gain or loss will
generally be capital gain or loss if the interest in the Certificate was held as
a capital asset. Capital losses 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.
NON-U.S. CERTIFICATE OWNERS
In general, a non-U.S. Certificate Owner will not be subject to U.S. federal
income tax on interest (including OID) on a beneficial interest in a Certificate
unless (i) the non-U.S. Certificate Owner actually or constructively owns 10
percent or more of the total combined voting power of all classes of stock of
the Transferor entitled to vote (or of a profits or capital interest of the
Trust characterized as a partnership), (ii) the non-U.S. Certificate Owner is a
controlled foreign corporation that is related to the Transferor (or the Trust
treated as a partnership) through stock ownership, (iii) the non-U.S.
Certificate Owner is a bank described in Code Section 881(c)(3)(A), (iv) such
interest is contingent interest described in Code Section 871(h)(4), or (v) the
non-U.S. Certificate Owner bears certain relationships to any holder of either
the Transferor Certificate other than the Transferor or any other interest in
the Trust not properly characterized as debt. To qualify for the exemption from
taxation, the last U.S. Person in the chain of payment prior to payment to a
non-U.S. Certificate Owner (the "Withholding Agent") must have received (in the
year in which a payment of interest or principal occurs or in either of the two
preceding years) a statement that (i) is signed by the non-U.S. Certificate
Owner under penalties of perjury, (ii) certifies that the non-U.S. Certificate
Owner is not a U.S. Person and (iii) provides the name and address of the
non-U.S. Certificate Owner. The statement may be made on a Form W-8 or
substantially similar substitute form, and the non-U.S. Certificate Owner must
inform the Withholding Agent of any change in the information on the statement
within 30 days of the change. If a Certificate is held through a securities
clearing organization or certain other financial institutions, the organization
or institution may provide a signed statement to the Withholding Agent. However,
in that case, the signed statement must be accompanied by a Form W-8 or
substitute form provided by the non-U.S. Certificate Owner to the organization
or institution holding the Certificate on behalf of the non-U.S. Certificate
Owner. The U.S. Treasury Department is considering implementation of further
certification requirements aimed at determining whether the issuer of a debt
obligation is related to holders thereof.
Generally, any gain or income realized by a non-U.S. Certificate Owner upon
retirement or disposition of an interest in a Certificate will not be subject to
U.S. federal income tax, provided that (i) in the case of a Certificate Owner
that is an individual, such Certificate Owner is not present in the United
States for 183 days or more during the taxable year in which such retirement or
disposition occurs and (ii) in the case of gain representing accrued interest,
the conditions described in the preceding paragraph for exemption from
withholding are satisfied. Certain exceptions may be applicable, and an
individual non-U.S. Certificate Owner should consult a tax adviser.
If the Certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificate Owner to be treated as
engaged in a trade or business in the United States. In that event, the non-U.S.
Certificate Owner would be required to file a federal income tax return and, in
general, would be subject to U.S. federal income tax (including the branch
profits tax) on its net income from the partnership. Further, certain
withholding obligations apply with respect to income allocable or distributions
made to a foreign partner. That withholding may be at a rate as high as 39.6
percent. If some or all of the Certificates were treated as stock in a
corporation, any related dividend distributions to a non-U.S. Certificate Owner
generally would be subject to withholding of tax at the rate of 30 percent,
unless that rate were reduced by an applicable tax treaty.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Backup withholding of U.S. federal income tax at a rate of 31 percent may
apply to payments made in respect of a Certificate to a registered owner who is
not an "exempt recipient" and who fails to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the manner required. Generally, individuals are not exempt recipients whereas
corporations and certain other entities are exempt recipients. Payments made in
respect of a U.S. Certificate Owner must be reported to the IRS, unless the U.S.
Certificate Owner is an exempt recipient or otherwise establishes an exemption.
Compliance with the identification procedures (described in the preceding
section) would establish an exemption from backup withholding for a non-U.S.
Certificate Owner who is not an exempt recipient.
In addition, upon the sale of a Certificate to (or through) a "broker," the
broker must withhold 31 percent of the entire purchase price, unless either (i)
the broker determines that the seller is a corporation or other exempt recipient
or (ii) the seller provides certain identifying information in the required
manner, and in the case of a non-U.S. Certificate Owner certifies that the
seller is a non-U.S. Certificate Owner (and certain other conditions are met).
Such a sale must also be reported by the broker to the IRS, unless either (i)
the broker determines that the seller is an exempt recipient or (ii) the seller
certifies its non-U.S. status (and certain other conditions are met).
Certification of the registered owner's non-U.S. status normally would be made
on Form W-8 under penalties of perjury, although in certain cases it may be
possible to submit other documentary evidence. As defined by Treasury
regulations, the term "broker" includes all persons who stand ready to effect
sales made by others in the ordinary course of a trade or business, as well as
brokers and dealers registered as such under the laws of the United States or a
state. These requirements generally will apply to a U.S. office of a broker, and
the information reporting requirements generally will apply to a foreign office
of a U.S. broker as well as to a foreign office of a foreign broker (i) that is
a controlled foreign corporation within the meaning of section 957(a) of the
Code or (ii) 50 percent or more of whose gross income from all sources for the
three year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the foreign broker has been in
existence) was effectively connected with the conduct of a trade or business
within the United States.
Any amounts withheld under the backup withholding rules from a payment to a
Certificate Owner would be allowed as a refund or a credit against such
Certificate Owner's U.S. federal income tax, provided that the required
information is furnished to the IRS.
NEW WITHHOLDING REGULATIONS
The Treasury Department has issued new regulations (the "New Regulations")
which make certain modifications to the withholding, backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
STATE AND LOCAL TAXATION
The discussion above does not address the taxation of the Trust or the tax
consequences of the purchase, ownership or disposition of an interest in the
Certificates under any state or local tax law. Each investor should consult its
own tax adviser regarding state and local tax consequences.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and section 4975 of the Code prohibit certain pension, profit sharing
or other employee benefit plans, individual retirement accounts or annuities and
employee annuity plans and Keogh plans (collectively, "Plans") from engaging in
certain transactions involving "plan assets" with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code (collectively,
"Parties in Interest") with respect to the Plan. A violation of these
"prohibited transaction" rules may generate excise tax and other liabilities
under ERISA and section 4975 of the Code for such persons, unless a statutory,
regulatory or administrative exemption is available. Plans that are governmental
plans
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(as defined in section 3(32) of ERISA) and certain church plans (as defined in
section 3(33) of ERISA) are not subject to ERISA requirements.
Subject to the considerations described below and except to the extent
otherwise specified in the accompanying Prospectus Supplement, the Transferor
anticipates that the most senior Class of each Series of Certificates will be
eligible for purchase by Plan investors.
A violation of the prohibited transaction rules could occur if any Series of
Certificates were to be purchased with "plan assets" of any Plan and the
Transferor, the Trustee, any underwriters of such Series or any of their
affiliates were a Party in Interest with respect to such Plan, unless a
statutory, regulatory or administrative exemption is available or an exception
applies under a regulation (the "Plan Asset Regulation") issued by the
Department of Labor (the "DoL"). The Transferor, the Trustee, any underwriters
of a Series and their affiliates are likely to be Parties in Interest with
respect to many Plans. Before purchasing Certificates, a Plan fiduciary or other
Plan investor should consider whether a prohibited transaction might arise by
reason of the relationship between the Plan and the Transferor, the Trustee, any
underwriters of such Series or any of their affiliates and consult their counsel
regarding the purchase in light of the considerations described below. The DoL
has issued five class exemptions that may apply to otherwise prohibited
transactions arising from the purchase or holding of the Certificates: DoL
Prohibited Transaction Class Exemptions ("PTCEs") 84-14 (Class Exemption for
Plan Asset Transactions Determined by Independent Qualified Professional Asset
Managers), 90-1 (Class Exemption for Certain Transactions Involving Insurance
Company Pooled Separate Accounts), 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds), 95-60 (Class Exemption
for Certain Transactions Involving Insurance Company General Accounts), and
96-23 (Class Exemption for Plan Asset Transactions Determined by In-House Asset
Managers).
Under certain circumstances, the Plan Asset Regulation treats the assets of an
entity in which a Plan holds an equity interest as "plan assets" of such Plan.
Because the Certificates will represent beneficial interests in the Trust, and
despite the agreement of the Transferor and the Certificate Owners to treat each
Series of Certificates as debt instruments, the Certificates are likely to be
considered equity interests in the Trust for purposes of the Plan Asset
Regulation, with the result that the assets of the Trust are likely to be
treated as "plan assets" of the investing Plans for purposes of ERISA and
section 4975 of the Code, unless either of the following exceptions applies.
The first exception applies to a "publicly-offered security." A
publicly-offered security is a security that is (a) freely transferable, (b)
part of a class of securities that is owned, immediately subsequent to the
initial offering, by 100 or more investors who were independent of the issuer
and of one another ("Independent Investors") and (c) either is (i) part of a
class of securities registered under section 12(b) or 12(g) of the Exchange Act,
or (ii) sold to the 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 SEC)
after the end of the fiscal year of the issuer during which the offering of such
securities to the public occurred. For purposes of the 100 Independent Investor
criterion, except to the extent otherwise disclosed in the accompanying
Prospectus Supplement, each Class of Certificates should be deemed to be a
"class" of securities that would be tested separately from any other securities
that may be issued by the Trust. The accompanying Prospectus Supplement will
indicate whether it is anticipated that each Class of Certificates will meet the
foregoing criteria for treatment as "publicly-offered securities." No
restrictions will be imposed on the transfer of the Certificates. Except to the
extent otherwise disclosed in the accompanying Prospectus Supplement, the
Transferor expects that the most senior Class of each Series of Certificates
will be held by at least 100 Independent Investors at the conclusion of the
initial public offering although no assurance can be given, and no monitoring or
other measures will be taken to ensure, that such condition is met. Unless
otherwise disclosed in the accompanying Prospectus Supplement, the most senior
Class of each Series of Certificates will be sold as part of an offering
pursuant to an effective registration statement under the Act and then will be
timely registered under the Exchange Act.
The second exception applies if equity participation in the entity by "benefit
plan investors" (i.e., Plans and other employee benefit plans not subject to
ERISA, such as governmental or foreign plans, as well as entities holding assets
deemed to be "plan assets") is not "significant." Benefit plan investors' equity
participation in the Trust is not significant on any date on which any Series of
Certificates is issued and outstanding if, immediately after the most recent
acquisition of any equity interest in the Trust, less than 25% of the value of
each class of equity interests in
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the Trust (excluding interests held by the Transferor, the Trustee or their
affiliates) is held by benefit plan investors. No assurance can be given by the
Transferor as to whether the value of each class of equity interests in the
Trust held by benefit plan investors will be "significant" upon completion of
the offering of any Series of Certificates or thereafter, and no monitoring or
other measures will be taken with respect to the satisfaction of the conditions
to this exception.
If neither of the foregoing exceptions under the Plan Asset Regulation were
satisfied with respect to the Trust and the Trust were considered to hold "plan
assets," transactions involving the Trust and Parties in Interest with respect
to a Plan that is a Certificate Owner might be prohibited under section 406 of
ERISA and/or section 4975 of the Code and result in excise tax and other
liabilities under ERISA and section 4975 of the Code unless an exemption were
available. The five DoL class exemptions mentioned above may not provide relief
for all transactions involving the assets of the Trust even if they would
otherwise apply to the purchase of a Certificate by a Plan.
The Certificates of any Series may not be purchased with the assets of a Plan
if the Transferor, the Servicer, the Trustee or any of their affiliates (a) has
investment or administrative discretion with respect to such Plan assets; (b)
has authority or responsibility to give, or regularly gives, investment advice
with respect to such Plan assets, for a fee and pursuant to an agreement or
understanding that such advice (i) will serve as a primary basis for investment
decisions with respect to such Plan assets, and (ii) will be based on the
particular investment needs of such Plan; or (c) unless PTCE 90-1, 91-38 or
95-60 is applicable, is an employer maintaining or contributing to such Plan.
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the Certificates on behalf or with "plan assets" of any Plan should
consult their own counsel regarding whether the Trust assets represented by the
Certificates would be considered "plan assets," the consequences that would
apply if the Trust's assets were considered "plan assets," and the possibility
of exemptive relief from the prohibited transaction rules. In addition, based on
the reasoning of the United States Supreme Court's decision in John Hancock Mut.
Life. Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86 (1993), under certain
circumstances assets in the general account of an insurance company may be
deemed to be plan assets for certain purposes, and under such a reasoning a
purchase of Certificates with assets of an insurance company's general account
may subject the insurance company to the prohibited transaction and other
fiduciary responsibility rules of ERISA with respect to such assets. Insurance
company general account investors should also consider the effect of the
enactment of Section 401(c) of ERISA and any regulations issued under Section
401(c). Finally, Plan fiduciaries and other Plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
Plan's particular circumstances before authorizing an investment of a portion of
the Plan's assets in the Certificates. Accordingly, among other factors, Plan
fiduciaries and other Plan investors should consider whether the investment (i)
satisfies the diversification requirement of ERISA or other applicable law, (ii)
is in accordance with the Plan's governing instruments, and (iii) is prudent in
light of the "Risk Factors" and other factors discussed in this Prospectus and
in the accompanying Prospectus Supplement.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement (an
"Underwriting Agreement") to be entered into with respect to each Series of
Certificates, the Transferor will agree to sell or cause the Trust to sell to
each of the underwriters named therein and in the accompanying Prospectus
Supplement, and each of such underwriters will severally agree to purchase from
the Transferor or Trust, as applicable, the principal amount of Certificates set
forth therein and in the accompanying Prospectus Supplement (subject to
proportional adjustment on the terms and conditions set forth in the related
Underwriting Agreement in the event of an increase or decrease in the aggregate
amount of Certificates offered hereby and by the accompanying Prospectus
Supplement). NationsBanc Montgomery Securities LLC, an affiliate of the
Transferor, the Servicer and the Corporation, may participate as an underwriter
in the offering of the Certificates.
In each Underwriting Agreement, the several underwriters will agree, subject
to the terms and conditions set forth therein, to purchase all the Certificates
offered hereby and by the accompanying Prospectus Supplement if any of such
Certificates are purchased. In the event of a default by any underwriter, each
Underwriting Agreement will provide that, in certain circumstances, purchase
commitments of the nondefaulting underwriters may be increased or the
Underwriting Agreement may be terminated.
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Each Prospectus Supplement will set forth the price at which each Series of
Certificates or Class being offered thereby initially will be offered to the
public and any concessions that may be offered to certain dealers participating
in the offering of such Certificates. After the initial public offering, the
public offering price and such concessions may be changed.
This Prospectus and the accompanying Prospectus Supplement may be used by
NationsBanc Montgomery Securities LLC, an affiliate of the Transferor and
Servicer, in connection with offers and sales related to market-making
transactions in the Certificates. NationsBanc Montgomery Securities LLC may act
as principal or agent in such transactions. Such prices will be made at prices
related to prevailing market prices at the time of sale or otherwise.
Each Underwriting Agreement will provide that the Transferor will indemnify
the related underwriters against liabilities relating to the adequacy of
disclosure to investors, including liabilities under the Securities Act of 1933,
as amended.
The place and time of delivery for any Series of Certificates in respect of
which this Prospectus is delivered will be set forth in the accompanying
Prospectus Supplement.
Any underwriters, agents or dealers participating in the distribution of
Certificates may be deemed to be underwriters, and any discounts or commissions
received by them on the sale or resale of Certificates may be deemed to be
underwriting discounts and commissions, under the Securities Act. Certain agents
and underwriters may be entitled under agreements entered into with Bank of
America to indemnification by Bank of America against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, Bank of America or its affiliates in the ordinary
course of business.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates will be
passed upon for the Transferor by Andrea B. Goldenberg, Senior Counsel for the
Corporation, and by Orrick, Herrington & Sutcliffe LLP, San Francisco,
California, special counsel to the Transferor. Certain legal matters relating to
the federal tax consequences of the issuance of the Certificates will be passed
upon for the Transferor by Orrick, Herrington & Sutcliffe LLP, San Francisco,
California, special tax counsel to the Transferor. Certain legal matters
relating to the issuance of the Certificates will be passed upon for the
underwriters by such counsel as specified in the accompanying Prospectus
Supplement.
REPORTS TO CERTIFICATEHOLDERS
The Servicer will prepare monthly and annual reports that will contain
information about the Trust. The financial information contained in the reports
will not be prepared in accordance with generally accepted accounting
principles. Unless and until Definitive Certificates are issued, the reports
will be sent to Cede & Co. which is the nominee of The Depository Trust Company
and the registered holder of the Certificates. No financial reports will be sent
to you. See "Description of the Certificates Book-Entry Registration,"
"--Reports to Certificateholders" and "--Evidence as to Compliance" in this
Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the Certificates with the SEC.
This Prospectus is part of the registration statement, but the registration
statement includes additional information.
The Servicer will file with the SEC all required annual, monthly and special
SEC reports and other information about the Trust.
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You may read and copy any reports, statements or other information we file at
the SEC's public reference room in Washington, D.C. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
on the SEC Internet site (http://www.sec.gov.).
The SEC allows us to "incorporate by reference" information we file with it,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to
be part of this Prospectus. Information that we file later with the SEC will
automatically update the information in this Prospectus. In all cases, you
should rely on the later information over different information included in this
Prospectus or the accompanying Prospectus Supplement. We incorporate by
reference any future annual, monthly and special SEC reports and proxy materials
filed by or on behalf of the Trust until we terminate our offering of the
Certificates.
As a recipient of this Prospectus, you may request a copy of any document we
incorporate by reference, except exhibits to the documents (unless the exhibits
are specifically incorporated by reference), at no cost, by writing or calling
us at: _________________________.
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INDEX OF TERMS FOR PROSPECTUS
ACCOUNTS...................................................................17
ACCUMULATION PERIOD........................................................17
ADDITIONAL ACCOUNTS........................................................17
ADDITIONAL TRANSFEROR......................................................24
AGGREGATE ADDITION LIMIT...................................................29
AGREEMENT..................................................................14
AMORTIZATION PERIOD........................................................18
ASSIGNMENT.................................................................30
AUTOMATIC ADDITIONAL ACCOUNTS..............................................29
BAC ......................................................................18
BANK OF AMERICA............................................................14
BANK OF AMERICA NT&SA......................................................14
BANK PORTFOLIO.............................................................17
BILL ......................................................................53
CASH COLLATERAL ACCOUNT....................................................46
CASH COLLATERAL GUARANTY...................................................46
CEDE ......................................................................20
CEDEL......................................................................20
CEDEL PARTICIPANTS.........................................................22
CERTIFICATE OWNER..........................................................20
CERTIFICATE RATE...........................................................19
CERTIFICATEHOLDER..........................................................22
CERTIFICATEHOLDERS.........................................................17
CERTIFICATES...............................................................14
CLASS......................................................................17
CLOSING DATE...............................................................17
CODE ......................................................................53
COLLATERAL INTEREST........................................................46
COLLECTION ACCOUNT.........................................................32
CONTROLLED ACCUMULATION PERIOD ............................................17
CONTROLLED AMORTIZATION PERIOD ............................................17
COOPERATIVE................................................................22
CORPORATION................................................................18
CREDIT ENHANCEMENT.........................................................44
CREDIT ENHANCEMENT PERCENTAGE..............................................33
CREDIT ENHANCEMENT PROVIDER................................................41
CUT-OFF DATE...............................................................17
DEFAULTED ACCOUNTS.........................................................33
DEFINITIVE CERTIFICATES....................................................20
DEPOSITARIES...............................................................20
DEPOSITORY.................................................................20
DESIGNATED ADDITIONAL ACCOUNTS ............................................29
DETERMINATION DATE.........................................................36
DISCLOSURE DOCUMENT........................................................26
DISCOUNT PERCENTAGE........................................................31
DISTRIBUTION ACCOUNT.......................................................32
DISTRIBUTION DATE..........................................................17
DoL ......................................................................56
DTC ......................................................................20
ELIGIBLE ACCOUNT...........................................................28
ELIGIBLE RECEIVABLE........................................................28
ENHANCEMENT................................................................14
ENHANCEMENT INVESTED AMOUNT................................................45
ERISA......................................................................55
EUROCLEAR..................................................................22
EUROCLEAR OPERATOR.........................................................22
EUROCLEAR PARTICIPANTS.....................................................22
EXCHANGE ACT...............................................................21
FASIT......................................................................53
FDIA ......................................................................11
FDIC ......................................................................10
FINANCE CHARGE ACCOUNT.....................................................32
FINANCE CHARGE RECEIVABLES.................................................17
FIRREA.....................................................................11
FITCH......................................................................32
FULL INVESTOR INTEREST.....................................................31
FUNDING PERIOD.............................................................32
GAAP ......................................................................44
GROUP......................................................................35
HOLDERS....................................................................23
IDENTIFIED POOL............................................................17
INDEPENDENT INVESTORS......................................................56
INDIRECT PARTICIPANTS......................................................21
INELIGIBLE RECEIVABLE......................................................27
INSOLVENCY EVENT...........................................................38
INTERCHANGE................................................................16
INTEREST FUNDING ACCOUNT...................................................25
INTEREST PERIOD............................................................42
INVESTOR INTEREST..........................................................19
INVESTOR PERCENTAGE........................................................19
IRS ......................................................................51
L/C BANK...................................................................45
LIBOR......................................................................47
MERGER.....................................................................18
MERGER AGREEMENT...........................................................18
MINIMUM TRANSFEROR INTEREST................................................27
MONTHLY PERIOD.............................................................25
MOODY'S....................................................................32
NATIONSBANK................................................................18
NATIONSBANK (DE)...........................................................18
NEW ISSUANCE...............................................................20
NEW REGULATIONS............................................................55
NON-U.S. CERTIFICATE OWNER.................................................51
OID ......................................................................51
OID REGULATIONS............................................................51
PAIRED SERIES..............................................................36
PARTICIPANTS...............................................................21
PARTICIPATION AGREEMENT....................................................30
PARTICIPATIONS.............................................................30
PARTIES IN INTEREST........................................................55
PAY OUT EVENT..............................................................38
PAYING AGENT...............................................................42
PERMITTED INVESTMENTS......................................................32
PLAN ASSET REGULATION......................................................56
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PLANS......................................................................55
PORTFOLIO YIELD............................................................31
PRE-FUNDING ACCOUNT........................................................32
PRE-FUNDING AMOUNT.........................................................32
PRINCIPAL ACCOUNT..........................................................32
PRINCIPAL AMORTIZATION PERIOD..............................................17
PRINCIPAL FUNDING ACCOUNT..................................................25
PRINCIPAL RECEIVABLES......................................................15
PRINCIPAL TERMS............................................................26
PROSPECTUS SUPPLEMENT......................................................16
PTCEs......................................................................56
QUALIFIED INSTITUTION......................................................32
RAPID ACCUMULATION PERIOD..................................................17
RAPID AMORTIZATION PERIOD...................................................7
RATING AGENCY..............................................................24
RECEIVABLES................................................................14
RECORD DATE................................................................19
REGULATIONS................................................................52
REINCORPORATION MERGER.....................................................18
REMOVED ACCOUNTS...........................................................17
REORGANIZATION.............................................................18
RESERVE ACCOUNT............................................................47
REVOLVING PERIOD...........................................................20
RISK FACTORS...............................................................57
SCHEDULED PAYMENT DATE.....................................................17
SEC ......................................................................30
SECURITIES ACT.............................................................26
SENIOR CERTIFICATES........................................................19
SERIES.....................................................................14
SERIES SUPPLEMENT..........................................................19
SERIES TERMINATION DATE....................................................38
SERVICE TRANSFER...........................................................41
SERVICER...................................................................14
SERVICER DEFAULT...........................................................41
SERVICING FEE..............................................................16
SPECIAL COUNSEL............................................................50
SPREAD ACCOUNT.............................................................46
STANDARD & POOR'S..........................................................32
SUBORDINATED CERTIFICATES..................................................19
SUPPLEMENTAL CERTIFICATE...................................................24
SWAPS......................................................................47
TAX OPINION................................................................27
TERMS AND CONDITIONS.......................................................23
TRANSFER DATE..............................................................34
TRANSFEROR.................................................................14
TRANSFEROR CERTIFICATE.....................................................19
TRANSFEROR INTEREST........................................................20
TRANSFEROR PERCENTAGE......................................................19
TRUST......................................................................14
TRUST PORTFOLIO............................................................17
TRUST TERMINATION DATE.....................................................38
TRUSTEE....................................................................14
TSYS ......................................................................15
U.S. CERTIFICATE OWNER.....................................................50
U.S. PERSON.................................................................3
UCC ......................................................................48
UNALLOCATED PRINCIPAL COLLECTIONS .........................................35
UNDERWRITING AGREEMENT.....................................................57
WITHHOLDING AGENT..........................................................54
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered BA Master Credit
Card 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.
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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 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:
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(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, under currently applicable law, (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 generally 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 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 advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
Further, the IRS has recently proposed new regulations that would revise some
aspects of the current system for withholding on amounts paid to foreign
persons. Under these proposed regulations, interest or OID paid to a
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nonresident alien would continue to be exempt from U.S. withholding taxes
(including backup withholding) provided that the holder complies with the new
certification procedures.
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PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee ........................................... $295**
Printing and Engraving....................................... *
Trustee's Fees ........................................... *
Legal Fees and Expenses...................................... *
Blue Sky Fees and Expenses................................... *
Accountants' Fees and Expenses............................... *
Rating Agency Fees........................................... *
Miscellaneous Fees........................................... *
-----------
Total $ *
===========
</TABLE>
----------
* To be filed by amendment.
** Actual
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the Delaware General Corporation Law
(the "DGCL") empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. Subsection (b) of Section 145 of the DGCL
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit if such person acted in accordance with the above standards,
except that no indemnification may be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which the action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnification
for such expenses which the Court of Chancery or such other court shall deem
proper.
Section 145 of the DGCL further provides that, to the extent that a
director or officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in the defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith; and that indemnification provided by, or granted pursuant to, Section
145 shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled. Section 145 further empowers the corporation to
purchase and maintain
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insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him or her and incurred by him or her in any such capacity, or arising out of
such person's status as such, whether or not the corporation would have the
power to indemnify such person against such liabilities under Section 145 of the
DGCL.
The foregoing is only a general summary of certain aspects of Delaware
law dealing with indemnification of directors and officers and does not purport
to be complete. It is qualified in its entirety by reference to the relevant
statutes, which contain detailed specific provisions regarding the circumstances
under which and, the person for whose benefit indemnification shall or may be
made.
The Agreement and Plan of Reorganization (the "Merger Agreement")
pursuant to which BankAmerica Corporation's ("BankAmerica") predecessor
corporations, old BankAmerica Corporation and NationsBank Corporation (the
"Predecessor Companies") merged (the "Merger") on September 30, 1998 (the
"Effective Time") provided that BankAmerica will, for six years after the
Effective Time, indemnify directors, officers and employees of the Predecessor
Companies or any of their respective subsidiaries (including Bank of America
National Association (the "Bank")) against certain liabilities in connection
with such persons' status as such or in connection with the Merger Agreement,
certain stock option agreements or any of the transactions contemplated thereby.
Pursuant to the Merger Agreement, BankAmerica will also, for six years after the
Effective Time and with respect to events occurring prior to the Effective Time,
honor all rights to indemnification and limitations of liability existing in
favor of the foregoing persons as provided in the governing documents of the
Predecessor Companies or their respective subsidiaries. The Bylaws of old
BankAmerica Corporation and of the Bank immediately prior to the Effective Time
provided for indemnification of directors and officers to the fullest extent
permitted by the DGCL as a contract right.
The Articles of Association of the Bank provide that a director shall
not be personally liable to the Bank or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Bank or its shareholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for willful or negligent violation of
Sections 56 or 60 of Title 12 of the United States Code, or (iv) for any
transaction from which the director derives any improper personal benefit.
The current Bylaws of BankAmerica, a Delaware corporation and the
parent of the Bank, provide that, in addition to the indemnification otherwise
provided by law and subject to any other requirements under applicable law,
BankAmerica shall, under certain circumstances, indemnify the current or former
directors and officers of the Bank against all liability and expenses, including
reasonable attorneys' fees, in any proceeding including without limitation a
proceeding brought by or on behalf of BankAmerica or the Bank itself arising out
of their status as directors or officers, except for liability or litigation
expense incurred on account of activities that were at the time known or
believed by such director or officer to be in conflict with the best interest of
the Bank.
There is directors' and officers' liability insurance presently
outstanding which insures directors and officers of the Bank. The policies cover
losses which the directors or officers must pay as the result of claims brought
against them based upon the commission of wrongful acts in the performance of
their duties and for which they are not indemnified by the Corporation or the
Bank. The losses covered by the policies are subject to certain exclusions and
do not include fines or penalties imposed by law or other matters uninsurable
under the law.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
Exhibit Description
Number
(a) Exhibits
1.1 - Form of Underwriting Agreement (incorporated by reference to
Exhibit 1.1 to the registrant's Registration Statement on
Form S-3, No. 333-4152)
4.1 - Pooling and Servicing Agreement (incorporated by reference to
Exhibit 4.1 to the registrant's Form 8-K filed with the
Securities and Exchange Commission on September 11, 1996)
4.2 - Form of Pooling and Servicing Agreement (incorporated by
reference to Exhibit 4.1 to the registrant's Registration
Statement on Form S-3, No. 333-4152)
4.3 - Form of Series Supplement (including form of Certificates)
(incorporated by reference to Exhibit 4.2 to the registrant's
Registration Statement on Form S-3, No. 333-4152)
4.4 - Form of Prospectus Supplement
5.1 - Opinion of Orrick, Herrington & Sutcliffe LLP with respect to
legality*
8.1 - Opinion of Orrick, Herrington & Sutcliffe LLP with respect to
tax matters*
23.1 - Consent of Orrick, Herrington & Sutcliffe LLP (included in
its opinions filed as Exhibits 5.1 and 8.1)*
24.1 - Powers of Attorney
(b) Financial Statements
All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
- - - - ------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement; (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change in such information in the registration
statement; provided, however, that (a)(i) and (a)(ii) will not apply if the
information required to be included in a post-effective amendment thereby is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this registration statement.
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(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(d) 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.
(e) To provide to the underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.
(f) That 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 provisions described under Item 15
above, 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 controlling 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.
(g) That, 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.
(h) That, 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.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
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
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF PHOENIX, STATE OF ARIZONA, ON OCTOBER 26, 1998.
BANK OF AMERICA NATIONAL ASSOCIATION
as originator of the Trust and Registrant
By: /s/ Margaret A. Sprude
------------------------------------------
Name: Margaret A. Sprude
Title: Chief Financial Officer and Chief
Accounting Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT ON FORM S-3 HAS BEEN SIGNED ON OCTOBER 26, 1998 BY
THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
Chairman of the Board, Chief Executive Officer and
*/s/ G. Patrick Phillips President
- - - - -----------------------------------------
G. PATRICK PHILLIPS
Chief Financial Officer, Chief Accounting Officer
/s/ Margaret A. Sprude and Director
- - - - -----------------------------------------
MARGARET A. SPRUDE
*/s/ Richard G. Campbell Director
- - - - -----------------------------------------
RICHARD G. CAMPBELL
*/s/ Jody Ciethaml Director
- - - - -----------------------------------------
JODY CEITHAML
*/s/ Gilbert W. Jones Director
- - - - -----------------------------------------
GILBERT W. JONES.
*/s/ Jane D. Snyder Director
- - - - -----------------------------------------
JANE D. SNYDER
</TABLE>
*By: /s/ Andrea Goldenberg
------------------------------------
Andrea Goldenberg
Attorney-in-Fact
- - - - ---------------
* NOTE: Powers of Attorney appointing Cheryl Sorokin, Jeffrey R. Lapic, Andrea
Goldenberg and Willie C. Bogan, or any of them acting singly, to execute the
Registration Statement and any amendments thereto on behalf of the above-named
individuals, are filed as Exhibit 24.1 to this Registration Statement.
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EXHIBIT INDEX
Exhibit
Number Description
- - - - ------ -----------
1.1 -- Form of Underwriting Agreement (incorporated by reference to
Exhibit 1.1 to the registrant's Registration Statement on Form
S-3, No. 333-4152)
4.1 -- Pooling and Servicing Agreement (incorporated by reference to
Exhibit 4.1 to the registrant's Form 8-K filed with the
Securities and Exchange Commission on September 11, 1996)
4.2 -- Form of Pooling and Servicing Agreement (incorporated by
reference to Exhibit 4.1 to the registrant's Registration
Statement on Form S-3, No. 333-4152)
4.3 -- Form of Series Supplement (including form of Certificates)
(incorporated by reference to Exhibit 4.2 to the registrant's
Registration Statement on Form S-3, No. 333-4152)
4.4 -- Form of Prospectus Supplement
5.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect to
legality*
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect to
tax matters*
23.1 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in its
opinions filed as Exhibits 5.1 and 8.1)*
24.1 -- Powers of Attorney
- - - - ------------------
* To be filed by amendment.
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THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
NOT COMPLETE AND MAY BE AMENDED. WE MAY NOT SELL THESE SECURITIES UNTIL WE
DELIVER A FINAL PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE NOT AN OFFER TO SELL
NOR ARE THEY SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
Supplement to Prospectus Dated_______ __, 199__
BA MASTER CREDIT CARD TRUST
Issuer
BANK OF AMERICA NATIONAL ASSOCIATION
Transferor and Servicer
SERIES 199__-___
$____________ FLOATING-RATE ASSET BACKED CERTIFICATES
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 10 IN THE PROSPECTUS.
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.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of Bank of America or any of its
affiliates.
This prospectus supplement may be used to offer and sell the certificates only
if accompanied by the prospectus.
THE TRUST WILL ISSUE --
Class A Certificates Class B Certificates
Principal amount $_____________ $______________
Certificate rate One-Month LIBOR One-Month LIBOR
plus ___% annually plus ___% annually
Interest paid Monthly Monthly
First interest payment date ______ 15, 199__ _______ 15,
199__
Scheduled payment date _______ ___, ___ _______ ___, ___
Legal final maturity _______ ___, ___ _______ ___, ___
CREDIT ENHANCEMENT --
- - - - - The Class B certificates are subordinated to the Class A certificates.
Subordination of the Class B certificates provides credit enhancement for
the Class A certificates.
- - - - - The trust is also issuing a collateral interest in the amount of
$___________ that is subordinated to the Class A certificates and the
Class B certificates. Subordination of the collateral interest provides
credit enhancement for both the Class A certificates and the Class B
certificates.
This prospectus supplement and the accompanying prospectus relate to the
offering of the certificates only.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Underwriter[s] of the Class A Certificates
Underwriter[s]of the Class B Certificates
________ __, 199__
<PAGE> 2
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the certificates in two separate
documents: (a) this prospectus supplement, which describes the specific terms of
your series of certificates and (b) the accompanying prospectus, which provides
general information, some of which may not apply to your series of certificates.
IF THE TERMS OF YOUR SERIES OF CERTIFICATES VARY BETWEEN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION
IN THIS PROSPECTUS SUPPLEMENT.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the accompanying prospectus are defined under the
caption "Index of Terms for Prospectus Supplement" beginning on page S-48 in
this document and under the caption "Index of Terms for Prospectus" beginning on
page 59 in the accompanying prospectus.
S-2
<PAGE> 3
TABLE OF CONTENTS
PAGE
----
SUMMARY OF TERMS.........................................................S-4
Offered Securities.....................................................S-4
Interest Payments.....................................................S-4
Principal Payments....................................................S-5
The Collateral Interest................................................S-5
Credit Enhancement.....................................................S-5
Other Interests In The Trust...........................................S-5
Other Series of Certificates..........................................S-5
The Transferor Certificate............................................S-5
Information About The Receivables......................................S-6
Collections By The Servicer............................................S-6
Allocations And Payments To You And Your Series........................S-6
Allocations of Collections of Finance Charge Receivables..............S-7
Shared Excess Finance Charge Collections..............................S-9
Allocations of Collections of Principal Receivables...................S-9
Revolving Period.....................................................S-10
Controlled Accumulation Period.......................................S-10
Rapid Amortization Period............................................S-11
Pay Out Events.......................................................S-11
Shared Excess Principal Collections..................................S-12
Denominations..........................................................S-12
Registration, Clearance And Settlement.................................S-12
Tax Status.............................................................S-12
ERISA Considerations...................................................S-13
Certificate Ratings....................................................S-13
INTRODUCTION.............................................................S-14
BANK OF AMERICA'S CREDIT CARD ACTIVITIES.................................S-14
General................................................................S-14
Billing, Payments and Fees.............................................S-14
Delinquency and Loss Experience........................................S-15
Interchange............................................................S-16
THE RECEIVABLES..........................................................S-17
MATURITY ASSUMPTIONS.....................................................S-21
RECEIVABLE YIELD CONSIDERATIONS..........................................S-23
BANKAMERICA CORPORATION, BANK OF AMERICA AND BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION.................................S-24
DESCRIPTION OF THE CERTIFICATES..........................................S-24
General................................................................S-25
Interest Payments......................................................S-25
Principal Payments.....................................................S-27
Postponement of Controlled Accumulation
Period................................................................S-28
Subordination..........................................................S-28
Allocation Percentages.................................................S-29
Reallocation of Cash Flows.............................................S-31
Application of Collections.............................................S-32
Shared Excess Finance Charge Collections...............................S-37
Shared Excess Principal Collections....................................S-38
Required Collateral Interest...........................................S-38
Defaulted Receivables; Investor
Charge-Offs...........................................................S-39
Principal Funding Account..............................................S-40
Reserve Account........................................................S-41
Pay Out Events.........................................................S-42
Servicing Compensation and Payment
of Expenses...........................................................S-43
Paired Series..........................................................S-44
Reports to Certificateholders..........................................S-44
Amendments.............................................................S-44
ERISA CONSIDERATIONS.....................................................S-44
Class A Certificates...................................................S-45
Class B Certificates...................................................S-45
Consultation With Counsel..............................................S-45
UNDERWRITING.............................................................S-46
LEGAL MATTERS............................................................S-47
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT.................................S-48
ANNEX I: OTHER SERIES ISSUED.............................................A-1
S-3
<PAGE> 4
SUMMARY OF TERMS
- - - - - THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES
NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING
YOUR INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING
OF THE CERTIFICATES, READ CAREFULLY THIS ENTIRE DOCUMENT AND THE
ACCOMPANYING PROSPECTUS.
- - - - - THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS AND
OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL
DESCRIPTION OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
OFFERED SECURITIES
The BA Master Credit Card Trust is offering the certificates as part of this
Series 199_-__. The certificates represent an interest in the assets of the
trust.
The Class B certificates are subordinated to the Class A certificates.
INTEREST PAYMENTS
The Class A certificates will accrue interest for each interest period at an
annual rate equal to LIBOR plus ___%.
The Class B certificates will accrue interest for each interest period at an
annual rate equal to LIBOR plus ___%.
Interest accrued during each interest period will be due on each distribution
date. Any interest due but not paid on a distribution date will be payable on
the next distribution date together with additional interest at the applicable
certificate rate plus 2% per annum.
- - - - - A distribution date is the 15th day of each month, or if that day is not a
business day, the next business day. The first distribution date is
__________ ___, 199_.
- - - - - Each interest period begins on and includes a distribution date and ends
on and excludes the next distribution date. However, the first interest
period will begin on and include _______ ___, 199_ and end on and exclude
______ ___, 199_, the first distribution date.
- - - - - LIBOR is the rate for deposits in U.S. dollars for a one-month period
which appears on the Dow Jones Telerate Page 3750 (or similar replacement
page) as of 11:00 a.m., London time, on the related LIBOR determination
date. In addition, see "Description of the Certificates --Interest
Payments" in this prospectus supplement for a discussion of the
determination of LIBOR if that rate does not appear on Dow Jones Telerate
Page 3750 (or similar replacement page).
- - - - - LIBOR determination dates are:
- _____ ___, 199_, for the period beginning on and including _________
__, 199__ and ending on and excluding _____ ___, 199_;
- _____ __, 199_ for the period beginning on and including _____ __,
199_ and ending on and excluding _____ __, 199_; and
- the second London business day prior to the first day of each
interest period, for each interest period following the first
interest period.
The following time line shows the relevant dates for the first two interest
periods:
[FIRST TWO INTEREST PERIODS FLOWCHART]
Other interest periods will follow sequentially after the second interest period
in the same manner as is shown in the time line.
See "Description of the Certificates -- Interest Payments" in this prospectus
supplement for a discussion of the determination of amounts available
S-4
<PAGE> 5
to pay interest and for the definition of business day and London business day.
You may obtain the certificate rates for the current and immediately preceding
interest periods by telephoning U.S. Bank National Association, the trustee, at
(612) 244-0743.
PRINCIPAL PAYMENTS
If you hold a Class A certificate, you are expected to receive payment of
principal in full on the Class A scheduled payment date which is ______ __,
____, or, if that date is not a business day, the next business day. If you hold
a Class B certificate, you are expected to receive payment of principal in full
on the Class B scheduled payment date which is __________ ____, ____, or, if
that date is not a business day, the next business day. However, certain
circumstances could cause principal to be paid earlier or later, or in reduced
amounts. No principal will be paid to the Class B certificateholders until the
Class A certificateholders are paid in full. See "Maturity Assumptions" in this
prospectus supplement and in the prospectus and "Description of the Certificates
- - - - -- Allocation Percentages" in this prospectus supplement.
The final payment of principal and interest on the certificates will be made no
later than ______ ___, ____, or, if that date is not a business day, the next
business day, called the legal final maturity or the Series 199_-___ termination
date.
See "Description of the Certificates -- Principal Payments" in this prospectus
supplement for a discussion of the determination of amounts available to pay
principal.
THE COLLATERAL INTEREST
The trust is also issuing an interest in the assets of the trust that is
subordinated to the certificates called the collateral interest. The initial
size of the collateral interest is $_______, representing [___]% of the initial
aggregate principal amount of the certificates and the collateral interest. As a
subordinated interest, the collateral interest is a form of credit enhancement
for the certificates. The collateral interest holder will have voting and
certain other rights as if the collateral interest were a subordinated class of
certificates.
THE COLLATERAL INTEREST IS NOT BEING OFFERED THROUGH THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS.
CREDIT ENHANCEMENT
Credit enhancement for your series is for your series's benefit only, and you
are not entitled to the benefits of any credit enhancement available to other
series.
Subordination of the Class B certificates provides credit enhancement for the
Class A certificates. Subordination of the collateral interest provides credit
enhancement for both the Class A certificates and the Class B certificates. The
collateral interest and the Class B investor interest must be reduced to zero
before the Class A investor interest will suffer any loss of principal. The
collateral interest must be reduced to zero before the Class B investor interest
will suffer any loss of principal. For a description of the events which may
lead to a reduction of the Class A investor interest, the Class B investor
interest and the collateral interest, see "Description of the Certificates --
Reallocation of Cash Flows," " -- Application of Collections" and " -- Defaulted
Receivables; Investor Charge-Offs" in this prospectus supplement.
OTHER INTERESTS IN THE TRUST
OTHER SERIES OF CERTIFICATES
The trust has issued other series of certificates and expects to issue
additional series of certificates. When issued by the trust, the certificates of
each of those series also represent an interest in the assets of the trust. You
can review a summary of each series previously issued and currently outstanding
under the caption "Annex I: Other Series Issued" included at the end of this
prospectus supplement. The trust may issue additional series with terms that may
be different from any other series without prior review or consent by any
certificateholders.
THE TRANSFEROR CERTIFICATE
Bank of America initially will own the transferor certificate, which represents
the remaining interest in the assets of the trust not represented by the
certificates, the collateral interest and the other interests issued by the
trust. The transferor interest
S-5
<PAGE> 6
does not provide credit enhancement for your series or any other series.
INFORMATION ABOUT THE RECEIVABLES
The trust assets include receivables in certain MasterCard(R) and VISA(R)*
revolving credit card accounts selected from a sub-set of Bank of America's
credit card account portfolio.
The receivables consist of both principal receivables and finance charge
receivables.
Principal receivables are, generally, amounts charged by cardholders for (a)
goods and services and (b) cash advances.
Finance charge receivables are, generally (a) the related finance charges and
credit card fees and (b) for your series, certain amounts of fees, called
interchange, collected through MasterCard and VISA and annual membership fees
collected from cardholders.
See "Bank of America's Credit Card Activities -- Interchange" in this prospectus
supplement and in the accompanying prospectus.
COLLECTIONS BY THE SERVICER
The servicer will collect payments on the receivables and will periodically
deposit those collections in an account. The servicer will keep track of those
collections that are finance charge receivables and those that are principal
receivables.
ALLOCATIONS AND PAYMENTS TO YOU AND YOUR SERIES
Each month, the servicer will allocate collections and the amount of receivables
that are not collected and are charged-off as uncollectible, called the default
amount, among:
- - - - - your series, based on the size of the investor interest in relation to the
overall size of the receivables in the trust (initially $___________);
- - - - - other outstanding series, based on the size of their respective interests
in the trust in relation to the overall size of the receivables in the
trust; and
- - - - - the holder of the transferor certificate, based on the size of the
transferor interest in relation to the overall size of the receivables in
the trust.
The trust assets allocated to your series will be further allocated to the
following, based on varying percentages:
- - - - - holders of the Class A certificates, based on the Class A investor
interest (initially $___________);
- - - - - holders of the Class B certificates, based on the Class B investor
interest (initially $_________); and
- - - - - the holder of the collateral interest, based on the collateral interest
(initially $__________).
See the following chart and "Description of the Certificates -- Allocation
Percentages" in this prospectus supplement.
The following chart illustrates the trust's general allocation structure only
and does not reflect the relative percentages of collections or other amounts
allocated to the transferor interest, to any series, including your series, or
to holders of the Class A certificates, the Class B certificates or the
collateral interest.
[ALLOCATION OF TRUST ASSETS FLOWCHART]
You are entitled to receive payments of interest and principal based upon
allocations to your series. The investor interest, which is the basis for
allocations to your series, is the sum of (a) the Class A investor
- - - - --------
* MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and Visa U.S.A., Inc., respectively.
S-6
<PAGE> 7
interest, (b) the Class B investor interest and (c) the collateral interest. The
Class A investor interest, the Class B investor interest and the collateral
interest will initially equal the outstanding principal amount of the Class A
certificates, the Class B certificates and the collateral interest. The investor
interest will decline as a result of principal payments and may decline due to
the charging-off of receivables or other reasons. If your investor interest
declines, amounts allocated and available for payment to your series and to you
will be reduced. For a description of the events which may lead to these
reductions, see "Description of the Certificates -- Reallocation of Cash Flows"
in this prospectus supplement.
ALLOCATIONS OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES
The following chart demonstrates the manner in which collections of finance
charge receivables are allocated and applied to your series. THE CHART IS A
SIMPLIFIED DEMONSTRATION OF CERTAIN ALLOCATION AND PAYMENT PROVISIONS AND IS
QUALIFIED BY THE FULL DESCRIPTIONS OF THESE PROVISIONS IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
Step 1: Collections of finance charge receivables for your series are allocated,
based on varying percentages, among the Class A investor interest, the
Class B investor interest and the collateral interest.
Step 2: Collections of finance charge receivables allocated to the Class A
investor interest are applied to cover, in the following priority: the
interest payment due to Class A, Class A's portion of the servicing fee
due to the servicer and Class A's portion of the default amount.
Collections of finance charge receivables allocated to the Class B
investor interest are applied to cover, in the following priority: the
interest payment due to Class B and Class B's portion of the servicing fee
due to the servicer.
Collections of finance charge receivables allocated to the collateral
interest are applied, under certain circumstances, to cover the collateral
interest's portion of the servicing fee due to the servicer.
Step 3: Collections of finance charge receivables allocated to your series and
not used in Step 2 are combined with shared excess finance charge
collections from other series in shared excess finance charge collections
group one, to the extent necessary and available, and treated as excess
spread and applied, in the following priority, to cover:
- - - - - the interest payment due to Class A, Class A's portion of the servicing
fee due to the servicer and Class A's portion of the default amount, each
to the extent not covered in Step 2;
- - - - - reimbursement of certain reductions of the Class A investor interest;
- - - - - the interest payment due to Class B and Class B's portion of the servicing
fee due to the servicer, each to the extent not covered in Step 2;
- - - - - Class B's portion of the default amount;
- - - - - reimbursement of certain reductions of the Class B investor interest.
Remaining excess spread is then applied, in the following priority, to cover,
among other things:
- - - - - the interest payment due to the collateral interest;
- - - - - the collateral interest's portion of the servicing fee due to the
servicer, to the extent not covered in Step 2;
- - - - - the collateral interest's portion of the default amount;
- - - - - reimbursement of reductions of the collateral interest if it is below its
minimum required amount;
- - - - - funding, if necessary, of a reserve account maintained to cover certain
interest payment shortfalls, if any; and
- - - - - other amounts owing to the collateral interest.
Step 4: Collections of finance charge receivables allocated to your
series and not used in Steps 2
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<PAGE> 8
and 3 above may be paid to other series in shared excess finance charge
collections group one, to the extent necessary, or to the transferor.
See "Description of the Certificates -- Application of Collections" in this
prospectus supplement.
[ALLOCATIONS OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES FLOWCHART]
S-8
<PAGE> 9
SHARED EXCESS FINANCE CHARGE COLLECTIONS
This series is included in a group of series designated as shared excess finance
charge collections group one. Each series identified under the caption "Annex I:
Other Series Issued" included at the end of this prospectus supplement is, and
other series in the future may be, included in shared excess finance charge
collections group one. To the extent that collections of finance charge
receivables allocated to your series are not needed to make payments or deposits
for your series, these collections, called shared excess finance charge
collections, will be applied to cover finance charge related payments for other
series within shared excess finance charge collections group one. Any
reallocation for this purpose will not reduce your series's investor interest.
In addition, you may receive the benefits of collections of excess finance
charge collections and certain other amounts allocated to other series in shared
excess finance charge collections group one, to the extent those collections are
not needed for those other series. See "Description of the Certificates --
Shared Excess Finance Charge Collections" in this prospectus supplement and in
the accompanying prospectus.
ALLOCATIONS OF COLLECTIONS OF PRINCIPAL RECEIVABLES
The following chart demonstrates the manner in which collections of principal
receivables are allocated and applied to your series. THE CHART IS A SIMPLIFIED
DEMONSTRATION OF CERTAIN ALLOCATION AND PAYMENT PROVISIONS AND IS QUALIFIED BY
THE FULL DESCRIPTIONS OF THESE PROVISIONS IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS.
Step 1: Collections of principal receivables for your series are allocated,
based on varying percentages, among the Class A investor interest, the
Class B investor interest and the collateral interest.
Step 2: Collections of principal receivables allocated to the collateral
interest and the Class B investor interest may be reallocated and treated
as finance charge receivables and made available to pay amounts due to the
Class A investor interest that have not been paid by either the Class A's
share of collections of finance charge receivables or excess spread. If
required Class A amounts are satisfied, the collateral interest also
provides the same type of protection to the Class B investor interest.
Certain collections which are reallocated for Class A or Class B will not
be made part of available investor principal collections.
Step 3: Collections of principal receivables allocated to your series and not
used in Step 2 above are combined with shared excess principal collections
from other series in the shared excess principal collections group, to the
extent necessary and available, and treated as available investor
principal collections.
Available investor principal collections may be paid, or accumulated and
then paid, to you as payments of principal as discussed below. The amount,
priority and timing of your principal payments, if any, depend on whether
your series is in the revolving period, the controlled accumulation period
or the rapid amortization period, as described below.
The Class A certificates will be paid in full before the Class B
certificates receive any payments of principal.
As available investor principal collections are accumulated for the Class
A certificates and the Class B certificates, the minimum required credit
enhancement (i.e., the collateral interest) will decrease and available
investor principal collections will be paid to the holder of the
collateral interest to the extent of this decrease.
See "Maturity Assumptions" and "Description of the Certificates
--Application of Collections" in this prospectus supplement.
Step 4: Collections of principal receivables allocated to your series and not
used in Steps 2 and 3 above may be paid to other series, to the extent
necessary, or to the transferor.
S-9
<PAGE> 10
[ALLOCATIONS OF COLLECTIONS OF PRINCIPAL RECEIVABLES FLOWCHART]
As discussed above in Step 3, available investor principal collections will be
applied as follows:
REVOLVING PERIOD: The certificates will have a period of time, called the
revolving period, when the trust will not pay, or accumulate, principal for
certificateholders. In general, during the revolving period the trust will pay
available principal to other series or the holder of the transferor certificate.
See "Description of the Certificates -- Principal Payments" and " -- Application
of Collections" in this prospectus supplement.
The revolving period starts on the closing date and ends on the earlier to begin
of:
- - - - - the controlled accumulation period; or
- - - - - the rapid amortization period.
CONTROLLED ACCUMULATION PERIOD: During the period called the controlled
accumulation period, each month the servicer will deposit (a) a specified amount
in the principal funding account in order to pay the Class A certificates in
full on the Class A scheduled payment date and (b) a specified amount in the
distribution account in order to pay the Class B certificates on the Class B
scheduled payment date.
Each month, the trust will pay principal not required to be deposited in the
principal funding account to other series or the holder of the transferor
certificate. Each month, if the amount actually deposited in the principal
funding account or the distribution account is less than the required deposit,
the amount of this deficiency
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<PAGE> 11
will be carried forward as a shortfall and included in the next month's required
deposit.
See "Description of the Certificates -- Principal Payments" and " --Application
of Collections" in this prospectus supplement. For information about the
application of money on deposit in the principal funding account, and the
distribution account including any net investment earnings, see "Description of
the Certificates -- Principal Funding Account" in this prospectus supplement.
On the Class A scheduled payment date, the trust will use the money on deposit
in the principal funding account to pay the Class A investor interest. On the
Class B scheduled payment date, the trust will use the money on deposit in the
distribution account to pay the Class B investor interest if the Class A
investor interest is paid in full.
You should be aware that there may not be sufficient amounts available to pay
principal in full for the Class A investor interest and the Class B investor
interest on the Class A scheduled payment date and the Class B scheduled payment
date, respectively. In addition, if the money on deposit in the principal
funding account is insufficient to pay the Class A investor interest on the
Class A scheduled payment date or if the money on deposit in the distribution
account is insufficient to pay the Class B investor interest on the Class B
scheduled payment date, or if a pay out event occurs, the rapid amortization
period will begin and the timing of your principal payments could change. See
"Maturity Assumptions" in this prospectus supplement and in the accompanying
prospectus.
The controlled accumulation period is scheduled to begin on __________ ___, ____
but in some cases may be delayed to no later than ________ ___, _____. See
"Description of the Certificates -- Postponement of Controlled Accumulation
Period" in this prospectus supplement.
The controlled accumulation period will end when any one of the following
occurs:
- - - - - the investor interest is paid in full;
- - - - - a rapid amortization period begins; or
- - - - - the Series 199_-___ termination date.
RAPID AMORTIZATION PERIOD: If a period called the rapid amortization period
begins, the trust will use any available principal collections allocated to your
series to pay (a) the Class A investor interest, (b) if the Class A investor
interest is paid in full, the Class B investor interest and (c) if the Class B
investor interest is paid in full, the collateral interest. These payments will
begin on the distribution date in the month immediately following the
commencement of the rapid amortization period.
The rapid amortization period will begin if a pay out event occurs and will end
when any one of the following occurs:
- - - - - the investor interest is paid in full;
- - - - - the Series 199_-__ termination date; or
- - - - - the trust termination date.
PAY OUT EVENTS: Certain adverse events called pay out events might lead to the
start of a rapid amortization period and the end of either the revolving period
or the controlled accumulation period.
A pay out event for your series will include the following events:
- - - - - the transferor does not make any required payment or deposit;
- - - - - the transferor materially violates any other obligation or agreement
relating to the certificates causing you to be adversely affected, if (a)
the transferor does not remedy the violation within 60 days after it has
received written notice and (b) you continue to be materially and
adversely affected for the 60-day period;
- - - - - the transferor provides certain representations, warranties or other
information which were materially incorrect at the time they were provided
causing you to be adversely affected, if (a) they continue to be
materially incorrect 60 days after the transferor has received written
notice and (b) you continue to be materially and adversely affected for
the 60-day period;
- - - - - the average yield on the receivables is below a minimum level called the
base rate for three consecutive monthly periods;
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<PAGE> 12
- - - - - the transferor fails to transfer additional assets to the trust when
required;
- - - - - certain defaults by the servicer occur that have a material adverse effect
on you;
- - - - - you are not paid in full on the scheduled payment date;
- - - - - certain events of insolvency or receivership relating to the transferor
occur;
- - - - - the transferor is unable to transfer receivables to the trust as required
under the agreement; or
- - - - - the trust becomes an "investment company" under the Investment Company Act
of 1940.
For a more detailed discussion of these pay out events, see "Description of the
Certificates -- Pay Out Events" in this prospectus supplement. In addition, see
"Description of the Certificates -- Pay Out Events" in the accompanying
prospectus for a discussion of the consequences of an insolvency or receivership
of the transferor.
SHARED EXCESS PRINCIPAL COLLECTIONS
This series is included in a group of series designated as the shared excess
principal collections group. Each series identified under the caption "Annex I:
Other Series Issued" included at the end of this prospectus supplement is, and
other series in the future may be, included in the shared excess principal
collections group. To the extent that collections of principal receivables
allocated to your series are not needed to make payments or deposits to the
principal funding account for your series, these collections, called shared
excess principal collections, will be applied to cover principal payments for
other series within the shared excess principal collections group. Any
reallocation for this purpose will not reduce your series's investor interest.
In addition, you may receive the benefits of collections of principal
receivables and certain other amounts allocated to other series in the shared
excess principal collections group, to the extent those collections are not
needed for those other series. See "Description of the Certificates -- Shared
Excess Principal Collections" in this prospectus supplement and in the
accompanying prospectus.
DENOMINATIONS
Beneficial interests in the certificates will be offered in minimum
denominations of $1,000 and integral multiples of that amount.
REGISTRATION, CLEARANCE AND SETTLEMENT
Your certificates will be registered in the name of Cede & Co., as the nominee
of the Depository Trust Company ("DTC"). You will not receive a definitive
certificate representing your interest, except in limited circumstances
described in the accompanying prospectus when certificates in fully registered,
certificated form are issued. See "Description of the Certificates -- Definitive
Certificates" in the accompanying prospectus.
You may elect to hold your certificates through DTC, in the United States, or
Cedel Bank, societe anonyme ("Cedel") or the Euroclear System ("Euroclear"), in
Europe. Transfers within DTC, Cedel or Euroclear, as the case may be, will be
made in accordance with the usual rules and operating procedures of those
systems. Cross-market transfers between persons holding directly or indirectly
through DTC and counterparties holding directly or indirectly through Cedel or
Euroclear will be made in DTC through the relevant depositaries of Cedel or
Euroclear. See "Description of the Certificates -- Book-Entry Registration" in
the accompanying prospectus.
We expect that the certificates will be delivered in book-entry form through the
facilities of DTC, Cedel and Euroclear on or about _____ __, 199_.
TAX STATUS
Special counsel to the transferor is of the opinion that, under existing law,
your certificates will be characterized as debt for federal income tax purposes.
Under the agreement, you and the transferor will agree to treat your
certificates as debt for federal, state and local income tax purposes and
franchise tax purposes. See "Federal Income Tax Consequences" in the
accompanying prospectus for additional information concerning the application of
federal income tax laws.
S-12
<PAGE> 13
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the Class A
certificates are eligible for purchase by persons investing assets of employee
benefit plans or individual retirement accounts.
For the reasons discussed under "ERISA Considerations" in this prospectus
supplement and the accompanying prospectus, the Class B certificates are not
eligible for purchase by persons investing assets of employee benefit plans or
individual retirement accounts.
CERTIFICATE RATINGS
The Class A certificates are required to be rated at issuance in the highest
rating category, excluding subcategory designations, by at least one nationally
recognized rating organization.
The Class B certificates are required to be rated at issuance in one of the
three highest rating categories, excluding subcategory designations, by at least
one nationally recognized rating organization.
See "Certificate Ratings" in the accompanying prospectus for a discussion of the
primary factors upon which the ratings are based.
S-13
<PAGE> 14
INTRODUCTION
The following provisions of this Prospectus Supplement contain more
detailed information concerning the asset backed certificates offered hereby.
The certificates will be issued by BA Master Credit Card Trust (the "Trust")
pursuant to the terms of the Agreement. The Trust will issue $___________
aggregate principal amount Class A Floating Rate Asset Backed Certificates,
Series 199_-_ (the "Class A Certificates"), $_________ aggregate principal
amount Class B Floating Rate Asset Backed Certificates, Series 199_-_ (the
"Class B Certificates" and together with the Class A Certificates, the
"Certificates") and $______ aggregate principal amount of Collateral Interest,
Series 199__-__ (the "Collateral Interest"). The date on which the Certificates
and Collateral Interest are issued, _______ __, 199__, is the "Closing Date."
BANK OF AMERICA'S CREDIT CARD ACTIVITIES
GENERAL
The receivables (the "Receivables") conveyed to the Trust by Bank of
America pursuant to the pooling and servicing agreement (as amended from time to
time, the "Agreement") between Bank of America, as transferor (the "Transferor")
and as servicer, and U.S. Bank National Association (formerly known as First
Bank National Association), as Trustee, have been or will be generated from
transactions made by holders of selected MasterCard and VISA credit card
accounts (the "Accounts"), including premium accounts and standard accounts,
from a sub-set of MasterCard and VISA accounts identified by the Transferor
(such sub-set, as identified from time-to-time, the "Identified Pool"), as
constituted at the time of such Accounts' selection.
BILLING, PAYMENTS AND FEES
The Accounts currently have various billing and payment characteristics,
including varying periodic rate finance charges and fees. With the December 1,
1994 transfer of the accounts from Bank of America NT&SA to Bank of America, the
state law governing most of such accounts changed from California to Arizona.
Each cardholder was given the option to (a) continue the cardholder's account
relationship automatically under Arizona law by continuing to charge purchases
and cash advances to the account, or (b) retain California law as the state law
governing the cardmember agreement for the account by ceasing to use the account
for new purchases and cash advances. Accounts that opted to retain California
law are paying down their outstanding balances.
Currently, monthly billing statements are sent by Bank of America to
cardholders with balances at the end of each billing period. With some
exceptions, cardholders must make a minimum monthly payment generally equal to
the greatest of (a) 2.5% of the outstanding balance (including purchases, cash
advances, finance charges, and fees posted to the Account) plus any past due
amounts; (b) $10 plus any past due amounts; or (c) the amount of the outstanding
balance in excess of the account credit line. If the cardholder's outstanding
balance is less than $10, the minimum monthly payment equals the amount of the
outstanding balance.
Accounts may have a different annual percentage rate for purchases and
cash advance balances. Bank of America uses variable-rate pricing based on a
selected external rate.
Accounts have a grace period which allows payment of the new balance of
purchases in full every month without incurring a finance charge. There is no
grace period on balances resulting from cash advances. There can be no assurance
that periodic-rate finance charges, fees, and other charges on Accounts will
remain at current levels.
Bank of America offers fixed-rate and variable-rate credit card accounts.
Generally the variable rates range from [7.49] percentage points to [9.49]
percentage points above the prime rate as published from time to time in the
Wall Street Journal. Bank of America also offers temporary promotional rates
and, under certain circumstances, the periodic finance charges on a limited
number of accounts may be less than those generally assessed by Bank of America.
Although more than [90]% of the Accounts are currently priced at variable rates,
some Accounts retain fixed rates which generally range from [8.1]% to [19.8]%.
S-14
<PAGE> 15
Bank of America assesses annual membership fees (generally $[18]) on
certain accounts, although under various marketing and relationship incentive
programs, these fees may be waived or rebated. For most credit card accounts,
Bank of America also assesses late and overlimit charges (generally $[25]) and
returned check charges (generally $[25]). Bank of America generally assesses a
cash advance fee, typically [2.5]% of the cash advance amount, with minimums of
$[2], $[6] and $[20] depending on the type of cash advance.
DELINQUENCY AND LOSS EXPERIENCE
An account is contractually delinquent if the minimum payment is not
received by the payment due date. An account is not treated as delinquent if the
minimum monthly payment is received by the next billing date; provided, however,
the period of delinquency on any account is measured from the payment due date.
Collection of delinquent credit card receivables currently is performed by Bank
of America's credit card collections personnel located in operations centers in
Phoenix, Arizona and Pasadena, California, or by Bank of America's agents.
Bank of America's credit card collection programs employ advanced
technology to manage risk and streamline processes. This technology includes
automated calling systems to improve collector efficiency, scoring models to
estimate the relative risk of loss exposure, and behavior analysis to prioritize
cardholder contacts. Collection activities include statement messages, telephone
calls and formal collection letters. Collectors generally initiate telephone
contact with cardholders whose accounts are 5 days or more contractually
delinquent. In the event that the initial telephone call fails to cure the
delinquency, Bank of America continues to contact the cardholder by telephone
and by mail. Bank of America may enter into arrangements with cardholders to
extend or otherwise change payment schedules as approved by one of Bank of
America's collections managers. Delinquency levels are monitored daily by Bank
of America's collections representatives with aggregate delinquency information
reported to senior management on a daily basis.
Accounts are charged-off once they have become contractually past due 180
days, unless a payment has been received in an amount sufficient to bring the
account into a different delinquency category or to bring the account current.
At the time of charge-off, an evaluation is made whether to pursue further
remedies. In certain cases, outside collection agencies and law firms are
engaged. The credit evaluation, servicing and charge-off policies, and
collection practices of Bank of America, may change from time to time in
accordance with Bank of America's business judgment and applicable law. Account
balances for bankrupt cardholders are charged-off as soon as practically
possible and generally within 45 days from the date of verifiable bankruptcy
notification.
The Federal Financial Institutions Examination Council, on June 30, 1998,
proposed a revised policy statement on the classification of retail credit. If
adopted, the revised policy statement could establish, effective January 1,
2001, a uniform charge-off period of 150 days delinquency for open-end and
closed-end credit. Alternatively, the proposal also contains guidance that
would, effective January 1, 1999, standardize the methodology for implementing
the existing 180 day charge-off policy requirement for open-end credit. The
revised policy statement could also, effective January 1, 1999, provide guidance
for loans affected by bankruptcy, fraudulent activity and death; establish
standards for re-aging, extending, deferring or rewriting of past due accounts;
and broaden the circumstances under which partial payments are recognized as
full payments for purposes of determining that a loan is no longer delinquent.
Upon the creation of the Trust, the Transferor conveyed to the Trustee,
for the benefit of the Trust, all Receivables existing under certain Accounts
that were selected from the Identified Pool as constituted on the Cut-Off Date
(the "Initial Identified Pool"). All Additional Accounts, the Receivables of
which have been, or will be, designated for inclusion in the Trust, have been or
will be selected from the Identified Pool, as constituted at the time of such
designation. Pursuant to a consolidation of processing functions by the
Servicer, Accounts relating to the Initial Identified Pool are no longer
identified separately from accounts relating to the entire Bank Portfolio. The
following tables set forth the delinquency and loss experience for (a) each of
the calendar years ended December 31, 1995 and December 31, 1996 for the Initial
Identified Pool and (b) the calendar year ended December 31, 1997 and the ____
calendar months ended ______ ___, 199_, for the Trust Portfolio. The Trust
Portfolio's delinquency and loss experience is comprised of segments which may,
when taken individually, have delinquency and loss characteristics different
from those of the Initial Identified Pool. As of the end of the day on December
31, 1996, the last day on which data is available for the Initial Identified
Pool, the Receivables in the Trust Portfolio represented approximately 99.6% of
the Initial Identified Pool. Because the Trust Portfolio is not identical to the
Initial
S-15
<PAGE> 16
Identified Pool, actual delinquency and loss experience with respect to the
Receivables may be different from that set forth below for the Initial
Identified Pool. There can be no assurance that the delinquency and loss
experience for the Trust Portfolio in the future will be similar to the
historical experience of the Trust Portfolio or the Initial Identified Pool set
forth below.
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------------------
, 1998 1997 1996 1995
------------------------- ------------------------- ------------------------- -------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding(2). $ $4,160,515 $4,038,334 $4,290,345
Receivables
Delinquent:
30 - 59 Days.. $ % $ 73,329 1.76% $ 65,307 1.62% $ 65,246 1.52%
60 - 89 Days.. 44,086 1.06 39,131 0.97 37,532 0.87
90 or More
Days........ 79,210 1.90 65,931 1.63 63,644 1.48
---------- ---- ---------- ---- ---------- ---- ---------- ----
Total....... $ % $ 196,625 4.73% $ 170,369 4.22% $ 166,422 3.88%
========== ==== ========== ==== ========== ==== ========== ====
</TABLE>
- - - - ----------
(1) Data for 1998 and 1997 is for the Trust Portfolio as constituted at such
time. Data for 1996 and 1995 is for the Initial Identified Pool. The
Receivables in the Trust Portfolio represented approximately 99.6% of the
Initial Identified Pool on December 31, 1996, the last date on which data
is available for the Initial Identified Pool.
(2) The Receivables Outstanding on the accounts consist of all amounts due
from cardholders as posted to the accounts as of the end of the period
shown.
LOSS EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
__ MONTHS
ENDED YEAR ENDED DECEMBER 31,
--------------- -----------------------------------------------
______ __,1998 1997 1996 1995
--------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(2) $ $3,795,496 $4,028,066 $ 4,170,853
Total Gross Charge-Offs(3) 259,943 236,364 231,009
Recoveries 9,340 22,252 27,180
Total Net Charge-Offs 250,603 214,112 203,829
Total Net Charge-Offs as a percentage
of Average Receivables
Outstanding (4)(5) % 6.60% 5.32% 4.89%
</TABLE>
- - - - ----------
(1) Data for 1998 and 1997 is for the Trust Portfolio as constituted at such
time. Data for 1996 and 1995 is for the Initial Identified Pool. The
Receivables in the Trust Portfolio represented approximately 99.6% of the
Initial Identified Pool on December 31, 1996, the last date on which data
is available for the Initial Identified Pool.
(2) Average Receivables Outstanding is the average of the daily receivable
balance during the period indicated.
(3) Total Gross Charge-Offs are total principal charge-offs before recoveries
and do not include the amount of any reductions in Average Receivables
Outstanding due to fraud, returned goods, customer disputes or other
miscellaneous credit adjustments.
(4) The percentage reflected for the ____ months ended _____ __, 199_ is an
annualized figure.
INTERCHANGE
The Transferor will be required, pursuant to the terms of the Agreement,
to transfer to the Trust a percentage of the Interchange attributed to
cardholder charges for goods and services in the Accounts. Interchange arising
under the Accounts will be allocated to the Certificates on the basis of the
Floating Investor Percentage of the ratio which the amount of cardholder charges
for goods and services in the Accounts bears to the total amount of cardholder
charges for goods and services in the MasterCard and VISA credit card accounts
owned by Bank of America, as
S-16
<PAGE> 17
reasonably estimated by the Transferor. MasterCard and VISA may from time to
time change the amount of Interchange reimbursed to banks issuing their credit
cards. Interchange will be treated as collections of Finance Charge Receivables
for the purposes of determining the amount of Finance Charge Receivables,
allocating collections of Finance Charge Receivables, making required monthly
payments, and calculating the Portfolio Yield. Under the circumstances described
in this Prospectus Supplement, Interchange will be used to pay a portion of the
Investor Servicing Fee required to be paid on each Transfer Date. See
"Description of the Certificates -- Servicing Compensation and Payment of
Expenses" in this Prospectus Supplement and "Bank of America's Credit Card
Activities -- Interchange" in the accompanying Prospectus.
THE RECEIVABLES
The Receivables conveyed to the Trust arise in Accounts selected from the
Initial Identified Pool on the basis of criteria set forth in the Agreement as
applied on May 18, 1996 (the "Cut-Off Date") and, with respect to Additional
Accounts, from the Identified Pool, as constituted at the applicable time, on
the basis of criteria set forth in the Agreement as applied on their date of
designation for inclusion in the Trust (the "Trust Portfolio"). Pursuant to the
Agreement, the Transferor has the right, subject to certain limitations and
conditions set forth therein, 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. On
October 27, 1997, March 2, 1998, and September 2, 1998, the Transferor
designated Additional Accounts and conveyed the Receivables arising therein to
the Trust, which at the time of each such conveyance included approximately $486
million, $2.5 billion and $850 million, respectively, of amounts charged by
cardholders for goods and services and cash advances ("Principal Receivables").
The Transferor will be required to designate Additional Accounts, to the extent
available (a) to maintain the interest of the Transferor in the Trust (the
"Transferor Interest") so that during any period of 30 consecutive days, the
Transferor Interest averaged over that period equals or exceeds the Minimum
Transferor Interest for the same period and (b) to maintain, for so long as
certificates of any Series (including the Certificates) remain outstanding, an
aggregate amount of Principal Receivables equal to or greater than the Minimum
Aggregate Principal Receivables. "Minimum Transferor Interest" for any period
means 7.0% of the average Principal Receivables; provided, however, that the
Transferor may reduce the Minimum Transferor Interest to not less than 2% of the
average Principal Receivables for such period upon satisfaction of the Rating
Agency Condition and certain other conditions set forth in the Agreement.
"Minimum Aggregate Principal Receivables" means an amount equal to the sum of
the numerators used to calculate the Investor Percentages with respect to the
allocation of collections of Principal Receivables for each Series then
outstanding; provided further, however, that with respect to any Series in its
Rapid Accumulation Period, or such other period as designated in the related
Series Supplement, with an investor interest as of such date of determination
equal to the principal funding account balance relating to such Series, taking
into account any deposit to be made to the principal funding account relating to
such Series on the Transfer Date following such date of determination, the
numerator used in the calculation of the Investor Percentage with respect to
Principal Receivables relating to such Series shall, solely for the purpose of
the definition of Minimum Aggregate Principal Receivables, be deemed to equal
zero; provided further, however, that the Minimum Aggregate Principal
Receivables may be reduced to a lesser amount at any time if the Rating Agency
Condition is satisfied. Further, pursuant to the Agreement, the Transferor will
have the right (subject to certain limitations and conditions) to designate
certain Removed Accounts and to require the Trustee to reconvey all Receivables
in such Removed Accounts to the Transferor, whether such Receivables are then
existing or thereafter created. 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. As of the Cut-Off Date and, with respect to Receivables in Additional
Accounts, as of their date of designation for inclusion in the Trust, and on the
date any new Receivables are created, the Transferor will represent and warrant
to the Trust that the Receivables meet the eligibility requirements specified in
the Agreement. See "Description of the Certificates -- Representations and
Warranties" in the accompanying Prospectus.
The paragraph immediately below and the tables that follow, each summarize
the Trust Portfolio (other than Accounts that have a zero balance with no
current charging privileges due to such Accounts being classified as lost,
stolen or involved in a product change) by various criteria as of the end of the
day on______ ___, 199_. Because the future composition of the Trust Portfolio
may change over time, information contained in the paragraph immediately
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<PAGE> 18
below and the tables that follow is not necessarily indicative of the
composition of the Trust Portfolio at any subsequent time.
The Receivables in the Trust Portfolio, as of the end of the day on ______
__, 199_, included $___________ of Principal Receivables and $___________ of the
related finance charges, credit card fees, interchange and annual membership
fees ("Finance Charge Receivables"). The Accounts had an average total
Receivable balance of $_____ and an average credit limit of $______. The
percentage of the aggregate total Receivable balance to the aggregate total
credit limit was _____%. The average age of the Accounts was approximately ____
months. As of the end of the day on______ __, 199_, cardholders whose Accounts
are included in the Trust Portfolio had billing addresses in all 50 States, the
District of Columbia and certain other United States territories and
possessions. Due to a concentration of Accounts in the state of California,
social, technological, legal and economic factors in that state may have a
disproportionate effect on the Trust Portfolio as a whole. As of the end of the
day on ____ ___, 199_, ______% of the Accounts were standard accounts and ____%
were premium accounts, and the aggregate Receivable balances of standard
accounts and premium accounts, as a percentage of the total aggregate
Receivables, were ____% and ____% respectively.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
--------------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Credit Balance.................. % $ %
No Balance......................
Less than or equal to
$1,000.00.....................
$1,000.01 -- $3,000.00..........
$3,000.01 -- $5,000.00..........
$5,000.01 -- $7,500.00..........
$7,500.01 -- $10,000.00.........
$10,000.01 or More..............
------- ----- ---------- -----
TOTAL................. % $ %
======= ===== ========== =====
</TABLE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- - - - ------------------ --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Less than or % $ %
equal to $1,000.....................
$1,001 -- $3,000....................
$3,001 -- $5,000....................
$5,001 -- $9,999....................
$10,000 or More.....................
------- ----- ---------- ----
TOTAL..................... % $ %
======= ===== ========== ====
</TABLE>
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<PAGE> 19
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF OF TOTAL
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- - - - -------------------------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Not Delinquent................ % $ %
1 Day to 30 Days..............
31 Days to 60 Days............
61 Days to 90 Days............
91 Days to 120 Days...........
121 Days and Over.............
--------- ---- -----------
TOTAL............... % $ %
========== ==== =========== ====
</TABLE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT AGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- - - - ----------------------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
0 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 to 84 Months......
Over 84 Months to 96 Months......
Over 96 Months to 108 Months.....
Over 108 Months to 120 Months....
Over 120 Months.................. --------- ----------- ----------- -----------
TOTAL.................. % $ %
========= =========== =========== ===========
</TABLE>
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<PAGE> 20
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- - - - ------------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Alabama................ % $ %
Alaska.................
Arizona................
Arkansas...............
California.............
Colorado...............
Connecticut............
Delaware...............
Florida................
Georgia................
Hawaii.................
Idaho..................
Illinois...............
Indiana................
Iowa...................
Kansas.................
Kentucky...............
Louisiana..............
Maine..................
Maryland...............
Massachusetts..........
Michigan...............
Minnesota..............
Mississippi............
Missouri...............
Montana................
Nebraska...............
Nevada.................
New Hampshire..........
New Jersey.............
New Mexico.............
New York...............
North Carolina.........
North Dakota...........
Ohio...................
Oklahoma...............
Oregon.................
Pennsylvania...........
Rhode Island...........
South Carolina.........
South Dakota...........
Tennessee..............
Texas..................
Utah...................
Vermont................
Virginia...............
Washington.............
West Virginia..........
Wisconsin..............
Wyoming................
District of Columbia...
Other..................
--------- ----------- ----------- -----------
TOTAL........ % $ %
========= =========== =========== ===========
</TABLE>
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<PAGE> 21
MATURITY ASSUMPTIONS
The Agreement provides that the holders of the Class A Certificates (the
"Class A Certificateholders") will not receive payments of principal until
___________ __, 200__ (the "Class A Scheduled Payment Date"), or earlier in the
event of a Pay Out Event which results in the commencement of the Rapid
Amortization Period. The Agreement also provides that the holders of the Class B
Certificates (the "Class B Certificateholders" and, together with the Class A
Certificateholders, the "Certificateholders") will not receive payments of
principal until _______________ ___, 200__ the "Class B Scheduled Payment
Date"), or earlier in the event of a Pay Out Event which results in the
commencement of the Rapid Amortization Period (in the latter case, only after
the Class A Investor Interest has been paid in full). The Class B
Certificateholders will not begin to receive payments of principal until the
final principal payment on the Class A Certificates has been made.
Controlled Accumulation Period. On each Transfer Date during a period called
the "Controlled Accumulation Period" prior to the payment of the Class A
Investor Interest in full, an amount equal to, for each Monthly Period, the
least of (a) the Available Investor Principal Collections, (b) the "Controlled
Deposit Amount" for such Monthly Period, which is equal to the sum of the
Controlled Accumulation Amount for such Monthly Period and the Accumulation
Shortfall, if any, for such Monthly Period and (c) the Class A Adjusted Investor
Interest prior to any deposits on such day, will be deposited in the Principal
Funding Account established by the Trustee until the principal amount on deposit
in the Principal Funding Account (the "Principal Funding Account Balance")
equals the Class A Investor Interest. After the Class A Investor Interest has
been paid in full, or following the first Transfer Date upon which the Principal
Funding Account Balance has increased to the amount of the Class A Investor
Interest, Available Investor Principal Collections, to the extent required, will
be distributed to the Class B Certificateholders on each related Distribution
Date beginning, during the Controlled Accumulation Period, on the Class B
Scheduled Payment Date, until the earlier of the date the Class B Investor
Interest has been paid in full and ________ __, 200__ (the "Series 199_-___
Termination Date"). After the Class A Investor Interest and the Class B Investor
Interest have each been paid in full, Available Investor Principal Collections,
to the extent required, will be distributed to the holder of the Collateral
Interest (the "Collateral Interest Holder") on each related Distribution Date
until the earlier of the date the Collateral Interest has been paid in full and
the Series 199_-___ Termination Date. Amounts in the Principal Funding Account
are expected to be available to pay the Class A Investor Interest on the Class A
Scheduled Payment Date. After the payment of the Class A Investor Interest in
full, Available Investor Principal Collections are expected to be available to
pay the Class B Investor Interest on the Class B Scheduled Payment Date.
Although it is anticipated that collections of Principal Receivables will be
available on each Transfer Date during the Controlled Accumulation Period to
make a deposit of the applicable Controlled Deposit Amount and that the Class A
Investor Interest will be paid to the Class A Certificateholders on the Class A
Scheduled Payment Date and the Class B Investor Interest will be paid to the
Class B Certificateholders on the Class B Scheduled Payment Date, respectively,
no assurance can be given in this regard. If the amount required to pay the
Class A Investor Interest or the Class B Investor Interest in full is not
available on the Class A Scheduled Payment Date or the Class B Scheduled Payment
Date, respectively, a Pay Out Event will occur and the Rapid Amortization Period
will commence.
Rapid Amortization Period. If a Pay Out Event occurs, a period called the
"Rapid Amortization Period" will commence and any amount on deposit in the
Principal Funding Account will be paid to the Class A Certificateholders on the
Distribution Date in the month following the commencement of the Rapid
Amortization Period. In addition, to the extent that the Class A Investor
Interest has not been paid in full, the Class A Certificateholders will be
entitled to monthly payments of principal equal to the Available Investor
Principal Collections until the earlier of the date on which the Class A
Certificates have been paid in full and the Series 199_-___ Termination Date.
After the Class A Certificates have been paid in full and if the Series 199_-___
Termination Date has not occurred, Available Investor Principal Collections will
be paid to the Class B Certificateholders on each Distribution Date until the
earlier of the date on which the Class B Certificates have been paid in full and
the Series 199_-___ Termination Date.
Pay Out Events. A Pay Out Event occurs, either automatically or after
specified notice, upon (a) the failure of the Transferor to make certain
payments or transfers of funds for the benefit of the Certificateholders within
the time periods stated in the Agreement, (b) material breaches of certain
representations, warranties or covenants of the Transferor, (c) the occurrence
of certain events of insolvency, receivership or bankruptcy relating to the
Transferor
S-21
<PAGE> 22
or other holder of the Transferor Certificate, (d) the average of the Portfolio
Yields for any three consecutive Monthly Periods being less than the average of
the Base Rates for such period, (e) the Trust becoming an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (f) the
Transferor is unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of the Agreement, (g) the occurrence of a
Servicer Default which would have a material adverse effect on the
Certificateholders, (h) the deposit of insufficient monies in the Distribution
Account to pay the Class A Investor Interest or the Class B Investor Interest in
full on the Class A Scheduled Payment Date or the Class B Scheduled Payment
Date, respectively, or (i) the failure of the Transferor to convey Receivables
arising under Additional Accounts or Participations to the Trust when required
by the Agreement. See "Description of the Certificates -- Pay Out Events" in
this Prospectus Supplement. The term "Base Rate" means, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction, the
numerator of which is the sum of the Class A Monthly Interest, the Class B
Monthly Interest and the Collateral Monthly Interest, each for the related
Interest Period, and the Certificateholder Servicing Fee and the Servicer
Interchange, each for such Monthly Period, and the denominator of which is the
Investor Interest as of the close of business on the last day of such Monthly
Period. The term "Portfolio Yield" means, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the numerator of which is
the sum of (a) collections of Finance Charge Receivables, Principal Funding
Investment Proceeds and amounts withdrawn from the Reserve Account and in each
case deposited into the Finance Charge Account and allocable to the Certificates
and the Collateral Interest for such Monthly Period, calculated on a cash basis
after subtracting the Aggregate Investor Default Amount for such Monthly Period
and (b) upon the satisfaction of the Rating Agency Condition with respect to
their inclusion in Portfolio Yield, Shared Excess Finance Charge Collections, if
any, allocable to Series 199_-___, and the denominator of which is the Investor
Interest as of the close of business on the last day of such Monthly Period.
Paired Series. The Transferor may, at or after the time at which the
Controlled Accumulation Period commences for Series 199_-___, cause the Trust to
issue another Series (or some portion thereof, to the extent that the full
principal amount of such other Series is not otherwise outstanding at such time)
as a Paired Series with respect to Series 199_-___ to be used to finance the
increase in the Transferor Interest caused by the accumulation of principal in
the Principal Funding Account with respect to Series 199_-___. No assurances can
be given as to whether such other Series will be issued and, if issued, the
terms thereof, since the terms of the Certificates may vary from the terms of
such other Series, the pay out events with respect to such other Series may vary
from the Pay Out Events with respect to Series 199_-___ and may include pay out
events which are unrelated to the status of the Transferor or the Receivables,
such as pay out events related to the continued availability and rating of
certain providers of Enhancement to such other Series. If a pay out event does
occur with respect to any such Paired Series prior to the payment in full of the
Certificates, the final payment of principal to the Certificateholders may be
delayed. See "Description of the Certificates -- Paired Series" in this
Prospectus Supplement. If a Pay Out Event occurs with respect to a Series (which
may be Series 199_-___) having a Paired Series or with respect to the Paired
Series when such Series is in the Controlled Accumulation Period, the percentage
used for allocating collections of Principal Receivables for the Series (which
may be Series 199_-___) and for the Paired Series may reset as specified in this
Prospectus Supplement.
Payment Rates. The following table sets forth the highest and lowest
cardholder monthly payment rates during any month in the period shown and the
average cardholder monthly payment rates for all months during the periods shown
(a) for the Initial Identified Pool for each of the calendar years ended
December 31, 1995 and December 31, 1996 and (b) for the Trust Portfolio for the
calendar year ended December 31, 1997 and the ___ calendar months ended ____ __,
199_, in each case calculated as a percentage of total ending monthly account
balances during the periods shown. As of the end of the day on December 31,
1996, the last day on which data is available for the Initial Identified Pool,
the Receivables in the Trust Portfolio represented approximately 99.6% of the
Initial Identified Pool. Payment rates shown in the table are based on amounts
which would be deemed payments of Principal Receivables and Finance Charge
Receivables with respect to the Accounts.
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<PAGE> 23
CARDHOLDER MONTHLY PAYMENT RATES(1)
<TABLE>
<CAPTION>
__ MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------
, 199 1997 1996 1995
-------------- ---- ---- ----
<S> <C> <C> <C> <C>
Lowest Month....... % 13.04% 13.18% 12.83%
Highest Month...... % 15.06% 15.00% 15.42%
Monthly Average.... % 14.07% 14.03% 14.05%
</TABLE>
- - - - ----------
(1) Data for 1998 and 1997 is for the Trust Portfolio as constituted at such
time. Data for 1996 and 1995 is for the Initial Identified Pool. The
Receivables in the Trust Portfolio represented approximately 99.6% of the
Initial Identified Pool on December 31, 1996, the last date on which data
is available for the Initial Identified Pool.
Currently, with some exceptions, cardholders must make a minimum monthly
payment generally equal to the greater of (a) 2.5% of the outstanding balance
(including purchases, cash advances, finance charges, and fees posted to the
Account) plus any past due amounts; (b) $10 plus any past due amounts; or (c)
the amount of the outstanding balance in excess of the Account credit line. If
the cardholder's outstanding balance is less than $10, the minimum monthly
payment equals the amount of the outstanding balance. Payments are applied
pursuant to the terms of the credit card agreements governing the Accounts.
There can be no assurance that the cardholder monthly payment rates in the
future will be similar to the historical experience set forth above. In
addition, the amount of collections of Receivables may vary from month to month
due to seasonal variations, general economic conditions and payment habits of
individual cardholders. There can be no assurance that collections of
Receivables with respect to the Trust Portfolio will be similar to the
historical experience set forth above or that deposits into the Principal
Funding Account or the Distribution Account, as applicable, will be made in
accordance with the applicable Controlled Accumulation Amount. If a Pay Out
Event occurs, the average life of the Certificates could be significantly
reduced or increased.
Because there may be a slowdown in the payment rate below the payment
rates used to determine the Controlled Accumulation Amounts, or a Pay Out Event
may occur which would initiate the Rapid Amortization Period, there can be no
assurance that the actual number of months elapsed from the date of issuance of
the Class A Certificates and the Class B Certificates to their respective final
Distribution Dates will equal the expected number of months. As described under
"Description of the Certificates -- Postponement of Controlled Accumulation
Period" in this Prospectus Supplement, the Servicer may shorten the Controlled
Accumulation Period and, in such event, there can be no assurance that there
will be sufficient time to accumulate all amounts necessary to pay the Class A
Investor Interest and the Class B Investor Interest on the Class A Scheduled
Payment Date and the Class B Scheduled Payment Date, respectively. See "Maturity
Assumptions" and "Risk Factors -- Timing of Principal Payments" in the
accompanying Prospectus.
RECEIVABLE YIELD CONSIDERATIONS
The gross revenues from finance charges and fees billed to accounts in the
Initial Identified Pool for each of the calendar years ended December 31, 1995
and December 31, 1996 and the gross revenues from finance charges and fees
billed to Accounts in the Trust Portfolio for the calendar year ended December
31, 1997 and the ___ calendar months ended _____ __, 199_, are set forth in the
following table.
The historical yield figures in the following table are calculated on an
accrual basis. Collections of Receivables included in the Trust will be on a
cash basis and may not reflect the historical yield experience in the table.
During periods of increasing delinquencies or periodic payment deferral
programs, accrual yields may exceed cash amounts accrued and billed to
cardholders. Conversely, cash yields may exceed accrual yields as amounts
collected in a current period may include amounts accrued during prior periods.
However, the Transferor believes that during the three calendar years ended
December 31, 1997 and the ___ calendar months ended _____ __, 199_, the yield on
an accrual basis closely approximated the yield on a cash basis. The yield on
both an accrual and a cash basis will be affected by numerous factors, including
the monthly periodic finance charges on the Receivables, the amount of the
annual membership fees and other fees, changes in the delinquency rate on the
Receivables and the percentage of cardholders who pay their balances in full
each month and do not incur monthly periodic finance charges. See "Risk Factors"
in the accompanying Prospectus.
S-23
<PAGE> 24
PORTFOLIO YIELD(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
___ MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------
, 199 1997 1996 1995
----------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Average Receivables $ $3,795,496 $4,028,066 $4,170,853
Outstanding(2)..................
Finance Charges and Fee Revenue
Billed........................ $ $ 744,810 $ 726,444 $ 750,350
Interchange..................... $ $ 61,710 $ 73,519 $ 76,451
Average Yield(3)(4)............. % 19.62% 18.03% 17.99%
</TABLE>
- - - - ----------
(1) Data for 1998 and 1997 is for the Trust Portfolio as constituted at such
time. Data for 1996 and 1995 is for the Initial Identified Pool. The
Receivables in the Trust Portfolio represented approximately 99.6% of the
Initial Identified Pool on December 31, 1996, the last date on which data is
available for the Initial Identified Pool.
(2) Average Receivables Outstanding is the average of the daily ending
receivable balance during the period indicated.
(3) Average Yield is the result of dividing Finance Charges and Fee Revenue
Billed by the Average Receivables Outstanding for the period and does not
include revenue attributable to Interchange or recoveries.
(4) The percentage reflected for the ___ months ended _______ , 199_ is an
annualized figure.
The revenue for the Trust Portfolio and the Initial Identified Pool of
credit card accounts shown in the above table is comprised of monthly periodic
finance charges, credit card fees and Interchange. These revenues vary for each
account based on the type and volume of activity for each account. Because the
Trust Portfolio is not identical to the Initial Identified Pool, actual yield
with respect to Receivables for the years ended December 31, 1996 and December
31, 1995 may be different from that set forth above for the Initial Identified
Pool. See "Bank of America's Credit Card Activities" in this Prospectus
Supplement and "Bank of America's Credit Card Activities" in the accompanying
Prospectus.
BANKAMERICA CORPORATION, BANK OF AMERICA AND BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
BankAmerica Corporation (the "Corporation") is a multi-bank holding company
which was incorporated in Delaware and formed in connection with the merger on
September 30, 1998 of NationsBank Corporation ("NationsBank") and the former
BankAmerica Corporation ("BAC"). At June 30, 1998, on a pro forma basis,
NationsBank and BAC had combined total assets of approximately $571.9 billion,
total liabilities of approximately $526.0 billion, and total shareholders'
equity of approximately $45.9 billion. Bank of America is a wholly-owned
subsidiary of the Corporation and was formed as a national bank organized under
the laws of the United States in 1989 and is headquartered in Phoenix, Arizona.
On June 30, 1998, Bank of America's total assets were approximately $5.5
billion, total liabilities were approximately $4.7 billion, and total
stockholders' equity was approximately $0.8 billion, as reported in Bank of
America's Consolidated Reports of Condition and Income (the "Call Report") as of
the same date. The Call Report is required to be prepared in accordance with
regulatory accounting principles, which differ in some respects from generally
accepted accounting principles.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement as supplemented by
the supplement relating to the Certificates (the "Series 199_-__ Supplement").
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 199_-___ Supplement. See "Description of the
Certificates" in the accompanying Prospectus for additional information
concerning the Certificates and the Agreement.
S-24
<PAGE> 25
GENERAL
The Certificates will represent the right to receive certain payments from
the assets of the Trust, including the right to the applicable allocation
percentage of all cardholder payments on the Receivables in the Trust to the
extent necessary to pay principal and interest on the Certificates. Each Class A
Certificate represents the right to receive interest at an annual rate equal to
LIBOR plus __% (the "Class A Certificate Rate") on the outstanding principal
amount of the Class A Certificates for the related Interest Period and payments
of principal on the Class A Scheduled Payment Date or, to the extent of the
Class A Investor Interest, on each Distribution Date with respect to the Rapid
Amortization Period, funded from collections of Finance Charge Receivables and
Principal Receivables, respectively, allocated to the Class A Investor Interest
and certain other available amounts. Each Class B Certificate represents the
right to receive payments of interest at an annual rate equal to LIBOR plus ___%
(the "Class B Certificate Rate") on the principal amount of the Class B
Certificates for the related Interest Period, and payments of principal on the
Class B Scheduled Payment Date or, to the extent of the Class B Investor
Interest, on each Distribution Date with respect to the Rapid Amortization
Period after the Class A Certificates have been paid in full, funded from
collections of Finance Charge Receivables and Principal Receivables,
respectively, allocated to the Class B Investor Interest and certain other
available amounts. Amounts payable to the Class A Certificateholders may be paid
from collections of Finance Charge Receivables and Principal Receivables, from
Excess Spread, funds on deposit in the Principal Funding Account and the Reserve
Account and certain investment earnings thereon, Reallocated Principal
Collections, Shared Excess Principal Collections, Shared Excess Finance Charge
Collections and certain other available amounts. Amounts payable to the Class B
Certificateholders may be paid from collections of Finance Charge Receivables
and Principal Receivables, Excess Spread, Reallocated Collateral Principal
Collections, Shared Excess Finance Charge Collections and Shared Excess
Principal Collections. Payments of interest and principal will be made, to the
extent of funds available therefor, on each Distribution Date on which such
amounts are due to Certificateholders in whose names the Certificates were
registered on the last business day of the calendar month preceding such
Distribution Date (each, a "Record Date").
The Transferor initially will own the "Transferor Certificate," which
represents the remaining interest in the assets of the Trust not represented by
the Certificates, the Collateral Interest and the other interests issued by the
Trust. The Transferor Certificate represents the right to receive certain
payments from the assets of the Trust, including the right to a percentage (the
"Transferor Percentage") of all cardholder payments on the Receivables in the
Trust equal to 100% minus the sum of the applicable Investor Percentages for all
Series of certificates then outstanding. The Transferor Certificate may be
transferred in whole or in part subject to certain limitations and conditions
set forth in the Agreement. See "Description of the Certificates -- Certain
Matters Regarding the Transferor and the Servicer" in the accompanying
Prospectus.
The Class A Certificates and the Class B Certificates initially will be
represented by certificates registered in the name of Cede, as nominee of DTC.
Unless and until Definitive Certificates are issued, all references in this
Prospectus Supplement to actions by Class A Certificateholders and/or Class B
Certificateholders shall refer to actions taken by DTC upon instructions from
DTC Participants and all references in this Prospectus Supplement to
distributions, notices, reports and statements to Class A Certificateholders
and/or Class B Certificateholders shall refer to distributions, notices, reports
and statements to DTC or Cede, as the registered holder of the Class A
Certificates and the Class B Certificates, as the case may be, for distribution
to Certificate Owners in accordance with DTC procedures. Certificateholders may
hold their Certificates through DTC (in the United States) or Cedel Bank or
Euroclear (in Europe) 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 Bank and Euroclear will hold
omnibus positions on behalf of the Cedel Bank Participants and the Euroclear
Participants, respectively, through customers' securities accounts in Cedel
Bank's and Euroclear's names on the books of their respective Depositaries which
in turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC. See "Description of the Certificates --
General," " -- Book-Entry Registration" and " -- Definitive Certificates" in the
accompanying Prospectus.
INTEREST PAYMENTS
Interest will accrue on the Class A Certificates at the Class A Certificate
Rate and on the Class B Certificates at the Class B Certificate Rate from the
Closing Date. Each "Interest Period" begins on and includes a Distribution Date
and ends on and excludes the next Distribution Date. However, the first Interest
Period will begin on and
S-25
<PAGE> 26
include the Closing Date and end on and exclude the ________ ___, 199__, the
first Distribution Date. Interest will be distributed to Certificateholders on
____ __, 199_ and on the 15th day of each following month (or, if such 15th day
is not a business day, the next succeeding business day) (each, a "Distribution
Date"). For purposes of this Prospectus Supplement and the accompanying
Prospectus, a "business day" is, unless otherwise indicated, any day other than
a Saturday, a Sunday, or a day on which banking institutions in St. Paul,
Minnesota or Phoenix, Arizona are authorized or obligated by law or executive
order to be closed. Interest payments on the Class A Certificates and the Class
B Certificates on any Distribution Date will be calculated on the outstanding
principal balance of the Class A Certificates and the outstanding principal
balance of the Class B Certificates, as applicable, as of the preceding Record
Date, except that interest for the first Distribution Date will accrue at the
applicable Certificate Rate on the initial outstanding principal balance of the
Class A Certificates and the initial outstanding principal balance of the Class
B Certificates, as applicable, from the Closing Date. Interest due on the
Certificates but not paid on any Distribution Date will be payable on the next
succeeding Distribution Date together with additional interest on such amount at
the applicable Certificate Rate plus 2.00% per annum (such amount with respect
to the Class A Certificates, the "Class A Additional Interest," and such amount
with respect to the Class B Certificates, the "Class B Additional Interest" and
together, the "Additional Interest"). Additional Interest shall accrue on the
same basis as interest on the Certificates, and shall accrue from the
Distribution Date on which such overdue interest first became due, to but
excluding the Distribution Date on which such Additional Interest is paid.
Interest payments on the Class A Certificates on any Distribution Date will be
paid from Class A Available Funds for the related Monthly Period, and to the
extent such Class A Available Funds are insufficient to pay such interest, from
Excess Spread, Shared Excess Finance Charge Collections allocated to Series
199_-___ and Reallocated Principal Collections (each, to the extent available)
for such Monthly Period. Interest payments on the Class B Certificates on any
Distribution Date will be paid from Class B Available Funds for the related
Monthly Period, and to the extent such Class B Available Funds are insufficient
to pay such interest, from Excess Spread, Shared Excess Finance Charge
Collections allocated to Series 199_-___ and Reallocated Collateral Principal
Collections (each, to the extent available) remaining after certain other
payments have been made with respect to the Class A Certificates. See " --
Application of Collections -- Excess Spread; Shared Excess Finance Charge
Collections" in this Prospectus Supplement.
"Class A Available Funds" means, with respect to any Monthly Period, an
amount equal to the sum of (a) the Class A Floating Allocation of collections of
Finance Charge Receivables allocated to the Investor Interest and deposited in
the Finance Charge Account with respect to such Monthly Period (excluding the
portion of collections of Finance Charge Receivables attributable to Interchange
that is allocable to Servicer Interchange), (b) Principal Funding Investment
Proceeds, if any, with respect to the related Transfer Date and (c) amounts, if
any, to be withdrawn from the Reserve Account which are required to be included
in Class A Available Funds pursuant to the Series 199_-___ Supplement with
respect to such Transfer Date. "Class B Available Funds" means, with respect to
any Monthly Period, an amount equal to the Class B Floating Allocation of
collections of Finance Charge Receivables allocated to the Investor Interest and
deposited in the Finance Charge Account with respect to such Monthly Period
(excluding the portion of collections of Finance Charge Receivables attributable
to Interchange that is allocable to Servicer Interchange).
The Class A Certificates will accrue interest from and including the Closing
Date through and excluding ____ __, 199_, and from and including ____ __, 199_
through and excluding ____ __, 199_ and with respect to each Interest Period
thereafter, at a rate of ___% per annum above LIBOR prevailing on the related
LIBOR Determination Date with respect to each such period. The Class B
Certificates will accrue interest from and including the Closing Date through
and excluding ____ __, 199_, and from and including ____ __, 199_ through and
excluding ____ __, 199_ and with respect to each Interest Period thereafter, at
a rate of ____% per annum above LIBOR prevailing on the related LIBOR
Determination Date with respect to each such period.
The Trustee will determine LIBOR on ____ __, 199_ for the period from and
including the Closing Date through and excluding ____ __, 199_, on ____ __, 199_
for the period from and including ____ __, 199_ through and excluding ____ __,
199_, and for each Interest Period thereafter, on the second business day prior
to the Distribution Date on which such Interest Period commences (each, a "LIBOR
Determination Date"). For purposes of calculating LIBOR, a "London business day"
is any business day on which dealings in deposits in United States dollars are
transacted in the London interbank market.
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a one-month period which appears on Telerate Page 3750
as of 11:00 a.m., London time, on such date. If such rate does
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<PAGE> 27
not appear on Telerate Page 3750, the rate for that LIBOR Determination Date
will be determined on the basis of the rates at which deposits in United States
dollars are offered by the Reference Banks at approximately 11:00 a.m., London
time, on that day to prime banks in the London interbank market for a one-month
period. The Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that LIBOR Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are provided,
the rate for that LIBOR Determination Date will be the arithmetic mean of the
rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Reference Banks" means four major banks in the London interbank market
selected by the Servicer.
The Class A Certificate Rate and the Class B Certificate Rate applicable to
the current and immediately preceding Interest Period may be obtained by
telephoning the Trustee at its Corporate Trust Office at (800) 934-6802.
Interest on the Certificates will be calculated on the basis of the actual
number of days in the related Interest Period and a 360-day year.
PRINCIPAL PAYMENTS
On each Transfer Date relating to a period of time called the "Revolving
Period" (which begins on the Closing Date and ends at the commencement of the
Controlled Accumulation Period or, if earlier, the Rapid Amortization Period),
unless a reduction in the Required Collateral Interest has occurred, collections
of Principal Receivables allocable to the Investor Interest will, subject to
certain limitations, including the allocation of any Reallocated Principal
Collections with respect to the related Monthly Period to pay the Class A
Required Amount and the Class B Required Amount, be treated as Shared Excess
Principal Collections.
On each Transfer Date relating to the Controlled Accumulation Period, the
Trustee will deposit in the Principal Funding Account an amount equal to the
least of (a) Available Investor Principal Collections on deposit in the
Principal Account with respect to such Transfer Date, (b) the applicable
Controlled Deposit Amount and (c) the Class A Adjusted Investor Interest on such
Transfer Date prior to any deposits on such date. Amounts in the Principal
Funding Account will be paid to the Class A Certificateholders on the Class A
Scheduled Payment Date. After the Class A Investor Interest has been paid in
full, on each Transfer Date during the Controlled Accumulation Period, amounts
equal to the lesser of (a) Available Investor Principal Collections with respect
to such Transfer Date and (b) the Class B Investor Interest on such Transfer
Date will be deposited in the Distribution Account for distribution to the Class
B Certificateholders until the Class B Investor Interest has been paid in full.
Such amounts in the Distribution Account will be paid to the Class B
Certificateholders on the Class B Scheduled Payment Date. On each Transfer Date,
if a reduction in the Required Collateral Interest has occurred, a portion of
collections of Principal Receivables allocable to the Investor Interest will be
applied in accordance with the Loan Agreement among the Transferor, the Trustee,
the Servicer and the Collateral Interest Holder (the "Loan Agreement") to reduce
the Collateral Interest to the Required Collateral Interest. During the
Controlled Accumulation Period until the final principal payment to the Class B
Certificateholders, the portion of Available Investor Principal Collections not
applied to Class A Monthly Principal, Class B Monthly Principal or Collateral
Monthly Principal on a Transfer Date will generally be treated as Shared Excess
Principal Collections.
"Available Investor Principal Collections" means, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) collections of Principal
Receivables received during such Monthly Period and certain other amounts
allocable to the Investor Interest, minus (ii) the amount of Reallocated
Principal Collections with respect to such Monthly Period used to fund the
Required Amount, plus (b) any Shared Excess Principal Collections with respect
to other Series in a group of Series designated as the "Shared Excess Principal
Collections Group" that are allocated to the Series of the Trust represented by
the Certificates and the Collateral Interest ("Series 199_-__").
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<PAGE> 28
On each Distribution Date with respect to the Rapid Amortization Period, the
Class A Certificateholders will be entitled to receive Available Investor
Principal Collections for the related Monthly Period in an amount up to the
Class A Investor Interest until the earliest of the date the Class A
Certificates are paid in full, the Series 199_-___ Termination Date and the
Trust Termination Date. After payment in full of the Class A Investor Interest,
the Class B Certificateholders will be entitled to receive on each Distribution
Date with respect to the Rapid Amortization Period, Available Investor Principal
Collections until the earliest of the date the Class B Certificates are paid in
full, the Series 199_-___ Termination Date and the Trust Termination Date. After
payment in full of the Class B Investor Interest, the Collateral Interest Holder
will be entitled to receive on each Transfer Date (other than the Transfer Date
prior to the Series 199_-___ Termination Date) and on the Series 199_-___
Termination Date, Available Investor Principal Collections until the earliest of
the date the Collateral Interest is paid in full, the Series 199_-___
Termination Date and the Trust Termination Date. See " -- Pay Out Events" below
for a discussion of events which might lead to the commencement of the Rapid
Amortization Period.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The commencement of the Controlled Accumulation Period may be postponed, and
the length of the Revolving Period extended, subject to certain conditions
including those set forth below. Such postponement and extension, respectively,
will take place only if the Accumulation Period Length (determined as described
below) is less than twelve months. On the Determination Date immediately
preceding the ____ ____ Distribution Date and on each Determination Date
thereafter, until the Controlled Accumulation Period begins, the Servicer, on
behalf of the Transferor will determine the "Accumulation Period Length," which
is the number of whole months expected to be required to fully fund the
Principal Funding Account up to the initial outstanding principal amount of the
Class A Certificates no later than the Class A Scheduled Payment Date, based on
(a) the expected monthly collections of Principal Receivables expected to be
distributable to the Certificateholders of all Series (excluding certain other
Series), assuming a principal payment rate no greater than the lowest monthly
principal payment rate 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 Controlled Accumulation Period. If the
Accumulation Period Length is less than twelve months, the commencement of the
Controlled Accumulation Period will be postponed such that the number of months
included in the Controlled 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 Controlled Accumulation Period based on the
investor interest of certain other Series which are scheduled to be in their
revolving periods during the Controlled Accumulation Period and on increases in
the principal payment rate occurring after the Closing Date. The length of the
Controlled Accumulation Period will not be determined to be less than one month.
SUBORDINATION
The Class B Certificates and the Collateral Interest will be subordinated to
the extent necessary to fund certain payments with respect to the Class A
Certificates. In addition, the Collateral 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 Investor Interest may be reduced if the Collateral
Interest is equal to zero. Similarly, certain principal payments allocable to
the Collateral Interest may be reallocated to cover amounts in respect of the
Class A Certificates and the Class B Certificates and the Collateral Interest
may be reduced. To the extent the Class B Investor Interest is reduced, the
percentage of collections of Finance Charge Receivables allocated to the Class B
Certificates in subsequent Monthly Periods will be reduced. Moreover, to the
extent the amount of such reduction in the Class B Investor Interest is not
reimbursed, the amount of principal distributable to the Class B
Certificateholders, and the amounts available to be distributed with respect to
interest on the Class B Certificates, will be reduced. No principal will be paid
to the Class B Certificateholders until the Class A Investor Interest is paid in
full. See " -- Allocation Percentages," " --Reallocation of Cash Flows" and " --
Application of Collections -- Excess Spread; Shared Excess Finance Charge
Collections" in this Prospectus Supplement.
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<PAGE> 29
ALLOCATION PERCENTAGES
Pursuant to the Agreement, with respect to each Monthly Period the Servicer
will allocate among the Investor Interest, the investor interest for all other
Series issued and outstanding and the Transferor Interest, all amounts collected
on Finance Charge Receivables, all amounts collected on Principal Receivables
and all Default Amounts with respect to such Monthly Period. Each "Monthly
Period" will be the period from and including the first day of a calendar month
to and including the last day of such calendar month (other than the initial
Monthly Period, which will commence on and include the Closing Date and end on
and include ______ ___, 199_).
Collections of Finance Charge Receivables and Default Amounts at any time
and collections of Principal Receivables during the Revolving Period will be
allocated to the Investor Interest based on the Floating Investor Percentage.
The "Floating Investor Percentage" means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the Adjusted
Investor Interest as of the close of business on the last day of the preceding
Monthly Period (or with respect to the first Monthly Period, the initial
Investor Interest) and the denominator of which is the greater of (x) the
aggregate amount of Principal Receivables as of the close of business on the
last day of the preceding Monthly Period (or with respect to the first calendar
month in the first Monthly Period, the aggregate amount of Principal Receivables
as of the close of business on the day immediately preceding the Closing Date,
and with respect to the second calendar month in the first Monthly Period, the
aggregate amount of Principal Receivables as of the close of business on the
last day of the first calendar month in such first Monthly Period) and (y) the
sum of the numerators used to calculate the Investor Percentages for allocations
with respect to Finance Charge Receivables, Default Amounts or Principal
Receivables, as applicable, for all outstanding Series on such date of
determination; provided, however, that with respect to any Monthly Period in
which an Addition Date occurs or in which a Removal Date occurs on which, if any
Series has been paid in full, Principal Receivables in an aggregate amount
approximately equal to the initial investor interest of such Series are removed
from the Trust, the amount in clause (x) above shall be (i) the aggregate amount
of Principal Receivables in the Trust as of the close of business on the last
day of the prior Monthly Period for the period from and including the first day
of such Monthly Period to but excluding the related Addition Date or Removal
Date and (ii) the aggregate amount of Principal Receivables in the Trust as of
the beginning of the day on the related Addition Date or Removal Date after
adjusting for the aggregate amount of Principal Receivables added to or removed
from the Trust on the related Addition Date or Removal Date, as the case may be,
for the period from and including the related Addition Date or Removal Date to
and including the last day of such Monthly Period. The amounts so allocated will
be further allocated between the Class A Certificateholders, Class B
Certificateholders and the Collateral Interest Holder based on the Class A
Floating Allocation, the Class B Floating Allocation and the Collateral Floating
Allocation, respectively. The "Class A Floating Allocation" means, with respect
to any Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the Class A
Adjusted Investor Interest as of the close of business on the last day of the
preceding Monthly Period (or with respect to the first Monthly Period, as of the
Closing Date) and the denominator of which is equal to the Adjusted Investor
Interest as of the close of business on such day. The "Class B Floating
Allocation" means, with respect to any Monthly Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is equal to the Class B Investor Interest as of the close of business on the
last day of the preceding Monthly Period (or with respect to the first Monthly
Period, as of the Closing Date) and the denominator of which is equal to the
Adjusted Investor Interest as of the close of business on such day. The
"Collateral Floating Allocation" means, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is equal to the Collateral Interest as of the close of
business on the last day of the preceding Monthly Period (or with respect to the
first Monthly Period, as of the Closing Date) and the denominator of which is
equal to the Adjusted Investor Interest as of the close of business on such day.
Collections of Principal Receivables during the Controlled Accumulation
Period and Rapid Amortization Period will be allocated to the Investor Interest
based on the Fixed Investor Percentage. The "Fixed Investor Percentage" means,
with respect to any Monthly Period, the percentage equivalent of a fraction, the
numerator of which is the Investor Interest as of the close of business on the
last day of the Revolving Period and the denominator of which is the greater of
(x) the aggregate amount of Principal Receivables as of the close of business on
the last day of the prior Monthly Period and (y) the sum of the numerators used
to calculate the Investor Percentages for allocations with respect to Principal
Receivables for all outstanding Series for such Monthly Period; provided,
however, that if Series 199_-___ is paired with a Paired Series and a Pay Out
Event occurs with respect to such Paired Series during the Controlled
Accumulation Period, the Transferor may, by written notice delivered to the
Trustee and the Servicer,
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designate a different numerator (provided that such numerator is not less than
the Adjusted Investor Interest (less the balance on deposit in the Principal
Account) as of the last day of the revolving period for such Paired Series);
provided, however, that with respect to any Monthly Period in which an Addition
Date occurs or in which a Removal Date occurs on which, if any Series has been
paid in full, Principal Receivables in an aggregate amount approximately equal
to the initial investor interest of such Series are removed from the Trust, the
amount in clause (x) above shall be (i) the aggregate amount of Principal
Receivables in the Trust as of the close of business on the last day of the
prior Monthly Period for the period from and including the first day of such
Monthly Period to but excluding the related Addition Date or Removal Date and
(ii) the aggregate amount of Principal Receivables in the Trust at the beginning
of the day on the related Addition Date or Removal Date after adjusting for the
aggregate amount of Principal Receivables added to or removed from the Trust on
the related Addition Date or Removal Date, as the case may be, for the period
from and including the related Addition Date or Removal Date to and including
the last day of such Monthly Period. The amounts so allocated will be further
allocated between the Class A Certificateholders, the Class B Certificateholders
and the Collateral Interest Holder based on the Class A Fixed Allocation, the
Class B Fixed Allocation and the Collateral Fixed Allocation, respectively. The
"Class A Fixed Allocation" means, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is equal to the Class A Investor Interest as of the close
of business on the last day of the Revolving Period; provided, however, that if
Series 199_-___ is paired with a Paired Series and a Pay Out Event occurs with
respect to such Paired Series during the Controlled Accumulation Period, the
Transferor may, by written notice delivered to the Trustee and the Servicer,
designate a different numerator (provided that such numerator is not less than
the Class A Adjusted Investor Interest (less the balance on deposit in the
Principal Account) as of the last day of the revolving period for such Paired
Series) and the denominator of which is equal to the numerator used to determine
the Fixed Investor Percentage with respect to such Monthly Period. The "Class B
Fixed Allocation" means, with respect to any Monthly Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is equal to the Class B Investor Interest as of the close of
business on the last day of the Revolving Period; provided, however, that if
Series 199_-___ is paired with a Paired Series and a Pay Out Event occurs with
respect to such Paired Series during the Controlled Accumulation Period, the
Transferor may, by written notice delivered to the Trustee and the Servicer,
designate a different numerator (provided that such numerator is not less than
the Class B Investor Interest (less, if the Class A Fixed Allocation is zero,
the balance on deposit in the Principal Account to the extent not subtracted in
reducing the Class A Fixed Allocation to zero) as of the last day of the
revolving period for such Paired Series) and the denominator of which is equal
to the numerator used to determine the Fixed Investor Percentage with respect to
such Monthly Period. The "Collateral Fixed Allocation" means, with respect to
any Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the Collateral
Interest as of the close of business on the last day of the Revolving Period;
provided, however, that if Series 199_-___ is paired with a Paired Series and a
Pay Out Event occurs with respect to such Paired Series during the Controlled
Accumulation Period, the Transferor may, by written notice delivered to the
Trustee and the Servicer, designate a different numerator (provided that such
numerator is not less than the Collateral Interest (less, if the Class B Fixed
Allocation is zero, the balance on deposit in the Principal Account, to the
extent not subtracted in reducing the Class B Fixed Allocation to zero) as of
the last day of the revolving period for such Paired Series) and the denominator
of which is equal to the numerator used to determine the Fixed Investor
Percentage with respect to such Monthly Period.
"Class A Investor Interest" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class A Certificates, minus (b) the
aggregate amount of principal payments made to Class A Certificateholders prior
to such date, minus (c) the excess, if any, of the aggregate amount of Class A
Investor Charge-Offs for all Transfer Dates preceding such date over the
aggregate amount of any reimbursements of Class A Investor Charge-Offs for all
Transfer Dates preceding such date; provided, however, that the Class A Investor
Interest may not be reduced below zero.
"Class A Adjusted Investor Interest," for any date of determination, means
an amount equal to the then current Class A Investor Interest, minus the
Principal Funding Account Balance on such date.
"Class B Investor Interest" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class B Certificates, minus (b) the
aggregate amount of principal payments made to 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 aggregate amount of Reallocated Class B
Principal Collections for all prior Transfer Dates for which
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the Collateral Interest has not been reduced, minus (e) an amount equal to the
aggregate amount by which the Class B Investor Interest has been reduced to fund
the Class A Investor Default Amount on all prior Transfer Dates as described
under " -- Defaulted Receivables; Investor Charge-Offs" in this Prospectus
Supplement and plus (f) the aggregate amount of Excess Spread and Shared Excess
Finance Charge 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 Investor Interest
may not be reduced below zero.
"Collateral Interest" for any date means an amount equal to (a) initially
$________ (the "Initial Collateral Interest"), 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 aggregate amount of Reallocated Principal Collections for
all prior Transfer Dates, minus (e) an amount equal to the aggregate amount by
which the Collateral Interest has been reduced to fund the Class A Investor
Default Amount and the Class B Investor Default Amount on all prior Transfer
Dates as described under " -- Defaulted Receivables; Investor Charge-Offs" in
this Prospectus Supplement plus (f) the aggregate amount of Excess Spread and
Shared Excess Finance Charge 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
Interest may not be reduced below zero.
"Investor Interest," for any date of determination, means an amount equal to
the sum of (a) the Class A Investor Interest, (b) the Class B Investor Interest
and (c) the Collateral Interest.
REALLOCATION OF CASH FLOWS
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class A Required Amount"), which will be equal to the amount, if any, by
which the sum of (a) Class A Monthly Interest due on the related Distribution
Date and overdue Class A Monthly Interest and Class A Additional Interest
thereon, if any, (b) the Class A Servicing Fee for the related Monthly Period
and overdue Class A Servicing Fee, if any, and (c) the Class A Investor Default
Amount, if any, for the related Monthly Period exceeds the Class A Available
Funds for the related Monthly Period. If the Class A Required Amount is greater
than zero, Excess Spread and Shared Excess Finance Charge Collections allocated
to Series 199_-___ 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 Finance Charge Collections are insufficient to fund the Class A
Required Amount, first, Reallocated Collateral Principal Collections and, then,
Reallocated Class B Principal Collections will be used to fund the remaining
Class A Required Amount. If Reallocated Principal Collections with respect to
the related Monthly Period, together with such Excess Spread and Shared Excess
Finance Charge Collections, are insufficient to fund the remaining Class A
Required Amount for such related Monthly Period, then the Collateral Interest
(after giving effect to reductions for any Collateral Charge-Offs and
Reallocated 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 Monthly Period). In the event that such reduction would cause the
Collateral Interest to be a negative number, the Collateral Interest will be
reduced to zero, and the Class B Investor Interest (after giving effect to
reductions for any Class B Investor Charge-Offs and any Reallocated Class B
Principal Collections for which the Collateral Interest was not reduced on such
Transfer Date) will be reduced by the amount by which the Collateral Interest
would have been reduced below zero (but not by more than the excess of the Class
A Investor Default Amount, if any, for such Monthly Period over the amount of
such reduction, if any, of the Collateral Interest with respect to such Monthly
Period). In the event that such reduction would cause the Class B Investor
Interest to be a negative number, the Class B Investor Interest will be reduced
to zero and the Class A Investor Interest will be reduced by the amount by which
the Class B Investor Interest would have been reduced below zero (but not by
more than the excess, if any, of the Class A Investor Default Amount for such
Monthly Period over the amount of the reductions, if any, of the Collateral
Interest and the Class B Investor Interest with respect to such Monthly Period).
Any such reduction in the Class A Investor Interest 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 interests in the
Trust. See " -- Defaulted Receivables; Investor Charge-Offs" in this Prospectus
Supplement.
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class B Required Amount"), which will be 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 overdue Class B Monthly Interest and Class B
Additional Interest thereon, if any, and
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(ii) the Class B Servicing Fee for the related Monthly Period and overdue Class
B Servicing Fee, if any, exceeds the Class B Available Funds for the related
Monthly Period and (b) the Class B Investor Default Amount, if any, for the
related Monthly Period. If the Class B Required Amount is greater than zero,
Excess Spread and Shared Excess Finance Charge Collections allocated to Series
199_-___ not required to pay 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 Finance
Charge Collections are insufficient to fund the Class B Required Amount,
Reallocated Collateral Principal Collections not required to fund the Class A
Required Amount for the related Monthly Period will be used to fund the
remaining Class B Required Amount. If such Reallocated Collateral Principal
Collections with respect to the related Monthly Period, together with such
Excess Spread and Shared Excess Finance Charge Collections are insufficient to
fund the remaining Class B Required Amount, then the Collateral Interest (after
giving effect to reductions for any Collateral Charge-Offs and Reallocated
Principal Collections on such Transfer Date and after any adjustments made
thereto for the benefit of the Class A Certificateholders) will be reduced by
the amount of such deficiency (but not by more than the Class B Investor Default
Amount for such Monthly Period). In the event that such a reduction would cause
the Collateral Interest to be a negative number, the Collateral Interest will be
reduced to zero, and the Class B Investor Interest will be reduced by the amount
by which the Collateral Interest would have been reduced below zero (but not by
more than the excess of the Class B Investor Default Amount for such Monthly
Period over the amount of such reduction of the Collateral Interest). Any such
reduction in the Class B Investor Interest will have the effect of slowing or
reducing the return of principal and interest to the Class B Certificateholders.
In such case, the Class B Certificateholders will bear directly the credit and
other risks associated with their interests in the Trust. See " -- Defaulted
Receivables; Investor Charge-Offs" in this Prospectus Supplement.
Reductions of the Class A Investor Interest or Class B Investor Interest
described above shall be reimbursed by, and the Class A Investor Interest or
Class B Investor Interest increased to the extent of, Excess Spread and Shared
Excess Finance Charge Collections available for such purposes on each Transfer
Date. See " -- Application of Collections -- Excess Spread; Shared Excess
Finance Charge Collections" in this Prospectus Supplement. When such reductions
of the Class A Investor Interest and Class B Investor Interest have been fully
reimbursed, reductions of the Collateral Interest shall be reimbursed until
reimbursed in full in a similar manner.
"Required Amount" for any Monthly Period means the sum of (a) the Class A
Required Amount and (b) the Class B Required Amount, each for such Monthly
Period.
"Reallocated Class B Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Class B Investor Interest
for the related Monthly Period in an amount not to exceed the amount applied to
fund the Class A Required Amount, if any; provided, however, that such amount
will not exceed the Class B Investor Interest after giving effect to any Class B
Investor Charge-Offs for the related Transfer Date.
"Reallocated Collateral Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Collateral Interest for
the related Monthly Period in an amount not to exceed the amount applied to fund
the Class A Required Amount and the Class B Required Amount, if any; provided,
however, that such amount will not exceed the Collateral Interest after giving
effect to any Collateral Charge-Offs for the related Transfer Date.
"Reallocated Principal Collections" for any Monthly Period means the sum of
(a) the Reallocated Class B Principal Collections for such Monthly Period, if
any, and (b) the Reallocated Collateral Principal Collections for such Monthly
Period, if any.
APPLICATION OF COLLECTIONS
Allocations. Except as otherwise provided below, the Servicer will deposit
into the Collection Account, no later than the second business day following the
date of processing, any payment collected by the Servicer on the Receivables. On
the same day as any such deposit is made, the Servicer will make the deposits
and payments to the accounts and parties as indicated below; provided, however,
that for as long as Bank of America remains the Servicer under the Agreement and
(a) (i) the Servicer provides to the Trustee a letter of credit or other credit
enhancement covering the risk of collection of the Servicer and (ii) the
Transferor shall have received a notice from each Rating Agency that reliance on
such letter of credit or other credit enhancement would not result in the
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<PAGE> 33
lowering of such Rating Agency's then-existing rating of any Series then
outstanding or (b) the Servicer has and maintains a certificate of deposit or
short-term deposit rating of P-1 by Moody's and of A-1 by Standard & Poor's and
deposit insurance provided by the FDIC, then the Servicer may make such deposits
and payments on the business day immediately prior to the Distribution Date (the
"Transfer Date") in an amount equal to the net amount of such deposits and
payments which would have been made had the conditions of this proviso not
applied. Currently, Bank of America remains the Servicer and maintains a
certificate of deposit or short-term deposit rating of P-1 by Moody's and of
A-1+ by Standard & Poor's and deposit insurance provided by the FDIC.
With respect to the Certificates and any Monthly Period, and
notwithstanding anything in the Agreement to the contrary, whether the Servicer
is required to make monthly or daily deposits from the Collection Account into
the Finance Charge Account or the Principal Account (i) the Servicer will only
be required to deposit Collections from the Collection Account into the Finance
Charge Account or the Principal Account up to the required amount to be
deposited into any such deposit account or, without duplication, distributed on
or prior to the related Distribution Date to Certificateholders or to the
Collateral Interest Holder 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.
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
Finance Charge Account in the following priority:
(a) On each Transfer Date, an amount equal to the Class A
Available Funds 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 overdue Class A
Monthly Interest and Class A Additional Interest thereon, if any,
will be deposited into the Distribution Account for distribution to
Class A Certificateholders on such Distribution Date;
(ii) an amount equal to the Class A Servicing Fee for the
related Monthly Period, plus the amount of any overdue Class A
Servicing Fee, will be paid to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount,
if any, for the related Monthly Period will be treated as a portion
of Available Investor Principal Collections and deposited into the
Principal Account on such Transfer Date; and
(iv) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed as described under " --
Excess Spread; Shared Excess Finance Charge Collections" in this
Prospectus Supplement.
(b) On each Transfer Date, an amount equal to the Class B
Available Funds 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 overdue Class B
Monthly Interest and Class B Additional Interest thereon, if any,
will be deposited into the Distribution Account for distribution to
Class B Certificateholders on such Distribution Date;
(ii) an amount equal to the Class B Servicing Fee for the
related Monthly Period, plus the amount of any overdue Class B
Servicing Fee, will be paid to the Servicer; and
(iii) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed as described under " --
Excess Spread; Shared Excess Finance Charge Collections" in this
Prospectus Supplement.
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(c) On each Transfer Date, an amount equal to the Collateral
Available Funds will be distributed in the following priority:
(i) if Bank of America, an affiliate thereof or an
Acceptable Successor Servicer is not the Servicer, an amount equal
to the Collateral Interest Servicing Fee for the related Monthly
Period, plus the amount of any overdue Collateral Interest Servicing
Fee, will be paid to the Servicer; and
(ii) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed as described under " --
Excess Spread; Shared Excess Finance Charge Collections" in this
Prospectus Supplement.
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class A Certificate Rate for the related Interest Period,
(ii) the actual number of days in such Interest Period divided by 360 and (iii)
the outstanding principal balance of the Class A Certificates as of the related
Record Date; provided, however, with respect to the first Distribution Date,
Class A Monthly Interest will be equal to the interest accrued on the initial
outstanding principal balance of the Class A Certificates at the applicable
Class A Certificate Rate for the period from and including the Closing Date
through and including ____ __, 199_.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Certificate Rate for the related Interest Period,
(ii) the actual number of days in such Interest Period divided by 360 and (iii)
the outstanding principal balance of the Class B Certificates as of the related
Record Date; provided, however, with respect to the first Distribution Date,
Class B Monthly Interest will be equal to the interest accrued on the initial
outstanding principal balance of the Class B Certificates at the applicable
Class B Certificate Rate for the period from and including the Closing Date
through and including ____ __, 199_.
"Collateral Available Funds" means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Allocation of collections of Finance
Charge Receivables allocated to the Investor Interest and deposited in the
Finance Charge Account with respect to such Monthly Period (excluding the
portion of collections of Finance Charge Receivables attributable to Interchange
that is allocable to Servicer Interchange).
"Excess Spread" means, with respect to any Transfer Date, an amount equal to
the sum of the amounts described in clause (a) (iv), clause (b) (iii) and clause
(c) (ii) above.
Excess Spread; Shared Excess Finance Charge Collections. On each Transfer
Date, the Trustee, acting pursuant to the Servicer's instructions, will apply
Excess Spread and Shared Excess Finance Charge Collections allocated to Series
199_-___ with respect to the related Monthly 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 the Class A Required
Amount; provided, however, that in the event the Class A Required Amount for
such Transfer Date exceeds the amount of Excess Spread and Shared Excess
Finance Charge Collections allocated to Series 199_-___, such Excess Spread
and Shared Excess Finance Charge Collections allocated to Series 199_-___
shall be applied first to pay amounts due with respect to such Transfer Date
pursuant to clause (a)(i) above under " -- Payment of Interest, Fees and
Other Items"; second to pay amounts due with respect to such Transfer Date
pursuant to clause (a) (ii) above under " -- Payment of Interest, Fees and
Other Items"; and third to pay amounts due with respect to such Transfer
Date pursuant to clause (a) (iii) under " -- Payment of Interest, Fees and
Other Items" above;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed (after giving effect
to the allocation on such Transfer Date of certain other amounts applied for
that purpose) will be deposited into the Principal Account and treated as a
portion of Available Investor Principal Collections for such Transfer Date
as described under " -- Payments of Principal" below;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class B Required
Amount; provided, however, that in the event the Class B Required Amount for
such Transfer Date exceeds the amount of Excess Spread and Shared Excess
Finance Charge Collections
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allocated to Series 199_-___, such Excess Spread and Shared Excess Finance
Charge Collections allocated to Series 199_-___ shall be applied first to
pay amounts due with respect to such Transfer Date pursuant to clause
(b)(i) above under " -- Payment of Interest, Fees and Other Items"; second
to pay amounts due with respect to such Transfer Date pursuant to clause
(b) (ii) above under " -- Payment of Interest, Fees and Other Items" and
third, the amount remaining, up to the Class B Investor Default Amount,
will be deposited into the Principal Account and treated as a portion of
Available Investor Principal Collections for such Transfer Date as
described under " -- Payments of Principal" below;
(d) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the initial Class B Investor
Interest for reasons other than the payment of principal to the Class B
Certificateholders (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be deposited
into the Principal Account and treated as a portion of Available Investor
Principal Collections for such Transfer Date as described under " --
Payments of Principal" below;
(e) an amount equal to the Collateral Monthly Interest for the
related Distribution Date, plus the amount of any Collateral Monthly
Interest previously due but not distributed to the Collateral Interest
Holder on a prior Distribution Date, will be deposited into the
Distribution Account on such Transfer Date and distributed to the
Collateral Interest Holder on the related Distribution Date in accordance
with the Loan Agreement;
(f) if Bank of America, an affiliate thereof or an Acceptable
Successor Servicer is the Servicer, an amount equal to the Collateral
Interest Servicing Fee for the related Monthly Period, plus the amount of
any overdue Collateral Interest Servicing Fee, will be paid to the
Servicer;
(g) an amount equal to the aggregate Collateral Default Amount, if
any, for such Transfer Date will be deposited into the Principal Account
and treated as a portion of Available Investor Principal Collections for
such Transfer Date as described under " -- Payments of Principal" below;
(h) an amount equal to the aggregate amount by which the Collateral
Interest has been reduced below the Required Collateral Interest 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 deposited into the Principal
Account and treated as a portion of Available Investor Principal
Collections for such Transfer Date as described under " -- Payments of
Principal" below;
(i) 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" in this Prospectus Supplement an
amount up to the excess, if any, of the Required Reserve Account Amount
over the Available Reserve Account Amount will be deposited into the
Reserve Account;
(j) an amount equal to the aggregate of any other amounts then due
to the Collateral Interest Holder out of collections of Excess Spread and
Shared Excess Finance Charge Collections allocated to Series 199_-___
pursuant to the Loan Agreement shall be deposited into the Distribution
Account on such Transfer Date and distributed to the Collateral Interest
Holder on the related Distribution Date for application in accordance with
the Loan Agreement; and
(k) the balance, if any, will constitute a portion of Shared Excess
Finance Charge Collections for such Distribution Date and will be
available for allocation to other Series in Shared Excess Finance Charge
Collections Group One or to the holder of the Transferor Certificate as
described in "Description of the Certificates -- Shared Excess Finance
Charge Collections" in the accompanying Prospectus.
"Collateral Monthly Interest" with respect to any Distribution Date will
equal the product of (a) an amount equal to LIBOR plus 1.0% per annum, or such
lesser amount as may be designated in the Loan Agreement (the "Collateral
Rate"), (b) the actual number of days in the related Interest Period divided by
360 and (c) the Collateral Interest as of the related Record Date or, with
respect to the first Distribution Date, the Initial Collateral Interest.
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Payments of Principal. On each Transfer Date, the Trustee, acting pursuant
to the Servicer's instructions, will distribute Available Investor Principal
Collections (see " -- Principal Payments" above) on deposit in the Principal
Account in the following priority:
(a) on each Transfer Date with respect to the Revolving Period,
all such Available Investor Principal Collections will be distributed or
deposited in the following priority:
(i) an amount equal to the Collateral Monthly Principal will
be deposited into the Distribution Account on such Transfer Date and
distributed on the related Distribution Date to the Collateral
Interest Holder in accordance with the Loan Agreement; and
(ii) the balance will be treated as Shared Excess Principal
Collections and applied as described under "Description of the
Certificates -- Shared Excess Principal Collections" in this
Prospectus Supplement and in the accompanying Prospectus;
(b) on each Transfer Date with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, all such Available
Investor Principal Collections will be distributed or deposited in the
following priority:
(i) an amount equal to Class A Monthly Principal will be
deposited in the Principal Funding Account (during the Controlled
Accumulation Period) or deposited into the Distribution Account for
distribution to the Class A Certificateholders (during the Rapid
Amortization Period); and
(ii) for each Transfer Date after the Class A Investor
Interest 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 deposited
into the Distribution Account for distribution to the Class B
Certificateholders;
(c) on each Transfer Date with respect to the Controlled
Accumulation Period and the Rapid Amortization Period in which a reduction
in the Required Collateral Interest has occurred, Available Investor
Principal Collections not applied to Class A Monthly Principal or Class B
Monthly Principal will be applied on the related Distribution Date to
reduce the Collateral Interest to the Required Collateral Interest; and
(d) on each Transfer Date with respect to the Controlled
Accumulation Period and the Rapid Amortization Period, the balance of
Available Investor Principal Collections not applied pursuant to (b) and
(c) above, if any, will be treated as Shared Excess Principal Collections
and applied as described under "Description of the Certificates -- Shared
Excess Principal Collections" in this Prospectus Supplement and in the
accompanying Prospectus.
"Class A Monthly Principal" with respect to any Transfer Date relating to
the Controlled Accumulation Period or the Rapid Amortization Period, prior to
the payment in full of the Class A Investor Interest, will equal the least of
(i) the Available Investor Principal Collections on deposit in the Principal
Account with respect to such Transfer Date, (ii) for each Transfer Date with
respect to the Controlled Accumulation Period, prior to the payment in full of
the Class A Investor Interest, and on or prior to the Class A Scheduled Payment
Date, the applicable Controlled Deposit Amount for such Transfer Date and (iii)
the Class A Adjusted Investor Interest prior to any deposits on such Transfer
Date.
"Class B Monthly Principal" with respect to any Transfer Date relating to
the Controlled Accumulation Period, beginning with the Transfer Date following
the Monthly Period in which the Class A Investor Interest has been paid in full,
or with respect to any Transfer Date relating to the Rapid Amortization Period,
beginning with the Transfer Date immediately preceding the Distribution Date on
which the Class A Certificates have 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 Investor Principal Collections on deposit in the Principal
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 Investor Interest for such Transfer Date.
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"Collateral Monthly Principal" means (a) with respect to any Transfer Date
relating to the Revolving Period following any reduction of the Required
Collateral Interest pursuant to clause (3) of the proviso in the definition
thereof, an amount equal to the lesser of (i) the excess, if any, of the
Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and Reallocated Principal Collections on such Transfer Date and
after giving effect to any adjustments thereto for the benefit of the Class A
Certificateholders and the Class B Certificateholders on such Transfer Date)
over the Required Collateral Interest on such Transfer Date, and (ii) the
Available Investor Principal Collections on such Transfer Date or (b) with
respect to any Transfer Date relating to the Controlled Accumulation Period or
Rapid Amortization Period, an amount equal to the lesser of (i) the excess, if
any, of the Collateral Interest (after giving effect to reductions for any
Collateral Charge-Offs and Reallocated Principal Collections on such Transfer
Date and after giving effect to any adjustments thereto for the benefit of the
Class A Certificateholders and the Class B Certificateholders on such Transfer
Date) over the Required Collateral Interest on such Transfer Date, and (ii) the
excess, if any, of (A) the Available Investor Principal Collections on such
Transfer Date over (B) the sum of the Class A Monthly Principal and the Class B
Monthly Principal for such Transfer Date.
"Controlled Accumulation Amount" means (a) for any Transfer Date with
respect to the Controlled Accumulation Period, prior to the payment in full of
the Class A Investor Interest, $_________; provided, however, that if the
commencement of the Controlled Accumulation Period is delayed as described above
under " -- Postponement of Controlled Accumulation Period," the Controlled
Accumulation Amount may be higher than the amount stated above for each Transfer
Date with respect to the Controlled Accumulation Period and will be determined
by the Servicer in accordance with the Agreement based on the principal payment
rates for the Accounts and on the investor interests of other Series (other than
certain excluded Series) which are scheduled to be in their revolving periods
and then scheduled to create Shared Excess Principal Collections during the
Controlled Accumulation Period and (b) for any Transfer Date with respect to the
Controlled Accumulation Period after the payment in full of the Class A Investor
Interest, an amount equal to the Class B Investor Interest on such Transfer
Date.
"Accumulation Shortfall" means (a) on the first Transfer Date with respect
to the Controlled Accumulation Period, the excess, if any, of the Controlled
Accumulation Amount for such Transfer Date over the amount distributed from the
Principal Account as Class A Monthly Principal for such Transfer Date and (b) on
each subsequent Transfer Date with respect to the Controlled Accumulation
Period, the excess, if any, of the applicable Controlled Accumulation Amount for
such subsequent Transfer Date plus any Accumulation Shortfall for the prior
Transfer Date over the amount distributed from the Principal Account as Class A
Monthly Principal for such subsequent Transfer Date.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
The Series 199_-___ Certificates will be the ninth Series issued by the
Trust, outstanding as of the Closing Date, included in a group of Series
designated "Shared Excess Finance Charge Collections Group One." Series 1996-A,
Series 1996-B, Series 1997-A, Series 1997-B, Series 1997-C, Series 1998-A,
Series 1998-B and Series 1998-C are also included in Shared Excess Finance
Charge Collections Group One. In the future, the Transferor may, but will not be
required to, designate other Series that are issued by the Trust to be included
in Shared Excess Finance Charge Collections Group One although there can be no
assurance that any other Series will be issued by the Trust or, if issued, will
be designated by the Transferor to be included in Shared Excess Finance Charge
Collections Group One.
Collections of Finance Charge Receivables for any Monthly Period allocated
to the Investor Interest will first be used to cover, with respect to any
Monthly Period, all amounts described under "Description of the Certificates --
Application of Collections -- Payment of Interest, Fees and Other Items" and "
- - - - -- Application of Collections -- Excess Spread; Shared Excess Finance Charge
Collections" in this Prospectus Supplement. The Servicer will then determine (i)
the amount of collections of Finance Charge Receivables for any Monthly Period
allocated to the Investor Interest remaining after covering such required
payments to the Certificateholders and the Collateral Interest Holder and (ii)
any similar amounts remaining with respect to any other Series in Shared Excess
Finance Charge Collections Group One ("Shared Excess Finance Charge
Collections"). The Servicer will allocate any Shared Excess Finance Charge
Collections to cover any required distributions to certificateholders for any
Series in Shared Excess Finance Charge Collections Group One entitled thereto
which have not been covered out of the
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collections of Finance Charge Receivables allocable to such Series ("Finance
Charge Shortfalls"). If Finance Charge Shortfalls exceed Shared Excess Finance
Charge Collections for any Monthly Period, Shared Excess Finance Charge
Collections will be allocated pro rata among the applicable Series in Shared
Excess Finance Charge Collections Group One based on the relative amounts of
Finance Charge Shortfalls. To the extent that Shared Excess Finance Charge
Collections exceed Finance Charge Shortfalls, the balance will be paid to the
holder of the Transferor Certificate. See "Description of Certificates -- Shared
Excess Finance Charge Collections" in the accompanying Prospectus for a
discussion of the limitations on the availability of Shared Excess Finance
Charge Collections.
SHARED EXCESS PRINCIPAL COLLECTIONS
The Series 199_-___ Certificates will be the ninth Series issued by the
Trust, outstanding as of the Closing Date, included in the Shared Excess
Principal Collections Group. Series 1996-A, Series 1996-B, Series 1997-A, Series
1997-B, Series 1997-C, Series 1998-A, Series 1998-B and Series 1998-C are also
included in the Shared Excess Principal Collections Group. In the future, the
Transferor may, but will not be required to, designate other Series that are
issued by the Trust to be included in the Shared Excess Principal Collections
Group although there can be no assurance that any other Series will be issued by
the Trust or, if issued, will be designated by the Transferor to be included in
the Shared Excess Principal Collections Group.
Collections of Principal Receivables for any Monthly Period allocated to the
Investor Interest will first be used to cover, with respect to any Monthly
Period during the Controlled Accumulation Period, deposits of the applicable
Controlled Deposit Amount to the Principal Funding Account or the Distribution
Account, and during the Rapid Amortization Period, payments to the
Certificateholders and then under certain circumstances payments to the
Collateral Interest Holder. The Servicer will determine the amount of
collections of Principal Receivables for any Monthly Period allocated to the
Investor Interest remaining after covering required payments to the
Certificateholders and any similar amount remaining for any other Series in the
Shared Excess Principal Collections Group ("Shared Excess Principal
Collections"). The Servicer will allocate the Shared Excess Principal
Collections to cover any scheduled or permitted principal distributions to
certificateholders and deposits to principal funding accounts, if any, for any
Series entitled thereto which have not been covered out of the collections of
Principal Receivables allocable to such Series and certain other amounts for
such Series ("Principal Shortfalls"). Shared Excess Principal Collections will
not be used to cover investor charge-offs for any Series. If Principal
Shortfalls exceed Shared Excess Principal Collections for any Monthly Period,
Shared Excess Principal Collections will be allocated pro rata among the
applicable Series in the Shared Excess Principal Collections Group based on the
relative amounts of Principal Shortfalls. To the extent that Shared Excess
Principal Collections exceed Principal Shortfalls, the balance will, subject to
certain limitations, be paid to the holder of the Transferor Certificate.
REQUIRED COLLATERAL INTEREST
The "Required Collateral Interest" with respect to any Transfer Date means
(i) initially $_________ and (ii) thereafter on each Transfer Date an amount
equal to [___]% of the sum of the Class A Adjusted Investor Interest and the
Class B Investor Interest on such Transfer Date, after taking into account
deposits into the Principal Funding Account on such Transfer Date and payments
to be made on the related Distribution Date, and the Collateral Interest on the
prior Transfer Date after any adjustments made on such Transfer Date, but not
less than $________; provided, however, that (1) if certain reductions in the
Collateral Interest are made or if a Pay Out Event occurs, the Required
Collateral Interest for such Transfer Date shall equal the Required Collateral
Interest for the Transfer Date immediately preceding the occurrence of such
reduction or Pay Out Event, (2) in no event shall the Required Collateral
Interest exceed the unpaid principal amount of the Certificates as of the last
day of the Monthly Period preceding such Transfer Date after taking into account
payments to be made on the related Distribution Date and (3) the Required
Collateral Interest may be reduced to a lesser amount at any time if the Rating
Agency Condition is satisfied.
"Rating Agency Condition" means the notification in writing by each Rating
Agency to the Transferor, the Servicer and the Trustee that a proposed action
will not result in such Rating Agency reducing or withdrawing its then existing
rating of the investor certificates of any outstanding Series or class with
respect to which it is a Rating Agency.
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With respect to any Transfer Date, if the Collateral Interest is less than
the Required Collateral Interest, certain Excess Spread and Shared Excess
Finance Charge Collections allocated to Series 199_-___, if available, will be
allocated to increase the Collateral Interest to the extent of such shortfall.
Any of such Excess Spread and Shared Excess Finance Charge Collections allocated
to Series 199_-___ not required to be so allocated or deposited into the Reserve
Account with respect to any Transfer Date will be applied in accordance with the
Loan Agreement. See " -- Application of Collections -- Excess Spread; Shared
Excess Finance Charge Collections" in this Prospectus Supplement.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On or before each Transfer Date, the Servicer will calculate the Aggregate
Investor Default Amount for the preceding Monthly Period. The term "Aggregate
Investor Default Amount" means, for any Monthly Period, the sum of the Investor
Default Amounts for such Monthly Period. The term "Investor Default Amount"
means, for any Defaulted Account, the product of (a) the Floating Investor
Percentage on the day such Account became a Defaulted Account and (b) the
aggregate amount of Principal Receivables (other than Ineligible Receivables) in
such Account on the day such Account became a Defaulted Account (the "Default
Amount"). A portion of the Aggregate 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
Allocation applicable during the related Monthly Period and the Aggregate
Investor Default Amount for such Monthly Period. A portion of the Aggregate
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 Allocation applicable during the related
Monthly Period and the Aggregate Investor Default Amount for such Monthly
Period. A portion of the Aggregate Investor Default Amount will be allocated to
the Collateral Interest Holder (the "Collateral Default Amount") on each
Transfer Date in an amount equal to the product of the Collateral Floating
Allocation applicable during the related Monthly Period and the Aggregate
Investor Default Amount for such Monthly Period.
On each Transfer Date, if the Class A Investor Default Amount for such Transfer
Date exceeds the amount of Class A Available Funds, Excess Spread, Shared Excess
Finance Charge Collections and Reallocated Principal Collections available to
fund such amount with respect to the Monthly Period immediately preceding such
Transfer Date as described under " -- Application of Collections -- Excess
Spread; Shared Excess Finance Charge Collections" in this Prospectus Supplement,
the Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated Principal Collections on such Transfer Date)
will be reduced by the amount of such excess, but not more than the lesser of
the Class A Investor Default Amount and the Collateral Interest (after giving
effect to reductions for any Collateral Charge-Offs and any Reallocated
Principal Collections on such Transfer Date) for such Transfer Date. In the
event that such reduction would cause the Collateral Interest to be a negative
number, the Collateral Interest will be reduced to zero, and the Class B
Investor Interest (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 Interest would have
been reduced below zero. In the event that such reduction would cause the Class
B Investor Interest to be a negative number, the Class B Investor Interest will
be reduced to zero, and the Class A Investor Interest will be reduced by the
amount by which the Class B Investor Interest would have been reduced below
zero, but not more than the Class A Investor Default Amount for such Transfer
Date (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 Investor Interest 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 allocated and available for such purpose as described under " --
Application of Collections -- Excess Spread; Shared Excess Finance Charge
Collections" in this Prospectus Supplement.
On each Transfer Date, if the Class B Investor Default Amount for such
Transfer Date exceeds the amount of Excess Spread, Shared Excess Finance Charge
Collections and Reallocated Collateral Principal Collections which are allocated
and available to fund such amount with respect to the Monthly Period preceding
such Transfer Date as described under "--Application of Collections--Excess
Spread; Shared Excess Finance Charge Collections" in this Prospectus Supplement,
the Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated 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 more
than the lesser of the Class B Investor Default Amount and the Collateral
Interest (after giving effect to reductions for any
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Collateral Charge-Offs and any Reallocated Principal Collections on such
Transfer Date and after giving effect to any adjustments with respect thereto as
described in the preceding paragraph) for such Transfer Date. In the event that
such reduction would cause the Collateral Interest to be a negative number, the
Collateral Interest will be reduced to zero and the Class B Investor Interest
will be reduced by the amount by which the Collateral Interest would have been
reduced below zero, but not more than the Class B Investor Default Amount for
such Transfer Date (a "Class B Investor Charge-Off"). The Class B Investor
Interest will also be reduced by the amount of Reallocated Class B Principal
Collections in excess of the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and any Reallocated Collateral
Principal Collections on such Transfer Date) and the amount of any portion of
the Class B Investor Interest allocated to the Class A Certificates to avoid a
reduction in the Class A Investor Interest. The Class B Investor Interest will
thereafter be reimbursed (but not 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 Finance Charge Collections allocated and available for that
purpose as described under " -- Application of Collections -- Excess Spread;
Shared Excess Finance Charge Collections" in this Prospectus Supplement.
On each Transfer Date, if the Collateral Default Amount for such Transfer
Date exceeds the amount of Excess Spread and Shared Excess Finance Charge
Collections which is allocated and available to fund such amount as described
under "-- Application of Collections--Excess Spread; Shared Excess Finance
Charge Collections" in this Prospectus Supplement, the Collateral Interest will
be reduced by the amount of such excess but not more than the lesser of the
Collateral Default Amount and the Collateral Interest for such Transfer Date (a
"Collateral Charge-Off"). The Collateral Interest will also be reduced by the
amount of Reallocated Principal Collections and the amount of any portion of
the Collateral Interest allocated to the Class A Certificates to avoid a
reduction in the Class A Investor Interest or to the Class B Certificates to
avoid a reduction in the Class B Investor Interest. The Collateral Interest
will thereafter be reimbursed on any Transfer Date by the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated and available for
that purpose as described under "--Application of Collections--Excess Spread;
Shared Excess Finance Charge Collections" in this Prospectus Supplement."
PRINCIPAL FUNDING ACCOUNT
Pursuant to the Series 199_-___ Supplement, the Trustee will establish and
maintain with a Qualified Institution a segregated trust account held for the
benefit of the Certificateholders (the "Principal Funding Account"). During the
Controlled Accumulation Period, the Trustee at the direction of the Servicer
will transfer collections in respect of Principal Receivables (other than
Reallocated Principal Collections) and Shared Excess Principal Collections from
other Series, if any, allocated to Series 199_-___ from the Principal Account to
the Principal Funding Account as described under " -- Application of
Collections" in this Prospectus Supplement. Such collections will be retained in
the Principal Funding Account and ultimately used to pay principal of the Class
A Certificates on the Class A Scheduled Payment Date or the Distribution Date in
the month following the commencement of the Rapid Amortization Period, whichever
occurs earlier.
Funds on deposit in the Principal Funding Account shall be invested at the
direction of the Servicer by the Trustee in Permitted Investments evidencing
obligations of any of the Corporation or any Affiliate thereof; provided,
however, that if no obligations of the Corporation or any Affiliate thereof
shall qualify as Permitted Investments, notwithstanding the preceding, the funds
on deposit in the Principal Funding Account shall be invested by the Trustee in
Permitted Investments. Investment earnings (net of investment losses and
expenses) on funds on deposit in the Principal Funding Account (the "Principal
Funding Investment Proceeds") will be applied on each Transfer Date as Class A
Available Funds. If, on any Transfer Date, the Principal Funding Investment
Proceeds for the related Interest Period are less than the product of (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, (b) the Class A Certificate
Rate in effect with respect to the related Interest Period and (c) the Principal
Funding Account Balance as of the Record Date preceding such Transfer Date (the
"Covered Amount"), the amount of such deficiency (the "Principal Funding
Investment Shortfall") shall be paid, to the extent available, from the Reserve
Account and, if necessary, from Excess Spread, Shared Excess Finance Charge
Collections and Reallocated Principal Collections.
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RESERVE ACCOUNT
Pursuant to the Series 199_-___ Supplement, the Trustee will establish and
maintain with a Qualified Institution a segregated trust account held for the
benefit of the Certificateholders (the "Reserve Account"). The Reserve Account
is established to assist with the subsequent distribution of interest on the
Certificates during the Controlled Accumulation Period. On each Transfer Date
from and after the Reserve Account 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 Finance Charge
Collections allocated to the Certificates (to the extent described above under "
- - - - -- Application of Collections -- Excess Spread; Shared Excess Finance Charge
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
Monthly Period which commences no later than three months prior to the
commencement of the Controlled Accumulation Period, or such earlier date as may
be required by the Agreement. The "Required Reserve Account Amount" for any
Transfer Date on or after the Reserve Account Funding Date will be equal to (a)
[___]% of the outstanding principal balance of the Class A Certificates or (b)
any other amount designated by the Transferor; provided, however, that if such
designation is of a lesser amount, the Transferor shall have provided the
Servicer, the Collateral Interest Holder and the Trustee with evidence that the
Rating Agency Condition has been satisfied 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 a Pay Out Event or an
event that, after the giving of notice or the lapse of time, would cause a Pay
Out Event to occur with respect to Series 199_-___. 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 deposit such
excess into the Distribution Account to be paid to the Collateral Interest
Holder on the related Distribution Date, for application in accordance with the
terms of the Loan Agreement.
Provided that the Reserve Account has not terminated as described below,
funds on deposit in the Reserve Account shall be invested at the direction of
the Servicer by the Trustee in Permitted Investments evidencing obligations of
any of the Corporation or any Affiliate thereof; provided, however, that if no
obligations of the Corporation or any Affiliate thereof shall qualify as
Permitted Investments, notwithstanding the preceding, the funds on deposit in
the Reserve Account shall be invested by the Trustee in Permitted 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 Finance Charge Account and treated as Class A Available
Funds.
On or before each Transfer Date with respect to the Controlled Accumulation
Period and on the first Transfer Date with respect to the Rapid Amortization
Period, a withdrawal will be made from the Reserve Account, and the amount of
such withdrawal will be deposited in the Finance Charge Account and included in
collections of Finance Charge Receivables 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, however, 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 (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 Controlled
Accumulation Period has not commenced, the first Transfer Date with respect to
the Rapid Amortization Period or, if the Controlled Accumulation Period has
commenced, the earlier to occur of (i) the first Transfer Date with respect to
the Rapid Amortization Period and (ii) the Transfer Date immediately preceding
the Class A Scheduled 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 deposited into the
Distribution Account to be paid to the Collateral Interest Holder on the related
Distribution Date, for application in accordance with the terms of the Loan
Agreement. Any amounts
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withdrawn from the Reserve Account and distributed to the Collateral Interest
Holder as described above will not be available for distribution to the
Certificateholders.
PAY OUT EVENTS
As described above, the Revolving Period will continue through ____ __, ____
(unless such date is postponed as described under " -- Postponement of
Controlled Accumulation Period" in this Prospectus Supplement), unless a Pay Out
Event occurs prior to such date. A "Pay Out 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 which shall not exceed five days) or (ii) to observe or perform
in any material respect any other covenants or agreements of the Transferor
set forth in the Agreement, which failure has a material adverse effect on
the Certificateholders (which determination shall be made without reference
to the amount of the Collateral Interest) and which continues unremedied for
a period of 60 days after written notice and continues to materially and
adversely affect the interests of the Certificateholders (which
determination shall be made without regard to the amount of the Collateral
Interest) 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 or when delivered and which continues to be
incorrect in any material respect for a period of 60 days after written
notice and as a result of which the interests of the Certificateholders are
materially and adversely affected (which determination shall be made without
reference to the amount of the Collateral Interest) and continue to be
materially and adversely affected for such period; provided, however, that a
Pay Out Event pursuant to this subparagraph (b) shall not be deemed to occur
thereunder if the Transferor has accepted reassignment of the related
Receivable or all such Receivables, if applicable, during such period in
accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three consecutive
Monthly Periods is less than the average of the Base Rates for such period;
(d) a failure by the Transferor to convey Receivables arising under
Additional Accounts, or Participations, to the Trust when required by the
Agreement;
(e) any Servicer Default occurs which would have a material adverse
effect on the Certificateholders;
(f) the Class A Investor Interest is not paid in full on the Class A
Scheduled Payment Date or the Class B Investor Interest is not paid in full
on the Class B Scheduled Payment Date;
(g) certain events of insolvency, receivership or bankruptcy relating to
the Transferor or other holder of the Transferor Certificate;
(h) the Transferor becomes unable for any reason to transfer Receivables
to the Trust in accordance with the provisions of the Agreement; or
(i) the Trust becomes an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In the case of any event described in clause (a), (b) or (e) above, a Pay
Out Event will be deemed to have occurred with respect to the Certificates only
if, after any applicable grace period, either the Trustee or Certificateholders
and the Collateral Interest Holder evidencing interests aggregating not less
than 50% of the Investor Interest, by written notice to the Transferor and the
Servicer (and to the Trustee if given by the Certificateholders) declare that a
Pay Out Event has occurred with respect to the Certificates as of the date of
such notice. In the case of any event described in clause (g), (h) or (i), a Pay
Out Event with respect to all Series then outstanding, and in the case of any
event described in clause (c), (d) or (f), a Pay Out 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, the Collateral
Interest Holder or all certificateholders, as appropriate, immediately upon the
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occurrence of such event. On the date on which a Pay Out Event is deemed to have
occurred, the Rapid Amortization Period will commence. In such event,
distributions of principal to the Certificateholders will begin on the first
Distribution Date following the month in which such Pay Out Event occurred. If,
because of the occurrence of a Pay Out Event, the Rapid Amortization Period
begins on or prior to ____ __, ____ Certificateholders may begin receiving
distributions of principal earlier than they otherwise would have, which may
shorten the average life of the Certificates.
See "Description of the Certificates -- Pay Out Events" in the accompanying
Prospectus for an additional discussion of the consequences of an insolvency,
conservatorship or receivership of the Transferor.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Investor Interest with
respect to any Transfer Date (the "Investor Servicing Fee") shall be equal to
one-twelfth of the product of (a) [___]% and (b) the Adjusted Investor Interest
as of the last day of the Monthly Period preceding such Transfer Date; provided,
however, with respect to the first Transfer Date, the Investor Servicing Fee
shall be equal to $___________. On each Transfer Date, but only if Bank of
America, an affiliate thereof, U.S. Bank National Association (formerly known as
First Bank National Association) or another successor servicer meeting the
requirements described in the Series 199_-___ Supplement (an "Acceptable
Successor Servicer") is the Servicer, Servicer Interchange with respect to the
related Monthly Period that is on deposit in the Finance Charge Account shall be
withdrawn from the Finance Charge Account and paid to the Servicer in payment of
a portion of the Investor Servicing Fee with respect to such Monthly Period. The
"Servicer Interchange" for any Monthly Period for which Bank of America, an
affiliate thereof or an Acceptable Successor Servicer is the Servicer will be an
amount equal to the portion of collections of Finance Charge Receivables
allocated to the Investor Interest with respect to such Monthly Period that is
attributable to Interchange; provided, however, that Servicer Interchange for a
Monthly Period shall not exceed one-twelfth of the product of (i) the Adjusted
Investor Interest, as of the last day of such Monthly Period and (ii) [___]%;
provided further, however, that with respect to the first Transfer Date, the
Servicer Interchange may equal but shall not exceed $_________. In the case of
any insufficiency of Servicer Interchange on deposit in the Finance Charge
Account, a portion of the Investor Servicing Fee with respect to such Monthly
Period will not be paid to the extent of such insufficiency 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 out of Servicer
Interchange.
The share of the Investor Servicing Fee allocable to the Class A
Certificateholders with respect to any Transfer Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Class A Floating
Allocation, (b) 1.0%, or if Bank of America, an affiliate thereof or an
Acceptable Successor Servicer is not the Servicer, 2.0% (the "Net Servicing Fee
Rate") and (c) the Adjusted Investor Interest as of the last day of the Monthly
Period preceding such Transfer Date; provided, however, that with respect to the
first Transfer Date, the Class A Servicing Fee shall be equal to $_________. The
share of the Investor Servicing Fee allocable to the Class B Certificateholders
with respect to any Transfer Date (the "Class B Servicing Fee") shall be equal
to one-twelfth of the product of (a) the Class B Floating Allocation, (b) the
Net Servicing Fee Rate and (c) the Adjusted Investor Interest as of the last day
of the Monthly Period preceding such Transfer Date; provided, however, that with
respect to the first Transfer Date, the Class B Servicing Fee shall be equal to
$_______. The share of the Investor Servicing Fee allocable to the Collateral
Interest Holder with respect to any Transfer Date (the "Collateral Interest
Servicing Fee," together with the Class A Servicing Fee and the Class B
Servicing Fee, the "Certificateholder Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Collateral Floating Allocation, (b) the
Net Servicing Fee Rate and (c) the Adjusted Investor Interest as of the last day
of the Monthly Period preceding such Transfer Date; provided, however, that with
respect to the first Transfer Date, the Collateral Interest Servicing Fee shall
be equal to $______. The remainder of the Servicing Fee shall be paid by the
holder of the Transferor Certificate or by 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. The Class A Servicing Fee and the
Class B Servicing Fee shall be payable to the Servicer solely to the extent
amounts are available for distribution in respect thereof as described under "
- - - - -- Application of Collections" in this Prospectus Supplement.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee and independent
certified public accountants and other fees which are not expressly stated in
the Agreement to be payable by the
S-43
<PAGE> 44
Trust or the Certificateholders other than any tax imposed on or measured by
income, including United States federal, state and local income and franchise
taxes, if any, of the Trust or the Certificateholders.
PAIRED SERIES
The Transferor may cause the Trust to issue another Series as a Paired
Series with respect to Series 199_-___. Although no assurance can be given as to
whether such other Series will be issued and, if issued, the specific terms
thereof, the outstanding principal amount of such Series may vary from time to
time whether or not a Pay Out Event occurs with respect to Series 199_-___, and
the interest rate with respect to certificates of such other Series will be
established on the date of issuance of such Series and may be reset
periodically. Further, the pay out events with respect to such other Series may
vary from the Pay Out Events with respect to the Series 199_-___ and may include
pay out events which are unrelated to the status of the Transferor, the Servicer
or the Receivables, such as events related to the continued availability and
rating of certain providers of Enhancement to such other Series. If a Pay Out
Event does occur with respect to any such Paired Series prior to the payment in
full of the Certificates, the final payment of principal to the Holders may be
delayed. In particular, the numerator of the Fixed Allocation Percentage may be
changed upon the occurrence of a pay out event with respect to a Paired Series
resulting in a possible reduction of the percentage of collections of Principal
Receivables allocated to the Certificateholders and a possible delay in payments
to such Certificateholders. See " -- Allocation Percentages" and " -- Paired
Series" in this Prospectus Supplement.
REPORTS TO CERTIFICATEHOLDERS
On each Transfer Date, the Trustee will forward to each Certificateholder of
record, a statement prepared by the Servicer setting forth the items described
in "Description of the Certificates -- Reports to Certificateholders" in the
accompanying Prospectus. In addition, such statement will include certain
information regarding the Principal Funding Account and the Collateral Interest,
if any, for such Transfer Date. The Servicer intends to file with the SEC
periodic reports with respect to the Certificates following completion of the
reporting period required by Rule 15d-1.
AMENDMENTS
In addition to being subject to amendment pursuant to any other provisions
relating to amendments in the Agreement, the Series 199_-___ Supplement may be
amended by the Transferor without the consent of the Servicer, the Trustee or
any Certificateholder if the Transferor provides the Trustee with (a) an opinion
of counsel to the effect that such amendment or modification would reduce the
risk that the Trust would be treated as taxable as a publicly traded partnership
pursuant to section 7704 of the Internal Revenue Code of 1986, as amended (the
"Code") and (b) a certificate that such amendment or modification would not
materially and adversely affect any Certificateholder; provided, however, that
no such amendment shall be deemed effective without the Trustee's consent, if
the Trustee's rights, duties and obligations under the Series 199_-___
Supplement are thereby modified. Promptly after the effectiveness of any such
amendment, the Transferor shall deliver a copy of such amendment to each of the
Servicer, the Trustee and each Rating Agency described in the Series 199_-___
Supplement.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and section 4975 of the Code prohibit certain pension, profit
sharing or other employee benefit plans, individual retirement accounts or
annuities and employee annuity plans and Keogh plans (collectively, "Plans")
from engaging in certain transactions involving "plan assets" with persons that
are "parties in interest" under ERISA or "disqualified persons" under the Code
(collectively, "Parties in Interest") with respect to the Plan. A violation of
these "prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and section 4975 of the Code for such persons, unless a
statutory, regulatory or administrative exemption is available. Plans that are
governmental plans (as defined in section 3(32) of ERISA) and certain church
plans (as defined in section 3(33) of ERISA) are not subject to ERISA
requirements.
S-44
<PAGE> 45
CLASS A CERTIFICATES
A violation of the prohibited transaction rules could occur if the Class A
Certificates were to be purchased with "plan assets" of any Plan if the
Transferor, the Trustee, any underwriters of such Series or any of their
affiliates were a Party in Interest with respect to such Plan, unless a
statutory, regulatory or administrative exemption is available or an exemption
applies under a regulation (the "Plan Asset Regulation") issued by the
Department of Labor ("DoL"). The Transferor, the Trustee, the Underwriters and
their affiliates are likely to be Parties in Interest with respect to many
Plans. Before purchasing the Class A Certificates, a Plan fiduciary or other
Plan investor should consider whether a prohibited transaction might arise by
reason of the relationship between the Plan and the Transferor, the Trustee, any
Underwriter of such Series or any of their affiliates and consult their counsel
regarding the purchase in light of the considerations described below and in the
accompanying Prospectus.
Under certain circumstances, the Plan Asset Regulation treats the assets of
an entity in which a Plan holds an equity interest as "plan assets" of such
Plan. Because the Class A Certificates will represent beneficial interests in
the Trust, and despite the agreement of the Transferor and the Certificate
Owners to treat the Class A Certificates as debt instruments, the Class A
Certificates are likely to be considered equity interests in the Trust for
purposes of the Plan Asset Regulation, with the result that the assets of the
Trust are likely to be treated as "plan assets" of the investing Plans for
purposes of ERISA and section 4975 of the Code, unless the exception for
"publicly-offered securities" is applicable as described in the accompanying
Prospectus. It is anticipated that the Class A Certificates will meet the
criteria for treatment as "public-offered securities" as described in the
accompanying Prospectus. No restrictions will be imposed on the transfer of the
Class A Certificates. It is expected that the Class A Certificates will be held
by at least 100 Independent Investors at the conclusion of the initial public
offering although no assurance can be given, and no monitoring or other measures
will be taken to ensure, that such condition is met. The Class A Certificates
will be sold as part of an offering pursuant to an effective registration
statement under the Act and then will be timely registered under the Exchange
Act.
If the foregoing exception under the Plan Asset Regulation were not
satisfied, transactions involving the Trust and Parties in Interest with respect
to a Plan that purchases or holds Class A Certificates might be prohibited under
section 406 of ERISA and/or section 4975 of the Code and result in excise tax
and other liabilities under ERISA and section 4975 of the Code unless an
exemption were available. The five DoL class exemptions described in the
accompanying Prospectus may not provide relief for all transactions involving
the assets of the Trust even if they would otherwise apply to the purchase of a
Class A Certificate by a Plan.
CLASS B CERTIFICATES
The Class B Certificates may not be acquired or held by, on behalf of, or
with "plan assets" of any Plan.
CONSULTATION WITH COUNSEL
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the Class A Certificates on behalf or with "plan assets" of any Plan
should consult their own counsel regarding whether the Trust assets represented
by the Class A Certificates would be considered "plan assets," the consequences
that would apply if the Trust's assets were considered "plan assets," and the
possibility of exemptive relief from the prohibited transaction rules.
Finally, Plan fiduciaries and other Plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
Plan's particular circumstances before authorizing an investment of a portion of
the Plan's assets in the Class A Certificates. Accordingly, among other factors,
Plan fiduciaries and other Plan investors should consider whether the investment
(i) satisfies the diversification requirement of ERISA or other applicable law,
(ii) is in accordance with the Plan's governing instruments, and (iii) is
prudent in light of the "Risk Factors" and other factors discussed in this
Prospectus Supplement and the accompanying Prospectus.
S-45
<PAGE> 46
UNDERWRITING
Subject to the terms and conditions set forth in the Class A Underwriting
Agreement (the "Class A Underwriting Agreement") between the Transferor and the
Class A Underwriter named below (the "Class A Underwriter"), and the terms and
conditions set forth in the Class B Underwriting Agreement (the "Class B
Underwriting Agreement," and together with the Class A Underwriting Agreement,
the "Underwriting Agreement") between the Transferor and the Class B Underwriter
named below (the "Class B Underwriter," and together with the Class A
Underwriter, the "Underwriters"), the Transferor has agreed to sell to the
Underwriters, and each of the Underwriters has severally agreed to purchase, the
principal amount of the Certificates set forth opposite its name:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS A UNDERWRITER CLASS A CERTIFICATES
------------------- --------------------
<S> <C>
$
----------------------- -----------
Total....................... $
===========
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS B UNDERWRITER CLASS B CERTIFICATES
------------------- --------------------
<S> <C>
$
----------------------- -----------
Total....................... $
===========
</TABLE>
In the Class A Underwriting Agreement, the Class A Underwriter has agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Class A Certificates offered hereby if any of the Class A Certificates are
purchased. In the Class B Underwriting Agreement, the Class B Underwriter has
agreed, subject to the terms and conditions set forth therein, to purchase all
of the Class B Certificates offered hereby if any of the Class B Certificates
are purchased. The Underwriters have agreed to reimburse the Transferor for
certain expenses of the issuance and distribution of the Certificates.
The Class A Underwriter proposes 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
amount of the Class A Certificates. The Class A Underwriter may allow, and such
dealers may reallow, concessions not in excess of ___% of the principal amount
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 Class A Underwriter.
The Class B Underwriter proposes 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
amount of the Class B Certificates. The Class B Underwriter may allow, and such
dealers may reallow, concessions not in excess of ___% of the principal amount
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 Class B Underwriter.
We will receive proceeds of approximately $________ from the sale of the
Class A Certificates (representing ___% of the principal amount each Class A
Certificate) after paying the underwriting discount of $______ (representing
___% of each Class A Certificate). We will receive proceeds of approximately
$_______ from the sale of the Class B Certificates (representing ___% of each
Class B Certificate) after paying the underwriting discount of $________
(representing __% of each Class B Certificate). Additional offering expenses are
estimated to be $__________.
Each Underwriter will represent and agree that:
(a) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the Certificates in, from or otherwise involving the United Kingdom;
(b) 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 1995
or is a person to whom such document may otherwise lawfully be issued or passed
on;
S-46
<PAGE> 47
(c) if it is an authorized person under Chapter III of Part 1 of the
Financial Services Act 1986, it has only promoted and will only promote (as that
term is defined in Regulation 1.02(2) of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991) to any person in the United Kingdom the
scheme described in this Prospectus Supplement and the Prospectus if that person
is 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; and
(d) it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995.
The Transferor will indemnify the Underwriters against liabilities relating
to the adequacy of disclosure to investors, including liabilities under the
Securities Act, or contribute to payments the Underwriters may be required to
make in respect thereof.
The Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Certificates in accordance with Regulation M under the Exchange Act.
Over-allotment transactions involve syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing transactions permit
bids to purchase the Certificates so long as the stabilizing bids do not exceed
a specified maximum. Syndicate covering transactions involve purchases of the
Certificates in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the Underwriters
to reclaim a selling concession from a syndicate member when the Certificates
originally sold by such syndicate member are purchased in a syndicate covering
transaction. Such over-allotment transactions, stabilizing transactions,
syndicate covering transactions and penalty bids may cause the prices of the
Certificates to be higher than they would otherwise be in the absence of such
transactions. Neither the Transferor nor any of the Underwriters represent that
the Underwriters will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice at any time.
This Prospectus Supplement and the accompanying Prospectus may be used by
NationsBanc Montgomery Securities LLC, an affiliate of the Transferor and
Servicer, in connection with offers and sales related to secondary market
transactions in the Certificates. NationsBanc Montgomery Securities LLC may act
as principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale or otherwise.
The Underwriters or agents and their associates may be customers of
(including borrowers from), engage in transactions with, and/or perform services
for, the Transferor, the Servicer, or the Corporation, their respective
affiliates and the Trustee, in the ordinary course of business.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates will be
passed upon for the Transferor by [__________________], [__________ Counsel] at
the Corporation, and by [_____________________________], special counsel to the
Transferor. Certain legal matters relating to the federal tax consequences of
the issuance of the Certificates will be passed upon for the Transferor by
[_______________________________________________], special tax counsel to the
Transferor. Certain legal matters relating to the issuance of the Certificates
will be passed upon for the Underwriters by
[___________________________________].
S-47
<PAGE> 48
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
Term Page
- - - - ---- ----
<S> <C>
Acceptable Successor Servicer....................S-43
Accounts.........................................S-14
Accumulation Period Length.......................S-28
Accumulation Shortfall...........................S-37
Additional Interest..............................S-26
Aggregate Investor Default Amount................S-39
Agreement........................................S-14
Available Investor Principal Collections.........S-27
Available Reserve Account Amount.................S-41
BAC..............................................S-24
Base Rate........................................S-22
Call Report......................................S-24
Cedel............................................S-12
Certificateholder Servicing Fee..................S-43
Certificateholders...............................S-21
Certificates.....................................S-14
Class A Additional Interest......................S-26
Class A Adjusted Investor Interest...............S-30
Class A Available Funds..........................S-26
Class A Certificate Rate.........................S-25
Class A Certificateholders.......................S-21
Class A Certificates.............................S-14
Class A Fixed Allocation.........................S-30
Class A Floating Allocation......................S-29
Class A Investor Charge-Off......................S-39
Class A Investor Default Amount..................S-39
Class A Investor Interest........................S-30
Class A Monthly Interest.........................S-34
Class A Monthly Principal........................S-36
Class A Required Amount..........................S-31
Class A Scheduled Payment Date...................S-21
Class A Servicing Fee............................S-43
Class A Underwriter..............................S-46
Class A Underwriting Agreement...................S-46
Class B Additional Interest......................S-26
Class B Available Funds..........................S-26
Class B Certificate Rate.........................S-25
Class B Certificateholders.......................S-21
Class B Certificates.............................S-14
Class B Fixed Allocation.........................S-30
Class B Floating Allocation......................S-29
Class B Investor Charge-Off......................S-40
Class B Investor Default Amount..................S-39
Class B Investor Interest........................S-30
Class B Monthly Interest.........................S-34
Class B Monthly Principal........................S-36
Class B Required Amount..........................S-31
Class B Scheduled Payment Date...................S-21
Class B Servicing Fee............................S-43
Class B Underwriter..............................S-46
Class B Underwriting Agreement...................S-46
Closing Date.....................................S-14
Code.............................................S-45
Collateral Available Funds.......................S-34
Collateral Charge-Off............................S-40
Collateral Default Amount........................S-39
Collateral Fixed Allocation......................S-30
Collateral Floating Allocation...................S-29
Collateral Interest........................S-14, S-31
Collateral Interest Holder.......................S-21
Collateral Interest Servicing Fee................S-43
Collateral Monthly Interest......................S-35
Collateral Monthly Principal.....................S-37
Collateral Rate..................................S-35
Controlled Accumulation Amount...................S-37
Controlled Accumulation Period...................S-21
Controlled Deposit Amount........................S-21
Corporation......................................S-24
Covered Amount...................................S-40
Cut-Off Date.....................................S-17
Default Amount...................................S-39
Distribution Date................................S-26
DoL..............................................S-45
DTC..............................................S-12
ERISA............................................S-44
Euroclear........................................S-12
Excess Spread....................................S-34
Finance Charge Receivables.......................S-18
Finance Charge Shortfalls........................S-38
Fixed Investor Percentage........................S-29
Floating Investor Percentage.....................S-29
Identified Pool..................................S-14
Initial Collateral Interest......................S-31
Initial Identified Pool..........................S-15
Interest Period..................................S-25
Investor Default Amount..........................S-39
Investor Interest................................S-31
Investor Servicing Fee...........................S-43
LIBOR............................................S-26
LIBOR Determination Date.........................S-26
Loan Agreement...................................S-27
London business day..............................S-26
Minimum Aggregate Principal Receivables..........S-17
Minimum Transferor Interest......................S-17
Monthly Period...................................S-29
NationsBank......................................S-24
Net Servicing Fee Rate...........................S-43
Parties in Interest..............................S-44
Pay Out Event....................................S-42
Plan Asset Regulation............................S-45
Plans............................................S-44
Portfolio Yield..................................S-22
Principal Funding Account........................S-40
Principal Funding Account Balance................S-21
Principal Funding Investment Proceeds............S-40
Principal Funding Investment Shortfall...........S-40
Principal Receivables............................S-17
Principal Shortfalls.............................S-38
Rapid Amortization Period........................S-21
Rating Agency Condition..........................S-38
Reallocated Class B Principal Collections........S-32
Reallocated Collateral Principal Collections.....S-32
Reallocated Principal Collections................S-32
Receivables......................................S-14
Record Date......................................S-25
Reference Banks..................................S-27
Required Amount..................................S-32
Required Collateral Interest.....................S-38
Required Reserve Account Amount..................S-41
Reserve Account..................................S-41
Reserve Account Funding Date.....................S-41
Revolving Period.................................S-27
</TABLE>
S-48
<PAGE> 49
<TABLE>
<CAPTION>
Term Page
- - - - ---- ----
<S> <C>
Series 199_-__...................................S-28
Series 199_-__ Supplement........................S-24
Series 199_-___ Termination Date.................S-21
Servicer Interchange.............................S-43
Shared Excess Finance Charge Collections.........S-37
Shared Excess Finance Charge Collections
Group One.......................................S-37
Shared Excess Principal Collections..............S-38
Shared Excess Principal Collections Group........S-27
Telerate Page 3750...............................S-27
Transfer Date....................................S-33
Transferor.......................................S-14
Transferor Certificate...........................S-25
Transferor Interest..............................S-17
Transferor Percentage............................S-25
Trust............................................S-14
Trust Portfolio..................................S-17
Underwriters.....................................S-46
Underwriting Agreement...........................S-46
</TABLE>
S-49
<PAGE> 50
ANNEX I
OTHER SERIES ISSUED
The table below sets forth the principal characteristics of the eight other
Series previously issued by the Trust, Series 1996-A, Series 1996-B, Series
1997-A, Series 1997-B, Series 1997-C, Series 1998-A, Series 1998-B and Series
1998-C which are each in Shared Excess Finance Charge Collections Group One and
the Shared Excess Principal Collections Group. For more specific information
with respect to any Series, any prospective investor should contact Bank of
America at (602) 597-3273. Bank of America will provide without charge to any
prospective purchaser of the Certificates a copy of the Disclosure Documents for
any previously publicly-issued Series.
1. Series 1996-A
<TABLE>
<CAPTION>
Class A Certificates
<S> <C>
Initial Investor Interest.................................................................$427,500,000
Certificate Rate..................................................One-Month LIBOR plus 0.13% per annum
Controlled Accumulation Amount (subject to adjustment)................................... $ 35,625,000
Commencement of Accumulation Period......................................................June 30, 2000
Annual Servicing Fee Percentage........................................................2.00% per annum
Initial Collateral Interest...............................................................$ 40,000,000
Other Enhancement................................................Subordination of Class B Certificates
Series 1996-A Termination Date...........................................August 2003 Distribution Date
Series Issuance Date.....................................................................July 19, 1996
Class B Certificates
Initial Investor Interest.................................................................$ 32,500,000
Certificate Rate..................................................One-Month LIBOR plus 0.29% per annum
Controlled Accumulation Amount............................................................$ 32,500,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1996-A Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
2. Series 1996-B
Class A Certificates
Initial Investor Interest.................................................................$830,000,000
Certificate Rate...............................................Three-Month LIBOR plus 0.125% per annum
Controlled Accumulation Amount (subject to Adjustment)....................................$ 69,166,167
Commencement of Accumulation Period.................................................September 30, 2002
Annual Servicing Fee Percentage........................................................2.00% per annum
Initial Collateral Interest...............................................................$ 77,661,000
Other Enhancement................................................Subordination of Class B Certificates
Series 1996-B Termination Date.........................................November 2005 Distribution Date
Series Issuance Date..................................................................October 11, 1996
Class B Certificates
Initial Investor Interest.................................................................$ 63,100,000
Certificate Rate................................................Three-Month LIBOR plus 0.28% per annum
Controlled Accumulation Amount............................................................$ 63,100,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1996-B Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
A-1
</TABLE>
<PAGE> 51
3. Series 1997-A
<TABLE>
<CAPTION>
Class A Certificates
<S> <C>
Initial Investor Interest.................................................................$648,750,000
Certificate Rate..................................................One-Month LIBOR plus 0.11% per annum
Controlled Accumulation Amount (subject to Adjustment)....................................$ 54,062,500
Commencement of Accumulation Period.......................................................May 31, 2001
Annual Servicing Fee Percentage........................................................2.00% per annum
Initial Collateral Interest.............................................................. $ 60,000,000
Other Enhancement................................................Subordination of Class B Certificates
Series 1997-A Termination Date.............................................July 2004 Distribution Date
Series Issuance Date.....................................................................June 17, 1997
Class B Certificates
Initial Investor Interest.................................................................$ 41,250,000
Certificate Rate..................................................One-Month LIBOR plus 0.29% per annum
Controlled Accumulation Amount............................................................$ 41,250,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1997-A Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
4. Series 1997-B
Class A Certificates
Initial Investor Interest.................................................................$648,750,000
Certificate Rate..............................................Three-Month LIBOR minus 0.125% per annum
Controlled Accumulation Amount (subject to Adjustment)....................................$ 54,062,500
Commencement of Accumulation Period....................................................August 31, 2001
Annual Servicing Fee Percentage........................................................2.00% per annum
Initial Collateral Interest...............................................................$ 60,000,000
Other Enhancement................................................Subordination of Class B Certificates
Series 1997-B Termination Date..........................................October 2004 Distribution Date
Series Issuance Date................................................................September 25, 1997
Class B Certificates
Initial Investor Interest.................................................................$ 41,250,000
Certificate Rate................................................Three-Month LIBOR plus 0.26% per annum
Controlled Accumulation Amount............................................................$ 41,250,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1997-B Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
5. Series 1997-C
Class A Certificates
Initial Investor Interest.................................................................$562,250,000
Certificate Rate..................................................One-Month LIBOR plus 0.12% per annum
Controlled Accumulation Amount (subject to Adjustment)....................................$ 46,854,167
Commencement of Accumulation Period..................................................November 30, 1999
Annual Servicing Fee Percentage........................................................2.00% per annum
Initial Collateral Interest...............................................................$ 52,000,000
Other Enhancement................................................Subordination of Class B Certificates
Series 1997-C Termination Date..........................................January 2003 Distribution Date
Series Issuance Date..................................................................December 9, 1997
A-2
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
Class B Certificates
<S> <C>
Initial Investor Interest.................................................................$ 35,750,000
Certificate Rate..................................................One-Month LIBOR plus 0.33% per annum
Controlled Accumulation Amount........................................................... $ 35,750,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1997-C Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
6. Series 1998-A
Class A Certificates
Initial Investor Interest.................................................................$648,750,000
Certificate Rate..................................................One-Month LIBOR plus 0.11% per annum
Controlled Accumulation Amount (subject to Adjustment)....................................$ 54,062,500
Commencement of Accumulation Period..................................................February 28, 2002
Annual Servicing Fee Percentage........................................................2.00% per annum
Initial Collateral Interest...............................................................$ 60,000,000
Other Enhancement................................................Subordination of Class B Certificates
Series 1998-A Termination Date............................................April 2005 Distribution Date
Series Issuance Date....................................................................March 26, 1998
Class B Certificates
Initial Investor Interest.................................................................$ 41,250,000
Certificate Rate..................................................One-Month LIBOR plus 0.27% per annum
Controlled Accumulation Amount............................................................$ 41,250,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1998-A Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
7. Series 1998-B
Class A Certificates
Initial Investor Interest.................................................................$648,750,000
Certificate Rate..................................................One-Month LIBOR plus 0.12% per annum
Controlled Accumulation Amount (subject to Adjustment)....................................$ 54,062,500
Commencement of Accumulation Period.....................................................April 30, 2003
Annual Servicing Fee Percentage........................................................2.00% per annum
Initial Collateral Interest...............................................................$ 60,000,000
Other Enhancement................................................Subordination of Class B Certificates
Series 1998-B Termination Date.............................................June 2006 Distribution Date
Series Issuance Date.......................................................................May 7, 1998
Class B Certificates
Initial Investor Interest.................................................................$ 41,250,000
Certificate Rate..................................................One-Month LIBOR plus 0.28% per annum
Controlled Accumulation Amount............................................................$ 41,250,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1998-B Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
A-3
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
8. Series 1998-C
Class A Certificates
<S> <C>
Initial Investor Interest.................................................................$432,500,000
Certificate Rate..................................................One-Month LIBOR plus 0.14% per annum
Controlled Accumulation Amount (subject to Adjustment)....................................$ 36,041,667
Commencement of Accumulation Period....................................................August 31, 2000
Annual Servicing Fee Percentage...........................................................2% per annum
Initial Collateral Interest...............................................................$ 40,000,000
Other Enhancement...............................................Subordination of Class B Certificates
Series 1998-C Termination Date..........................................October 2003 Distribution Date
Series Issuance Date................................................................September 25, 1998
Class B Certificates
Initial Investor Interest.................................................................$ 27,500,000
Certificate Rate.................................................One-Month LIBOR plus 0.365% per annum
Controlled Accumulation Amount............................................................$ 27,500,000
Commencement of Accumulation Period.............................Same as above for Class A Certificates
Annual Servicing Fee Percentage.................................Same as above for Class A Certificates
Initial Collateral Interest.....................................Same as above for Class A Certificates
Series 1998-C Termination Date..................................Same as above for Class A Certificates
Series Issuance Date............................................Same as above for Class A Certificates
A-4
</TABLE>
<PAGE> 54
BA MASTER CREDIT CARD TRUST
Issuer
BANK OF AMERICA NATIONAL ASSOCIATION
Transferor and Servicer
SERIES 199_-__
$__________ FLOATING-RATE ASSET BACKED CERTIFICATES
PROSPECTUS SUPPLEMENT
_________
UNDERWRITER[S] OF THE CLASS A CERTIFICATES
UNDERWRITER[S] OF THE CLASS B CERTIFICATES
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THE CERTIFICATES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS AS OF ANY DATE OTHER THAN THE DATES STATED ON
THEIR RESPECTIVE COVERS.
DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS
UNDERWRITERS OF THE CERTIFICATES AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS. IN ADDITION ALL DEALERS SELLING THE CERTIFICATES WILL DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS UNTIL _______ ___ 199_.
This document is printed entirely on recycled paper.
<PAGE> 1
POWER OF ATTORNEY
I hereby appoint CHERYL SOROKIN, JEFFREY R. LAPIC, ANDREA GOLDENBERG,
and WILLIE C. BOGAN, and each of them, my attorneys-in-fact, each with full
power of substitution, to sign for me as the Chairman of the Board, Chief
Executive Officer and President of Bank of America National Association and file
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, a registration statement covering the public offering, on a
delayed or continuous basis, of one or more series of pass-through certificates
and/or participation certificates or other securities representing interests in,
or backed or secured by, a separate pool of credit card receivables, loans or
other assets, and any amendment and supplemental prospectus to such registration
statement.
This power of attorney, unless earlier revoked or terminated, will
terminate on January 31, 1999.
Dated: October 22, 1998
/s/ G. Patrick Phillips
-----------------------
G. Patrick Phillips
[Chief Executive Officer - Securitization Registrations]
<PAGE> 2
POWER OF ATTORNEY
I hereby appoint CHERYL SOROKIN, JEFFREY R. LAPIC, ANDREA GOLDENBERG,
and WILLIE C. BOGAN, and each of them, my attorneys-in-fact, each with full
power of substitution, to sign for me as a Director of Bank of America National
Association and file with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, a registration statement covering the public
offering, on a delayed or continuous basis, of one or more series of
pass-through certificates and/or participation certificates or other securities
representing interests in, or backed or secured by, a separate pool of credit
card receivables, loans or other assets, and any amendment and supplemental
prospectus to such registration statement.
This power of attorney, unless earlier revoked or terminated, will
terminate on January 31, 1999.
Dated: September 11, 1998
/s/ Richard G. Campbell
-----------------------
Richard G. Campbell
[Director - Securitization Registrations]
<PAGE> 3
POWER OF ATTORNEY
I hereby appoint CHERYL SOROKIN, JEFFREY R. LAPIC, ANDREA GOLDENBERG,
and WILLIE C. BOGAN, and each of them, my attorneys-in-fact, each with full
power of substitution, to sign for me as a Director of Bank of America National
Association and file with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, a registration statement covering the public
offering, on a delayed or continuous basis, of one or more series of
pass-through certificates and/or participation certificates or other securities
representing interests in, or backed or secured by, a separate pool of credit
card receivables, loans or other assets, and any amendment and supplemental
prospectus to such registration statement.
This power of attorney, unless earlier revoked or terminated, will
terminate on January 31, 1999.
Dated: September 11, 1998
/s/ Jody L. Ceithaml
--------------------
Jody L. Ceithaml
[Director - Securitization Registrations]
<PAGE> 4
POWER OF ATTORNEY
I hereby appoint CHERYL SOROKIN, JEFFREY R. LAPIC, ANDREA GOLDENBERG,
and WILLIE C. BOGAN, and each of them, my attorneys-in-fact, each with full
power of substitution, to sign for me as a Director of Bank of America National
Association and file with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, a registration statement covering the public
offering, on a delayed or continuous basis, of one or more series of
pass-through certificates and/or participation certificates or other securities
representing interests in, or backed or secured by, a separate pool of credit
card receivables, loans or other assets, and any amendment and supplemental
prospectus to such registration statement.
This power of attorney, unless earlier revoked or terminated, will
terminate on January 31, 1999.
Dated: September 11, 1998
/s/ Gilbert W. Jones
--------------------
Gilbert W. Jones
[Director - Securitization Registrations]
<PAGE> 5
POWER OF ATTORNEY
I hereby appoint CHERYL SOROKIN, JEFFREY R. LAPIC, ANDREA GOLDENBERG,
and WILLIE C. BOGAN, and each of them, my attorneys-in-fact, each with full
power of substitution, to sign for me as a Director of Bank of America National
Association and file with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, a registration statement covering the public
offering, on a delayed or continuous basis, of one or more series of
pass-through certificates and/or participation certificates or other securities
representing interests in, or backed or secured by, a separate pool of credit
card receivables, loans or other assets, and any amendment and supplemental
prospectus to such registration statement.
This power of attorney, unless earlier revoked or terminated, will
terminate on January 31, 1999.
Dated: September 11, 1998
/s/ Jane D. Snyder
------------------
Jane D. Snyder
[Director - Securitization Registrations]
