SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
For Registration of Certain Classes of Securities
pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934
FIRST NATIONAL BANK OF COMMERCE
(Exact Name of Registrant as Specified in its Charter)
United States
(State or Other Jurisdiction of Incorporation)
333-24023
(Commission File Number)
72-0269760
(I.R.S. Employer Identification No.)
201 Saint Charles Avenue, 29th Floor, New Orleans, Louisiana 70170
(Address of Principal Executive Offices) (Zip Code)
(504) 623-1492
(Registrant's Telephone Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
First NBC Credit Card Master Trust
Class A 6.15% Asset Backed Certificates, Series 1997-1
and
Class B 6.35% Asset Backed Certificates, Series 1997-1
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
The description of the Class A 6.15% Asset Backed Certificates,
Series 1997-1 and the Class B 6.35% Asset Backed Certificates, Series
1997-1 appears under the captions entitled: "Prospectus Summary"; "Risk
Factors"; "Maturity Assumptions"; "Description of the Certificates";
"Credit Enhancement"; "Certain Legal Aspects of the Receivables"; "U.S.
Federal Income Tax Consequences"; "State and Local Taxation"; and "ERISA
Considerations" in the Prospectus dated July 23, 1997, and "Summary of
Terms"; "Risk Factors"; "Maturity Assumptions"; and "Description of the
Certificates" in the Prospectus Supplement dated July 31, 1997 (the
Prospectus and the Prospectus Supplement are incorporated herein by
reference as Exhibit 4.5).
Item 2. Exhibits.
Exhibit
No. Document Description
4.1 Articles of Association of First National Bank of Commerce
("First NBC").
4.2 By-Laws of First NBC.
4.3 Pooling and Servicing Agreement between First NBC and The
First National Bank of Chicago, dated as of August 7, 1997.
4.4 Series 1997-1 Supplement between First NBC and The First
National Bank of Chicago, dated as of August 7, 1997.
4.5 Prospectus dated July 23, 1997 and Prospectus Supplement
dated July 31, 1997, as filed with the Securities and
Exchange Commission on August 1, 1997 pursuant to Rule
424(b).
4.6 Form of specimen certificates representing the Class A
6.15% Asset Backed Certificates, Series 1997-1 and the
Class B 6.35% Asset Backed Certificates, Series 1997-1.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Form 8-A to be signed on its
behalf by the undersigned hereunto duly authorized.
FIRST NATIONAL BANK OF COMMERCE
(Registrant)
Dated: October 22, 1997 By: /s/ Michael J. Fowler
-----------------------
Name: Michael J. Fowler
Title: Executive Vice President
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INDEX TO EXHIBITS
Exhibit
No. Document Description
4.1 Articles of Association of First National Bank of Commerce
("First NBC").
4.2 By-Laws of First NBC.
4.3 Pooling and Servicing Agreement between First NBC and The
First National Bank of Chicago, dated as of August 7, 1997.
4.4 Series 1997-1 Supplement between First NBC and The First
National Bank of Chicago, dated as of August 7, 1997.
4.5 Prospectus dated July 23, 1997 and Prospectus Supplement
dated July 31, 1997, as filed with the Securities and
Exchange Commission on August 1, 1997 pursuant to Rule
424(b).
4.6 Form of specimen certificates representing the Class A
6.15% Asset Backed Certificates, Series 1997-1 and the
Class B 6.35% Asset Backed Certificates, Series 1997-1.
ARTICLES OF ASSOCIATION
OF
FIRST NATIONAL BANK OF COMMERCE
ARTICLE I
Name
The name of the Association is First National Bank of Commerce
(hereinafter referred to as the "Association").
ARTICLE II
Capital
The Association has authority to issue one million ninety thousand
five hundred sixty-five (1,090,565) shares of $10.00 par value per share
common stock.
ARTICLE III
Preemptive Rights
The shareholder shall, upon issuance of shares for cash, have a
preemptive right to subscribe, at such price and upon such terms as may be
fixed in compliance with applicable law, for such proportion of the shares
to be issued, as the number of shares held by it bears to the total number
of shares having voting rights then outstanding.
ARTICLE IV
Directors
The Board of Directors shall consist of not less than five nor
more than twenty-five persons, the exact number of which shall be the
number elected from time to time by the shareholder.
The Board of Directors shall not have authority to (i) select a
Chief Executive Officer, (ii) adopt or amend the By-laws, (iii) issue any
capital stock or rights to acquire capital stock without the consent of the
shareholder, (iv) fill a vacancy on the Board of Directors, or (v) set the
compensation of the Chief Executive Officer. All power with respect to the
foregoing is reserved to the shareholder, as more fully described in the
By-laws.
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ARTICLE V
Limitation of Liability of Directors and Officers
A. No director or officer of the Association shall be liable to
the Association or to its shareholder for monetary damages for breach of
his fiduciary duty as a director or officer, provided that the foregoing
provision shall not eliminate or limit the liability of a director or
officer for (a) any breach of his duty of loyalty to the Association or its
shareholder; (b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law: (c) liability for
unlawful distributions of the association's assets to, or redemption or
repurchase of the Association's shares from, the shareholder of the
Association; or (d) any transaction from which he derived an improper
personal benefit.
B. The Board of Directors may, with the approval of the
shareholder, (a) cause the Association to enter into contracts with
directors and officers providing for the limitation of liability set forth
in this Article V and for indemnification to the fullest extent permitted
by law.
C. Any amendment or repeal of this Article V shall not adversely
affect any elimination or limitation of liability of a director or officer
of the Association under this Article V with respect to any action or
inaction occurring prior to the time of such amendment or repeal.
ARTICLE VI
INDEMNIFICATION
Section 1. Definitions. As used in this Article the following terms
shall have the meanings set out below:
(a) "Board"' - the Board of Directors of the Association.
(b) "Claim" - any threatened or pending or completed
claim, action, suit, or proceeding, whether civil, criminal, administrative
or investigative and whether made judicially or extra-judicially, or any
separate issue or matter therein, as the context requires.
(c) "Determining Body" - (i) the shareholder, or (ii) if
a majority of the members of the board of directors of the shareholder are
parties to the Claim, or the shareholder so directs, independent legal
counsel, which may be the regular outside counsel of the Association.
(d) "Disbursing Officer" - the Chief Executive Officer of
the Association or, if the Chief Executive Officer is a party to the Claim
for which indemnification is being sought, any officer not a party to such
Claim who is designated by the shareholder to be the Disbursing
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Officer with respect to indemnification requests related to the Claim,
which designation shall be made promptly after receipt of the initial
request for indemnification with respect to such Claim.
(e) "Expenses" - any expenses or costs (including,
without limitation, attorney's fees, judgments, punitive or exemplary
damages, fines and amounts paid in settlement).
(f) "Indemnitee"' - each person who is or was a director
or officer of the Association, but such term shall not include any person
who was a director or officer of any institution absorbed by the
Association by way of merger, consolidation, transfer of assets or
otherwise, provided that nothing herein shall prevent the Association from
providing indemnification to such persons under circumstances which the
Association determines in its discretion to be appropriate and in
accordance with law.
Section 2. Indemnity.
(a) To the extent such Expenses exceed the sum of amounts
paid or due under or pursuant to (i) policies of liability insurance
maintained by the Association, (ii) policies of liability insurance
maintained by or on behalf of the Indemnitee and (iii) provisions for
indemnification in the by-laws, resolutions or other instruments of any
entity other than the Association or its shareholder, the Association shall
indemnify Indemnitee against any Expenses actually and reasonably incurred
by him (as they are incurred) in connection with any Claim either against
him or as to which he is involved solely as a witness or person required to
give evidence, by reason of his position.
(i) as a director or officer of the Association,
(ii) as a director or officer of any subsidiary
of the Association or as fiduciary with respect to any employee benefit plan
of the Association, or
(iii) as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other for profit
or not for profit entity or enterprise, if such position is or was held at the
request of the Association,
whether relating to service in such position, before or after the effective
date of this Article, if he (i) is successful in his defense of the Claim
on the merits or otherwise or (ii) has been found by the Determining Body
(acting in good faith) to have me the Standard of Conduct; provided that
(A) the amount otherwise payable by the Association may be reduced by the
Determining Body to such amount as it deems proper if it determines that
the Claim involved the receipt of a personal benefit by Indemnitee, and (B)
no indemnification shall be made (i) in respect of any Claim as to which
Indemnitee shall have been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for willful or
intentional misconduct in the performance of his duty to the Association or
to have obtained an improper personal benefit, or (ii) for expenses,
penalties or other payments incurred in an administrative proceeding or
action instituted by a bank regulatory agency, which action results in a
final order assessing civil
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monetary penalties or payments to the Association, unless in each such
case, and only to the extent that, a court shall determine upon application
that, in view of all the circumstances of the case, Indemnitee is fairly
and reasonably entitled to indemnity for such Expenses as the court deems
proper.
(b) The Standard of Conduct is met when the conduct by an
Indemnitee with respect to which a Claim is asserted was conduct that he
reasonably believed to be in, or not opposed to, the best interest of the
Association, and, in the case of a criminal action or proceeding, that he
had no reasonable cause to believe was unlawful. The termination of any
Claim by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any
Claim as to which he may be identified hereunder, Indemnitee shall notify
the Chief Executive Officer of the Association of the Claim and whether he
intends to seek indemnification hereunder. If such notice indicates that
Indemnitee does so intend, the Chief Executive Officer shall promptly
notify the shareholder, which shall promptly establish the Determining
Body. After the Determining Body has been established the Chief Executive
Officer shall inform the Indemnitee thereof and Indemnitee shall
immediately provide the Determining Body with all facts relevant to the
Claim known to him. Within 60 days of the receipt of such information,
together with such additional information as the Determining Body may
request of Indemnitee, the Determining Body shall determine, and shall
advise Indemnitee of its determination, whether Indemnitee has met the
Standard of Conduct. The Determining Body may extend such sixty-day period
by no more than an additional sixty days.
(d) Indemnitee shall promptly inform the Determining Body
upon his becoming aware of any relevant facts not therefore provided by him
to the Determining Body, unless the Determining Body has obtained such
facts by other means. If, after determining that the Standard of Conduct
has been met, the Determining Body obtains facts of which it was not aware
at the time it made such determination, the Determining Body on its own
motion, after notifying the Indemnitee and providing him an opportunity to
be heard, may, on the basis of such facts, revoke such determination,
provided that in the absence of actual fraud by Indemnitee no such
revocation may be made later than thirty days after final disposition of
the Claim.
(e) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding,
(i) If Indemnitee has, in the good faith judgment
of the Determining Body, met the Standard of Conduct, the Association may, in
its sole discretion after notice to Indemnitee, assume all responsibility for
the defense of the Claim, and, in any event, the Association and the Indemnitee
each shall keep the other informed as to the progress of the defense,
including prompt disclosure of any proposals for settlement; provided that
if the Association or other shareholder is a party to the Claim and
Indemnitee reasonably determines
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that there is a conflict between the positions of the Association or the
shareholder and Indemnitee with respect to the Claim, then Indemnitee shall
be entitled to conduct his defense, with counsel of his choice; and
provided further that Indemnitee shall in any event be entitled at his
expense to employ counsel chosen by him to participate in the defense of
the Claim; and
(ii) The Association shall fairly consider any
proposals by Indemnitee for settlement of the Claim. If the Association (A)
proposes a settlement acceptable to the person asserting the Claim, or (B)
believes a settlement proposed by the person asserting the Claim should be
accepted, it shall inform Indemnitee of the terms thereof and shall fix a
reasonable date by which Indemnitee shall respond. If Indemnitee agrees to
such terms, he shall execute such documents as shall be necessary to effect
the settlement. If he does not agree he may proceed with the defense of the
Claim in any manner he chooses, but if he is not successful on the merits
or otherwise, the Association's obligation to indemnify him for any
Expenses incurred following his disagreement shall be limited to the lesser
of (A) the total Expenses incurred by him following his decision not to
agree to such proposed settlement or (B) the amount the Association would
have paid pursuant to the terms of the proposed settlement. If, however,
the proposed settlement would impose upon Indemnitee any requirement to act
or refrain from acting that would materially interfere with the conduct of
his affairs, Indemnitee may refuse such settlement and proceed with the
defense of the Claim, if he so desires, at the Association's expense
without regard to the limitations imposed by the preceding sentence. In no
event, however, shall the Association be obligated to indemnify Indemnitee
for any amount paid in a settlement that the Association has not approved.
(f) In the case of a Claim involving a proposed,
threatened or pending criminal proceeding, Indemnitee shall be entitled to
conduct the defense of the Claim, and to make all decisions with respect
thereto, with counsel of his choice; provided that the Association shall
not be obligated to indemnify Indemnitee for an amount paid in settlement
that the Association has not approved.
(g) After notifying the Association of the existence of a
Claim, Indemnitee may from time to time request the Association to pay the
Expenses (other than judgments, fines, penalties or amounts paid in
settlement) that he incurs in pursuing a defense of the Claim prior to the
time that the Determining Body determines whether the Standard of Conduct
has been met. If the Disbursing Officer believes the amount requested to be
reasonable, he shall pay to Indemnitee the amount requested (regardless of
Indemnitee's apparent ability to repay such amount) upon receipt of an
undertaking by or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Association under the circumstances. If the Disbursing Officer does not
believe such amount to be reasonable, the Association shall pay the amount
deemed by him to be reasonable, and Indemnitee may apply directly to the
Determining Body for the remainder of the amount requested.
(h) After it has been determined that the Standard of
Conduct was met, for so long as and to the extent that the Association is
required to indemnify Indemnitee under this Article, the provisions of
Paragraph (g) shall continue to apply with respect to Expenses incurred
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after such time except that (i) no undertaking shall be required of
Indemnitee and (ii) the Disbursing Officer shall pay to Indemnitee such
amount of any fines, penalties or judgments against him which have become
final and as to which the Association is obligated to indemnify him.
(i) Any determination by the Association with respect to
settlements of a Claim shall be made by the Determining Body.
(j) The Association and Indemnitee shall keep
confidential, to the extent permitted by law and their fiduciary
obligations, all facts and determinations provided or made pursuant to or
arising out of the operation of this Agreement, and the Association and
Indemnitee shall instruct it or his agents and employees to do likewise.
Section 3. Enforcement.
(a) The rights provided by this Article shall be
enforceable by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his
rights under this Article Indemnitee shall be entitled to recover from the
Association, and shall be indemnified by the Association against, any and
all Expenses actually and reasonably incurred by him in connection with
such proceeding but only if he prevails therein. If it shall be determined
that Indemnitee is entitled to receive part but not all of the relief
sought, then the Indemnitee shall be entitled to be reimbursed for all
Expenses incurred by him in connection with such judicial adjudication if
the amount to which he is determined to be entitled exceeds 50% of the
amount of his claim. Otherwise, the Expenses incurred by Indemnitee in
connection with such judicial adjudication shall be appropriately prorated.
(c) In any judicial proceeding described in this
subsection, the Association shall bear the burden of proving that
Indemnitee is not entitled to any Expenses sought with respect to any
Claim.
Section 4. Saving Clause. If any provision of this Article is
determined by a court having jurisdiction over the matter to require the
Association to do or refrain from doing any act that is in violation of
applicable law, the court shall be empowered to modify or reform such
provision so that, as modified or reformed, such provision provides the
maximum indemnification permitted by law, and such provision, as so
modified or reformed, and the balance of this Article, shall be applied in
accordance with their terms. Without limiting the generality of the
foregoing, if any portion of this Article shall be invalidated on any
ground, the Association shall nevertheless indemnify an Indemnitee to the
full extent permitted by any applicable portion of this Article that shall
not have been invalidated and to the full extent permitted by law with
respect to that portion that has been invalidated.
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Section 5. Non-Exclusivity.
(a) The indemnification and advancement of Expenses
provided by or granted pursuant to this Article shall not be deemed
exclusive of any other rights to which Indemnitee is or may become entitled
under any statute, article of association or incorporation, by-law,
authorization of shareholders or directors, agreement, or otherwise,
provided that unless required by law any indemnification payment made
otherwise than pursuant to this Article must be approved by the
shareholder.
(b) It is the intent of the Association by this Article
to indemnify and hold harmless Indemnitee to the fullest extent permitted
by law, so that if applicable law would permit the Association to provide
broader indemnification rights than are currently permitted, the
Association shall indemnify and hold harmless Indemnitee to the fullest
extent permitted by applicable law notwithstanding that the other terms of
this Article would provide for lesser indemnification, provided that unless
otherwise required by law or the express terms of this Article, no
indemnification payment may be made unless it is approved by the
shareholder.
Section 6. Successors and Assigns. This Article shall inure to the
benefit of the Indemnitee's heirs, personal representatives, and assigns and
to the benefit of the Association, its successors and assigns.
Section 7. Indemnification of Other Persons.
The Association may indemnify any person not covered by
Sections 1 through 6 of this Article to the extent provided in a resolution
of the shareholder or a separate provision of these Articles.
Section 8. Restrictions on Indemnification By Law and Regulation
Notwithstanding any provision of this Article to the
contrary, no indemnification or advancement of expenses may be made if, in
the good faith opinion of the shareholder, such indemnification or
advancement of expenses could violate any applicable law or regulation,
unless the Association has received evidence satisfactory to it that no
such violation would occur.
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BY-LAWS
of
FIRST NATIONAL BANK OF COMMERCE
(As Amended through December 18, 1995)
Section 1. OFFICES
1.1. Main Office of the Association. The main office of the
Association shall be at 210 Baronne Street, New Orleans, Louisiana.
1.2. Additional Offices. The Association may have such offices at
such other places permitted by law as the Board of Directors may from time
to time determine or the business of the Association may require.
Section 2. SHAREHOLDERS' MEETINGS
2.1. Place of Meetings. Unless otherwise required by law, all
shareholder meetings shall be held in the Board Room of the First National
Bank of Commerce, 210 Baronne Street, New Orleans, Louisiana.
2.2. Annual Meeting. An annual shareholder meeting shall be held
on the same date as the annual meeting of shareholders of First Commerce
Corporation for the purpose of electing directors and for the transaction
of such other business as may properly be brought before the meeting.
Failure to hold the annual meeting shall not affect the validity of any
action taken by the Association or its Board of Directors or officers,
provided that if no annual meeting is held, or unanimous consent executed
in lieu thereof, within 18 months of the date of the previous annual
meeting or unanimous consent in lieu thereof, then the Board of Directors
or the Chief Executive Officer of the Association are each empowered to
call the annual shareholder meeting.
2.3. Special Meetings. Except as otherwise specifically provided
by statute, special shareholder meetings may be called for any purpose at
any time by the shareholder, a majority of the Board of Directors or the
Chief Executive Officer of the Association.
2.4. Proxies. The shareholder may vote at any shareholder meeting
through its Chief Executive Officer or by proxies duly authorized in
writing and signed by its Chief Executive Officer or accompanied by a
certified copy of a resolution of its Board of Directors, but no officer or
employee of the Association shall act as proxy. Proxies shall be valid only
for one meeting, to be specified therein, and any adjournments of such
meeting. Proxies shall be dated and shall be filed with the records of the
meeting.
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Section 3. DIRECTORS
3.1. Number. The number of authorized directors shall be such
number, not less than five nor more than twenty-five, as shall be elected
from time to time by the shareholder.
3.2. General Powers; Election. All of the corporate powers shall
be vested in, and the business and affairs of the Association shall be
managed by the Board of Directors, except to the extent limited in the
Articles of Association or these By-laws. The Board of Directors may
exercise all such powers of the Association and do all such lawful acts and
things which are not by law, the Articles of Association or these By-laws
directed or required to be done by the Chief Executive Officer or the
shareholder. Directors, other than directors elected to fill a vacancy,
shall be elected at the annual shareholder meeting and shall hold office
for one year or until their successors are chosen and have qualified.
3.3. Limitation on Power to Issue Stock. The Board of Directors
shall not have power to issue any capital stock of the Association, or any
rights to acquire capital stock, without the consent of the shareholder.
3.4. Vacancies. Except as otherwise provided in the Articles of
Association or these Bylaws (a) the office of a director shall become
vacant if he dies, resigns, is removed from office, or ceases at any time
to have the qualifications required by law, and (b) the Board of Directors
or the shareholder may declare vacant the office of a director if (i) he is
interdicted or adjudicated an incompetent, (ii) an action is filed by or
against him, or any entity of which he is employed as his principal
business activity, under the bankruptcy laws of the United States, (iii) he
becomes incapacitated by illness or other infirmity so that he is unable to
perform his duties for a period of six months or longer, or (iv) he ceases
at any time to have the qualifications required by the Articles of
Association or these By-laws. The shareholder shall have the exclusive
right to fill any vacancy on the Board of Directors.
3.5. Eligibility for Nomination or Election. No person shall be
eligible for nomination or election as a director who:
(1) shall have attained the age of 72 years, provided
that any person who on April 16, 1990 was a director of First Commerce
Corporation may continue to be nominated and elected for so long as he is
also a director of First Commerce Corporation;
(2) while a director of the Bank was absent during his
annual term of office from more than one-third of the aggregate number of
meetings of the Board of Directors and Committees of which he was a member,
unless the failure to so attend resulted from illness or other reason
determined by the Executive Committee of First Commerce Corporation to
excuse such failure to attend, provided that nothing herein shall be deemed
to be in derogation of the power of the Board of Directors or shareholder
to declare the office of a director vacant on the grounds of prolonged
illness or disability; or
(3) while a director of the Bank ceased for any reason to
be engaged in the principal occupation or employment in which he was
engaged on the date of his election to the Board of
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Directors; provided that a director ineligible for nomination or election
under this subparagraph (3) may be declared eligible for nomination or
election if the Executive Committee of First Commerce Corporation
determines that such director's new principal occupation or employment
justifies such nomination or election.
3.6. Advisory Directors. The Board of Directors, with the advice
and consent of the Shareholder, may select one or more persons to serve as
advisory directors of the Bank, provided that (1) no person shall serve or
be eligible to serve as an advisory director after he or she has attained
age 78, and (2) no person not a duly elected member of the Board of
Directors of the Bank may serve as a voting member of any Committee of the
Bank.
Section 4. MEETINGS OF THE BOARD OF DIRECTORS
4.1. Place of Meetings. The meetings of the Board of Directors
shall be held in the Board Room at the Association's Main Office or at such
other place as the Board of Directors may from time to time designate or as
may be fixed in the notice of a special meeting given pursuant to Section
4.4 hereof.
4.2. Annual Meeting. The first meeting of each newly-elected Board
of Directors shall be held on the date of the next scheduled regular
meeting following the annual shareholder meeting in the Board Room at the
Association's Main Office or at such other place as the Board of Directors
may determine, and no notice of such first meeting shall be necessary to
the newly-elected directors in order legally to constitute the meeting.
4.3. Regular Meetings; Notice. Regular meetings of the Board of
Directors shall be held on the third Monday of each month, or if such day
is a legal holiday, then on the next succeeding banking day, but the Board
may at any regular or special meeting change the date of any next
succeeding regular meeting. Notice of regular meetings of the Board of
Directors shall not be required unless the date thereof has been changed,
in which case two days notice shall suffice.
4.4. Special Meetings; Notice. Special meetings of the Board of
Directors may be called by the Chief Executive Officer or shareholder on
two day's notice given to each director. Special meetings shall be called
by the Chief Executive Officer or shareholder in like manner and on like
notice on the written request of a majority of the Board of Directors and,
if the Chief Executive Officer or shareholder fails or refuses or is unable
to call a special meeting within 24 hours of such request, then a majority
of the Board of Directors may call the special meeting on two days' notice
given to each director.
4.5. Business to be Conducted at Meetings. Except as otherwise
provided in these By-laws, any business of the Association which is
necessary or proper for action by the Board of Directors may be conducted
at any meeting of the Board of Directors, whether annual, regular or
special, and it shall not be necessary that any notice of any meeting state
its purpose. If, however, a notice of a meeting states its purpose and does
not further state that the meeting may consider any other business, then
the business to be conducted at the meeting shall be limited to the purpose
stated in such notice.
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4.6. Quorum; Adjournments. A majority of the Board of Directors
shall be necessary to constitute a quorum for the transaction of business,
and except as otherwise provided by law or these By-laws, the acts of a
majority of the directors present at a meeting at which a quorum is present
shall be the acts of the Board of Directors. If a quorum is not present at
any meeting of the Board of Directors, the directors present may adjourn
the meeting from time to time, without notice other than announcement at
the meeting, until a quorum is present.
4.7. Withdrawal. If a quorum is present when the meeting is
convened, the directors present may continue to do business, taking action
by vote of a majority of a quorum as fixed in Section 4.6 hereof, until
adjournment, notwithstanding the withdrawal of enough directors to leave
less than a quorum as fixed in Section 4.6 hereof, or the refusal of any
director present to vote.
4.8. Compensation. Directors who are not salaried officers of the
Association or any of its subsidiaries shall be entitled to such
compensation for their services as directors as may from time to time be
determined by the shareholder, and all directors shall be entitled to
reimbursement for any reasonable expenses incurred in attending meetings of
the Board of Directors or any committee thereof.
4.9. Action by Consent. Any action which may be taken at a meeting
of the Board of Directors or any committee thereof may be taken by a
consent in writing signed by all of the directors or by all members of the
committee, as the case may be, and filed with the records of proceedings of
the Board of Directors or committee.
4.9.1 Meeting by Telephone or Similar Communications. Members of
the Board of Directors may participate at and be present at any meeting of
the Board of Directors or any committee thereof by means of conference
telephone or similar communications equipment if all persons participating
in such meeting can hear and communicate with each other. Participation in
a meeting pursuant to this Section 4.9.1 shall constitute presence in
person at such meeting, except where otherwise required by law.
Section 5. COMMITTEES OF THE BOARD OF DIRECTORS
5.1. Designation. The Board of Directors may designate one or more
committees, each committee to consist of not less than three directors of
the Association (and one or more directors may be named as alternate
members to replace any absent or disqualified regular members), which, to
the extent provided by resolution of the Board of Directors or these
By-laws, shall have and may exercise the powers of the Board of Directors
in the management of the business and affairs of the Association, and may
have the power to authorize the seal of the Association to be affixed to
documents. The members of each committee shall be nominated by the Chief
Executive Officer and approved by the Board of Directors and, in a similar
manner, one of the members of each committee shall be selected as its
Chairman, who shall be authorized to call all meetings of such committee,
to preside at all such meetings and to appoint a Secretary (who may be an
officer of the Association or any of its subsidiaries) to keep regular
minutes of its meetings and report the same to the Board of Directors when
required. Such committee or committees shall have such name or names as may
be stated in these By-laws, or as may be determined, from time to time, by
the Board of Directors. Any vacancy occurring in any such committee shall
be filled in the same manner as appointments
<PAGE>
are made, but the Chief Executive Officer may designate another director to
serve on the committee pending action by the Board of Directors. Each such
committee shall hold office during the term of the Board of Directors
constituting it, unless otherwise ordered by the Board of Directors.
5.2. Executive Committee. The Executive Committee, one of the
members of which shall be the Chief Executive Officer, shall meet as
necessary in order to perform the duties provided for in this Section 5.2.
The functions of the Executive Committee shall be to:
A. Exercise any of the powers of the Board of Directors
if by the unanimous consent of the members of the Executive Committee it is
determined that because of the nature of the particular situation it is not
possible or practical to convene the full Board of Directors.
B. Perform such other duties and exercise such other
powers as may be delegated to it expressly by the Board of Directors.
5.3. Examining Committee. The Examining Committee shall be
selected from those directors who are not officers of the Association or
members of the Trust Committee. The functions of the Examining Committee
shall be to:
A. Consult with the chosen independent auditors of First
Commerce Corporation with respect to the plan of the audit of the
Association.
B. Consult with the internal auditor of First Commerce
Corporation assigned responsibility with respect to the Association
directly on any matter the Committee or the internal auditor deems
appropriate in connection with carrying out their functions.
C. Review all examinations and internal audit reports of
the Association, its divisions, departments or subsidiaries and report to
the Board of Directors the results of each examination and any
recommendations by the examiners, and review and report to the Board of
Directors in a timely manner on all internal audits.
D. Discuss with the Association's management its
responses to the reports and recommendations emanating from internal and
external audits;
E. Cause the required audit of the Association's Trust
Department; and
F. Report to the Board of Directors concerning the
results of its reviews.
5.4. Directors Loan Committee. The Directors Loan Committee shall
meet monthly, or as necessary in order to perform the duties provided for
in this Section 5.4. The Committee may, by a vote of not less than
three-fourths of its members, establish one or more subcommittees and may
delegate to any such subcommittee any of the functions specified below.
A. Review the loan policies.
B. Review information concerning quality and volume
changes of the loan portfolio.
<PAGE>
C. Review new and existing credits in excess of
$2,500,000.
D. Review new problem credits and significant changes in
existing problem credits.
E. Review material exceptions made by management to the
loan policies in cases involving in excess of $2,500,000.
5.5. Trust Committee. The Trust Committee shall contain a majority
of directors who are not officers of the Association or any of its
subsidiaries. The Trust Committee shall meet at least quarterly, or as
necessary in order to perform the duties provided for in this Section 5.5.
The functions of the Trust Committee shall be to:
A. Exercise general supervision of the Trust Division of
the Association, including assigning the administration of fiduciary powers
as they may consider proper to such directors, officers, employees or
committees as they may designate in order to exercise supervision of the
Trust Division.
B. Adopt administrative and investment policies, subject
to approval by the Board of Directors of any major changes in such
policies, designed to insure adherence to the Regulations of the
Comptroller of the Currency, and sound fiduciary principles.
C. Report all material exceptions to administrative and
investment policies to the Board of Directors at its next regular meeting.
5.6. Directors Investment Committee. The Directors Investment
Committee shall meet monthly, or as necessary in order to perform the
duties provided for in this Section 5.6. The Committee may, by a vote of
not less than three-fourths of its members, establish one or more
subcommittees and may delegate to any such subcommittee any of the
functions specified below.
A. Monitor the degree of interest rate risk which exists
within the balance sheet.
B. Oversee the liquidity management practices of the bank.
C. Review the composition of bank liabilities in order to
ensure a proper mix of deposits.
D. Review all relevant data related to the Investment
Portfolio of the Bank.
E. Review the investment and business strategies of the
Funds Management Group on an annual basis.
F. Review the FCC Asset Liability Committee Minutes.
G. Review new laws and regulations that apply to the
funds management process.
<PAGE>
Section 6. NOTICES
6.1. Form of Delivery. Whenever under the provisions of law, the
Articles of Incorporation or these By-laws, notice is required to be given
to any director or the shareholder, it shall not be construed to mean
personal notice unless otherwise specifically provided in the Articles of
Association or these By-laws, but said notice may be given by mail,
addressed to such director or shareholder at his address as it appears on
the records of the Association, with postage thereon prepaid. Such notices
shall be deemed to be given at the time they are deposited in the United
States mail. Notice to a director pursuant to Section 4 hereof may also be
given personally or by telephone or telegram sent to his address as it
appears on the records of the Association.
6.2. Waiver. Whenever any notice is required to be given by law,
the Articles of Association or these By-laws, a wavier thereof in writing
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto. In
addition, notice shall be deemed to have been given to, or waived by, the
shareholder or any director who attends a shareholder meeting or meeting of
directors in person (or in the case of the shareholder, is represented at
such meeting by proxy) without protesting at the commencement of the
meeting the transaction of any business because the meeting is not lawfully
called or convened.
Section 7. OFFICERS AND EMPLOYEES
7.1. Designations. The officers of the Association shall be a
Chairman of the Board, a President, a Chief Executive Officer and a
Secretary and may be such additional officers as provided in Sections 7.10
and 7.11 hereof. Any two offices may be held by the same person, provided
that no person holding more than one office may sign, in more than one
capacity, any certificate or other instrument required by law to be signed
by two officers.
7.2. Compensation. The salary and bonus of the Chief Executive
Officer shall be fixed from time to time by the shareholder. The salaries
and bonus of all other officers and employees of the Association shall be
fixed from time to time by the Chief Executive Officer, provided that the
salary to any such officer or employee shall be no higher than 80% of the
salary of the Chief Executive Officer without the approval of the
shareholder. No officer shall be prevented from receiving such salary or
bonus by reason of the fact that he is also a director of the Association.
7.3. Employment Contracts. The Association is prohibited from
entering into any employment contracts without the prior review and
approval of such contracts by the shareholder.
7.4. Removal. Any officer or employee of the Association may be
removed, with or without cause, at any time by the action of the
shareholder, the Board of Directors or the Chief Executive Officer, but
such removal shall not prejudice the contract rights, if any, of the person
so removed.
7.5. Duties and Powers of Officers. The duties and powers of the
officers of the Association shall be as provided in these By-laws, or as
provided for pursuant to these By-laws, or as shall be specified from time
to time by the Chief Executive Officer, or (except to the extent
inconsistent with these By-laws, or with any provision made pursuant
hereto) shall be those customarily exercised by corporate officers holding
such offices.
<PAGE>
7.6. Chairman of the Board. The Board of Directors shall appoint
one of its members to be Chairman of the Board to serve at the pleasure of
the Board. The Chairman of the Board shall, if present, open and close all
meetings of the shareholders and the Board of Directors, shall preside at
all meetings of the Board of Directors and shareholders when the Chief
Executive Officer is absent or otherwise unable to preside, and shall have
and may exercise such further powers and duties as from time to time may be
conferred upon, or assigned by the Board of Directors and the Chief
Executive Officer.
7.7. Chief Executive Officer. From the Board of Directors the
shareholder shall designate one person to be Chief Executive Officer of the
Association. The shareholder will notify the Board of Directors of the
appointment promptly upon its being made, and may, if it deems practicable,
provide advance notice of such appointment. Concurrently with such notice
the shareholder will provide the Board with information on the background
and qualifications of the person the shareholder has appointed. The Chief
Executive Officer shall preside at all meetings of the Board, shall have
general executive powers, shall have the power to authorize and direct the
bringing or defending of any civil suit or other litigation which in his
judgment ought to be brought or defended, shall vote the stock of any
subsidiary of the Association, shall have authority consistent with the
loan and investment policies of the Association to make investments and to
extend credit up to the legal limit and designate other officers to make
such investments and extensions of credit up to specified amounts, and
shall have and may exercise any and all other powers and duties pertaining
by law, regulation, or practice, to the office of Chief Executive Officer,
or imposed by these Bylaws. The Chief Executive Officer shall also have and
may exercise such further powers and duties as from time to time may be
conferred, or assigned by the Board of Directors. The Chief Executive
Officer may delegate to any other officer of the Association any of the
powers and duties specified in this Section 7.7.
7.8. President. From the Board of Directors the shareholder shall
designate one person to be President of the Association. The shareholder
will notify the Board of Directors of the appointment promptly upon its
being made, and may, if it deems practicable, provide advance notice of
such appointment. Concurrently with such notice the shareholder will
provide the Board with information on the background and qualifications of
the person the shareholder has appointed. The President shall exercise such
powers as may be delegated to him by the Chief Executive Officer.
7.9. Secretary. The Board of Directors shall appoint a Secretary,
Cashier, or other designated officer who shall be Secretary of the Board
and of the Association, and shall keep accurate minutes of all meetings.
The Secretary shall attend to the giving of all notices required by these
By-laws to be given; shall be custodian of the corporate seal, records,
documents and papers of the Association; shall provide for the keeping of
proper records of all transactions of the Association; shall have and may
exercise any and all other powers and duties pertaining by law, regulation
or practice, to the office of Cashier, or imposed by these By-laws; and
shall also perform such other duties as may be assigned from time to time,
by the Board of Directors or the Chief Executive Officer.
<PAGE>
7.10. Chief Operating Officer. The shareholder may appoint a Chief
Operating Officer. Such officer shall exercise such powers and perform such
duties as pertain to the office, or as may be conferred upon, or assigned
to the office by the Chief Executive Officer.
7.11. Other Officers. The Board of Directors or the Chief
Executive Officer may appoint one or more Vice-Chairmen or Vice-Presidents
(who may be given special designations or seniority), Assistant Vice
Presidents, Trust Officers, Assistant Secretaries, Banking Officers,
Managers and Assistant Managers of Branches and such other officers and
Attorneys-in-fact as from time to time may appear to be required or
desirable to transact the business of the Association. Such officers shall
respectively exercise such powers and perform such duties as pertain to
their several offices, or as may be conferred upon, or assigned to, them by
the Board of Directors or the Chief Executive Officer.
7.12. Honorary Designation. The Chief Executive Officer shall have
the authority to give one or more officers designated pursuant to Section
7.11 the honorary designation of Market President of a particular, named
geographic region. Such designation shall not in itself convey or confer
any authority to act on behalf of the Association. Any authority or
responsibility that a designee has is that which has been or may be
conferred pursuant to Sections 7.11 and 8.1 herein. A designee hereunder
shall not be deemed by virtue of such designation to be an executive
officer and is specifically excluded from participation in major policy
making functions of the Association as set forth in the Federal Reserve
Board's Regulation O, 12 C.F.R. 215.2(d). Provided that the full
designation hereunder, and not an abbreviated form, is used, the designee
may use the designation on letterhead, business cards, and promotional
material. A designee may not use the designation hereunder alone to enter
into obligations, commitments, or agreements of any kind on behalf of the
Association; any ability to obligate or bind the Association must be
derived, if at all, through the designee's title and authority pursuant to
Sections 7.11 and 8.1 herein. The term during which an officer may use the
designation hereunder is completely within the discretion of the Chief
Executive Officer, who may also revoke the designation at any time and for
any reason.
7.13. Tenure of Office. All officers shall hold office for the
current year for which the Board of Directors was elected, unless they
shall resign, become disqualified, or be removed; and any vacancy occurring
in any office other than that of the President or the Chief Executive
Officer may be filled by the Board of Directors or the Chief Executive
Officer. Any vacancy in the office of President or Chief Executive Officer
shall be filled by the shareholder.
Section 8. CERTAIN TRANSACTIONS
8.1. Loans and Investments. The Chief Executive Officer and such
officers as he may from time to time designate shall have the authority to
sign, execute, acknowledge, verify, deliver or accept on behalf of the
Association all agreements, contracts, loan agreements, indentures,
mortgages, security instruments, satisfactions, settlements, powers of
attorney, undertakings and other instruments or documents in connection
with the extension or repayment of any lines of credit and/or the making or
repayment of any loans and investments.
<PAGE>
8.2. As Fiduciary, Trustee, Registrar and Transfer Agent. The
Chief Executive Officer and such officers as he may from time to time
designate shall have the authority to sign, execute, countersign,
acknowledge, verify, deliver or accept on behalf of the Association.
A. All agreements, indentures, mortgages, deeds,
advances, powers of attorney, transfers, certificates, discharges,
releases, satisfactions, settlements, bonds, undertakings, proxies and
other instruments or documents in connection with the exercise of any of
the fiduciary powers of the Association; and
B. All authentications, registrations or certifications
by the Association as Trustee under any mortgage or deed of trust,
indenture or other instrument, securing bonds, debentures, notes or other
obligations of any person, firm or corporation, all certificates as
Registrar or Transfer Agent and all certificates of deposit for stocks and
bonds, interim receipts, trusts certificates and similar certificates.
8.3. Sales of Property. The Chief Executive Officer or Chief
Operating Officer and such officers as the Chief Executive Officer or Chief
Operating Officer may from time to time designate in writing are hereby
authorized and empowered to buy, acquire, sell, lease or exchange any
movable or immovable property on behalf of the Association, including
property acquired by this Association in connection with any obligation
owed to this Association, and are further authorized and empowered to take
any and all action, execute any and all documents and file any and all
papers with any local, state or federal authority which he or they shall in
his or their sole discretion deem necessary or advisable in order to
consummate such purchase, acquisition, sale, lease or exchange, so long as
the amount involved in any one transaction or series of related
transactions does not exceed $1,000,000. Any one transaction or series of
related transactions greater than $1,000,000 must first be approved by the
shareholder.
8.4. Settlement of Claims. The Chief Executive Officer or Chief
Operating Officer and such officers as the Chief Executive Officer or Chief
Operating Officer may from time to time designate are hereby authorized and
empowered to renegotiate, settle or compromise any claim of less than
$500,000 which the Association has or may have against any person or entity
resulting from an extension of credit made to or endorsed by such person or
entity and, in connection therewith, to receive any and all funds or other
property to be paid to the Association, to execute any and all documents
and to take any and all other actions which he or they in his or their sole
discretion shall deem necessary or advisable. The Chief Executive Officer
or Chief Operating Officer and such officers as the Chief Executive Officer
or Chief Operating Officer may from time to time designate are hereby
authorized and empowered to negotiate, settle or compromise any claim which
may be brought against the Association by any person or entity, whether
resulting from an extension of credit or not, for an amount not to exceed
$50,000. The negotiation, settlement or compromise of any one claim or
series of related claims (i) brought against the Association by any person
or entity for an amount greater than $50,000, or (ii) brought on behalf of
the Association for an amount greater than $500,000 must first be approved
by the shareholder.
8.5. Investment Accounts. The Chief Executive Officer and such
officers as he may from time to time designate are hereby authorized and
empowered to open and close accounts for the
<PAGE>
Association with any person, partnership, corporation or other entity for
the purpose of the purchase and sale of securities of whatever type.
8.6. Other Accounts. The Chief Executive Officer and such officer
or officers as he may from time to time designate are authorized and
empowered to open and close one or more accounts of any type or types with
any one or more banks, savings and loan associations, or other institutions
and to make deposits to, transfers to or from, withdrawals from such
accounts and to take any and all other actions with respect thereto as they
in their sole discretion shall deem necessary or advisable.
8.7. Purchase and Sale of Investment Securities. The Chief
Executive Officer and such officer or officers as the Chief Executive
Officer may from time to time designate are hereby authorized and empowered
to purchase and sell, for and on behalf of the Association, any securities
issued by any corporation, partnership or other entity, in such amounts and
for such consideration as the Chief Executive Officer or other designated
officer or officers shall determine.
Section 9. MISCELLANEOUS
9.1. Fiscal Year. The fiscal year shall be the calendar year.
9.2. Seal. The President, the Chief Executive Officer, the Chief
Operating Officer, the Cashier, the Secretary or any Assistant Cashier or
Assistant Secretary or other officer thereunto designated by the Board of
Directors, shall have authority to affix the corporate seal to any document
requiring such seal, and to attest the same.
9.3. Gender. All pronouns and variations thereof used in these
By-laws shall be deemed to refer to the masculine, feminine or neuter
gender, singular or plural, as the identity of the person, persons, entity
or entities referred to require.
Section 10. AMENDMENTS
These By-laws may be altered, amended or repealed or new By-laws
may be adopted only by the shareholder.
FIRST NATIONAL BANK OF COMMERCE
Transferor and Servicer
and
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
on behalf of the Holders
of the First NBC Credit Card Master Trust
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1997
<PAGE>
|| TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................................1
SECTION 1.1 Definitions........................................... 1
SECTION 1.2 Other Interpretive Provisions.........................21
ARTICLE II CONVEYANCE OF RECEIVABLES.......................................22
SECTION 2.1 Conveyance of Receivables.............................22
SECTION 2.2 Acceptance by Trustee.................................23
SECTION 2.3 Representations and Warranties of Transferor..........24
SECTION 2.4 Representations and Warranties of Transferor Relating
to this Agreement and the Receivables.....27
SECTION 2.5 Covenants of Transferor...............................32
SECTION 2.6 Addition of Accounts..................................35
SECTION 2.7 Removal of Accounts...................................38
SECTION 2.8 Discount Option.......................................40
SECTION 2.9 Additional Transferors.................................40
ARTICLE III ADMINISTRATION AND SERVICING...................................41
SECTION 3.1 Acceptance of Appointment and Other Matters Relating
to Servicer...............................41
SECTION 3.2 Servicing Compensation................................43
SECTION 3.3 Representations, Warranties and Covenants of
Servicer...................................44
SECTION 3.4 Reports and Records for Trustee.......................45
SECTION 3.5 Annual Servicer's Certificate.........................45
SECTION 3.6 Annual Independent Accountants' Servicing Report......46
SECTION 3.7 Tax Treatment.........................................47
SECTION 3.8 Notices to Transferor.................................47
SECTION 3.9 Reports to the Commission.............................47
ARTICLE IV RIGHTS OF HOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS...............47
SECTION 4.1 Rights of Holders.....................................47
SECTION 4.2 Establishment of Accounts.............................48
SECTION 4.3 Collections and Allocations...........................50
SECTION 4.4 Shared Principal Collections...........................53
SECTION 4.5 Excess Finance Charge Collections......................54
SECTION 4.6 Allocation of Trust Assets to Series or Groups.........54
i
<PAGE>
Page
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE SPECIFIED
IN THE SUPPLEMENT WITH RESPECT TO ANY
SERIES.]..............................................55
ARTICLE VI THE CERTIFICATES................................................55
SECTION 6.1 The Certificates......................................55
SECTION 6.2 Authentication of Certificates........................56
SECTION 6.3 Registration of Transfer and Exchange of
Certificates...............................56
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates.....60
SECTION 6.5 Persons Deemed Owners.................................60
SECTION 6.6 Appointment of Paying Agent...........................61
SECTION 6.7 Access to List of Holders' Names and Addresses........62
SECTION 6.8 Authenticating Agent..................................62
SECTION 6.9 New Issuances.........................................64
SECTION 6.10 Book-Entry Certificates..............................66
SECTION 6.11 Notices to Clearing Agency...........................67
SECTION 6.12 Definitive Certificates..............................67
SECTION 6.13 Global Certificate; Euro-Certificate Exchange
Date.......................................68
SECTION 6.14 Meetings of Holders..................................68
SECTION 6.15 Transfers of Certain Certificates....................68
SECTION 6.16 Trust Tax Election...................................69
ARTICLE VII OTHER MATTERS RELATING TO TRANSFEROR...........................69
SECTION 7.1 Liability of Transferor...............................69
SECTION 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, Transferor................69
SECTION 7.3 Limitation on Liability...............................70
ARTICLE VIII OTHER MATTERS RELATING TO SERVICER............................71
SECTION 8.1 Liability of Servicer.................................71
SECTION 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer..................71
SECTION 8.3 Limitation on Liability of Servicer and Others........72
SECTION 8.4 Servicer Indemnification of the Trust and Trustee.....72
SECTION 8.5 Servicer Not to Resign................................73
SECTION 8.6 Access to Certain Documentation and Information
Regarding the Receivables.................73
SECTION 8.7 Delegation of Duties..................................73
SECTION 8.8 Examination of Records................................74
ii
<PAGE>
Page
ARTICLE IX TRUST PAY OUT EVENTS............................................74
SECTION 9.1 Trust Pay Out Events..................................74
SECTION 9.2 Additional Rights Upon the Occurrence of Certain
Events................................................74
ARTICLE X SERVICER DEFAULTS................................................75
SECTION 10.1 Servicer Defaults....................................75
SECTION 10.2 Trustee to Act; Appointment of Successor.............77
SECTION 10.3 Notification to Holders..............................79
SECTION 10.4 Waiver of Past Defaults..............................79
ARTICLE XI TRUSTEE.........................................................79
SECTION 11.1 Duties of Trustee....................................79
SECTION 11.2 Certain Matters Affecting Trustee....................82
SECTION 11.3 Trustee Not Liable for Recitals in Certificates......83
SECTION 11.4 Trustee May Not Own Certificates.....................83
SECTION 11.5 Servicer to Pay Trustee's Fees and Expenses..........83
SECTION 11.6 Eligibility Requirements for Trustee.................84
SECTION 11.7 Resignation or Removal of Trustee....................84
SECTION 11.8 Successor Trustee....................................85
SECTION 11.9 Merger or Consolidation of Trustee...................85
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee.......86
SECTION 11.11 Tax Returns.........................................87
SECTION 11.12 Trustee May Enforce Claims Without Possession
of Certificates............................87
SECTION 11.13 Suits for Enforcement...............................88
SECTION 11.14 Rights of Holders to Direct Trustee.................88
SECTION 11.15 Representations and Warranties of Trustee...........88
SECTION 11.16 Maintenance of Office or Agency.....................89
ARTICLE XII TERMINATION....................................................90
SECTION 12.1 Termination of Trust.................................90
SECTION 12.2 Optional Purchase....................................91
SECTION 12.3 Final Payment with Respect to any Series.............91
SECTION 12.4 Termination Rights of Transferor. ...................93
SECTION 12.5 Defeasance...........................................93
ARTICLE XIII MISCELLANEOUS PROVISIONS......................................94
SECTION 13.1 Amendment............................................94
SECTION 13.2 Protection of Right, Title and Interest to Trust.....96
SECTION 13.3 Limitation on Rights of Holders......................97
SECTION 13.4 GOVERNING LAW........................................98
iii
<PAGE>
Page
SECTION 13.5 Notices..............................................98
SECTION 13.6 Severability of Provisions...........................99
SECTION 13.7 Assignment...........................................99
SECTION 13.8 Certificates Non-Assessable and Fully Paid...........99
SECTION 13.9 Further Assurances...................................99
SECTION 13.10 No Waiver; Cumulative Remedies......................99
SECTION 13.11 Counterparts.......................................100
SECTION 13.12 Third-Party Beneficiaries..........................100
SECTION 13.13 Actions by Holders.................................100
SECTION 13.14 Rule 144A Information..............................100
SECTION 13.15 Merger and Integration.............................100
SECTION 13.16 Headings...........................................101
SECTION 9.2 Additional Rights Upon the Occurrence of Certain
Events........................... .......I-1
EXHIBITS
EXHIBIT A Form of Assignment of Receivables in
Additional Accounts
EXHIBIT B Form of Monthly Servicer's Certificate
EXHIBIT C Form of Annual Servicer's Certificate
EXHIBIT D Form of Opinion of Counsel Regarding
Additional Accounts
EXHIBIT E Form of Annual Opinion of Counsel
EXHIBIT F Form of Reassignment of Receivables
EXHIBIT G Form of Reconveyance of Receivables
EXHIBIT H Form of Amended Section 9.2
||
iv
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of August 1, 1997, by
and between FIRST NATIONAL BANK OF COMMERCE, a national banking
association, as Transferor and Servicer, and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association, as Trustee.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties and the
Holders:
ARTICLE I DEFINITIONS
SECTION 1.1 Definitions. Whenever used in this Agreement, the
following words and phrases have the meanings identified below:
"Account" means each VISA(R), MasterCard(R)* and Private Label
credit card account serviced at the New Orleans area servicing centers of
Transferor, or at such other servicing center of Transferor as shall be
designated by Transferor or Servicer pursuant to subsection 13.2(c),
established pursuant to an Account Agreement and which is identified in an
Account Schedule delivered to Trustee by Transferor pursuant to Section 2.1
or 2.6. The term "Account" also (i) includes each Transferred Account, (ii)
includes an Additional Account only from and after its Addition Date and
(iii) includes a Removed Account only prior to its Removal Date.
"Account Agreement" means the agreement between any Obligor and
Transferor governing the operation of the Obligor's Account, as each such
agreement may be amended, modified or otherwise changed from time to time
in accordance with Section 2.5(c).
"Account Guidelines" means Transferor's policies and procedures
relating to the operation of its credit card business and the Accounts,
including policies and procedures for determining the creditworthiness of
Obligors, the extension of credit to Obligors and the maintenance of credit
card accounts and any other Accounts and collection of credit card
receivables and any other Receivables, as such policies and procedures may
be amended from time to time in accordance with Section 2.5(c).
"Account Schedule" means a computer file or microfiche list
containing an accurate list of Accounts, identified by account number and
setting forth the Receivable balance as of (a) the Cut-Off Date (for the
Account Schedule delivered on the Initial Closing Date), (b) the related
Addition Cut-Off Date (for any Account Schedule delivered in connection
- -------------
* VISA(R) and MasterCard(R) are registered servicemarks of VISA U.S.A.,
Inc. and of MasterCard International Inc., respectively.
1
<PAGE>
with any designation of Additional Accounts) or (c) the end of the prior
Monthly Period (for any Account Schedule relating to Transferred Accounts).
"Addition Cut-Off Date" means the date as of which any Additional
Accounts or Participations are designated for inclusion in the Trust, as
specified in the related Assignment.
"Addition Date" means (a) as to Additional Accounts, the date on
which the Receivables in such Additional Accounts are conveyed to the Trust
pursuant to subsection 2.6(a) or (b), and (b) as to Participations, the
date from and after which such Participations are to be included as Trust
Assets pursuant to subsection 2.6(a) or (b).
"Additional Account" is defined in subsection 2.6(a).
"Adjusted Aggregate Investor Interest" means as of any date of
determination, the sum of the "Adjusted Investor Interest" (as defined in
the related Supplement) of each Series then issued and outstanding for
which an Adjusted Investor Interest is specified in the related Supplement
plus the sum of the Investor Interests of all other Series then issued and
outstanding.
"Adjusted Investor Interest" with respect to any Series, has the
meaning specified in the related Supplement, or if not so specified, the
Investor Interest of such Series.
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such Person.
"Aggregate Finance Charge Receivables" means, as of any date of
determination, the aggregate amount of the Finance Charge Receivables,
measured for each Account as of the end of the applicable Billing Cycle
ending in the Monthly Period immediately preceding such date of
determination.
"Aggregate Investor Interest" means, as of any date of
determination, the sum of the Investor Interests of all Series then issued
and outstanding.
"Aggregate Investor Percentage" means, as to Principal
Receivables, Finance Charge Receivables and Receivables in Defaulted
Accounts, as the case may be, as of any date of determination, the sum (not
to exceed 100%) of the relevant Investor Percentages for all Series then
issued and outstanding.
"Aggregate Principal Receivables" means the aggregate amount of
the Principal Receivables, measured (a) for any date of determination prior
to the Conversion Date, for each Account as of the end of the applicable
Billing Cycle
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ending in the Monthly Period immediately preceding such date of
determination and (b) for any other date of determination, as of the end of
the day on such date of determination.
"Aggregate Receivables" means, as of any date of determination,
the aggregate amount of the Receivables, measured for each Account as of
the end of the applicable Billing Cycle ending in the Monthly Period
immediately preceding such date of determination.
"Agreement" means this Pooling and Servicing Agreement, as
amended, supplemented or otherwise modified from time to time, including by
any Supplement.
"Amortization Period" means, as to any Series or Class, any period
specified in the related Supplement during which principal collections are
set aside to repay the principal investment in that Series or Class
(excluding repayments of a Variable Interest during its revolving period).
"Annual Account Fee" means amounts referred to as "annual account
fees," "annual fees," "annual membership fees" or "inactivity charges" (or
similar terms) in the Account Agreement applicable to any Account.
"Applicants" is defined in Section 6.7.
"Assignment" is defined in subsection 2.6(d)(ii).
"Authorized Newspaper" means a newspaper of general circulation in
the Borough of Manhattan, The City of New York printed in the English
language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Automatic Additional Account" means Additional Accounts that are
treated as Automatic Additional Accounts pursuant to subsection 2.6(c).
"Bank Portfolio" means all VISA, MasterCard, Private Label and
other revolving credit accounts owned by Transferor.
"Bearer Certificates" is defined in Section 6.1.
"Bearer Rules" means the provisions of the Internal Revenue Code,
in effect from time to time, governing the treatment of bearer obligations,
including sections 163(f), 871, 881, 1441, 1442 and 4701, and any
regulations thereunder including, to the extent applicable to any Series,
proposed or temporary regulations.
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"Benefit Plan" is defined in subsection 6.3(e).
"BIF" means the Bank Insurance Fund administered by the FDIC.
"Billed Finance Charge Receivables" is defined in subsection 4.3(d).
"Billed Principal Receivables" is defined in subsection 4.3(d).
"Billing Cycle" means, with respect to any Account, the monthly
billing cycle for such Account, determined in accordance with the Account
Guidelines.
"Book-Entry Certificates" means certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers
of which shall be made through book entries by a Clearing Agency as
described in Section 6.10.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York, the city in which
the Corporate Trust Office is located, or New Orleans, Louisiana (or, for
any Series, any additional city specified in the related Supplement) are
authorized or obligated by law or executive order to be closed.
"Cash Advance Fees" means amounts referred to as "cash advance
fees," "cash access / cash advance fees," "cash access fees," "transaction
fees for cash advances," or "cash advance charges" (or similar terms) in
the Account Agreement applicable to any Account.
"CEDEL" means Cedel Bank, societe anonyme.
"Certificate" means an Investor Certificate or any Supplemental
Certificate.
"Certificate Owner" means the beneficial owner of a Book-Entry
Certificate, as reflected on the books of the Clearing Agency or of a
Person maintaining an account with the Clearing Agency (directly or as an
indirect participant).
"Certificate Register" is defined in Section 6.3.
"Class" means any class of Investor Certificates of any Series.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934.
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"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency or Foreign Clearing Agency effects book-entry transfers and pledges
of securities deposited with the Clearing Agency or Foreign Clearing
Agency.
"Closing Date" means, for any Series, the date of issuance of such
Series of Certificates, as specified in the related Supplement.
"Collected Finance Charge Receivables" is defined in subsection 4.3(d).
"Collected Principal Receivables" is defined in subsection 4.3(d).
"Collection Account" is defined in subsection 4.2(a).
"Collection Recomputation Date" is defined in subsection 4.3(d).
"Collections" means all payments (including Insurance Proceeds and
Recoveries) received by Servicer in respect of the Receivables, in the form
of cash, checks, wire transfers, ATM transfers or any other form of payment
in accordance with the Account Agreement in effect from time to time on any
Receivables.
"Conversion Date" means the date specified in a notice from
Servicer to Trustee and each Rating Agency as the date upon which Servicer
elects to begin administering this Agreement on the basis of daily
computations of the aggregate amounts of Principal Receivables and Finance
Charge Receivables, rather than by reference to balances at the end of each
Billing Cycle which ends during each Monthly Period. Any such notice shall
be delivered (or not delivered) at Servicer's sole option.
"Corporate Trust Office" means the principal corporate trust
office of Trustee at which, at any particular time, its corporate trust
business is administered, which office at the date hereof is located at One
First National Plaza, Suite 0216, Chicago, Illinois 60670-0126, Attention:
Corporate Trust Services Division, except for purposes of Section 11.16,
where such term shall mean the office or agency of the Trustee in the
Borough of Manhattan, the City of New York, which office at the date hereof
is located at First Chicago Trust Company of New York, 14 Wall Street,
Eighth Floor, New York, New York 10005.
"Coupons" is defined in Section 6.1.
"Credit Adjustment" is defined in subsection 4.3(c).
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"Credit Enhancement" means, as to any Series, the subordination,
cash collateral guaranty or account, collateral interest, letter of credit,
surety bond, insurance policy, spread account, reserve account,
cross-support feature or any other contract or agreement for the benefit of
the Holders of such Series (or Holders of a Class within such Series) as
designated in the applicable Supplement.
"Credit Enhancement Provider" means, as to any Series, any Person
designated as such in the related Supplement.
"Cut-Off Date" means April 30, 1997.
"Date of Processing" means, as to any transaction, the date on
which such transaction is first recorded on Servicer's computer master file
of VISA, Mastercard and Private Label accounts (without regard to the
effective date of such recordation).
"Default Amount" means, as to any Defaulted Account, the amount of
Principal Receivables (other than Ineligible Receivables) in such Defaulted
Account on the day it became a Defaulted Account.
"Defaulted Account" means each Account as to which, in accordance
with the Account Guidelines or Servicer's customary and usual servicing
procedures for servicing credit card or other receivables comparable to the
Receivables, Servicer has charged off the Receivables in such Account as
uncollectible. An Account shall become a Defaulted Account on the day on
which such Receivables are recorded as charged off as uncollectible on
Servicer's computer master file of VISA, MasterCard and Private Label
accounts. Notwithstanding any other provision hereof, any Receivables in a
Defaulted Account that are Ineligible Receivables shall be treated as
Ineligible Receivables rather than Receivables in Defaulted Accounts.
"Defeasance" is defined in Section 12.4.
"Defeased Series" is defined in Section 12.4.
"Definitive Certificates" is defined in Section 6.10.
"Depository" is defined in Section 6.10.
"Depository Agreement" means, as to each Series (subject to the
related Supplement), the agreement among Transferor, Trustee and the
applicable Clearing Agency or Foreign Clearing Agency.
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"Determination Date" means, unless otherwise specified in the
related Supplement, the third Business Day prior to each Transfer Date.
"Discount Option Receivables" is defined in Section 2.8.
"Discount Option Receivables Amount" means, on any date of
determination on and after the date on which Transferor's exercise of its
discount option pursuant to Section 2.8 takes effect, the excess of (a) the
aggregate Discount Option Receivables created on or prior to such date
(which amount, prior to the date on which Transferor's exercise of its
discount option takes effect and with respect to Receivables generated
prior to such date, shall be zero), over (b) any Discount Option
Receivables Collections received on or prior to such date.
"Discount Option Receivables Collections" means on any Date of
Processing on and after the date on which Transferor's exercise of its
discount option pursuant to Section 2.8 takes effect, the product of (a) a
fraction the numerator of which is the Discount Option Receivables Amount
and the denominator of which is the sum of the Principal Receivables plus
the Discount Option Receivables Amount, in each case (for both numerator
and denominator) at the end of the prior Monthly Period, and (b)
Collections of Principal Receivables, prior to any reduction for Discount
Option Receivables, received on such Date of Processing.
"Discount Percentage" is defined in Section 2.8.
"Distribution Account" is defined in subsection 4.2(c).
"Distribution Date" is defined, for each Series, in the related
Supplement.
"Dollars", "$" or "U.S. $" means United States dollars.
"Eligible Account" means, as of the Cut-Off Date (or, as to
Additional Accounts, as of the relevant Addition Date), a VISA, Mastercard,
Private Label or other revolving credit account in the Bank Portfolio that:
(a) is in existence and maintained with Transferor;
(b) is payable in Dollars;
(c) has as its most recent billing address an address
located in the United States or its territories or possessions or
a Military Address; provided that an Account having as its most
recent billing address an address which is not located in the
United States or its territories or
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possessions or at a Military Address shall not be deemed to be
ineligible pursuant to this clause (c) at any time of
determination to the extent that the aggregate amount of all such
Accounts shall be less than 3% of the aggregate amount of all
Accounts at such time;
(d) except as provided below, Transferor has not
classified on its electronic records as counterfeit, fraudulent,
stolen or lost; and
(e) Transferor has not charged off in its customary
and usual manner for charging off such Accounts.
Notwithstanding the foregoing, Eligible Accounts may include accounts which
have been identified by the Obligor as having been incurred as a result of
fraudulent use of credit cards or with respect to any credit cards which
have been reported to Transferor as lost or stolen, so long as (1) the
balance of all receivables included in such accounts is reflected as zero
on the books and records of Transferor and (2) charging privileges with
respect to all such accounts have been canceled and are not reinstated.
"Eligible Receivable" means a Receivable:
(a) that has arisen under an Eligible Account;
(b) that was created in compliance, in all material
respects, with (and pursuant to an Account Agreement that
complies, in all material respects, with) all Requirements of Law
applicable to Transferor;
(c) as to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given
by Transferor in connection with the creation of such Receivable
or the execution, delivery and performance by Transferor of the
Account Agreement pursuant to which such Receivable was created,
have been duly obtained, effected or given and are in full force
and effect as of such date of creation;
(d) as to which, at the time of and at all times
after the creation of such Receivable, Transferor or the Trust had
good and marketable title, free and clear of all Liens arising
under or through Transferor or any of its Affiliates (other than
Liens permitted by subsection 2.5(b));
(e) that is the legal, valid and binding payment
obligation of the Obligor thereon, enforceable against such
Obligor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws,
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now or hereafter in effect, affecting the enforcement of
creditors' rights in general and except as such enforceability may
be limited by general principles of equity (whether considered in
a suit at law or in equity);
(f) that, at the time of its transfer to the Trust,
is not subject to any right of rescission, setoff, counterclaim or
any other defense of the Obligor (including the defense of usury),
other than defenses arising out of any bankruptcy or other
insolvency laws and except as enforceability may be limited by
general principles of equity (whether considered in a suit at law
or equity) or as to which Servicer makes a Credit Adjustment
pursuant to subsection 4.3(c); and
(g) that constitutes an "account," a "general
intangible" or "chattel paper."
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Euroclear Operator" means Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, as operator of the Euroclear System.
"Excess Allocation Series" means any series that is designated as
an Excess Allocation Series in the related Supplement.
"Excess Finance Charge Collections" means, with respect to any
Transfer Date, the aggregate amount for all outstanding Excess Allocation
Series that the related Supplements specify are to be treated as "Excess
Finance Charge Collections" for such Transfer Date.
"Excess Funding Account" is defined in subsection 4.2(b).
"Extended Trust Termination Date" is defined in subsection 12.1(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"Finance Charge Account" is defined in subsection 4.2(b).
"Finance Charge Receivables" means Receivables created in respect
of the Periodic Finance Charges, Cash Advance Fees, Annual Account Fees,
Late Fees, Overlimit Fees, NSF Fees, closed account maintenance charges and
similar fees and charges, including charges for Special Fees to the extent
such Special Fees are categorized as Finance Charge Receivables, and
Discount Option Receivables. Except as otherwise specified in any
Supplement, Net Recoveries shall be treated as Collections of Finance
Charge Receivables. Collections of Finance Charge Receivables with respect
to any Monthly Period shall also include (a) Discount
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Option Receivables Collections (if any) with respect to such Monthly
Period, (b) the amount of Interchange (if any), Other Account Revenues (if
any) and other amounts allocable to any Series of Certificates pursuant to
any Supplement with respect to such Monthly Period (to the extent received
by the Trust and deposited into the Finance Charge Account or any Series
Account, as the case may be, on the Transfer Date following such Monthly
Period), and (c) all interest and other investment earnings (net of losses
and investment expenses) accrued on or prior to the related Transfer Date
in connection with the investment of funds on deposit in the Collection
Account, the Distribution Account, the Excess Funding Account and the
Finance Charge Account.
"Finance Charge Shortfalls" is defined, for any Series, in the
related Supplement.
"First NBC" means First National Bank of Commerce, a national
banking association.
"Fitch" means Fitch Investors Service, L.P.
"Foreign Clearing Agency" means CEDEL and the Euroclear Operator.
"Global Certificate" is defined in Section 6.13.
"Governmental Authority" means the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Group" means, as to any Series, the group of Series in which the
related Supplement specifies that such Series shall be included.
"Holder" means the Person in whose name a Certificate is
registered in the Certificate Register and, if applicable, the holder of
any Bearer Certificate or Coupon, as the case may be, and, as to any
Series, such other Person deemed to be an "Investor Holder" or "Holder" in
any related Supplement except as otherwise provided in such Supplement.
"Ineligible Receivable" is defined in subsection 2.4(d)(iii).
"Initial Closing Date" means August 7, 1997.
"Initial Investor Interest" means, as to any Series, the amount
stated in the related Supplement.
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"Insolvency Event" is defined in Section 9.2.
"Insurance Proceeds" means any amounts recovered by Servicer
pursuant to any credit insurance policies covering any Obligor with respect
to Receivables under such Obligor's Account.
"Interchange" means interchange fees payable to Transferor, in its
capacity as credit card issuer, through VISA U.S.A., Inc. and Mastercard
International Inc.
"Internal Revenue Code" means the Internal Revenue Code of 1986.
"Investment Company Act" means the Investment Company Act of 1940.
"Investor Account" means each of the Finance Charge Account, the
Excess Funding Account and the Distribution Account.
"Investor Certificate" means any one of the certificates
(including Bearer Certificates, Registered Certificates and Global
Certificates) executed by Transferor and authenticated by Trustee
substantially in the form (or forms in the case of a Series with multiple
Classes) attached to the related Supplement and such other interest in the
Trust deemed to be an "Investor Certificate" in any related Supplement
except as otherwise provided in such Supplement.
"Investor Holder" means the holder of record of an Investor Certificate.
"Investor Interest" is defined, as to any Series, in the related
Supplement.
"Investor Issuance" is defined in subsection 6.9(b).
"Investor Percentage" is defined, as to any Series, in the related
Supplement.
"Investor Servicing Fee" is defined in Section 3.2.
"Issuance" means either of the procedures described under subsection
6.9(b).
"Issuance Date" is defined in subsection 6.9(b).
"Issuance Notice" is defined in subsection 6.9(b).
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"Late Fees" means amounts referred to as "late fees," "late
charges" or "late payment fees" (or similar terms) in the Account Agreement
applicable to any Account.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, participation or equity interest, deposit arrangement,
encumbrance, lien (statutory or other), preference, priority or other
security agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement
under the UCC (other than any such financing statement filed for
informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing; provided that any assignment pursuant to
Section 7.2 shall not be deemed to constitute a Lien.
"Military Address" means any mailing address on any United States
armed forces military base of operations, including APO and FPO addresses.
"Minimum Aggregate Principal Receivables" means, unless otherwise
provided in a Supplement relating to a Paired Series (with respect to the
Paired Series), as of any date of determination, 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
outstanding on such date.
"Minimum Transferor Interest" means the Minimum Transferor Percentage
of the Aggregate Principal Receivables.
"Minimum Transferor Percentage" means 7%; provided that Transferor
may increase or reduce the Minimum Transferor Percentage upon (a) 30 days'
prior notice to Trustee, each Rating Agency and any Credit Enhancement
Provider entitled to receive such notice pursuant to the relevant
Supplement, (b) satisfaction of the Rating Agency Condition, and (c)
delivery to Trustee and each such Credit Enhancement Provider of an
Officer's Certificate stating that Transferor reasonably believes that such
increase or reduction will not, based on the facts known to such officer at
the time of such certification, then or thereafter cause a Pay Out Event to
occur with respect to any Series.
"Monthly Period" means, unless otherwise defined in any
Supplement, each period from and including the first day of a calendar
month to and including the last day of that calendar month.
"Moody's" means Moody's Investors Service, Inc.
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"Net Default Amount" means, for any Monthly Period, the excess (if
any) of (a) the amount of Receivables in Accounts that became Defaulted
Accounts during such Monthly Period over (b) all Recoveries received during
such Monthly Period.
"Net Recoveries" means, for any Monthly Period, the excess (if
any) of (a) all Recoveries received during such Monthly Period over (b) the
amount of Receivables in Accounts that became Defaulted Accounts during
such Monthly Period.
"Notice Date" is defined in subsection 2.6(d)(i).
"NSF Fees" means charges assessed against any Obligor pursuant to
the related Account Agreement on account of the return of checks for
non-sufficient funds.
"Obligor" means, as to any Account, the Person or Persons
obligated to make payments on that Account, including any guarantor.
"Officer's Certificate" means a certificate signed by any Vice
President or more senior officer of Transferor or Servicer and delivered to
Trustee.
"Other Account Revenues" means amounts received by Transferor (a)
from any third party in consideration of the inclusion of advertising
inserts with monthly statements relating to accounts in the Bank Portfolio,
(b) from issuers of credit insurance policies on account of experience
rebates or similar amounts related to obligors on accounts included in the
Bank Portfolio and (c) from any other Person on account of revenues related
to the Accounts, to the extent (in the case of this clause (c)) that
Transferor designates such amounts to be treated as "Other Account
Revenues" in an Officer's Certificate.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for or an employee of the Person providing the opinion (except
that no tax opinion or opinion delivered pursuant to Section 8.5 may be
delivered by such an employee), and who shall be reasonably acceptable to
Trustee.
"Overlimit Fees" means amounts referred to as "overlimit fees,"
"overlimit charges," or "exceeding the credit limit fees" (or similar
terms) in the Account Agreement applicable to any Account.
"Paired Series" means each Series that has been paired with
another Series (one of which Series may be prefunded or partially
prefunded) such that a reduction of the Adjusted Investor Interest of one
Series results in an increase of the Investor Interest of the other Series.
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"Participations" is defined in subsection 2.6(a).
"Paying Agent" means any paying agent appointed pursuant to
Section 6.6 and shall initially be Trustee.
"Pay Out Event" means each Trust Pay Out Event and, as to any
Series, each other "Pay Out Event," if any, described in the Supplement for
such Series.
"Periodic Finance Charges" means amounts referred to as "finance
charges" (or similar terms) in the Account Agreement applicable to any
Account.
"Permitted Investments" means, unless otherwise provided in the
Supplement with respect to any Series: (a) book-entry securities or
negotiable instruments or securities represented by instruments in bearer
or registered form which evidence (i) obligations of or fully guaranteed as
to timely payment by the United States of America, (ii) demand deposits,
time deposits or certificates of deposit of any depository institution or
trust company incorporated under the laws of the United States of America
or any state thereof or domestic branches of foreign banks and subject to
supervision and examination by Federal or state banking or depository
institution authorities, provided that at the time of the Trust's
investment or contractual commitment to invest therein, the certificates of
deposit or short-term deposits of such depository institution or trust
company shall have a credit rating from Moody's and Standard & Poor's of
P-1 and A-1+, respectively, (iii) commercial paper having, at the time of
the Trust's investment or contractual commitment to invest therein, a
rating from Moody's and Standard & Poor's of P-1 and A-1+, respectively,
and, if rated by Fitch, F-1+ by Fitch, (iv) bankers' acceptances issued by
any depository institution or trust company described in clause (a)(ii),
(v) investments in money market or common trust funds rated AAA-m or AAA-mg
by Standard & Poor's and P-1 by Moody's and, if rated by Fitch, AAA by
Fitch, if such investment will not require the Trust to register as an
"investment company" under the Investment Company Act, and (vi) repurchase
obligations with respect to (A) any security described in clause (a)(i) or
(B) any other security issued or guaranteed by an agency or instrumentality
of the United States of America, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (a)(ii); (b) demand deposits in the name of the Trust or Trustee in
any depository institution or trust company described in clause (a)(ii);
and (c) any other investment if (i) the Rating Agency Condition has been
satisfied and (ii) purchase of such investment will not require the Trust
to be registered as an investment company under the Investment Company Act.
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture,
association, joint-stock
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company, trust, unincorporated organization, governmental entity or other
entity of similar nature.
"Principal Receivable" means each Receivable other than (without
duplication) (a) Finance Charge Receivables and (b) Receivables in
Defaulted Accounts. A Receivable shall be deemed to have been created at
the end of the day on the Date of Processing of such Receivable. In
calculating the aggregate amount of Principal Receivables on any day, the
amount of Principal Receivables shall be reduced by the aggregate amount of
credit balances in the Accounts on such day. Any Receivables which
Transferor is unable to transfer as provided in subsection 2.5(d)(i) shall
not be included in calculating the aggregate amount of Principal
Receivables.
"Principal Sharing Series" means a Series designated pursuant to
the related Supplement as a Principal Sharing Series which is entitled to
receive Shared Principal Collections.
"Principal Terms" is defined in subsection 6.9(c).
"Private Label" is the generic term used in this Agreement to
refer to revolving credit card accounts opened by Transferor in connection
with any of its military affinity programs which are not MasterCard or VISA
accounts.
"Qualified Institution" is defined in subsection 4.2(a).
"Rating Agency" means, as to each Series, the rating agency or
agencies, if any, specified in the related Supplement.
"Rating Agency Condition" means, as to any event or condition,
receipt by Transferor from each Rating Agency that such event or condition
will not result in a downgrade, qualification or withdrawal of its then
current rating of any outstanding Series.
"Reassignment" is defined in subsection 2.7(b)(ii).
"Reassignment Date" is defined in subsection 2.4(e).
"Receivable" means any amount owing by the Obligors under the
Account Agreements, including amounts owing for the purchase of goods and
services, cash advances, access checks, Annual Account Fees, Cash Advance
Fees, Periodic Finance Charges, Late Fees, Overlimit Fees, NSF Fees and
credit insurance premiums and Special Fees, if any.
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"Record Date" means, with respect to any Distribution Date, the
last Business Day of the preceding Monthly Period.
"Recoveries" means all amounts, including Insurance Proceeds,
received by Servicer with respect to Receivables in Defaulted Accounts,
less related expenses of outside collection agencies.
"Registered Certificates" is defined in Section 6.1.
"Removal Date" is defined in subsection 2.7(a).
"Removal Notice Date" is defined in subsection 2.7(a).
"Removed Accounts" is defined in subsection 2.7(a).
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty,
rule or regulation, or determination of an arbitrator or Governmental
Authority, in each case applicable to or binding upon such Person or to
which such Person is subject, whether Federal, state or local (including
usury laws, the Federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System).
"Responsible Officer" means any officer within the Corporate Trust
Office (or any successor group of Trustee), including any Vice President,
any Assistant Secretary or any other officer of Trustee customarily
performing functions similar to those performed by any person who at the
time shall be an above-designated officer and any particular officer to
whom any corporate trust matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Retention Condition" means:
(a) on any day on and after the Conversion Date,
either (i) the Transferor Interest is less than the Minimum
Transferor Interest or (ii) the sum of Aggregate Principal
Receivables and the principal amount on deposit in the Excess
Funding Account is less than the Minimum Aggregate Principal
Receivables (in each case determined after giving effect to any
transfer of Principal Receivables to the Trust on such day); or
(b) on any day prior to the Conversion Date, either
(i)(A) the sum of the aggregate amount of Receivables and the
principal amount on deposit in the Excess Funding Account at the
end of the day immediately
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prior to such date of determination, minus the Adjusted Aggregate
Investor Interest at the end of such preceding day, minus the
outstanding principal amount of all Supplemental Certificates (and
any purchased interest sold pursuant to subsection 6.9(d)) at the
end of such preceding day is less than (B) 3% of the aggregate
amount of Receivables at the end of the day immediately prior to
such date of determination, or (ii)(A) the sum of (1) the product
of 0.97 times the aggregate amount of Receivables plus (2) the
principal amount on deposit in the Excess Funding Account, in each
case at the end of the day immediately prior to such date of
determination is less than (B) the Minimum Aggregate Principal
Receivables (in the case of both clauses (i) and (ii) determined
after giving effect to any transfer of Receivables to the Trust on
such day).
"SAIF" means the Savings Association Insurance Fund administered by
the FDIC.
"Securities Act" means the Securities Act of 1933.
"Series" means any series of Investor Certificates issued pursuant to
a Supplement.
"Series Account" means any account established pursuant to a
Supplement for the benefit of the related Series.
"Series Principal Shortfall" is defined, as to any Series, in the
related Supplement.
"Series Servicing Fee Percentage" is defined, as to any Series, in
the related Supplement.
"Series Termination Date" is defined, as to any Series, in the
related Supplement.
"Servicer" means (a) initially First NBC and (b) after any Person
is appointed as Successor Servicer, such Person as herein provided to
service the Receivables.
"Servicer Default" is defined in Section 10.1.
"Servicer Letter of Credit" is defined in subsection 4.3(a).
"Servicing Fee" is defined in Section 3.2.
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"Servicing Officer" means any officer of Servicer involved in, or
responsible for, the administration and servicing of the Receivables whose
name appears on a list of servicing officers furnished to Trustee by
Servicer, as such list may be amended from time to time.
"Shared Principal Collections" means, with respect to any Transfer
Date, the aggregate amount for all outstanding Principal Sharing Series
that the related Supplements specify are to be treated as "Shared Principal
Collections" for such Transfer Date.
"Special Fees" means fees which are not now but from time to time
may be assessed on the Accounts. On or after the date on which any of such
Special Fees begin to be assessed on the Accounts, Transferor may designate
in an Officer's Certificate whether such Special Fees shall be treated as
Principal Receivables or Finance Charge Receivables.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc.
"Subject Certificate" is defined in subsection 6.15(a).
"Successor Servicer" is defined in subsection 10.2(a).
"Supplement" means, as to any Series or Supplemental Certificate,
a supplement to this Agreement executed in conjunction with any issuance of
that Series or Supplemental Certificate.
"Supplemental Certificate" is defined in subsection 6.3(b).
"Tax Opinion" means, as to any action, an Opinion of Counsel to
the effect that, for Federal income tax purposes, (a) such action will not
adversely affect the tax characterization as debt of Investor Certificates
of any outstanding Series or Class with respect to which an Opinion of
Counsel was delivered at the time of their issuance that such Investor
Certificates would be characterized as debt, (b) such action will not cause
the Trust to be classified, for Federal income tax purposes, as an
association (or publicly traded partnership) taxable as a corporation and
(c) such action will not cause or constitute an event in which gain or loss
would be recognized by any Investor Holder.
"Termination Notice" is defined in Section 10.1.
"Transfer Agent and Registrar" is defined in Section 6.3 and shall
initially be Trustee's Corporate Trust Office.
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"Transfer Date" means, unless otherwise specified in the related
Supplement, with respect to any Series, the Business Day immediately prior
to each Distribution Date.
"Transferor" means First NBC.
"Transferor Interest" means, on any date of determination, the
result (but not less than zero) of (a) the sum of the aggregate amount of
Principal Receivables and the principal amount on deposit in the Excess
Funding Account at the end of the day immediately prior to such date of
determination, minus (b) the Adjusted Aggregate Investor Interest at the
end of such preceding day, minus (c) the outstanding principal amount of
any purchased interest sold pursuant to subsection 6.9(d) at the end of
such preceding day.
"Transferor Issuance" is defined in subsection 6.9(b).
"Transferor Percentage" means, on any date of determination, when
used with respect to Principal Receivables, Finance Charge Receivables and
Receivables in Defaulted Accounts, a percentage equal to 100% minus the
Aggregate Investor Percentage with respect to such categories of
Receivables.
"Transferor Servicing Fee" is defined in Section 3.2.
"Transferred Account" means (a) an Account with respect to which a
new credit account number has been issued by Servicer or Transferor under
circumstances resulting from a lost or stolen credit card or from the
transfer from one affinity group to another affinity group and not
requiring standard application and credit evaluation procedures under the
Account Guidelines or (b) an Eligible Account resulting from the conversion
of an Account that was a standard account to a premium account or from a
premium account to a standard account, and which in either case can be
traced or identified by accessing Transferor's computer files by reference
to or by way of an Account Schedule delivered to Trustee pursuant to
Section 2.1 or 2.6 or pursuant to this definition as an account into which
an Account has been transferred. A Transferred Account shall not be treated
as an Automatic Additional Account for purposes of this Agreement or any
Supplement.
"Trust" means the trust created by this Agreement, which shall be
known as the First NBC Credit Card Master Trust, and the corpus of which is
the Trust Assets.
"Trust Assets" means the Receivables now existing or hereafter
created and arising in connection with the Accounts, all monies due or to
become due with respect to such Receivables (including all Finance Charge
Receivables and
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Recoveries), all proceeds (as defined in Section 9-306 of the UCC as in
effect in the State of Louisiana) of such Receivables and Insurance
Proceeds relating to the Receivables, and all proceeds (as defined in
Section 9-306 of the UCC as in effect in the State of Louisiana) thereof,
the right to receive certain amounts paid or payable as Interchange (if
provided for in any Supplement), such funds as from time to time are
deposited in the Collection Account, the Finance Charge Account, the Excess
Funding Account, the Distribution Account and any Series Account and the
rights to any Credit Enhancement with respect to any Series.
"Trust Extension" is defined in subsection 12.1(a).
"Trust Pay Out Event" is defined in Section 9.1.
"Trust Termination Date" means the earliest to occur of (a) unless
a Trust Extension shall have occurred, the first Business Day after the
Distribution Date with respect to any Series following the date on which
funds shall have been deposited in the Distribution Account or the
applicable Series Account for the payment of Investor Holders of each
Series then issued and outstanding sufficient to pay in full such
Certificates, (b) if a Trust Extension shall have occurred, the Extended
Trust Termination Date and (c) a day which is 21 years less one day after
the death of the officers and the last survivor of all the lineal
descendants of every officer of Trustee who are living on the date hereof;
provided, however, that if at any time any rights, privileges or options
under the Trust shall be or become valid under applicable law for a period
subsequent to the 21st anniversary of the death of such last survivor or
without limiting the generality of the foregoing, if legislation shall
become effective providing for the validity or permitting the effective
grant of such rights, privileges and options for a period in gross,
exceeding the period for which such rights, privileges and options are
stated to extend and be valid pursuant to this clause (c)), then such
rights, privileges or options shall not terminate as otherwise provided in
this clause (c) but, subject to the occurrence of the Trust Termination
Date pursuant to clause (a) or clause (b) above, shall extend to and
continue in effect, but only if such nontermination and extension shall
then be valid under applicable law, until one day prior to such time as the
same shall, under applicable law, cease to be valid.
"Trustee" means The First National Bank of Chicago a national
banking association, and its successors and any corporation resulting from
or surviving any consolidation or merger to which it or its successors may
be a party and any successor trustee appointed as herein provided.
"UCC" means the Uniform Commercial Code as in effect in any specified
jurisdiction.
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"Undivided Interest" means the undivided interest in the Trust
evidenced by an Investor Certificate.
"Variable Interest" means either of (a) any Investor Certificate
that is designated as a variable funding certificate in the related
Supplement and (b) any purchased interest sold as permitted by subsection
6.9(d).
"Zero Balance Account" means, as of any date of determination, an
Account with a Receivable balance of zero and in which there has been no
activity for the twelve calendar months preceding such date of
determination.
SECTION 1.2 Other Interpretive Provisions. With respect to any
Series, all terms used and not defined herein are used as defined in the
related Supplement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document delivered
pursuant hereto unless otherwise defined therein. For purposes of this
Agreement and all such certificates and other documents, unless the context
otherwise requires: (a) accounting terms not otherwise defined in this
Agreement, and accounting terms partly defined in this Agreement to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles; (b) terms defined in Article 9 of
the UCC as in effect in the State of Louisiana and not otherwise defined in
this Agreement are used as defined in that Article; (c) any reference to
each Rating Agency shall only apply to any specific rating agency if such
rating agency is then rating any outstanding Series; (d) references to any
amount as on deposit or outstanding on any particular date means such
amount at the close of business on such day; (e) the words "hereof,"
"herein" and "hereunder" and words of similar import refer to this
Agreement (or the certificate or other document in which they are used) as
a whole and not to any particular provision of this Agreement (or such
certificate or document); (f) references to any Section, Schedule or
Exhibit are references to Sections, Schedules and Exhibits in or to this
Agreement (or the certificate or other document in which the reference is
made), and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (g)
the term "including" means "including without limitation"; (h) references
to any law or regulation refer to that law or regulation as amended from
time to time and include any successor law or regulation; (i) references to
any Person include that Person's successors and assigns; and (j) headings
are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof. The agreements,
representations and warranties of First NBC in this Agreement, in its
capacities as Transferor and Servicer, shall be deemed to be its
agreements, representations and warranties only so long as it remains a
party to this Agreement in such capacity. The monthly Servicer certificate
shall be in substantially the form of Exhibit B, with
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such changes as Servicer may determine to be necessary or desirable;
provided that no such change shall serve to exclude information required by
this Agreement or any Supplement. Servicer shall, upon making such
determination, deliver to Trustee and each Rating Agency an Officer's
Certificate to which shall be annexed the form of the related Exhibit, as
so changed. Upon the delivery of such Officer's Certificate to Trustee, the
related Exhibit, as so changed, shall for all purposes of this Agreement
constitute such Exhibit. Trustee may conclusively rely upon such Officer's
Certificate in determining whether the related Exhibit, as changed,
conforms to the requirements of this Agreement.
ARTICLE II CONVEYANCE OF RECEIVABLES
SECTION 2.1 Conveyance of Receivables. (a) Transferor hereby
transfers, assigns, sets-over and otherwise conveys to Trustee, on behalf
of the Trust, for the benefit of the Holders, without recourse, all of its
right, title and interest in, to and under the Receivables now existing and
hereafter created and arising in connection with the Accounts (other than
Receivables in Additional Accounts), all monies due or to become due with
respect to such Receivables (including all Finance Charge Receivables and
Recoveries), any collateral securing any such Receivables and Insurance
Proceeds relating to such Receivables, and all proceeds of all of the
foregoing.
(b) In connection with such transfer, assignment, set-over and
conveyance, Transferor agrees to record and file, at its own expense, a
financing statement (including any continuation statements with respect to
such financing statement when applicable) with respect to the Receivables
now existing and hereafter created meeting the requirements of applicable
state law in such manner and in such jurisdictions as are necessary to
perfect the assignment of the Receivables to the Trust, and to deliver a
file-stamped copy of such financing statement or continuation statement or
other evidence of such filing (which may, for purposes of this Section 2.1,
consist of telephone confirmation of such filing) to Trustee on or prior to
the date of issuance of the Certificates (and in the case of any
continuation statements filed pursuant to this Section 2.1, as soon as
practicable after receipt thereof by Transferor). The foregoing transfer,
assignment, set-over and conveyance to the Trust shall be made to Trustee,
on behalf of the Trust, and each reference in this Agreement to such
transfer, assignment, set-over and conveyance shall be construed
accordingly.
(c) In connection with such transfer, Transferor agrees, at its
own expense, on or prior to the Initial Closing Date (i) to indicate in its
computer files that the Receivables created in connection with the Accounts
(other than any Additional Accounts) have been transferred to Trustee, on
behalf of the Trust, pursuant to this Agreement for the benefit of the
Holders by identifying such Accounts as those that may be accessed on
Transferor's computer files through
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use of the database code "T" and (ii) to deliver to Trustee an Account
Schedule relating to the initial Accounts, which is hereby incorporated
into and made a part of this Agreement. Transferor further agrees, at its
own expense, with respect to Automatic Additional Accounts to indicate in
its computer files on or prior to the applicable Addition Date that
Receivables created in connection with each Automatic Additional Account
have been transferred to Trustee, on behalf of the Trust, pursuant to this
Agreement for the benefit of the Holders by identifying such Accounts as
those that may be accessed on Transferor's computer files through use of
the database code "T". Transferor shall not alter the file designations
referenced in this subsection 2.1(c) with respect to any Account during the
term of this Agreement unless and until such Account becomes a Removed
Account or a Zero Balance Account. Transferor shall hold the information to
be provided with respect to the Transferred Accounts, prior to delivery to
Trustee, in trust for the benefit of Trustee, on behalf of the Trust.
(d) The parties intend that if, and to the extent that, such
transfer is not deemed to be a sale, Transferor shall be deemed hereunder
to have granted to Trustee, for the benefit of the Investor Holders, a
first priority perfected security interest in all of Transferor's right,
title and interest in, to and under the Receivables now existing and
hereafter created and arising in connection with the Accounts (other than
Receivables in Additional Accounts), all monies due or to become due with
respect to such Receivables, any collateral securing any such Receivables
and all Insurance Proceeds relating to such Receivables (including all
Finance Charge Receivables and Recoveries) and all proceeds of all of the
foregoing, that this Agreement shall constitute such a security agreement
under applicable law, and that the Transferor Interest shall be deemed to
represent Transferor's equity in the collateral granted.
Pursuant to the request of Transferor, Trustee shall cause
Certificates in authorized denominations evidencing the entire interest in
the Trust to be duly authenticated and delivered to or upon the order of
Transferor pursuant to Section 6.2.
SECTION 2.2 Acceptance by Trustee. (a) Trustee hereby acknowledges
its acceptance, on behalf of the Trust, of all right, title and interest
previously held by Transferor in and to the Receivables now existing and
hereafter created and arising in connection with the Accounts (other than
Receivables in Additional Accounts), all monies due or to become due with
respect to such Receivables (including all Finance Charge Receivables and
Recoveries), any collateral securing any such Receivables, Insurance
Proceeds relating to such Receivables and all proceeds of all of the
foregoing, and declares that it shall maintain such right, title and
interest, upon the Trust herein set forth, for the benefit of all Holders.
Trustee further acknowledges that, prior to or simultaneously with the
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execution and delivery of this Agreement, Transferor delivered to Trustee
the initial Account Schedule referred to in subsection 2.1(c).
(b) Trustee agrees not to disclose to any Person any of the names,
addresses, account numbers or other information contained in the computer
files or microfiche lists delivered to Trustee by Transferor pursuant to
Sections 2.1, 2.6 and 2.7 or any other information provided by Transferor
to Trustee in any format whatsoever except as is required in connection
with the performance of its duties hereunder or in enforcing the rights of
the Holders or to a Successor Servicer appointed pursuant to Section 10.2,
as mandated pursuant to any Requirement of Law applicable to Trustee or as
required to ensure that any security interest in the Receivables is
perfected. Trustee agrees to take such measures as shall be reasonably
requested by Transferor to protect and maintain the security and
confidentiality of such information, and, in connection therewith, (i)
Trustee shall not open the sealed container in which any Account Schedule
is delivered to Trustee by Transferor except (A) after the appointment of
Trustee or any other Person as Successor Servicer after a Servicer Default,
(B) as necessary to answer any query made to it in its capacity as a
secured party with respect to the Receivables or any other Trust Assets
(and, in the case of this clause (B), only after Trustee has informed
Transferor of such query and Transferor has consented to such disclosure)
or (C) in connection with any disclosure permitted by the next sentence,
and (ii) Trustee shall allow Transferor to inspect Trustee's security and
confidentiality arrangements, policies and procedures from time to time
during normal business hours. In the event that Trustee is required by law
to disclose any such information, Trustee shall provide Transferor with
prompt written notice, unless such notice is prohibited by law, of any such
request or requirement so that Transferor may request a protective order or
other appropriate remedy. Trustee shall make best efforts to provide
Transferor with written notice no later than five days prior to any
disclosure pursuant to this subsection 2.2(b).
(c) Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement. No liability to any Obligor under any
Account Agreement, any Requirement of Law, or any of the Receivables
arising out of any act or omission to act of Transferor in originating the
Receivables or Servicer in servicing the Receivables is intended to be
assumed by the Trust, Trustee, or the Certificateholders under or as a
result of this Agreement and the transactions contemplated hereby, and to
the maximum extent permitted and valid under mandatory provisions of law,
each expressly disclaims such assumption.
SECTION 2.3 Representations and Warranties of Transferor.
Transferor hereby represents and warrants to the Trust as of the Initial
Closing Date:
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(a) Organization and Good Standing. Transferor is a national
banking association duly organized and validly existing in good standing
under the laws of the United States and has full corporate power, authority
and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted,
and to execute, deliver and perform its obligations under this Agreement
and to execute and deliver to Trustee the Certificates pursuant hereto.
(b) Due Qualification. Transferor is duly qualified to do business
and is in good standing (or is exempt from such requirement) in any state
required in order to conduct its business, and has obtained all necessary
licenses and approvals with respect to Transferor required under Federal
and Louisiana law; provided that no representation or warranty is made with
respect to any qualifications, licenses or approvals which Trustee would
have to obtain to do business in any state in which Trustee seeks to
enforce any Receivable.
(c) Due Authorization. The execution and delivery of this
Agreement and the execution and delivery to Trustee of the Certificates by
Transferor and the consummation of the transactions provided for in this
Agreement have been duly authorized by Transferor by all necessary
corporate action on its part, and this Agreement will remain, from the time
of its execution, an official record of Transferor.
(d) No Conflict. The execution and delivery of this Agreement and
the Certificates, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof by Transferor will not
conflict with, result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any material indenture, contract,
agreement, mortgage, deed of trust or other instrument to which Transferor
is a party or by which it or any of its properties are bound.
(e) No Violation. The execution and delivery of this Agreement and
the Certificates, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof by Transferor will not
conflict with or violate any Requirements of Law applicable to Transferor.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of Transferor, threatened against
Transferor before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality (i) asserting the invalidity
of this Agreement or the Certificates, (ii) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions
contemplated by this Agreement or the Certificates, (iii) seeking any
determination or ruling that, in the reasonable judgment of Transferor,
would materially and adversely affect the performance by Transferor
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of its obligations under this Agreement, (iv) seeking any determination or
ruling that would materially and adversely affect the validity or
enforceability of this Agreement or the Certificates or (v) seeking to
affect adversely the income tax attributes of the Trust.
(g) Eligibility of Accounts. As of the Cut-Off Date, each Account
was an Eligible Account and no selection procedures adverse to the Investor
Holders have been employed by Transferor in selecting the Accounts from
among the Eligible Accounts in the Bank Portfolio.
(h) Transferor's Deposit Accounts. As of the Initial Closing Date,
deposits in Transferor's deposit accounts were insured to the limits
provided by law by BIF or SAIF.
(i) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body
or official required in connection with the execution and delivery of this
Agreement and the Certificates, the performance of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof by
Transferor, have been obtained.
(j) Insolvency. No Insolvency Event has occurred. Transferor did
not (i) execute this Agreement or the Certificates, (ii) grant to Trustee
the security interests described in Section 2.1(d), (iii) cause, permit, or
suffer the perfection or attachment of such a security interest, (iv)
otherwise effectuate or consummate any transfer to Trustee pursuant to this
Agreement or (v) acquire its interest in the Trust, in each case: (A) in
contemplation of insolvency; (B) with a view to preferring one creditor
over another or to preventing the application of its assets in the manner
required by applicable law or regulations; (C) after committing an act of
insolvency; or (D) with any intent to hinder, delay, or defraud itself or
its creditors.
(k) Trustee. Trustee is not an insider or Affiliate of Transferor.
For the purposes of the representations and warranties contained
in this Section 2.3 and made by Transferor on the Initial Closing Date,
"Certificates" means the Certificates issued on the Initial Closing Date.
The representations and warranties set forth in this Section 2.3 shall
survive the transfer and assignment of the respective Receivables to the
Trust and any termination of the rights and obligations of Servicer
pursuant to Section 10.1. Transferor hereby represents and warrants to the
Trust, with respect to any Series of Certificates, as of its Closing Date,
unless otherwise stated in the related Supplement, that the representations
and warranties of Transferor set forth in this Section 2.3 are true and
correct as of such date (and for purposes of such representations and
warranties, (x) "Certificates" means the Certificates issued on the related
Closing Date, (y)
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references to the Initial Closing Date shall be deemed to refer to that
Closing Date and (z) subsection 2.3(g) shall be deemed to refer to the
applicable Addition Cut-Off Date with respect to any Additional Account).
Upon discovery by Transferor, Servicer or Trustee of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the others.
SECTION 2.4 Representations and Warranties of Transferor Relating
to this Agreement and the Receivables.
(a) Binding Obligation; Valid Transfer and Assignment. Transferor
hereby represents and warrants to the Trust that, as of the Initial Closing
Date:
(i) This Agreement constitutes a legal, valid and
binding obligation of Transferor, enforceable against Transferor
in accordance with its terms, except (A) as such enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect affecting the enforcement of creditors' rights in
general and the rights of creditors of national banking
associations, and (B) as such enforceability may be limited by
general principles of equity (whether considered in a suit at law
or in equity).
(ii) This Agreement constitutes either (A) a valid
transfer, assignment, set-over and conveyance to Trustee, on
behalf of the Trust, for the benefit of the Holders, of all right,
title and interest of Transferor in and to the Receivables now
existing and hereafter created and arising in connection with the
Accounts (other than Receivables in Additional Accounts), all
monies due or to become due with respect to such Receivables
(including all Finance Charge Receivables and Recoveries), and
Insurance Proceeds relating to such Receivables, all of which
property will be held by the Trust free and clear of any Lien of
any Person claiming through or under Transferor or any of its
Affiliates except for (x) Liens permitted under subsection 2.5(b),
and (y) the Transferor Interest, or (B) a grant of a security
interest in such property to Trustee, for the benefit of the
Investor Holders, which is enforceable with respect to the
existing Receivables (other than Receivables in Additional
Accounts), the proceeds thereof, and Recoveries and Insurance
Proceeds relating thereto upon execution and delivery of this
Agreement, and which will be enforceable with respect to such
Receivables hereafter created, the proceeds thereof and Insurance
Proceeds relating thereto, upon such creation. If this Agreement
constitutes the grant of a security interest to Trustee in such
property, upon the filing of the financing statement described in
Section 2.1 and in the case of the Receivables hereafter created
and proceeds thereof and Recoveries and Insurance Proceeds
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relating thereto, upon such creation, Trustee shall have a first
priority perfected security interest in such property (subject to
Section 9-306 of the UCC as in effect in the State of Louisiana),
except for Liens permitted under subsection 2.5(b). Neither
Transferor nor any Person claiming through or under Transferor
shall have any claim to or interest in the Excess Funding Account,
the Finance Charge Account, the Distribution Account or any Series
Account, and if this Agreement constitutes the grant of a security
interest in such property, except for the interest of Transferor
in such property as a debtor for purposes of the UCC as in effect
in the State of Louisiana.
(b) Eligibility of Receivables. Transferor hereby represents and
warrants to the Trust as of the Initial Closing Date and as of each
Addition Date, as the case may be, that:
(i) As of the Initial Closing Date, Transferor
represents and warrants that each Receivable was an Eligible
Receivable as of the end of the Cut-Off Date. As of any Addition
Date, Transferor represents and warrants that each Receivable was
an Eligible Receivable as of the end of the Addition Cut-Off Date.
(ii) Each Receivable then existing has been conveyed
to the Trust free and clear of any Lien of any Person claiming
through or under Transferor or any of its Affiliates (other than
Liens permitted under subsection 2.5(b)) and in compliance, in all
material respects, with all Requirements of Law applicable to
Transferor.
(iii) With respect to each Receivable then existing,
all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority
required to be obtained, effected or given by Transferor in
connection with the conveyance of such Receivable to the Trust
have been duly obtained, effected or given and are in full force
and effect.
(iv) As of the Initial Closing Date or the applicable
Addition Date, the related Account Schedule is an accurate and
complete listing in all material respects of (A) on the Closing
Date, all of the Accounts as of the Cut-Off Date and (B) on an
Addition Date, the related Additional Accounts. In either case,
the information contained therein with respect to the identity of
such Accounts and the Receivables existing thereunder is accurate
in all material respects as of the Cut-Off Date or the applicable
Addition Date. As of the Cut-Off Date, the Aggregate Receivables
equaled $814,353,580, of which $802,881,646 consisted of the
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Aggregate Principal Receivables and $11,471,934 consisted of the
Aggregate Finance Charge Receivables.
On each day on which any new Receivable is created, Transferor shall be
deemed to represent and warrant to the Trust that (A) each Receivable
created on such day is an Eligible Receivable, (B) each Receivable created
on such day has been conveyed to the Trust in compliance, in all material
respects, with all Requirements of Law applicable to Transferor, (C) with
respect to each such Receivable, all consents, licenses, approvals or
authorizations of or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given by Transferor in
connection with the conveyance of such Receivable to the Trust have been
duly obtained, effected or given and are in full force and effect and (D)
the representations and warranties set forth in subsection 2.4(a) are true
and correct with respect to each Receivable created on such day as if made
on such day.
(c) Notice of Breach. The representations and warranties set forth
in this Section 2.4 shall survive the transfer and assignment of the
respective Receivables to the Trust. Upon discovery by Transferor, Servicer
or Trustee of a breach of any of the representations and warranties set
forth in this Section 2.4, the party discovering such breach shall give
prompt written notice to the other parties mentioned above. Transferor
agrees to cooperate with Servicer and Trustee in attempting to cure any
such breach.
(d) Transfer of Ineligible Receivables.
(i) Automatic Removal. In the event of a breach with
respect to a Receivable of any representations and warranties set
forth in subsection 2.4(b)(ii), or in the event that a Receivable
is not an Eligible Receivable as a result of the failure to
satisfy the conditions set forth in clause (d) of the definition
of Eligible Receivable, and any of the following three conditions
is met: (A) as a result of such breach or event such Receivable is
charged off as uncollectible or the Trust's rights in, to or under
such Receivable or its proceeds are impaired or the proceeds of
such Receivable are not available for any reason to the Trust free
and clear of any Lien; (B) the Lien upon the subject Receivable
(1) arises in favor of the United States of America or any State
or any agency or instrumentality thereof and involves taxes or
liens arising under Title IV of ERISA or (2) has been consented to
by Transferor; or (C) the certificate of deposit or unsecured
short term debt rating of Transferor is not P-1 by Moody's and the
Lien upon the subject Receivable ranks prior to the Lien created
pursuant to this Agreement; then, upon the earlier to occur of the
discovery of such breach or event by Transferor or Servicer or
receipt by Transferor of written notice of such breach or event
given by Trustee,
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each such Receivable shall be automatically removed from the Trust
on the terms and conditions set forth in subsection 2.4(d)(iii).
(ii) Removal After Cure Period. In the event of a
breach of any of the representations and warranties set forth in
subsection 2.4(b) other than a breach or event subject to
subsection 2.4 (d)(i), and as a result of such breach the related
Account becomes a Defaulted Account or the Trust's rights in, to
or under the Receivable or its proceeds are impaired or the
proceeds of such Receivable are not available for any reason to
the Trust free and clear of any Lien, then, upon the expiration of
60 days (or such longer period as may be agreed to by Trustee in
its sole discretion, but in no event later than 120 days) from the
earlier to occur of the discovery of any such event by either
Transferor or Servicer, or receipt by Transferor of written notice
of any such event given by Trustee, each such Receivable shall be
removed from the Trust on the terms and conditions set forth in
subsection 2.4(d)(iii); provided that no such removal shall be
required to be made if, on any day within such applicable period,
such representations and warranties with respect to such
Receivable shall then be true and correct in all material respects
as if such Receivable had been created on such day.
(iii) Procedures for Removal. When the provisions of
subsection 2.4(d)(i) or (ii) require removal of a Receivable,
Transferor shall accept reassignment of such Receivable (an
"Ineligible Receivable") by directing Servicer to deduct the
principal balance of each such Ineligible Receivable (other than
any portion of such principal balance constituting Discount Option
Receivables) from the Principal Receivables in the Trust (to the
extent previously included therein) and to decrease the Transferor
Interest by such amount. On and after the date of such removal,
each Ineligible Receivable shall be deducted from the aggregate
amount of Principal Receivables used in the calculation of any
Investor Percentage, the Transferor Percentage or the Transferor
Interest. If the exclusion of an Ineligible Receivable from the
calculation of the Transferor Interest would cause the Transferor
Interest to be reduced below the Minimum Transferor Interest,
Transferor shall promptly, and in no event later than 10 Business
Days after such event, make a deposit in the Excess Funding
Account in immediately available funds prior to the next
succeeding Transfer Date in an amount equal to the amount by which
the Transferor Interest would be reduced below zero. Upon the
removal of any Ineligible Receivable (and the making of any
deposit required above), the Trust shall automatically and without
further action be deemed to transfer, assign, set-over and
otherwise convey to Transferor, without recourse, representation
or warranty, all the right, title and interest of the Trust in and
to such Ineligible Receivable, all monies due or to become due
with
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respect to such Ineligible Receivable and all proceeds of such
Ineligible Receivable and Recoveries and Insurance Proceeds
relating to such Ineligible Receivable and Interchange (if any)
allocated to such Ineligible Receivable pursuant to any
Supplement. Such reassigned Ineligible Receivable shall be treated
by the Trust as collected in full as of the date on which it was
transferred. Trustee shall execute such documents and instruments
of transfer or assignment and take other actions as shall
reasonably be requested by Transferor to evidence the conveyance
of such Ineligible Receivable pursuant to this subsection
2.4(d)(iii). The obligation of Transferor set forth in this
subsection 2.4(d)(iii), or the automatic removal of such
Receivable from the Trust, as the case may be, shall constitute
the sole remedy respecting any breach of the representations and
warranties set forth in the above-referenced subsections with
respect to such Receivable available to Holders or Trustee on
behalf of Holders.
(iv) Proceeds Held by Servicer. For the purposes of
subsections 2.4(d)(i) and (ii) above, proceeds of a Receivable
shall not be deemed to be impaired hereunder solely because such
proceeds are held by Servicer (if Servicer is Transferor) for more
than the applicable period under Section 9-306(3) of the UCC as in
effect in the State of Louisiana.
(e) Reassignment of Trust Portfolio. If any of the representations
and warranties set forth in subsection 2.4(a) is not true and correct in
any material respect when made and such breach has a material adverse
effect upon the interest of the Holders in the Receivables, then either
Trustee or the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 50% of the Aggregate Investor Interest, by
notice then given in writing to Transferor (and to Trustee and Servicer, if
given by the Investor Holders), may direct Transferor to accept
reassignment of all Principal Receivables and Discount Option Receivables
within 60 days of such notice (or within such longer period as may be
specified in such notice), and Transferor shall accept reassignment of such
Principal Receivables and Discount Option Receivables on a Distribution
Date specified by Transferor (such Distribution Date, the "Reassignment
Date") occurring within such applicable period on the terms and conditions
set forth below; provided that no such reassignment shall be required to be
made if, at any time during such applicable period, the representations and
warranties contained in subsection 2.4(a) shall then be true and correct in
all material respects. Transferor shall deposit on the Transfer Date (in
New York Clearing House, next day funds) preceding the Reassignment Date an
amount equal to the reassignment deposit amount for such Receivables in the
Distribution Account or, if provided in the related Supplement for any
Series, a Series Account for such Series, for distribution to the Investor
Holders pursuant to Article XII. The reassignment deposit amount with
respect to each Series for such reassignment, unless otherwise stated in
the related Supplement, shall be equal to (i) the Investor
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Interest of such Series at the end of the day on the last day of the
Monthly Period preceding the Reassignment Date, less the amount, if any,
previously allocated for payment of principal to such Holders on the
related Distribution Date in the Monthly Period in which the Reassignment
Date occurs, plus (ii) an amount equal to all interest accrued but unpaid
on the Investor Certificates of such Series at the applicable interest rate
through such last day, less the amount, if any, previously allocated for
payment of interest to the Holders of such Series on the related
Distribution Date in the Monthly Period in which the Reassignment Date
occurs. Payment of the reassignment deposit amount with respect to each
Series, and all other amounts in the Distribution Account or the applicable
Series Account in respect of the preceding Monthly Period, shall be
considered a prepayment in full of the Receivables represented by the
Investor Certificates. On the Distribution Date following the Transfer Date
on which such amount has been deposited in full into the Distribution
Account or the applicable Series Account, the Receivables and all monies
due or to become due with respect to such Receivables and any collateral
securing any such Receivables and Recoveries and Insurance Proceeds
relating to such Receivables and Interchange (if any) allocated to the
Receivables pursuant to any Supplement and proceeds of all of the foregoing
shall be released to Transferor after payment of all amounts otherwise due
hereunder on or prior to such dates and Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be prepared by and as are reasonably
requested by Transferor to vest in Transferor, or its designee or assignee,
all right, title and interest of the Trust in and to the Receivables, all
monies due or to become due with respect to such Receivables and any
collateral securing any such Receivables and Recoveries and Insurance
Proceeds relating to such Receivables and Interchange (if any) allocated to
the Receivables pursuant to any Supplement, and proceeds of all of the
foregoing. If Trustee or the Investor Holders give notice directing
Transferor to accept reassignment as provided above, the obligation of
Transferor to accept reassignment of the Receivables and pay the
reassignment deposit amount pursuant to this subsection 2.4(e) shall
constitute the sole remedy respecting a breach of the representations and
warranties contained in subsection 2.4(a) available to the Investor Holders
or Trustee on behalf of the Investor Holders.
SECTION 2.5 Covenants of Transferor. Transferor hereby covenants
that:
(a) Receivables Not to Be Instruments. Except as the Servicer may
deem appropriate in connection with enforcement activities, Transferor
shall take no action to cause any Receivable to be evidenced by an
instrument.
(b) Security Interests. Except for the conveyances hereunder,
Transferor shall not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist any Lien on any
Receivable, whether now
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existing or hereafter created, or any interest therein; Transferor shall
immediately notify Trustee of the existence of any Lien on any Receivable;
and Transferor shall defend the right, title and interest of the Trust in,
to and under the Receivables, whether now existing or hereafter created,
against all claims of third parties claiming through or under Transferor;
provided that nothing in this subsection 2.5(b) shall prevent or be deemed
to prohibit Transferor from suffering to exist upon any of the Receivables
any Liens for municipal or other local taxes if such taxes shall not at the
time be due and payable or if Transferor shall currently be contesting the
validity thereof in good faith by appropriate proceedings and shall have
set aside on its books adequate reserves with respect thereto.
(c) Account Agreements and Account Guidelines. Transferor shall
comply with and perform its obligations under the Account Agreements
relating to the Accounts and the Account Guidelines and all applicable
rules and regulations of VISA U.S.A., Inc., MasterCard International Inc.,
and the Air Force Logistics Command's Club Card Program, as applicable,
except insofar as any failure to comply or perform would not materially and
adversely affect the rights of the Trust or the Holders hereunder or under
the Certificates. Transferor may change the terms and provisions of the
Account Agreements or the Account Guidelines in any respect (including the
reduction of the required minimum monthly payment, the calculation of the
amount, or the timing, of charge-offs and the Periodic Finance Charges and
other fees to be assessed thereon) only if such change (i) would not, in
the reasonable belief of Transferor, cause a Pay Out Event for any related
Series to occur, and (ii) is made applicable to any comparable segment of
the revolving credit accounts owned and serviced by Transferor which have
characteristics the same as, or substantially similar to, the Accounts that
are the subject of such change, except as otherwise restricted by an
endorsement, sponsorship, or other agreement between Transferor and an
unrelated third party or by the terms of the Account Agreements. Transferor
shall provide the Rating Agencies written notice if Transferor's management
contract for the Air Force Logistics Command's Club Card Program is not
renewed.
(d) Account Allocations.
(i) If Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the
provisions of this Agreement (including by reason of the
application of the provisions of Section 9.2 or an order by any
Federal governmental agency having regulatory authority over
Transferor or any court of competent jurisdiction that Transferor
not transfer any additional Principal Receivables to the Trust)
then, in any such event: (A) Transferor agrees to allocate and pay
to the Trust, after the date of such inability, all Collections
with respect to Principal
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Receivables, all Discount Option Receivables Collections, and all
amounts which would have constituted Collections with respect to
Principal Receivables and all Discount Option Receivables
Collections but for Transferor's inability to transfer such
Receivables (up to an aggregate amount equal to the amount of
Principal Receivables and the Discount Option Receivables Amount
in the Trust on such date); (B) Transferor agrees to have such
amounts applied as Collections in accordance with Article IV; and
(C) for only so long as all Collections and all amounts which
would have constituted Collections are allocated and applied in
accordance with clauses (A) and (B), Principal Receivables and
Discount Option Receivables (and all amounts which would have
constituted Principal Receivables or Discount Option Receivables,
as the case may be, but for Transferor's inability to transfer
Receivables to the Trust) that are charged off as uncollectible in
accordance with this Agreement shall continue to be allocated in
accordance with Article IV, and all amounts that would have
constituted Principal Receivables or Discount Option Receivables,
as the case may be, but for Transferor's inability to transfer
Receivables to the Trust shall be deemed to be Principal
Receivables or Discount Option Receivables, as the case may be,
for the purpose of calculating (i) the applicable Investor
Percentage with respect to any Series and (ii) the Aggregate
Investor Percentage thereunder. If Transferor is unable pursuant
to any Requirement of Law to allocate Collections as described
above, Transferor agrees that it shall in any such event allocate,
after the occurrence of such event, payments on each Account with
respect to the principal balance of such Account first to the
oldest principal balance of such Account and to have such payments
applied as Collections in accordance with Article IV. The parties
hereto agree that Finance Charge Receivables, whenever created,
accrued in respect of Principal Receivables that have been
conveyed to the Trust, or that would have been conveyed to the
Trust but for the above described inability to transfer such
Receivables, shall continue to be a part of the Trust
notwithstanding any cessation of the transfer of additional
Principal Receivables and Discount Option Receivables to the
Trust, and Collections with respect thereto shall continue to be
allocated and paid in accordance with Article IV.
(ii) If Transferor accepts reassignment of an
Ineligible Receivable pursuant to subsection 2.4(d), then, in any
such event, Transferor agrees to account for payments received
with respect to such Ineligible Receivable separately from its
accounting for Collections on Principal Receivables retained by
the Trust. If payments received from or on behalf of an Obligor
are not specifically applicable either to an Ineligible Receivable
of such Obligor reassigned to Transferor or to the Receivables of
such Obligor retained in the Trust, then Transferor agrees to
allocate payments proportionately based on the total amount of
Principal
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Receivables of such Obligor retained in the Trust and the total
amount owing by such Obligor on any Ineligible Receivables
reassigned to Transferor, and the portion allocable to any
Principal Receivables retained in the Trust shall be treated as
Collections and deposited in accordance with the provisions of
Article IV.
(e) Delivery of Collections. If at any time Transferor ceases to
act as Servicer, Transferor shall pay to the Successor Servicer all
payments received by Transferor in respect of the Receivables as soon as
practicable after receipt thereof by Transferor.
(f) Conveyance of Accounts. Transferor shall not convey, assign,
exchange or otherwise transfer the Accounts to any Person prior to the
termination of this Agreement pursuant to Article XII; provided that
Transferor shall not be prohibited hereby from conveying, assigning,
exchanging or otherwise transferring the Accounts in connection with a
transaction complying with the provisions of Section 7.2.
SECTION 2.6 Addition of Accounts. (a) If during any period of
thirty consecutive days, the Transferor Interest averaged over that period
is less than the Minimum Transferor Interest for that period, Transferor
shall designate additional Eligible Accounts ("Additional Accounts") from
the Bank Portfolio to be included as Accounts in a sufficient amount such
that the average Transferor Interest for such thirty-day period, computed
by assuming that the amount of the Principal Receivables of such Additional
Accounts shall be deemed to be outstanding in the Trust during each day of
such thirty-day period, is at least equal to the Minimum Transferor
Interest. In addition, if on any Record Date the sum of the Aggregate
Principal Receivables plus the principal amount on deposit in the Excess
Funding Account is less than the Minimum Aggregate Principal Receivables,
Transferor shall designate Additional Accounts from the Bank Portfolio to
be included as Accounts in a sufficient amount such that the Aggregate
Principal Receivables plus the principal amount on deposit in the Excess
Funding Account will be equal to or greater than the Minimum Aggregate
Principal Receivables. Receivables from all such Additional Accounts shall
be transferred to the Trust on or before the tenth Business Day following
such thirty-day period or Record Date, as the case may be. In lieu of, or
in addition to, designating Additional Accounts as required above,
Transferor may (subject to compliance with applicable securities laws), on
or before such tenth business day, convey to the Trust participations or
trust certificates representing undivided legal or beneficial interests in
a pool of assets primarily consisting of receivables arising under
revolving credit card accounts or other revolving credit accounts owned by
Transferor or any of its Affiliates and collections thereon
("Participations"). Any addition of Participations to the Trust (whether
pursuant
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to this subsection (a) or subsection (b) below) shall be effected by an
amendment hereto, dated the applicable Addition Date, pursuant to
subsection 13.1(a).
(b) In addition to its obligation under subsection 2.6(a),
Transferor may, but shall not be obligated to, from time to time designate
Additional Accounts or Participations to be included as Trust Assets, in
either case as of the applicable Addition Date.
(c) Additional Accounts that Transferor is required to designate
pursuant to subsection 2.6(a), or elects to designate pursuant to
subsection 2.6(b), shall be treated as Automatic Additional Accounts (with
the result that the Rating Agency Condition will not have to be satisfied
with respect to such designation), so long as (x) such Additional Accounts
are MasterCard, VISA or Private Label accounts originated by Transferor in
the ordinary course of business and (y) the number of such new Additional
Accounts would not exceed an amount equal to the lesser of:
(i) the excess (if any) of (A) 15% of the aggregate
number of Accounts determined as of the first day of the third
Monthly Period prior to the applicable Addition Date (or, if
later, as of the Initial Closing Date) over (B) the aggregate
number of Automatic Additional Accounts the Addition Date for
which has occurred since the first day of such third prior Monthly
Period (or, if later, since the Initial Closing Date); and
(ii) the excess (if any) of (A) 20% of the aggregate
number of Accounts determined as of the first day of the calendar
year in which the Addition Date occurs (or, if later, as of the
Initial Closing Date) over (B) the aggregate number of Automatic
Additional Accounts the Addition Date for which has occurred since
the first day of such calendar year (or, if later, since the
Initial Closing Date).
(d) Transferor agrees that any transfer of Receivables from
Additional Accounts or Participations under subsection 2.6(a) or (b) shall
occur only upon satisfaction of the following conditions (to the extent
applicable):
(i) on or before the fifth Business Day prior to the
Addition Date with respect to additions pursuant to subsection
2.6(a) and on or before the tenth Business Day prior to the
Addition Date with respect to additions pursuant to subsection
2.6(b) (the "Notice Date"), Transferor shall give Trustee, each
Rating Agency and Servicer written notice that such Additional
Accounts or Participations will be included, which notice shall
specify the approximate aggregate amount of the Receivables or
Participations to be transferred;
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(ii) on or before the Addition Date, Transferor shall
have delivered to Trustee a written assignment (including an
acceptance by Trustee on behalf of the Trust for the benefit of
the Investor Holders) in substantially the form of Exhibit A (the
"Assignment") and Transferor shall have indicated in its computer
files that the Receivables created in connection with the
Additional Accounts have been transferred to the Trust and, within
ten Business Days thereafter, Transferor shall have delivered to
Trustee an Account Schedule relating to the Additional Accounts,
which Account Schedule list shall be deemed automatically, as of
the date of such Assignment, incorporated into and made a part of
such Assignment and this Agreement;
(iii) Transferor shall represent and warrant that (A)
each Additional Account is an Eligible Account, and each
Receivable in such Additional Account is an Eligible Receivable,
in each case as of the Addition Cut-Off Date, (B) no selection
procedures believed by Transferor to be materially adverse to the
interests of the Investor Holders were utilized in selecting the
Additional Accounts from the available Eligible Accounts from the
Bank Portfolio, (C) as of the Addition Date, Transferor is not
insolvent and (D) in the reasonable belief of Transferor, the
transfer of the Receivables from such Additional Accounts shall
not cause a Pay Out Event to occur;
(iv) Transferor shall represent and warrant that (A)
as of the Addition Date, the Assignment constitutes either (x) a
valid transfer and assignment to Trustee, on behalf of the Trust,
of all right, title and interest of Transferor in and to the
Receivables then existing and thereafter created in the Additional
Accounts, and all monies due or to become due with respect to such
Receivables (including all Finance Charge Receivables and
Recoveries), and Insurance Proceeds relating to such Receivables
and all proceeds of all of the foregoing, all of which will be
held by Trustee on behalf of the Trust, free and clear of any Lien
of any Person claiming through or under Transferor or any of its
Affiliates, except for (i) Liens permitted under subsection
2.5(b), and (ii) the Transferor Interest or (y) a grant of a
security interest in such property to Trustee, for the benefit of
the Investor Holders, which is enforceable with respect to then
existing Receivables in the Additional Accounts, the proceeds
thereof and any Insurance Proceeds and Recoveries relating thereto
upon the conveyance of such Receivables to the Trust, and which
will be enforceable with respect to the Receivables thereafter
created in respect of Additional Accounts conveyed on such
Addition Date, the proceeds thereof and any Insurance Proceeds and
Recoveries relating thereto upon such creation; and (B) if the
Assignment constitutes the grant of a security interest to Trustee
in such property, upon the filing of
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financing statements as described in Section 2.1 with respect to
such Additional Accounts and in the case of the Receivables
thereafter created in such Additional Accounts and the proceeds
thereof, and any Insurance Proceeds and Recoveries relating
thereto, upon such creation, Trustee shall have a first priority
perfected security interest in such property (subject to Section
9-306 of the UCC as in effect in the State of Louisiana), except
for Liens permitted under subsection 2.5(b);
(v) Transferor shall deliver to Trustee an Officer's
Certificate confirming the items set forth in clauses (ii) through
(iv);
(vi) Transferor shall deliver an Opinion of Counsel
with respect to the Receivables in the Additional Accounts to
Trustee (with a copy to each Rating Agency for any outstanding
Series) substantially in the form of Exhibit D; and
(vii) the Rating Agency Condition shall have been
satisfied as to the initial transfer of Receivables from such
Additional Accounts (other than Automatic Additional Accounts) or
Participations.
SECTION 2.7 Removal of Accounts. (a) Subject to the conditions set
forth below, Transferor may, but shall not be obligated to, designate
Receivables from Accounts for deletion and removal ("Removed Accounts")
from the Trust; provided that Transferor shall not make more than one such
designation in any Monthly Period. On or before the fifth Business Day (the
"Removal Notice Date") prior to the date on which the designated Removed
Accounts will be reassigned by Trustee to Transferor (the "Removal Date"),
Transferor shall give Trustee and Servicer written notice that the
Receivables from such Removed Accounts are to be reassigned to Transferor.
(b) Transferor shall 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 on any Removal Date shall not, in the reasonable belief
of Transferor, (a) cause a Pay Out Event to occur, provided that
for the purposes of this subsection 2.7(b)(i)(a), the Receivables
of each Removed Account shall be considered to have been removed
as of the Removal Date, (b) cause the Transferor Interest as a
percentage of the aggregate amount of Principal Receivables to be
less than the Minimum Transferor Percentage on such Removal Date,
(c) cause the aggregate amount of Principal Receivables to be less
than the Minimum Aggregate Principal Receivables, or (d)
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result in the failure to make any payment specified in the related
Supplement with respect to any Series;
(ii) on or prior to the Removal Date, Transferor
shall have delivered to Trustee for execution a written assignment
substantially in the form of Exhibit F (the "Reassignment") and,
within five Business Days thereafter, Transferor shall have
delivered to Trustee a computer file or microfiche list containing
an accurate list of all Removed Accounts identified by account
number and the aggregate amount of the Receivables in such Removed
Accounts as of the Removal Date, which computer file or microfiche
list shall as of the Removal Date modify and amend and be made a
part of this Agreement;
(iii) Transferor shall represent and warrant that no
selection procedures believed by Transferor to be materially
adverse to the interests of the Holders were utilized in selecting
the Removed Accounts to be removed from the Trust;
(iv) on or before the tenth Business Day prior to the
Removal Date, each Rating Agency shall have received notice of
such proposed removal of the Receivables of such Accounts, and the
Rating Agency Condition shall have been satisfied with respect to
the removal; and
(v) Transferor shall have delivered to Trustee an
Officer's Certificate confirming the items set forth in clauses
(i) through (iv).
Upon satisfaction of the above conditions, Trustee shall execute
and deliver the Reassignment to Transferor, and the Receivables from the
Removed Accounts shall no longer constitute a part of the Trust; provided,
that, if Transferor so elects, Receivables existing in Removed Accounts
prior to the Removal Date may remain in the Trust, in which case (x)
Servicer shall allocate, after the Removal Date and until the balance of
such retained Receivables has been reduced to zero (in accordance with the
following allocation method), payments on each such Removed Account with
respect to the principal balance of such Account first to the oldest
principal balance of such Account and apply such payments as Collections in
accordance with Article IV, and (y) Finance Charge Receivables, whenever
created, accrued in respect of retained Principal Receivables in Removed
Accounts (the balance of which shall be determined in accordance with the
allocation rule specified in clause (x)) shall continue to be a part of the
Trust notwithstanding any cessation of the transfer of additional Principal
Receivables from the related Removed Accounts to the Trust, and Collections
with respect thereto shall continue to be allocated and paid in accordance
with Article IV. Transferor may impose additional conditions upon the
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designation of Removed Accounts that it determines are necessary for
Transferor to derecognize the Receivables under applicable accounting
principles.
(c) Transferor may, but shall not be obligated to, designate at
any time Zero Balance Accounts, any future receivables of which will no
longer be part of the Trust, and to remove from its computer records the
designation of Receivables arising in such Accounts as having been
transferred to the Trust.
SECTION 2.8 Discount Option. Transferor may at any time, upon at
least 30 days' prior written notice to Servicer, Trustee, each Credit
Enhancement Provider and each Rating Agency, designate a percentage, which
may be a fixed percentage or a variable percentage based on a formula (the
"Discount Percentage"), of the amount of Principal Receivables (determined
before subtracting Discount Option Receivables) arising in all of the
Accounts on and after such designation (and, if so elected by Transferor,
Principal Receivables then existing), or for the period specified, to be
treated as Discount Option Receivables (collectively, "Discount Option
Receivables"), and Transferor may from time to time increase, reduce or
eliminate the Discount Percentage for Discount Option Receivables arising
in the Accounts on and after the date of such change; provided that no such
designation or changes to the Discount Percentage shall become effective
unless the following conditions have been satisfied:
(i) the designation of Discount Option Receivables
(or increase, reduction or elimination of the Discount Percentage)
shall not, in the reasonable belief of Transferor, cause a Pay Out
Event to occur or cause an event which with notice or the lapse of
time or both would constitute a Pay Out Event;
(ii) on or before the date specified in the written
notice, Transferor shall have notified each Rating Agency of the
exercise of Transferor's rights under this Section 2.8 and the
Rating Agency Condition shall have been satisfied; and
(iii) Transferor shall have delivered to Trustee an
Officer's Certificate confirming the items set forth in clauses
(i) and (ii). Trustee may conclusively rely on such Officer's
Certificate, shall have no duty to make inquiries with regard to
the matters set forth therein and shall incur no liability in so
relying.
SECTION 2.9 Additional Transferors. Transferor may designate
additional or substitute Persons to be included as Transferors under this
Agreement by an amendment to this Agreement (which amendment shall be
subject to Section 13.1 and to any applicable restrictions in the
Supplement for any outstanding Series);
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provided that prior to any such designation and issuance the conditions set
forth in Section 6.3(b) and the Rating Agency Condition shall have been
satisfied.
ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.1 Acceptance of Appointment and Other Matters Relating
to Servicer. (a) Transferor agrees to act as Servicer under this Agreement.
The Investor Holders of each Series by their acceptance of the related
Certificates consent to Transferor acting as Servicer.
(b) Servicer shall service and administer the Receivables and
shall collect payments due under the Receivables in accordance with its
customary and usual servicing procedures for servicing credit card or other
receivables comparable to the Receivables and in accordance with the
Account Guidelines and shall have full power and authority, acting alone or
through any party properly designated by it hereunder, to do any and all
things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the
foregoing and subject to Section 10.1, Servicer is hereby authorized and
empowered (i) to make withdrawals from the Collection Account as set forth
in this Agreement, (ii) unless such power and authority is revoked by
Trustee on account of the occurrence of a Servicer Default pursuant to
Section 10.1, to instruct Trustee to make withdrawals and payments from the
Finance Charge Account, the Excess Funding Account and any Series Account,
in accordance with such instructions as set forth in this Agreement, (iii)
unless such power and authority is revoked by Trustee on account of the
occurrence of a Servicer Default pursuant to Section 10.1, to instruct
Trustee in writing, as set forth in this Agreement, (iv) to execute and
deliver, on behalf of the Trust for the benefit of the Holders, any and all
instruments of satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, with respect to the
Receivables and, after the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable law and regulations, to
commence enforcement proceedings with respect to such Receivables and (v)
to make any filing, reports, notices, applications, registrations with, and
to seek any consents or authorizations from, the Securities and Exchange
Commission and any state securities authority on behalf of the Trust as may
be necessary or advisable to comply with any Federal or state securities or
reporting requirements. Trustee agrees that it shall promptly follow the
written instructions of Servicer to withdraw funds from the Excess Funding
Account, the Finance Charge Account or any Series Account and to take any
action required under any Credit Enhancement, in each case at such time or
times as required under this Agreement. Trustee shall execute at Servicer's
written request such documents prepared by Transferor and acceptable to
Trustee as may be necessary or
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appropriate to enable Servicer to carry out its servicing and administrative
duties hereunder.
(c) If Transferor is unable for any reason to transfer Receivables
to the Trust in accordance with the provisions of this Agreement (including
by reason of the application of the provisions of Section 9.2 or the order
of any Federal governmental agency having regulatory authority over
Transferor or any court of competent jurisdiction that Transferor not
transfer any additional Principal Receivables to the Trust) then, in any
such event, (A) Servicer agrees to allocate, after such date, all
Collections with respect to Principal Receivables, all Discount Option
Receivables Collections and all amounts which would have constituted
Collections with respect to Principal Receivables and all Discount Option
Receivables Collections but for Transferor's inability to transfer such
Receivables (up to an aggregate amount equal to the aggregate amount of
Principal Receivables and the Discount Option Receivables Amount in the
Trust as of such date) in accordance with subsection 2.5(d); (B) Servicer
agrees to apply such amounts as Collections in accordance with Article IV,
and (C) for only so long as all Collections and all amounts which would
have constituted Collections are allocated and applied in accordance with
clauses (A) and (B) above, Principal Receivables and Discount Option
Receivables (and all amounts which would have constituted Principal
Receivables or Discount Option Receivables, as the case may be, but for
Transferor's inability to transfer Receivables to the Trust) that are
charged off as uncollectible in accordance with this Agreement shall
continue to be allocated in accordance with Article IV, and all amounts
which would have constituted Principal Receivables or Discount Option
Receivables, as the case may be, but for Transferor's inability to transfer
Receivables to the Trust shall be deemed to be Principal Receivables for
the purpose of calculating (i) the applicable Investor Percentage with
respect to any Series and (ii) the Aggregate Investor Percentage
thereunder. If Servicer is unable pursuant to any Requirement of Law to
allocate payments on the Accounts as described above, Servicer agrees that
it shall in any such event allocate, after the occurrence of such event,
payments on each Account with respect to the principal balance of such
Account first to the oldest principal balance of such Account and to have
such payments applied as Collections in accordance with Article IV. The
parties hereto agree that Finance Charge Receivables, whenever created,
accrued in respect of Principal Receivables which have been conveyed to the
Trust, or which would have been conveyed to the Trust but for the above
described inability to transfer such Receivables, shall be deemed to be a
part of the Trust notwithstanding any cessation of the transfer of
additional Principal Receivables and Discount Option Receivables to the
Trust, and Collections with resect thereto shall continue to be allocated
and paid in accordance with Article IV.
(d) If Transferor accepts reassignment of an Ineligible Receivable
pursuant to subsection 2.4(d) then, in any such event, Servicer agrees to
account for
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payments received with respect to such Ineligible Receivable separately
from its accounting for Collections on Principal Receivables retained by
the Trust. If payments received from or on behalf of an Obligor are not
specifically applicable either to an Ineligible Receivable of such Obligor
reassigned to Transferor or to Receivables of such Obligor retained in the
Trust, then Servicer agrees to allocate payments proportionately based on
the total amount of Principal Receivables of such Obligor retained in the
Trust and the total amount owing by such Obligor on any Ineligible
Receivables purchased by Transferor, and the portion allocable to any
Principal Receivables retained in the Trust shall be treated as Collections
and deposited in accordance with the provisions of Article IV.
(e) Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables
from the procedures, offices, employees and accounts used by Servicer in
connection with servicing other credit card receivables.
(f) Servicer shall maintain 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 Servicer believes to be reasonable from time to
time. The relationship of Servicer (and any Successor Servicer other than
Trustee) to Trustee under this Agreement is intended by the parties to be
that of independent contractor and not that of a joint venturer, partner,
or agent of Trustee, including any act of Servicer performed in the name of
Trustee.
SECTION 3.2 Servicing Compensation. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set
forth in the immediately following paragraph, the Servicer shall be
entitled to receive a servicing fee (the "Servicing Fee") prior to the
termination of the Trust pursuant to Section 12.1. The Servicing Fee shall
be payable, with respect to each Series, at the times and in the amounts
set forth in the related Supplement. The Servicing Fee shall be allocated
between the Investor Certificates (the "Investor Servicing Fee") and
Transferor (the "Transferor Servicing Fee").
Servicer's expenses include the amounts due to Trustee pursuant to
Section 11.5 and the reasonable fees and disbursements of independent
public accountants and all other expenses incurred by Servicer in
connection with its activities hereunder; provided that Servicer shall not
be liable for any liabilities, costs or expenses of the Trust, the Investor
Holders or the Certificate Owners arising under any tax law, including any
Federal, state or local income or franchise taxes or any other tax imposed
on or measured by income (or any interest or penalties with respect thereto
or arising from a failure to comply therewith). Servicer shall be required
to pay such expenses for its own account and shall not be entitled to any
payment therefor other than the Servicing Fee.
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SECTION 3.3 Representations, Warranties and Covenants of Servicer.
First NBC, as initial Servicer, hereby makes, and any Successor Servicer by
acceptance of its appointment hereunder shall make, the following
representations and warranties on which Trustee has relied in accepting the
Receivables in trust and in authenticating the Certificates issued on the
Initial Closing Date:
(a) Organization and Good Standing. Servicer is a national banking
association duly organized, validly existing and in good standing under the
laws of the United States and has full corporate power, authority and legal
right to own its properties and conduct its credit card business as such
properties are presently owned and as such business is presently conducted,
and to execute, deliver and perform its obligations under this Agreement.
(b) Due Qualification. Servicer is not required to qualify nor
register as a foreign corporation in any state in order to service the
Receivables as required by this Agreement and has obtained all licenses and
approvals necessary in order to so service the Receivables as required
under Federal and Louisiana law. If Servicer shall be required by any
Requirement of Law to so qualify or register or obtain such license or
approval, then it shall do so.
(c) Due Authorization. The execution, delivery, and performance of
this Agreement have been duly authorized by Servicer by all necessary
corporate action on the part of Servicer and this Agreement will remain,
from the time of its execution, an official record of Servicer.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights in
general and the rights of creditors of national banking associations and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(e) No Violation. The execution and delivery of this Agreement by
Servicer and the performance of the transactions contemplated by this
Agreement by Servicer, and the fulfillment of the terms hereof applicable
to Servicer, will not conflict with, violate, result in any breach of any
of the material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, any Requirement of Law
applicable to Servicer or any material indenture, contract, agreement,
mortgage, deed of trust or other instrument to which Servicer is a party or
by which it is bound.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of Servicer, threatened against Servicer
before any
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court, regulatory body, administrative agency or other tribunal or
governmental instrumentality seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by
this Agreement, seeking any determination or ruling that, in the reasonable
judgment of Servicer, would materially and adversely affect the performance
by Servicer of its obligations under this Agreement, or seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement.
(g) Compliance with Requirements of Law. Servicer shall duly
satisfy all obligations on its part to be fulfilled under or in connection
with each Receivable and the related Account, will maintain in effect all
qualifications required under Requirements of Law in order to service
properly each Receivable and the related Account and will comply in all
material respects with all other Requirements of Law in connection with
servicing each Receivable and the related Account the failure to comply
with which would have a material adverse effect on the Holders or any
Credit Enhancement Provider.
SECTION 3.4 Reports and Records for Trustee. (a) Daily Reports. On
each Business Day, Servicer, with prior notice, shall prepare and make
available at the office of Servicer for inspection by Trustee a record
setting forth (i) the aggregate amount of Collections processed by Servicer
on the preceding Business Day and (ii) the aggregate amount of Receivables
as of the close of business on the preceding Business Day; provided that
(x) Servicer shall be required to so report the information provided in
clause (i) only at such times as Servicer is required to make deposits,
payments and withdrawals on a daily basis, rather than on each Transfer
Date, as permitted in Section 4.3(a), and (y) Servicer shall be required to
so report the information provided in clause (ii) on any day in any Monthly
Period only if the Aggregate Principal Receivables as of the end of the
prior Monthly Period, minus the sum of the Adjusted Aggregate Investor
Interest and the outstanding principal amount of any purchased interest
sold pursuant to subsection 6.9(d) is less than 20% of the Aggregate
Principal Receivables as of the end of such prior Monthly Period.
(b) Monthly Servicer's Certificate. Unless otherwise stated in the
related Supplement with respect to any Series, on each Determination Date
Servicer shall forward, as provided in Section 13.5, to Trustee, the Paying
Agent, any Credit Enhancement Provider and each Rating Agency, a
certificate of a Servicing Officer in the form of Exhibit B (which includes
the Schedule thereto specified as such in each Supplement) as to such
matters as are set forth in Exhibit B.
SECTION 3.5 Annual Servicer's Certificate. On or before March 31
of each calendar year, beginning with March 31, 1998, Servicer will
deliver, as provided in Section 13.5, to Trustee, any Credit Enhancement
Provider and each Rating Agency, an Officer's Certificate substantially in
the form of Exhibit C
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stating that (a) a review of the activities of Servicer during the
twelve-month period ending on December 31 of the immediately prior calendar
year, or for the initial period, from the Closing Date until December 31,
1997, and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) to the best of
such officer's knowledge, based on such review, Servicer has fully
performed all its obligations under this Agreement throughout such period,
or, if there has been a default in the performance of any such obligation,
specifying each such default known to such officer and the nature and
status thereof. A copy of such certificate may be obtained by any Investor
Holder by a request in writing to Trustee addressed to the Corporate Trust
Office.
SECTION 3.6 Annual Independent Accountants' Servicing Report. (a)
On or before March 31 of each calendar year, beginning with March 31, 1998,
Servicer shall cause a firm of nationally recognized independent certified
public accountants (who may also render other services to Servicer or
Transferor) to furnish, as provided in Section 13.5, a report to Trustee,
any Credit Enhancement Provider and each Rating Agency, to the effect that
such firm has applied certain agreed upon procedures with Servicer and such
firm has examined certain documents and records relating to the servicing
of Accounts under this Agreement and each Supplement, compared the
information contained in Servicer's certificates delivered pursuant to this
Agreement during the period covered by such report with such documents and
records, and that, on the basis of such agreed upon procedures, such firm
is of the opinion (assuming the accuracy of any reports generated by
Servicer's third party agents) that such servicing was conducted in
compliance with this Agreement during the period covered by such report
(which shall be the prior calendar year, or the portion thereof falling
after the Initial Closing Date), except for such exceptions, errors or
irregularities as such firm shall believe to be immaterial to the financial
statements of Servicer and such other exceptions, errors or irregularities
as shall be set forth in such report. Unless otherwise provided with
respect to any Series in the related Supplement, a copy of such report may
be obtained by any Investor Holder by a request in writing to Trustee
addressed to the Corporate Trust Office.
(b) On or before March 31 of each calendar year, beginning with
March 31, 1998, Servicer shall cause a firm of nationally recognized
independent certified public accountants (who may also render other
services to Servicer or Transferor) to furnish, as provided in Section
13.5, a report, prepared using generally accepted auditing standards, to
Trustee and each Rating Agency to the effect that they have compared the
mathematical calculations of each amount set forth in the monthly
certificates forwarded by Servicer pursuant to subsection 3.4(b) during the
period covered by such report (which shall be the prior calendar year, or
the portion thereof falling after the Initial Closing Date), with
Servicer's computer reports which were the source of such amounts and that
on the basis of such comparison, such firm is of the opinion that such
amounts are in agreement,
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except for such exceptions as it believes to be immaterial to the financial
statements of Servicer and such other exceptions as shall be set forth in
such report. A copy of such report may be obtained by any Investor Holder
by a request in writing to Trustee addressed to the Corporate Trust Office.
SECTION 3.7 Tax Treatment. Transferor has structured this
Agreement and the Investor Certificates with the intention that the
Investor Certificates will qualify under applicable Federal, state, local
and foreign tax law as indebtedness. Transferor, Servicer, each Investor
Holder, and each Certificate Owner, agree to treat and to take no action
inconsistent with the treatment of the Investor Certificates (or beneficial
interest therein) as indebtedness for purposes of Federal, state, local and
foreign income or franchise taxes and any other tax imposed on or measured
by income. Each Investor Holder, by acceptance of its Certificate and each
Certificate Owner, by acquisition of a beneficial interest in a
Certificate, agree to be bound by the provisions of this Section 3.7.
Notwithstanding the foregoing or any other provision of this Agreement
Transferor may, at its option, make any election to have the Trust or any
Series treated as a "financial asset securitization investment trust" under
the Internal Revenue Code, so long as prior to that election taking effect
Transferor delivers to Trustee an Opinion of Counsel to the effect that the
election (a) will not cause the Trust to be classified, for Federal income
tax purposes, as an association (or publicly traded partnership) taxable as
a corporation and (b) will not cause or constitute an event in which gain
or loss would be recognized by any Investor Holder.
SECTION 3.8 Notices to Transferor. If Transferor is no longer
acting as Servicer, any Successor Servicer pursuant to Section 10.2 shall
deliver or make available to Transferor each certificate and report
required to be prepared, forwarded or delivered thereafter pursuant to
Sections 3.4, 3.5 and 3.6.
SECTION 3.9 Reports to the Commission. Servicer shall, on behalf
of the Trust, cause to be filed with the Securities and Exchange Commission
any periodic reports required to be filed under the provisions of the
Securities Exchange Act of 1934 and the rules and regulations of the
Securities and Exchange Commission thereunder. Transferor, if Transferor is
not Servicer, shall, at the expense of Servicer, cooperate in any
reasonable request of Servicer in connection with such filings.
ARTICLE IV RIGHTS OF HOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS
SECTION 4.1 Rights of Holders. Each Series of Investor
Certificates shall represent Undivided Interests in the Trust, including
the benefits of any Credit Enhancement issued with respect to such Series
and the right to receive the
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Collections and other amounts at the times and in the amounts specified in
this Article IV to be deposited in the Investor Accounts and any other
Series Account (if so specified in the related Supplement) or to be paid to
the Investor Holders of such Series. The aggregate interest represented by
such Certificates in the Principal Receivables at any time shall not exceed
an amount equal to the Aggregate Investor Interest at such time. Transferor
shall own the remaining undivided interest in the Trust, including the
right to receive the Collections and other amounts at the times and in the
amounts specified in this Article IV to be paid on account of the
Transferor Interest. Transferor's aggregate interest in the Principal
Receivables at any time shall not exceed the Transferor Interest at such
time and Transferor shall not have any interest in the Investor Accounts,
except as provided in this Agreement, or the benefits of any Credit
Enhancement issued with respect to any Series. If this Agreement is deemed
to constitute a grant to Trustee, for the benefit of the Investor Holders,
of a security interest in the Receivables and other Trust Assets, then the
Transferor Interest shall be deemed to represent Transferor's equity in the
collateral granted.
SECTION 4.2 Establishment of Accounts. (a) The Collection Account.
Servicer, for the benefit of the Holders, shall establish and maintain in
the name of Trustee, on behalf of the Trust, a non-interest bearing
segregated account (the "Collection Account") bearing a designation clearly
indicating that the funds deposited therein are held in trust for the
benefit of the Holders, or shall cause such Collection Account to be
established and maintained, with an office or branch of (i) a depository
institution or trust company (which may include Trustee, Servicer or an
Affiliate of Servicer) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia and
with deposit insurance provided by BIF or SAIF; provided that at all times
the certificates of deposit, short-term deposits or commercial paper or the
long-term unsecured debt obligations (other than such obligation whose
rating is based on collateral or on the credit of a Person other than such
institution or trust company) of the depository institution or trust
company at which the Collection Account is maintained (including, if
applicable, Servicer) shall have a credit rating from Moody's and Standard
& Poor's of at least P-1 and A-1+, respectively, and, if rated by Fitch, a
credit rating from Fitch of at least F-1, in the case of the certificates
of deposit, short-term deposits or commercial paper, or a rating from
Moody's of at least Aa3 and from Standard & Poor's of at least AA-, and, if
rated by Fitch, from Fitch of at least AA-, in the case of the long-term
unsecured debt obligations, or (ii) a depository institution, which may
include Trustee, which is acceptable to each Rating Agency (any of the
foregoing being a "Qualified Institution"); provided further, that upon the
insolvency of Servicer, the Collection Account shall not be permitted to be
maintained with Servicer. Pursuant to authority granted to it pursuant to
subsection 3.1(b), Servicer shall have the revocable power to withdraw
funds from the Collection Account for the purposes of carrying out its
duties hereunder.
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(b) The Finance Charge and Excess Funding Accounts. Trustee, for
the benefit of the Investor Holders, shall establish and maintain with
Trustee in the name of the Trust two segregated trust accounts (the
"Finance Charge Account" and the "Excess Funding Account," respectively)
bearing a designation clearly indicating that the funds therein are held
for the benefit of the Investor Holders, or shall cause such Finance Charge
Account or Excess Funding Account to be established and maintained with an
office or branch of a Qualified Institution. Trustee shall possess all
right, title and interest in all funds and Permitted Investments on deposit
from time to time in the Finance Charge Account and the Excess Funding
Account and in all proceeds thereof. The Finance Charge Account and the
Excess Funding Account shall be under the sole dominion and control of
Trustee for the benefit of the Investor Holders. Pursuant to authority
granted to it hereunder, Servicer shall have the revocable power to
instruct Trustee to withdraw funds from the Finance Charge Account and the
Excess Funding Account for the purpose of carrying out Servicer's duties
hereunder. Trustee at all times shall maintain accurate records reflecting
each transaction in the Finance Charge Account and the Excess Funding
Account, and that funds held therein shall at all times be held in trust
for the benefit of the Investor Holders.
(c) The Distribution Account. Trustee, for the benefit of the
Investor Holders, shall cause to be established and maintained in the name
of the Trust, a segregated trust account (the "Distribution Account")
bearing a designation clearly indicating that the funds deposited therein
are held in trust for the benefit of the Investor Holders, or shall cause
such Distribution Account to be established and maintained, with an office
or branch of a Qualified Institution (other than Transferor). Trustee shall
possess all right, title and interest in all funds on deposit from time to
time in the Distribution Account and in all proceeds thereof. The
Distribution Account shall be under the sole dominion and control of
Trustee for the benefit of the Investor Holders.
(d) Series Accounts. If so provided in the related Supplement,
Trustee, for the benefit of the Investor Holders, shall cause to be
established and maintained in the name of the Trust, one or more Series
Accounts. Each such Series Account shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Investor Holders of such Series. Each such Series Account will be a trust
account, if so provided in the related Supplement, and will have the other
features and be applied as set forth in the related Supplement.
(e) Administration of the Finance Charge Account, Excess Funding
Account and Distribution Account. Funds on deposit in the Excess Funding
Account, the Finance Charge Account and the Distribution Account shall at
all times be invested by Trustee at the written direction of Servicer in
Permitted Investments. Any such investment in the Finance Charge Account or
the Excess Funding Account shall mature and such funds shall be available
for withdrawal on or prior
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to the Transfer Date related to the Monthly Period in which such funds are
processed for collection, or if so specified in the related Supplement,
immediately preceding a Distribution Date. Funds on deposit in the
Distribution Account on any Transfer Date shall be invested in such
Permitted Investments that will mature or be payable on demand so that all
such funds will be available for withdrawal on the related Distribution
Date. Trustee shall maintain for the benefit of the Investor Holders
possession of the negotiable instruments or securities evidencing the
Permitted Investments described in clause (a) and, as applicable, (c) of
the definition thereof from the time of purchase thereof until the time of
sale or maturity; provided that no such investment shall be disposed of
prior to its maturity date. On each Transfer Date, all interest and other
investment earnings (net of losses and investment expenses) accrued on or
prior to that Transfer Date in connection with the investment of funds on
deposit in the Collection Account, the Excess Funding Account, the Finance
Charge Account, and the Distribution Account since the prior Transfer Date
shall be deemed to constitute, and for all purposes hereof shall be treated
as, Collections of Finance Charge Receivables with respect to the prior
Monthly Period, except as otherwise specified in the related Supplement.
For purposes of determining the availability of funds or the balances in
the Finance Charge Account, the Excess Funding Account and the Distribution
Account for any reason under this Agreement, all investment earnings on
such funds shall be deemed not to be available or on deposit.
(f) Withdrawals from Excess Funding Account. Servicer shall
instruct Trustee that funds on deposit in the Excess Funding Account shall
be withdrawn and paid to Transferor on any date to the extent that no
Retention Condition would exist after such withdrawal (after giving effect
to any addition of Principal Receivables to the Trust on such date). In
addition, on any Distribution Date on which one or more Series that is a
Principal Sharing Series is in an Amortization Period, Servicer shall
determine the aggregate amounts of Series Principal Shortfalls, if any,
with respect to each such Series (after giving effect to all allocation and
payment provisions in the Supplement with respect to each such Series), and
Servicer shall instruct Trustee to withdraw such amount from the Excess
Funding Account (up to an amount equal to the lesser of (x) the amount on
deposit in the Excess Funding Account after application of all transfers to
the Excess Funding Account on that day and (y) the amount, if any, by which
the Transferor Interest would be less than zero if there were no funds on
deposit in the Excess Funding Account on that day) on such Distribution
Date and allocate such amount among each such Series as specified in each
related Supplement.
SECTION 4.3 Collections and Allocations. (a) Collections. Except
as provided below, Servicer shall deposit all Collections in the Collection
Account as promptly as possible after the Date of Processing of such
Collections, but in no event later than the second Business Day following
such Date of Processing.
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In the event of the insolvency of Servicer, then, immediately upon the
occurrence of such event and thereafter, Servicer shall deposit all
Collections into the Collection Account which may no longer be established
and maintained with Servicer in accordance with subsection 4.2(a), and in
no such event shall Servicer deposit any Collections thereafter into any
account established, held or maintained with Servicer. For purposes of this
Agreement, Servicer may allocate Recoveries, fee reversals and
miscellaneous fees between the Accounts and other accounts in the Bank
Portfolio on any reasonable basis.
Servicer shall allocate such amounts to each Series of Investor
Certificates and to Transferor in accordance with this Article IV and shall
withdraw the required amounts from the Collection Account or pay such
amounts to Transferor in accordance with this Article IV, in both cases as
modified by any Supplement. Servicer shall make such deposits or payments
on the date indicated therein by wire transfer or as otherwise provided in
the Supplement for any Series of Certificates with respect to such Series.
Notwithstanding anything in this Agreement to the contrary, for so
long as, and only so long as, Transferor shall remain Servicer hereunder,
and (a)(i) Servicer provides to Trustee a letter of credit covering
collection risk of Servicer (the "Servicer Letter of Credit") or makes
other arrangements to cover Servicer's collection risk, and (ii) the Rating
Agency Condition shall have been satisfied with respect to the Servicer
Letter of Credit or such other arrangements, or (b) Transferor shall have
and maintain a certificate of deposit or unsecured short-term debt rating
of P-1 by Moody's and of at least A-1 by Standard & Poor's and, if rated by
Fitch, at least F-1 by Fitch, and deposit insurance provided by BIF or
SAIF, Servicer need not deposit Collections into the Collection Account or
from the Collection Account into the Excess Funding Account, the Finance
Charge Account or any Series Account, as provided in any Supplement, prior
to each Transfer Date, but may make such deposits, payments and withdrawals
on each Transfer Date, in an amount equal to the net amount of such
deposits, payments and withdrawals which would have been made but for the
provisions of this paragraph.
Notwithstanding anything else in this Agreement to the contrary,
with respect to any Monthly Period, whether Servicer is required to make
monthly or daily deposits from the Collection Account into the Finance
Charge Account, the Excess Funding Account or any Series Account, as
provided in any Supplement, (i) Servicer will only be required to deposit
Collections from the Collection Account into the Finance Charge Account,
the Excess Funding Account or any Series 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 Investor
Holders or to any Credit Enhancement Provider pursuant to the terms of any
Supplement or agreement relating to such Credit Enhancement and
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(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), Servicer may withdraw the excess
from the Collection Account.
(b) Allocations for Transferor. Throughout the existence of the
Trust, unless otherwise stated in any Supplement, Servicer shall allocate
to Transferor an amount equal to the product of (A) the applicable
Transferor Percentage and (B) the aggregate amount of Collections allocated
to Principal Receivables and Finance Charge Receivables in respect of each
Monthly Period. Notwithstanding anything in this Agreement to the contrary,
unless otherwise stated in any Supplement, Servicer need not deposit this
amount or any other amounts so allocated to Transferor pursuant to any
Supplement into the Collection Account and shall pay, or be deemed to pay,
such amounts as collected to Transferor.
(c) Adjustments for Miscellaneous Credits and Fraudulent Charges.
Servicer shall reduce (a "Credit Adjustment") on a net basis not later than
the Determination Date following each Monthly Period the aggregate amount
of Principal Receivables used to calculate the Transferor Interest with
respect to any Principal Receivable (i) which was created in respect of
merchandise refused or returned by the Obligor thereunder or as to which
the Obligor thereunder has successfully asserted a counterclaim or defense,
(ii) which is reduced by Servicer by the amount of any rebate, refund,
charge-back or adjustment (including Servicer errors) or (iii) which was
created as a result of a fraudulent or counterfeit charge.
If a Credit Adjustment would cause the Transferor Interest to be
an amount less than the Minimum Transferor Interest, Transferor shall make
a deposit, no later than the Business Day following the Date of Processing
of such Credit Adjustment, in the Excess Funding Account in immediately
available funds in an amount equal to the amount by which the Transferor
Interest would be less than zero after giving effect to such Credit
Adjustment on such Date of Processing.
(d) Estimation of Allocations. Until the Conversion Date:
(i) For the purposes of making the allocations described
in Article IV, all Collections received by Servicer with respect
to Receivables in each Billing Cycle shall be deemed, on each Date
of Processing, to be Collections of Finance Charge Receivables up
to the amount of Finance Charge Receivables billed as of the
opening of such Billing Cycle with respect to Accounts in such
Billing Cycle (with respect to each such Billing Cycle, the
"Billed Finance Charge Receivables"). Collections received by
Servicer with respect to Receivables in each Billing Cycle in
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excess of the related Billed Finance Charge Receivables shall be
deemed, on each Date of Processing, to be Collections of Principal
Receivables ("Billed Principal Receivables").
(ii) On a Business Day not later than the Determination
Date in the Monthly Period following the Monthly Period in which a
Billing Cycle ends (the "Collection Recomputation Date"), Servicer
shall determine the amount of Collections of Finance Charge
Receivables and the Collections of Principal Receivables received
by Servicer on each Date of Processing during such Billing Cycle
(the "Collected Finance Charge Receivables" and the "Collected
Principal Receivables," respectively). Servicer shall recompute
the allocations made on each Date of Processing during each such
Billing Cycle pursuant to subsection 4.6(e)(i) based on the amount
of Collected Finance Charge Receivables and Collected Principal
Receivables and, based upon such recomputation, (x) Servicer shall
pay to Transferor from monies in the Collection Account or, any
Series Account as provided in each Supplement any underpayment to
such Holder which such recomputation discloses, or (y) Transferor
shall pay to the Servicer any overpayment of such Holder which
such recomputation discloses, for deposit in the Collection
Account or any Series Account as provided in each Supplement for
the Monthly Period preceding such Determination Date for
allocation pursuant to Article IV. Deposits and withdrawals with
respect to the Collection Account and any Series Account shall be
allocated to each Series based on the applicable Investor
Percentage with respect to such Series as provided in the related
Supplement.
(iii) All references in this Agreement (including any
Supplement) to Default Amounts, Net Default Amounts, Recoveries
and Net Recoveries with reference to any Monthly Period shall be
deemed to refer to such amounts calculated with respect to
Accounts in each Billing Cycle for the Billing Cycles ending in
such Monthly Period and then aggregated.
Notwithstanding the foregoing, on or after the Conversion Date the
provisions of this Section 4.3(d) shall not be applicable, and Collections
shall be allocated as otherwise provided in this Agreement.
SECTION 4.4 Shared Principal Collections. On each Business Day,
Shared Principal Collections may, at the option of Transferor, be applied
(or held in the Collection Account for later application) as principal with
respect to any Variable Interest or, so long as either no Principal Sharing
Series is in an Amortization Period or no Principal Sharing Series that is
in an Amortization Period will have a Series Principal Shortfall on the
related Transfer Date (assuming no Pay Out Event occurs), be withdrawn from
the Collection Account
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and paid to Transferor; and on each Distribution Date, (a) Servicer shall
allocate Shared Principal Collections not previously so applied or paid to
each applicable Principal Sharing Series, pro rata, in proportion to the
Series Principal Shortfalls, if any, with respect to each such Series, and
any remainder may, at the option of Transferor, be applied as principal
with respect to any Variable Interest and (b) Servicer shall withdraw from
the Collection Account or applicable Series Account and pay to Transferor
any amounts representing Shared Principal Collections remaining after the
allocations and applications referred to in clause (a); provided that, if,
on any day a Retention Condition exists, Servicer shall not distribute to
Transferor any Shared Principal Collections that otherwise would be
distributed to Transferor, but shall deposit such funds in the Excess
Funding Account to the extent required so that the Retention Condition no
longer exists.
SECTION 4.5 Excess Finance Charge Collections. On each
Distribution Date, (a) Servicer shall apply the aggregate amount for all
outstanding Excess Allocation Series of the amounts which the related
Supplements specify are to be treated as "Excess Finance Charge
Collections" for the related Transfer Date to other Excess Allocation
Series, pro rata, in proportion to the Finance Charge Shortfalls, if any,
with respect to each such Series, and (b) Servicer shall withdraw (or shall
instruct Trustee to withdraw) from the Collection Account and pay to
Transferor an amount equal to the excess, if any, of (x) the aggregate
amount for all outstanding Excess Allocation Series of the amounts which
the related Supplements specify are to be treated as "Excess Finance Charge
Collections" for such Distribution Date over (y) the aggregate amount for
all outstanding Excess Allocation Series which the related Supplements
specify are "Finance Charge Shortfalls", for such Distribution Date;
provided that the sharing of Excess Finance Charge Collections among Excess
Allocation Series will continue only until such time, if any, as Transferor
shall deliver to Trustee an Officer's Certificate to the effect that, in
the reasonable belief of Transferor, the continued sharing of Excess
Finance Charge Collections among Excess Allocation Series would have
adverse regulatory implications with respect to Transferor. Following the
delivery by Transferor of such an Officer's Certificate to Trustee, there
will not be any further sharing of Excess Finance Charge Collections among
Excess Allocation Series.
SECTION 4.6 Allocation of Trust Assets to Series or Groups. To the
extent so provided in the Supplement for any Series or in an amendment to
this Agreement executed pursuant to Section 13.1(a), Receivables and
Participations conveyed to the Trust and all Collections received with
respect thereto may be allocated or applied in whole or in part to one or
more Series or Groups as may be provided in such Supplement or amendment;
provided that any such allocation and application shall be effective only
upon satisfaction of the following conditions:
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(i) on or before the fifth Business Day immediately
preceding such allocation, the Servicer shall have given Trustee
and each Rating Agency written notice of such allocation;
(ii) the Rating Agency Condition shall have been
satisfied with respect to such allocation; and
(iii) the Servicer shall have delivered to Trustee an
Officer's Certificate, dated the date of such allocation, to the
effect that the Servicer reasonably believes that such allocation
will not materially adversely affect the interests of the Holders
of any Series issued and outstanding.
Any such Supplement or amendment may provide that (i) such
allocation to one or more particular Series or Groups may terminate upon
the occurrence of certain events specified therein and (ii) upon the
occurrence of any such event, such assets and any Collections with respect
thereto shall be reallocated to other Series or Groups or to all Series,
all as shall be provided in such Supplement or amendment.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND
SHALL BE SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO ANY SERIES.]
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE SPECIFIED
IN THE SUPPLEMENT WITH RESPECT TO ANY SERIES.]
ARTICLE VI THE CERTIFICATES
SECTION 6.1 The Certificates. Subject to Sections 6.10 and 6.13,
the Investor Certificates of each Series and any Class thereof may be
issued in bearer form (the "Bearer Certificates") with attached interest
coupons and a special coupon (collectively, the "Coupons") or in fully
registered form (the "Registered Certificates"), and shall be substantially
in the form of the exhibits with respect thereto attached to the related
Supplement. The Investor Certificates shall, upon issue pursuant hereto or
to Section 6.9 or Section 6.10, be executed and delivered by Transferor to
Trustee for authentication and redelivery as provided in Sections 6.1 and
6.2. Any Investor Certificate shall be issuable in a minimum denomination
of $1,000 Undivided Interest and integral multiples thereof, unless
otherwise specified in any Supplement. Each Certificate shall be executed
by manual or facsimile signature on behalf of Transferor by its President
or any Vice President. Certificates bearing the manual or facsimile
signature of the individual who was, at the time when such signature was
affixed, authorized to sign on behalf of Transferor or Trustee shall not be
rendered invalid, notwithstanding that such individual has ceased to be so
authorized prior to the authentication and
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delivery of such Certificates or does not hold such office at the date of
such Certificates. No Certificate shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form
provided for herein, executed by or on behalf of Trustee by the manual
signature of a duly authorized signatory, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication except Bearer
Certificates which shall be dated the applicable Issuance Date as provided
in the related Supplement.
SECTION 6.2 Authentication of Certificates. On the Initial Closing
Date, Trustee shall authenticate and deliver the initial Series of Investor
Certificates, to or upon the written order of Transferor against payment to
Transferor or its designee of the Initial Investor Interest (net of any
purchase or underwriting discount) to the extent such delivery is required
pursuant to the applicable supplement. Upon the receipt of such payment and
the issuance of the Investor Certificates, such Investor Certificates shall
be fully paid and non-assessable. Upon an Issuance as provided in Section
6.9 and the satisfaction of certain other conditions specified therein,
Trustee shall authenticate and deliver the Investor Certificates of
additional Series (with the designation provided in the related
Supplement), upon the order of Transferor, to the Persons designated in
such Supplement. Upon the order of Transferor, the Certificates of any
Series shall be duly authenticated by or on behalf of Trustee, in
authorized denominations. If specified in the related Supplement for any
Series, Trustee shall authenticate and deliver outside the United States
the Global Certificate that is issued upon original issuance thereof, upon
the written order of Transferor, to the Depository against payment of the
purchase price therefor. If specified in the related Supplement for any
Series, Trustee shall authenticate Book-Entry Certificates that are issued
upon original issuance thereof, upon the written order of Transferor, to a
Clearing Agency or its nominee as provided in Section 6.10 against payment
of the purchase price thereof.
SECTION 6.3 Registration of Transfer and Exchange of Certificates.
(a) Trustee shall cause to be kept at the office or agency to be maintained
by a transfer agent and registrar (the "Transfer Agent and Registrar"), in
accordance with the provisions of Section 11.16, a register (the
"Certificate Register") in which, subject to such reasonable regulations as
it may prescribe, the Transfer Agent and Registrar shall provide for the
registration of the Investor Certificates of each Series (unless otherwise
provided in the related Supplement) and of transfers and exchanges of the
Investor Certificates as herein provided. Trustee is the initial Transfer
Agent and Registrar. If any Investor Certificate is issued as a Global
Certificate, Trustee may, or if and so long as any Series of Investor
Certificates are listed on the Luxembourg Stock Exchange and such exchange
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shall so require, Trustee shall appoint a co-transfer agent and
co-registrar in Luxembourg or another European city. Any reference in this
Agreement to the Transfer Agent and Registrar shall include any co-transfer
agent and co-registrar unless the context otherwise requires. Trustee shall
be permitted to resign as Transfer Agent and Registrar upon 30 days'
written notice to Servicer. In the event that Trustee shall no longer be
the Transfer Agent and Registrar, Trustee shall appoint a successor
Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Certificate at
any office or agency of the Transfer Agent and Registrar, subject to the
provisions of subsection 6.3(c), Transferor shall execute, and Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of
like aggregate Undivided Interests; provided that the provisions of this
paragraph shall not apply to Bearer Certificates.
At the option of an Investor Holder, Investor Certificates may be
exchanged for other Investor Certificates of the same Series in authorized
denominations of like aggregate Undivided Interests, upon surrender of the
Investor Certificates to be exchanged at any such office or agency. At the
option of any Holder of Registered Certificates, Registered Certificates
may be exchanged for other Registered Certificates of the same Series in
authorized denominations of like aggregate Undivided Interests in the
Trust, upon surrender of the Registered Certificates to be exchanged at any
office or agency of the Transfer Agent and Registrar maintained for such
purpose. At the option of a Holder of a Bearer Certificate, subject to
applicable laws and regulations (including the Bearer Rules), Bearer
Certificates may be exchanged for other Bearer Certificates or Registered
Certificates of the same Series in authorized denominations of like
aggregate Undivided Interests in the Trust, in the manner specified in the
Supplement for such Series, upon surrender of the Bearer Certificates to be
exchanged at an office or agency of the Transfer Agent and Registrar
located outside the United States. Each Bearer Certificate surrendered
pursuant to this Section 6.3 shall have attached thereto (or be accompanied
by) all unmatured Coupons, provided that any Bearer Certificate so
surrendered after the close of business on the Record Date preceding the
relevant Distribution Date after the related Series Termination Date need
not have attached the Coupons relating to such Distribution Date.
Whenever any Investor Certificates of any Series are so
surrendered for exchange, Transferor shall execute, and Trustee shall
authenticate and (unless the Transfer Agent and Registrar is different than
Trustee, in which case the Transfer Agent and Registrar shall) deliver, the
Investor Certificates of such Series which the Holder making the exchange
is entitled to receive. Every Investor Certificate presented or surrendered
for registration of transfer or exchange shall be
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accompanied by a written instrument of transfer in a form satisfactory to
Trustee and the Transfer Agent and Registrar duly executed by the Holder
thereof or his attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding,
Trustee or the Transfer Agent and Registrar, as the case may be, shall not
be required to register the transfer of or exchange any Investor
Certificate of any Series for a period of 15 days preceding the due date
for any payment with respect to the Investor Certificates of such Series.
Unless otherwise provided in the related Supplement, no service
charge shall be made for any registration of transfer or exchange of
Certificates, but the Transfer Agent and Registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
All Investor Certificates (together with any Coupons attached to
Bearer Certificates) surrendered for registration of transfer and exchange
shall be canceled by the Transfer Agent and Registrar and disposed of in a
manner satisfactory to Trustee. Trustee shall cancel and destroy the Global
Certificates upon its exchange in full for Definitive Certificates and
shall deliver a certificate of destruction to Transferor. Such certificate
shall also state that a certificate or certificates of each Foreign
Clearing Agency to the effect referred to in Section 6.13 was received with
respect to each portion of the Global Certificate exchanged for Definitive
Certificates.
Transferor shall execute and deliver to Trustee or the Transfer
Agent and Registrar, as applicable, Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable
Trustee to fulfill its responsibilities under this Agreement and the
Certificates.
(b) Except as provided in Section 2.9, 6.9 or 7.2 or this
subsection 6.3(b), Transferor shall not transfer the Transferor Interest or
any interest therein. Transferor may from time to time transfer a portion
of the Transferor Interest by causing the issuance of one or more
additional certificates (each a "Supplemental Certificate"), the terms of
which shall be defined in a Supplement (which Supplement shall be subject
to Section 13.1(a) to the extent that it amends any of the terms of this
Agreement), to be delivered to or upon the order of Transferor (or the
Holder of a Supplemental Certificate, in the case of the transfer or
exchange thereof, as provided below), upon satisfaction of the following
conditions:
(i) Trustee shall have received an Officer's Certificate
of Transferor certifying that the Transferor Interest shall not be
less than the
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Minimum Transferor Interest, in each case as of the date of, and after
giving effect to, such exchange;
(ii) the Rating Agency Condition shall have been
satisfied with respect to such exchange (or transfer or exchange
as provided below); and
(iii) Transferor shall have delivered to Trustee and each
Rating Agency a Tax Opinion, dated the date of such exchange (or
transfer or exchange as provided below), with respect thereto.
Any Supplemental Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clauses (ii) and (iii).
(c) Unless otherwise provided in the related Supplement,
registration of transfer of Registered Certificates containing a legend
relating to the restrictions on transfer of such Registered Certificates
(which legend shall be set forth in the Supplement relating to such
Investor Certificates) shall be effected only if the conditions set forth
in such related Supplement are satisfied.
Whenever a Registered Certificate containing the legend set forth
in the related Supplement is presented to the Transfer Agent and Registrar
for registration of transfer, the Transfer Agent and Registrar shall
promptly seek instructions from Servicer regarding such transfer. The
Transfer Agent and Registrar and Trustee shall be entitled to receive
written instructions signed by a Servicing Officer prior to registering any
such transfer or authenticating new Registered Certificates, as the case
may be. Servicer shall indemnify the Transfer Agent and Registrar and
Trustee and hold each of them harmless against any loss, liability or
expense incurred without negligence or bad faith on their part arising out
of or in connection with actions taken or omitted by them in reliance on
any such written instructions furnished pursuant to this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its expense
in New York, New York (and subject to this Section 6.3, if specified in the
related Supplement for any Series, any other city designated in such
Supplement) an office or offices or any agency or agencies where Investor
Certificates of such Series may be surrendered for registration of transfer
or exchange.
(e) The Certificates of any Series (or if there is more than one
Class in a Series, each Class) may not be acquired with the plan assets of
(i) any "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or (ii) any "plan" as defined in Section
4975 of the Internal Revenue Code (each a "Benefit Plan"), unless such
Series (or Class) has been registered under Section 12(b) or Section 12(g)
of the Securities Exchange Act of 1934, and the underwriter or underwriters
for such Series (or Class) notifies Transferor and
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Trustee that as of the date immediately following the conclusion of the
offering, the Certificates of such Series (or Class) have been sold to at
least 100 separately named persons. If the Certificates of any Series (or
Class) may not be acquired with plan assets because the foregoing
requirements are not satisfied, then each purchaser and each transferee of
such Certificates will be deemed to represent and warrant that it is not
purchasing such Certificates with plan assets of a Benefit Plan.
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate (together, in the case of Bearer
Certificates, with all unmatured Coupons, if any, appertaining thereto) is
surrendered to the Transfer Agent and Registrar, or the Transfer Agent and
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there is delivered to the Transfer Agent
and Registrar, Transferor and Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of
notice to Trustee that such Certificate has been acquired by a bona fide
purchaser, Transferor shall execute and Trustee shall authenticate and
(unless the Transfer Agent and Registrar is different from Trustee, in
which case the Transfer Agent and Registrar shall) deliver (in compliance
with applicable law), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
aggregate Undivided Interest. In connection with the issuance of any new
Certificate under this Section 6.4, Trustee or the Transfer Agent and
Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of Trustee and the Transfer
Agent and Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 6.4 shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.5 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Article
V (as described in any Supplement) and for all other purposes whatsoever,
and neither Trustee, the Paying Agent, the Transfer Agent and Registrar nor
any agent of any of them shall be affected by any notice to the contrary;
provided that in determining whether the holders of Investor Certificates
evidencing the requisite Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Investor Certificates owned by Transferor, Servicer or any Affiliate
thereof shall be disregarded and deemed not to be outstanding, except that,
in determining whether Trustee shall be protected in relying upon any such
request, demand,
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authorization, direction, notice, consent or waiver, only Investor
Certificates which a Responsible Officer knows to be so owned shall be so
disregarded. Investor Certificates so owned that have been pledged in good
faith shall not be disregarded as outstanding, if the pledgee establishes
to the satisfaction of Trustee the pledgee's right so to act with respect
to such Investor Certificates and that the pledgee is not Transferor,
Servicer or an Affiliate thereof.
In the case of a Bearer Certificate, Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may treat the
bearer of a Bearer Certificate or Coupon as the owner of such Bearer
Certificate or Coupon for the purpose of receiving distributions pursuant
to Article IV and Article XII and for all other purposes whatsoever, and
neither Trustee, the Paying Agent, the Transfer Agent and Registrar nor any
agent of any of them shall be affected by any notice to the contrary.
SECTION 6.6 Appointment of Paying Agent. (a) The Paying Agent
shall make distributions to Investor Holders from the appropriate account
or accounts maintained for the benefit of Holders as specified in this
Agreement or the related Supplement for any Series pursuant to Articles IV
and V. Any Paying Agent shall have the revocable power to withdraw funds
from such appropriate account or accounts for the purpose of making
distributions referred to above. Trustee (or Servicer if Trustee is the
Paying Agent) may revoke such power and remove the Paying Agent, if Trustee
(or Servicer if Trustee is the Paying Agent) determines in its sole
discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect or for other good
cause. Trustee (or Servicer if Trustee is the Paying Agent) shall notify
the Rating Agencies of the removal of any Paying Agent. The Paying Agent,
unless the Supplement with respect to any Series states otherwise, shall
initially be Trustee. If any form of Investor Certificate is issued as a
Global Certificate, or if and so long as any Series of Investor
Certificates are listed on the Luxembourg Stock Exchange and such exchange
shall so require, Trustee shall appoint a co-paying agent in Luxembourg or
another European city. Trustee shall be permitted to resign as Paying Agent
upon 30 days' written notice to Servicer. In the event that Trustee shall
no longer be the Paying Agent, Trustee shall appoint a successor to act as
Paying Agent (which shall be a bank or trust company). The provisions of
Sections 11.1, 11.2 and 11.3 shall apply to Trustee also in its role as
Paying Agent, for so long as Trustee shall act as Paying Agent. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long as
the Investor Certificates of such Series are outstanding, Transferor shall
maintain a co-paying agent in New York City (for Registered Certificates
only) or any other city designated in such Supplement which, if and so long
as any Series of Investor
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Certificates is listed on the Luxembourg Stock Exchange or other stock
exchange and such exchange so requires, shall be in Luxembourg or the
location required by such other stock exchange.
(b) Trustee shall cause the Paying Agent (other than itself) to
execute and deliver to Trustee an instrument in which such Paying Agent
shall agree with Trustee that such Paying Agent will hold all sums, if any,
held by it for payment to the Holders in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders and
shall agree, and if Trustee is the Paying Agent it hereby agrees, that it
shall comply with all requirements of the Internal Revenue Code regarding
the withholding by Trustee of payments in respect of Federal income taxes
due from Certificate Owners.
SECTION 6.7 Access to List of Holders' Names and Addresses.
Trustee shall furnish or cause to be furnished by the Transfer Agent and
Registrar to Servicer or the Paying Agent, within five Business Days after
receipt by Trustee of a request therefor from Servicer or the Paying Agent,
respectively, in writing, a list in such form as Servicer or the Paying
Agent may reasonably require, of the names and addresses of the Investor
Holders as of the most recent Record Date for payment of distributions to
Investor Holders. Unless otherwise provided in the related Supplement,
Holders of the Investor Certificates evidencing Undivided Interests
aggregating not less than 10% of the Investor Interest of the Investor
Certificates of any Series (the "Applicants") may apply in writing to
Trustee, and if such application states that the Applicants desire to
communicate with other Investor Holders of any Series with respect to their
rights under this Agreement or under the Investor Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the
Transfer Agent and Registrar to afford such Applicants access during normal
business hours to the most recent list of Holders held by Trustee and shall
give Servicer notice that such request has been made, within five Business
Days after the receipt of such application. Such list shall be as of a date
no more than 45 days prior to the date of receipt of such Applicants'
request. Every Holder, by receiving and holding a Certificate, agrees with
Trustee that neither Trustee, the Transfer Agent and Registrar, nor any of
their respective agents shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Holders hereunder, regardless of the source from which such information was
obtained.
SECTION 6.8 Authenticating Agent. (a) Trustee may appoint one or
more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of Trustee in authenticating the Certificates
in connection with the issuance, delivery, registration of transfer,
exchange or repayment of the Certificates. Whenever reference is made in
this Agreement to the authentication
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of Certificates by Trustee or Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of Trustee by
an authenticating agent and a certificate of authentication executed on
behalf of Trustee by an authenticating agent. Each authenticating agent
must be acceptable to Transferor.
(b) Any institution succeeding to the corporate agency business of
an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any paper or any further act on the part
of Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to Trustee and to Transferor. Trustee may at
any time terminate the agency of an authenticating agent by giving notice
of termination to such authenticating agent and to Transferor. Upon
receiving such a notice of resignation or upon such a termination, or in
case at any time an authenticating agent shall cease to be acceptable to
Trustee or Transferor, Trustee promptly may appoint a successor
authenticating agent. Any successor authenticating agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally
named as an authenticating agent. No successor authenticating agent shall
be appointed unless acceptable to Trustee and Transferor.
(d) Trustee agrees to pay each authenticating agent from time to
time reasonable compensation for its services under this Section 6.8, and
Trustee shall be entitled to be reimbursed and Servicer shall reimburse
Trustee for such reasonable payments actually made, subject to the
provisions of Section 11.5.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of Trustee's certificate of
authentication, an alternate certificate of authentication in substantially
the following form:
"This is one of the certificates described in the Pooling
and Servicing Agreement.
---------------------------------------
as Authenticating Agent for Trustee,
By:____________________________________
Authorized Officer"
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SECTION 6.9 New Issuances. (a) Upon request by Transferor from
time to time, Trustee shall issue to Transferor under Section 6.1, for
execution and redelivery to Trustee for authentication under Section 6.2,
one or more new Series of Investor Certificates. Any such Series shall be
substantially in the form specified in the related Supplement and shall
bear, upon its face, the designation for such Series to which it belongs,
as selected by Transferor. Except as specified in any Supplement for a
related Series, all Investor Certificates of any Series shall rank pari
passu and be equally and ratably entitled as provided herein to the
benefits hereof (except that the Credit Enhancement provided for any Series
shall not be available for any other Series) without preference, priority
or distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Agreement
and the related Supplement.
(b) Transferor may require Trustee to issue to Transferor under
Section 6.1, for execution and redelivery to Trustee for authentication
under Section 6.2, one or more newly issued Series of Investor Certificates
or in connection with a Paired Series, interests in such Series, in
exchange for a reduction in the Transferor Interest (any such transaction,
a "Transferor Issuance"). In addition, to the extent permitted for any
Series of Investor Certificates as specified in the related Supplement (and
subject to any applicable requirements under the Securities Exchange Act of
1934 and the rules and regulations thereunder, including Rule 13e-4), the
Investor Holders of such Series may tender their Investor Certificates to
Trustee pursuant to the terms and conditions set forth in such Supplement
in exchange for one or more newly issued Series of Investor Certificates
(an "Investor Issuance"). Transferor may initiate an Issuance by notifying
Trustee, in writing at least three days in advance (an "Issuance Notice")
of the date upon which the Issuance is to occur (an "Issuance Date"). Any
Issuance Notice shall state the designation of any Series (and Class
thereof, if applicable) to be issued on the Issuance Date and, with respect
to each such Series, its Initial Investor Interest (or the method for
calculating such Initial Investor Interest), the applicable interest rate
(or the method for allocating interest payments or other cash flows to such
Series), if any, and the Credit Enhancement Provider, if any, with respect
to such Series. On the Issuance Date, Trustee shall authenticate and
deliver any such Series of Investor Certificates only upon delivery to it
of the following: (1) a Supplement satisfying the criteria set forth in
subsection 6.9(c) executed by Transferor and specifying the Principal Terms
of such Series, (2) the applicable Credit Enhancement, if any, (3) the
agreement, if any, pursuant to which the Credit Enhancement Provider agrees
to provide the Credit Enhancement, if any, (4) a Tax Opinion, (5) evidence
that the Rating Agency Condition has been satisfied with respect to the
Issuance, (6) an Officer's Certificate signed by a Vice President (or any
more senior officer) of Transferor,
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that on the Issuance Date (i) Transferor, after giving effect to the
Issuance, would not be required to add Additional Accounts pursuant to
subsection 2.6(a) and (ii) after giving effect to such Issuance, the
Transferor Interest would be at least equal to the Minimum Transferor
Interest, and (7) the existing Investor Certificates, in the case of an
Investor Issuance. Upon satisfaction of such conditions, Trustee shall
issue as provided above, such Series of Investor Certificates, dated the
Issuance Date and, in the case of an Investor Issuance, cancel the Investor
Certificates tendered in exchange for the new Series. There is no limit to
the number of Issuances that may be performed under this Agreement.
(c) In conjunction with an Issuance, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect
to any newly issued Series of Investor Certificates, which may include: (i)
its name or designation, (ii) an Initial Investor Interest or the method of
calculating the Initial Investor Interest, (iii) the method of determining
any adjusted Investor Interest, if applicable, (iv) the applicable interest
rate (or formula for its determination), (v) the Closing Date, (vi) each
rating agency rating such Series, (vii) the name of the Clearing Agency, if
any, (viii) the rights of Transferor that have been transferred to the
Holders of such Series pursuant to such Issuance (including any rights to
allocations of Collections of Finance Charge Receivables and Principal
Receivables), (ix) the interest payment date or dates and the date or dates
from which interest shall accrue, (x) the periods during which or dates on
which principal will be paid or accrued, (xi) the method of allocating
Collections with respect to Principal Receivables for such Series and, if
applicable, with respect to other Series and the method by which the
principal amount of Investor Certificates of such Series shall amortize or
accrete and the method for allocating Collections with respect to Finance
Charge Receivables and Receivables in Defaulted Accounts, (xii) any other
Collections with respect to Receivables or other amounts available to be
paid with respect to such Series, (xiii) the names of any accounts to be
used by such Series and the terms governing the operation of any such
account and use of monies therein, (xiv) the Investor Servicing Fee and the
Series Servicing Fee Percentage, (xv) the Minimum Transferor Interest and
the Series Termination Date, (xvi) the terms of any Credit Enhancement with
respect to such Series, and the Credit Enhancement Provider, if applicable,
(xvii) the base rate applicable to such Series, (xviii) the terms on which
the Certificates of such Series may be repurchased or remarketed to other
investors, (xix) any deposit into any account provided for such Series,
(xx) the number of Classes of such Series, and if more than one Class, the
rights and priorities of each such Class, (xxi) whether Interchange or
other fees will be included in the funds available to be paid for such
Series, (xxii) the priority of any Series with respect to any other Series,
(xxiii) the rights, if any, of Transferor that have been transferred to the
holders of such Series, (xxiv) the Minimum Aggregate Principal Receivables,
(xxv) whether such Series will be part of a Group, (xxvi) whether
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such Series will be a Principal Sharing Series, (xxvii) whether such Series
will or may be a Paired Series and the Series with which it will be paired,
if applicable and (xxviii) any other relevant terms of such Series
(including whether or not such Series will be pledged as collateral for an
issuance of any other securities, including commercial paper) (all such
terms, the "Principal Terms" of such Series). The terms of such Supplement
may modify or amend the terms of this Agreement solely as applied to such
new Series.
(d) Upon satisfaction of the above conditions (mutatis mutandis),
Transferor may also cause Trustee to enter into one or more agreements
pursuant to which Trustee shall sell purchased interests in the Receivables
and other Trust Assets to one or more purchasers. Such agreement(s) shall
specify terms similar to Principal Terms for any such purchased interests
and may grant the purchaser(s) of such interests, or an agent or other
representative of such purchaser(s), notice and consultation rights with
respect to any rights or actions of Trustee.
SECTION 6.10 Book-Entry Certificates. Unless otherwise provided in
any related Supplement, the Investor Certificates, upon original issuance,
shall be issued in the form of typewritten Certificates representing the
Book-Entry Certificates, to be delivered to the depository specified in
such Supplement (the "Depository") for the Clearing Agency or Foreign
Clearing Agency for such Series. The Investor Certificates of each Series
shall, unless otherwise provided in the related Supplement, initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency or Foreign Clearing Agency. No Certificate Owner will
receive a definitive certificate representing such Certificate Owner's
interest in the related Series of Investor Certificates, except as provided
in Section 6.12. Unless and until definitive, fully registered Investor
Certificates of any Series ("Definitive Certificates") have been issued to
Certificate Owners pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full
force and effect with respect to each such Series;
(ii) Transferor, Servicer, the Paying Agent, the Transfer
Agent and Registrar and Trustee may deal with the Clearing Agency
and the Clearing Agency Participants for all purposes (including
the making of distributions on the Investor Certificates of each
such Series) as the authorized representatives of the Certificate
Owners;
(iii) to the extent that the provisions of this Section
6.10 conflict with any other provisions of this Agreement, the
provisions of this Section 6.10 shall control with respect to each
such Series; and
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(iv) the rights of Certificate Owners of each such Series
shall be exercised only through the Clearing Agency or Foreign
Clearing Agency and the applicable Clearing Agency Participants
and shall be limited to those established by law and agreements
between such Certificate Owners and the Clearing Agency or Foreign
Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Depository Agreement applicable to a Series, unless and
until Definitive Certificates of such Series are issued pursuant
to Section 6.12, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Investor
Certificates to such Clearing Agency Participants.
SECTION 6.11 Notices to Clearing Agency. Whenever notice or other
communication to the Holders is required under this Agreement, unless and
until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 6.12, Trustee shall give all such notices and
communications specified herein to be given to Holders of the Investor
Certificates to the Clearing Agency or Foreign Clearing Agency for
distribution to Holders of Investor Certificates.
SECTION 6.12 Definitive Certificates. If (i) (A) Transferor
advises Trustee in writing that the Clearing Agency or Foreign Clearing
Agency is no longer willing or able to discharge properly its
responsibilities under the applicable Depository Agreement, and (B) Trustee
or Transferor is unable to locate a qualified successor, (ii) Transferor,
at its option, advises Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or Foreign Clearing Agency
with respect to any Series of Certificates or (iii) after the occurrence of
a Servicer Default, Certificate Owners of a Series representing beneficial
interests aggregating not less than 50% of the Investor Interest of such
Series advise Trustee and the applicable Clearing Agency or Foreign
Clearing Agency through the applicable Clearing Agency Participants in
writing that the continuation of a book-entry system through the applicable
Clearing Agency or Foreign Clearing Agency is no longer in the best
interests of the Certificate Owners, Trustee shall notify all Certificate
Owners or, with respect to clauses (ii) and (iii), Certificate Owners of
the applicable Series, through the applicable Clearing Agency Participants,
of the occurrence of any such event and of the availability of Definitive
Certificates to all Certificate Owners or, as the case may be, Certificate
Owners of such series, in each case requesting the same. Upon surrender to
Trustee of all Investor Certificates or the Investor Certificates of such
Series by the applicable Clearing Agency or Foreign Clearing Agency,
accompanied by registration instructions from the applicable Clearing
Agency or Foreign Clearing Agency for registration, Trustee shall issue the
applicable Definitive Certificates. Neither Transferor nor Trustee shall be
liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of
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Definitive Certificates of any Series, all references herein to obligations
imposed upon or to be performed by the applicable Clearing Agency or
Foreign Clearing Agency shall be deemed to be imposed upon and performed by
Trustee, to the extent applicable with respect to such Definitive
Certificates, and Trustee shall recognize the Holders of the Definitive
Certificates of such Series as Holders of such Series hereunder.
SECTION 6.13 Global Certificate; Euro-Certificate Exchange Date.
If specified in the related Supplement for any Series, the Investor
Certificates may be initially issued in the form of a single temporary
global certificate (the "Global Certificate") in bearer form, without
interest coupons, in the denomination of the Initial Investor Interest and
substantially in the form attached to the related Supplement. Unless
otherwise specified in the related Supplement, the provisions of this
Section 6.13 shall apply to such Global Certificate. The Global Certificate
will be authenticated by Trustee upon the same conditions, in substantially
the same manner and with the same effect as the Definitive Certificates.
The Global Certificate may be exchanged in the manner described in the
related Supplement for Registered or Bearer Certificates in definitive
form.
SECTION 6.14 Meetings of Holders. To the extent provided by the
Supplement for any Series issued in whole or in part in Bearer
Certificates, Servicer or Trustee may at any time call a meeting of the
Holders of such Series, to be held at such time and at such place as
Servicer or Trustee, as the case may be, shall determine, for the purpose
of approving a modification of or amendment to, or obtaining a waiver of,
any covenant or condition set forth in this Agreement with respect to such
Series or in the Certificates of such Series, subject to Section 13.1.
SECTION 6.15 Transfers of Certain Certificates. (a)
Notwithstanding any other provision of this Agreement, any Certificate for
which an Opinion of Counsel has not been issued opining that such
Certificates would be treated as debt for Federal income tax purposes
(each, a "Subject Certificate") shall be subject to the next succeeding
paragraph.
(b) No transfer (or purported transfer) of all or any part of a
Subject Certificate (or any economic interest therein), whether to another
Certificate Owner or to a person who is not a Certificate Owner shall be
effective, and any such transfer (or purported transfer) shall be void ab
initio, and no Person shall otherwise become a Holder of a Subject
Certificate if: (i) at the time of such transfer (or purported transfer)
any Subject Certificates are traded on an established securities market;
(ii) after such transfer (or purported transfer) the Trust would have more
than 100 Holders of Subject Certificates; or (iii) the Subject Certificates
have been issued in a transaction or transactions that were required to be
registered under the Securities Act, and to the extent such offerings
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or sales were not required to be registered under the Securities Act by
reason of Regulation S (17 CFR 230.901 through 230.904 or any successor
thereto) such offerings or sales would not have been required to be
registered under the Securities Act if the interests so offered or sold had
been offered and sold within the United States. For purposes of clause (i)
of the preceding sentence, an established securities market is a national
securities exchange described in Treasury Regulation 1.7704-1(b). For
purposes of determining whether the Trust will have more than 100 Holders
of Subject Certificates, each Person indirectly owning an interest in the
Trust through a partnership (including any entity treated as a partnership
for federal income tax purposes), a grantor trust or an S corporation (each
such entity a "flow-through entity") shall be treated as a Holder of a
Subject Certificate unless the Servicer determines in its sole discretion,
after consulting with qualified tax counsel, that less than substantially
all of the value of the beneficial owner's interest in the flow-through
entity is attributable to the flow through entity's interest (direct or
indirect) in the Trust.
SECTION 6.16 Trust Tax Election. No Person, including the Trustee,
shall have the authority to make an election under Treasury Regulation
301.7701- 3(c) to cause the Trust to be classified as an association
taxable as a corporation.
ARTICLE VII OTHER MATTERS RELATING TO TRANSFEROR
SECTION 7.1 Liability of Transferor. Transferor shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Transferor.
SECTION 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, Transferor. (a) Transferor shall not consolidate with or
merge into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of Transferor substantially as
an entirety shall be, if Transferor is not the surviving entity,
organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall be a
national banking association, state banking corporation or other
entity which is not subject to the bankruptcy laws of the United
States of America and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to Trustee, in form
satisfactory to Trustee, the performance of every covenant and
obligation of Transferor, as applicable hereunder, and shall
benefit from all the rights granted to Transferor, as applicable
hereunder. To the extent that any right, covenant or obligation of
Transferor, as applicable hereunder,
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is inapplicable to the successor entity, such successor entity
shall be subject to such covenant or obligation, or benefit from
such right, as would apply, to the extent practicable, to such
successor entity. In furtherance hereof, in applying this Section
7.2 to a successor entity, Section 9.2 shall be applied by
reference to events of involuntary liquidation, receivership or
conservatorship applicable to such successor entity as shall be
set forth in the officer's certificate described in subsection
7.2(a)(ii);
(ii) Transferor shall have delivered to Trustee an
Officer's Certificate signed by a Vice President (or any more
senior officer) of Transferor stating that such consolidation,
merger, conveyance or transfer and such supplemental agreement
comply with this Section 7.2 and that all conditions precedent
herein provided for relating to such transaction have been
complied with and an Opinion of Counsel that such supplemental
agreement is legal, valid and binding; and
(iii) Transferor shall have delivered notice to each
Rating Agency of such consolidation, merger, conveyance or
transfer.
(b) Upon satisfaction of the following conditions, Transferor may
sell or otherwise dispose of the Transferor Interest, and any other right,
title or interest of Transferor in and to the Trust Assets to any other
Person, which Person shall thereafter be Transferor and, if so agreed,
Servicer for all purposes of this Agreement:
(i) Transferor delivers an Opinion of Counsel to Trustee
stating that (A) the new Transferor has effectively assumed all
obligations of the Transferor and, if so agreed, the Servicer
under this Agreement and (B) all actions necessary to perfect the
interest of the Trustee in the Trust Assets as against the new
Transferor have been taken; and
(ii) the Rating Agency Condition is satisfied.
(c) The obligations of Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of Transferor
hereunder except as described in subsection (a) and (b) above and in
Section 2.9.
SECTION 7.3 Limitation on Liability. Transferor and its directors,
officers, employees and agents shall not be under any liability to the
Trust, Trustee, the Holders, any Credit Enhancement Provider or any other
Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and
released as a condition of, and as consideration for, the execution of this
Agreement and any Supplement
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and the issuance of the Certificates; provided that this provision shall
not protect Transferor or its officers, directors, employees, or agents
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder, or
under any Supplement.
ARTICLE VIII OTHER MATTERS RELATING TO SERVICER
SECTION 8.1 Liability of Servicer. Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Servicer in such capacity herein.
SECTION 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Servicer shall not consolidate with or merge into
any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of Servicer substantially as an
entirety shall be a Person organized and existing under the laws
of the United States of America or any State or the District of
Columbia, and shall be a national banking association, state
banking corporation or other entity which is not subject to the
bankruptcy laws of the United States of America and, if Servicer
is not the surviving entity, shall expressly assume, by an
agreement supplemental hereto, executed and delivered to Trustee
in form satisfactory to Trustee, the performance of every covenant
and obligation of Servicer hereunder (and to the extent that any
right, covenant or obligation of Servicer, as applicable
hereunder, is inapplicable to the successor entity, such successor
entity shall be subject to such covenant or obligation, or benefit
from such right, as would apply, to the extent practicable, to
such successor entity);
(ii) Servicer shall have delivered to Trustee an
Officer's Certificate that such consolidation, merger, conveyance
or transfer and such supplemental agreement comply with this
Section 8.2 and that all conditions precedent herein provided for
relating to such transaction have been complied with and an
Opinion of Counsel that such supplemental agreement is legal,
valid and binding with respect to Servicer; and
(iii) Servicer shall have delivered notice to the Rating
Agency of such consolidation, merger, conveyance or transfer.
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SECTION 8.3 Limitation on Liability of Servicer and Others. The
directors, officers, employees or agents of Servicer shall not be under any
liability to the Trust, Trustee, the Holders, any Credit Enhancement
Provider or any other Person hereunder or pursuant to any document
delivered hereunder, it being expressly understood that all such liability
is expressly waived and released as a condition of, and as consideration
for, the execution of this Agreement and any Supplement and the issuance of
the Certificates; provided that this provision shall not protect the
directors, officers, employees and agents of Servicer against any liability
which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. Except as provided
in Section 8.4 with respect to the Trust and Trustee, its officers,
directors, employees and agents, Servicer shall not be under any liability
to the Trust, Trustee, its officers, directors, employees and agents, the
Holders or any other Person for any action taken or for refraining from the
taking of any action in its capacity as Servicer pursuant to this Agreement
or any Supplement; provided that this provision shall not protect Servicer
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or
by reason of its reckless disregard of its obligations and duties hereunder
or under any Supplement. Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Receivables in accordance with this
Agreement which in its reasonable opinion may involve it in any expense or
liability.
SECTION 8.4 Servicer Indemnification of the Trust and Trustee.
Servicer shall indemnify and hold harmless the Trust and Trustee, its
officers, directors, employees and agents, from and against any reasonable
loss, liability, expense, damage or injury suffered or sustained by reason
of any acts or omissions or alleged acts or omissions of Servicer with
respect to activities of the Trust or Trustee pursuant to this Agreement or
any Supplement or any Credit Enhancement, including any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred
in connection with the defense of any actual or threatened action,
proceeding or claim; provided that (a) Servicer shall not indemnify Trustee
if such acts, omissions or alleged acts or omissions constitute or are
caused by fraud, negligence, or willful misconduct by Trustee, (b) Servicer
shall not indemnify the Trust, the Investor Holders or the Certificate
Owners for any liabilities, costs or expenses of the Trust with respect to
any action taken by Trustee at the request of the Investor Holders, (c)
Servicer shall not indemnify the Trust, the Investor Holders or the
Certificate Owners as to any losses, claims or damages incurred by any of
them in their capacities as investors, including losses incurred as a
result of Defaulted Accounts or Receivables which
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are charged off as uncollectible and (d) Servicer shall not indemnify the
Trust, the Investor Holders or the Certificate Owners for any liabilities,
costs or expenses of the Trust, the Investor Holders or the Certificate
Owners arising under any tax law, including any Federal, state, local or
foreign income or franchise taxes or any other tax imposed on or measured
by income (or any interest or penalties with respect thereto or arising
from a failure to comply therewith) required to be paid by the Trust, the
Investor Holders or the Certificate Owners in connection herewith to any
taxing authority. Any such indemnification shall not be payable from the
assets of the Trust. The provisions of this indemnity shall run directly to
and be enforceable by an injured party subject to the limitations hereof
and shall survive termination of this Agreement and the resignation or
removal of Trustee.
SECTION 8.5 Servicer Not to Resign. Except as provided in
subsection 7.2(b), Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that (i) the
performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which Servicer could
take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of
Servicer shall be evidenced as to clause (i) by an Opinion of Counsel to
such effect delivered to Trustee. No such resignation shall become
effective until Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of Servicer in accordance with Section
10.2. If Trustee is unable within 120 days of the date of such
determination to appoint a Successor Servicer, Trustee shall serve as
Successor Servicer hereunder until such time as Trustee shall appoint a
Successor Servicer and such Successor Servicer shall have assumed the
responsibilities and obligations of Servicer in accordance with Section
10.2.
SECTION 8.6 Access to Certain Documentation and Information
Regarding the Receivables. Servicer shall provide Trustee access to the
documentation regarding the Accounts and the Receivables when Trustee is
required in connection with the enforcement of the rights of the Investor
Holders, or by applicable law, to review such documentation, such access
being afforded without charge but only upon reasonable request, during
normal business hours, subject to Servicer's normal security and
confidentiality procedures and at offices designated by Servicer. Nothing
in this Section 8.6 shall derogate from the obligation of Transferor,
Trustee or Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of Servicer to provide
access as provided in this Section 8.6 as a result of such obligations
shall not constitute a breach of this Section 8.6.
SECTION 8.7 Delegation of Duties. In the ordinary course of business,
Servicer may at any time delegate any duties hereunder to any Person who agrees
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to conduct such duties in accordance with the Account Guidelines. Any such
delegations shall not relieve Servicer of its liability and responsibility
with respect to such duties, and shall not constitute a resignation within
the meaning of Section 8.5 hereof. If any such delegation is to a party
other than an Affiliate of Transferor, notification thereof shall be given
to each Rating Agency.
SECTION 8.8 Examination of Records. Servicer shall clearly and
unambiguously identify each Account (including any Additional Account
designated pursuant to Section 2.6) in its computer or other records to
reflect that the Receivables arising in such Account have been conveyed to
the Trust pursuant to this Agreement. Servicer shall, prior to the sale or
transfer to a third party of any receivable held in its custody, examine
its computer and other records to determine that such receivable is not a
Receivable.
ARTICLE IX TRUST PAY OUT EVENTS
SECTION 9.1 Trust Pay Out Events. Each of the following events
(each, a "Trust Pay Out Event") shall constitute a Pay Out Event with
respect to all Series of Certificates, immediately upon the occurrence of
such event, and without any notice or other action on the part of Trustee
or the Investor Holders:
(a) Transferor shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating
to all or substantially all of its property, or a decree or order of a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against Transferor; or Transferor shall
admit in writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations; or Transferor shall
become unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of this Agreement; or
(b) the Trust shall become an "investment company" within the
meaning of the Investment Company Act.
SECTION 9.2 Additional Rights Upon the Occurrence of Certain
Events. If Transferor shall consent to the appointment of a conservator or
receiver or liquidator for the winding-up or liquidation of its affairs, or
a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator for the winding-up or liquidation of its affairs
shall have been entered against Transferor (an
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"Insolvency Event"), Transferor shall on the day of such Insolvency Event
immediately cease to transfer Principal Receivables and Discount Option
Receivables to the Trust and shall promptly give notice to Trustee of such
Insolvency Event. Notwithstanding any cessation of the transfer to the
Trust of additional Principal Receivables and Discount Option Receivables,
Finance Charge Receivables, whenever created, accrued in respect of
Principal Receivables or Discount Option Receivables which have been
transferred to the Trust shall continue to be a part of the Trust, and
Collections with respect thereto shall continue to be allocated and paid in
accordance with Article IV.
ARTICLE X SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by Servicer to make any payment, transfer or
deposit or to give instructions or notice to Trustee pursuant to Article IV
or to instruct Trustee to make any required drawing, withdrawal, or payment
under any Credit Enhancement on or before the date occurring five Business
Days after the date such payment, transfer, deposit withdrawal or drawing
or such instruction or notice is required to be made or given, as the case
may be, under the terms of this Agreement;
(b) failure on the part of Servicer duly to observe or perform in
any respect any other covenants or agreements of Servicer set forth in this
Agreement, which has a material adverse effect on the Investor Holders of
any Series and which continues unremedied for a period of 60 days after the
date on which written notice of such failure, specifying such notice to be
a notice of Servicer Default hereunder, requiring the same to be remedied,
shall have been given to Servicer by Trustee, or to Servicer and Trustee by
the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 25% of the Investor Interest of any Series
adversely affected thereby and continue to materially adversely affect such
Investor Holders for such period; or Servicer shall delegate its duties
under this Agreement, except as permitted by Section 8.7;
(c) any representation, warranty or certification made by Servicer
in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a
material adverse effect on the Investor Holders of any Series and which
continues to be incorrect in any material respect for a period of 60 days
after the date on which written notice of such failure, specifying such
notice to be a notice of Servicer Default hereunder, requiring the same to
be remedied, shall have been given to Servicer by Trustee, or to Servicer
and Trustee by the Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 25% of the Investor Interest of any
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Series adversely affected thereby and continues to materially adversely
affect such Investor Holders for such period; or
(d) Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to Servicer
or of or relating to all or substantially all of its property, or a decree
or order of a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidating of its affairs, shall have been entered against Servicer, and
such decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; or Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make any
assignment for the benefit of its creditors or voluntarily suspend payment
of its obligations; then, so long as such Servicer Default shall not have
been remedied or waived, either Trustee, or the Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50% of
the Aggregate Investor Interest, by notice then given in writing to
Servicer (and to Trustee if given by the Investor Holders) (a "Termination
Notice"), may terminate all of the rights and obligations of Servicer as
Servicer under this Agreement.
After receipt by Servicer of such Termination Notice, and on the
date that a Successor Servicer shall have been appointed by Trustee
pursuant to Section 10.2, all authority and power of Servicer under this
Agreement shall pass to and be vested in a Successor Servicer; and Trustee
is hereby authorized and empowered (upon the failure of Servicer to
cooperate) to execute and deliver, on behalf of Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of Servicer to execute or deliver such documents or instruments,
and to do and accomplish all other acts or things necessary or appropriate
to effect the purpose of such transfer of servicing rights and obligations.
Servicer agrees to cooperate with Trustee and such Successor Servicer in
effecting the termination of the responsibilities and rights of Servicer to
conduct servicing hereunder including the transfer to such Successor
Servicer of all authority of Servicer to service the Receivables provided
for under this Agreement, including all authority over all Collections
which shall on the date of transfer be held by Servicer for deposit, or
which have been deposited by Servicer, in the Collection Account, the
Finance Charge Account, the Excess Funding Account, the Distribution
Account, and any Series Account, or which shall thereafter be received with
respect to the Receivables, and in assisting the Successor Servicer and in
enforcing all rights to Insurance Proceeds and Interchange (if any)
applicable to the Trust. Servicer shall promptly transfer its electronic
records or electronic copies thereof relating to the Receivables to the
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Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer
all other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the
Successor Servicer shall reasonably request. To the extent that compliance
with this Section 10.1 shall require Servicer to disclose to the Successor
Servicer information of any kind which Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as Servicer shall deem
necessary to protect its interests. Servicer shall, on the date of any
servicing transfer, transfer all of its rights and obligations under the
Credit Enhancement with respect to any Series to the Successor Servicer.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in subsection 10.1(a) for a period of 10 Business
Days or under subsection 10.1(b) or (c) for a period of 30 Business Days,
shall not constitute a Servicer Default if such delay or failure could not
be prevented by the exercise of reasonable diligence by Servicer and such
delay or failure was caused by an act of God or the public enemy, acts of
declared or undeclared war, public disorder, rebellion, riot or sabotage,
epidemics, landslides, lightning, fire, hurricanes, tornadoes, earthquakes,
nuclear disasters or meltdowns, floods, power outages or similar causes.
The preceding sentence shall not relieve Servicer from using its best
efforts to perform its obligations in a timely manner in accordance with
the terms of this Agreement and Servicer shall provide Trustee, any Credit
Enhancement Provider, Transferor, each Rating Agency and the Holders of
Investor Certificates with an Officer's Certificate giving prompt notice of
such failure or delay by it, together with a description of the cause of
such failure or delay and its efforts to so perform its obligations.
SECTION 10.2 Trustee to Act; Appointment of Successor. (a) On and
after the receipt by Servicer of a Termination Notice pursuant to Section
10.1, Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Termination Notice or otherwise
specified by Trustee in writing or, if no such date is specified in such
Termination Notice or otherwise specified by Trustee, until a date mutually
agreed upon by Servicer and Trustee. Trustee shall notify each Rating
Agency of such removal of Servicer. Trustee shall, as promptly as possible
after the giving of a Termination Notice, appoint a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to Trustee.
Trustee may obtain bids from any potential successor servicer. If a
Successor Servicer has not been appointed and has not accepted its
appointment at the time when Servicer ceases to act as Servicer, Trustee
without further action shall automatically be appointed the Successor
Servicer. The Trustee, when acting as Successor Servicer, is authorized to
perform any servicing function through agents or affiliates.
Notwithstanding the above, Trustee shall, if it is legally
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unable so to act, petition a court of competent jurisdiction to appoint any
established financial institution having, in the case of an entity that is
subject to risk-based capital adequacy requirements, risk-based capital of
at least $50,000,000 or, in the case of an entity that is not subject to
risk-based capital requirements, having a net worth of not less than
$50,000,000 and in each case whose regular business includes the servicing
of VISA or MasterCard credit card receivables as the Successor Servicer
hereunder.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on Servicer by the terms and
provisions hereof, and all references in this Agreement to Servicer shall
be deemed to refer to the Successor Servicer. Notwithstanding the above, or
anything in this Section to the contrary, Trustee, if it becomes Servicer
pursuant to this Section, shall have no responsibility or obligation for
any act or omission of either a predecessor or Successor Servicer other
than Trustee. Any Successor Servicer, by its acceptance of its appointment,
will automatically agree to be bound by the terms and provisions of each
Credit Enhancement, but only to the extent applicable to Servicer. No
Successor Servicer shall have any responsibility for the duties of
Transferor under any circumstance.
(c) In connection with such appointment and assumption, Trustee
shall be entitled to such compensation, or may make such arrangements for
the compensation of the Successor Servicer out of Collections, as it and
such Successor Servicer shall agree; provided that no such compensation
shall be in excess of the Servicing Fee permitted to Servicer pursuant to
Section 3.2. Transferor agrees that if Servicer is terminated hereunder, it
will agree to deposit a portion of the Collections in respect of Finance
Charge Receivables that it is entitled to receive pursuant to Article IV to
pay its share of the compensation of the Successor Servicer. The Servicer
being terminated shall bear all costs of the appointment of a Successor
hereunder, including those of Trustee reasonably allocable to specific
employees and overhead, legal fees and expenses, accounting and financial
consulting fees and expenses, and costs of amending this Agreement, if
necessary.
(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon
termination of the Trust pursuant to Section 12.1 and shall pass to and be
vested in Transferor and Transferor is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to
do and accomplish all other acts or things necessary or appropriate to
effect the purposes of such transfer of servicing rights. The Successor
Servicer agrees to cooperate with Transferor in effecting the
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termination of the responsibilities and rights of the Successor Servicer to
conduct servicing on the Receivables. The Successor Servicer shall transfer
its electronic records relating to the Receivables to Transferor in such
electronic form as Transferor may reasonably request and shall transfer all
other records, correspondence and documents to Transferor in the manner and
at such times as Transferor shall reasonably request. To the extent that
compliance with this Section 10.2 shall require the Successor Servicer to
disclose to Transferor information of any kind which the Successor Servicer
deems to be confidential, Transferor shall be required to enter into such
customary licensing and confidentiality agreements as the Successor
Servicer shall deem necessary to protect its interests.
SECTION 10.3 Notification to Holders. Within two Business Days
after Servicer becomes aware of any Servicer Default, Servicer shall give
prompt written notice thereof to the Rating Agencies, Trustee and any
Credit Enhancement Provider, and Trustee shall give notice to the Investor
Holders at their respective addresses appearing in the Certificate
Register. Upon any termination or appointment of a Successor Servicer
pursuant to this Article X, Trustee shall give prompt written notice
thereof to the Rating Agencies and the Investor Holders at their respective
addresses appearing in the Certificate Register.
SECTION 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than
66-2/3% of the Investor Interest of each Series adversely affected by any
default by Servicer or Transferor may, on behalf of all Holders of such
Series, waive any default by Servicer or Transferor in the performance of
its obligations hereunder (including any Servicer Default) and its
consequences, except a default in the failure to make any required deposits
or payments of interest or principal relating to such Series pursuant to
Article IV which default does not result from the failure of the Paying
Agent to perform its obligations to make any required deposits or payments
of interest and principal in accordance with Article IV. Upon any such
waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI TRUSTEE
SECTION 11.1 Duties of Trustee. (a) Trustee, prior to the
occurrence of any Servicer Default and after the curing or waiver of all
Servicer Defaults which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this
Agreement. If a Responsible Officer has received written notice that a
Servicer Default has occurred (which has not been cured or
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waived and for which a Successor Servicer has not been appointed), Trustee
shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs, provided, however that if Trustee is acting
as Successor Servicer it shall exercise such of the rights and powers, and
use the same degree of care and skill in its exercise, as the Servicer
under this Agreement.
(b) Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to
determine whether they substantially conform on their face to the
requirements of this Agreement. Trustee shall be under no duty to verify
the contents or computations contained therein.
(c) Subject to subsection 11.1(a), no provision of this Agreement
shall be construed to relieve Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided that:
(i) Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or
Responsible Officers of Trustee, unless it shall be proved that
Trustee was negligent in ascertaining the pertinent facts;
(ii) Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of Investor
Certificates evidencing Undivided Interests aggregating more than
50% of the Investor Interest of any Series relating to the time,
method and place of conducting any proceeding for any remedy
available to Trustee, or exercising any trust or power conferred
upon Trustee in relation to such Series, under this Agreement, so
long as Trustee was not negligent in carrying out such directions;
and
(iii) Trustee shall not be charged with knowledge of any
failure by Servicer referred to in clauses (a), (b) or (c) of
Section 10.1 unless a Responsible Officer of Trustee obtains
actual knowledge of such failure or Trustee receives written
notice of such failure from Servicer or any Holders of Investor
Certificates evidencing Undivided Interests aggregating not less
than 10% of the Investor Interest of any Series adversely affected
thereby.
(d) Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its
duties
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hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it, and none of the provisions contained in this Agreement shall in any
event require Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of Servicer under this Agreement
except during such time, if any, as Trustee shall be the Successor
Servicer.
(e) Except for actions expressly authorized by this Agreement,
Trustee shall take no action reasonably likely to impair the interests of
the Trust in any Receivable now existing or hereafter created or to impair
the value of any Receivable now existing or hereafter created.
(f) Except as provided in this subsection 11.1(f), Trustee shall
have no power to vary the corpus of the Trust including the power to (i)
accept any substitute obligation for a Receivable assigned to the Trust
under Section 2.1 or 2.6, (ii) add any other investment, obligation or
security to the Trust, except for an addition permitted under Section 2.6,
or (iii) withdraw from the Trust any Receivables, except for a withdrawal
permitted under Sections 2.7, 9.2, 10.2, 12.1 or 12.2 or subsections
2.4(d), 2.4(e) or Article IV.
(g) If the Paying Agent or the Transfer Agent and Registrar shall
fail to perform any obligation, duty or agreement in the manner or on the
day required to be performed by the Paying Agent or the Transfer Agent and
Registrar, as the case may be, under this Agreement, then, subject to
subsection 11.1(d), Trustee shall be obligated promptly to perform such
obligation, duty or agreement in the manner so required.
(h) If Transferor has agreed to transfer any of its credit card
receivables (other than the Receivables) to another Person, upon the
written request of Transferor, Trustee shall enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary to identify separately the rights, if any, of the Trust and such
other Person in Transferor's credit card receivables; provided that Trustee
shall not be required to enter into any intercreditor agreement which could
adversely affect either its own interests or the interests of the Holders
and, upon the request of Trustee, Transferor will deliver an Opinion of
Counsel on any matters relating to such intercreditor agreement, reasonably
requested by Trustee.
(i) Subject to Section 11.4, Trustee may transact banking and
trust business generally with Transferor, Servicer, and any Credit
Enhancement Provider as freely as if it were not Trustee hereunder.
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SECTION 11.2 Certain Matters Affecting Trustee. Except as otherwise
provided in Section 11.1:
(a) Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accord with, any assignment of Receivables in
Additional Accounts, the initial report, the monthly Servicer's
certificate, the annual Servicer's certificate, the monthly payment
instructions and notification to Trustee, the monthly Holder's statement,
any resolution, Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it
to be genuine and to have been signed or presented to it pursuant to this
Agreement by the proper party or parties;
(b) Trustee may consult with counsel selected by it in good faith,
and any Opinion of Counsel, any Tax Opinion or any written opinion of its
own counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such Opinion of Counsel, Tax Opinion or
written opinion, so long as Trustee is not negligent in carrying out the
actions so authorized;
(c) Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or any Credit Enhancement,
or to institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the Holders or any
Credit Enhancement Provider, pursuant to the provisions of this Agreement,
unless such Holders or Credit Enhancement Provider shall have offered to
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve Trustee of the obligations, upon the
occurrence of any Servicer Default (which has not been cured or waived, and
for which a Successor Servicer has not been appointed), to exercise such of
the rights and powers vested in it by this Agreement and to use the same
degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs;
(d) Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement, so long as Trustee is not negligent in taking, suffering or
omitting such action;
(e) Trustee shall not be bound to make any investigation into the
facts of matters stated in any assignment of Receivables in Accounts as of
the Cut-Off Date or any Additional Accounts, any Reassignment of Removed
Accounts, the initial report, any daily Servicer's report, the monthly
Servicer's certificate, the
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annual Servicer's certificate, the monthly payment instructions and
notification to Trustee, the monthly Holder's statement, any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless requested
in writing so to do by Holders of Investor Certificates evidencing
Undivided Interests aggregating more than 50% of the Investor Interest of
any Series which could be adversely affected if Trustee does not perform
such acts;
(f) Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or
custodian (including any Transfer Agent and Registrar or Paying Agent)
appointed with due care by it hereunder; and
(g) Subject to subsection 11.1(a), Trustee shall not be required
to make any initial or periodic examination of any documents or records
related to the Receivables or the Accounts for the purpose of establishing
the presence or absence of defects, the compliance by Transferor with its
representations and warranties or for any other purpose.
SECTION 11.3 Trustee Not Liable for Recitals in Certificates.
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15,
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of
authentication on the Certificates) or of any Receivable or related
document. Trustee shall not be accountable for the use or application by
Transferor of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to Transferor
in respect of the Receivables or deposited in or withdrawn from the
Collection Account, the Excess Funding Account, or the Finance Charge
Account, or any Series Account by Servicer.
SECTION 11.4 Trustee May Not Own Certificates. Trustee in its
individual capacity shall not, but in a fiduciary or any other capacity
may, become the owner of Investor Certificates. In connection with such
ownership in other than its individual capacity, Trustee shall have the
same rights as it would have if it were not Trustee.
SECTION 11.5 Servicer to Pay Trustee's Fees and Expenses. Servicer
shall pay to Trustee from time to time, and Trustee shall be entitled to
receive, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust) for all services
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rendered by it in the execution of the Trust hereby created and in the
exercise and performance of any of the powers and duties hereunder of
Trustee, and, subject to Section 8.4, Servicer will pay or reimburse
Trustee (without reimbursement from any Investor Account, any Series
Account or otherwise) upon its request for all reasonable expenses,
disbursements and advances incurred or made by Trustee in accordance with
any of the provisions of this Agreement or any Credit Enhancement except
any such expense, disbursement or advance as may arise from its own
negligence or bad faith and except as provided in the following sentence.
If Trustee is appointed Successor Servicer pursuant to Section 10.2, and
subject to the provisions of Section 10.2 the provisions of this Section
11.5 shall not apply to expenses, disbursements and advances made or
incurred by Trustee in its capacity as Successor Servicer.
The obligations of Servicer under this Section 11.5 shall survive
the termination of the Trust and the resignation or removal of Trustee.
SECTION 11.6 Eligibility Requirements for Trustee. Trustee
hereunder shall at all times be a corporation or association organized and
doing business under the laws of the United States of America or any state
thereof authorized under such laws to exercise corporate trust powers,
having a long-term unsecured debt rating of at least Baa3 by Moody's and
BBB- by Standard & Poor's and, if rated by Fitch, at least BBB- by Fitch,
having, in the case of an entity that is subject to risk-based capital
adequacy requirements, risk-based capital of at least $50,000,000 or, in
the case of an entity that is not subject to risk-based capital adequacy
requirements, having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or state authority. If
such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 11.6, the combined capital
and surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published. In case at any time Trustee shall cease to be eligible in
accordance with the provisions of this Section 11.6, Trustee shall resign
immediately in the manner and with the effect specified in Section 11.7.
SECTION 11.7 Resignation or Removal of Trustee. (a) Trustee may at
any time resign and be discharged from the Trust hereby created by giving
written notice thereof to Servicer. Upon receiving such notice of
resignation, Servicer shall promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered
to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted within 30
days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee.
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(b) If at any time Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to
resign after written request therefor by Transferor, or if at any time
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of Trustee or of its property shall be appointed,
or any public officer shall take charge or control of Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then Transferor may, but shall not be required to, remove
Trustee and promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to Trustee so
removed and one copy to the successor trustee.
(c) Any resignation or removal of Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.8 hereof and any liability of Trustee
arising hereunder shall survive such appointment of a successor trustee.
SECTION 11.8 Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.7 hereof shall execute, acknowledge and
deliver to Transferor and to its predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of
its predecessor hereunder, with the like effect as if originally named as
Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents and statements held by it hereunder, and Transferor
and the predecessor Trustee shall execute and deliver such instruments and
do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section 11.8 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.6.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.8, such successor trustee shall mail notice of
such succession hereunder to all Holders at their addresses as shown in the
Certificate Register.
SECTION 11.9 Merger or Consolidation of Trustee. Any Person into
which Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which Trustee shall be a party, or any Person succeeding
to the corporate trust business of Trustee, shall be the successor of
Trustee hereunder, provided such Person
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shall be eligible under Section 11.6, without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust may at the time be located, Trustee shall have the
power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
Person or Persons, in such capacity and for the benefit of the Holders,
such title to the trust, or any part thereof, and, subject to the other
provisions of this Section 11.10, such powers, duties, obligations, rights
and trusts as Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 11.6 and no notice to
Holders of the appointment of any co-trustee or separate trustee shall be
required under Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon Trustee shall be conferred or imposed upon and
exercised or performed by Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee
or co-trustee is not authorized to act separately without Trustee
joining in such act), except to the extent that under any laws of
any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to
Servicer hereunder), Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate
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trustee or co-trustee shall refer to this Agreement and the conditions of
this Article XI. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with Trustee or
separately, as may be provided therein, subject to all the provisions of
this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording
protection to, Trustee. Every such instrument shall be filed with Trustee
and a copy thereof given to Servicer.
(d) Any separate trustee or co-trustee may at any time constitute
Trustee as its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect
to this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and
be exercised by Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 11.11 Tax Returns. If the Trust shall be required to file
tax returns, Servicer shall prepare or cause to be prepared any tax returns
required to be filed by the Trust and shall remit such returns to Trustee
for signature and, to the extent possible, file such returns at least five
days before such returns are due to be filed. Trustee is hereby authorized
to sign any such return on behalf of the Trust. Servicer shall prepare or
shall cause to be prepared all tax information required by law to be
distributed to Holders and shall deliver such information to Trustee at
least five days prior to the date it is required by law to be distributed
to Holders. Trustee, upon request, shall furnish Servicer with all such
information known to Trustee as may be reasonably required in connection
with the preparation of all tax returns of the Trust, and shall cause such
tax returns to be signed in the manner required by law. In no event shall
Trustee or Servicer be liable for any liabilities, costs or expenses of the
Trust, the Investor Holders or the Certificate Owners arising under any tax
law, including Federal, state, local or foreign income or excise taxes or
any other tax imposed on or measured by income (or any interest or penalty
with respect thereto or arising from a failure to comply therewith).
SECTION 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any
Series of Certificates may be prosecuted and enforced by Trustee without
the possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by Trustee
shall be brought in its own name as trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of Trustee, its agents and counsel, be
for the ratable benefit of any Series of Holders in respect of which such
judgment has been obtained.
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SECTION 11.13 Suits for Enforcement. If a Servicer Default shall
occur and be continuing, Trustee, in its discretion may, subject to the
provisions of Section 10.1, proceed to protect and enforce its rights and
the rights of any Series of Holders under this Agreement by a suit, action
or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in
aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy as Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of
the rights of Trustee or any Series of Holders.
SECTION 11.14 Rights of Holders to Direct Trustee. Holders of
Investor Certificates evidencing Undivided Interests aggregating more than
50% of the Aggregate Investor Interest (or, with respect to any remedy,
trust, or power that does not relate to all Series, 50% of the Aggregate
Investor Interest of the Investor Certificates of all Series to which such
remedy, trust, or power relates) shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to
Trustee, or exercising any trust or power conferred on Trustee; provided
that (a) subject to Section 11.1, Trustee shall have the right to decline
to follow any such direction if Trustee being advised by counsel determines
that the action so directed may not lawfully be taken, or if Trustee in
good faith shall, by a Responsible Officer or Responsible Officers of
Trustee, determine that the proceedings so directed would be illegal or
involve it in personal liability or be unduly prejudicial to the rights of
Holders not parties to such direction and (b) nothing in this Agreement
shall impair the right of Trustee to take any action deemed proper by
Trustee and which is not inconsistent with such direction of such Holders
of Investor Certificates.
SECTION 11.15 Representations and Warranties of Trustee. Trustee
represents and warrants that:
(a) Organization and Good Standing. Trustee is a national banking
association duly organized and validly existing in good standing under the
laws of the United States and has full corporate power, authority and legal
right to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) Due Qualification. Trustee is duly qualified to do business
and is in good standing (or is exempt from such requirement) in any state
required in order to conduct its business, and has obtained all necessary
licenses and approvals required under federal or state law.
(c) Due Authorization. The execution and delivery of this
Agreement have been duly authorized by Trustee by all necessary corporate
action on its part, and
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this Agreement will remain, from the time of its execution, an official
record of Trustee.
(d) No Conflict. The execution and delivery of this Agreement and
the performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof by Trustee will not conflict with, result
in any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a material default under,
any material indenture, contract, agreement, mortgage, deed of trust or
other instrument to which Trustee is a party or by which it or any of its
properties are bound.
(e) No Violation. The execution and delivery of this Agreement and
the Certificates, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof by Trustee will not
conflict with or violate any Requirements of Law applicable to Trustee.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of Trustee, threatened against Trustee
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality (i) asserting the invalidity of this
Agreement, (ii) seeking any determination or ruling that, in the reasonable
judgment of Trustee, would materially and adversely affect the performance
by Trustee of its obligations under this Agreement, (iii) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement.
(g) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body
or official required in connection with the execution and delivery of this
Agreement and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof by Trustee, have been
obtained.
(h) Trustee. Trustee is not an insider or Affiliate of Transferor.
(i) Binding Obligation; Valid Transfer and Assignment. This
Agreement constitutes a legal, valid and binding obligation of Trustee,
enforceable against Trustee in accordance with its terms, except (A) as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and the rights of
creditors of national banking associations, and (B) as such enforceability
may be limited by general principles of equity (whether considered in a
suit at law or in equity).
SECTION 11.16 Maintenance of Office or Agency. Trustee will maintain
at its expense in the Borough of Manhattan, the City of New York an office or
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offices, or agency or agencies, where notices and demands to or upon
Trustee in respect of the Certificates and this Agreement may be served.
Trustee initially appoints the Corporate Trust Office as its office for
such purposes in New York. Trustee will give prompt written notice to
Servicer and to Holders in accordance with Section 13.5 (or in the case of
Holders of Bearer Certificates, in the manner provided for in the related
Supplement) of any change in the location of the Certificate Register or
any such office or agency.
ARTICLE XII TERMINATION
SECTION 12.1 Termination of Trust. (a) The respective obligations
and responsibilities of Transferor, Servicer and Trustee created hereby
(other than the obligation of Trustee to make payments to Holders as
hereafter set forth) shall terminate, except with respect to the duties
described in Section 11.5 and subsections 2.4(c) and 12.3(b), on the Trust
Termination Date; provided that the Trust shall not terminate on the date
specified in clause (a) of the definition of "Trust Termination Date" if
each of Servicer and Transferor notify Trustee in writing, not later than
five Business Days preceding such date, that they desire that the Trust not
terminate on such date, which notice (such notice, a "Trust Extension")
shall specify the date on which the Trust shall terminate (such date, the
"Extended Trust Termination Date"); provided that the Extended Trust
Termination Date shall in any event not be later than the day specified in
clause (c) of the definition of "Trust Termination Date." Servicer and
Transferor may, on any date following the Trust Extension, so long as no
Series of Certificates is outstanding, deliver a notice in writing to
Trustee changing the Extended Trust Termination Date.
(b) All principal or interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in
a Supplement, in the event that the Investor Interest of any Series of
Certificates is greater than zero on its Series Termination Date (after
giving effect to all transfers, withdrawals, deposits and drawings to occur
on such date and the payment of principal to be made on such Series on such
date), Trustee will sell or cause to be sold, and pay the proceeds first,
to all Holders of such Series pro rata in final payment of all principal of
and accrued interest on such Series of Certificates, and second, as
provided in the related Supplement, an amount of Principal Receivables and
the related Finance Charge Receivables (or interests therein) up to 110% of
the Investor Interest of such Series at the close of business on such date
(but in no event in excess of the applicable Investor Percentages of
Principal Receivables and Finance Charge Receivables on such date). Trustee
shall notify each Credit Enhancement Provider of the proposed sale of such
Receivables and shall provide each Credit Enhancement Provider an
opportunity to bid on such Receivables. Transferor shall be permitted to
purchase such Receivables in such case and shall
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have a right of first refusal with respect thereto. Any proceeds of such
sale in excess of such principal and interest paid shall be paid to
Transferor. Upon such Series Termination Date with respect to the
applicable Series of Certificates, final payment of all amounts allocable
to any Investor Certificates of such Series shall be made in the manner
provided in Section 12.3.
SECTION 12.2 Optional Purchase. (a) If so provided in any
Supplement, Transferor may, but shall not be obligated to, cause a final
distribution to be made in respect of the related Series of Certificates on
a Distribution Date specified in such Supplement by depositing into the
Distribution Account or the applicable Series Account, not later than the
Transfer Date preceding such Distribution Date, for application in
accordance with Section 12.3, the amount specified in such Supplement;
provided that if the short term deposits or long-term unsecured debt
obligations of Transferor are not rated at the time of such purchase of
Certificates at least P-3 or Baa-3, respectively, by Moody's, no such event
shall occur unless Transferor shall deliver an Opinion of Counsel
reasonably acceptable to Trustee that such deposit into the Distribution
Account as provided in the related Supplement would not constitute a
fraudulent conveyance of Transferor.
(b) The amount deposited pursuant to subsection 12.2(a) shall be
paid to the Investor Holders of the related Series pursuant to Section 12.3
on the related Distribution Date following the date of such deposit. All
Certificates of a Series which are purchased by Transferor pursuant to
subsection 12.2(a) shall be delivered by Transferor upon such purchase to,
and be canceled by, the Transfer Agent and Registrar and be disposed of in
a manner satisfactory to Trustee and Transferor. The Investor Interest of
each Series which is purchased by Transferor pursuant to subsection 12.2(a)
shall, for the purposes of the definition of "Transferor Interest," be
deemed to be equal to zero on the Distribution Date following the making of
the deposit, and the Transferor Interest shall thereupon be deemed to have
been increased by the Investor Interest of such Series.
SECTION 12.3 Final Payment with Respect to any Series. (a) Written
notice of any termination, specifying the Distribution Date upon which the
Investor Holders of any Series may surrender their Certificates for payment
of the final distribution with respect to such Series and cancellation,
shall be given (subject to at least two Business Days' prior notice from
Servicer to Trustee) by Trustee to Investor Holders of such Series mailed
not later than the fifth day of the month of such final distribution (or in
the manner provided by the Supplement relating to such Series) specifying
(i) the Distribution Date (which shall be the Distribution Date in the
month (x) in which the deposit is made pursuant to subsection 2.4(e),
9.2(b), or 12.2(a) of this Agreement or such other section as may be
specified in the related Supplement, or (y) in which the related Series
Termination Date occurs) upon which final payment of such Investor
Certificates
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will be made upon presentation and surrender of such Investor Certificates
at the office or offices therein designated (which, in the case of Bearer
Certificates, shall be outside the United States), (ii) the amount of any
such final payment, and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Investor Certificates at the office or
offices therein specified. Servicer's notice to Trustee in accordance with
the preceding sentence shall be accompanied by an Officers' Certificate
setting forth the information specified in Article V of this Agreement
covering the period during the then current calendar year through the date
of such notice and setting forth the date of such final distribution.
Trustee shall give such notice to the Transfer Agent and Registrar and the
Paying Agent at the time such notice is given to such Investor Holders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 12.1(a) or the occurrence of the Series Termination Date with
respect to any Series, all funds then on deposit in the Finance Charge
Account, the Excess Funding Account, the Distribution Account or any Series
Account applicable to the related Series shall continue to be held in trust
for the benefit of the Holders of the related Series and the Paying Agent
or Trustee shall pay such funds to the Holders of the related Series upon
surrender of their Certificates (which surrenders and payments, in the case
of Bearer Certificates, shall be made only outside the United States). In
the event that all of the Investor Holders of any Series shall not
surrender their Certificates for cancellation within six months after the
date specified in the above-mentioned written notice to Investor Holders,
Trustee shall give a second written notice (or, in the case of Bearer
Certificates, publication notice) to the remaining Investor Holders of such
Series upon receipt of the appropriate records from the Transfer Agent and
Registrar to surrender their Certificates for cancellation and receive the
final distribution with respect thereto. If within one and one-half years
after the second notice with respect to a Series, all the Investor
Certificates of such Series shall not have been surrendered for
cancellation, Trustee may take appropriate steps or may appoint an agent to
take appropriate steps, to contact the remaining Investor Holders of such
Series concerning surrender of their Certificates, and the cost thereof
shall be paid out of the funds in the Distribution Account or any Series
Account held for the benefit of such Investor Holders. Trustee and the
Paying Agent shall pay to Transferor upon request any monies held by them
for the payment of principal or interest which remains unclaimed for two
years. After payment to Transferor, Investor Holders entitled to the money
must look to Transferor for payment as general creditors unless an
applicable abandoned property law designates another Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer
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Agent and Registrar and be disposed of in a manner satisfactory to Trustee
and Transferor.
SECTION 12.4 Termination Rights of Transferor. Upon the
termination of the Trust pursuant to Section 12.1, and after payment of all
amounts due hereunder on or prior to such termination, Trustee shall
execute a written reconveyance substantially in the form of Exhibit G
pursuant to which it shall reconvey to Transferor (without recourse,
representation or warranty) all right, title and interest of the Trust in
the Receivables, whether then existing or thereafter created, all moneys
due or to become due with respect to such Receivables (including all
accrued interest theretofore posted as Finance Charge Receivables and
Recoveries) and all proceeds of such Receivables and Insurance Proceeds
relating to such Receivables and Interchange (if any) allocable to the
Trust pursuant to any Supplement, and all proceeds thereof, except for
amounts held by Trustee pursuant to subsection 12.3(b). Trustee shall
execute and deliver such instruments of transfer and assignment, in each
case without recourse, as shall be reasonably requested by Transferor to
vest in Transferor all right, title and interest which the Trust had in the
Receivables.
SECTION 12.5 Defeasance. Notwithstanding anything to the contrary
in this Agreement:
(a) Transferor may at its option be discharged from its
obligations hereunder with respect to any Series or all outstanding Series
(in any such case, the "Defeased Series") on the date the applicable
conditions set forth in subsection 12.5(c) are satisfied (a "Defeasance");
provided, however, that the following rights, obligations, powers, duties
and immunities shall survive with respect to the Defeased Series until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
Investor Certificates of the Defeased Series to receive, solely from the
trust fund provided for in subsection 12.5(c), payments in respect of
principal of and interest on such Investor Certificates when such payments
are due; (ii) the right of any Credit Enhancement Provider to the repayment
of any amount due to it under the applicable Credit Enhancement and
Supplement, including interest thereon; (iii) Transferor's obligations with
respect to such Certificates under Sections 6.3 and 6.4; (iv) the rights,
powers, trusts, duties and immunities of Trustee, the Paying Agent and the
Transfer Agent and Registrar hereunder; and (v) this Section 12.5.
(b) Subject to subsection 12.5(c),Transferor at its option may
cause Collections allocated to the Defeased Series and available to
purchase Principal Receivables to be applied to purchase Permitted
Investments rather than Principal Receivables.
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(c) The following shall be the conditions to Defeasance under
subsection 12.5(a): (i) Transferor irrevocably shall have deposited or
caused to be deposited with Trustee (such deposit to be made other than
from Transferor's funds), under the terms of an irrevocable trust agreement
in form and substance satisfactory to Trustee, as trust funds in trust for
making the payments described below, (A) Dollars in an amount, or (B)
Permitted Investments which through the scheduled payment of principal and
interest in respect thereof will provide, not later than the due date of
payment thereon, money in an amount, or (C) a combination thereof, in each
case sufficient to pay and discharge, and which shall be applied by Trustee
to pay and discharge, all remaining scheduled interest and principal
payments on all outstanding Investor Certificates of the Defeased Series on
the dates scheduled for such payments in this Agreement and the applicable
Supplements and all amounts owing to the Credit Enhancement Providers, if
any, with respect to the Defeased Series; and (ii) prior to any exercise of
its right pursuant to this Section 12.5 with respect to a Defeased Series
to substitute money or Permitted Investments for Receivables, (x)
Transferor shall have delivered to Trustee a Tax Opinion with respect to
such deposit and termination of obligations and 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 and (y) Transferor shall have
delivered to Trustee and each Credit Enhancement Provider an Officer's
Certificate stating that Transferor reasonably believes that such deposit
and termination of obligations will not, based on the facts known to such
officer at the time of such certification, then or thereafter cause a Pay
Out Event with respect to any Series.
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment. (a) This Agreement or any Supplement may
be amended in writing from time to time by Servicer, Transferor and
Trustee, without the consent of any of Holders; provided that such action
shall not, in the reasonable belief of Transferor, as evidenced by an
Officer's Certificate from Transferor addressed and delivered to Trustee,
adversely affect in any material respect the interests of any Investor
Holders; provided, further, that each Rating Agency shall have notified
Transferor, Servicer and Trustee in writing that the Rating Agency
Condition has been satisfied with respect to any outstanding Series or
Class to which it is a Rating Agency. This Agreement or any Supplement may
be amended in writing by Servicer, Transferor and Trustee, without the
consent of any of the Holders to (i) provide for additional Credit
Enhancement or substitute Credit Enhancement with respect to a Series (so
long as the amount of such substitute Credit Enhancement, unless otherwise
provided in any related Supplement, is equal to the original Credit
Enhancement for such Series), (ii) add one or more Participations to the
Trust, (iii) to effect the designation of any additional Transferor or to
provide for the addition to the Trust of Participations,
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(iv) cure any ambiguity or correct or supplement any provision contained
Agreement or Series Supplement which may be defective or inconsistent with
any other provisions thereof, (v) enable all or a portion of the Trust to
qualify as, and to permit an election to be made to cause the Trust to be
treated as a "financial asset securitization investment trust" under the
Internal Revenue Code (and, in connection with any such election, to modify
or eliminate existing provisions relating to the intended Federal income
tax treatment of the Certificates and the Trust), (vi) enable the Trust to
qualify as a partnership for purposes of any state tax laws (including by
amending Section 9.2 to read in its entirety substantially as set forth on
Exhibit H), and (vii) enable Receivables transferred to the Trust to be
derecognized by Transferor (or applicable additional Transferor) under
applicable accounting principles and the Trust to not be treated as a
member of Transferor's (or such related additional Transferor's)
consolidated group under applicable accounting principles.
(b) This Agreement or any Supplement may also be amended in
writing from time to time by Servicer, Transferor and Trustee with the
consent of the Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 66-2/3% of the Investor Interest of
each outstanding Series or Class adversely affected by such amendment for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or any Supplement or
modifying in any manner the rights of Investor Holders of any Series or
Class then issued and outstanding; provided that no such amendment shall
(i) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any Investor Certificates of
such Series without the consent of each Investor Holder of such Series,
(ii) change the definition of or the manner of calculating the Investor
Interest or the Investor Percentage of such Series without the consent of
each Investor Holder of such Series, or (iii) reduce the aforesaid
percentage required to consent to any such amendment, without the consent
of each Investor Holder of all Series adversely affected. Trustee may, but
shall not be obligated to, enter into any such amendment which affects
Trustee's rights, duties or immunities under this Agreement or otherwise.
(c) Notwithstanding anything in this Section 13.1 to the contrary,
the Supplement with respect to any Series may be amended on the items and
in accordance with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment (other than
an amendment pursuant to subsection (a)), Trustee shall furnish
notification of the substance of such amendment to each Investor Holder of
each Series adversely affected and to each Rating Agency providing a rating
for such Series.
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(e) It shall not be necessary for the consent of Investor Holders
under this Section 13.1 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Investor Holders shall be
subject to such reasonable requirements as Trustee may prescribe.
(f) Any Supplement executed and delivered pursuant to Section 6.9
and any amendments regarding the addition to or removal of Receivables from
the Trust as provided in Section 2.6 or 2.7, executed in accordance with
the provisions hereof, shall not be considered amendments to this Agreement
for the purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, Trustee may request an
Opinion of Counsel from Transferor or Servicer to the effect that the
amendment complies with all requirements of this Agreement.
SECTION 13.2 Protection of Right, Title and Interest to Trust. (a)
Servicer shall cause this Agreement, all amendments hereto and/or all
financing statements and continuation statements and any other necessary
documents covering the Holders' and Trustee's right, title and interest to
the Trust to be promptly recorded, registered, and filed, and at all times
to be kept recorded, registered, and filed, all in such manner and in such
places as may be required by law fully to preserve and protect the right,
title and, interest of the Holders or Trustee, as the case may be,
hereunder to all property comprising the Trust. Servicer shall deliver to
Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. Transferor shall
cooperate fully with Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill
the intent of this subsection 13.2(a).
(b) Within 30 days after Transferor makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with subsection (a) seriously
misleading within the meaning of Section 9-402(7) of the UCC as in effect
in the State of Louisiana, Transferor shall give Trustee notice of any such
change and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in
the Receivables and the proceeds thereof.
(c) Each of Transferor and Servicer will give Trustee prompt
written notice of any relocation of any office from which it services
Receivables or keeps records concerning the Receivables or of its principal
executive office and
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whether, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's security interest in the Receivables
and the proceeds thereof. Each of Transferor and Servicer will at all times
maintain each office from which it services Receivables and its principal
executive office within the United States of America.
(d) The Servicer will deliver to Trustee: (i) upon each date that
any Additional Accounts are to be included in the Accounts pursuant to
subsection 2.6(a) or (b), an Opinion of Counsel substantially in the form
of Exhibit D; and (ii) on or before March 31 of each year, beginning with
March 31, 1998, an Opinion of Counsel, substantially in the form of Exhibit
E.
(e) Upon not less than 5 Business Days' written notice from
Transferor to Trustee and Servicer that Transferor wishes to dispose of any
receivables arising from any of its VISA, MasterCard, Private Label or
other revolving credit accounts which are not Accounts but which are
included in the Bank Portfolio, Trustee shall execute and deliver such
instruments of release, in each case without recourse, representation or
warranty, as shall be prepared by and as are reasonably requested by
Transferor to release of record any purported right, title or interest of
the Trust in and to such receivables, all monies due or to become due with
respect to such receivables and all proceeds of such receivables; provided
that Transferor shall deliver to Trustee and Servicer an Officer's
Certificate dated the date of such release, certifying that no property
described in such release constitutes Trust Assets.
SECTION 13.3 Limitation on Rights of Holders. (a) The death or
incapacity of any Holder shall not operate to terminate this Agreement or
the Trust, nor shall such death or incapacity entitle such Holder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Holder shall have any right to vote (except with respect to
the Investor Holders as provided in Section 13.1 hereof) or in any manner
otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to
constitute the Holders from time to time as partners or members of an
association; nor shall any Holder be under any liability to any third
person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
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(c) No Holder shall have any right by virtue of any provisions of
this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given written notice to Trustee, and unless the
Holders of Certificates evidencing Undivided Interests aggregating more
than 50% of the Investor Interest of any Series which may be adversely
affected but for the institution of such suit, action or proceeding, shall
have made written request upon Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to
Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and Trustee,
for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action,
suit or proceeding; it being understood and intended, and being expressly
covenanted by each Holder with every other Holder and Trustee, that no one
or more Holders shall have the right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to
any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit
of all Holders. For the protection and enforcement of the provisions of
this Section 13.3, each and every Holder and Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 13.4 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 13.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given
if personally delivered at, sent by facsimile or courier or mailed by
registered mail, return receipt requested, to (a) in the case of Transferor
and Servicer, First National Bank of Commerce, 201 Saint Charles Avenue,
29th Floor, New Orleans, Louisiana 70170, Attention: Michael A. Flick,
Secretary, (b) in the case of Trustee, the Corporate Trust Office, (c) in
the case of the Credit Enhancement Provider for a particular Series, the
address or facsimile number, if any, specified in the Supplement relating
to such Series, and (d) in the case of the Rating Agency for a particular
Series, the address or facsimile number, if any, specified in the
Supplement relating to such Series; or, as to each party, such other
address or facsimile number as shall be designated by such party in a
written notice to each other party. Unless otherwise provided with respect
to any Series in the related Supplement any notice required or permitted to
be mailed to a Holder shall be given by first class mail, postage prepaid,
at the address of such Holder
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as shown in the Certificate Register, or with respect to any notice
required or permitted to be made to the Holders of Bearer Certificates, by
publication in the manner provided in the related Supplement. If and so
long as any Series or Class is listed on the Luxembourg Stock Exchange and
such Exchange shall so require, any notice to Investor Holders shall be
published in an authorized newspaper of general circulation in Luxembourg
within the time period prescribed in this Agreement. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed
to have been duly given, whether or not the Holder receives such notice.
SECTION 13.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or rights of the Holders thereof.
SECTION 13.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 8.2 and 8.5, this
Agreement may not be assigned by Servicer without the prior consent of
Holders of Investor Certificates evidencing Undivided Interests aggregating
not less than 66-2/3% of the Investor Interest of each Series on a
Series-by-Series basis, and satisfaction of the Rating Agency Condition.
SECTION 13.8 Certificates Non-Assessable and Fully Paid. It is the
intention of the parties to this Agreement that the Holders shall not be
personally liable for obligations of the Trust, that the Undivided
Interests represented by the Certificates shall be non-assessable for any
losses or expenses of the Trust or for any reason whatsoever, and that
Certificates upon authentication thereof by Trustee pursuant to Sections
2.1 and 6.2 are and shall be deemed fully paid.
SECTION 13.9 Further Assurances. Transferor and Servicer agree to
do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by Trustee more
fully to effect the purposes of this Agreement, including the execution of
any financing statements or continuation statements relating to the
Receivables for filing under the provisions of the UCC of any applicable
jurisdiction.
SECTION 13.10 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of Trustee, any Credit
Enhancement Provider or the Investor Holders, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other
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or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of any rights, remedies, powers
and privileges provided by law.
SECTION 13.11 Counterparts. This Agreement may be executed in two
or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall
constitute one and the same instrument.
SECTION 13.12 Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Holders and,
to the extent provided in the related Supplement, to the Credit Enhancement
Provider named therein, and their respective successors and permitted
assigns. Except as otherwise provided in this Article XIII, no other Person
will have any right or obligation hereunder.
SECTION 13.13 Actions by Holders. (a) Wherever in this Agreement a
provision is made that an action may be taken or a notice, demand or
instruction given by Investor Holders, such action, notice or instruction
may be taken or given by any Investor Holder, unless such provision
requires a specific percentage of Investor Holders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Holder shall bind such Holder and every
subsequent holder of such Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by Trustee or Servicer in reliance
thereon, whether or not notation of such action is made upon such
Certificate.
SECTION 13.14 Rule 144A Information. For so long as any of the
Investor Certificates of any Series or any Class are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
each of Transferor, Servicer, Trustee and the Credit Enhancement Provider
for such Series agree to cooperate with each other to provide to any
Investor Holders of such Series or Class and to any prospective purchaser
of Certificates designated by such an Investor Holder upon the request of
such Investor Holder or prospective purchaser, any information required to
be provided to such holder or prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the Securities Act.
SECTION 13.15 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral,
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are superseded by this Agreement. This Agreement may not be modified,
amended, waived or supplemented except as provided herein.
SECTION 13.16 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
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IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused
this Agreement to be duly executed by their respective officers as of the
day and year first above written.
FIRST NATIONAL BANK OF COMMERCE,
Transferor and Servicer
By: /s/ Michael J. Fowler
------------------------
Name: Michael J. Fowler
Title: Chief ALCO Officer
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By: /s/ T. Marshall
--------------------
Name: T. Marshall
Title: Trust Officer
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EXHIBIT A
FORM OF ASSIGNMENT OF RECEIVABLES
IN ADDITIONAL ACCOUNTS
(As required by Section 2.6 of
the Pooling and Servicing Agreement)
ASSIGNMENT No. _______ OF RECEIVABLES IN ADDITIONAL
ACCOUNTS dated as of _____________, ___** by and between FIRST NATIONAL
BANK OF COMMERCE, a national banking association, as Transferor
("Transferor") and Servicer ("Servicer"), and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association, as Trustee ("Trustee"), pursuant
to the Pooling and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, Transferor, Servicer and Trustee are parties to
the Pooling and Servicing Agreement dated as of August 1, 1997 (as may be
amended and supplemented from time to time, the "Agreement");
WHEREAS, pursuant to the Agreement, Transferor wishes to
designate Additional Accounts to be included as Accounts and to convey the
Receivables of such Additional Accounts, whether now existing or hereafter
created, to the Trust as part of the corpus of the Trust (as each such
terms are defined in the Agreement); and
WHEREAS, Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, Transferor, Servicer and Trustee hereby
agree as follows:
1. Defined Terms. All capitalized terms used herein shall
have the meanings ascribed to them in the Agreement unless otherwise
defined herein.
"Addition Date" means, with respect to the Additional
Accounts designated hereby, ________, ____.
- --------------------
** To be dated as of the applicable Addition Date.
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"Addition Cut Off Date" means, with respect to the
Additional Accounts designated hereby, ________, ____.
2. Designation of Additional Accounts. Within ten
Business Days after the Addition Date, Transferor will deliver to Trustee
an Account Schedule identifying all such Additional Accounts and specifying
for each such Account, as of the Addition Cut Off Date, its account number,
the aggregate amount outstanding in such Account and the aggregate amount
of Principal Receivables outstanding in such Account, which Account
Schedule shall be immediately incorporated into and made a part of this
Assignment and the Agreement.
3. Conveyance of Receivables. Transferor does hereby
transfer, assign, set over and otherwise convey to Trustee, on behalf of
the Trust, for the benefit of the Holders, without recourse, all its right,
title and interest in, to and under the Receivables of such Additional
Accounts existing at the close of business on the Addition Date and
thereafter created and arising in connection with the Additional Accounts,
all monies due or to become due with respect to such Receivables (including
all Finance Charge Receivables and Recoveries), all proceeds of such
Receivables and Insurance Proceeds relating to such Receivables, and all
proceeds thereof. The foregoing does not constitute and is not intended to
result in the creation or assumption by the Trust, Trustee, any Investor
Holder or any Credit Enhancement Provider of any obligation of Servicer,
Transferor or any other Person in connection with the Accounts, the
Receivables or under any agreement or instrument relating thereto,
including any obligation to Obligors, merchant banks, merchants clearance
systems or insurers.
Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with
respect to the Receivables in the Additional Accounts, meeting the
requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect, and maintain perfection of, the
assignment of such Receivables to the Trust, and to deliver a file-stamped
copy of each such financing statement or other evidence of such filing to
Trustee on or prior to the Addition Date. The foregoing transfer,
assignment, set-over and conveyance to the Trust shall be made to Trustee,
on behalf of the Trust, and each reference in this Assignment to such
transfer, assignment, set-over and conveyance shall be construed
accordingly. Trustee shall be under no obligation whatsoever to file such
financing or continuation statements or to make any other filing under the
UCC in connection with such assignment.
In connection with such assignment, Transferor has
indicated in its computer files that Receivables created in connection with
the Additional
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Accounts and designated hereby have been transferred to Trustee, on behalf
of the Trust, for the benefit of the Holders.
The parties intend that if, and to the extent that, such
assignment is not deemed to be a sale, Transferor shall be deemed hereunder
to have granted to Trustee, on behalf of the Trust, for the benefit of the
Investor Holders, a first priority perfected security interest in all of
Transferor's right, title and interest in, to and under the Receivables now
existing and hereafter created and arising in connection with the
Additional Accounts, all monies due or to become due with respect to such
Receivables (including all Finance Charge Receivables and Recoveries) and
all proceeds thereof, that this Assignment shall constitute such a security
agreement under applicable law, and that the Transferor Interest shall be
deemed to represent Transferor's equity in the collateral granted.
4. Acceptance by Trustee. Trustee hereby acknowledges its
acceptance on behalf of the Trust for the benefit of the Holders of all
right, title and interest to the property, now existing and hereafter
created, conveyed to the Trust pursuant to Section 3 of this Assignment,
and declares that it shall maintain such right, title and interest, upon
the trust set forth in the Agreement for the benefit of all Holders.
Trustee further acknowledges that, within five Business Days after the
execution and delivery of this Assignment, Transferor will deliver to
Trustee the Account Schedule or printed list described in Section 2 of this
Assignment.
5. Representations and Warranties of Transferor.
Transferor hereby represents and warrants to Trustee, on behalf of the
Trust, as of the date of this Assignment and as of the Addition Date that:
(a) Legal, Valid and Binding Obligation. This
Assignment constitutes a legal, valid and binding
obligation of Transferor enforceable against Transferor
in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement
of creditors' rights in general and except as such
enforceability may be limited by general principles of
equity (whether considered in a suit at law or in
equity);
(b) Eligibility of Accounts and Receivables.
Each Additional Account designated hereby is an Eligible
Account, and each Receivable in such Additional Account
is an Eligible Receivable;
(c) Selection Procedures. No selection procedures
believed by Transferor to be materially adverse to the
interests of the
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Investor Holders were utilized in selecting the Additional
Accounts from the Bank Portfolio;
(d) Insolvency. As of the Addition Date,
Transferor is not insolvent.
(e) Pay Out Event. Transferor reasonably
believes that the transfer of the Receivables arising in
the Additional Accounts will not cause a Pay Out Event to
occur with respect to any Series;
(f) Security Interest. This Assignment
constitutes either (x) a valid transfer and assignment to
Trustee, on behalf of the Trust, of all right, title and
interest of Transferor in and to the Receiv ables
existing at the close of business on the Addition Date
and thereafter created in the Additional Accounts, and
all monies due or to become due with respect to such
Receivables (including all Finance Charge Receivables and
Recoveries), all proceeds of such Receivables and
Insurance Proceeds relating to such Receivables and all
proceeds thereof, all of which will be held by Trustee on
behalf of the Trust, free and clear of any Lien of any
Person claiming through or under Transferor or any of its
Affiliates, except for (i) Liens permitted under
subsection 2.5(b), (ii) the interest of Transferor and
(iii) Transferor's right to receive interest accruing on,
and investment earnings in respect of, the Finance Charge
Account and the Excess Funding Account and any Series
Account as provided in the Agreement and any related
Supplement or (y) a grant of a security interest in such
property to Trustee, for the benefit of the Investor
Holders, which is enforceable with respect to then
existing Receivables in the Additional Accounts, the
proceeds thereof and Insurance Proceeds and Recoveries
relating thereto upon the conveyance of such Receivables
to the Trust, and which will be enforceable with respect
to the Receivables thereafter created in respect of
Additional Accounts conveyed on the Addition Date, the
proceeds thereof and Insurance Proceeds and Recoveries
relating thereto upon such creation; and (z) if the
Assignment constitutes the grant of a security interest
to Trustee in such property, upon the filing of a
financing statement as described in Section 2.1 of the
Agreement with respect to the Additional Accounts and in
the case of the Receivables thereafter created in the
Additional Accounts and the proceeds thereof, and
Insurance Proceeds and Recoveries relating thereto, upon
such creation, Trustee shall have a first priority
perfected security interest in such property (subject to
Section 9-306 of the UCC as
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in effect in the State of Louisiana), except for Liens
permitted under subsection 2.5(b) of the Agreement;
(g) No Conflict. The execution and delivery by
Transferor of this Assignment, the performance of the
transactions contemplated by this Assignment and the
fulfillment of the terms hereof applicable to Transferor,
will not conflict with or violate any Requirements of Law
applicable to Transferor or conflict with, result in any
breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract,
agreement, mortgage, deed of trust or other instrument to
which Transferor is a party or by which it or its
properties are bound;
(h) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of
Transferor, threatened against Transferor before any
court, regulatory body, administrative agency or other
tribunal or governmental instrumentality (i) asserting
the invalidity of this Assignment, (ii) seeking to
prevent the consummation of any of the transactions
contemplated by this Assignment, (iii) seeking any
determination or ruling that, in the reasonable judgment
of Transferor, would materially and adversely affect the
performance by Transferor of its obligations under this
Assignment, (iv) seeking any determination or ruling that
would materially and adversely affect the validity or
enforceability of this Assignment or (v) seeking to
affect adversely the income tax attributes of the Trust
under the Federal, or applicable state income or
franchise tax systems; and
(i) All Consents. All authorizations, consents,
orders or approvals or other actions of any Person or of
any court or other governmental authority required to be
obtained by Transferor in connection with the execution
and delivery of this Assignment by Transferor and the
performance of the transactions contemplated by this
Assignment by Transferor, have been obtained.
6. Ratification of Agreement. As supplemented by this
Assignment, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Assignment shall be read, taken and
construed as one and the same instrument.
7. Counterparts. This Assignment may be executed in two
or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one
and the same instrument.
A-5
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8. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-6
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have
caused this Assignment to be duly executed by their respective officers as
of the day and year first above written.
FIRST NATIONAL BANK OF COMMERCE,
Transferor and Servicer
By:____________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:____________________________________________
Name:
Title:
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EXHIBIT B
FORM OF MONTHLY SERVICER'S CERTIFICATE
FIRST NATIONAL BANK OF COMMERCE
--------------------------
First NBC Credit Card Master Trust, Series ______
--------------------------
For the _____________ Determination Date
For the ___________ Monthly Period
The undersigned, a duly authorized representative of
First National Bank of Commerce, as Servicer pursuant to the Pooling and
Servicing Agreement dated as of August 1, 1997 (the "Pooling and Servicing
Agreement") by and between First National Bank of Commerce and The First
National Bank of Chicago, as Trustee, does hereby certify as follows:
1. Capitalized terms used in this Certificate have their
respective meanings set forth in the Pooling and Servicing Agreement;
provided, that the "preceding Monthly Period" shall mean the Monthly Period
immediately preceding the calendar month in which this Certificate is
delivered. This Certificate is delivered pursuant to subsection 3.4(b) of
the Pooling and Servicing Agreement. References herein to certain sections
and subsections are references to the respective sections and subsections
of the Pooling and Servicing Agreement, as amended by the applicable Series
Supplement.
2. First National Bank of Commerce is Servicer under the
Pooling and Servicing Agreement.
3. The undersigned is a Servicing Officer.
4. The date of this Certificate is _____________, 199__
which is a Determination Date under the Pooling and Servicing Agreement.
5. The aggregate amount of Collections processed during
the preceding Monthly Period (equal to 5(a) plus 5(b)) was equal to
$________.
(a) The aggregate amount of Collections of
Finance Charge Receivables collected during the preceding
Monthly Period (the "Collections of Finance Charge
Receivables") was equal to
$_________.
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(b) The aggregate amount of Collections of
Principal Receivables collected during the preceding
Monthly Period (the "Collections of Principal
Receivables") was equal to $________.
6. The aggregate amount of Receivables as of the end of
the last day of the preceding Monthly Period was equal to $__________.
7. Attached hereto is an authentic copy of the statements
required to be delivered by the Servicer on the date of this Certificate to
the Paying Agent pursuant to Article V.
8. To the knowledge of the undersigned, there are no
Liens on any Receivables in the Trust except as described below:
[If applicable, insert "None".]
9. The amount, if any, by which the sum of the balance of
the Excess Funding Account and the aggregate Principal Receivables exceeds
the Minimum Aggregate Principal Receivables required to be maintained
pursuant to the Pooling and Servicing Agreement, is equal to $_________.
10. The amount, if any, of the drawing request required
to be made by Trustee on the Servicer Letter of Credit pursuant to
subsection 4.3(a) of the Pooling and Servicing Agreement on the related
Transfer Date is equal to
$____________.
IN WITNESS WHEREOF, the undersigned has duly executed and
delivered this certificate this _____ day of ____________, _____.
FIRST NATIONAL BANK OF
COMMERCE, Servicer
By:_______________________________
Name:
Title:
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<PAGE>
Schedule __ to Monthly
Servicer's Certificate
FIRST NATIONAL BANK OF COMMERCE
--------------------------
First NBC Credit Card Master Trust, Series ______
--------------------------
For the _____________ Determination Date
For the ___________ Monthly Period
[TO COME]
1
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EXHIBIT C
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before each
March 31 beginning with March 31, 1998,
pursuant to Section 3.5 of the Pooling and
Servicing Agreement referred to below)
FIRST NATIONAL BANK OF COMMERCE
FIRST NBC CREDIT CARD MASTER TRUST
The undersigned, a duly authorized representative of First
National Bank of Commerce, as Servicer ("First NBC"), pursuant to the
Pooling and Servicing Agreement dated as of August 1, 1997 (as may be
amended and supplemented from time to time, the "Agreement"), among First
NBC, as Transferor and Servicer, and The First National Bank of Chicago, as
Trustee, does hereby certify that:
1. First NBC is, as of the date hereof, Servicer under the
Agreement. Capitalized terms used in this Certificate have their respective
meanings as set forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to
Trustee.
3. A review of the activities of Servicer during the fiscal year
ended __________, ____, and of its performance under the Agreement was
conducted under my supervision.
4. Based on such review, Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5.
5. The following is a description of each default in the
performance of Servicer's obligations under the provisions of the Agreement
known to me to have been made by Servicer during the fiscal year ended
___________, _____, which sets forth in detail (i) the nature of each such
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<PAGE>
default, (ii) the action taken by Servicer, if any, to remedy each such
default and (iii) the current status of each such default: [if applicable,
insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ______ day of ____________, 19___.
FIRST NATIONAL BANK OF
COMMERCE, Servicer
By ________________________
Name:
Title:
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EXHIBIT D
FORM OF OPINION OF COUNSEL WITH RESPECT
TO ADDITION OF ADDITIONAL ACCOUNTS
(Provisions to be included in
Opinion of Counsel to be
delivered pursuant to
Section 2.6(d)(vi) of the
Pooling and Servicing Agreement)
The opinions set forth below may be subject to appropriate
qualifications, assumptions, limitations and exceptions.
1. The Receivables arising in such Additional Accounts constitute
accounts, general intangibles or chattel paper.
2. The Pooling and Servicing Agreement creates either a valid sale
of the Receivables in such Additional Accounts and the proceeds thereof, or
creates, in favor of Trustee, on behalf of the Trust, for the benefit of
the Investor Holders, a security interest in Transferor's rights in the
Receivables in such Additional Accounts and the proceeds thereof.
3. The security interest described in paragraph 2 is perfected and
of first priority under the UCC.
4. No further filings or actions are required under the UCC prior
to ______________, _______ in order to maintain the perfection and priority
of the security interest created by the Pooling and Servicing Agreement in
favor of Trustee, on behalf of the Trust, in Transferor's rights in the
Receivables in such Additional Accounts and the proceeds thereof.
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EXHIBIT E
FORM OF ANNUAL OPINION OF COUNSEL
The opinion set forth below, which is to be delivered pursuant to
subsection 13.2(d)(ii) of the Pooling and Servicing Agreement, may be
subject to certain qualifications, assumptions, limitations and exceptions
taken or made in the opinion of counsel delivered on the Initial Closing
Date with respect to similar matters.
No filing or other action, other than such filing or action
described in such opinion, is necessary from the date of such opinion
through March 31 of the following year to continue the perfected status of
the interest of Trustee, on behalf of the Trust, in the collateral
described in the financing statements referred to in such opinion.
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EXHIBIT F
FORM OF REASSIGNMENT OF RECEIVABLES
(As required by Section 2.7 of
the Pooling and Servicing Agreement)
REASSIGNMENT No. _______ OF RECEIVABLES dated as of _________,
____* by and among FIRST NATIONAL BANK OF COMMERCE, a national banking
association, as Transferor ("Transferor") and Servicer ("Servicer"), and
THE FIRST NATIONAL BANK OF CHICAGO, a national banking association
("Trustee"), pursuant to the Pooling and Servicing Agreement referred to
below.
WITNESSETH:
WHEREAS, Transferor, Servicer and Trustee are parties to the
Pooling and Servicing Agreement dated as of August 1, 1997 (as may be
amended and supplemented from time to time, the "Agreement");
WHEREAS, pursuant to the Agreement, Transferor wishes to remove
from the Trust all Receivables in certain designated Accounts (the "Removed
Accounts") and to cause Trustee to reconvey the Receivables of such Removed
Accounts, whether now existing or hereafter created, from the Trust to
Transferor; and
WHEREAS, Trustee is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof;
NOW, THEREFORE, Transferor, Servicer and Trustee hereby agree as
follows:
1. Defined Terms. All terms defined in the Agreement and used
herein shall have such defined meanings when used herein, unless otherwise
defined herein.
"Removal Date" means, with respect to the Removed Accounts
designated hereby, ____________, _____.
- ----------------
* To be dated as of the Removal Date.
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"Removal Notice Date" means, with respect to the Removed Accounts,
______________, ____.
2. Designation of Removed Accounts. On or before the date that is
ten Business Days after the Removal Date, Transferor will deliver to
Trustee a computer file or microfiche list containing an accurate list of
all Removed Accounts identified by account number and the aggregate amount
of the Receivables in such Removed Accounts as of the Removal Date, which
computer file or microfiche list shall as of the Removal Date modify and
amend and be made part of the Agreement.
3. Conveyance of Receivables. (a) Trustee does hereby transfer,
assign, set over and otherwise convey, without recourse, to Transferor, on
and after the Removal Date, all right, title and interest of Trustee, on
behalf of the Trust, in, to and under the Receivables existing at the close
of business on the Removal Date and thereafter created from time to time in
the Removed Accounts designated hereby, all monies due or to become due
with respect to such Receivables (including all Finance Charge Receivables
and Recoveries), all proceeds of such Receivables and Insurance Proceeds
relating to such Receivables, and all proceeds thereof.
(b) In connection with such transfer, Trustee agrees to execute
and deliver to Transferor on or prior to the date this Reassignment is
delivered, applicable termination statements with respect to the
Receivables existing at the close of business on the Removal Date and
thereafter created from time to time in the Removed Accounts reassigned
hereby and the proceeds thereof evidencing the release by the Trust of its
interest in the Receivables in the Removed Accounts, and meeting the
requirements of applicable state law, in such manner and such jurisdictions
as are necessary to terminate such interest.
4. Representations and Warranties of Transferor. Transferor hereby
represents and warrants to Trustee, on behalf of the Trust, as of the
Removal Date:
(a) Legal, Valid and Binding Obligation. This
Reassignment constitutes a legal, valid and binding obligation of
Transferor enforceable against Transferor, in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement
of creditors' rights in general and except as such enforceability
may be limited by general principles of equity (whether considered
in a suit at law or in equity);
F-2
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(b) Pay Out Event, Minimum Transferor Interest, Minimum
Aggregate Principal Receivables, Series Payments. Transferor
reasonably believes that the removal of the Receivables in the
Removed Accounts will not (A) cause a Pay Out Event to occur with
respect to any Series (provided that for purposes of this
subsection 4(b)(A), the Receivables in the Removed Accounts shall
be considered to have been removed as of the Removal Date), (B)
cause the Transferor Interest as a percentage of the aggregate
amount of Principal Receivables to be less than the Minimum
Transferor Interest, (C) cause the aggregate amount of Principal
Receivables to be less than the Minimum Aggregate Principal
Receivables, or (D) result in the failure to make any payment
specified in the related Supplement with respect to any Series;
(c) Selection Procedure. No selection procedures believed
by Transferor to be materially adverse to the interests of the
Holders of any Series as of the Removal Date were utilized in
selecting the Removed Accounts to be removed from the Trust; and
(d) Rating Agency Notice; Approval. Each Rating Agency
has received notice, on or before the tenth Business Day prior to
the Removal Date, of the proposed removal of the Receivables from
the Removed Accounts, and the Rating Agency Condition has been
satisfied with respect to the removal
5. Ratification of Agreement. As supplemented by this
Reassignment, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Reassignment shall be read, taken
and construed as one and the same instrument.
6. Counterparts. This Reassignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the
same instrument.
7. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CON STRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
F-3
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused
this Reassignment to be duly executed by their respective officers as of
the day and year first above written.
FIRST NATIONAL BANK OF COMMERCE,
Transferor and Servicer
By:__________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:__________________________________
Name:
Title:
F-4
<PAGE>
EXHIBIT G
FORM OF RECONVEYANCE OF RECEIVABLES
RECONVEYANCE of RECEIVABLES, dated as of __________ __, 19__, by
and between FIRST NATIONAL BANK OF COMMERCE, a national banking association
(the "Transferor") and THE FIRST NATIONAL BANK OF CHICAGO, a national
banking association (the "Trustee") pursuant to the Pooling and Servicing
Agreement referred to below.
W I T N E S S E T H:
WHEREAS, Transferor and Trustee are parties to the Pooling and
Servicing Agreement dated as of August 1, 1997 (hereinafter as such
agreement may have been, or may from time to time be, amended, supplemented
or otherwise modified, the "Pooling and Servicing Agreement") by and among
First National Bank of Commerce, as Transferor and Servicer, and Trustee;
WHEREAS, pursuant to the Pooling and Servicing Agreement,
Transferor wishes to cause Trustee to reconvey all of the Receivables and
proceeds thereof, whether now existing or hereafter created, from the Trust
to Transferor pursuant to the terms of Section 12.4 of the Pooling and
Servicing Agreement upon termination of the Trust pursuant to Section 12.1
of the Pooling and Servicing Agreement (as each such term is defined in the
Pooling and Servicing Agreement);
WHEREAS, Trustee is willing to reconvey the Receivables subject to
the terms and conditions hereof;
NOW THEREFORE, Transferor and Trustee hereby agree as follows:
1. Defined Terms. All terms defined in the Pooling and Servicing
Agreement and used herein shall have such defined meanings when used
herein, unless otherwise defined herein.
"Reconveyance Date" shall mean __________ __, 19__.
2. Return of Lists of Accounts. Trustee shall deliver to
Transferor not later than three Business Days after the Reconveyance Date,
each and every computer file or microfiche list of Accounts delivered to
Trustee pursuant to the terms of the Pooling and Servicing Agreement.
G-1
<PAGE>
3. Conveyance of Receivables. (a) Trustee does hereby reconvey to
Transferor, without recourse, representation or warranty, on and after the
Reconveyance Date, all right, title and interest of the Trust in and to
each and every Receivable now existing and hereafter created in the
Accounts, all monies due or to become due with respect thereto (including
all accrued interest heretofore posted as Finance Charge Receivables and
Recoveries), and all proceeds of such Receivables and Insurance Proceeds
relating to such Receivables and Interchange (if any) allocable to the
Trust pursuant to any Supplement, except for amounts, if any, held by
Trustee pursuant to subsection 12.3(b) of the Pooling and Servicing
Agreement.
(b) In connection with such transfer, Trustee agrees to
execute and deliver on or prior to the date of this Reconveyance, such UCC
termination statements or other instruments of transfer and assignment, in
each case without recourse, as Transferor may reasonably request to vest in
such Holder all right, title and interest which the Trust had in the
Receivables.
4. Counterparts. This Reconveyance may be executed in two or more
counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one
and the same instrument.
5. GOVERNING LAW. THIS RECONVEYANCE SHALL BE CON STRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
G-2
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Reconveyance
of Receivables to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
FIRST NATIONAL BANK OF COMMERCE,
Transferor and Servicer
By_______________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By_______________________________
Name:
Title:
G-3
<PAGE>
EXHIBIT H
FORM OF AMENDED SECTION 9.2
SECTION 9.2 Additional Rights Upon the Occurrence of Certain
Events. (a) If Transferor shall consent to the appointment of a conservator
or receiver or liquidator for the winding-up or liquidation of its affairs,
or a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator for the winding-up or liquidation of its affairs
shall have been entered against Transferor (an "Insolvency Event"),
Transferor shall on the day of such Insolvency Event (the "Appointment
Day") immediately cease to transfer Principal Receivables and Discount
Option Receivables to the Trust and shall promptly give notice to Trustee
of such Insolvency Event. Notwithstanding any cessation of the transfer to
the Trust of additional Principal Receivables and Discount Option
Receivables, Finance Charge Receivables, whenever created, accrued in
respect of Principal Receivables or Discount Option Receivables which have
been transferred to the Trust shall continue to be a part of the Trust, and
Collections with respect thereto shall continue to be allocated and paid in
accordance with Article IV. Within 15 days of the Appointment Day, Trustee
shall (i) publish a notice in an Authorized Newspaper that an Insolvency
Event has occurred and that Trustee intends to sell, dispose of or
otherwise liquidate the Receivables in a commercially reasonable manner and
(ii) send written notice to the Investor Holders describing the provisions
of this Section 9.2 and requesting instructions from such Holders. Unless
within 90 days from the day notice pursuant to clause (i) is first
published, Trustee shall have received written instructions of Holders of
Investor Certificates evidencing more than 50% of the Investor Interest of
each Series issued and outstanding (or, if any such Series has two or more
Classes, each Class) to the effect that such Holders disapprove of the
liquidation of the Receivables and wish to continue having Principal
Receivables and Discount Option Receivables transferred to the Trust as
before such Insolvency Event, Trustee shall sell, dispose of or otherwise
liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids. Trustee may obtain a prior determination for any such
conservator, receiver or liquidator that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable. The
provisions of Sections 9.1 and 9.2 shall not be deemed to be mutually
exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to subsection (a) shall be treated as Collections on
the Receivables and shall be allocated and deposited in accordance with the
provisions of Article IV; provided, that Trustee shall determine
conclusively in its sole
H-1
<PAGE>
discretion the amount of such proceeds which are allocable to Finance
Charge Receivables and the amount of such proceeds which are allocable to
Principal Receivables. Unless Trustee receives written instructions from
Investor Holders as provided in subsection (a), on the day following the
last Distribution Date in the Monthly Period during which such proceeds are
distributed to the Investor Holders of each Series, the Trust shall
terminate.
(c) Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article IX with respect to competitive
bids.
H-2
FIRST NATIONAL BANK OF COMMERCE
Transferor and Servicer
and
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
on behalf of the Series 1997-1 Holders
--------------------------------------
SERIES 1997-1 SUPPLEMENT
Dated as of August 1, 1997
to
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1997
--------------------------
FIRST NBC CREDIT CARD MASTER TRUST
Series 1997-1
----------------------------
<PAGE>
| TABLE OF CONTENTS
Page
SECTION 1. Designation.......................................................1
SECTION 2. Definitions.......................................................2
SECTION 3. Servicing Compensation and Assignment of Interchange and Other
Account Revenues........................................................19
SECTION 4. Reassignment and Transfer Terms..................................21
SECTION 5. Delivery and Payment for the Investor Certificates...............21
SECTION 6. Depository; Form of Delivery of Investor Certificates; Legends;
Transfer Restrictions and Procedures......................... ..........21
SECTION 7. Article IV of Agreement..........................................21
SECTION 4.6 Rights of Holders and the Collateral Interest Holder.......21
SECTION 4.7 Allocations................................................22
SECTION 4.8 Determination of Monthly Interest....................... ..28
SECTION 4.9 Determination of Monthly Principal.........................29
SECTION 4.10 Coverage of Required Amount...... ..................30
SECTION 4.11 Monthly Payments........................ .................31
SECTION 4.12 Series Investor Charge-Offs...............................36
SECTION 4.13 Excess Spread............................ ...............37
SECTION 4.14 Reallocated Investor Finance Charge Collections...........39
SECTION 4.15 Reallocated Principal Collections.........................40
SECTION 4.16 Shared Principal Collections..............................41
SECTION 4.17 Principal Account and Principal Funding Account... ......42
SECTION 4.18 Reserve Account...........................................43
SECTION 4.19 [RESERVED]................................................45
SECTION 4.20 Transferor's or Servicer's Failure to Make a Deposit or
Payment...................................................... .....45
SECTION 4.21. Conversion Date........ ..................................45
SECTION 8. Article V of the Agreement.......................................45
SECTION 5.1 Distributions...... .....................................45
SECTION 5.2 Monthly Series 1997-1 Holders' Statement...................46
SECTION 9. Series 1997-1 Pay Out Events.....................................47
SECTION 10. Series 1997-1 Termination........................................48
-i-
<PAGE>
Page
SECTION 11. Periodic Finance Charges and Other Fees.........................48
SECTION 12. Counterparts......... .......................................48
SECTION 13. Governing Law...................................................48
SECTION 14. No Petition.....................................................49
SECTION 15. Amendments......................................................49
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT B Form of Monthly Payment Instructions
and Notification to Trustee
EXHIBIT C Form of Monthly Series 1997-1 Holders' Statement
||
-ii-
<PAGE>
SERIES 1997-1 SUPPLEMENT, dated as of August 1, 1997 (this "Series
Supplement"), by and between FIRST NATIONAL BANK OF COMMERCE, a national
banking association ("First NBC"), as Transferor and Servicer, and THE
FIRST NATIONAL BANK OF CHICAGO, as Trustee under the Pooling and Servicing
Agreement dated as of August 1, 1997 between First NBC and Trustee (the
"Agreement").
Section 6.9 of the Agreement provides, among other things, that
Transferor and Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the delivery by
Trustee to Transferor for the execution and redelivery to Trustee for
authentication of one or more Series of Certificates.
Pursuant to this Series Supplement, Transferor and the Trust shall
create a new Series of Investor Certificates and shall specify the
Principal Terms thereof.
SECTION 1. Designation. (a) There is hereby created a Series of
Investor Certificates to be issued in two Classes pursuant to the Agreement
and this Series Supplement and to be known together as the "Series 1997-1
Certificates." The two classes shall be designated the Class A 6.15% Asset
Backed Certificates, Series 1997-1 (the "Class A Certificates") and the
Class B 6.35% Asset Backed Certificates, Series 1997-1 (the "Class B
Certificates"). The Class A Certificates and the Class B Certificates shall
be substantially in the form of Exhibits A-1 and A-2, respectively. In
addition, there is hereby created a third Class which constitutes an
uncertificated interest in the Trust, shall be deemed to be an "Investor
Certificate" for all purposes under the Agreement and this Series
Supplement, except as expressly provided herein, and shall be known as the
Collateral Interest, Series 1997-1 and have the rights assigned to the
Collateral Interest in this Series Supplement.
(b) Series 1997-1 shall be included in Group I, which shall be a
Reallocation Group in which all Series shall also be Excess Allocation
Series. Series 1997-1 shall be a Principal Sharing Series. Series 1997-1
shall not be subordinated to any other Series.
(c) The Collateral Interest Holder, as holder of an "Investor
Certificate" under the Agreement, shall be entitled to the benefits of the
Agreement and this Series Supplement upon payment by the Collateral
Interest Holder of amounts owing on the Closing Date pursuant to the Loan
Agreement. Notwithstanding the foregoing, except as expressly provided
herein, the provisions of Article VI and Article XII of the Agreement
relating to the registration, authentication, delivery, presentation,
cancellation and surrender of Registered Certificates shall not be
applicable to the Collateral Interest.
SECTION 2. Definitions. If any term or provision contained herein
shall conflict with or be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern.
References to any
1
<PAGE>
Article, Section or subsection are references to Articles, Sections or
subsections of the Agreement, except as otherwise expressly provided. All
capitalized terms not otherwise defined herein are defined in the
Agreement, and the interpretive provisions set out in Section 1.2 of the
Agreement apply to this Series Supplement. Each capitalized term defined
herein relates only to the Investor Certificates and no other Series of
Certificates issued by the Trust.
"Accumulation Shortfall" initially means zero and thereafter
means, with respect to any Monthly Period during the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount
for the previous Monthly Period over the amount deposited into the
Principal Funding Account pursuant to subsection 4.11(e)(i) with respect to
the Class A Certificates for the previous Monthly Period.
"Actual Allocations" is defined in subsection 4.7(e).
"Adjusted Investor Interest" means, on any date of determination,
an amount equal to the sum of (a) the Class A Adjusted Investor Interest
and (b) the Class B Investor Interest and (c) the Collateral Interest.
"Available Investor Principal Collections" means, as to any
Monthly Period, an amount equal to (a) the Investor Principal Collections
for such Monthly Period, minus (b) the amount of Reallocated Principal
Collections with respect to such Monthly Period that, pursuant to Section
4.15, are required to fund the Class A Required Amount and the Class B
Required Amount (other than any portions thereof that are applied pursuant
to (x) subsection 4.11(a)(iii) and (y) subsection 4.13(c) (to the extent
such portions pursuant to subsection 4.13(c) are available to pay the Class
B Net Default Amount), which shall, without duplication, be included as
Available Investor Principal Collections), plus (c) the amount of Shared
Principal Collections that are allocated to Series 1997-1 in accordance
with subsection 4.16(b).
"Available Reserve Account Amount" means, as to any Transfer Date,
the lesser of (a) the amount on deposit in the Reserve Account on such date
(after taking into account any interest and earnings retained in the
Reserve Account pursuant to subsection 4.18(b) on such date, but before
giving effect to any deposit made or to be made pursuant to subsection
4.13(i) to the Reserve Account on such date) and (b) the Required Reserve
Account Amount.
"Base Rate" means, as to any Monthly Period, the sum of (a) the
weighted average of the Class A Certificate Rate, the Class B Certificate
Rate, and the Collateral Rate (each for the related Interest Period) plus
(b) the Series Servicing Fee Percentage.
"Class A Additional Interest" is defined in Section 4.8(a).
2
<PAGE>
"Class A Adjusted Investor Interest" means, on any date of
determination, an amount equal to the Class A Investor Interest minus the
Principal Funding Account Balance on such date of determination.
"Class A Available Funds" means, as to any Monthly Period, an
amount equal to the sum of (a) the Class A Floating Allocation of
Reallocated Investor Finance Charge Collections (excluding the portion of
Reallocated Investor Finance Charge Collections attributable to Servicer
Interchange) and Series Investment Earnings, (b) with respect to any
Monthly Period during the Controlled Accumulation Period prior to the
payment in full of the Class A Investor Interest, the Principal Funding
Investment Proceeds arising pursuant to subsection 4.17(b), if any, with
respect to the related Transfer Date that are to be applied as Class A
Available Funds pursuant to subsection 4.17(b) and (c) amounts, if any, to
be withdrawn from the Reserve Account that will be deposited into the
Finance Charge Account on the related Transfer Date pursuant to subsections
4.18(b) and 4.18(d) (or that will be required to be deposited in the
Finance Charge Account pursuant to such subsections on the related Transfer
Date (before giving effect to any permitted netting)).
"Class A Certificate Rate" means 6.15%.
"Class A Certificates" is defined in subsection 1(a) of this Series
Supplement.
"Class A Deficiency Amount" is defined in subsection 4.8(a).
"Class A Fixed Allocation" means, for any Monthly Period following
the Revolving Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Class A
Investor Interest as of the close of business on the last day of the
Revolving Period and the denominator of which is equal to the numerator
used in determining the related Fixed Investor Percentage; provided that if
Series 1997-1 is paired with a Paired Series and a Pay Out Event occurs
with respect to such Paired Series during the Controlled Accumulation
Period, Transferor may, by written notice delivered to Trustee and
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).
"Class A Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class A Adjusted Investor Interest
as of the close of business on the last day of the preceding Monthly Period
and the denominator of which is equal to the Adjusted Investor Interest as
of the close of business on such day; provided that, with respect to the
first Monthly Period, the Class A Floating Allocation means the percentage
equivalent of a fraction, the numerator of which is the Class A Initial
Investor Interest and the denominator of which is the Initial Investor
Interest.
3
<PAGE>
"Class A Holder" means the Person in whose name a Class A
Certificate is registered in the Certificate Register.
"Class A Initial Investor Interest" means the aggregate initial
principal amount of the Class A Certificates, which is $259,500,000.
"Class A Investor Allocation" means, for any Monthly Period, (a)
with respect to Net Default Amounts and Reallocated Investor Finance Charge
Collections at any time and Principal Receivables during the Revolving
Period, the Class A Floating Allocation and (b) with respect to Principal
Receivables during the Controlled Accumulation Period or Rapid Amortization
Period, the Class A Fixed Allocation.
"Class A Investor Charge-Off" is defined in subsection 4.12(a).
"Class A Investor Interest" means, on any date of determination,
an amount equal to (a) the Class A Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class A Holders prior to
such date and minus (c) the excess, if any, of the aggregate amount of
Class A Investor Charge-Offs pursuant to subsection 4.12(a) over Class A
Investor Charge-Offs reimbursed pursuant to subsection 4.13(b) prior to
such date of determination; provided that the Class A Investor Interest may
not be reduced below zero.
"Class A Monthly Interest" is defined in subsection 4.8(a).
"Class A Monthly Principal" is defined in subsection 4.9(a).
"Class A Net Default Amount" means, as to each Transfer Date, an
amount equal to the product of (a) the Series Net Default Amount for such
Transfer Date and (b) the Class A Floating Allocation applicable for the
related Monthly Period.
"Class A Required Amount" is defined in subsection 4.10(a).
"Class A Scheduled Payment Date" means the August, 2002
Distribution Date.
"Class A Servicing Fee" is defined in subsection 3(a) of this
Series Supplement.
"Class B Additional Interest" is defined in subsection 4.8(b).
"Class B Available Funds" means, as to any Monthly Period, an
amount equal to the Class B Floating Allocation of Reallocated Investor
Finance Charge
4
<PAGE>
Collections (excluding the portion of Reallocated Investor Finance Charge
Collections attributable to Servicer Interchange) and Series Investment
Earnings.
"Class B Certificate Rate" means 6.35%.
"Class B Certificates" is defined in subsection 1(a) of this Series
Supplement.
"Class B Deficiency Amount" is defined in subsection 4.8(b).
"Class B Fixed Allocation" means, for any Monthly Period following
the Revolving Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Class B
Investor Interest as of the close of business on the last day of the
Revolving Period and the denominator of which is equal to the numerator
used in determining the related Fixed Investor Percentage; provided that if
Series 1997-1 is paired with a Paired Series and a Pay Out Event occurs
with respect to such Paired Series during the Controlled Accumulation
Period, Transferor may, by written notice delivered to Trustee and
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 and the
Principal Funding Account, in each case 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).
"Class B Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class B Investor Interest as of the
close of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Adjusted Investor Interest as of the
close of business on such day; provided that, with respect to the first
Monthly Period, the Class B Floating Allocation means the percentage
equivalent of a fraction, the numerator of which is the Class B Initial
Investor Interest and the denominator of which is the Initial Investor
Interest.
"Class B Holder" means the Person in whose name a Class B
Certificate is registered in the Certificate Register.
"Class B Initial Investor Interest" means the aggregate initial
principal amount of the Class B Certificates, which is $21,000,000.
"Class B Investor Allocation" means, for any Monthly Period, (a)
with respect to Net Default Amounts and Reallocated Investor Finance Charge
Collections at any time and Principal Receivables during the Revolving
Period, the Class B Floating Allocation and (b) with respect to Principal
Receivables during the Controlled Accumulation Period or Rapid Amortization
Period, the Class B Fixed Allocation.
5
<PAGE>
"Class B Investor Charge-Off" is defined in subsection 4.12(b).
"Class B Investor Interest" means, on any date of determination,
an amount equal to (a) the Class B Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class B Holders prior to
such date, minus (c) the aggregate amount of Class B Investor Charge-Offs
for all prior Transfer Dates pursuant to subsection 4.12(b), minus (d) the
amount of the Reallocated Class B Principal Collections allocated pursuant
to subsection 4.15(a) on all prior Transfer Dates for which the Collateral
Interest has not been reduced, minus (e) an amount equal to the amount by
which the Class B Investor Interest has been reduced on all prior Transfer
Dates pursuant to subsection 4.12(a), plus (f) the aggregate amount of
Excess Spread allocated and available on all prior Transfer Dates pursuant
to subsection 4.13(d) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e); provided that the Class
B Investor Interest may not be reduced below zero.
"Class B Monthly Interest" is defined in subsection 4.8(b).
"Class B Monthly Principal" is defined in subsection 4.9(b).
"Class B Net Default Amount" means, as to each Transfer Date, an
amount equal to the product of (a) the Series Net Default Amount for such
Transfer Date and (b) the Class B Floating Allocation applicable for the
related Monthly Period.
"Class B Required Amount" is defined in subsection 4.10(b).
"Class B Scheduled Payment Date" means the September, 2002
Distribution Date.
"Class B Servicing Fee" is defined in subsection 3(a) of this
Series Supplement.
"Closing Date" means August 7, 1997.
"Collateral Allocation" means, for any Monthly Period, (a) with
respect to Net Default Amounts and Reallocated Investor Finance Charge
Collections at any time and Principal Receivables during the Revolving
Period, the Collateral Floating Allocation and (b) with respect to
Principal Receivables during the Controlled Accumulation Period or Rapid
Amortization Period, the Collateral Fixed Allocation.
"Collateral Available Funds" means, as to any Monthly Period, an
amount equal to the Collateral Floating Allocation of Reallocated Investor
Finance Charge Collections (excluding the portion of Reallocated Investor
Finance Charge Collections attributable to Servicer Interchange) and Series
Investment Earnings.
6
<PAGE>
"Collateral Charge-Off" is defined in subsection 4.12(c).
"Collateral Fixed Allocation" means, for any Monthly Period
following the Revolving Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the
Collateral Interest as of the close of business on the last day of the
Revolving Period and the denominator of which is equal to the numerator
used in determining the related Fixed Investor Percentage; provided that if
Series 1997-1 is paired with a Paired Series and a Pay Out Event occurs
with respect to such Paired Series during the Controlled Accumulation
Period, Transferor may, by written notice delivered to Trustee and
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).
"Collateral Floating Allocation" means, for any Monthly Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Collateral Interest as of the close
of business on the last day of the preceding Monthly Period and the
denominator of which is equal to the Adjusted Investor Interest as of the
close of business on such day; provided that, with respect to the first
Monthly Period, the Collateral Floating Allocation means the percentage
equivalent of a fraction, the numerator of which is the Collateral Initial
Interest and the denominator of which is the Initial Investor Interest.
"Collateral Initial Interest" means $19,500,000.
"Collateral Interest" means, on any date of determination, a
fractional undivided interest in the Trust that shall consist of the right
to receive, to the extent necessary to make the required payments to the
Collateral Interest Holder under this Series Supplement, the portion of
Collections allocable thereto under the Agreement and this Series
Supplement and funds on deposit in the Collection Account allocable thereto
pursuant to the Agreement and this Series Supplement. On any date, for
purposes of all calculations in the Agreement and this Series Supplement,
the amount of the Collateral Interest shall be an amount equal to (a) the
Collateral Initial 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 pursuant to subsection 4.12(c), minus (d) the amount of Reallocated
Principal Collections allocated pursuant to subsections 4.15(a) and (b) on
all prior Transfer Dates, minus (e) an amount equal to the amount by which
the Collateral Interest has been reduced on all prior Transfer Dates
pursuant to subsections 4.12(a) and (b), plus (f) the aggregate amount of
Excess Spread allocated and available on all prior Transfer Dates pursuant
to subsection 4.13(h) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e); provided that the
Collateral Interest may not be reduced below zero.
7
<PAGE>
"Collateral Interest Holder" means the entity so designated in the
Loan Agreement.
"Collateral Interest Servicing Fee" is defined in subsection 3(a)
of this Series Supplement.
"Collateral Monthly Interest" is defined in subsection 4.8(c).
"Collateral Monthly Principal" is defined in subsection 4.9(c).
"Collateral Net Default Amount" means, as to any Transfer Date, an
amount equal to the product of (a) the Series Net Default Amount for such
Transfer Date and (b) the Collateral Floating Allocation applicable for the
related Monthly Period.
"Collateral Rate" means, for any Interest Period, the rate specified
in the Loan Agreement.
"Collection Recomputation Date" means, with respect to Collections
received during any Billing Cycle that are initially allocated on an
estimated basis as provided in subsection 4.7(d), the date on which
Servicer performs the recomputations provided for in subsection 4.7(e),
which date shall not be later than the Determination Date in the Monthly
Period following the Monthly Period in which such Billing Cycle ends.
"Controlled Accumulation Amount" means, for any Transfer Date with
respect to the Controlled Accumulation Period prior to the payment in full
of the Class A Investor Interest, $21,625,000; provided that if the
Controlled Accumulation Period Length is modified pursuant to subsection
4.11(i), (i) the Controlled Accumulation Amount for each Transfer Date with
respect to the Controlled Accumulation Period shall mean the amount
determined in accordance with Section 4.11(i) on the date on which the
Controlled Accumulation Period has most recently been modified and (ii) the
sum of the Controlled Accumulation Amounts for all Transfer Dates with
respect to the modified Controlled Accumulation Period shall not be less
than the Class A Investor Interest.
"Controlled Accumulation Date" means July 31, 2001.
"Controlled Accumulation Period" means, unless a Pay Out Event
shall have occurred prior thereto, the period commencing at the close of
business on the Controlled Accumulation Date or such later date as is
determined in accordance with subsection 4.11(i) and ending on the first to
occur of (a) the commencement of the Rapid Amortization Period and (b) the
Series 1997-1 Termination Date.
"Controlled Accumulation Period Length" is defined in subsection 4.11(i).
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"Controlled Deposit Amount" means, with respect to any Transfer
Date, the sum of (a) the Controlled Accumulation Amount for such Transfer
Date and (b) any existing Accumulation Shortfall.
"Covered Amount" means an amount determined as of each Transfer
Date with respect to any Interest Period as the product of (a) (i)
one-twelfth, times (ii) the Class A Certificate Rate in effect with respect
to such Interest Period, and (b) the Principal Funding Account Balance as
of the Record Date preceding such Transfer Date.
"Credit Enhancement" means (a) with respect to the Class A
Certificates, the subordination of the Class B Certificates and the
Collateral Interest and (b) with respect to the Class B Certificates, the
subordination of the Collateral Interest.
"Credit Enhancement Provider" means the Collateral Interest Holder.
"Cumulative Series Principal Shortfall" means the sum of the
Series Principal Shortfalls (as such term is defined in each of the related
Supplements) for each Principal Sharing Series.
"Deficiency Amount" means, at any time of determination, the sum
of (a) the Class A Deficiency Amount and (b) the Class B Deficiency Amount.
"Distribution Date" means September 15, 1997 and the fifteenth day
of each calendar month thereafter or, if such fifteenth day is not a
Business Day, the next succeeding Business Day.
"Estimated Allocations" is defined in subsection 4.7(e).
"Excess Principal Funding Investment Proceeds" means, with respect
to each Transfer Date relating to the Controlled Accumulation Period, the
amount, if any, by which the Principal Funding Investment Proceeds for such
Transfer Date exceed the Covered Amount determined on such Transfer Date.
"Excess Spread" means, with respect to any Transfer Date, the sum
of (a) the sum of the amounts, if any, with respect to that Transfer Date
specified pursuant to subsections 4.11(a)(iv), 4.11(b)(iii) and
4.11(c)(ii), plus (b) the Excess Finance Charge Collections, if any,
allocated to the Investor Interest pursuant to Section 4.5 for that
Transfer Date.
"Finance Charge Shortfall" means, with respect to any Transfer
Date, an amount equal to the excess, if any, of (a) the sum of the amounts
specified in clauses (a) through (j) of Section 4.13 for that Transfer Date
over (b) the sum of the amounts,
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if any, with respect to such Transfer Date specified pursuant to
subsections 4.11(a)(iv), 4.11(b)(iii) and 4.11(c)(ii).
"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 (a) the
Aggregate Principal Receivables determined as of the close of business on
the last day of the prior Monthly Period and (b) the sum of the numerators
used to calculate the Investor Percentages for all outstanding Series with
respect to Principal Receivables on such date of determination; provided
that (x) if Series 1997-1 is paired with a Paired Series and a Pay Out
Event occurs with respect to such Paired Series during the Controlled
Accumulation Period, Transferor may, by written notice delivered to Trustee
and Servicer, 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) and (y) if one or more Reset Dates occur in
a Monthly Period, the Fixed Investor Percentage for the portion of the
Monthly Period falling after each such Reset Date (the "subject Reset
Date") and prior to the earlier of the last day of the current Monthly
Period and any subsequent Reset Date shall be determined using a
denominator equal to the greater of the amounts specified in clause (a) and
clause (b) above determined as of the subject Reset Date.
"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 (a) the Aggregate Principal Receivables as of the close of
business on the last day of the preceding Monthly Period and (b) the sum of
the numerators used to calculate the Investor Percentages for all
outstanding Series with respect to Finance Charge Receivables, Net Default
Amounts or Principal Receivables, as applicable, on such date of
determination; provided that if one or more Reset Dates occurs in a Monthly
Period, the Floating Investor Percentage for the portion of the Monthly
Period falling after each such Reset Date (the "subject Reset Date") and on
or prior to the earlier of the last day of the current Monthly Period and
any subsequent Reset Date shall be determined using a denominator equal to
the greater of the amounts specified in clause (a) and clause (b) above
determined as of the subject Reset Date.
"Group I" means Series 1997-1 and each other Series specified in
the related Supplement to be included in Group I.
"Group I Investor Charge-Offs" means, with respect to any Transfer
Date, the sum of (a) the Series Investor Charge-Offs for such Transfer Date
and (b) the
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series investor charge-offs for all other Series included in Group I for
such Transfer Date.
"Group I Investor Finance Charge Collections" means, with respect
to any Transfer Date, the sum of (a) the Investor Finance Charge
Collections for such Distribution Date and (b) the aggregate investor
finance charge collections for all other Series included in Group I for
such Distribution Date.
"Group I Monthly Fees" means, with respect to any Transfer Date,
the sum of (a) the Series Monthly Fees for such Transfer Date and (b) the
aggregate series monthly fees for all other Series included in Group I for
such Transfer Date.
"Group I Monthly Interest" means, with respect to any Transfer
Date, the sum of (a) the Series Monthly Interest for such Transfer Date and
(b) the aggregate series monthly interest for all other Series included in
Group I for such Transfer Date.
"Group I Net Default Amount" means, with respect to any Transfer
Date, the sum of (a) the Series Net Default Amount for such Transfer Date
and (b) the aggregate series net default amounts for all other Series
included in Group I for such Transfer Date.
"Initial Investor Interest" means $300,000,000.
"Interest Period" means, with respect to any Distribution Date,
the period from and including the previous Distribution Date through and
including the day preceding such Distribution Date, except that the initial
Interest Period will be the period from and including the Closing Date
through the day preceding the initial Distribution Date.
"Investor Certificates" means the Class A Certificates, the Class
B Certificates and the Collateral Interest.
"Investor Finance Charge Collections" means for any Transfer Date,
the sum of the following amounts determined for the related Monthly Period:
(a) insofar as such Monthly Period fell prior to the
Conversion Date, an amount equal to the aggregate Collections of
Finance Charge Receivables processed during each Billing Cycle
which ended during such Monthly Period (and prior to the
Conversion Date) which are deposited in the Finance Charge Account
(or required to be deposited in the Finance Charge Account on that
Transfer Date (before giving effect to any permitted netting) with
respect to such portion of such Monthly Period pursuant to
subsection 4.2(e), the third paragraph of subsection 4.3(a) and
subsection 4.7(d) of the
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Agreement), less any amount required to be withdrawn from the
Finance Charge Account with respect to such portion of such
Monthly Period pursuant to subsection 4.7(f); plus
(b) insofar as such Monthly Period fell on or after the
Conversion Date, an amount equal to the aggregate Collections of
Finance Charge Receivables deposited in the Finance Charge Account
on each day in such Monthly Period falling on or after the
Conversion Date (or required to be deposited in the Finance Charge
Account on that Transfer Date (before giving effect to any
permitted netting) with respect to any such day pursuant to
subsection 4.2(e), the third paragraph of subsection 4.3(a) and
subsection 4.7(d) of the Agreement); plus
(c) any amount required to be deposited in the Finance
Charge Account on that Transfer Date (before giving effect to any
permitted netting) with respect to such Monthly Period pursuant to
subsection 3(b) of this Series Supplement and investment earnings
(net of losses and investment expenses) accrued on or prior to
that Transfer Date in connection with the investment of funds on
deposit in the Principal Account.
"Investor Holder" means (a) with respect to the Class A
Certificates, the holder of record of a Class A Certificate, (b) with
respect to the Class B Certificates, the holder of record of a Class B
Certificate and (c) with respect to the Collateral Interest, the Collateral
Interest Holder.
"Investor Interest" means, on any date of determination, an amount
equal to the sum of (a) the Class A Investor Interest, (b) the Class B
Investor Interest and (c) the Collateral Interest, each as of such date.
"Investor Percentage" with respect to Series 1997-1 means, for any
Monthly Period, (a) with respect to Finance Charge Receivables and Net
Default Amounts at any time and Principal Receivables during the Revolving
Period, the Floating Investor Percentage and (b) with respect to Principal
Receivables during the Controlled Accumulation Period or the Rapid
Amortization Period, the Fixed Investor Percentage.
"Investor Principal Collections" means, for any Monthly Period, the
sum of:
(a) insofar as such Monthly Period fell prior to the
Conversion Date, an amount equal to the aggregate Collections of
Principal Receivables processed during each Billing Cycle which
ended during such Monthly Period (and prior to the Conversion
Date) which are deposited (or required to be deposited on the
related Transfer Date (before giving effect to any permitted
netting)) into the Principal Account for such Monthly Period
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pursuant to subsections 4.7(a)(ii), (iii) and (iv), 4.7(b)(ii),
(iii) and (iv), or 4.7(c)(ii), in each case, as applicable to such
Monthly Period, minus any amount required to be withdrawn from the
Principal Account with respect to such Monthly Period pursuant to
subsection 4.7(e) of the Agreement; plus
(b) insofar as such Monthly Period fell on or after the
Conversion Date, an amount equal to the aggregate Collections of
Principal Receivables (or required to be deposited on the related
Transfer Date (before giving effect to any permitted netting))
into the Principal Account on any day in such Monthly Period
falling on or after the Conversion Date pursuant to subsections
4.7(a)(ii), (iii) and (iv), 4.7(b)(ii), (iii) and (iv), or
4.7(c)(ii), in each case, as applicable to such Monthly Period;
plus
(c) the aggregate amount to be treated as Investor
Principal Collections pursuant to subsections 4.11(a)(iii) and
4.13(a), (b), (c), (d), (g) and (h) for such Monthly Period (other
than such amount paid from Reallocated Principal Collections),
plus
(d) the aggregate amount transferred (or required to be
transferred on the related Distribution Date (before giving effect
to any permitted netting)) from the Excess Funding Account into
the Principal Account pursuant to subsection 4.2(f).
"Investor Servicing Fee" is defined in subsection 3(a) of this Series
Supplement.
"Loan Agreement" means the agreement among Transferor, Servicer,
Trustee, and the Collateral Interest Holder, dated as of August 7, 1997, as
amended or modified from time to time.
"London Business Day" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank
market.
"Monthly Period" is defined in the Agreement.
"Net Servicing Fee Rate" means (a) so long as Transferor or The
First National Bank of Chicago is Servicer, 1.25% per annum, and (b) if
neither Transferor nor The First National Bank of Chicago is Servicer,
2.00% per annum.
"Paired Series" means a Series that has been paired with Series
1997-1 (which Series may be prefunded or partially prefunded or may be a
Variable Interest) such that a reduction of the Adjusted Investor Interest
results in (or permits) an increase of the investor interest of such Series
that has been paired with Series 1997-1.
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"Pay Out Commencement Date" means the date on which a Trust Pay
Out Event is deemed to occur pursuant to Section 9.1 of the Agreement or a
Series 1997-1 Pay Out Event is deemed to occur pursuant to Section 9 of
this Series Supplement.
"Portfolio Adjusted Yield" means, with respect to any Transfer
Date, the average of the percentages obtained for each of the three
preceding Monthly Periods by subtracting the Base Rate from the Portfolio
Yield for such Monthly Period and deducting 0.50% from the result for each
Monthly Period.
"Portfolio Yield" means, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is
an amount equal to the sum of (a) the amount of Reallocated Investor
Finance Charge Collections for the related Transfer Date, (b) the Principal
Funding Investment Proceeds deposited into the Finance Charge Account on
the Transfer Date related to such Monthly Period and (c) the amount of the
Reserve Draw Amount (up to the Available Reserve Account Amount) plus any
amounts of interest and earnings described in Section 4.18, each deposited
or required to be deposited into the Finance Charge Account on the Transfer
Date (before giving effect to any permitted netting) relating to such
Monthly Period, such sum to be calculated on a cash basis after subtracting
the Series Default Amount 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.
"Principal Account" is defined in subsection 4.17(a).
"Principal Funding Account" is defined in subsection 4.17(a).
"Principal Funding Account Balance" means, with respect to any
date of determination, the principal amount, if any, on deposit in the
Principal Funding Account on such date of determination.
"Principal Funding Investment Proceeds" means, with respect to
each Transfer Date, the investment earnings on funds in the Principal
Funding Account (net of investment expenses and losses) for the period from
and including the immediately preceding Transfer Date to but excluding such
Transfer Date.
"Principal Funding Investment Shortfall" means, with respect to
each Transfer Date relating to the Controlled Accumulation Period, the
amount, if any, by which the Principal Funding Investment Proceeds for such
Transfer Date are less than the Covered Amount determined as of such
Transfer Date.
"Rapid Amortization Period" means the period commencing on the Pay
Out Commencement Date and ending on the earlier to occur of (a) the Series
1997-1 Termination Date and (b) the termination of the Trust pursuant to
Section 12.1.
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"Rating Agency" means Moody's and Standard & Poor's.
"Rating Agency Condition" means the notification in writing by
each Rating Agency to Transferor, Servicer and Trustee that an action will
not result in any Rating Agency reducing or withdrawing its then existing
rating of the Class A Certificates or the Class B Certificates.
"Reallocated Class B Principal Collections" means, with respect to
any Transfer Date, Collections of Principal Receivables applied in
accordance with subsection 4.15(a) in an amount not to exceed the product
of (a) the Class B Investor Allocation for the Monthly Period relating to
such Transfer Date and (b) the Investor Percentage for the Monthly Period
relating to such Transfer Date and (c) the amount of Collections of
Principal Receivables for the Monthly Period relating to such Transfer
Date; provided that such amount shall not exceed the Class B Investor
Interest after giving effect to any Class B Investor Charge-Offs for such
Transfer Date.
"Reallocated Collateral Principal Collections" means, with respect
to any Transfer Date, Collections of Principal Receivables applied in
accordance with subsections 4.15(a) and (b) in an amount not to exceed the
product of (a) the Collateral Allocation for the Monthly Period relating to
such Transfer Date and (b) the Investor Percentage for the Monthly Period
relating to such Transfer Date and (c) the amount of Collections of
Principal Receivables for the Monthly Period relating to such Transfer
Date; provided that such amount shall not exceed the Collateral Interest
after giving effect to any Collateral Charge-Offs for such Transfer Date.
"Reallocated Investor Finance Charge Collections" means that
portion of Group I Investor Finance Charge Collections allocated to Series
1997-1 pursuant to Section 4.14.
"Reallocated Principal Collections" means the sum of (a)
Reallocated Class B Principal Collections and (b) Reallocated Collateral
Principal Collections.
"Reference Banks" means four major banks in the London interbank
market selected by Servicer.
"Required Collateral Interest" means (a) initially, $19,500,000
and (b) on any Transfer Date thereafter, 6.5% of (1) the sum of the Class A
Adjusted Investor Interest and the Class B Investor Interest on such
Transfer Date, in each case after taking into account deposits into the
Principal Funding Account on such Transfer Date and payments to be made on
the related Distribution Date, plus (2) the Collateral Interest on the
prior Transfer Date, after any adjustments to be made on such date, but not
less than $9,000,000; provided that (x) if either (i) there is a
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reduction in the Collateral Interest pursuant to clause (c), (d) or (e) of
the definition of such term or (ii) a Pay Out Event with respect to the
Investor Certificates has occurred, the Required Collateral Interest for
any Transfer Date shall (subject to clauses (y) and (z)) equal the Required
Collateral Interest for the Transfer Date immediately preceding such
reduction or Pay Out Event, (y) in no event shall the Required Collateral
Interest exceed the sum of the outstanding principal amounts of (i) the
Class A Certificates and (ii) the Class B Certificates, each as of the last
day of the Monthly Period preceding such Transfer Date after taking into
account the payments to be made on the related Distribution Date and (z)
the Required Collateral Interest may be reduced at Transferor's option at
any time to a lesser amount if Transferor, Servicer, the Collateral
Interest Holder and Trustee have been provided evidence that the Rating
Agency Condition has been satisfied.
"Required Reserve Account Amount" means, with respect to any
Transfer Date on or after the Reserve Account Funding Date, an amount equal
to (a) 0.50% of the outstanding principal balance of the Class A
Certificates or (b) any other amount designated by Transferor; provided
that if such designation is less than the amount determined pursuant to
clause (a), Transferor shall (i) provide Servicer, the Collateral Interest
Holder and Trustee with evidence that the Rating Agency Condition has been
satisfied and (ii) deliver to 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 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 1997-1.
"Reserve Account" is defined in subsection 4.18(a).
"Reserve Account Funding Date" means the Transfer Date that occurs
not later than the earliest of: (a) the Transfer Date with respect to the
Monthly Period that commences three months prior to the commencement of the
Controlled Accumulation Period; (b) the first Transfer Date for which the
Portfolio Adjusted Yield is less than 2.00%, but in such event the Reserve
Account Funding Date shall not be required to occur earlier than the
Transfer Date with respect to the Monthly Period that commences 12 months
prior to the commencement of the Controlled Accumulation Period; (c) the
first Transfer Date for which the Portfolio Adjusted Yield is less than
3.00%, but in such event the Reserve Account Funding Date shall not be
required to occur earlier than the Transfer Date with respect to the
Monthly Period that commences 6 months prior to the commencement of the
Controlled Accumulation Period; and (d) the first Transfer Date for which
the Portfolio Adjusted Yield is less than 4.00%, but in such event the
Reserve Account Funding Date shall not be required to occur earlier than
the Transfer Date with respect to the Monthly Period that commences 4
months prior to the commencement of the Controlled Accumulation Period.
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"Reserve Account Surplus" means, as of any Transfer Date following
the Reserve Account Funding Date, the amount, if any, by which the amount
on deposit in the Reserve Account exceeds the Required Reserve Account
Amount.
"Reserve Draw Amount" is defined in subsection 4.18(c).
"Reset Date" means any of the following occurring after the
Conversion Date: (a) an Addition Date; (b) a Removal Date 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; and (c) a date on which there is an increase in the
Investor Interest under any Variable Interest issued by the Trust.
"Revolving Period" means the period from and including August 1,
1997 to, but not including, the earlier of (a) the day the Controlled
Accumulation Period commences and (b) the Pay Out Commencement Date.
"Series Investment Earnings" means, for any Monthly Period, the
sum of (a) the Floating Investor Percentage of the aggregate amount of
investment earnings (net of losses and investment expenses) accrued during
the period after the Transfer Date falling in that Monthly Period (or, in
the case of the first Monthly Period, from the Closing Date) to and
including the next following Transfer Date in connection with the
investment of funds on deposit in the Collection Account, the Distribution
Account, the Excess Funding Account and the Finance Charge Account plus (b)
the aggregate amount of investment earnings (net of losses and investment
expenses) accrued during the same period in connection with the investment
of funds on deposit in the Principal Account.
"Series Investor Charge-Offs" means, for any Transfer Date, the
sum of the Class A Investor Charge-Offs, Class B Investor Charge-Offs and
the Collateral Investor Charge-Offs for such Transfer Date.
"Series Monthly Fees" means, for any Transfer Date, the sum of the
Investor Servicing Fee and Servicer Interchange for such Transfer Date.
"Series Monthly Interest" means, for any Transfer Date, the sum of
the Class A Monthly Interest, Class A Deficiency Amount, Class A Additional
Interest, Class B Monthly Interest, Class B Deficiency Amount, Class B
Additional Interest, Collateral Monthly Interest, Collateral Deficiency
Amount and Collateral Additional Interest for such Transfer Date.
"Series Net Default Amount" means, for any Transfer Date, the
product of the Net Default Amount and the Floating Investor Percentage, in
each case, for the related Monthly Period.
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"Series Principal Shortfall" means, with respect to any Transfer
Date, the excess, if any, of (a) the sum of (i) with respect to any
Transfer Date relating to the Controlled Accumulation Period, the sum of
(A) the Controlled Deposit Amount for such Transfer Date, (B) on the
Transfer Date after the Transfer Date on which the Class A Adjusted
Investor Interest is reduced to zero, the Class B Invested Amount and (C)
the excess, if any, of the Collateral Interest for such Transfer Date over
the Required Collateral Interest for such Transfer Date, (ii) with respect
to any Transfer Date during the Rapid Amortization Period, the Adjusted
Investor Interest and (iii) with respect to any Transfer Date relating to
the Revolving Period, the amount specified in clause (a)(i)(C) above over
(b) the Investor Principal Collections minus the Reallocated Principal
Collections (other than any portions thereof that are applied pursuant to
(x) subsection 4.11(a)(iii) and (y) subsection 4.13(c) (to the extent such
portions pursuant to subsection 4.13(c) are available to pay the Class B
Net Default Amount)) for such Transfer Date.
"Series Servicing Fee Percentage" means 2.0%.
"Series 1997-1" means the Series of the First NBC Credit Card
Master Trust represented by the Investor Certificates.
"Series 1997-1 Certificates" means the Class A Certificates and
the Class B Certificates.
"Series 1997-1 Holder" means the holder of record of a Series 1997-1
Certificate.
"Series 1997-1 Pay Out Event" is defined in Section 9 of this
Series Supplement.
"Series 1997-1 Termination Date" means the earliest to occur of
(a) the Distribution Date on which the Investor Interest is paid in full,
(b) the September, 2004 Distribution Date and (c) the Trust Termination
Date.
"Servicer Interchange" is defined in subsection 3(a) of this Series
Supplement.
"Shared Principal Collections" means, as the context requires,
either (a) the amount allocated to the Investor Certificates which may be
applied to the Series Principal Shortfall with respect to other outstanding
Principal Sharing Series or (b) the amounts allocated to the investor
certificates of other Principal Sharing Series which the applicable
Supplements for such Series specify are to be treated as "Shared Principal
Collections" and which may be applied to cover the Series Principal
Shortfall with respect to the Investor Certificates.
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"Specified Deposit" is defined in subsection 4.7(d).
"Target Amount" is defined in subsection 4.7(d).
SECTION 3. Servicing Compensation and Assignment of Interchange
and Other Account Revenues. (a) The share of the Servicing Fee allocable to
Series 1997-1 with respect to any Transfer Date (the "Investor Servicing
Fee") shall, for purposes of calculating the Base Rate for the related
Monthly Period, be equal to one-twelfth of the product of (i) the Series
Servicing Fee Percentage and (ii) the Adjusted Investor Interest as of the
last day of the Monthly Period preceding such Transfer Date; provided that
with respect to the first Transfer Date, the Investor Servicing Fee shall
equal $383,333.33. The Investor Servicing Fee shall be paid only from the
sources and to the extent provided in this Section 3. On each Transfer Date
for which Transferor or Trustee is Servicer, a portion of 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 Servicer in payment of a portion of the Investor Servicing Fee with
respect to such Monthly Period ("Servicer Interchange"); provided the
amount so withdrawn and paid to Servicer (and constituting 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) 0.75%. Should Servicer Interchange on deposit in
the Finance Charge Account on any Transfer Date with respect to the related
Monthly Period be less than one-twelfth of 0.75% of the Adjusted Investor
Interest as of the last day of such Monthly Period, the Investor Servicing
Fee with respect to such Monthly Period will not be paid to the extent of
such insufficiency of Servicer Interchange on deposit in the Finance Charge
Account. The share of the Investor Servicing Fee allocable to the Class A
Investor Interest (the "Class A Servicing Fee"), the Class B Investor
Interest (the "Class B Servicing Fee") and the Collateral Interest (the
"Collateral Interest Servicing Fee") with respect to any Transfer Date
shall equal one-twelfth of the product of (i) the Class A Floating
Allocation, the Class B Floating Allocation or the Collateral Floating
Allocation, respectively, (ii) the Net Servicing Fee Rate and (iii) the
Adjusted Investor Interest as of the last day of the Monthly Period
preceding such Transfer Date; provided that with respect to the first
Transfer Date, the Class A Servicing Fee, the Class B Servicing Fee and the
Collateral Interest Servicing Fee shall equal $207,239.58, $16,770.83 and
$15,572.92, respectively. Except as specifically provided in this
subsection 3(a), the Servicing Fee shall be paid by the cash flows from the
Trust allocated to the Transferor or the certificateholders of other Series
(as provided in the related Supplements) and in no event shall the Trust,
Trustee or the Investor Holders be liable therefor. The Class A Servicing
Fee shall be payable to Servicer solely to the extent amounts are available
for distribution in respect thereof pursuant to subsections 4.11(a)(ii) and
4.13(a). The Class B Servicing Fee shall be payable solely to the extent
amounts are available for distribution in respect thereof pursuant to
subsections 4.11(b)(ii) and 4.13(c). The Collateral Interest Servicing Fee
shall be
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payable solely to the extent amounts are available for distribution in
respect thereof pursuant to subsection 4.13(f) or, if applicable.
subsection 4.11(c)(i).
(b) On or before each Transfer Date, Transferor shall notify
Servicer of the amount of Interchange and Other Account Revenues to be
included as Finance Charge Collections with respect to the preceding
Monthly Period as determined pursuant to this subsection 3(b). The amount
of Interchange to be so included shall be equal to the product of (i) the
total amount of Interchange paid or payable to Transferor with respect to
such Monthly Period and (ii) a fraction, the numerator of which is the
aggregate amount of cardholder charges for goods and services in the
Accounts with respect to such Monthly Period, and the denominator of which
is the aggregate amount of cardholder charges for goods and services in all
MasterCard and VISA consumer revolving credit card accounts owned by
Transferor with respect to such Monthly Period. The amount of Other Account
Revenues to be so included shall be equal to the portion of the revenues in
each applicable category for the entire Bank Portfolio that is allocable to
the Accounts, as determined by Transferor using any reasonable method. On
each Transfer Date, Transferor shall pay to Servicer, and Servicer shall
deposit into the Finance Charge Account, in immediately available funds,
the amount of Interchange and Other Account Revenues to be so included as
Finance Charge Collections with respect to the preceding Monthly Period.
Transferor hereby assigns, sets over, conveys, pledges and grants a
security interest and lien to Trustee, for the benefit of the Investor
Holders, in Interchange and Other Account Revenues and the proceeds of
both, as set forth in this subsection 3(b). In connection with the
foregoing grant of a security interest, this Series Supplement shall
constitute a security agreement under applicable law. To the extent that a
Supplement for a related Series, other than Series 1997-1, assigns, sets
over, conveys, pledges or grants a security interest in Interchange and
Other Account Revenues allocable to the Trust, all investor certificates of
any such Series (except as otherwise specified in any such Supplement) and
the Investor Certificates shall rank pari passu and be equally and ratably
entitled as provided herein to the benefits of such Interchange and Other
Account Revenues without preference or priority on account of the actual
time or times of authentication and delivery, all in accordance with the
terms and provisions of this Series Supplement and other related
Supplements.
SECTION 4. Reassignment and Transfer Terms. The Investor
Certificates shall be subject to retransfer to Transferor at its option, in
accordance with subsection 12.2(a), on any Distribution Date on or after
the Distribution Date on which the Investor Interest is reduced to an
amount less than or equal to 5% of the Initial Investor Interest. The
deposit required in connection with any such repurchase shall include the
amount, if any, on deposit in the Principal Funding Account and will be
equal to the sum of (a) the Investor Interest and (b) accrued and unpaid
interest on the Investor Certificates through the day preceding the
Distribution Date on which the repurchase occurs.
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SECTION 5. Delivery and Payment for the Investor Certificates.
Transferor shall execute and deliver the Series 1997-1 Certificates to
Trustee for authentication in accordance with Section 6.1. The Trustee
shall deliver such Certificates when authenticated in accordance with
Section 6.2.
SECTION 6. Depository; Form of Delivery of Investor Certificates;
Legends; Transfer Restrictions and Procedures. (a) The Class A Certificates
and the Class B Certificates shall be delivered as Book-Entry Certificates
as provided in Sections 6.1 and 6.10.
(b) The Depository for Series 1997-1 shall be The Depository Trust
Company, and the Class A Certificates shall be initially registered in the
name of Cede & Co., its nominee.
SECTION 7. Article IV of Agreement. Sections 4.1 through 4.5 shall
read in their entirety as provided in the Agreement. Article IV (except for
Sections 4.1 through 4.5 thereof) shall be read in its entirety as follows
and shall be applicable only to the Investor Certificates:
ARTICLE IV RIGHTS OF HOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS
SECTION 4.6 Rights of Holders and the Collateral Interest Holder.
The Investor Certificates shall represent undivided interests in the Trust,
consisting of the right to receive, to the extent necessary to make the
required payments with respect to such Investor Certificates at the times
and in the amounts specified in this Agreement (and subject to reallocation
as provided herein), (a) the applicable Investor Percentage of Collections
received with respect to the Receivables and (b) funds on deposit in the
Collection Account, the Finance Charge Account, the Principal Account, the
Principal Funding Account, the Reserve Account and the Distribution
Account. The Collateral Interest shall be subordinate to the Class A
Certificates and the Class B Certificates to the extent described herein.
The Class B Certificates shall be subordinate to the Class A Certificates
to the extent described herein. Transferor shall not have any interest in
the Collection Account, the Finance Charge Account, the Principal Account,
the Principal Funding Account, the Reserve Account or the Distribution
Account, except as specifically provided in this Article IV.
SECTION 4.7 Allocations. (a) Allocations During the Revolving Period.
During the Revolving Period, Servicer shall allocate Collections to the
Investor Holders as follows:
(i) allocate to the Investor Holders an amount equal to
the product of (A) the Investor Percentage on the Date of
Processing of such Collections
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and (B) the aggregate amount of Collections processed in respect of
Finance Charge Receivables on such Date of Processing;
(ii) allocate to the Investor Holders an amount equal to
the product of (A) the Collateral Allocation on the Date of
Processing of such Collections, (B) the Investor Percentage on the
Date of Processing of such Collections and (C) the aggregate
amount of Collections processed in respect of Principal
Receivables on such Date of Processing; and
(iii) allocate to the Investor Holders an amount equal to
the product of (A) the Class B Investor Allocation on the Date of
Processing of such Collections, (B) the Investor Percentage on the
Date of Processing of such Collections and (C) the aggregate
amount of Collections processed in respect of Principal
Receivables on such Date of Processing.
In addition, an amount equal to the product of (1) the Class A
Investor Allocation on the Date of Processing of such Collections, (2) the
Investor Percentage on the Date of Processing of such Collections and (3)
the aggregate amount of Collections processed in respect of Principal
Receivables on each Date of Processing shall be treated as Shared Principal
Collections.
(b) Allocations During the Controlled Amortization Period. During the
Controlled Amortization Period, Servicer shall allocate Collections to the
Investor Holders as follows:
(i) allocate to the Investor Holders an amount equal to
the product of (A) the Investor Percentage on the Date of
Processing of such Collections and (B) the aggregate amount of
Collections processed in respect of Finance Charge Receivables on
such Date of Processing;
(ii) allocate to the Investor Holders an amount equal to
the product of (A) the Collateral Allocation on the Date of
Processing of such Collections, (B) the Investor Percentage on the
Date of Processing of such Collections and (C) the aggregate
amount of Collections processed in respect of Principal
Receivables on such Date of Processing;
(iii) allocate to the Investor Holders an amount equal to
the product of (A) the Class B Investor Allocation on the Date of
Processing of such Collections, (B) the Investor Percentage on the
Date of Processing of such Collections and (C) the aggregate
amount of Collections processed in respect of Principal
Receivables on such Date of Processing; and
(iv) (A) allocate to the Investor Holders an amount equal
to the product of (1) the Class A Investor Allocation on the Date
of Processing of
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such Collections, (2) the Investor Percentage on the Date of
Processing of such Collections and (3) the aggregate amount of
Collections processed in respect of Principal Receivables on such
Date of Processing; provided that the amount allocated pursuant to
this subsection 4.7(b)(iv)(A) during any Monthly Period shall not
exceed the Controlled Deposit Amount for the related Transfer Date
(after taking into account any payments to be made on the
immediately preceding Distribution Date) and (B) treat as Shared
Principal Collections any amount not allocated as a result of the
proviso to clause (A).
(c) Allocations During the Rapid Amortization Period. During the Rapid
Amortization Period, Servicer shall allocate Collections to the Investor
Holders as follows:
(i) allocate to the Investor Holders an amount equal to
the product of (A) the Investor Percentage on the Date of
Processing of such Collections and (B) the aggregate amount of
Collections processed in respect of Finance Charge Receivables on
such Date of Processing;
(ii) allocate to the Investor Holders an amount equal to
the product of (A) the Collateral Allocation on the Date of
Processing of such Collections and (B) the Investor Percentage on
the Date of Processing of such Collections and (C) the aggregate
amount of Collections processed in respect of Principal
Receivables on such Date of Processing;
(iii) allocate to the Investor Holders an amount equal to
the product of (A) the Class B Investor Allocation on the Date of
Processing of such Collections, (B) the Investor Percentage on the
Date of Processing of such Collections and (C) the aggregate
amount of Collections processed in respect of Principal
Receivables on such Date of Processing; and
(iv) (A) allocate to the Investor Holders an amount equal
to the product of (1) the Class A Investor Allocation on the Date
of Processing of such Collections and (2) the Investor Percentage
on the Date of Processing of such Collections and (3) the
aggregate amount of Collections processed in respect of Principal
Receivables on such Date of Processing; provided that the
aggregate amount allocated pursuant to this subsection
4.7(c)(iv)(A) during any Monthly Period shall not exceed the
Adjusted Investor Interest as of the close of business on the last
day of the prior Monthly Period (after taking into account any
payments to be made on the Distribution Date relating to such
prior Monthly Period and deposits and any adjustments to be made
to the Invested Amount to be made on the Transfer Date relating to
such Monthly Period) and (B) treat as Shared Principal Collections
any amount not allocated as a result of the proviso to clause (A).
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(d) Applications of Allocated Funds. On or prior to the Closing
Date, Transferor shall transfer to Trustee for deposit into the Finance
Charge Account, to be held for the benefit of the Investor Holders,
immediately available funds in the amount of $1,441,062.50 (the "Specified
Deposit"). The Specified Deposit shall not be released from the Finance
Charge Account except (1) for deposit into the Distribution Account if on
any Transfer Date Transferor fails to make the deposit required by the next
following grammatical paragraph (in which case such funds shall be used to
pay the Class A Monthly Interest and Class B Monthly Interest on the
related Distribution Date), or (2) at such time as Transferor shall request
(in which case such funds shall be returned to Transferor), provided that
at the time of any withdrawal pursuant to this clause (2), Transferor and
Servicer must be in compliance with the remainder of this subsection 4.7(d)
as it applies when the Specified Deposit is not being maintained in the
Finance Charge Account.
During any Monthly Period during the Revolving Period when
Transferor is maintaining the Specified Deposit in the Finance Charge
Account and during any other period when Servicer is permitted by Section
4.3 to make a single monthly deposit to the Collection Account, amounts
allocated to the Investor Holders pursuant to Sections 4.7(a), (b) and (c)
with respect to any Monthly Period need not be deposited into the
Collection Account or any Series Account prior to the related Transfer
Date, and, when so deposited, (x) may be deposited net of any amounts
required to be distributed to Transferor and, if First NBC is Servicer,
Servicer and (y) shall be deposited into the Finance Charge Account (in the
case of Collections of Finance Charge Receivables) and the Principal
Account (in the case of Collections of Principal Receivables (not including
any Shared Principal Collections allocated to Series 1997-1 pursuant to
Section 4.16)), subject in either case to the proviso to the next sentence.
At any other time, amounts so allocated on each Date of Processing shall be
deposited on that Date of Processing into the Finance Charge Account (in
the case of Collections of Finance Charge Receivables) and the Principal
Account (in the case of Collections of Principal Receivables (not including
any Shared Principal Collections allocated to Series 1996-A pursuant to
Section 4.16)), provided that:
(i) with respect to any day falling in each Monthly
Period falling in the Revolving Period or in that portion of each
Monthly Period in the Controlled Accumulation Period falling on or
after the day on which Collections of Principal Receivables equal
to the related Controlled Deposit Amount have been allocated
pursuant to subsection 4.7(b)(iv) and deposited pursuant to this
subsection 4.7(d)), Collections of Finance Charge Receivables
shall be deposited into the Finance Charge Account only until such
time as the aggregate amount so deposited, plus amounts similarly
deposited pursuant to the Supplement for each other outstanding
Series in Group I, equals the sum of (x) the sum (the "Target
Amount") of (A) the amounts of Class A Monthly Interest, Class B
Monthly Interest, and any
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Class A Deficiency Amount, Class A Additional Interest, Class B
Deficiency Amount and Class B Additional Interest for the related
Distribution Date, (B) if First NBC is not Servicer, the Class A
Servicing Fee, Class B Servicing Fee and Collateral Interest
Servicing Fee for the related Distribution Date, (C) any
Collateral Monthly Interest due on the related Transfer Date, plus
(y) the target amounts for each other Series in Group I,
calculated as provided in the related Supplements, plus (z) any
Finance Charge Shortfalls (as defined in the related Supplement)
for any outstanding Excess Allocation Series not included in Group
I; and
(ii) with respect to each Monthly Period falling in the
Revolving Period, (A) until such time as (x) the sum of the
aggregate Collections of Finance Charge Receivables deposited into
the Finance Charge Account pursuant to clause (i) above with
respect to that Monthly Period and the aggregate Collections of
Principal Receivables deposited into the Principal Account
pursuant to this clause (ii)(A) with respect to that Monthly
Period equals (y) the sum of Class A Monthly Interest, Class B
Monthly Interest, and any Class A Deficiency Amount, Class A
Additional Interest, Class B Deficiency Amount and Class B
Additional Interest for the related Distribution Date, Collections
of Principal Receivables allocated to the Investor Holders
pursuant to Section 4.7(a)(ii) and (iii) shall be deposited into
the Principal Account and be subject to use as Reallocated
Principal Collections on the related Transfer Date and (B)
thereafter, Collections of Principal Receivables allocated to the
Investor Holders pursuant to Section 4.7(a)(ii) and (iii) shall
(after an amount equal to any Collateral Monthly Principal for
that Monthly Period has been deposited into the Principal Account)
be paid to Transferor (or, if the Transferor Interest is less than
the Minimum Transferor Interest, deposited into the Excess Funding
Account), but Transferor shall make an amount equal to the
Reallocated Principal Collections for the related Transfer Date
available on that Transfer Date for application in accordance with
Section 4.15. Funds deposited in the Principal Account pursuant to
clause (A) above may be withdrawn at any time to the extent that
(1) the sum of the amounts specified in subclause (x) of clause
(A) (less the aggregate amount of such withdrawals during the
applicable Monthly Period) would not be less than the sum of the
amounts specified in subclause (y) of clause (A) and (2) such
funds are not required to be retained in the Principal Account
puruant to clause (B) above.
With respect to any Monthly Period when deposits of Collections of Finance
Charge Receivables into the Finance Charge Account are limited in
accordance with clause (i) of the preceding proviso, notwithstanding such
limitation: (1) "Excess Spread" for the related Transfer Date shall be
calculated as if the full amount of Finance Charge Collections allocated to
the Investor Certificates during that Monthly Period had been deposited in
the Finance Charge Account and applied on such Transfer Date in
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accordance with Sections 4.11(a), 4.11(b) and 4.11(c); (2) Collections of
Finance Charge Receivables released to Transferor pursuant to such clause
(i) shall be deemed, for purposes of all calculations under this Supplement
and the Loan Agreement, to have been distributed on account of or otherwise
applied to the items specified in Sections 4.11(a), 4.11(b), 4.11(c) and
4.13 to which such amounts would have been applied (and in the priority in
which they would have been applied) had such amounts been available in the
Finance Charge Account on such Transfer Date. To avoid doubt, the
calculations referred to in the preceding clause (2) include the
calculations required by clause (c) of the definition of Class A Investor
Interest, clause (f) of the definition of Class B Investor Interest, clause
(f) of the definition of Collateral Interest and Section 4.10.
Notwithstanding clause (i) above, if on any Business Day Servicer
determines that the Target Amount for a Monthly Period exceeds the Target
Amount for that Monthly Period as previously calculated by Servicer, then
(x) Servicer shall (on the same Business Day) inform Transferor of such
determination, and (y) within two Business Days of receiving such notice
Transferor shall deposit into the Finance Charge Account funds in an amount
equal to the amount of Collections of Finance Charge Receivables allocated
to the Investor Certificates for that Monthly Period but not deposited into
the Finance Charge Account due to the operation of clause (i) (but not in
excess of the amount required so that the aggregate amount deposited for
the subject Monthly Period equals the Target Amount). In addition, if on
any Transfer Date the Transferor Interest will be less than the Minimum
Transferor Interest after giving effect to all transfers and deposits on
that Transfer Date, Transferor shall, on that Transfer Date, deposit into
the Principal Account funds in an amount equal to the amounts of Class A
Available Funds and Excess Spread that are required to be treated as
Investor Principal Collections pursuant to Sections 4.11(a)(iii) and 4.13
but are not available from funds in the Finance Charge Account as a result
of the operation of clause (i).
(e) Allocation Adjustments. Unless the Servicer is depositing
Collections monthly pursuant to Section 4.3, on each Collection
Recomputation Date to and including the Collection Recomputation Date after
the Collection Recomputation Date referred to in clause (ii) below, the
Servicer shall recompute the allocations to the Series 1997-1 Certificates
previously made pursuant to subsections 4.7(a), (b) and (c)
(i) in the case of a Collection Recomputation Date which
occurs prior to the Conversion Date, during each Billing Cycle
which ended during the preceding Monthly Period and
(ii) in the case of the Collection Recomputation Date
which occurs in the Monthly Period in which the Conversion Date
occurs, during each Billing
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Cycle which ended during the preceding Monthly Period and on any
other Date of Processing during such Monthly Period prior to the
Conversion Date
(such allocations with respect to any such period, the "Estimated
Allocations") based on the Collected Finance Charge Receivables and the
Collected Principal Receivables (such allocations with respect to any such
period, the "Actual Allocations"), and based on the Actual Allocations of
Finance Charge Receivables and Principal Receivables not later than 11:00
a.m. New York City time on the Transfer Date following such Collection
Recomputation Date:
(1) make any necessary deposits or withdrawals with
respect to the Finance Charge Account and the Principal Account
such that the amount on deposit in each such account with respect
to such Monthly Period is equal to the amount that would have been
on deposit if the Actual Allocation of Finance Charge Receivables
and the Actual Allocation of Principal Receivables had been made
on each day during such Monthly Period;
(2) pay to the Transferor any underpayment with respect
to allocations of Principal Receivables or Finance Charge
Receivables with respect to such Monthly Period;
(3) notify the Transferor of the amount of any
overpayment to such Holder which such recomputation discloses, and
the Transferor shall deposit into the Finance Charge Account, the
Principal Account and the Excess Funding Account, as provided in
the notice from the Servicer, any portion of any such overpayment
which resulted in a shortfall in the amounts deposited into each
such account; and
(4) for the purposes of administrative convenience,
payments to be made to the Transferor and deposits to be made by
the Transferor pursuant to this subsection 4.7(e) may be netted
against each other.
It is the intention of the parties that this subsection 4.7(e) be
construed so that the reallocation provided for herein shall result in the
Series 1997-1 Certificateholders and the Collateral Interest Holder on the
one hand and the Transferor on the other hand being in the same position
they would have been in if the Estimated Allocations had been based upon
actual Collections of Principal Receivables.
(f) Certain Investment Earnings. On each Transfer Date, Servicer
shall allocate to the Investor Holders an amount equal to the product of
the Investor Percentage for the related Monthly Period and the aggregate
amount of interest and other investment earnings (net of losses and
investment expenses) accrued on or prior to the related Transfer Date in
connection with the investment of funds
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on deposit in the Collection Account, the Distribution Account, the Excess
Funding Account and the Finance Charge Account and apply such amount as
provided in subsection 4.7(d) as if such amount had been allocated to the
Investor Holders as Collections of Finance Charge Receivables during the
related Monthly Period.
(g) Errors. On any date, Servicer may withdraw from the Collection
Account or any Series Account any amounts inadvertently deposited in such
account that should have not been so deposited.
SECTION 4.8 Determination of Monthly Interest. (a) The amount of
monthly interest distributable to the Class A Certificates shall equal the
product of (i) (A) one-twelfth, times (B) the Class A Certificate Rate
times (ii) the outstanding principal balance of the Class A Certificates
determined as of the Record Date preceding the related Transfer Date,
provided that on the first Distribution Date interest will be distributable
to the Class A Certificates in the amount of $1,684,587.50 (the "Class A
Monthly Interest"); provided further that in addition to Class A Monthly
Interest an amount equal to the amount of any unpaid Class A Deficiency
Amounts, as defined below plus an amount equal to the product of (A) (1)
one-twelfth times (2) the sum of the Class A Certificate Rate plus 2% per
annum, and (B) any Class A Deficiency Amount from the prior Transfer Date,
as defined below (or the portion thereof that has not theretofore been paid
to Class A Holders) (the "Class A Additional Interest"), shall also be
distributable to the Class A Certificates, and on such Transfer Date
Trustee shall deposit such funds, to the extent available, into the
Distribution Account. The "Class A Deficiency Amount" for any Transfer Date
shall equal the excess, if any, of the aggregate amount accrued pursuant to
this subsection 4.8(a) as of the prior Interest Period over the amount
actually transferred to the Distribution Account for payment of such
amount. Notwithstanding anything to the contrary herein, Class A Additional
Interest shall be payable or distributed to the Class A Certificateholders
only to the extent permitted by applicable law.
(b) The amount of monthly interest distributable to the Class B
Certificates shall equal the product of (i) (A) one-twelfth, times (B) the
Class B Certificate Rate times (ii) the outstanding principal balance of
the Class B Certificates determined as of the Record Date preceding the
related Transfer Date (the "Class B Monthly Interest"); provided that on
the first Distribution Date interest will be distributable to the Class B
Certificates in an amount equal to $140,758.33; provided, further that in
addition to the Class B Monthly Interest, an amount equal to the amount of
any unpaid Class B Deficiency Amounts, as defined below, plus an amount
equal to the product of (A) (1) one-twelfth times (2) the sum of the Class
B Certificate Rate plus 2% per annum, and (B) any Class B Deficiency Amount
from the prior Transfer Date, as defined below (or the portion thereof
which has not theretofore been paid to Class B Holders) (the "Class B
Additional Interest") shall also be distributable to
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the Class B Certificates, and on such Transfer Date Trustee shall deposit
such funds, to the extent available, into the Distribution Account. The
"Class B Deficiency Amount" for any Transfer Date shall equal the excess,
if any, of the aggregate amount accrued pursuant to this subsection 4.8(b)
as of the prior Interest Period over the amount actually transferred to the
Distribution Account for payment of such amount. Notwithstanding anything
to the contrary herein, Class B Additional Interest shall be payable or
distributed to the Class B Certificateholders only to the extent permitted
by applicable law.
(c) The amount of monthly interest distributable to the Collateral
Interest shall equal the product of (i) (A) a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360, times (B) the Collateral Rate in effect with
respect to the related Interest Period, times (ii) the Collateral Interest
determined as of the Record Date preceding such Transfer Date or, in the
case of the initial Interest Period, as of the Closing Date (the
"Collateral Monthly Interest").
SECTION 4.9 Determination of Monthly Principal. (a) The amount of
monthly principal distributable from the Principal Account with respect to
the Class A Certificates on each Transfer Date ("Class A Monthly
Principal"), beginning with the Transfer Date in the month following the
month in which the Controlled Accumulation Period begins or, if earlier,
the Transfer Date following the commencement of the Rapid Amortization
Period, shall be equal to 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 Class A Scheduled Payment Date, the
Controlled Deposit Amount for such Transfer Date and (iii) the Class A
Adjusted Investor Interest on such Transfer Date prior to any deposit into
the Principal Funding Account to be made on such day.
(b) The amount of monthly principal distributable from the
Principal Account with respect to the Class B Certificates on each Transfer
Date (the "Class B Monthly Principal") for the Controlled Accumulation
Period, beginning with the Transfer Date after the one on which the Class A
Adjusted Investor Interest is reduced to zero (and for the Rapid
Amortization Period beginning with the Transfer Date on which the Class A
Investor Interest is reduced to zero, after giving effect to payments to be
made on the related Distribution Date), shall be an amount equal to the
lesser of (i) the excess, if any, of (A) the Available Investor Principal
Collections on such Transfer Date over (B) the Class A Monthly Principal on
such Transfer Date, if any, and (ii) the Class B Investor Interest (after
taking into account any adjustments to be made on such Transfer Date
pursuant to Sections 4.12 and 4.15) on such Transfer Date.
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(c) The amount of monthly principal (the "Collateral Monthly
Principal") distributable from the Principal Account with respect to the
Collateral Interest on each Transfer Date shall be (i) if any reduction of
the Required Collateral Interest has occurred pursuant to clause (z) of the
proviso in the definition thereof during the Revolving Period, an amount
equal to the lesser of (A) the excess, if any, of the Collateral Interest
(after taking into account any adjustments to be made on such Transfer Date
pursuant to Sections 4.12 and 4.15) over the Required Collateral Interest
on such Transfer Date, and (B) the Available Investor Principal Collections
on such Transfer Date or (ii) at all times during the Controlled
Accumulation Period or Rapid Amortization Period, an amount equal to the
lesser of (A) the excess, if any, of the Collateral Interest (after taking
into account any adjustments to be made on such Transfer Date pursuant to
Sections 4.12 and 4.15) over the Required Collateral Interest on such
Transfer Date and (B) the excess, if any, of (1) the Available Investor
Principal Collections on such Transfer Date over (2) the sum of the Class A
Monthly Principal and the Class B Monthly Principal for such Transfer Date.
SECTION 4.10 Coverage of Required Amount. (a) On or before each
Transfer Date, Servicer shall determine the amount (the "Class A Required
Amount"), if any, by which the sum of (i) the Class A Monthly Interest for
such Transfer Date, plus (ii) the Class A Deficiency Amount, if any, for
such Transfer Date, plus (iii) the Class A Additional Interest, if any, for
such Transfer Date, plus (iv) the Class A Servicing Fee for the prior
Monthly Period, plus (v) the Class A Servicing Fee, if any, due but not
paid on any prior Transfer Date, plus (vi) the Class A Net Default Amount,
if any, for such Transfer Date, exceeds the Class A Available Funds for the
related Monthly Period.
(b) On or before each Transfer Date, Servicer shall also determine
the amount (the "Class B Required Amount"), if any, equal to the sum of (i)
the amount, if any, by which the sum of (A) the Class B Monthly Interest
for such Transfer Date, plus (B) the Class B Deficiency Amount, if any, for
such Transfer Date, plus (C) the Class B Additional Interest, if any, for
such Transfer Date, plus (D) the Class B Servicing Fee for the prior
Monthly Period, plus (E) the Class B Servicing Fee, if any, due but not
paid on any prior Transfer Date, exceeds the Class B Available Funds for
the related Monthly Period, plus (ii) the Class B Net Default Amount, if
any, for the prior Monthly Period.
(c) If the sum of the Class A Required Amount and the Class B
Required Amount for such Transfer Date is greater than zero, Servicer shall
give written notice to Trustee of such positive Class A Required Amount
and/or Class B Required Amount on or before such Transfer Date. In
addition:
(i) If the Class A Required Amount for such Transfer Date
is greater than zero, all or a portion of the Excess Spread with
respect to such Transfer Date in an amount equal to the Class A
Required Amount, to the extent
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available, for such Transfer Date shall be distributed from the
Finance Charge Account on such Transfer Date pursuant to
subsection 4.13(a). If the Class A Required Amount for such
Transfer Date exceeds the amount of Excess Spread with respect to
such Transfer Date, the Collections of Principal Receivables
allocable to the Collateral Interest and the Class B Certificates
with respect to the prior Monthly Period shall be applied as
specified in Section 4.15.
(ii) If the Class B Required Amount for such Transfer
Date is greater than zero, all or a portion of the Excess Spread
with respect to such Transfer Date in an amount equal to the Class
B Required Amount, to the extent available, for such Transfer Date
shall be distributed from the Finance Charge Account on such
Transfer Date pursuant to subsection 4.13(c). If the Class B
Required Amount for such Transfer Date exceeds the amount of
Excess Spread available to fund the Class B Required Amount
pursuant to subsection 4.13(c), the Collections of Principal
Receivables allocable to the Collateral Interest (after
application to the Class A Required Amount) shall be applied as
specified in Section 4.15; provided that the sum of any payments
pursuant to this subsection 4.10(c) shall not exceed the sum of
the Class A Required Amount and the Class B Required Amount.
SECTION 4.11 Monthly Payments. On or before each Transfer Date,
Servicer shall instruct Trustee in writing (which writing shall be
substantially in the form of Exhibit B to the Series Supplement) to
withdraw, and Trustee, acting in accordance with such instructions, shall
withdraw on such Transfer Date or the related Distribution Date, as
applicable, to the extent of available funds, the amounts required to be
withdrawn from the Finance Charge Account, the Principal Account, the
Principal Funding Account and the Distribution Account as follows:
(a) An amount equal to the Class A Available Funds for the related
Monthly Period will be distributed on each Transfer Date, to the extent
available, in the following priority:
(i) an amount equal to Class A Monthly Interest plus any
Class A Deficiency Amount plus any Class A Additional Interest (in
each case for such Transfer Date) shall be deposited by Servicer
or Trustee into the Distribution Account;
(ii) an amount equal to the Class A Servicing Fee for
such Transfer Date plus any Class A Servicing Fee due but not paid
to Servicer on any prior Transfer Date shall be distributed to
Servicer;
(iii) an amount equal to the Class A Net Default Amount,
if any, for the preceding Monthly Period shall be treated as a
portion of Investor
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Principal Collections and deposited into the Principal Account on such
Transfer Date; and
(iv) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section
4.13.
(b) An amount equal to the Class B Available Funds for the related
Monthly Period will be distributed on each Transfer Date, to the extent
available, in the following priority:
(i) an amount equal to the Class B Monthly Interest plus
any Class B Deficiency Amount plus any Class B Additional Interest
(in each case for such Transfer Date) shall be deposited by
Servicer or Trustee into the Distribution Account;
(ii) an amount equal to the Class B Servicing Fee for
such Transfer Date plus any Class B Servicing Fee due but not paid
to Servicer on any prior Transfer Date for such Transfer Date
shall be distributed to Servicer; and
(iii) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section
4.13.
(c) An amount equal to the Collateral Available Funds for the
related Monthly Period will be distributed on each Transfer Date, to the
extent available, in the following priority:
(i) if Transferor or Trustee is no longer Servicer, an
amount equal to the Collateral Interest Servicing Fee for such
Transfer Date plus any Collateral Interest Servicing Fee due but
not paid to Servicer on any prior Transfer Date shall be
distributed to Servicer; and
(ii) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section
4.13.
(d) During the Revolving Period, an amount equal to the Available
Investor Principal Collections for the related Monthly Period will be
distributed on each Transfer Date, to the extent available, in the
following priority:
(i) an amount equal to the Collateral Monthly Principal
for such Transfer Date shall be held in the Principal Account,
invested overnight in Permitted Investments and distributed to the
Collateral Interest Holder on the related Distribution Date in
accordance with the Loan Agreement;
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(ii) an amount equal to the lesser of (A) the product of
(1) a fraction, the numerator of which is equal to the Available
Investor Principal Collections remaining after the application
specified in subsection 4.11(d)(i) and the denominator of which is
equal to the sum of (x) the Shared Principal Collections
(determined in accordance with clause (b) of the definition
thereof), plus (y) the Available Investor Principal Collections
remaining after the application specified in subsection 4.11(d)(i)
and (2) the Cumulative Series Principal Shortfall and (B)
Available Investor Principal Collections shall remain in the
Principal Account to be treated as Shared Principal Collections
and applied to Principal Sharing Series other than this Series
1997-1; and
(iii) an amount equal to the excess, if any, of (A) the
Available Investor Principal Collections for such Transfer Date
over (B) the applications specified in subsections 4.11(d)(i) and
(ii) above shall be paid to the Transferor; provided that the
amount to be paid to the Transferor pursuant to this subsection
4.11(d)(iii) with respect to such Transfer Date shall be paid to
the Transferor only to the extent that the Transferor Interest on
such Transfer Date is greater than the Minimum Transferor Interest
(after giving effect to the inclusion in the Trust of all
Receivables created on or prior to such Transfer Date and the
application of payments referred to in subsection 4.3(b)) and
otherwise shall be deposited into the Excess Funding Account in
accordance with subsection 4.7(d).
(e) During the Controlled Accumulation Period or the Rapid
Amortization Period, an amount equal to the Available Investor Principal
Collections for the related Monthly Period will be distributed on each
Transfer Date, beginning with the Transfer Date in the month following the
month in which the Controlled Accumulation Period began or the Transfer
Date following the commencement of the Rapid Amortization Period, as
applicable, to the extent available, in the following priority:
(i) an amount equal to the Class A Monthly Principal for
such Transfer Date shall be, (A) during the Controlled
Accumulation Period, deposited into the Principal Funding Account,
and (B) during the Rapid Amortization Period, deposited into the
Distribution Account;
(ii) after giving effect to the distribution referred to
in clause (i), an amount equal to the Class B Monthly Principal
shall be deposited into the Distribution Account;
(iii) for each Transfer Date (other than the Transfer
Date immediately preceding the Series 1997-1 Termination Date, in
which case on the Series 1997-1 Termination Date), after giving
effect to the distribution referred to
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in clauses (i) and (ii), an amount equal to Collateral Monthly
Principal shall be held in the Principal Account, invested
overnight in Permitted Investments and distributed to the
Collateral Interest Holder on the related Distribution Date in
accordance with the Loan Agreement;
(iv) an amount equal to the lesser of (A) the product of
(1) a fraction, the numerator of which is equal to the Available
Investor Principal Collections remaining after the application
specified in subsections 4.11(e)(i), (ii) and (iii) and the
denominator of which is equal to the sum of the Shared Principal
Collections (determined in accordance with clause (b) of the
definition thereof), and (2) the Cumulative Series Principal
Shortfall and (B) the Available Investor Principal Collections
shall remain in the Principal Account to be treated as Shared
Principal Collections and applied to Principal Sharing Series
other than this Series 1997-1; and
(v) an amount equal to the excess, if any, of (A) the
Available Investor Principal Collections over (B) the applications
specified in subsections 4.11(e)(i) through (iv) shall be paid to
the Transferor; provided that the amount to be paid to the
Transferor pursuant to this subsection 4.11(e)(v) with respect to
such Transfer Date shall be paid to the Transferor only to the
extent that the Transferor Interest on such Transfer Date is
greater than the Minimum Transferor Interest (after giving effect
to the inclusion in the Trust of all Receivables created on or
prior to such Transfer Date and the application of payments
referred to in subsection 4.3(b)) and otherwise shall be deposited
into the Excess Funding Account in accordance with subsection
4.7(d).
(f) On 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, Trustee, acting
in accordance with instructions from Servicer, shall withdraw from the
Principal Funding Account and deposit in the Distribution Account the
amount on deposit in the Principal Funding Account.
(g) On each Distribution Date, Trustee shall pay (i) in accordance
with subsection 5.1(a) to the Class A Holders from the Distribution
Account, the amount deposited into the Distribution Account pursuant to
subsection 4.11(a)(i) on the preceding Transfer Date and (ii) in accordance
with subsection 5.1(b) to the Class B Holders from the Distribution
Account, the amount deposited into the Distribution Account pursuant to
subsection 4.11(b)(i) on the preceding Transfer Date.
(h) On the earlier to occur of (i) the first Distribution Date
with respect to the Rapid Amortization Period and (ii) the Class A
Scheduled Payment Date and on each Distribution Date thereafter, Trustee,
acting in accordance with instructions from Servicer, shall pay in
accordance with Section 5.1 from the Distribution Account the
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amount so deposited into the Distribution Account pursuant to subsections
4.11(e) and (f) on the related Transfer Date in the following priority:
(i) an amount equal to the lesser of such amount on
deposit in the Distribution Account and the Class A Investor
Interest shall be paid to the Class A Holders; and
(ii) for each Distribution Date with respect to the Rapid
Amortization Period and on the Class B Scheduled Payment Date,
after giving effect to the distributions referred to in clause (i)
above, an amount equal to the lesser of such amount on deposit in
the Distribution Account and the Class B Investor Interest shall
be paid to the Class B Holders.
(i) The Controlled Accumulation Period is scheduled to commence at
the close of business on the Controlled Accumulation Date; provided that if
the Controlled Accumulation Period Length (determined as described below)
on any Determination Date on or after the July 2001 Determination Date is
less than twelve months, upon written notice to Trustee, Transferor and
each Rating Agency, Servicer, at its option, may elect to modify the date
on which the Controlled Accumulation Period actually commences to the first
day of the month that is a number of months prior to the month in which the
Class A Scheduled Payment Date occurs at least equal to the Controlled
Accumulation Period Length (so that as a result of such election the number
of Monthly Periods in the Controlled Accumulation Period will at least
equal the Controlled Accumulation Period Length); provided that (i) the
length of the Controlled Accumulation Period will not be less than one
month; (ii) such determination of the Controlled Accumulation Period Length
shall be made on each Determination Date on and after the July 2001
Determination Date but prior to the commencement of the Controlled
Accumulation Period, and any election to shorten the Controlled
Accumulation Period shall be subject to the subsequent lengthening of the
Controlled Accumulation Period to the Controlled Accumulation Period Length
determined on any subsequent Determination Date, but the Controlled
Accumulation Period shall in no event commence prior to the Controlled
Accumulation Date and (iii) notwithstanding any other provision of this
Series Supplement to the contrary, no election to postpone the commencement
of the Controlled Accumulation Period shall be made after a Pay Out Event
shall have occurred and be continuing with respect to any other Series. The
"Controlled Accumulation Period Length" will mean a number of months such
that the amount available for distribution of principal on the Class A
Certificates on the Class A Scheduled Payment Date is expected to equal or
exceed the Class A Investor Interest, assuming for this purpose that (1)
the payment rate with respect to Collections of Principal Receivables
remains constant at the lowest level of such payment rate during the twelve
preceding Monthly Periods (or such lower payment rate as Servicer may
select), (2) the total amount of Principal Receivables in the Trust (and
the principal amount on deposit in the Excess Funding Account, if any)
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remains constant at the level on such date of determination, (3) no Pay Out
Event with respect to any Series will subsequently occur and (4) no
additional Series (other than any Series being issued on such date of
determination) will be subsequently issued. Any notice by Servicer electing
to modify the commencement of the Controlled Accumulation Period pursuant
to this clause (i) shall specify (i) the Controlled Accumulation Period
Length, (ii) the commencement date of the Controlled Accumulation Period
and (iii) the Controlled Accumulation Amount with respect to each Monthly
Period during the Controlled Accumulation Period.
SECTION 4.12 Series Investor Charge-Offs. (a) On or before each
Transfer Date, Servicer shall calculate the Class A Net Default Amount. If,
on any Transfer Date, the Class A Net Default Amount for the prior Monthly
Period exceeds the sum of the amounts available for allocation with respect
thereto pursuant to subsection 4.11(a)(iii), subsection 4.13(a) and Section
4.15 with respect to such Monthly Period, then 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 by more than the lesser of the Class A
Net 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. If 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. If 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 Class A Net Default
Amount for such Transfer Date (a "Class A Investor Charge-Off"). If the
Class A Investor Interest has been reduced by the amount of any Class A
Investor Charge-Offs, it will be reimbursed on any Transfer Date by the
amount of Excess Spread allocated and available for such purpose pursuant
to subsection 4.13(b).
(b) On or before each Transfer Date, Servicer shall calculate the
Class B Net Default Amount. If, on any Transfer Date, the Class B Net
Default Amount for the prior Monthly Period exceeds the amount of Excess
Spread and Reallocated Collateral Principal Collections that are allocated
and available to fund such amount pursuant to subsection 4.13(c) and
Section 4.15, the Collateral Interest (after giving effect to reductions
for any Collateral Charge-Offs and any Reallocated Principal Collections on
such Transfer Date and any adjustments with respect thereto as described in
subsection 4.12(a)) will be reduced by the amount of such excess, but not
by more than the lesser of the Class B Net Default Amount and the
Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any
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Reallocated Principal Collections on such Transfer Date and any adjustments
with respect thereto as described in subsection 4.12(a)) for such Transfer
Date. If such reduction would cause the Collateral Interest to be a
negative number, the Collateral Interest shall be reduced to zero and the
Class B Investor Interest shall be reduced by the amount by which the
Collateral Interest would have been reduced below zero, but not by more
than the Class B Net 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 pursuant to Section 4.15 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 pursuant to subsection
4.12(a). The Class B Investor Interest will thereafter be reimbursed on any
Transfer Date by the amount of Excess Spread allocated and available for
that purpose as described under subsection 4.13(d).
(c) On or before each Transfer Date, Servicer shall calculate the
Collateral Net Default Amount. If, on any Transfer Date, the Collateral Net
Default Amount for the prior Monthly Period exceeds the amount of Excess
Spread which is allocated and available to fund such amount pursuant to
subsection 4.13(g), the Collateral Interest will be reduced by the amount
of such excess but not by more than the lesser of the Collateral Net
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 pursuant to Section 4.15
and the amount of any portion of the Collateral Interest allocated to the
Class A Certificates or the Class B Certificates to avoid a reduction in
the Class A Investor Interest, pursuant to subsection 4.12(a), or the Class
B Investor Interest, pursuant to subsection 4.12(b), respectively. The
Collateral Interest will thereafter be reimbursed on any Transfer Date by
the amount of the Excess Spread allocated and available for that purpose as
described under subsection 4.13(h).
SECTION 4.13 Excess Spread. On or before each Transfer Date,
Servicer shall instruct Trustee in writing (which writing shall be
substantially in the form of Exhibit B to the Series Supplement) to apply,
and Trustee, acting in accordance with such instructions shall apply,
Excess Spread with respect to the related Monthly Period, to make the
following distributions on each Transfer Date in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class A Required
Amount and be applied in accordance with, and in the priority set forth in,
subsection 4.11(a);
(b) an amount equal to the aggregate amount of Class A Investor
Charge- Offs which have not been previously reimbursed will be treated as a
portion of
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Investor Principal Collections and deposited into the Principal Account on such
Transfer Date;
(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 and be applied first in accordance with, and in the priority set
forth in, subsection 4.11(b) and then any remaining amount available to pay
the Class B Net Default Amount shall be treated as a portion of Investor
Principal Collections and deposited into the Principal Account on such
Transfer Date;
(d) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the Class B Initial Investor
Interest for reasons other than the payment of principal to the Class B
Holders (but not in excess of the aggregate amount of such reductions which
have not been previously reimbursed) will be treated as a portion of
Investor Principal Collections and deposited into the Principal Account on
such Transfer Date;
(e) an amount equal to the Collateral Monthly Interest plus the
amount of any past due Collateral Monthly Interest for such Transfer Date
will be held in the Finance Charge Account, invested overnight in Permitted
Investments and paid to the Collateral Interest Holder on the related
Distribution Date in accordance with the Loan Agreement;
(f) if Transferor or Trustee is Servicer, an amount equal to the
aggregate amount of accrued but unpaid Collateral Interest Servicing Fee
will be paid to Servicer;
(g) an amount equal to the Collateral Net Default Amount, if any,
for the prior Monthly Period will be treated as a portion of Investor
Principal Collections and deposited into the Principal Account on such
Transfer Date;
(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 treated as a portion of
Investor Principal Collections and deposited into the Principal Account on
such Transfer Date;
(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 in subsection 4.18(f), an amount up to the excess, if any, of
the Required Reserve Account Amount over the Available Reserve Account
Amount shall be deposited into the Reserve Account;
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(j) an amount equal to all other amounts specified in the Loan
Agreement (to the extent payable from "Available Non-Principal Funds," as
defined therein) shall be held in the Finance Charge Account, invested
overnight in Permitted Investments and distributed on the related
Distribution Date in accordance with the Loan Agreement; and
(k) the balance, if any, after giving effect to the payments made
pursuant to clauses (a) through (j), shall constitute "Excess Finance
Charge Collections" to be applied with respect to other Principal Sharing
Series in accordance with Section 4.5 of the Agreement.
SECTION 4.14 Reallocated Investor Finance Charge Collections. (a)
That portion of Group I Investor Finance Charge Collections for any
Transfer Date equal to the amount of Reallocated Investor Finance Charge
Collections for such Transfer Date will be allocated to Series 1997-1 and
will be distributed as set forth in this Supplement.
(b) Reallocated Investor Finance Charge Collections with respect
to any Transfer Date shall equal the sum of (i) the aggregate amount of
Series Monthly Interest, Series Monthly Fees, Series Net Default Amount and
Series Investor Charge-Offs for such Distribution Date and (ii) that
portion of excess Group I Investor Finance Charge Collections to be
included in Reallocated Investor Finance Charge Collections pursuant to
subsection 4.14(c); provided that if the amount of Group I Investor Finance
Charge Collections for such Distribution Date is less than the sum of (w)
Group I Investor Monthly Interest, (x) Group I Investor Monthly Fees, (y)
Group I Net Default Amount and (z) Group I Investor Charge-Offs, then
"Reallocated Investor Finance Charge Collections" shall equal the sum of
the following amounts for such Distribution Date:
(A) The product of (I) Group I Investor Finance Charge
Collections (up to the amount of Group I Investor Monthly
Interest) and (II) a fraction, the numerator of which is Series
Monthly Interest and the denominator of which is Group I Investor
Monthly Interest;
(B) the product of (I) Group I Investor Finance Charge
Collections less the amount of Group I Investor Monthly Interest
(up to the Group I Investor Monthly Fees) and (II) a fraction, the
numerator of which is the Series Monthly Fees and the denominator
of which is the Group I Investor Monthly Fees;
(C) the product of (I) Group I Investor Finance Charge
Collections less the amount of Group I Investor Monthly Interest
and the Group I Investor Monthly Fees (up to Group I Net Default
Amount) and (II) a
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fraction, the numerator of which is Series Net Default Amount and
the denominator of which is Group I Net Default Amount; and
(D) the product of (I) Group I Investor Finance Charge
Collections less the sum of (x) Group I Investor Monthly Interest,
(y) the Group I Investor Monthly Fees and (z) Group I Net Default
Amount and (II) a fraction, the numerator of which is Series
Investor Charge-Offs and the denominator of which is Group I
Investor Charge-Offs.
(c) If the amount of Group I Investor Finance Charge Collections
for such Distribution Date exceeds the sum of (i) Group I Investor Monthly
Interest, (ii) Group I Investor Monthly Fees, (iii) Group I Net Default
Amount and (iv) Group I Investor Charge-Offs, then Reallocated Investor
Finance Charge Collections for such Distribution Date shall include an
amount equal to the product of (x) the amount of such excess and (y) a
fraction, the numerator of which is the Investor Interest as of the last
day of the second preceding Monthly Period (or, for Series 1997-1 only,
with respect to the first Transfer Date, as of the Closing Date) and the
denominator of which is the sum of such Investor Interest and the aggregate
Investor Interests for all other Series included in Group I as of such last
day (or, for Series 1997-1 only, with respect to the first Transfer Date,
as of the Closing Date).
SECTION 4.15 Reallocated Principal Collections. On or before each
Transfer Date, Servicer shall instruct Trustee in writing (which writing
shall be substantially in the form of Exhibit B to the Series Supplement)
to, and Trustee in accordance with such instructions shall, withdraw from
the Principal Account and apply Reallocated Principal Collections (applying
all Reallocated Collateral Principal Collections in accordance with
subsections 4.15(a) and (b) prior to applying any Reallocated Class B
Principal Collections in accordance with subsection 4.15(a) for any amounts
still owing after the application of Reallocated Collateral Principal
Collections) with respect to such Transfer Date, to make the following
distributions on each Transfer Date in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Transfer Date over (ii) the
amount of Excess Spread with respect to the related Monthly Period, shall
be applied pursuant to subsections 4.11(a)(i), (ii) and (iii); and
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Transfer Date over (ii) the
amount of Excess Spread allocated and available to the Class B Certificates
pursuant to subsection 4.13(c) on such Transfer Date shall be applied first
pursuant to subsections 4.11(b)(i) and (ii) and then pursuant to subsection
4.13(c).
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On each Transfer Date, the Collateral Interest shall be reduced by
the amount of Reallocated Collateral Principal Collections and by the
amount of Reallocated Class B Principal Collections applied pursuant to
subsections 4.15(a) and/or (b) on such Transfer Date. If such reduction
would cause the Collateral Interest (after giving effect to any Collateral
Charge-Offs for such Transfer Date) to be a negative number, the Collateral
Interest (after giving effect to any Collateral Charge-Offs for such
Transfer Date) shall be reduced to zero and the Class B Investor Interest
shall be reduced by the amount by which the Collateral Interest would have
been reduced below zero. If the reallocation of Reallocated Principal
Collections would cause the Class B Investor Interest (after giving effect
to any Class B Investor Charge-Offs for such Transfer Date) to be a
negative number on any Transfer Date, Reallocated Principal Collections
shall be reallocated on such Transfer Date in an aggregate amount not to
exceed the amount which would cause the Class B Investor Interest (after
giving effect to any Class B Investor Charge-Offs for such Transfer Date)
to be reduced to zero.
SECTION 4.16 Shared Principal Collections. (a) The portion of
Shared Principal Collections on deposit in the Principal Account equal to
the amount of Shared Principal Collections allocable to Series 1997-1 on
any Transfer Date shall be applied as Available Investor Principal
Collections pursuant to Section 4.11 and pursuant to such Section 4.11
shall be deposited in the Distribution Account or distributed in accordance
with the Loan Agreement.
(b) Shared Principal Collections allocable to Series 1997-1 with
respect to any Transfer Date means an amount equal to the Series Principal
Shortfall, if any, with respect to Series 1997-1 for such Transfer Date;
provided that if the aggregate amount of Shared Principal Collections for
all Principal Sharing Series for such Transfer Date is less than the
Cumulative Series Principal Shortfall for such Transfer Date, then Shared
Principal Collections allocable to Series 1997-1 on such Transfer Date
shall equal the product of (i) Shared Principal Collections for all
Principal Sharing Series for such Transfer Date and (ii) a fraction, the
numerator of which is the Series Principal Shortfall with respect to Series
1997-1 for such Transfer Date and the denominator of which is the
Cumulative Series Principal Shortfall for all Principal Sharing Series for
such Transfer Date.
(c) Solely for the purpose of determining the amount of Available
Investor Principal Collections to be treated as Shared Principal
Collections on any Transfer Date allocable to other Principal Sharing
Series, on each Determination Date, Servicer shall determine the Class A
Required Amount, the Class B Required Amount, Excess Spread and Reallocated
Principal Collections as of such Determination Date for the following
Transfer Date.
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SECTION 4.17 Principal Account and Principal Funding Account. (a)
The Trustee shall establish and maintain with a Qualified Institution,
which may be Trustee, in the name of the Trustee, on behalf of the Trust,
for the benefit of the Investor Holders, two segregated trust accounts with
the corporate trust department of such Qualified Institution (the
"Principal Account" and the "Principal Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Investor Holders. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Principal Account and the Principal Funding Account and in all proceeds
thereof. The Principal Account and the Principal Funding Account shall be
under the sole dominion and control of Trustee for the benefit of the
Investor Holders. If at any time the institution holding the Principal
Account and the Principal Funding Account ceases to be a Qualified
Institution, Transferor shall notify Trustee, and Trustee upon being
notified (or Servicer on its behalf) shall, within 10 Business Days,
establish a new Principal Account and a new Principal Funding Account
meeting the conditions specified above with a Qualified Institution, and
shall transfer any cash or any investments to such new Principal Account
and Principal Funding Account. The Trustee, at the direction of Servicer,
shall (i) make withdrawals from the Principal Account and the Principal
Funding Account from time to time in the amounts and for the purposes set
forth in this Agreement, and (ii) on each Transfer Date (from and after the
commencement of the Controlled Accumulation Period) prior to termination of
the Principal Funding Account make a deposit into the Principal Funding
Account in the amount specified in, and otherwise in accordance with,
subsection 4.11(e).
(b) Funds on deposit in the Principal Account and the Principal
Funding Account shall be invested at the direction of Servicer by Trustee
in Permitted Investments. Funds on deposit in the Principal Funding Account
on any Transfer Date, after giving effect to any withdrawals from the
Principal Funding Account on such Transfer Date, shall be invested in such
investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. The Trustee shall
maintain, for the benefit of the Investor Holders, possession of the
negotiable instruments or securities, if any, evidencing such Permitted
Investments. No Permitted Investment shall be disposed of prior to its
maturity.
On each Transfer Date, Trustee, acting at Servicer's direction
given on or before such Transfer Date, shall transfer (i) from the
Principal Account to the Finance Charge Account all investment earnings
(net of losses and investment expenses) accrued on or prior to that
Transfer Date in connection with the investment of funds on deposit in the
Principal Account for application as a part of Investor Finance Charge
Collections and (ii) from the Principal Funding Account to the Finance
Charge Account the Principal Funding Investment Proceeds on deposit in the
Principal Funding Account, but not in excess of the Covered Amount, for
application as Class A Available Funds applied pursuant to subsection
4.11(a)(i).
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Any Excess Principal Funding Investment Proceeds shall be paid to
the Transferor on each Transfer Date. An amount equal to any Principal
Funding Investment Shortfall will be deposited in the Finance Charge
Account on each Transfer Date from the Reserve Account to the extent funds
are available pursuant to subsection 4.18(d). Principal Funding Investment
Proceeds (including reinvested interest) shall not be considered part of
the amounts on deposit in the Principal Funding Account for purposes of
this Agreement.
SECTION 4.18 Reserve Account. (a) The Trustee shall establish and
maintain with a Qualified Institution, which may be Trustee, in the name of
the Trust, on behalf of the Trust, for the benefit of the Investor Holders,
a segregated trust account with the corporate trust department of such
Qualified Institution (the "Reserve Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Investor Holders. The Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Reserve
Account and in all proceeds thereof. The Reserve Account shall be under the
sole dominion and control of Trustee for the benefit of the Investor
Holders. If at any time the institution holding the Reserve Account ceases
to be a Qualified Institution, Transferor shall notify Trustee, and Trustee
upon being notified (or Servicer on its behalf) shall, within 10 Business
Days, establish a new Reserve Account meeting the conditions specified
above with a Qualified Institution, and shall transfer any cash or any
investments to such new Reserve Account. The Trustee, at the direction of
Servicer, shall (i) make withdrawals from the Reserve Account from time to
time in an amount up to the Available Reserve Account Amount at such time,
for the purposes set forth in this Agreement, and (ii) on each Transfer
Date (from and after the Reserve Account Funding Date) prior to termination
of the Reserve Account make a deposit into the Reserve Account in the
amount specified in, and otherwise in accordance with, subsection 4.13(i).
(b) Funds on deposit in the Reserve Account shall be invested at
the direction of Servicer by Trustee in Permitted Investments. Funds on
deposit in the Reserve Account on any Transfer Date, after giving effect to
any withdrawals from the Reserve Account on such Transfer Date, shall be
invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Transfer Date. The
Trustee shall maintain, for the benefit of the Investor Holders, possession
of the negotiable instruments or securities, if any, evidencing such
Permitted Investments. No Permitted Investment shall be disposed of prior
to its maturity. On each Transfer Date, all interest and earnings (net of
losses and investment expenses) accrued since the preceding Transfer Date
on funds on deposit in the Reserve Account shall be retained in the Reserve
Account (to the extent that the Available Reserve Account Amount is less
than the Required Reserve Account Amount) and the balance, if any, shall be
deposited into the Finance Charge Account and included in Class A Available
Funds for such Transfer Date. For purposes of determining the availability
of funds or the balance in the Reserve Account for any
43
<PAGE>
reason under this Agreement, except as otherwise provided in the preceding
sentence, investment earnings on such funds shall be deemed not to be
available or on deposit.
(c) On or before each Transfer Date with respect to the Controlled
Accumulation Period prior to the payment in full of the Class A Investor
Interest and on or before the first Transfer Date with respect to the Rapid
Amortization Period, Servicer shall calculate the "Reserve Draw Amount"
which shall be equal to the Principal Funding Investment Shortfall with
respect to each Transfer Date with respect to the Controlled Accumulation
Period or the first Transfer Date with respect to the Rapid Amortization
Period less, in each case, the amount of funds deposited into the Finance
Charge Account on such Transfer Date pursuant to subsection 4.18(b).
(d) If the Reserve Draw Amount for any Transfer Date is greater
than zero, the Reserve Draw Amount, up to the Available Reserve Account
Amount, shall be withdrawn from the Reserve Account on such Transfer Date
by Trustee (acting in accordance with the instructions of Servicer),
deposited into the Finance Charge Account and included in Class A Available
Funds for such Transfer Date.
(e) If the Reserve Account Surplus on any Distribution Date, after
giving effect to all deposits to and withdrawals from the Reserve Account
with respect to the related Transfer Date, is greater than zero, Trustee,
acting in accordance with the instructions of Servicer, shall withdraw from
the Reserve Account, and pay in accordance with the Loan Agreement, an
amount equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article XII, (ii) the first Distribution Date relating to the
Rapid Amortization Period and (iii) the Distribution Date immediately
preceding the Class A Scheduled Payment Date, Trustee, acting in accordance
with the instructions of Servicer, after the prior payment of all amounts
owing to the Series 1997-1 Holders that are payable from the Reserve
Account as provided herein, shall withdraw from the Reserve Account and pay
in accordance with the Loan Agreement all amounts, if any, on deposit in
the Reserve Account and the Reserve Account shall be deemed to have
terminated for purposes of this Series Supplement.
SECTION 4.19 [RESERVED]
SECTION 4.20 Transferor's or Servicer's Failure to Make a Deposit
or Payment. If Servicer or Transferor fails to make, or give instructions
to make, any payment or deposit (other than as required by subsections
2.4(d) and (e) and 12.2(a) or Sections 10.2 and 12.1) required to be made
or given by Servicer or Transferor, respectively, at the time specified in
the Agreement (including applicable grace
44
<PAGE>
periods), Trustee shall make such payment or deposit from the applicable
Investor Account without instruction from Servicer or Transferor. The
Trustee shall be required to make any such payment, deposit or withdrawal
hereunder only to the extent that Trustee has sufficient information to
allow it to determine the amount thereof; provided that Trustee shall in
all cases be deemed to have sufficient information to determine the amount
of interest payable to the Series 1997-1 Holders on each Distribution Date.
The Servicer shall, upon request of Trustee, promptly provide Trustee with
all information necessary to allow Trustee to make such payment, deposit or
withdrawal. Such funds or the proceeds of such withdrawal shall be applied
by Trustee in the manner in which such payment or deposit should have been
made by Transferor or Servicer, as the case may be.
SECTION 4.21. Conversion Date. Notwithstanding anything contained
in the Agreement to the contrary, the Agreement and this Series Supplement
may be amended pursuant to subsection 13.1(a) from time to time by
Transferor, Servicer and Trustee and without the consent of the
Certificateholders, to facilitate the conversion from a Billing Cycle basis
to Monthly Period basis for allocations or to remove provisions of the
Agreement or this Series Supplement made superfluous by such conversion.
SECTION 8. Article V of the Agreement. Article V of the Agreement
shall read in its entirety as follows and shall be applicable only to the
Investor Holders:
ARTICLE V DISTRIBUTIONS AND REPORTS TO
INVESTOR HOLDERS
SECTION 5.1 Distributions. (a) On each Distribution Date, Trustee
shall distribute (in accordance with the certificate delivered on or before
the related Transfer Date by Servicer to Trustee pursuant to subsection
3.4(b)) to each Class A Holder of record on the immediately preceding
Record Date (other than as provided in subsection 2.4(e) or Section 12.3
respecting a final distribution) such Holder's pro rata share (based on the
aggregate Undivided Interests represented by Class A Certificates held by
such Holder) of amounts on deposit in the Distribution Account as are
payable to the Class A Holders pursuant to Section 4.11 by check mailed to
each Class A Holder (at such Holder's address as it appears in the
Certificate Register), except that with respect to Class A Certificates
registered in the name of the nominee of a Clearing Agency, such
distribution shall be made in immediately available funds.
(b) On each Distribution Date, Trustee shall distribute (in
accordance with the certificate delivered on or before the related Transfer
Date by Servicer to Trustee pursuant to subsection 3.4(b)) to each Class B
Holder of record on the immediately preceding Record Date (other than as
provided in subsection 2.4(e) or Section 12.3 respecting a final
distribution) such Holder's pro rata share (based on the aggregate
45
<PAGE>
Undivided Interests represented by Class B Certificates held by such
Holder) of amounts on deposit in the Distribution Account as are payable to
the Class B Holders pursuant to Section 4.11 by check mailed to each Class
B Holder (at such Holder's address as it appears in the Certificate
Register), except that with respect to Class B Certificates registered in
the name of the nominee of a Clearing Agency, such distribution shall be
made in immediately available funds.
SECTION 5.2 Monthly Series 1997-1 Holders' Statement. (a) On or
before each Distribution Date, Trustee shall forward to each Series 1997-1
Holder a statement substantially in the form of Exhibit C to the Series
Supplement prepared by Servicer and delivered to Trustee.
(b) Annual Holders' Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 1998, Trustee shall distribute
to each Person who at any time during the preceding calendar year was a
Series 1997-1 Holder, a statement prepared by Servicer containing the
following information:
(i) the amount of the current distribution allocable to
Class A Monthly Principal, Class B Monthly Principal and
Collateral Monthly Principal, respectively; and
(ii) the amount of the current distribution allocable to
Class A Monthly Interest, Class A Deficiency Amounts, Class A
Additional Interest, Class B Monthly Interest, Class B Deficiency
Amounts, Class B Additional Interest and Collateral Monthly
Interest, and any accrued and unpaid Collateral Monthly Interest,
respectively.
Such information shall be aggregated for such calendar year or the
applicable portion thereof during which such Person was a Series 1997-1
Holder, together with such other customary information (consistent with the
treatment of the Certificates as debt) as Servicer deems necessary or
desirable to enable the Series 1997-1 Holders to prepare their tax returns.
Such obligations of Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by
Trustee pursuant to any requirements of the Internal Revenue Code.
SECTION 9. Series 1997-1 Pay Out Events. If any one of the following
events shall occur with respect to the Investor Certificates:
(a) failure on the part of Transferor (i) to make any payment or
deposit required by the terms of (A) the Agreement or (B) this Series
Supplement, on or before the date occurring five days after the date such
payment or deposit is herein required to be made or (ii) duly to observe or
perform in any material respect any covenants or agreements of Transferor
set forth in the Agreement or this Series Supplement (including the
covenant of Transferor contained in Section 11 of this
46
<PAGE>
Series Supplement), which failure has a material adverse effect on the
Series 1997-1 Holders (which determination shall be made without reference
to whether any funds are available under the Collateral Interest) and which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to Transferor by Trustee, or to Transferor and Trustee by
the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Investor Interest of this Series
1997-1, and continues to materially and adversely affect the interests of
the Series 1997-1 Holders (which determination shall be made without
reference to whether any funds are available under the Collateral Interest)
for such period;
(b) any representation or warranty made by Transferor in the
Agreement or this Series Supplement, or any information contained in an
Account Schedule required to be delivered by Transferor pursuant to Section
2.1 or 2.6, (i) shall prove to have been incorrect in any material respect
when made or when delivered, which continues to be incorrect in any
material respect for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to Transferor by Trustee, or to Transferor and Trustee by the Holders
of Investor Certificates evidencing Undivided Interests aggregating not
less than 50% of the Investor Interest of this Series 1997-1, and (ii)
results in a material and adverse effect on the interests of the Series
1997-1 Holders (which material adverse effect shall be determined without
reference to whether any funds are available under the Collateral
Interest), which result continues for such period; provided that a Series
1997-1 Pay Out Event pursuant to this subsection 9(b) shall not be deemed
to have occurred hereunder if Transferor has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of the Agreement;
(c) the average Portfolio Yield for any three consecutive Monthly
Periods is reduced to a rate which is less than the average Base Rate for
such period;
(d) Transferor shall fail to convey Receivables arising under
Additional Accounts, or Participations, to the Trust, as required by
subsection 2.6(b);
(e) any Servicer Default shall occur which would have a material
adverse effect on the Series 1997-1 Holders; or
(f) the Class A Investor Interest shall not be paid in full on the
Class A Scheduled Payment Date or the Class B Investor Interest shall not
be paid in full on the Class B Scheduled Payment Date;
then, in the case of any event described in subsection 9(a), (b) or (e) of
this Series Supplement, after the applicable grace period set forth in such
subsections, either Trustee or Holders of Series 1997-1 Certificates
(including, for this purpose, the
47
<PAGE>
Collateral Interest Holder) evidencing Undivided Interests aggregating not
less than 50% of the Investor Interest of this Series 1997-1 by notice then
given in writing to Transferor and Servicer (and to Trustee if given by the
Holders) may declare that a pay out event (a "Series 1997-1 Pay Out Event")
has occurred as of the date of such notice, and in the case of any event
described in subsection 9 (c), (d) or (f) of this Series Supplement, a
Series 1997-1 Pay Out Event shall occur without any notice or other action
on the part of Trustee or the Investor Holders immediately upon the
occurrence of such event.
SECTION 10. Series 1997-1 Termination. The right of the Investor
Holders to receive payments from the Trust will terminate on the first
Business Day following the Series 1997-1 Termination Date.
SECTION 11. Periodic Finance Charges and Other Fees. Transferor
hereby agrees that, except as otherwise required by any Requirement of Law,
or as is deemed by Transferor to be necessary in order for Transferor to
maintain its revolving credit business, based upon a good faith assessment
by Transferor, in its sole discretion, of the nature of the competition in
the credit card business, it shall not at any time reduce the Periodic
Finance Charges assessed on any Receivable or other fees on any Account if
Transferor reasonably expects that, as a result of such reduction, the
Portfolio Yield for the Monthly Period during which such reduction becomes
effective will be less than the Base Rate as at the beginning of such
Monthly Period.
SECTION 12. Counterparts. This Series Supplement may be executed
in any number of counterparts, each of which so executed shall be deemed to
be an original, but all of such counterparts shall together constitute but
one and the same instrument.
SECTION 13. Governing Law. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 14. No Petition. Transferor, Servicer and Trustee, by
entering into this Series Supplement and each Holder, by accepting a Series
1997-1 Certificate, hereby covenant and agree that they will not at any
time institute against the Trust, or join in any institution against the
Trust of, any bankruptcy proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating
to the Investor Holders, the Agreement or this Series Supplement.
SECTION 15. Amendments. This Series Supplement may be amended
pursuant to Section 13.1 of the Agreement. This Series Supplement may also be
48
<PAGE>
amended by Transferor without the consent of Servicer, Trustee or any
Investor Holder if Transferor provides Trustee with (i) 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 Internal Revenue Code section 7704 and would not
cause the Trust to be classified, for Federal income tax purposes, as an
association (or publicly traded partnership) taxable as a corporation or
cause or constitute an event in which gain or loss would be recognized by
any Investor Holder and (ii) a certificate that such amendment or
modification would not materially and adversely affect any Investor Holder;
provided that no such amendment shall be deemed effective without Trustee's
consent, if Trustee's rights, duties and obligations hereunder are thereby
modified. Promptly after the execution of any such amendment (other than an
amendment pursuant to subsection 13.1(a)), Trustee shall furnish
notification of the substance of such amendment to each Rating Agency.
49
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused
this Series 1997-1 Supplement to be duly executed by their respective
officers as of the day and year first above written.
FIRST NATIONAL BANK OF COMMERCE,
Transferor and Servicer
By: /s/ Michael J. Fowler
-------------------------------------
Name: Michael J. Fowler
Title: Chief ALCO Officer
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By: /s/ T. Marshall
----------------------------------------
Name: T. Marshall
Title: Trust Officer
<PAGE>
EXHIBIT A-1
FORM OF CERTIFICATE
CLASS A
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to First National Bank of Commerce or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered
in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.
No. ___ $_______
CUSIP No. 320958AA9
FIRST NBC CREDIT CARD MASTER TRUST
CLASS A 6.15%
ASSET BACKED CERTIFICATE, SERIES 1997-1
Evidencing an Undivided Interest in a trust, the corpus of which consists
of a portfolio of MasterCard(R), VISA(R)* and Private Label credit card
receivables generated or acquired by First National Bank of Commerce and
other assets and interests constituting the Trust under the Pooling and
Servicing Agreement described below.
(Not an interest in or obligation of
First National Bank of Commerce
or any Affiliate thereof.)
- -------------------
* MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and of VISA U.S.A., Inc., respectively.
<PAGE>
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the
corpus of which consists of a portfolio of receivables (the "Receivables")
now existing or hereafter created and arising in connection with selected
MasterCard, VISA and Private Label credit card accounts (the "Accounts") of
First National Bank of Commerce, a national banking association organized
under the laws of the United States, all monies due or to become due in
payment of the Receivables (including all Finance Charge Receivables and
Recoveries), the right to certain amounts received as Interchange with
respect to the Accounts, the benefits of the Collateral Interest (as
defined below) and the other assets and interests constituting the Trust
pursuant to a Pooling and Servicing Agreement dated as of August 1, 1997 as
supplemented by the Series 1997-1 Supplement dated as of August 1, 1997
(collectively, the "Pooling and Servicing Agreement"), by and between First
National Bank of Commerce, as Transferor ("Transferor") and as Servicer
("Servicer"), and The First National Bank of Chicago, as Trustee
("Trustee"). The Series 1997-1 Certificates are issued in two classes, the
Class A Certificates (of which this certificate is one) and the Class B
Certificates, which are subordinated to the Class A Certificates in certain
rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and
the Series 1997-1 Certificates with the intention that the Series 1997-1
Certificates will qualify under applicable tax law as indebtedness, and
each of Transferor, Servicer and each Series 1997-1 Holder (or Series
1997-1 Certificate Owner) by acceptance of its Series 1997-1 Certificate
(or in the case of a Series 1997-1 Certificate Owner, by virtue of such
Series 1997-1 Certificate Owner's acquisition of a beneficial interest
therein), agrees to treat and to take no action inconsistent with the
treatment of the Series 1997-1 Certificates (or any beneficial interest
therein) as indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by
income. Each Series 1997-1 Holder agrees that it will cause any Series
1997-1 Certificate Owner acquiring an interest in a Series 1997-1
Certificate through it to comply with the Pooling and Servicing Agreement
as to treatment of the Series 1997-1 Certificates as indebtedness for
certain tax purposes.
To the extent not defined herein, capitalized terms used herein
have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the
Class A Holder by virtue of the acceptance hereof assents and by which the
Class A Holder is bound.
This Class A Certificate represents an interest in only the First
NBC Credit Card Master Trust. This Class A Certificate does not represent
an obligation of, or an interest in, Transferor or Servicer, and neither
the Series 1997-1 Certificates nor the Accounts or Receivables are insured
or guaranteed by the Federal Deposit Insurance Corporation or (except for
Receivables in Private Label Accounts) any other governmental agency. This
Series 1997-1 Certificate is limited in right of payment to certain
collections respecting the Receivables, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
<PAGE>
Unless the certificate of authentication hereon has been executed
by or on behalf of Trustee, by manual signature, this Class A Certificate
shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, First National Bank of Commerce has
caused this Class A Certificate to be duly executed under its official
seal.
By:___________________________________
Authorized Officer
Attested to:
By:______________________________
Assistant Secretary
Date:____________________________
<PAGE>
Form of Trustee's Certificate of Authentication
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates, Series 1997-1, of the
First NBC Credit Card Master Trust referred to in the within-mentioned
Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF
CHICAGO, Trustee
By:_____________________________________
Authorized Signatory
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE
CLASS B
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to First National Bank of Commerce or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered
in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.
No. ___ $___________
CUSIP No. 320958AB7
FIRST NBC CREDIT CARD MASTER TRUST
CLASS B 6.35%
ASSET BACKED CERTIFICATE, SERIES 1997-1
Evidencing an Undivided Interest in a trust, the corpus of which consists
of a portfolio of MasterCard(R), VISA(R)* and Private Label credit card
receivables generated or acquired by First National Bank of Commerce and
other assets and interests constituting the Trust under the Pooling and
Servicing Agreement described below.
(Not an interest in or obligation of
First National Bank of Commerce
or any Affiliate thereof.)
- --------
* MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and of VISA U.S.A., Inc., respectively.
Exhibit A-2, Page 1
<PAGE>
This certifies that CEDE & CO. (the "Class B Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the
corpus of which consists of a portfolio of receivables (the "Receivables")
now existing or hereafter created and arising in connection with selected
MasterCard, VISA and Private Label credit card accounts (the "Accounts") of
First National Bank of Commerce, a national banking association organized
under the laws of the United States, all monies due or to become due in
payment of the Receivables (including all Finance Charge Receivables and
Recoveries), the right to certain amounts received as Interchange with
respect to the Accounts, the benefits of the Collateral Interest (as
defined below) and the other assets and interests constituting the Trust
pursuant to a Pooling and Servicing Agreement dated as of August 1, 1997 as
supplemented by the Series 1997-1 Supplement dated as of August 1, 1997
(collectively, the "Pooling and Servicing Agreement"), by and between First
National Bank of Commerce, as Transferor ("Transferor") and as Servicer
("Servicer"), and The First National Bank of Chicago, as Trustee
("Trustee"). The Series 1997-1 Certificates are issued in two classes, the
Class A Certificates and the Class B Certificates (of which this
certificate is one), which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and
Servicing Agreement.
Transferor has structured the Pooling and Servicing Agreement and
the Series 1997-1 Certificates with the intention that the Series 1997-1
Certificates will qualify under applicable tax law as indebtedness, and
each of Transferor, Servicer and each Series 1997-1 Holder (or Series
1997-1 Certificate Owner) by acceptance of its Series 1997-1 Certificate
(or in the case of a Series 1997-1 Certificate Owner, by virtue of such
Series 1997-1 Certificate Owner's acquisition of a beneficial interest
therein), agrees to treat and to take no action inconsistent with the
treatment of the Series 1997-1 Certificates (or any beneficial interest
therein) as indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by
income. Each Series 1997-1 Holder agrees that it will cause any Series
1997-1 Certificate Owner acquiring an interest in a Series 1997-1
Certificate through it to comply with the Pooling and Servicing Agreement
as to treatment of the Series 1997-1 Certificates as indebtedness for
certain tax purposes.
To the extent not defined herein, capitalized terms used herein
have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Class B Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the
Class B Holder by virtue of the acceptance hereof assents and by which the
Class B Holder is bound.
This Class B Certificate represents an interest in only the First
NBC Credit Card Master Trust. This Class B Certificate does not represent
an obligation of, or an interest in, Transferor or Servicer, and neither
the Series 1997-1 Certificates nor the Accounts or Receivables are insured
or guaranteed by the Federal Deposit
Exhibit A-2, Page 2
<PAGE>
Insurance Corporation or (except for Receivables in Private Label Accounts)
any other governmental agency. This Series 1997-1 Certificate is limited in
right of payment to certain collections respecting the Receivables, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
Unless the certificate of authentication hereon has been executed
by or on behalf of Trustee, by manual signature, this Class B Certificate
shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
Exhibit A-2, Page 3
<PAGE>
IN WITNESS WHEREOF, First National Bank of Commerce has
caused this Class B Certificate to be duly executed under its official
seal.
By:____________________________
Authorized Officer
Attested to:
By:_______________________________
Assistant Secretary
Date:_____________________________
Exhibit A-2, Page 4
<PAGE>
Form of Trustee's Certificate of Authentication
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates, Series 1997-1, of the
First NBC Credit Card Master Trust referred to in the within-mentioned
Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:_______________________________________
Authorized Signatory
<PAGE>
EXHIBIT B
---------
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO TRUSTEE
FIRST NATIONAL BANK OF COMMERCE
FIRST NBC CREDIT CARD MASTER TRUST, SERIES 1997-1
MONTHLY PERIOD ENDING ______________, ____
As Agreed upon from time to time between
Servicer and Trustee
<PAGE>
EXHIBIT C
---------
FORM OF MONTHLY SERIES 1997-1
-----------------------------
HOLDERS' STATEMENT
--------------------------------
SERIES 1997-1
FIRST NATIONAL BANK OF COMMERCE
-----------------------------------
FIRST NBC CREDIT CARD MASTER TRUST
----------------------------------
<PAGE>
<PAGE>
FILED PURSUANT TO RULE NO. 424(b)(1)
REGISTRATION NO. 333-24023
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED JULY 23, 1997
$280,500,000
FIRST NBC CREDIT CARD MASTER TRUST
$259,500,000 CLASS A 6.15% ASSET BACKED CERTIFICATES, SERIES 1997-1
$21,000,000 CLASS B 6.35% ASSET BACKED CERTIFICATES, SERIES 1997-1
FIRST NATIONAL BANK OF COMMERCE
TRANSFEROR AND SERVICER
--------------
Each Class A 6.15% Asset Backed Certificate, Series 1997-1 (collectively,
the "Class A Certificates") and each Class B 6.35% Asset Backed Certificate,
Series 1997-1 (collectively, the "Class B Certificates" and, together with the
Class A Certificates, the "Certificates") will represent the right to receive
certain payments from the First NBC Credit Card Master Trust, created pursuant
to a Pooling and Servicing Agreement between First National Bank of Commerce
("First NBC" or the "Bank"), as transferor and servicer, and The First
National Bank of Chicago, as trustee. Certain capitalized terms used in this
Prospectus Supplement are defined elsewhere in this Prospectus Supplement and
the accompanying Prospectus. Please refer to the "Index of Defined Terms for
Prospectus Supplement" on page S-48 and the "Index of Defined Terms for
Prospectus" on page 75 for a listing of the pages on which such terms are
defined.
(continued on next page)
--------------
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE CERTIFICATES, AND THERE IS NO
ASSURANCE THAT ONE WILL DEVELOP OR, IF ONE DOES, THAT IT WILL CONTINUE UNTIL
THE CERTIFICATES ARE PAID IN FULL. POTENTIAL INVESTORS SHOULD CONSIDER, AMONG
OTHER THINGS, THE INFORMATION SET FORTH IN "RISK FACTORS" COMMENCING ON PAGE
S-16 HEREIN AND PAGE 23 IN THE PROSPECTUS.
--------------
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF FIRST NBC OR ANY AFFILIATE THEREOF. A
CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE CERTIFICATES NOR THE
UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR (EXCEPT FOR RECEIVABLES ARISING
IN PRIVATE LABEL ACCOUNTS, WHICH REPRESENTED 1.23% OF THE RECEIVABLES
AS OF THE CUT-OFF DATE) ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COM-
MISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT TRANSFEROR(1)(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Certificate............... 99.875000% 0.315% 99.560000%
- ------------------------------------------------------------------------------------
Per Class B Certificate............... 99.984375% 0.365% 99.619375%
- ------------------------------------------------------------------------------------
Total................................. $280,172,343.75 $894,075 $279,278,268.75
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, at the Class A Rate or the Class B Rate, as
applicable, from August 7, 1997.
(2) Before deduction of expenses estimated to be $750,000.
--------------
The Certificates are offered by the Underwriters and First NBC when, as and
if issued by the Trust and accepted by the Underwriters and First NBC and
subject to the Underwriters' right to reject orders in whole or in part. It is
expected that the Certificates will be delivered in book-entry form on or
about August 7, 1997, through the facilities of The Depository Trust Company,
Cedel Bank, societe anonyme, and the Euroclear System.
--------------
UNDERWRITERS OF THE CLASS A CERTIFICATES
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
UNDERWRITER OF THE CLASS B CERTIFICATES
MERRILL LYNCH & CO.
--------------
The Date of this Prospectus Supplement is July 31, 1997
<PAGE>
(continued from previous page)
The property of the Trust includes receivables (the "Receivables") generated
from time to time in a portfolio of MasterCard(R), VISA(R) and private label
revolving credit card accounts (the "Accounts"), all monies due or to become
due in payment of the Receivables, all proceeds of the Receivables and
proceeds of credit insurance policies relating to the Receivables, all monies
in certain bank accounts of the Trust and certain other property as described
herein. In addition, the Collateral Interest will be issued in the initial
amount of $19,500,000 and will be subordinated to the Certificates as
described herein. First NBC will initially own the remaining undivided
interest in the Trust not represented by the Certificates, the Collateral
Interest and other interests issued by the Trust from time to time and will
initially service the Receivables. First NBC may from time to time offer other
Series of certificates that evidence undivided interests in certain assets of
the Trust, which may have terms significantly different from the Certificates.
Interest will accrue on the Class A Certificates from August 7, 1997 (the
"Closing Date") at the rate of 6.15% per annum (the "Class A Rate"). Interest
will accrue on the Class B Certificates from the Closing Date at the rate of
6.35% per annum (the "Class B Rate"). Interest with respect to the
Certificates will be distributed on September 15, 1997 and on the 15th day of
each month thereafter (or, if such 15th day is not a business day, the next
succeeding business day) (each, a "Distribution Date"). Principal on the Class
A Certificates is scheduled to be distributed on the August 2002 Distribution
Date (the "Class A Scheduled Payment Date"), but may be paid earlier or later
under the circumstances described herein. Principal on the Class B
Certificates is scheduled to be distributed on the September 2002 Distribution
Date (the "Class B Scheduled Payment Date"), but may be paid earlier or later
under the circumstances described herein. See "Maturity Assumptions."
The Class B Certificates will be subordinated to the Class A Certificates,
and the Collateral Interest will be subordinated to the Class A Certificates
and the Class B Certificates, as described herein.
First NBC does not intend to list the Certificates on any securities exchange.
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CERTIFICATES,
INCLUDING OVER-ALLOTMENT TRANSACTIONS, STABILIZING TRANSACTIONS, SYNDICATE
COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
----------------
The Certificates offered hereby constitute a separate Series of certificates
being offered by the Trust from time to time pursuant to its Prospectus dated
July 23, 1997. This Prospectus Supplement does not contain complete
information about the offering of the Certificates. Additional information is
contained in the Prospectus and purchasers are urged to read both this
Prospectus Supplement and the Prospectus in full. Sales of the Certificates
may not be consummated unless the purchaser has received both this Prospectus
Supplement and the Prospectus.
S-2
<PAGE>
SUMMARY OF TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Certain capitalized terms used in this summary are
defined elsewhere in this Prospectus Supplement and the accompanying
Prospectus. A listing of the pages on which all such terms are defined is found
in the "Index of Defined Terms for Prospectus Supplement" on page S-48 and the
"Index of Defined Terms for Prospectus" on page 75.
THE TRUST................... The First NBC Credit Card Master Trust.
TITLE OF SECURITIES ........ $259,500,000 Class A 6.15% Asset Backed
Certificates, Series 1997-1 (the "Class A
Certificates") and $21,000,000 Class B 6.35%
Asset Backed Certificates, Series 1997-1 (the
"Class B Certificates," and together with the
Class A Certificates, the "Certificates").
CLASS A RATE................ 6.15% per annum.
CLASS B RATE................ 6.35% per annum.
DISTRIBUTION DATES.......... The 15th day of each month (or, if any such day
is not a business day, the next succeeding
business day), commencing on September 15, 1997.
CLASS A SCHEDULED PAYMENT The August, 2002 Distribution Date.
DATE........................
CLASS B SCHEDULED PAYMENT The September, 2002 Distribution Date.
DATE........................
CLOSING DATE................ August 7, 1997.
CREDIT ENHANCEMENT.......... For the Class A Certificates, the subordination
of the Collateral Interest (in an initial amount
of $19,500,000, 6.5% of the initial Investor
Interest) and the Class B Certificates, as
described herein. For the Class B Certificates,
the subordination of the Collateral Interest, as
described herein.
CLASS STRUCTURE............. The Class A and Class B Certificates differ in
terms of priorities and are expected to differ
in terms of ratings. The Class B Certificates
are subordinated to the Class A Certificates to
the extent described herein in order to provide
credit enhancement for the Class A Certificates.
The Collateral Interest (which is not offered
hereby) is subordinated to both the Class A and
the Class B Certificates to the extent described
herein in order to provide credit enhancement.
(See "Description of Certificates--
Subordination" and "--Application of
Collections.") See "Risk Factors--Possible
Losses on Class B Certificates as a Result of
Subordination" herein for a discussion of the
risks associated with purchasing certificates of
a subordinated class. Also see "Class A
Certificate Rating" and "Class B Certificate
Rating" below in this Summary of Terms.
CERTIFICATE INTEREST AND Each of the Certificates offered hereby
PRINCIPAL .................. represents the right to receive certain payments
from the assets of the Trust. The Trust's assets
will be allocated among the Class A Holders (the
"Class A Investor Interest"), the Class B
Holders (the "Class B Investor Interest"), the
Collateral Interest Holder (the "Collateral
Interest," and together with the Class A
Investor Interest and the Class B Investor
Interest, the "Investor Interest"), the interest
of
S-3
<PAGE>
the holders of other undivided interests in the
Trust issued pursuant to the Agreement and
applicable Series Supplements and the Transferor
(the "Transferor Interest"), as described below.
As used in this Prospectus Supplement, the term
"Holders" refers to holders of the Certificates,
the term "Class A Holders" refers to holders of
the Class A Certificates, the term "Class B
Holders" refers to holders of the Class B
Certificates, the term "Collateral Interest
Holder" refers to the holder of the Collateral
Interest and the term "Agreement" (unless the
context requires otherwise) refers to the
Agreement as supplemented by the Series 1997-1
Supplement pursuant to which the Certificates
are issued (the "Series 1997-1 Supplement").
The Class A Certificates will represent the right
to receive from the assets of the Trust
allocated to the Class A Certificates funds up
to (but not in excess of) the amounts required
to make (a) payments of interest accruing from
the Closing Date through September 14, 1997, and
with respect to each Interest Period thereafter,
at the Class A Rate and (b) payments of
principal on the Class A Scheduled Payment Date
or, under certain limited circumstances, during
the Rapid Amortization Period, to the extent of
the Class A Investor Interest, which may be less
than the unpaid principal balance of the Class A
Certificates in certain circumstances described
herein.
The Class B Certificates will represent the right
to receive, from the assets of the Trust
allocated to the Class B Certificates, funds up
to (but not in excess of) the amounts required
to make (a) payments of interest accruing from
the Closing Date through September 14, 1997 and
with respect to each Interest Period thereafter,
at the Class B Rate and (b) payments of
principal on the Class B Scheduled Payment Date
or, under certain limited circumstances, during
the Rapid Amortization Period, to the extent of
the Class B Investor Interest, which may be less
than the unpaid principal balance of the Class B
Certificates in certain circumstances described
herein. No principal will be paid to the Class B
Holders until the Class A Investor Interest is
paid in full.
The aggregate principal amount of the Class A
Investor Interest and the Class B Investor
Interest will, except as otherwise provided
herein, remain fixed at $259,500,000 and
$21,000,000, respectively. The Class A Investor
Interest will decline in certain circumstances
if the Investor Default Amounts allocated to the
Class A Certificates exceed funds allocable
thereto as described herein and the Class B
Investor Interest and the Collateral Interest
are zero. The Class B Investor Interest will
decline in certain circumstances as a result of
(a) the reallocation of collections of Principal
Receivables otherwise allocable to the Class B
Investor Interest to fund certain payments in
respect of the Class A Certificates and (b) the
allocation to the Class B Investor Interest of
certain Investor Default Amounts, including such
amounts
S-4
<PAGE>
otherwise allocable to the Class A Investor
Interest when the Collateral Interest is zero.
During the Controlled Accumulation Period, for
the sole purpose of allocating collections of
Finance Charge Receivables, Net Default Amounts
and Net Recoveries with respect to each Monthly
Period, the Class A Investor Interest will be
further reduced by the amount on deposit in the
Principal Funding Account from time to time (as
so reduced, the "Class A Adjusted Investor
Interest" and together with the Class B Investor
Interest and the Collateral Interest, the
"Adjusted Investor Interest").
The Class A Certificates, the Class B
Certificates and the Collateral Interest will
each include the right to receive (but only to
the extent needed to make required payments
under the Agreement and subject to any
reallocation of such amounts as described
herein) varying percentages of collections of
Finance Charge Receivables (subject to
reallocation of Group Investor Finance Charge
Collections to other Series in Group I, as
described under "Description of the
Certificates--Reallocations Among Certificates
in Different Series within a Reallocation Group"
in the Prospectus) and Principal Receivables and
will be allocated varying percentages of Net
Default Amounts and Net Recoveries during each
calendar month (a "Monthly Period"). Collections
of Finance Charge Receivables, Net Default
Amounts and Net Recoveries at all times, and
collections of Principal Receivables during the
Revolving Period, will be allocated to the
Investor Interest based on the Floating Investor
Percentage and will be further allocated among
the Class A Investor Interest, the Class B
Investor Interest and the Collateral Interest
based on the Class A Floating Allocation, the
Class B Floating Allocation and the Collateral
Floating Allocation, respectively, applicable
during the related Monthly Period. Collections
of Principal Receivables during the Controlled
Accumulation Period and the Rapid Amortization
Period will be allocated to the Investor
Interest based on the Fixed Investor Percentage
and will be further allocated among the Class A
Investor Interest, the Class B Investor Interest
and the Collateral Interest based on the Class A
Fixed Allocation, the Class B Fixed Allocation
and the Collateral Fixed Allocation,
respectively. See "Description of the
Certificates--Allocation Percentages" and "--Pay
Out Events" herein and "Description of the
Certificates--Pay Out Events" in the Prospectus.
The final distribution of principal and interest
on the Certificates will be made no later than
the September, 2004 Distribution Date in the
manner provided in "Description of the
Certificates--Final Payment of Principal;
Termination" in the Prospectus. Series 1997-1
will terminate on the earliest to occur of (a)
the Distribution Date on which the Investor
Interest is paid in full, (b) the September,
2004 Distribution Date or (c) the Trust
Termination Date (such earliest to occur, the
"Series 1997-1
S-5
<PAGE>
Termination Date"). After the Series 1997-1
Termination Date, no further principal or
interest payments will be made on the
Certificates (except as described in
"Description of the Certificates--Final Payment
of Principal; Termination" in the Prospectus).
OTHER SERIES ............... The Certificates will be the first Series of
investor certificates issued by the Trust.
RECEIVABLES ................ The Receivables arise in Accounts in the Bank
Portfolio that satisfied the eligibility
criteria set forth in the Agreement as of the
Cut-Off Date. The Receivables consist of
Principal Receivables and Finance Charge
Receivables. In addition, certain amounts of
Interchange and Other Account Revenues
attributed to the Accounts will be allocated to
the Certificates and treated as Finance Charge
Receivables. See "First NBC's Credit Card
Activities--Interchange and Other Account
Revenues" in the Prospectus.
The aggregate amount of Receivables in the
Accounts as of the beginning of the day on May
1, 1997 was $814,353,580, comprised of
$802,881,646 of Principal Receivables and
$11,471,934 of Finance Charge Receivables. The
amount of Finance Charge Receivables will not
affect the amount of the Investor Interest
represented by the Certificates and the
Collateral Interest or the amount of the
Transferor Interest, all of which are determined
on the basis of the amount of Principal
Receivables in the Trust. The aggregate amount
of Principal Receivables in the Trust evidenced
by the Certificates and the Collateral Interest
will never exceed the amount of the Investor
Interest regardless of the total amount of
Principal Receivables in the Trust at any time.
DENOMINATIONS .............. Beneficial interests in the Certificates will be
offered for purchase in denominations of $1,000
and integral multiples thereof.
REGISTRATION OF The Certificates initially will be represented by
CERTIFICATES ............... Certificates registered in the name of Cede, as
the nominee of DTC. No Certificate Owner will be
entitled to receive a Definitive Certificate,
except under the limited circumstances described
herein. Holders may elect to hold their
Certificates through DTC (in the United States)
or Cedel or Euroclear (in Europe). Transfers
will be made in accordance with the rules and
operating procedures described herein. See
"Description of the Certificates--Definitive
Certificates" in the Prospectus.
SERVICING FEE .............. The Servicer will receive a monthly fee as
servicing compensation from the Trust on each
Transfer Date. The Servicing Fee Rate for the
Certificates will be 2% (the "Servicing Fee
Rate"). On each Transfer Date, Servicer
Interchange with respect to the related Monthly
Period that is on deposit in the Finance Charge
Account will be withdrawn from the Finance
Charge Account and paid to the Servicer in
respect of the Monthly Investor Servicing Fee.
In addition, the Class A Servicing Fee, the
Class B Servicing Fee
S-6
<PAGE>
and the Collateral Interest Servicing Fee will
be paid on each Transfer Date as described under
"Description of the Certificates--Servicing
Compensation and Payment of Expenses." See also
"Description of the Certificates--Servicing
Compensation and Payment of Expenses" in the
Prospectus.
REVOLVING PERIOD............ The "Revolving Period" for the Certificates means
the period from and including the Closing Date
to, but not including, the commencement of the
earlier of (a) the Controlled Accumulation
Period and (b) the Rapid Amortization Period.
During the Revolving Period, Available Investor
Principal Collections otherwise allocable to the
Investor Interest will, subject to certain
limitations and unless a reduction in the
Required Collateral Interest has occurred, be
treated as Shared Principal Collections and
allocated to the holders of certificates of
other Principal Sharing Series issued and
outstanding or, subject to certain limitations,
paid to the Transferor or deposited into the
Excess Funding Account. See "Description of the
Certificates--Principal Payments." See
"Description of the Certificates--Pay Out
Events" for a discussion of the events which
might lead to the termination of the Revolving
Period prior to the commencement of the
Controlled Accumulation Period.
CONTROLLED ACCUMULATION Unless a Pay Out Event occurs, the controlled
PERIOD...................... accumulation period for the Certificates (the
"Controlled Accumulation Period") is scheduled
to begin at the close of business on July 31,
2001. Subject to the conditions set forth under
"Description of the Certificates--Postponement
of Controlled Accumulation Period," the day on
which the Revolving Period ends and
the Controlled Accumulation Period begins may be
delayed to not later than the close of business
on June 30, 2002. The Controlled Accumulation
Period will end on the earliest of (i) the
commencement of the Rapid Amortization Period,
(ii) payment of the Investor Interest in full
and (iii) the Series 1997-1 Termination Date.
During the Controlled Accumulation Period, prior
to the payment of the Class A Investor Interest
in full, amounts equal to the least of (a)
Available Investor Principal Collections for the
related Monthly Period, (b) the sum of the
Controlled Accumulation Amount for such Monthly
Period and any portion of the Controlled
Accumulation Amount for any prior Monthly Period
that has not yet been deposited (such sum, the
"Controlled Deposit Amount" for such Monthly
Period) and (c) the Class A Adjusted Investor
Interest on such Transfer Date will be deposited
monthly in a trust account established by the
Trustee (the "Principal Funding Account") on
each Transfer Date beginning with the Transfer
Date in the month following the month in which
the Controlled Accumulation Period begins until
the Principal Funding Account Balance is equal
to the Class A Investor Interest. On each
Transfer Date during the Controlled Accumulation
Period beginning with the Transfer Date after
the one on which the Class A Investor Interest
has been provided for, an amount equal to the
S-7
<PAGE>
lesser of (a) Available Investor Principal
Collections for the related Monthly Period (less
any amount allocated to the Class A Investor
Interest as described in the prior sentence) and
(b) the Class B Investor Interest on such
Transfer Date will be deposited into the
Distribution Account for distribution to the
Class B Holders until the Class B Investor
Interest has been paid in full. If, for any
Monthly Period, the Available Investor Principal
Collections for such Monthly Period exceed the
sum of the Class A Monthly Principal and the
Class B Monthly Principal for the related
Transfer Date, the amount of such excess will be
first paid to the Collateral Interest Holder to
the extent that the Collateral Interest exceeds
the Required Collateral Interest and then will
be treated as Shared Principal Collections and
allocated to the holders of certificates of
other Principal Sharing Series or, subject to
certain limitations, paid to the Transferor or
deposited into the Excess Funding Account. See
"Description of the Certificates--Application of
Collections." Also see "Prospectus Summary--
Controlled Accumulation Period" in the
Prospectus for a general description of the
purpose of this feature and its effect on
Certificateholders.
Unless a Pay Out Event occurs, prior to the
payment of the Class A Investor Interest in
full, all funds on deposit in the Principal
Funding Account will be invested at the
direction of the Servicer by the Trustee in
certain Permitted Investments. Investment
earnings (net of investment losses and expenses)
on funds on deposit in the Principal Funding
Account (the "Principal Funding Investment
Proceeds") during the Controlled Accumulation
Period will be used to pay interest on the Class
A Certificates in an amount up to, for each
Transfer Date, the product of (a) one-twelfth,
(b) the Class A Rate and (c) the Principal
Funding Account Balance as of the Record Date
preceding such Transfer Date (the "Class A
Covered Amount"). If, for any Transfer Date, the
Principal Funding Investment Proceeds are less
than the Class A Covered Amount, the amount of
such deficiency (the "Class A Principal Funding
Investment Shortfall") shall be paid, to the
extent available, from the Reserve Account and,
if necessary, from Excess Spread and Reallocated
Principal Collections.
Funds on deposit in the Principal Funding Account
will be available to pay the Class A Holders in
respect of the Class A Investor Interest on the
Class A Scheduled Payment Date. If the aggregate
principal amount of deposits made to the
Principal Funding Account is insufficient to pay
the Class A Investor Interest in full on the
Class A Scheduled Payment Date, the Rapid
Amortization Period will commence. Although it
is anticipated that during the Controlled
Accumulation Period prior to the payment of the
Class A Investor Interest in full, funds will be
deposited in the Principal Funding Account in an
amount equal to the applicable Controlled
Deposit Amount on each Transfer Date and that
scheduled principal will be available for
distribution to the Class A Holders
S-8
<PAGE>
on the Class A Scheduled Payment Date, no
assurance can be given in that regard. See
"Maturity Assumptions" in the Prospectus and
herein.
On the Class B Scheduled Payment Date, provided
that the Class A Investor Interest is paid in
full on the Class A Scheduled Payment Date and
the Rapid Amortization Period has not commenced,
Available Investor Principal Collections will be
used to pay the Class B Holders in respect of
the Class B Investor Interest as described
herein. If the Available Investor Principal
Collections are insufficient to pay the Class B
Investor Interest in full on the Class B
Scheduled Payment Date, the Rapid Amortization
Period will commence. Although it is anticipated
that scheduled principal will be available for
distribution to the Class B Holders on the Class
B Scheduled Payment Date, no assurance can be
given in that regard. See "Maturity Assumptions"
in the Prospectus and herein.
If a Pay Out Event occurs during the Controlled
Accumulation Period, the Rapid Amortization
Period will commence, and any amounts on deposit
in the Principal Funding Account will be paid to
the Class A Holders on the Distribution Date in
the month following the commencement of the
Rapid Amortization Period.
Other Series offered by the Trust may or may not
have amortization or accumulation periods like
the Controlled Accumulation Period for the
Certificates, and such periods may have
different lengths and begin on different dates
than such Controlled Accumulation Period. Thus,
certain Series may be in their revolving periods
while others are in periods during which
collections of Principal
Receivables are distributed to or held for the
benefit of certificateholders of such other
Series. In addition, other Series may allocate
Principal Receivables based upon different
investor percentages. See "Description of the
Certificates--Exchanges" in the Prospectus for a
discussion of the potential terms of any other
Series.
RAPID AMORTIZATION PERIOD... During the period from the day on which a Pay Out
Event has occurred and ending on the earlier of
(a) the payment of the Investor Interest in
full, (b) the Series 1997-1 Termination Date and
(c) the Trust Termination Date (the "Rapid
Amortization Period"), Available Investor
Principal Collections will be distributed
monthly on each Distribution Date to the Class A
Holders and, following payment of the Class A
Investor Interest in full, to the Class B
Holders and, following payment of the Class B
Investor Interest in full, to the Collateral
Interest Holder beginning with the Distribution
Date in the month following the commencement of
the Rapid Amortization Period. See "Description
of the Certificates--Pay Out Events" for a
discussion of the events which might lead to the
commencement
S-9
<PAGE>
of the Rapid Amortization Period and "Prospectus
Summary-- Rapid Amortization Period" in the
Prospectus for a general discussion of the
purpose and effect on Certificateholders of this
feature.
SUBORDINATION OF THE CLASS
B CERTIFICATES AND THE
COLLATERAL INTEREST........
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 as described herein.
In addition, the Collateral Interest will be
subordinated to the extent necessary to fund
certain payments with respect to the Class B
Certificates. If the Class B Investor Interest
and the Collateral Interest are reduced to zero,
the Class A Holders will bear directly the
credit and other risks associated with their
interest in the Trust. If the Collateral
Interest is reduced to zero, the Class B Holders
will bear directly the credit and other risks
associated with their interest in the Trust. To
the extent the Class B Investor Interest is
reduced, the percentage of collections of
Finance Charge Receivables allocable to the
Class B Holders in subsequent Monthly Periods
will be reduced. Such reductions of the Class B
Investor Interest will thereafter be reimbursed
and the Class B Investor Interest increased on
each Transfer Date by the amount, if any, of
Excess Spread for such Transfer Date available
for that purpose. To the extent the amount of
such reduction in the Class B Investor Interest
is not reimbursed, the amount of principal and
interest distributable to the Class B Holders
will be reduced. See "Description of the
Certificates--Subordination."
ADDITIONAL AMOUNTS
AVAILABLE TO HOLDERS.......
With respect to any Transfer Date, Excess Spread
will be applied to fund the Class A Required
Amount and the Class B Required Amount, if any.
The "Class A Required Amount" means the amount,
if any, by which the sum of (a) the Class A
Monthly Interest due on the related Distribution
Date and any overdue Class A Monthly Interest
and Class A Additional Interest thereon, (b) the
Class A Servicing Fee for the related Monthly
Period and any overdue Class A Servicing Fee 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. The "Class B Required Amount" means the
amount, if any, equal to the sum of (a) the
amount, if any, by which the sum of (i) Class B
Monthly Interest due on the related Distribution
Date and any overdue Class B Monthly Interest
and Class B Additional Interest thereon and (ii)
the Class B Servicing Fee for the related
Monthly Period and any overdue Class B Servicing
Fee 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. The "Required Amount" for any
Monthly Period means the sum of the Class A
Required Amount and the Class B
S-10
<PAGE>
Required Amount for such Monthly Period. "Excess
Spread" for any Transfer Date will equal the sum
of (1) the excess of (A) Class A Available Funds
for the related Monthly Period over (B) the sum
of the amounts referred to in clauses (a), (b)
and (c) in the definition of "Class A Required
Amount" above, (2) the excess of (A) Class B
Available Funds for the related Monthly Period
over (B) the sum of the amounts referred to in
clauses (a)(i) and (a)(ii) in the definition of
"Class B Required Amount" above, (3) Collateral
Available Funds for the related Monthly Period
not used under certain circumstances to pay the
Collateral Interest Servicing Fee, as described
herein and (4) Excess Finance Charge Collections
allocated to the Investor Interest.
If, on any Transfer Date, Excess Spread is less
than the Class A Required Amount, then
Reallocated Principal Collections allocable
first to the Collateral Interest and then to the
Class B Investor Interest with respect to the
related Monthly Period will be used to fund the
remaining Class A Required Amount. If
Reallocated Principal Collections with respect
to such Monthly Period are insufficient to fund
the remaining Class A Required Amount for the
related Transfer Date, 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 deficiency
(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 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 such reductions in the
Collateral Interest and the Class B Investor
Interest with respect to such Monthly Period)
(such reduction, a "Class A Investor Charge-
Off"). If the Collateral Interest and the Class
B Investor Interest are reduced to zero, the
Class A Holders will bear directly the credit
and other risks associated with their undivided
interest in the Trust. See "Description of the
Certificates--Reallocation of Cash Flows" and
"--Defaulted Receivables; Investor Charge-Offs."
S-11
<PAGE>
If, on any Transfer Date, Excess Spread not
required to pay the Class A Required Amount and
to reimburse Class A Investor Charge-Offs is
less than the Class B Required Amount, then
Reallocated Principal Collections allocable to
the Collateral Interest for the related Monthly
Period not required to pay the Class A Required
Amount will be allocated to fund the remaining
Class B Required Amount. If such remaining
Reallocated Principal Collections allocable to
the Collateral Interest with respect to such
Monthly Period are insufficient to fund the
remaining Class B Required Amount for the
related Transfer Date, then the Collateral
Interest (after giving effect to reductions for
any Collateral Charge-Offs, Reallocated
Principal Collections and any adjustments made
thereto for the benefit of the Class A Holders)
will be reduced by the amount of such deficiency
(but not by more than the Class B Investor
Default Amount for such Monthly Period). If 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 by more than the
excess, if any, of the Class B Investor Default
Amount for such Monthly Period over such
reduction in the Collateral Interest with
respect to such Monthly Period) (such reduction,
a "Class B Investor Charge-Off"). In the event
of a reduction of the Class A Investor Interest,
the Class B Investor Interest or the Collateral
Interest, the amount of principal and interest
available to fund payments with respect to the
Class A Certificates and the Class B
Certificates will be decreased. See "Description
of the Certificates--Reallocation of Cash Flows"
and "--Defaulted Receivables; Investor Charge-
Offs."
REQUIRED COLLATERAL The "Required Collateral Interest" with respect
INTEREST.................... to any Transfer Date means (a) initially,
$19,500,000 (the "Initial Collateral Interest")
and (b) on any Transfer Date thereafter, an
amount equal to 6.5% 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 $9,000,000;
provided, however, (i) that if certain
reductions in the Collateral Interest occur 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;
(ii) 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 (iii) the
Required Collateral Interest may be reduced at
any time to a lesser amount if the Rating Agency
S-12
<PAGE>
Condition is satisfied. See "Description of the
Certificates--Required Collateral Interest."
If on any Transfer Date, the Collateral Interest
is less than the Required Collateral Interest,
certain Excess Spread amounts, if available,
will be used to increase the Collateral Interest
to the extent of such shortfall. If on any
Transfer Date the Collateral Interest equals or
exceeds the Required Collateral Interest, any
such Excess Spread amounts will first be
deposited into the Reserve Account as described
herein and second, to the extent available, be
applied in accordance with the Loan Agreement
among the Trustee, the Transferor, the Servicer
and the Collateral Interest Holder (the "Loan
Agreement") and will not be available to the
Holders.
REALLOCATED INVESTOR
FINANCE CHARGE
COLLECTIONS................
Series 1997-1 will be the first Series issued by
the Trust in a Group ("Group I") constituting a
Reallocation Group. Collections of Finance
Charge Receivables allocable to the investor
certificates of each Series in Group I will be
aggregated and made available for certain
required distributions to all Series in Group I
pro rata based upon the relative amount of such
required distributions for each Series in Group
I as described under "Description of the
Certificates--Reallocations Among Certificates
of Different Series within a Reallocation Group"
in the Prospectus. Consequently, any issuance of
a new Series in Group I may have the effect of
reducing or increasing the amount of collections
of Finance Charge Receivables allocable to the
Series 1997-1 Certificates. See "Risk Factors--
Possible Prepayment or Losses as a Result of
Issuance of New Series; Groups" in the
Prospectus. In addition, it has not been
determined whether any Series issued by the
Trust in the future will be included in Group I.
SHARED EXCESS FINANCE
CHARGE COLLECTIONS.........
Each Series in Group I, including Series 1997-1,
will be an Excess Allocation Series. See
"Description of the Certificates--Shared Excess
Finance Charge Collections."
PAIRED SERIES............... Series 1997-1 may be paired with one or more
other Series (each a "Paired Series"). If a
Paired Series is issued with respect to Series
1997-1, following the issuance of such Paired
Series, as the Adjusted Invested Amount is
reduced, the investor interest of the Paired
Series may increase by an equal amount. This
will have the effect of increasing the investor
interest of the Paired Series by an amount that
otherwise would have increased the Transferor
Interest. If a Pay Out Event occurs with respect
to any such Paired Series prior to the payment
in full of the Certificates, the percentages
used to determine the share of collections of
Principal Receivables allocable to the
Certificates may be reduced, which may delay the
final payment of principal to the Holders. See
"Maturity Assumptions--Paired Series,"
"Description of the Certificates--Paired Series"
and "Description of the Certificates--Allocation
Percentages" herein.
S-13
<PAGE>
SHARED PRINCIPAL Series 1997-1 is a Principal Sharing Series. To
COLLECTIONS................. the extent that collections of Principal
Receivables allocated to the Investor Interest
are not needed to make payments on the Investor
Interest or to be deposited in the Principal
Funding Account, such collections ("Shared
Principal Collections") will be allocated to
cover certain principal payments due to or for
the benefit of certificateholders of other
Principal Sharing Series or, under certain
circumstances, paid to the Transferor or
deposited into the Excess Funding Account. Any
such reallocation or deposit will not result in
a reduction in the Investor Interest with
respect to Series 1997-1. In addition,
collections of Principal Receivables and certain
other amounts otherwise allocable to other
Principal Sharing Series, to the extent such
collections are not needed to make payments to
or deposits for the benefit of the
certificateholders of such other Series, may be
applied to cover principal payments due to or
for the benefit of the holders of the Class A
Certificates and the Class B Certificates or the
Collateral Interest Holder. See "Description of
the Certificates--Shared Principal Collections."
Also see "Prospectus Summary--Shared Principal
Collections" in the Prospectus for a general
discussion of the purpose and effect on
Certificateholders of this feature.
OPTIONAL REPURCHASE......... The Investor Interest will be subject to optional
repurchase by the Transferor on any Distribution
Date on or after the Distribution Date on which
the Investor Interest is reduced to an amount
less than or equal to $15,000,000 (5% of the
initial Investor Interest), if certain
conditions set forth in the Agreement are met.
The repurchase price will be equal to the sum of
the Investor Interest and all accrued and unpaid
interest on the Certificates and the Collateral
Interest through the day preceding the
Distribution Date on which the repurchase
occurs. See "Description of the Certificates--
Final Payment of Principal; Termination" in the
Prospectus.
TAX STATUS.................. Special Tax Counsel to the Transferor will opine
on the Closing Date that under existing law the
Certificates will be characterized as debt for
Federal income tax purposes and the Trust will
not be an association (or publicly traded
partnership) taxable as a corporation. Under the
Agreement, the Transferor, the Servicer, the
Holders and the Certificate Owners will agree to
treat the Certificates as debt for Federal,
state, local and foreign income and franchise
tax purposes. See "U.S. Federal Income Tax
Consequences" in the Prospectus for additional
information concerning the application of
Federal income tax laws.
ERISA CONSIDERATIONS........ Subject to considerations described below, the
Class A Certificates are eligible for purchase
by employee benefit plan investors. Under a
regulation issued by the Department of Labor,
the Trust's assets would not be deemed "plan
assets" of an employee benefit plan holding the
Class A Certificates if certain conditions are
met, including that the Class A Certificates
must be held, upon
S-14
<PAGE>
completion of the public offering made hereby,
by at least 100 investors who are independent of
the Transferor and of one another. At or before
the conclusion of the offering, the Underwriters
will notify the Transferor and the Trustee as to
whether or not the Class A Certificates will be
expected to be held by at least 100 separately
named persons at the conclusion of the offering,
although no assurances can be made and no
monitoring or other measures will be taken to
assure that the 100 separately named persons
criterion has been satisfied. The Transferor
anticipates that the other conditions of the
regulation will be met. If the Trust's assets
were deemed to be "plan assets" of an employee
benefit plan investor (e.g., if the 100
independent investor criterion is not
satisfied), violations of the "prohibited
transaction" rules of the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), could result and generate excise tax
and other liabilities under ERISA and section
4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), unless a statutory,
regulatory or administrative exemption is
available. It is uncertain whether existing
exemptions from the "prohibited transaction"
rules of ERISA would apply to all transactions
involving the Trust's assets. Accordingly,
fiduciaries or other persons contemplating
purchasing the Certificates on behalf or with
"plan assets" of any employee benefit plan
should consult their counsel before making a
purchase. See "ERISA Considerations" in the
Prospectus.
The Underwriters currently do not expect that
the Class B Certificates will be held by at
least 100 independent investors at the
conclusion of the offering and, therefore, do
not expect that such Class B Certificates will
qualify as publicly-offered securities under the
regulation referred to in the preceding
paragraph. Accordingly, the Class B Certificates
may not be acquired with plan assets of (a) any
employee benefit plan that is subject to ERISA,
or (b) any plan or other arrangement (including
an individual retirement account or Keogh plan)
that is subject to section 4975 of the Code. By
its acceptance of a Class B Certificate or an
interest therein, each Class B Holder and
Certificate Owner will be deemed to have
represented and warranted that it is not subject
to the foregoing limitation.
CLASS A CERTIFICATE RATING.. It is a condition to the issuance of the Class A
Certificates that they be rated in the highest
rating category by at least one Rating Agency.
The rating of the Class A Certificates is based
primarily on the value of the Receivables and
the terms of the Class B Certificates and the
benefits of the Collateral Interest.
CLASS B CERTIFICATE RATING.. It is a condition to the issuance of the Class B
Certificates that they be rated in one of the
three highest rating categories by at least one
Rating Agency. The rating of the Class B
Certificates is based primarily on the value of
the Receivables and the benefits of the
Collateral Interest.
S-15
<PAGE>
RISK FACTORS
Potential investors should consider among other things, the risk factors
discussed under "Risk Factors" in the Prospectus and the following risk
factors in connection with the purchase of the Certificates.
Possible Losses as a Result of Limited Amounts of Credit Enhancement.
Although Credit Enhancement with respect to the Class A Certificates will be
provided by the subordination of the Class B Certificates to the extent
described herein and by the Collateral Interest, and with respect to the Class
B Certificates, will be provided by the Collateral Interest, the amount
available thereunder is limited, may decline during the Controlled
Accumulation Period and will be reduced by payments made pursuant thereto. If
the Collateral Interest has been reduced to zero, Class B Certificateholders
will bear directly the credit and other risks associated with their undivided
interests in the Trust, and the Class B Investor Interest may be reduced. If
the Class B Investor Interest is reduced to zero, Class A Certificateholders
will bear directly the credit and other risks associated with their undivided
interest in the Trust, and the Class A Investor Interest may be reduced.
Further, in the event of a reduction of the Class B Investor Interest or the
Collateral Interest, the amount of principal and interest available to make
distributions with respect to the Class A Certificates and the Class B
Certificates may be reduced.
Possible Losses on Class B Certificates as a Result of Subordination. The
Class B Certificates are subordinated in right of payment of principal to the
Class A Certificates. Payments of principal in respect of the Class B
Certificates will not commence until after the final principal payment with
respect to the Class A Certificates has been made as described herein.
Moreover, the Class B Investor Interest is subject to reduction if the Class A
Required Amount for any Monthly Period is greater than zero and is not funded
from Excess Spread and Excess Finance Charge Collections allocated to Series
1997-1, Reallocated Principal Collections with respect to the Collateral
Interest and reductions in the Collateral Interest, if any. To the extent the
Class B Investor Interest is reduced, the percentage of collections of Finance
Charge Receivables allocable to the Class B Investor Interest in future
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 and interest distributable to the Class B Certificateholders will be
reduced. See "Description of the Certificates--Allocation Percentages" and "--
Subordination" herein.
Possible Prepayment or Losses as a Result of Increasing Credit Card Losses.
As set forth under "First NBC's Credit Card Portfolio--Delinquency and Loss
Experience" herein, losses and delinquencies in the Bank Portfolio have
increased in recent years. For instance, net charge-offs of receivables in the
Bank Portfolio for the years ended December 31, 1994, 1995 and 1996 were
1.59%, 2.05% and 2.94% of the average receivables outstanding during the
applicable year, and total delinquent receivables at December 31, 1994, 1995
and 1996 were 3.26%, 3.40% and 4.26% of the total receivables outstanding in
the Bank Portfolio. Based upon published reports such as the Moody's Investors
Service Credit Card Credit Indexes, First NBC understands that most domestic
credit card issuers have experienced increases in charge-offs and
delinquencies. Increasing losses and delinquencies in the Bank Portfolio may
result in the occurrence of a Pay Out Event and the commencement of the Rapid
Amortization Period. If losses reached a high enough level relative to the
yield on the Receivables, a Pay Out Event could occur, resulting in payments
to Certificateholders prior to the expected dates. In addition, if any
applicable Credit Enhancement is exhausted, Certificateholders will bear a
share of the losses on Receivables in the Trust, which could result in losses
to Certificateholders.
FIRST NBC'S CREDIT CARD PORTFOLIO
GENERAL
The Receivables to be conveyed to the Trust by First NBC pursuant to the
Agreement have been or will be generated from transactions made by holders of
selected VISA, MasterCard and private label credit card accounts, including
premium accounts and standard accounts, in the Bank Portfolio. A description
of the Bank's credit card business is contained in the Prospectus under the
heading "First NBC's Credit Card Activities."
S-16
<PAGE>
BILLING AND PAYMENTS
First NBC generates and mails to cardholders monthly statements summarizing
account activity and processes cardholder monthly payments at the end of each
Billing Cycle, generally within 3 business days after the cycle date assigned
to such account by the Servicer. Currently, the Servicer has ten Billing
Cycles within each calendar month. The monthly billing statement reflects all
purchases, cash advances, administrative charges, if applicable (such as
currency conversion charges, late charges, and returned payment charges),
annual fees, if any, credit life insurance charges and finance charges
incurred by the account during the Billing Cycle or a prior Billing Cycle and
reported to the Servicer, all payments or credits applicable to the account
and the outstanding balance of the account as of the cycle date, including the
available credit thereunder.
Customers receive a 25-day grace period on purchases. Currently, cardholders
in the programs included in the Trust Portfolio must make a monthly minimum
payment at least equal to the greater of (i) 2.5% or 10% (depending upon the
program) of the statement balance (excluding any disputed amounts) plus past
due amounts and (ii) a stated minimum payment (generally $10) plus past due
amounts.
The finance charges on purchases are assessed monthly and are calculated by
multiplying the account's average daily purchase balance times the applicable
annual periodic rate times the actual number of days in the applicable Billing
Cycle divided by 365. Finance charges are calculated on purchases from the
date of the purchase or the first day of the Billing Cycle in which the
purchase is posted to the account, whichever is later. Monthly periodic
finance charges are not assessed on purchases if all balances shown in the
billing statement are paid by the due date, which is 25 days after the billing
date. Finance charges are calculated on cash advances (including balance
transfers) from the date of the transaction. Currently, First NBC generally
treats the date before posting as the transaction date for cash advance
checks.
The Trust Portfolio includes fixed rate and variable rate credit card
accounts. Generally, fixed annual percentage rates range from 5.9% to 21.0%,
and variable rates range from prime plus 4.0% per annum to prime plus 8.4% per
annum. First NBC imposes no minimum finance charge. Certain accounts in the
Trust Portfolio may include a structure by which a portion of finance charges,
annual fees, cash advance fees or purchase volume are rebated to agent banks
or affinity groups.
A portion of the accounts require payment of annual fees (generally ranging
from $5.00 to $40.00), although under various marketing programs these fees
may be waived or rebated. First NBC also assesses late fees (generally $10.00
to $20.00), overlimit fees (generally $10.00 to $15.00) and returned check
charges (generally $15.00). First NBC assesses a cash advance fee, generally
2.5% of the cash advance amount, with a minimum fee of $2.50 and a maximum fee
of $20.00.
Payments in respect of the Accounts are processed by the FCSC (on behalf of
the Servicer) and are generally allocated at the end of the applicable Billing
Cycle to the outstanding balance of such Accounts in the following order: (i)
to fees assessed on the account, (ii) to finance charges, and (iii) to the
unpaid principal balance of purchases.
DELINQUENCY AND LOSS EXPERIENCE
An account is contractually delinquent if the minimum payment is not
received by the due date indicated on the customer's statement. An account may
be restricted for subsequent activity until the customer makes all past due
payments. Account restrictions may be instituted within a range of one to 40
days delinquency, based upon the customer's internal "behavioral score" and
credit bureau score. Generally, once a customer is four payments delinquent,
the account is permanently closed.
Efforts to collect contractually delinquent credit card receivables include
statement messages, telephone calls and formal collection letters. First NBC
updates monthly an internal "behavioral score", developed with Fair, Isaac and
Company, Inc., for each cardholder based upon payment and transaction history.
Each
S-17
<PAGE>
cardholder's credit bureau score, under a credit scoring model developed with
Fair, Isaac and Company, Inc., is also updated quarterly. The behavioral score
and the credit bureau score are used to prioritize accounts for initial
contact with the objective of contacting the highest risk and balance accounts
first. Accounts are worked continually at each stage of delinquency. Accounts
are charged off at 179 days delinquent, except for bankruptcy and deceased
losses, which are charged off within 45 days of notification. Charged off
accounts are placed with collection personnel at First NBC, outside collection
agencies or outside attorneys.
In First NBC's historical experience, delinquency and loss ratios for a
group of accounts opened at around the same time have peaked during the second
and third years after the accounts were opened and then dropped off
significantly thereafter. Although there can be no assurance that the
delinquency and loss experience for the Receivables in the future will be
similar to First NBC's historical experience, addition of a large number of
newly created Additional Accounts to the Trust Portfolio might be expected to
increase delinquency and loss ratios for the Trust Portfolio during the second
and third years after such addition of accounts.
The following tables set forth the delinquency and loss experience for each
of the periods shown for the Bank Portfolio of credit card accounts. The Bank
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 overall Bank Portfolio of credit card accounts. As
of the beginning of the day on May 1, 1997, the Receivables in the Trust
Portfolio represented approximately 98% of the Bank Portfolio. Because the
Trust Portfolio is only a portion of the Bank Portfolio, actual delinquency
and loss experience with respect to the Receivables may be different from that
set forth below for the Bank Portfolio. There can be no assurance that the
delinquency and loss experience for the Receivables in the future will be
similar to the historical experience of the Bank Portfolio set forth below.
DELINQUENCY EXPERIENCE
BANK PORTFOLIO(1)(2)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF APRIL 30 AS OF DECEMBER 31
----------------------------------- -----------------------------------------------------------------------
1997 1996 1996 1995 1994 1993
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
PERCENT- PERCENT- PERCENT- PERCENT- PERCENT- PERCENT-
AGE OF AGE OF AGE OF AGE OF AGE OF AGE OF
TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV-
ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding(3).... $830,994 $631,697 $828,812 $616,644 $425,983 $381,702
Receivables
Delinquent........
31-60 Days....... $ 12,332 1.48% $ 7,491 1.19% $ 13,685 1.65% $ 8,970 1.45% $ 6,073 1.43% $ 4,822 1.26%
61-90 Days....... $ 8,573 1.03% $ 4,524 .72% $ 8,484 1.02% $ 5,013 .81% $ 3,435 .81% $ 3,297 .86%
91-120 Days...... $ 5,079 .61% $ 3,874 .61% $ 5,998 .72% $ 3,516 .57% $ 2,209 .52% $ 1,793 .47%
121 Days Or More.. $ 7,572 .91% $ 4,227 .67% $ 7,111 .86% $ 3,484 .57% $ 2,169 .51% $ 1,874 .49%
-------- ---- -------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Total........... $ 33,556 4.04% $ 20,116 3.19% $ 35,278 4.26% $ 20,983 3.40% $ 13,886 3.26% $ 11,786 3.09%
======== ==== ======== ==== ======== ==== ======== ==== ======== ==== ======== ====
</TABLE>
(1) The above information is for First NBC's First BankCard Division only.
Amounts have not been restated for acquisitions of portfolios from the
Corporation's acquired banks which were accounted for as poolings-of-
interests.
(2) The above information includes the Private Label Accounts. Balances in the
Private Label Accounts are charged back to USAF at 90 days past due. The
balances in such accounts and the related delinquencies at April 30, 1997
and 1996, respectively, were: $10,224,531 outstanding, 6.56% delinquent;
and $4,022,733 outstanding, 6.39% delinquent; and at December 31, 1996,
1995, 1994 and 1993, respectively, were; $9,097,339 outstanding, 8.02%
delinquent; $2,179,667 outstanding, 8.55% delinquent; $1,471,198
outstanding, 11.60% delinquent; and $1,540,102 outstanding, 8.89%
delinquent.
(3) 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.
S-18
<PAGE>
LOSS EXPERIENCE(1)(2)
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOUR MONTHS ENDED APRIL 30 YEAR ENDED DECEMBER 31
----------------------------------- -----------------------------------------------------------------------
1997 1996 1996 1995 1994 1993
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
PERCENT- PERCENT- PERCENT- PERCENT- PERCENT- PERCENT-
AGE OF AGE OF AGE OF AGE OF AGE OF AGE OF
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV- RECEIV-
ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES ABLES
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average
Receivables
Outstanding(3).. $823,067 $615,555 $680,557 $444,393 $374,209 $362,449
Gross Charge-
Offs(4)........ $ 13,347 4.93% $ 6,111 3.00% $ 23,664 3.48% $ 11,970 2.69% $ 8,511 2.27% $ 8,824 2.43%
Recoveries...... -1,385 .51% -1,192 .59% -3,629 .54% -2,882 .64% -2,568 .69% -2,144 .59%
-------- ---- -------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Net Charge-Offs.. $ 11,962 4.42% $ 4,919 2.41% $ 20,035 2.94% $ 9,088 2.05% $ 5,943 1.59% $ 6,680 1.84%
======== ==== ======== ==== ======== ==== ======== ==== ======== ==== ======== ====
</TABLE>
- -------
(1) The above information is for First NBC's First BankCard Division only.
Amounts have not been restated for acquisitions of portfolios from the
Corporation's acquired banks which were accounted for as poolings-of-
interests.
(2) Interest and fees on charged off accounts are reversed from finance charge
revenues and fee income accounts, respectively, and are not included in
charge-offs.
(3) Average Receivables Outstanding is the average of the daily receivable
balance during the period indicated.
(4) 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.
INTERCHANGE AND OTHER ACCOUNT REVENUES
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. For administrative
convenience, the Transferor may exclude from the calculation of Interchange
certain interchange received from merchants for whom First NBC acts as the
MasterCard or VISA clearing bank. Interchange arising under the Accounts will
be allocated to the Certificates on the basis of the percentage equivalent of
the ratio of (i) the Floating Investor Percentage of cardholder charges for
goods and services in the Accounts to (ii) the total amount of cardholder
charges for goods and services in the MasterCard and VISA credit card accounts
owned by First NBC, as 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 herein, Interchange will be used to
pay a portion of the Monthly Investor Servicing Fee required to be paid on
each Transfer Date. See "Description of the Certificates--Servicing
Compensation and Payment of Expenses" herein and "First NBC's Credit Card
Activities--Interchange" in the Prospectus.
The Transferor will also be required, pursuant to the terms of the
Agreement, to transfer to the Trust, for the benefit of the Certificates, a
percentage of the Other Account Revenues (which presently consist of
advertising revenues and experience-based rebates of credit insurance
premiums). The amount of Other Account Revenues to be so included shall be
equal to the portion of the revenues in each applicable category for the
entire Bank Portfolio that is allocable to the Accounts, as determined by
Transferor using any reasonable method, multiplied by the Floating Investor
Percentage.
S-19
<PAGE>
THE RECEIVABLES
The Receivables in the Trust Portfolio, as of the beginning of the day on
May 1, 1997, included $802,881,646 of Principal Receivables and $11,471,934 of
Finance Charge Receivables. The Accounts had an average Principal Receivable
balance of $1,016 and an average credit limit of $3,920. The percentage of the
aggregate total Receivable balance to the aggregate total credit limit was
26%. The average age of the Accounts was approximately 59 months. As of the
beginning of the day on May 1, 1997, Receivables arising in Accounts in agent
bank, affinity or military relationship programs made up approximately 61% in
the aggregate of the total Receivables in the Trust Portfolio, with
approximately 33% of the total Receivables in the Trust Portfolio arising in
the single largest program of this type. See "Risk Factors--Possible Delays or
Prepayment as a Result of Affinity Programs" in the Prospectus. As of such
date, 70% of the Accounts were standard accounts and 30% were premium
accounts, and the aggregate Principal Receivable balances of standard accounts
and premium accounts, as a percentage of the total aggregate Principal
Receivables, were 65% and 35%, respectively. Because approximately 34%, 8%,
6%, 6% and 5% of the cardholders whose Accounts are included in the Trust
Portfolio had a billing address in Louisiana, Alabama, Mississippi, Texas and
Florida, respectively, the Trust Portfolio as a whole may be adversely
affected by material adverse legal, economic and social changes in such
states. First NBC is not aware of any material trends in such states that
would likely adversely impact the Trust Portfolio. See "Risk Factors--Possible
Delays or Prepayment as a Result of Effect of Social, Legal and Economic
Factors on Credit Card Usage" in the Prospectus. As of the beginning of the
day on May 1, 1997, Receivables arising in accounts in First NBC's military
programs made up approximately 33% in the aggregate of the total Receivables
in the Trust Portfolio. See "Risk Factors--Effects of Applicable Law--Possible
Prepayment or Losses as a Result of Limitations Imposed by Consumer Protection
Laws" in the Prospectus.
Credit applications for the Accounts under which the Receivables in the
Trust Portfolio arise are processed through an automated application
processing system using a credit scoring system based on models developed by
Fair, Isaac and Company, Inc. Those applications that are flagged for further
review (i.e., those that are neither accepted nor rejected) by the automated
application processing system are reviewed by a First BankCard credit
analyst who makes a credit and limit assignment decision based on a review of
(i) the score generated by the credit scorecard, (ii) information contained in
the application, (iii) an independent credit report and (iv) an analysis of
the applicant's capacity to repay. First BankCard also uses a prescreening
process as a method of acquiring new accounts. First BankCard primarily
identifies potential prospects for pre-approved solicitations through lists
obtained from (i) First NBC and its affiliated banks, (ii) agent banks and
(iii) affinity groups. First BankCard submits to the credit bureaus its credit
criteria and cutoff scores for those criteria to screen prospects. Lists of
individuals who meet the criteria are returned to the mailing list vendor, and
a pre-approved offer for a credit card is made to those individuals. An
offeree's response to the solicitation is reviewed and confirmed, and a credit
card is issued. Where an individual's creditworthiness undergoes rapid and
substantial change following the initial prescreening, First BankCard may
refuse to extend any credit to that individual despite the pre-approved offer.
The primary factors considered in the non-military credit scoring model
include (a) the presence or absence of existing credit references and checking
and savings account references, (b) the number of recently reported
installment loans reflected in the credit file, (c) revolving utilization
reflected in the credit file and (d) the number of inquiries by other credit
providers. The primary factors considered in the military credit scoring model
include (a) occupation, (b) high credit card utilization reflected in the
credit file, (c) the number of major derogatory ratings reflected in the
credit file and (d) the number of inquiries by other credit providers.
The Trust Portfolio will initially consist of all Receivables in the Bank
Portfolio, with the exception of Receivables arising under Accounts identified
as lost, stolen, fraudulent, voluntarily canceled, deceased, bankrupt,
internal expense accounts or foreign accounts. The following tables summarize
the Trust Portfolio by various criteria as of the beginning of the day on May
1, 1997. Because the future composition of the Trust Portfolio may change over
time, these tables are not necessarily indicative of the composition of the
Trust Portfolio at any subsequent time.
S-20
<PAGE>
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF RECEIVABLES OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS (IN THOUSANDS) RECEIVABLES
- --------------------- --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Credit Balance................. 25,638 3.25% $ (1,282) (.16)%
No Balance..................... 193,371 24.48 -- --
$.01--$5,000.00................ 540,004 68.36 626,987 76.99
$5,000.01--$10,000.00.......... 30,687 3.88 185,208 22.74
$10,000.01--$15,000.00......... 201 .03 2,364 .29
$15,000.01--$20,000.00......... 41 -- 698 .09
$20,000.01--$25,000.00......... 9 -- 200 .02
$25,000.01 or More............. 5 -- 179 .02
------- ------ -------- ------
TOTAL...................... 789,956 100.00% $814,354 100.00%
======= ====== ======== ======
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF RECEIVABLES OF TOTAL
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS (IN THOUSANDS) RECEIVABLES
- ------------------ --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Less than or equal to
$5,000.00..................... 555,308 70.30% $448,740 55.10%
$5,000.01--$10,000.00.......... 232,728 29.46 359,694 44.17
$10,000.01--$15,000.00......... 1,175 .15 3,423 .42
$15,000.01--$20,000.00......... 341 .04 1,229 .15
$20,000.01--$25,000.00......... 277 .03 721 .09
$25,000.01 or More............. 127 .02 547 .07
------- ------ -------- ------
TOTAL...................... 789,956 100.00% $814,354 100.00%
======= ====== ======== ======
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF RECEIVABLES OF TOTAL
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS (IN THOUSANDS) RECEIVABLES
- ------------------------------- --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Not delinquent or up to 30
Days.......................... 775,111 98.12% $783,128 96.17%
31 to 60 Days.................. 6,802 .86 11,499 1.41
61 to 90 Days.................. 3,421 .43 7,837 .96
91 or More Days................ 4,622 .59 11,890 1.46
------- ------ -------- ------
TOTAL...................... 789,956 100.00% $814,354 100.00%
======= ====== ======== ======
</TABLE>
S-21
<PAGE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE OF
NUMBER OF NUMBER OF RECEIVABLES TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS (IN THOUSANDS) RECEIVABLES
- --------------------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Not More than 6 Months........ 75,862 9.60% $ 42,727 5.24%
Over 6 Months to 12 Months.... 142,564 18.05 121,224 14.89
Over 12 Months to 24 Months... 214,244 27.12 198,471 24.37
Over 24 Months to 36 Months... 50,890 6.44 55,510 6.82
Over 36 Months to 48 Months... 27,613 3.50 29,458 3.62
Over 48 Months to 60 Months... 26,972 3.41 30,522 3.75
Over 60 months to 72 Months... 21,262 2.69 23,271 2.86
Over 72 Months................ 230,549 29.19 313,171 38.45
------- ------ -------- ------
TOTAL..................... 789,956 100.00% $814,354 100.00%
======= ====== ======== ======
</TABLE>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF TOTAL PERCENTAGE OF
OF NUMBER OF RECEIVABLES TOTAL
STATE(1) ACCOUNTS ACCOUNTS (IN THOUSANDS) RECEIVABLES
- -------- -------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Louisiana...................... 268,892 34.04% $332,830 40.87%
Alabama........................ 63,079 7.99 68,695 8.44
Mississippi.................... 49,933 6.32 52,725 6.47
Texas.......................... 46,339 5.87 48,564 5.96
Florida........................ 40,401 5.11 34,443 4.23
California..................... 24,333 3.08 23,121 2.84
Georgia........................ 20,492 2.59 20,967 2.57
North Carolina................. 17,181 2.17 14,767 1.81
Virginia....................... 14,701 1.86 12,678 1.56
Maryland....................... 13,211 1.67 12,127 1.49
New Mexico..................... 11,504 1.46 9,041 1.11
South Carolina................. 11,244 1.42 9,094 1.12
Arizona........................ 10,730 1.36 8,389 1.03
Ohio........................... 9,522 1.21 9,179 1.13
Oklahoma....................... 9,181 1.16 8,803 1.08
Other.......................... 179,213 22.69 148,931 18.29
------- ------ -------- ------
Total......................... 789,956 100.00% $814,354 100.00%
======= ====== ======== ======
</TABLE>
- --------
(1) No more than 1% of the aggregate principal balance of the Receivables as of
the Cut-Off Date were represented by Receivables owed by obligors located
in any single state other than those listed in this table.
S-22
<PAGE>
MATURITY ASSUMPTIONS
The Agreement provides that Class A Holders will not receive payments of
principal until 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 Class B Holders 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 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 equals the sum of the Controlled Accumulation
Amount for such Monthly Period and any portion of the Controlled Accumulation
Amount for any prior Monthly Period that was not deposited in the Principal
Funding Account) and (c) the Class A Adjusted Investor Interest prior to any
deposits on such day, will be deposited in the Principal Funding Account (the
"Principal Funding Account") established by the Servicer 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, Available Investor Principal
Collections, to the extent required, will be distributed to the Class B
Holders on each Distribution Date until the earlier of the date the Class B
Investor Interest has been paid in full and the Series 1997-1 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 Collateral Interest Holder on each
Transfer Date until the earlier of the date the Collateral Interest has been
paid in full and the Series 1997-1 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 Holders on the Class A Scheduled Payment Date and the Class B Investor
Interest will be paid to the Class B Holders 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, the Rapid Amortization
Period will commence and any amount on deposit in the Principal Funding
Account will be paid to the Class A Holders 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 Holders 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
1997-1 Termination Date. After the Class A Certificates have been paid in full
and if the Series 1997-1 Termination Date has not occurred, Available Investor
Principal Collections will be paid to the Class B Certificates on each
Distribution Date until the earlier of the date on which the Class B
Certificates have been paid in full and the Series 1997-1 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 Holders within the time
periods stated in the Agreement, (b) material breaches of certain
representations, warranties or covenants of the Transferor, (c) certain
insolvency events involving the Transferor, (d) a reduction in the average of
the Portfolio Yields for any three consecutive Monthly Periods to a rate that
is 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 failure of the Transferor to convey
Receivables arising under Additional Accounts or Participations to the Trust
when required by the Agreement, (g) the occurrence of a Servicer Default which
would have a material adverse effect on the Holders, (h) 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
S-23
<PAGE>
Date or the Class B Scheduled Payment Date, respectively, or (i) the
Transferor becomes unable for any reason to transfer Receivables to the Trust
in accordance with the provisions of the Agreement. See "Description of the
Certificates--Pay Out Events." The term "Base Rate" means, with respect to any
Monthly Period, the sum of (a) the weighted average of the Class A Certificate
Rate, the Class B Certificate Rate, and the Collateral Rate for the related
Interest Period plus (b) the Servicing Fee Percentage. 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 Reallocated
Investor Finance Charge Collections, Principal Funding Investment Proceeds and
amounts withdrawn from the Reserve Account 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 Investor
Default Amount 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.
Paired Series. The Transferor may cause the Trust to issue another Series as
a Paired Series with respect to Series 1997-1. 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 1997-1, and the interest rate with respect to certificates of such
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 Series 1997-1 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 Holders
and a possible slowdown in the repayment of principal to such Holders because
of such reduction in allocation of collections. See "Description of the
Certificates--Allocation Percentages" and "--Paired Series" herein.
Payment Rates and Creation of Additional Receivables. The following table
sets forth the highest and lowest cardholder monthly payment rates for the
Bank Portfolio during any month in the period shown and the average cardholder
monthly payment rates for all months during the periods shown, in each case
calculated as a percentage of average monthly account balances during the
periods shown. 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.
CARDHOLDER MONTHLY PAYMENT RATES
BANK PORTFOLIO
<TABLE>
<CAPTION>
FOUR MONTHS
ENDED YEAR ENDED DECEMBER
APRIL 30 31
------------ ----------------------
1997 1996 1996 1995 1994 1993
----- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Lowest Month........................ 13.7% 14.9% 14.1% 14.1% 14.5% 14.6%
Highest Month....................... 15.2% 17.0% 17.1% 17.2% 17.9% 18.0%
Monthly Average..................... 14.6% 15.7% 15.5% 15.7% 16.2% 16.6%
</TABLE>
Currently, cardholders must make a monthly minimum payment at least equal to
the greater of (i) 2.5% or 10% (depending upon the program) of the statement
balance (excluding any disputed amounts) plus past due amounts and (ii) a
stated minimum payment (generally $10) plus past due amounts. 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, any
election by the Transferor to designate (or increase) a Discount Percentage
may, by causing certain collections of Principal Receivables to be treated as
collections of Finance Charge Receivables, reduce
S-24
<PAGE>
the effective principal payment rate with respect to the Receivables. (See
"Description of the Certificates--Discount Option" in the Prospectus.) The
Receivables may be paid at any time and there is no assurance that there will
be additional Receivables created in the Accounts.
A significant decline in the amount of Receivables generated during the
Controlled Accumulation Period could result in the occurrence of a Pay Out
Event. In addition, a significant decline in the amount of Receivables
generated during the Rapid Amortization Period could significantly extend the
average life to maturity of the Certificates. The amount of collections of
Receivables and the creation of additional Receivables in the Accounts 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 Principal 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 decline in the creation of new Receivables in the
Accounts or 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," 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--Payments Other than at Expected
Maturity" in the Prospectus.
Any factors which effectively slow the principal payment rate with respect
to the Receivables, and hence slow the accumulation of principal for
distribution to the Certificateholders, may have the additional effect of
extending the period of time during which the Certificateholders are exposed
to losses on the Receivables.
RECEIVABLE YIELD CONSIDERATIONS
The gross revenues from finance charges and fees billed to accounts in the
Bank Portfolio for each of the four calendar years contained in the period
ended December 31, 1996 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 four calendar years
contained in the period ended December 31, 1996, 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 any 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 Prospectus.
S-25
<PAGE>
BANK PORTFOLIO YIELD(1)(2)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOUR MONTHS ENDED
APRIL 30 YEAR ENDED DECEMBER 31
------------------ --------------------------------------
1997 1996 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Receivables
Outstanding (3)........ $823,067 $615,555 $680,557 $444,393 $374,209 $362,449
Total Finance Charges
and Fees (4)(5)........ $ 48,802 $ 37,033 $127,061 $ 81,806 $ 72,673 $ 72,188
Total Finance Charges
and Fees
as a percentage of
Average
Receivables
Outstanding........... 18.03% 18.20% 18.68% 18.41% 19.42% 19.92%
</TABLE>
- --------
(1) Amounts have not been restated for acquisitions of portfolios from the
Corporation's acquired banks which were accounted for as poolings-of-
interests.
(2) Interest and fees on charged off accounts are reversed from finance charge
revenues and fee income accounts, respectively, and are not included in
charge-offs.
(3) Average Receivables Outstanding is the average of the daily receivable
balance during the period indicated.
(4) Fees include Annual Fees, Interchange, Cash Advance Fees, Late Fees,
Overlimit Fees and Other Fees as allocated to the Bank Portfolio.
(5) Finance Charges and Fees are presented net of adjustments pursuant to
First NBC's normal servicing procedures, including removal of incorrect or
disputed monthly periodic finance charges.
The revenue for the Bank Portfolio 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 only a
portion of the Bank Portfolio, actual yield with respect to Receivables may be
different from that set forth above for the Bank Portfolio. See "First NBC's
Credit Card Portfolio" herein and "First NBC Credit Card Activities" in the
Prospectus.
FIRST NBC AND FIRST COMMERCE CORPORATION
First NBC is a national banking association and a wholly owned subsidiary of
First Commerce Corporation (the "Corporation"). The Bank's main office is
located at 210 Baronne Street, New Orleans, Louisiana 70112, telephone (504)
623-1371. The Corporation is a Louisiana corporation and a bank holding
company under the Bank Holding Company Act of 1956, as amended, and maintains
its headquarters in New Orleans, Louisiana. As of December 31, 1996, First NBC
had assets of $5.9 billion and stockholder's equity of $374 million. As of
December 31, 1996, the Corporation had assets of $9.2 billion and
stockholders' equity of $724 million. The Corporation has six wholly owned
bank subsidiaries, each in Louisiana: the Bank, City National Bank of Baton
Rouge, Central Bank (Monroe), The First National Bank of Lafayette, Rapides
Bank & Trust Company in Alexandria and The First National Bank of Lake
Charles, which offer a full range of banking and related financial services to
commercial and consumer customers, including numerous types of interest-
bearing and noninterest-bearing deposit accounts, commercial and consumer
loans (including credit card loans), credit card merchant services, trust
services, correspondent banking services and safe deposit facilities.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement and the Series
1997-1 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 1997-1
S-26
<PAGE>
Supplement. See "Description of the Certificates" in the Prospectus for
additional information concerning the Certificates and the Agreement.
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. Each
Class A Certificate represents the right to receive payments of interest at
the Class A Rate for the related Interest Period funded from collections of
Finance Charge Receivables 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 during the Rapid Amortization Period, funded from
collections of Principal Receivables 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 the applicable Class B
Rate 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 during 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. In addition to
representing the right to payment from collections of Finance Charge
Receivables and Principal Receivables, each Class A Certificate also
represents the right to receive payments from Excess Spread, funds on deposit
in the Principal Funding Account and the Reserve Account and certain
investment earnings thereon, Reallocated Principal Collections and Shared
Principal Collections and certain other available amounts (including, under
certain circumstances, amounts on deposit in the Excess Funding Account). In
addition to representing the right to payment from collections of Finance
Charge Receivables and Principal Receivables, each Class B Certificate also
represents the right to receive payments from Excess Spread, Reallocated
Collateral Principal Collections and Shared Principal Collections and certain
other available amounts (including, under certain circumstances, amounts on
deposit in the Excess Funding Account). 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 Holders in whose names the Certificates
were registered on the last business day of the calendar month preceding such
Distribution Date (each, a "Record Date").
First NBC does not intend to list the Certificates on any securities
exchange.
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 herein to
actions by Class A Holders and/or Class B Holders shall refer to actions taken
by DTC upon instructions from DTC Participants and all references herein to
distributions, notices, reports and statements to Class A Holders and/or Class
B Holders shall refer to distributions, notices, reports and statements to DTC
or Cedel, 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. Holders 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. Cede 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 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 Prospectus.
INTEREST PAYMENTS
Interest will accrue on the Class A Certificates at the Class A Rate and on
the Class B Certificates at the Class B Rate from the Closing Date. Interest
will be distributed to Holders on September 15, 1997 and on each Distribution
Date thereafter. 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
S-27
<PAGE>
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% 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 collectively, 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 and Reallocated Principal Collections (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 and
Reallocated Collateral Principal Collections (to the extent available)
remaining after certain other payments have been made with respect to the
Class A Certificates.
"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 Reallocated
Investor Finance Charge Collections allocated to the Investor Interest with
respect to such Monthly Period (excluding the portion of collections of
Finance Charge Receivables attributable to Interchange that is allocable to
Servicer Interchange) and Series Investment Earnings, (b) Principal Funding
Investment Proceeds, if any, with respect to the related Transfer Date (up to
the Class A Covered Amount for such 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 1997-1 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
Reallocated Investor Finance Charge Collections allocated to the Investor
Interest with respect to such Monthly Period (excluding the portion of
collections of Finance Charge Receivables attributable to Interchange that is
allocable to Servicer Interchange) and Series Investment Earnings. "Series
Investment Earnings" means, with respect to any Monthly Period, the sum of (x)
the Investor Percentage for Finance Charge Receivables multiplied by the
aggregate amount of investment earnings (net of losses and investment
expenses) accrued on or prior to the related Transfer Date in connection with
the investment of funds on deposit in the Collection Account, the Distribution
Account, the Excess Funding Account and the Finance Charge Account plus (y)
the amount of investment earnings (net of losses and investment expenses)
accrued on or prior to the related Transfer Date in connection with the
investment of funds on deposit in the Principal Account.
The Class A Certificates will bear interest from the Closing Date through
September 14, 1997, and with respect to each Interest Period thereafter, at a
rate of 6.15% per annum (the "Class A Rate"). The Class B Certificates will
bear interest from the Closing Date through September 14, 1997, and with
respect to each Interest Period thereafter, at a rate of 6.35% per annum (the
"Class B Rate"). "Interest Period" means each period from the Closing Date to
September 14, 1997 and thereafter from and including one Distribution Date to
but excluding the next Distribution Date. Interest on the Certificates will be
calculated on the basis of twelve 30-day months and a 360-day year.
PRINCIPAL PAYMENTS
On each Transfer Date relating to 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 Principal Collections
or, under certain circumstances, deposited into the Excess Funding Account.
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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 with respect to such
Transfer Date, (b) the applicable Controlled Deposit Amount and (c) the Class
A Adjusted Investor Interest prior to any deposits on such date. Amounts in
the Principal Funding Account will be paid to the Class A Holders on the Class
A Scheduled Payment Date. After the Class A Investor Interest has been paid or
provided for 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 will be deposited in the Distribution Account for distribution to the
Class B Holders until the Class B Investor Interest has been paid in full.
Such amounts in the Distribution Account will be paid to the Class B Holders
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 to reduce the Collateral Interest to the
Required Collateral Interest. During the Controlled Accumulation Period until
the final principal payment to the Class B Holders, 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 Principal Collections or, under certain
circumstances, deposited into the Excess Funding Account.
"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, in
each case which are allocable to the Investor Interest, minus (ii) the amount
of Reallocated Principal Collections with respect to such Monthly Period used
to fund interest on the Certificates or the Class A Servicing Fee or Class B
Servicing Fee, plus (b) any Shared Principal Collections with respect to other
Principal Sharing Series that are allocated to Series 1997-1.
On each Distribution Date commencing with the first Distribution Date
following the date the Rapid Amortization Period begins, the Class A Holders
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 earlier of the date the Class A Certificates are paid in full and the
Series 1997-1 Termination Date. After payment in full of the Class A Investor
Interest, the Class B Holders will be entitled to receive on each Distribution
Date during the Rapid Amortization Period Available Investor Principal
Collections until the earlier of the date the Class B Certificates are paid in
full and the Series 1997-1 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 1997-1 Termination Date) and on the Series 1997-1 Termination Date,
Available Investor Principal Collections until the earlier of the date the
Collateral Interest is paid in full and the Series 1997-1 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
Upon written notice to the Trustee, the Transferor and each Rating Agency,
the Servicer may elect to postpone the commencement of the Controlled
Accumulation Period, and extend the length of the Revolving Period, subject to
certain conditions including those set forth below. The Servicer may make such
election only if the Accumulation Period Length (determined as described
below) is less than twelve months. On each Determination Date on or after the
July 2001 Determination Date, until the Controlled Accumulation Period begins,
the Servicer will determine the "Accumulation Period Length," which is a
number of months such that the amount available for distribution of principal
on the Class A Certificates on the Class A Scheduled Payment Date is expected
to equal or exceed the Class A Investor Interest, assuming (a) the expected
monthly collections of Principal Receivables expected to be distributable to
the Holders of all Series have a principal payment rate no greater than the
lowest monthly principal payment rate on the Receivables for the preceding
twelve months, (b) the amount of principal expected to be distributable to
Holders of all Series remains constant at the level on such date of
determination, (c) no Pay Out Event with respect to any Series will
subsequently occur and (d) no additional Series will be subsequently issued.
If the Accumulation Period Length is less than twelve months, the
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Servicer may, at its option, postpone the commencement of the Controlled
Accumulation Period 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
Holders 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
and interest distributable to the Class B Holders will be reduced. See "--
Allocation Percentages," "--Reallocation of Cash Flows" and "--Application of
Collections--Excess Spread."
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 Net Default Amounts and Net Recoveries with respect to
such Monthly Period.
Collections of Finance Charge Receivables, Net Default Amounts and Net
Recoveries at all times, and collections of Principal Receivables during the
Revolving Period, will be allocated to the Investor Interest based on the
Floating Investor Percentage. Collections of Finance Charge Receivables that
are so allocated will then be reallocated among all Series in Group I as
described in the "Description of the Certificates--Reallocations Among
Certificates of Different Series within a Reallocation Group" in the
Prospectus.
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 (a)
the Aggregate Principal Receivables as of the close of business on the last
day of the preceding Monthly Period (or with respect to the first Monthly
Period, the Aggregate Principal Receivables as of the close of business on the
day immediately preceding the Closing Date) and (b) the sum of the numerators
used to calculate the Investor Percentages for allocations with respect to
Finance Charge Receivables, Net Default Amounts, Net Recoveries or Principal
Receivables, as applicable, for all outstanding Series on such date of
determination; provided, however, that if one or more Reset Dates occur in a
Monthly Period, the Floating Investor Percentage for the portion of the
Monthly Period falling after each such Reset Date (the "subject Reset Date")
and prior to the earlier of the first day of the next Monthly Period and any
subsequent Reset Date shall be determined using a denominator equal to the
greater of the amounts specified in clause (a) and (b) above determined as of
the subject Reset Date.
The amounts so allocated (or reallocated) will be further allocated between
the Class A Holders, Class B Holders 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
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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 (a) the Aggregate Principal Receivables
as of the close of business on the last day of the prior Monthly Period (or
with respect to the first Monthly Period, the Aggregate Principal Receivables
as of the close of business on the day immediately preceding the Closing Date)
and (b) 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, that (x) if Series 1997-1 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
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 (y) if one or more Reset Dates occur in a Monthly Period, the Fixed
Investor Percentage for the portion of the Monthly Period falling after each
subject Reset Date and prior to the earlier of the first day of the next
Monthly Period and any subsequent Reset Date shall be determined using a
denominator equal to the greater of the amounts specified in clause (a) and
(b) above determined as of the subject Reset Date.
The amounts so allocated will be further allocated between the Class A
Holders, the Class B Holders 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, and the denominator of which is equal to the numerator used
in determining the related Fixed Investor Percentage; provided, that if Series
1997-1 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). 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,
and the denominator of which is equal to the numerator used in determining the
related Fixed Investor Percentage; provided that if Series 1997-1 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 Trustee and 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 and the Principal Funding Account, in each
case 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). The
"Collateral Fixed Allocation" means, with respect to any Monthly Period, the
percentage equivalent (which
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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, and the denominator of which is equal to the
numerator used in determining the related Fixed Investor Percentage; provided,
that if Series 1997-1 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, designated 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, in each case 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).
"Class A Adjusted Investor Interest," for any date of determination, means
an amount equal to then current Class A Investor Interest, minus the Principal
Funding Account Balance (up to the Class A Invested Amount) on such date.
"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 Holders 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 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 Holders 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 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," plus (f) the aggregate amount
of Excess Spread allocated to the Certificates 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) 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," plus (f) the
aggregate amount of Excess Spread allocated to the Certificates 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.
"Reset Date" means each of (a) any date on which Receivables in Additional
Accounts are conveyed to the Trust, (b) any date on which Accounts are removed
from the Trust and 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 and (c) a date on which
there is an increase in the Investor Interest under any Variable Interest
issued by the Trust.
"Variable Interest" means either of (a) any certificate that is designated
as a variable funding certificate in the related Series Supplement and (b) any
Purchased Interest sold as permitted by the Agreement.
REALLOCATION OF CASH FLOWS
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class A Required Amount"), if any, by which the sum of (a) Class A
Monthly Interest due on the related Distribution Date and
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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 allocated to Series 1997-1 and available for such purpose
will be used to fund the Class A Required Amount with respect to such Transfer
Date. If such Excess Spread is 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 Excess Spread, 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 Holders. In such case, the
Class A Holders will bear directly the credit and other risks associated with
their interests in the Trust. See "--Defaulted Receivables; Investor Charge-
Offs."
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 (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 allocated to Series
1997-1 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 is 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 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
Holders) 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), and the Class B
Holders will bear directly the credit and other risks associated with their
interests in the Trust. See "--Defaulted Receivables; Investor Charge-Offs."
Reductions of the Class A Investor Interest or Class B Investor Interest
described above will be reimbursed by, and the Class A Investor Interest or
Class B Investor Interest increased to the extent of, Excess Spread available
for such purposes on each Transfer Date. See "--Application of Collections--
Excess Spread." When
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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.
"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 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 First NBC 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 acceptable to the Rating Agencies and (ii) the Rating Agency
Condition shall have been satisfied with respect to reliance on such letter of
credit or other credit enhancement or (b) the certificate of deposit or
unsecured short-term debt obligations of the Transferor are rated P-1 by
Moody's and at least A-1 by Standard & Poor's and insured by either BIF or
SAIF or (c) the Transferor makes other arrangements satisfactory to each
Rating Agency rating any Series then outstanding, then the Servicer may make
such deposits (including the deposit to the Collection Account) 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. The
Pooling and Servicing Agreement provides, that before the Conversion Date, the
Servicer will make such deposits and payments based on the assumption that all
collections received by the Servicer with respect to the Receivables in each
Billing Cycle are collections of Finance Charge Receivables up to the amount
of Finance Charge Receivables billed with respect to Receivables in such
Billing Cycle (with respect to each Billing Cycle, the "Billed Finance Charge
Receivables") and collections in excess of the Billed Finance Charge
Receivables are collections of Principal Receivables. The term "Aggregate
Principal Receivables" means in the case of any date of determination which
occurs before the Conversion Date, the aggregate amount of Principal
Receivables as of the end of the Billing Cycles during the Monthly Period
immediately preceding such date of determination or, in the case of any date
of determination which occurs on or after the Conversion Date, the aggregate
amount of Principal Receivables as of the end of the day on such date of
determination.
Whether the Servicer is required to make monthly or daily deposits into the
Collection Account, (i) the Servicer will only be required to deposit
Collections into the Collection Account or 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 Holders or to the
Collateral Interest Holder and (ii) if at any time prior to such Distribution
Date the amount of Collections deposited in any such deposit account exceeds
the amount required to be deposited pursuant to clause (i) above, the Servicer
will be permitted to withdraw the excess from such an account.
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Payment of Interest, Fees and Other Items. On each Transfer Date, the
Trustee, acting pursuant to 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 manner:
(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
Holders 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 for 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."
(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
Holders 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."
(c) On each Transfer Date, an amount equal to the Collateral Available
Funds will be distributed in the following priority:
(i) if First NBC is no longer 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."
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class A Rate, (ii) one-twelfth, 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 Class A Rate
for the period from the Closing Date through September 14, 1997 (calculated on
the basis of a 360-day year and twelve 30-day months).
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Rate, (ii) one-twelfth, 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 Class B Rate
for the period from the Closing Date through September 14, 1997 (calculated on
the basis of a 360-day year and twelve 30-day months).
"Collateral Available Funds" means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Allocation of Reallocated Investor
Finance Charge Collections allocated to the Investor Interest with respect to
such Monthly Period (excluding the portion of collections of Finance Charge
Receivables attributable to Interchange that is allocable to Servicer
Interchange) and Series Investment Earnings.
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"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. To the extent such amounts are insufficient to make the
distributions required by subparagraphs (a) through (i) below under "--Excess
Spread," Excess Spread shall also be deemed to include any Excess Finance
Charge Collections allocable to other Series available to Series 1997-1 in
accordance with the Agreement.
Excess Spread. On each Transfer Date, the Trustee, acting pursuant to the
Servicer's instructions, will apply Excess Spread 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, that in the event the Class A Required Amount for such Transfer
Date exceeds the amount of Excess Spread, such Excess Spread 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) above under "--Payment of Interest, Fees
and Other Items";
(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 and
will 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 Holders (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 such Transfer
Date, plus the amount of any Collateral Monthly Interest previously due but
not distributed to the Collateral Interest Holder on a prior Transfer Date,
will be distributed to the Collateral Interest Holder for distribution in
accordance with the Loan Agreement;
(f) if First NBC or the Trustee 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 Investor 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;
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(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," 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 all other amounts due under the Loan Agreement (to
the extent payable out of Excess Spread or Excess Finance Charge
Collections) shall be distributed in accordance with the Loan Agreement;
and
(k) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (j) above, will constitute "Excess
Finance Charge Collections" to be applied with respect to other Series in
accordance with the Agreement.
"Collateral Monthly Interest" with respect to any Transfer 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. For
purposes of the foregoing, "LIBOR" means the reserve-adjusted London interbank
offered rate, as determined from time to time in accordance with the Loan
Agreement.
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 manner:
(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 paid
to the Collateral Interest Holder in accordance with the Loan
Agreement; and
(ii) the balance will be treated as Shared Principal Collections and
applied as described under "Description of the Certificates--Shared
Principal Collections" herein and in the 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 distributed to the Class A Holders (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 distributed to the Class B
Holders (on the related Distribution Date);
(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 to reduce the Collateral Interest to the Required
Collateral Interest; and
(d) on each Transfer Date with respect to the Controlled Accumulation
Period and 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 Principal Collections and applied as described
under "Description of the Certificates--Shared Principal Collections"
herein and in the 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
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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 or the Rapid Amortization Period, after 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.
"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
Holders and the Class B Holders 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 Holders and the Class B Holders 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 for any Transfer Date with respect to
the Controlled Accumulation Period, prior to the payment in full of the Class
A Investor Interest, $21,625,000; provided, however, that if the commencement
of the Controlled Accumulation Period is modified as described above under "--
Postponement of Controlled Accumulation Period," (i) the Controlled
Accumulation Amount for each Transfer Date with respect to the Controlled
Accumulation Period shall mean the amount determined in accordance with the
Agreement on the date on which the Controlled Accumulation Period has most
recently been modified and (ii) the sum of the Controlled Accumulation Amounts
for all Transfer Dates with respect to the modified Controlled Accumulation
Period shall not be less than the Class A Investor Interest.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Each Series in Group I, including Series 1997-1, will be an Excess
Allocation Series. To the extent that collections of Finance Charge
Receivables allocated to the Investor Interest (and any other amounts that are
to be treated as collections of Finance Charge Receivables allocated to the
Investor Interest) are not needed to make payment in respect of the Investor
Interest as described above under "--Application of Collections--Payment of
Interest, Fees and Other Items" and "--Excess Spread," such Excess Finance
Charge Collections will be applied to make payments in respect of other Series
in Group I entitled to share therein in accordance with the Agreement. In
addition, Excess Finance Charge Collections with respect to certain other
Series in Group I, to the extent not required to make payments in respect of
such Series, may be applied to cover shortfalls in amounts payable from Excess
Spread as described above under "--Application of Collections--Excess Spread"
(as well as shortfalls experienced by other Series).
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SHARED PRINCIPAL COLLECTIONS
Series 1997-1 is a Principal Sharing Series. Collections of Principal
Receivables for any Monthly Period allocated to the Investor Interest (and not
allocated as Reallocated Principal Collections) 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 Holders 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 Holders
and any similar amount remaining for any other Series ("Shared Principal
Collections"). The Servicer will allocate the Shared Principal Collections to
cover any scheduled or permitted principal distributions to certificateholders
and deposits to principal funding accounts, if any, for any Principal Sharing
Series entitled thereto which have not been covered out of the Collections of
Principal Receivables allocable to such Principal Sharing Series and certain
other amounts for such Series ("Principal Shortfalls"). Shared Principal
Collections will not be used to cover investor charge-offs for any Series. If
Principal Shortfalls exceed Shared Principal Collections for any Monthly
Period, Shared Principal Collections will be allocated pro rata among the
applicable Principal Sharing Series based on the relative amounts of Principal
Shortfalls. To the extent that Shared Principal Collections exceed Principal
Shortfalls, the balance will be paid to the Transferor or, under certain
circumstances, deposited into the Excess Funding Account.
REQUIRED COLLATERAL INTEREST
The "Required Collateral Interest" with respect to any Transfer Date means
(i) initially $19,500,000 and (ii) thereafter on each Transfer Date an amount
equal to 6.5% 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, plus the Collateral Interest on
the prior Transfer Date after any adjustments made on such Transfer Date, but
not less than $9,000,000; provided, however, (1) that 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 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.
With respect to any Transfer Date, if the Collateral Interest is less than
the Required Collateral Interest, certain Excess Spread, if available, will be
allocated to increase the Collateral Interest to the extent of such shortfall.
Any of such Excess Spread 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 or will be applied as Excess Finance Charge
Collections. See "--Application of Collections--Excess Spread."
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On or before each Transfer Date, the Servicer will calculate the Investor
Default Amount for the preceding Monthly Period. The term "Investor Default
Amount" means, for any Monthly Period, the product of (a) the Floating
Investor Percentage with respect to such Monthly Period (which shall be
calculated on a weighted average basis if a Reset Date occurred during that
Monthly Period) and (b) the Net Default Amount for such Monthly Period. A
portion of the Investor Default Amount will be allocated to the Class A
Holders (the "Class A Investor Default Amount") on each Transfer Date in an
amount equal to the product of the Class A Floating
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Allocation applicable during the related Monthly Period and the Investor
Default Amount for such Monthly Period. A portion of the Investor Default
Amount will be allocated to the Class B Holders (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
Investor Default Amount for such Monthly Period. A portion of the Investor
Default Amount will be allocated to the Collateral Interest Holder (the
"Collateral Investor 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 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 Excess Spread and Reallocated Principal
Collections available to fund such amount with respect to the Monthly Period
immediately preceding such Transfer Date, 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 Holders. 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."
On each Transfer Date, if the Class B Investor Default Amount for such
Transfer Date exceeds the amount of Excess Spread and Reallocated Collateral
Principal Collections which are allocated and available to fund such amount
with respect to the Monthly Period preceding such Transfer Date, 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 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
allocated and available for that purpose as described under "--Application of
Collections--Excess Spread."
On each Transfer Date, if the Collateral Investor Default Amount for such
Transfer Date exceeds the amount of Excess Spread which is allocated and
available to fund such amount as described under "--Application of
Collections--Excess Spread," the Collateral Interest will be reduced by the
amount of such excess but not more
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than the lesser of the Collateral Investor 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 allocated and available for
that purpose as described under "--Application of Collections--Excess Spread."
PRINCIPAL FUNDING ACCOUNT
Pursuant to the Series 1997-1 Supplement, the Trustee will establish and
maintain with a Qualified Institution a segregated trust account held for the
benefit of the Holders (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 Principal Collections from other
Principal Sharing Series, if any, allocated to Series 1997-1 from the
Principal Account to the Principal Funding Account as described under "--
Application of Collections."
Funds on deposit in the Principal Funding Account will be invested to the
following Transfer Date by the Trustee at the direction of the Servicer 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 used to pay interest on the Class A
Certificates in an amount up to, for each Transfer Date, 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 Rate and
(c) the Principal Funding Account Balance as of the Record Date preceding such
Transfer Date (the "Class A Covered Amount"). If, for any Transfer Date, the
Principal Funding Investment Proceeds are less than the Class A Covered
Amount, the amount of such deficiency (the "Class A Principal Funding
Investment Shortfall") shall be withdrawn, to the extent available, from the
Reserve Account and deposited in the Finance Charge Account and included in
collections of Finance Charge Receivables to be applied to the payment of
Class A Monthly Interest.
RESERVE ACCOUNT
Pursuant to the Series 1997-1 Supplement, the Trustee will establish and
maintain with a Qualified Institution a segregated trust account held for the
benefit of the Holders (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 allocated to the Certificates (to the
extent described above under "--Application of Collections--Excess Spread") 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 the Agreement may
require. The "Required Reserve Account Amount" for any Transfer Date on or
after the Reserve Account Funding Date will be equal to (a) 0.50% of the
outstanding principal balance of the Class A Certificates or (b) any other
amount designated by the Transferor; provided, that if such designation is of
a lesser amount, the Transferor shall have provided the Servicer, the
Collateral Interest Holder and the Trustee with 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 1997-1. On each Transfer Date, after
giving effect to any deposit to be made to, and any withdrawal to be made
from, the Reserve Account on such Transfer Date, the Trustee will withdraw
from the Reserve Account an amount equal to the excess, if any, of the
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amount on deposit in the Reserve Account over the Required Reserve Account
Amount and distribute such excess to the Collateral Interest Holder for
application in accordance with the terms of the Loan Agreement.
Provided that the Reserve Account has not terminated as described below, all
amounts on deposit in the Reserve Account on any Transfer Date (after giving
effect to any deposits to, or withdrawals from, the Reserve Account to be made
on such Transfer Date) will be invested to the following Transfer Date by the
Trustee at the direction of the Servicer in 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 Class A Principal Funding Investment Shortfall with
respect to such Transfer Date; provided, that the amount of such withdrawal
shall be reduced to the extent that funds otherwise would be available to be
deposited in the Reserve Account on such Transfer Date. On each Transfer Date,
the amount available to be withdrawn from the Reserve Account (the "Available
Reserve Account Amount") will be equal to the lesser of the amount on deposit
in the Reserve Account (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 distributed
to the Collateral Interest Holder for application in accordance with the terms
of the Loan Agreement. Any amounts withdrawn from the Reserve Account and
distributed to the Collateral Interest Holder as described above will not be
available for distribution to the Holders.
EXCESS FUNDING ACCOUNT
Pursuant to the Agreement, the Trustee will establish and maintain with a
Qualified Institution a segregated trust account held for the benefit of the
Holders (the "Excess Funding Account"). If on any date a Retention Condition
exists, the Servicer will not distribute to the Transferor any collections of
Principal Receivables that otherwise would be distributed to the Transferor,
but shall instead deposit such funds in the Excess Funding Account until the
Retention Condition ceases. Funds on deposit in the Excess Funding Account
will be withdrawn and paid to the Transferor on any date provided that a
Retention Condition is not in effect, or would result from such payment, on
such date. In addition, if a Controlled Accumulation Period or Rapid
Amortization Period commences with respect to the Certificates, then an amount
of funds on deposit in the Excess Funding Account (after giving effect to the
release of funds to the Transferor as described above) up to the amount, if
any, by which the Transferor Interest would be less than zero if there were no
funds on deposit in the Excess Funding Account on such date, will be treated
as Shared Principal Collections to the extent needed to cover principal
payments due to or for the benefit of such Series. "Retention Condition" means
(a) on any day on and after the Conversion Date, either (i) the Transferor
Interest is less than the Minimum Transferor Interest or (ii) the sum of the
Aggregate Principal Receivables and the principal amount on deposit in the
Excess Funding Account is less than the Minimum Aggregate Principal
Receivables (in each case determined after giving effect to any transfer of
Principal Receivables to the Trust on such day); or (b) on any day prior to
the Conversion Date, either (i)(A) the sum of the aggregate amount of
Receivables and the principal amount on deposit in the Excess Funding Account
at the end of the day immediately prior to such date of determination, minus
the
S-42
<PAGE>
Adjusted Aggregate Investor Interest at the end of such preceding day is less
than (B) 3% of the aggregate amount of Receivables at the end of the day
immediately prior to such date of determination, or (ii)(A) the sum of (1) the
product of 0.97 times the aggregate amount of Receivables plus (2) the
principal amount on deposit in the Excess Funding Account, in each case at the
end of the day immediately prior to such date of determination is less than
(B) the Minimum Aggregate Principal Receivables (in the case of both clauses
(i) and (ii) determined after giving effect to any transfer of Receivables to
the Trust on such day).
PAIRED SERIES
Series 1997-1 may be paired with one or more other Series (each a "Paired
Series"). Each Paired Series either will be prefunded with an initial deposit
to a Pre-Funding Account in an amount up to the initial principal balance of
such Paired Series and primarily from the proceeds of the sale of such Paired
Series or will be a Variable Interest. Any such Pre-Funding Account will be
held for the benefit of such Paired Series and not for the benefit of the
Holders. As principal is deposited into the Principal Funding Account with
respect to the Certificates, either (i) in the case of a prefunded Paired
Series, an equal amount of funds on deposit in the Pre-Funding Account for
such prefunded Paired Series will be released (which funds will be distributed
to the Transferor) or (ii) in the case of a Paired Series which is a Variable
Interest, an interest in such variable Paired Series in an equal or lesser
amount may be sold by the Trust (and the proceeds thereof will be distributed
to the Transferor) and, in either case, the investor interest of such Paired
Series will increase by up to a corresponding amount. Upon payment in full of
the Certificates, assuming that there have been no unreimbursed charge-offs
with respect to any related Paired Series, the aggregate investor interest of
such related Paired Series will have been increased by an amount up to an
aggregate amount equal to the payments of principal of the Certificates since
the issuance of such Paired Series. The issuance of a Paired Series will be
subject to the conditions described under "Description of the Certificates--
Exchanges" in the Prospectus. There can be no assurance, however, that the
terms of any Paired Series might not have an impact on the timing or amount of
payments received by a Holder. In particular, the denominator of the Fixed
Allocation Percentage may be reduced 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 Holders
and a possible slowdown in the repayment of principal to such Holders because
of such reduction in allocation of collections. See "Maturity Assumptions"
herein.
PAY OUT EVENTS
As described above, the Revolving Period will continue through July 31, 2001
(unless such date is postponed as described under "--Postponement of
Controlled Accumulation Period"), 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 Holders (which determination shall be made without regard to
the existence of the Collateral Interest) and which continues for a period
of 60 days after written notice and continues to materially and adversely
affect the interests of the Holders (which determination shall be made
without regard to the existence 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 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 Holders are materially and adversely
affected (which determination shall be made without regard to the existence
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
S-43
<PAGE>
period (or such longer period as the Trustee may specify) in accordance
with the provisions of the Agreement;
(c) any reduction of the average of the Portfolio Yields for any three
consecutive Monthly Periods to a rate which 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 Holders;
(f) insufficient moneys in the Distribution Account to pay the Class A
Investor Interest on the Class A Scheduled Payment Date or the Class B
Investor Interest on the Class B Scheduled Payment Date;
(g) certain events of insolvency, conservatorship or receivership
relating to the Transferor;
(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 Holders and
the Collateral Interest Holder evidencing undivided interests aggregating more
than 50% of the Investor Interest, by written notice to the Transferor and the
Servicer (and to the Trustee if given by the Holders) 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 Holders, the Collateral
Interest Holder or all certificateholders, as appropriate, immediately upon
the 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 Holders will begin on the first Distribution
Date following the month in which such Pay Out Event occurred.
See "Description of the Certificates--Pay Out Events" in the 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 "Monthly Investor Servicing Fee") shall be
equal to one-twelfth of the product of (a) 2.00% 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 Monthly
Investor Servicing Fee shall be equal to $383,333.33. On each Transfer Date,
but only if First NBC or the Trustee is the Servicer, Servicer Interchange
with respect to the related Monthly Period that is on deposit in the Finance
Charge Account will be withdrawn from the Finance Charge Account and paid to
the Servicer in payment of a portion of the Monthly Investor Servicing Fee
with respect to such Monthly Period. The "Servicer Interchange" for any
Monthly Period for which First NBC 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) 0.75%. In the
case of any insufficiency of Servicer Interchange on deposit in the Finance
Charge Account, a portion of the Monthly Investor Servicing Fee with respect
to such Monthly Period will not be paid to the extent of such
S-44
<PAGE>
insufficiency and in no event shall the Trust, the Trustee, the Holders or the
Collateral Interest Holder be liable for the share of the Servicing Fee to be
paid out of Servicer Interchange.
The share of the Monthly Investor Servicing Fee allocable to the Class A
Holders 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) 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 $207,239.58. The share of the Monthly Investor Servicing
Fee allocable to the Class B Holders 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 $16,770.83. The share of the
Monthly Investor Servicing Fee allocable to the Collateral Interest Holder
with respect to any Transfer Date (the "Collateral Interest 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 $15,572.92. The "Net
Servicing Fee Rate" shall mean (a) so long as First NBC or Trustee is the
Servicer, 1.25% per annum, and (b) so long as a Person other than First NBC or
the Trustee is the Servicer, 2.00% per annum. The remainder of the Servicing
Fee shall be paid by the Transferor or 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. In no event shall the Trust, the
Trustee, the Holders or the Collateral Interest Holder be liable for the share
of the Servicing Fee to be paid out of Servicer Interchange. 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."
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 Holders
other than federal, state and local income and franchise taxes, if any, of the
Trust.
REPORTS TO HOLDERS
On each Transfer Date, the Trustee will forward to each Holder of record, a
statement prepared by the Servicer setting forth the items described in
"Description of the Certificates--Reports to Holders" in the Prospectus. In
addition, such statement will include (a) the amount, if any, withdrawn from
the Principal Funding Account for such Transfer Date, and (b) the Collateral
Interest, if any, for such Transfer Date.
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 Underwriters named below (the "Class A Underwriters"), 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 Underwriters, 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:
S-45
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS A UNDERWRITERS CLASS A CERTIFICATES
-------------------- --------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated... $ 64,875,000
J.P. Morgan Securities Inc. ......................... 64,875,000
Lehman Brothers Inc. ................................ 64,875,000
Morgan Stanley & Co. Incorporated.................... 64,875,000
------------
Total............................................ $259,500,000
============
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS B UNDERWRITER CLASS B CERTIFICATES
------------------- --------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated... $ 21,000,000
</TABLE>
In the Class A Underwriting Agreement, the Class A Underwriters have 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 Class A Underwriters propose initially to offer the Class A Certificates
to the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of 0.25% of the principal
amount of the Class A Certificates. The Class A Underwriters may allow, and
such dealers may reallow, concessions not in excess of 1.25% 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 Underwriters.
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 0.25% 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 1.50% 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.
Until the distribution of the Certificates is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Certificates. As an exception to these
rules, Merrill Lynch & Co., on behalf of the Underwriters, are permitted to
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 create syndicate short positions. 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 reclamation of 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 Trust, the Transferor, nor any of the Underwriters
make any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the
Certificates. In addition, neither the Trust, 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.
S-46
<PAGE>
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 Series 1997-1 Certificates in, from or otherwise involving the
United Kingdom;
(b) it has only issued, distributed or passed on and will only issue,
distribute or pass on in the United Kingdom any document received by it in
connection with the issue of the Series 1997-1 Certificates to a person who
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
such document may otherwise lawfully be issued, distributed or passed on;
(c) if it is an authorized person under Chapter III of Part I 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 1996.
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.
S-47
<PAGE>
INDEX OF DEFINED TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accounts........ S-2
Accumulation Period
Length........ S-29
Additional Interest.
S-28
Adjusted Investor
Interest....... S-5
Aggregate Principal
Receivables... S-34
Agreement....... S-4
Available Investor
Principal
Collections... S-29
Available Reserve
Account Amount.. S-
42
Bank............ S-1
Base Rate...... S-24
Billed Finance
Charge Receivables.
S-34
Certificates... S-1,
S-3
Class A Additional
Interest...... S-28
Class A Adjusted
Investor Interest..
S-5, S-32
Class A Available
Funds......... S-28
Class A
Certificates.. S-1,
S-3
Class A Covered
Amount... S-8, S-41
Class A Fixed
Allocation.... S-31
Class A Floating
Allocation.... S-30
Class A Holders. S-4
Class A Investor
Charge-Off... S-11,
S-40
Class A Investor
Default Amount.. S-
39
Class A Investor
Interest. S-3, S-32
Class A Monthly
Interest...... S-35
Class A Monthly
Principal..... S-37
Class A Principal
Funding Investment
Shortfall.. S-8, S-
41
Class A Rate... S-2,
S-3, S-28
Class A Required
Amount.. S-10, S-32
Class A Scheduled
Payment Date.. S-2,
S-3
Class A Servicing
Fee........... S-45
Class A
Underwriters.. S-45
Class A Underwriting
Agreement..... S-45
Class B Additional
Interest...... S-28
Class B Available
Funds......... S-28
Class B
Certificates.. S-1,
S-3
Class B Fixed
Allocation.... S-31
Class B Floating
Allocation.... S-30
Class B Holders. S-4
Class B Investor
Charge-Off... S-12,
S-40
Class B Investor
Default Amount.. S-
40
Class B Investor
Interest. S-3, S-32
Class B Monthly
Interest...... S-35
Class B Monthly
Principal..... S-38
Class B Rate... S-2,
S-3, S-28
Class B Required
Amount.. S-10, S-33
Class B Scheduled
Payment Date.. S-2,
S-3
Class B Servicing
Fee........... S-45
Class B
Underwriters.. S-45
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Class B Underwriting
Agreement....... S-45
Closing Date. S-2, S-3
Code............. S-15
Collateral Available
Funds........... S-35
Collateral Charge-Off.
S-41
Collateral Fixed
Allocation...... S-31
Collateral Floating
Allocation...... S-31
Collateral Interest...
S-3, S-32
Collateral Interest
Holder........... S-4
Collateral Interest
Servicing Fee... S-45
Collateral Investor
Default Amount.. S-40
Collateral Monthly
Interest........ S-37
Collateral Monthly
Principal....... S-38
Collateral Rate.. S-37
Controlled
Accumulation Amount..
S-38
Controlled
Accumulation Period..
S-7
Controlled Deposit
Amount..... S-7, S-23
Credit Enhancement. S-
3
Distribution Date. S-2
Distribution Dates. S-
3
ERISA............ S-15
Excess Finance Charge
Collections..... S-37
Excess Funding
Account......... S-42
Excess Spread... S-11,
S-35
First NBC......... S-1
Fitch............ S-34
Fixed Investor
Percentage...... S-31
Floating Investor
Percentage...... S-30
Group I.......... S-13
Holders........... S-4
Initial Collateral
Interest........ S-12
Interest Period.. S-28
Investor Default
Amount.......... S-39
Investor Interest. S-3
LIBOR........ S-3 S-30
LIBOR Determination
Date............ S-30
Loan Agreement... S-13
Monthly Investor
Servicing Fee... S-44
Monthly Period.... S-5
Net Servicing Fee
Rate............ S-45
Paired Series... S-13,
S-43
Pay Out Event.... S-43
Portfolio Yield.. S-24
Principal Funding
Account... S-7, S-23,
S-41
Principal Funding
Account Balance. S-23
Principal Funding
Investment Proceeds..
S-8, S-41
Principal Shortfalls..
S-39
Rapid Amortization
Period........... S-9
Rating Agency
Condition....... S-39
</TABLE>
S-48
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reallocated
Class B
Principal
Collections..
S-33
Reallocated
Collateral
Principal
Collections..
S-34
Reallocated
Principal
Collections..
S-34
Receivables...
S-2
Record Date...
S-27
Required
Amount.. S-10
Required
Collateral
Interest.. S-
12, S-39
Required
Reserve
Account
Amount.. S-41
Reserve
Account. S-41
Reserve
Account
Funding Date.
S-41
Reset Date. S-
32
Retention
Condition. S-
42
Revolving
Period... S-7
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Series
Investment
Earnings.. S-28
Series 1997-1
Supplement. S-4
Series 1997-1
Termination
Date....... S-5
Servicer
Interchange. S-
44
Servicing Fee
Rate........S-6
Shared Principal
Collections. S-
14, S-39
Subject Reset
Date...... S-30
Transfer Date...
S-34
Transferor
Interest... S-4
Trust....... S-3
Underwriters. S-
45
Underwriting
Agreement. S-45
Variable
Interest.. S-32
</TABLE>
S-49
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS
- -------------------------------------------------------------------------------
FIRST NBC CREDIT CARD MASTER TRUST
ASSET BACKED CERTIFICATES
FIRST NATIONAL BANK OF COMMERCE
TRANSFEROR AND SERVICER
-------------
The Asset Backed Certificates (collectively, the "Certificates") described
herein may be sold from time to time in one or more series (each, a "Series"),
in amounts, at prices and on terms to be determined at the time of sale and to
be set forth in a supplement to this Prospectus (a "Prospectus Supplement").
The Certificates in each Series will represent an undivided interest in the
First NBC Credit Card Master Trust (the "Trust"). The Trust will be formed
pursuant to a pooling and servicing agreement between First National Bank of
Commerce ("First NBC" or the "Bank"), as transferor and servicer, and The
First National Bank of Chicago, as trustee. Certain capitalized terms used in
this Prospectus are defined elsewhere in this Prospectus and in the
accompanying Prospectus Supplement. Please refer to the "Index of Defined
Terms for Prospectus" on page 75 for a listing of the pages on which such
terms are defined.
The property of the Trust will include receivables (the "Receivables")
generated from time to time in a portfolio of revolving credit accounts, all
monies due or to become due in payment of the Receivables, any collateral
securing the Receivables, all proceeds of the foregoing and proceeds of credit
life insurance policies relating to the Receivables and all monies on deposit
in certain bank accounts of the Trust, as more fully described herein.
Additionally, with respect to any Series or Class offered hereby, the Trust
assets also may include (i) the right to receive Interchange and Other Account
Revenues and/or (ii) credit enhancement and interest rate protection
arrangements for such Series or Class, as described in the related Prospectus
Supplement. The Bank will initially own the remaining undivided interest in
the Trust not represented by the Certificates issued by the Trust and will
initially service the related Receivables.
Each Series will consist of one or more classes of Certificates (each, a
"Class"), one or more of which may be fixed rate Certificates, floating rate
Certificates or other types of Certificates, as specified in the related
Prospectus Supplement. Each Certificate will represent an undivided interest
in the Trust, and the interest of the holders of each Class or Series of
Certificates will include the right to receive a varying percentage of each
month's collections with respect to the Receivables at the times, in the
manner and to the extent described herein and, with respect to any Series
offered hereby, in the related Prospectus Supplement. Interest and principal
payments with respect to each Series offered hereby will be made as specified
in the related Prospectus Supplement. One or more Classes of a Series offered
hereby may be entitled to the benefits of a cash collateral account or
guaranty, a collateral interest, a letter of credit, a surety bond, an
insurance policy or other form of enhancement as specified in the Prospectus
Supplement relating to that Series. In addition, any Series offered hereby may
include one or more Classes which are subordinated in right and priority to
payment of principal of, and/or interest on, one or more other Classes of that
Series or another Series, in each case to the extent described in the related
Prospectus Supplement. Each Series of Certificates or Class offered hereby
will be rated in one of the four highest rating categories by at least one
nationally recognized rating organization.
While the specific terms of any Series in respect of which this Prospectus
is being delivered will be described in the related Prospectus Supplement, the
terms of such Series will not be subject to prior review by, or consent of,
the Certificateholders of any previously issued Series.
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" COMMENCING ON PAGE 23 OF THIS PROSPECTUS.
-------------
THE CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST ONLY AND WILL NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF FIRST NBC OR ANY
AFFILIATE THEREOF. A CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THE
CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR (EXCEPT
FOR RECEIVABLES ARISING IN PRIVATE LABEL ACCOUNTS, WHICH REPRESENTED
1.23% OF THE RECEIVABLES AS OF APRIL 30, 1997) ANY OTHER
GOVERNMENTAL AGENCY.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------
Certificates may be sold by the Bank or the Trust directly to purchasers,
through agents designated from time to time, through underwriting syndicates
led by one or more managing underwriters or through one or more underwriters
acting alone. If underwriters or agents are involved in the offering of the
Certificates of any Series offered hereby, the name of the managing
underwriter or underwriters or agents will be set forth in the related
Prospectus Supplement. If an underwriter, agent or dealer is involved in the
offering of the Certificates of any Series offered hereby, the underwriter's
discount, agent's commission or dealer's purchase price will be set forth in,
or may be calculated from, the related Prospectus Supplement, and the net
proceeds to the Bank from such offering will be the public offering price of
such Certificates less such discount in the case of an underwriter, the
purchase price of such Certificates less such commission in the case of an
agent or the purchase price of such Certificates in the case of a dealer, and
less, in each case, the other expenses of the Bank associated with the
issuance and distribution of such Certificates. See "Plan of Distribution."
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF ANY SERIES OF
CERTIFICATES UNLESS ACCOMPANIED BY THE RELATED PROSPECTUS SUPPLEMENT.
-------------
THE DATE OF THIS PROSPECTUS IS JULY 23, 1997.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series to be offered thereby and
hereby will, among other things, set forth with respect to that Series: (a)
the initial aggregate principal amount of each Class of that Series; (b) the
certificate interest rate (or method for determining it) of each Class of that
Series; (c) certain information concerning the Receivables allocated to that
Series; (d) the expected date or dates on which the principal amount of the
Certificates will be paid to holders of each Class of Certificates (the
"Certificateholders"); (e) the extent to which any Class within a Series is
subordinated to any other Class of that Series or any other Series; (f) the
identity of each Class of floating rate Certificates and fixed rate
Certificates included in that Series, if any, or such other type of Class of
Certificates; (g) the Distribution Dates for the respective Classes; (h)
relevant financial information with respect to the Receivables; (i) additional
information with respect to any Enhancement relating to that Series; and (j)
the plan of distribution of that Series.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
reports, containing information concerning the Trust and prepared by the
Servicer, will be sent on behalf of the Trust to the registered holder(s) of
the related Certificates. Cede & Co. ("Cede"), as nominee of The Depository
Trust Company ("DTC") is generally expected to be the only registered holder
of the Certificates. The availability of copies of such reports to DTC
participants and ultimately to the owners of beneficial interests in the
Certificates ("Certificate Owners") will be governed by arrangements among DTC
and such parties, subject to any statutory or regulatory requirements as may
be in effect from time to time. See "Description of the Certificates--Book-
Entry Registration," "--Reports to Certificateholders" and "--Evidence as to
Compliance." Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Transferor does
not intend to send any of its financial reports to Certificateholders or to
the Certificate Owners. The Servicer will file with the Commission such
periodic reports with respect to the Trust as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder.
AVAILABLE INFORMATION
This Prospectus, which forms a part of the Registration Statement, omits
certain information contained in such Registration Statement pursuant to the
rules and regulations of the Commission. For further information, reference is
made to the Registration Statement (including any amendments thereof and
exhibits thereto) and any reports and other documents incorporated herein by
reference as described below under "Incorporation of Certain Documents by
Reference," which are available for inspection without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
information may also be accessed electronically by means of the Commission's
home page on the World Wide Web located at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer, on behalf of the
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates shall be deemed to be incorporated by reference
into this Prospectus and to be part hereof. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that
2
<PAGE>
a statement contained herein or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Servicer will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to: Thomas L. Callicutt, Jr., Executive Vice
President, Controller and Principal Accounting Officer, First Commerce
Corporation, 201 Saint Charles Avenue, 19th Floor, New Orleans, Louisiana
70170, telephone number (504) 623-2913.
3
<PAGE>
PROSPECTUS SUMMARY
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and in the accompanying
Prospectus Supplement. Certain capitalized terms used in this summary are
defined elsewhere in this Prospectus and in the accompanying Prospectus
Supplement. A listing of the pages on which all such terms are defined is found
in the "Index of Defined Terms for Prospectus" on page 75. Unless the context
requires otherwise, capitalized terms used in this Prospectus and in the
accompanying Prospectus Supplement refer only to the particular Series being
offered by that Prospectus Supplement.
Risk Factors............ Potential investors should note that there are
material risks associated with an investment in the
Certificates and should consider, among other
things, the information set forth in "Risk Factors"
on page 23.
Type of Securities...... Asset Backed Certificates (the "Certificates")
evidencing an undivided interest in the assets of
the First NBC Credit Card Master Trust (the "Trust")
may be issued from time to time in one or more
series (each, a "Series") which will consist of one
or more classes of Certificates (each, a "Class").
The Trust............... The Trust will be formed pursuant to a pooling and
servicing agreement (the "Agreement") between First
National Bank of Commerce ("First NBC" or the
"Bank"), as transferor and servicer, and The First
National Bank of Chicago, as trustee (the
"Trustee"). Each Series issued by the Trust will be
issued pursuant to a series supplement to the
Agreement (a "Series Supplement"; references in this
Prospectus to the Agreement, as it relates to any
Series, shall include the Series Supplement entered
into in connection with such Series). Any Series (or
class thereof) may or may not be offered pursuant to
this Prospectus. Each Prospectus Supplement will
identify all outstanding Series previously issued by
the Trust. Certificate Owners with respect to any
Series are not required to be notified of the
issuance of any subsequent Series. However, it is a
condition precedent to the issuance of any
additional Series that each Rating Agency that has
rated any outstanding Series deliver written
confirmation to the Trustee that such issuance will
not result in the reduction or withdrawal of its
rating on any such outstanding Series.
Trust Assets............ The assets of the Trust will include receivables (the
"Receivables") arising under certain revolving
credit accounts (the "Accounts"), initially
comprised of a portion of the MasterCard(R),
VISA(R)* and private label credit card accounts
included in the portfolio of MasterCard, VISA and
private label accounts owned by the Bank (the "Bank
Portfolio"), and all monies due or to become due in
payment of the Receivables, including certain fees
charged on the Accounts and included as Finance
Charge Receivables, all proceeds of the Receivables
and proceeds of credit life insurance policies
relating to the Receivables, and any collateral
securing the Receivables and proceeds of such
collateral and may include the right to receive
Interchange and Other Account Revenues, if any,
allocable to the Certificates and all
- --------
*MasterCard(R) and VISA(R) are Federally registered servicemarks of
MasterCard International Inc. and Visa U.S.A., Inc., respectively.
4
<PAGE>
monies on deposit in certain bank accounts of the
Trust (including any permitted investments made with
such monies and related investment earnings), and
any Enhancement with respect to any particular
Series or Class, as described in the related
Prospectus Supplement. The private label accounts
included in the Bank Portfolio (the "Private Label
Accounts") relate to credit cards issued to military
personnel who are eligible to participate in one of
the Bank's military affinity programs but do not
meet the credit standards for issuance of standard
credit cards. Payments due under Private Label
Accounts are charged back to a non-appropriated
funds instrumentality associated with the United
States Air Force Services at 65-90 days past due.
The non-appropriated funds instrumentality does not
represent a full faith and credit obligation of the
United States. "Interchange" consists of certain
fees received by the Bank from VISA and MasterCard
as partial compensation for taking credit risk,
absorbing fraud losses and funding receivables for a
limited period prior to initial billing. "Other
Account Revenues" consist of amounts received by the
Transferor (a) from any third party in consideration
of the inclusion of advertising inserts with monthly
statements relating to accounts in the Bank
Portfolio, (b) from issuers of credit insurance
policies on account of experience rebates or similar
amounts related to obligors on accounts included in
the Bank Portfolio and (c) from any other Person on
account of revenues related to the Accounts, to the
extent (in the case of this clause (c)) that
Transferor in the future designates such amounts to
be treated as "Other Account Revenues." The term
"Enhancement" means, with respect to any Series or
Class, any Credit Enhancement or any derivative
product such as a guaranteed rate agreement,
maturity liquidity facility, interest rate cap
agreement, interest rate swap agreement or other
similar arrangement for the benefit of the
Certificateholders of that Series or Class. The term
"Credit Enhancement" means, with respect to any
Series or Class, any cash collateral guaranty or
account, collateral interest, letter of credit,
surety bond, insurance policy, spread account,
reserve account or other similar arrangement for the
benefit of the Certificateholders of that Series or
Class. Credit Enhancement may also take the form of
subordination of one or more Classes of a Series to
any other Class or Classes of a Series or a cross-
support feature which requires collections on
Receivables of one Series to be paid as principal
and/or interest with respect to another Series.
At the time of formation of the Trust, the Bank, as
transferor (in such capacity, the "Transferor"),
will convey to the Trustee, in trust for the benefit
of the Certificateholders, all Receivables existing
under certain Accounts selected from the Bank
Portfolio based on criteria provided in the
Agreement and all Receivables arising under such
Accounts from time to time thereafter until
termination of the Trust. In addition, the Agreement
will provide that the Bank may, from time to time
(subject to certain limitations and conditions), and
in some circumstances will be obligated to,
designate additional eligible revolving credit
accounts to be included as Accounts (the "Additional
Accounts"), the Receivables of which will be
included in the Trust and that in lieu of
5
<PAGE>
Additional Accounts or in addition thereto, the Bank
may include in the Trust participations or trust
certificates representing undivided interests in a
pool of assets primarily consisting of receivables
arising under revolving credit accounts and
collections thereon ("Participations").
Any Participation included in the Trust will
represent an undivided interest in the same types of
assets that may be added as Receivables arising in
"Additional Accounts," but in the case of a
Participation the Trust would have a less direct
interest in the specific assets. See "Description of
the Certificates--Addition of Trust Assets" for a
discussion of possible features of the indirect
ownership arrangement involved in a Participation.
Any Participation added to the Trust will either
have been registered under the Securities Act or be
eligible for sale under Rule 144(k) and, in either
case, will (except as otherwise permitted by the
Securities Act and applicable rules thereunder) have
been acquired by the Transferor in a bona fide
secondary market transaction and not from the issuer
of the Participation or any of its affiliates.
In addition to the periodic reports otherwise
required to be filed by the Servicer with the
Commission 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,
including statistical data, on a discrete basis,
describing the additional assets. Any conveyance by
the Transferor to the Trust of Receivables in
Additional Accounts or Participations is subject to
the satisfaction of several conditions. See "The
Receivables," "Risk Factors--Possible Prepayment or
Losses as a Result of Addition of Trust Assets--
Effect on Credit Quality" and "Description of the
Certificates--Addition of Trust Assets."
To the extent provided in any Series Supplement, or
in an amendment to the Agreement, all or a portion
of the Receivables or Participations conveyed to the
Trust and all collections received with respect
thereto may be allocated to one or more Series as
long as each Rating Agency confirms that such
allocation will not result in the reduction or
withdrawal of its rating on any outstanding Class of
Certificates, and the Servicer has delivered an
officer's certificate to the Trustee to the effect
that the Servicer reasonably believes such
allocation will not adversely affect in any material
respect the interests of the Certificateholders of
any Series issued and outstanding.
Certificate Interest Each Series of Certificates will represent an
and Principal........... undivided interest in the assets of the Trust. Each
Certificate of a Series will represent the right to
receive payments of (i) interest at the specified
rate or rates per annum (each, a "Certificate
Rate"), which may be a fixed, floating or other type
of rate and (ii) principal at the times and in the
circumstances (if any) described in the related
Prospectus Supplement. Payments of principal may be
made during a Controlled Amortization Period,
Principal Amortization Period, or, under certain
limited circumstances, Rapid Amortization Period
(each, an "Amortization Period") or, under
6
<PAGE>
certain limited circumstances, in connection with a
Partial Amortization; or principal may be payable on
Scheduled Payment Dates, in which case such Series
will have a Controlled Accumulation Period and,
under certain limited circumstances if so specified
in the related Prospectus Supplement, a Rapid
Accumulation Period (each, an "Accumulation
Period"), as well as, under certain limited
circumstances, a Rapid Amortization Period, all as
specified in the related Prospectus Supplement.
Each Series of Certificates will consist of one or
more Classes, one or more of which may be senior
("Senior Certificates") or subordinated
("Subordinated Certificates") to one or more other
Classes. Each Class of a Series may evidence the
right to receive a specified portion of each
distribution of principal, interest or both. The
Certificates of a Class may also differ from
Certificates of other Classes of the same Series in,
among other things, the amounts allocated to
principal payments, priority of payments, payment
dates, maturity, interest rates, interest rate
computation and availability and form of
Enhancement.
The assets of the Trust will be allocated among the
Certificateholders of each Series and the
Transferor. A portion of the assets of the Trust
also will be allocated to a related Credit
Enhancement Provider which provides Credit
Enhancement in the form of a Collateral Interest and
may be allocated to a provider of Credit Enhancement
in another form to the extent draws are made on the
Credit Enhancement to pay the principal of the
Certificates of the related Series. See "Credit
Enhancement--General" and "--Collateral Interest."
The aggregate principal amount of the interest of
the Certificateholders of a Series is called the
"Investor Interest" and is based on the portion of
the Aggregate Principal Receivables allocated to
that Series. If specified in any Prospectus
Supplement, the term "Investor Interest" with
respect to the related Series will include the
Collateral Interest with respect to that Series. The
aggregate principal amount of the interest of the
Transferor is called the "Transferor Interest," and
is based on the sum of the portion of the Aggregate
Principal Receivables in the Trust not allocated to
the Certificateholders or any provider of Credit
Enhancement (each a "Credit Enhancement Provider"),
with respect to the Trust and the principal amount,
if any, on deposit in the Excess Funding Account.
See "Description of the Certificates--General."
The Certificateholders of each Series will have the
right to receive (but only to the extent needed to
make required payments under the Agreement and the
related Series Supplement and subject, in the case
of any Series in a Reallocation Group, to
reallocation as described in "Description of the
Certificates--Reallocations Among Different Series
within a Reallocation Group") varying percentages of
the collections of Finance Charge Receivables and
Principal Receivables for each month and will be
allocated a varying percentage of the Net Default
Amount or any Net Recoveries for that month (each
such percentage, an "Investor Percentage"). The "Net
Default Amount" for any month means the excess (if
any) of the amount of Receivables in Accounts that
7
<PAGE>
were written off as uncollectible by the Servicer
("Defaulted Accounts") for that month over the
amounts received by the Servicer with respect to
Receivables in all Defaulted Accounts (net of
related expenses and allocated in accordance with
the Servicer's customary procedures) (collectively,
"Recoveries"). If the amount of Recoveries received
by the Servicer for a month exceeds the amount of
Receivables in Accounts that become Defaulted
Accounts in that month, the excess Recoveries are
referred to as "Net Recoveries."
The related Prospectus Supplement will specify the
Investor Percentages with respect to the allocation
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. If the Certificates of a Series offered
hereby include more than one Class of Certificates,
the assets of the Trust allocable to the
Certificates of that Series may be further allocated
among each Class in that Series as described in the
related Prospectus Supplement. See "Description of
the Certificates--Allocations."
The Certificates of each Series will represent
interests in the Trust only and will not represent
interests in or recourse obligations of the
Transferor or any affiliate thereof. A Certificate
is not a deposit and neither the Certificates nor
the underlying Accounts or Receivables are insured
or guaranteed by the Federal Deposit Insurance
Corporation (the "FDIC") or (except for Receivables
arising in Private Label Accounts) any other
governmental agency.
Receivables............. The Receivables held in the Trust will arise in
Accounts selected from the Bank Portfolio based on
criteria provided in the Agreement and described in
the related Prospectus Supplement as applied
initially on April 30, 1997 (the "Cut-Off Date"),
and, with respect to certain Additional Accounts, if
any, on subsequent dates.
The Receivables will consist of amounts charged by
accountholders for goods and services, cash advances
and balances transferred from other credit accounts
(the "Principal Receivables"), plus the related
periodic finance charges and amounts charged to the
Accounts in respect of certain annual account fees,
cash advance fees, late fees, overlimit fees, closed
account maintenance charges and similar fees and
charges (including fees which are not now but from
time to time may be assessed on the Accounts) (the
"Finance Charge Receivables"). Net Recoveries also
will be treated as collections of Finance Charge
Receivables unless the related Prospectus Supplement
provides that Net Recoveries shall not be treated as
Finance Charge Receivables for purposes of the
related Series. In addition, at the option of the
Transferor, an amount equal to the product of the
Discount Percentage and the amount of Receivables
arising in the related Accounts on and after the
date such option is exercised (and, if the
Transferor so elects, Receivables arising in the
related Accounts before the date such option is
exercised) that otherwise would be Principal
Receivables will be treated as Finance Charge
Receivables. See "Description of the
8
<PAGE>
Certificates--Discount Option." Finally, if so
specified in the related Prospectus Supplement,
certain amounts of Interchange and Other Account
Revenues may be allocated to the Certificates of a
Series or any of its Classes and treated as
collections of Finance Charge Receivables for
purposes of that Series or Class or may be applied
in some other manner as described in the related
Prospectus Supplement. See "First NBC's Credit Card
Activities--Interchange and Other Account Revenues."
During the term of the Trust, the Transferor will
automatically transfer all new Receivables arising
in the Accounts to the Trust. The total amount of
Receivables in the Trust will fluctuate from day to
day, because the amount of new Receivables arising
in the Accounts and the amount of payments collected
on existing Receivables usually differ each day.
Pursuant to the Agreement, the Transferor will have
the right (subject to certain limitations and
conditions), and, to the extent necessary to
maintain the Transferor Interest at or above a
specified level (the "Minimum Transferor Interest")
and in certain other circumstances, will be
obligated, to designate additional eligible
revolving credit accounts to be included as
Additional Accounts and to convey to the Trust all
of the Receivables in the Additional Accounts,
whether such Receivables are then existing or
thereafter created or designate Participations to be
included in the Trust in lieu thereof or in addition
thereto. See "Risk Factors--Possible Prepayment or
Losses as a Result of Addition of Trust Assets--
Effect on Credit Quality" and "Description of the
Certificates--Addition of Trust Assets."
Pursuant to the Agreement, the Transferor will have
the right (subject to certain limitations and
conditions) to designate certain Accounts as
"Removed Accounts" and stop transferring new
Receivables arising in the Removed Accounts to the
Trust. Pre-existing Receivables in Removed Accounts
may either be conveyed to the Transferor or its
designee or retained by the Trust. If such pre-
existing Receivables are retained in the Trust, the
Servicer and the Transferor will agree to allocate
principal collections on the Removed Accounts on a
first-in, first-out basis, so that such collections
will be allocated to outstanding advances in the
order in which such advances arose (beginning with
the oldest outstanding advance). Principal
collections allocable to Receivables retained by the
Trust will be applied as Collections in accordance
with the Agreement. Upon payment of all amounts
owing in respect of such Receivables, the Trust will
transfer the related Account to the Transferor. See
"Description of the Certificates--Removal of
Accounts."
New Issuances........... The Agreement will authorize the Trustee to issue two
types of certificates: (i) one or more Series of
Certificates that will be transferable and have the
characteristics described below; and (ii) one or
more supplemental certificates ("Supplemental
Certificates"), evidencing partial interests in the
Transferor Interest. The Supplemental Certificates
are not offered hereby and will be transferable only
as provided in the Agreement. Any Series of
Certificates may be offered
9
<PAGE>
to the public or other investors under a prospectus
or other disclosure document (a "Disclosure
Document") in offerings pursuant to this Prospectus
or in transactions either registered under the
Securities Act of 1933, as amended (the "Securities
Act") or exempt from registration thereunder,
directly or through one or more other underwriters
or placement agents, in fixed-price offerings or in
negotiated transactions or otherwise. To the extent
provided in the related Supplement (and subject to
any applicable requirements under the Exchange Act
and the rules and regulations thereunder, including
Rule 13e-4), a new Series may be issued fully or
partially in exchange for certificates of one or
more existing Series.
A new issuance of a Series of Certificates (a "New
Issuance") may occur only upon delivery to the
Trustee of the following: (i) a Series Supplement
specifying the terms of the new Series, (ii) (a) an
opinion of counsel to the effect that the
certificates of that Series will be characterized as
indebtedness for Federal income tax purposes, unless
the related Series Supplement indicates that such
opinion will not be provided and (b) an opinion of
counsel to the effect that, for Federal income tax
purposes, (1) such issuance will not adversely
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, (2) such issuance will not cause the Trust
to be classified as an association (or publicly
traded partnership) taxable as a corporation and (3)
such issuance will not cause or constitute an event
in which gain or loss would be recognized by any
Certificateholder (an opinion of counsel to this
effect with respect to any action being 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, (v) written
confirmation from each Rating Agency that the New
Issuance will not result in that Rating Agency
reducing or withdrawing its rating on any then
outstanding Series rated by it, (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 the
Receivables of any Additional Accounts pursuant to
the Agreement and the Transferor Interest would be
at least equal to the Minimum Transferor Interest
and (vii) if applicable, the Certificates
representing the Series to be exchanged. See
"Description of the Certificates--New Issuances."
The Certificates resulting from a New Issuance may
either be delivered by the Trustee to the Bank for
sale by the Bank or sold directly by the Trust.
The Transferor also may from time to time cause the
Trustee to sell interests (each, a "Purchased
Interest") in the Receivables and other assets of
the Trust to one or more purchasers. Any Purchased
Interest will represent an interest in the Trust's
assets similar to the interest of a Series of
Certificates. No Series will be subordinated to any
Purchased Interest, and no Purchased Interest will
have any interest in the Series Accounts or
Enhancement for any Series, unless the Prospectus
Supplement relating to that Series so provides. Any
such sale will take
10
<PAGE>
place pursuant to one or more agreements which will
specify terms for the applicable Purchased Interests
and may grant the purchasers of such interests
notice and consultation rights with respect to
rights or actions of the Trustee. Any sale of
Purchased Interests in the assets of the Trust will
be subject to the satisfaction of the same
conditions (including Rating Agency confirmations)
as for a New Issuance, as appropriately adjusted to
apply to the relevant Purchased Interest rather than
a New Issuance. No Purchased Interest is offered
hereby.
Denominations........... Beneficial interests in the Certificates will be
offered for purchase in the denominations specified
in the related Prospectus Supplement.
Registration of The Certificates of each Series offered hereby may or
Certificates............ may not be represented by Certificates registered in
the name of Cede, as the nominee of DTC, as
specified in the related Prospectus Supplement. If
the Certificates of a Series are so registered, then
no Certificate Owner will be entitled to receive a
definitive certificate representing its interest,
except in the event that Certificates in fully
registered, certificated form ("Definitive
Certificates") are issued under the limited
circumstances described herein. See "Description of
the Certificates--Definitive Certificates."
Clearance and Certificate Owners of each Series offered hereby may
Settlement.............. or may not be permitted to make an election to hold
their Certificates through any of DTC (in the United
States) or Cedel or Euroclear (in Europe), as
specified in the related Prospectus Supplement. If
such election is available, then transfers within
DTC, Cedel or Euroclear, as the case may be, will be
made in accordance with the usual rules and
operating procedures of the relevant system. Cross-
market transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will be
effected in DTC through the relevant Depositaries of
Cedel or Euroclear. See "Description of the
Certificates--Book-Entry Registration."
Transferor and First National Bank of Commerce ("First NBC" or the
Servicer................ "Bank"). The principal executive offices of the Bank
are located at New Orleans, Louisiana, telephone
number (504) 623-1371. The Servicer will receive a
fee as servicing compensation from the Trust in
respect of each Series in the amounts and at the
times specified in the related Prospectus Supplement
(the "Servicing Fee"). The Servicing Fee may be
payable from Finance Charge Receivables, Interchange
or other amounts as specified in the related
Prospectus Supplement. In certain limited
circumstances, the Bank may resign or be removed as
servicer, in which event the Trustee or a third
party servicer may be appointed as successor
servicer (the Bank, in this capacity, or any
successor servicer, is called the "Servicer"). The
Bank is a wholly owned subsidiary of First Commerce
Corporation (the "Corporation"). See "First NBC and
First Commerce Corporation." In addition, if the
Bank elects to sell or otherwise dispose of the
Accounts, then the new owner of the Accounts may be
substituted for the Bank as Transferor and Servicer
upon the satisfaction of certain conditions,
including the delivery of a Tax
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Opinion and receipt of written confirmation from
each Rating Agency that such substitution will not
result in such Rating Agency's reducing or
withdrawing its rating on any then outstanding
Series rated by it.
Collections............. The Servicer will deposit all collections of
Receivables in an account required to be established
for such purpose by the Agreement (the "Collection
Account"). All amounts deposited in the Collection
Account will be allocated by the Servicer between
amounts collected on Principal Receivables and
amounts collected on Finance Charge Receivables. If
so specified in the related Prospectus Supplement,
Principal Receivables and/or Finance Charge
Receivables may be otherwise characterized. See
"Description of the Certificates--Discount Option."
All such amounts will then be further allocated in
accordance with the respective interests of the
Certificateholders of each Series or Class of
Certificates and the Transferor and, in certain
circumstances, certain providers of Enhancement. See
"Description of the Certificates--Allocations."
Interest Payments....... Interest on each Series of Certificates or Class for
each applicable period (each, an "Interest Period")
specified in the related Prospectus Supplement will
be distributed in the amounts and on the dates
(which may be monthly, quarterly, semiannually or
otherwise as specified in the related Prospectus
Supplement) (each, a "Distribution Date") specified
in the related Prospectus Supplement. Interest
payments on each Distribution Date will be funded
from collections of Finance Charge Receivables
allocated to the Investor Interest during the
preceding calender month or months (each, a "Monthly
Period"), as described in the related Prospectus
Supplement, and may be funded from certain
investment earnings on funds in certain accounts of
the Trust and from any applicable Enhancement, if
necessary, or certain other amounts as specified in
the related 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 allocable to such
Series or Class may be deposited in one or more
trust accounts pending distribution to the
Certificateholders of such Series or Class, all as
described in the related Prospectus Supplement. See
"Description of the Certificates--Application of
Collections," "--Shared Excess Finance Charge
Collections," "Credit Enhancement" and "Risk
Factors--Possible Losses as a Result of Limited
Credit Enhancement."
Revolving Period........ Generally, no principal will be payable to
Certificateholders of any Series or Class until the
Principal Commencement Date or the Scheduled Payment
Date with respect to that Series or Class, as
described below. However, if specified in the
related Prospectus Supplement for a Series or Class,
principal may be payable to Certificateholders of
such Series or Class prior to either such date, in
connection with a Partial Amortization or otherwise.
For the period beginning on the date of issuance of
a Series (a "Closing Date") and ending with the
commencement of an Amortization Period or an
Accumulation Period (the "Revolving Period"),
collections of Principal Receivables otherwise
allocable to that Series' Investor Interest will,
subject to
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<PAGE>
certain limitations, be paid to the Transferor or
deposited in the Excess Funding Account for the
Trust or, under certain circumstances and if so
specified in the related Prospectus Supplement,
treated as Shared Principal Collections and paid to
the holders of certificates of other Principal
Sharing Series, as described herein and in the
related Prospectus Supplement. See "Description of
the Certificates--Pay Out Events" for a discussion
of the events which might lead to early termination
of the Revolving Period.
Principal Payments...... The principal of the Certificates of each Series
offered hereby will be scheduled to be paid either
in installments commencing on a date specified in
the related Prospectus Supplement (the "Principal
Commencement Date"), in which case such Series will
have either a Controlled Amortization Period or a
Principal Amortization Period, as described below,
or on an expected date specified in, or determined
in the manner specified in, the related Prospectus
Supplement (the "Scheduled Payment Date"), in which
case such Series will have an Accumulation Period,
as described below. If a Series has more than one
Class of Certificates, a different method of paying
principal, Principal Commencement Date or Scheduled
Payment Date may be assigned to each Class. The
payment of principal with respect to the
Certificates of a Series or Class may commence
earlier than the applicable Principal Commencement
Date or Scheduled Payment Date, and the final
principal payment with respect to the Certificates
of a Series or Class may be made earlier or later
than the applicable expected payment date, Scheduled
Payment Date or other expected date, if a Pay Out
Event occurs and the Rapid Amortization Period
commences with respect to such Series or Class or
under certain other circumstances described herein
or in the related Prospectus Supplement. See
"Description of the Certificates--Principal
Payments."
Controlled Amortization A Series or any Class thereof may have a "Controlled
Period.................. Amortization Period," as specified in the related
Prospectus Supplement, in order to permit payment of
the principal balance of the applicable Certificates
in fixed installments over a specified amortization
period. Unless a Rapid Amortization Period with
respect to a Series that has a Controlled
Amortization Period commences, collections of
Principal Receivables allocable to that Series'
Investor Interest during each Monthly Period falling
in its Controlled Amortization Period (and certain
other amounts if so specified in the related
Prospectus Supplement) will be used on the related
Distribution Date to make principal distributions in
scheduled amounts to the Certificateholders of such
Series or any Class of such Series then scheduled to
receive such distributions. The amount to be
distributed on any Distribution Date during the
Controlled Amortization Period will be limited to an
amount (the "Controlled Distribution Amount") equal
to an amount specified in the related Prospectus
Supplement (the "Controlled Amortization Amount"),
plus any Controlled Amortization Amount not paid on
prior Distribution Dates. If a Series has more than
one Class of Certificates, each Class may have a
separate Controlled Amortization Amount. In
addition, the related Prospectus Supplement may
describe priorities among such Classes
13
<PAGE>
with respect to such distributions. The Controlled
Amortization Period will commence at the close of
business on a date specified in the related
Prospectus Supplement and continue until the
earliest of (a) the commencement of the Rapid
Amortization Period, (b) payment in full of the
Investor Interest of the Certificates of such Series
or Class and, if so specified in the related
Prospectus Supplement, of any related Collateral
Interest or Enhancement Invested Amount and (c) the
related Series Termination Date.
Principal Amortization A Series or any Class thereof may have a "Principal
Period.................. Amortization Period" as specified in the related
Prospectus Supplement, in order to permit payment of
the principal balance of the applicable Certificates
in installments over a specified amortization
period. Such installment payments are not limited by
any Controlled Amortization Amount during a
Principal Amortization Period. Unless a Rapid
Amortization Period with respect to a Series that
has a Principal Amortization Period commences,
collections of Principal Receivables allocable to
that Series' Investor Interest during each Monthly
Period falling in its Principal Amortization Period
(and certain other amounts if so specified in the
related Prospectus Supplement) will be used on the
related Distribution Date to make principal
distributions to the Certificateholders of that
Series or any Class of that Series then scheduled to
receive such distributions. If a Series has more
than one Class of Certificates, the related
Prospectus Supplement may describe certain
priorities among those Classes with respect to such
distributions. The Principal Amortization Period
will commence at the close of business on a date
specified in the related Prospectus Supplement and
continue until the earlier of (a) the commencement
of the Rapid Amortization Period, (b) payment in
full of the Investor Interest of the Certificates of
such Series or Class and, if so specified in the
related Prospectus Supplement, of any related
Collateral Interest or Enhancement Invested Amount
and (c) the related Series Termination Date.
Controlled Accumulation A Series or any Class thereof may have a "Controlled
Period.................. Accumulation Period," as specified in the related
Prospectus Supplement, in order to allow for the
accumulation of principal collections in a trust
account established for the benefit of the
Certificateholders of that Series or Class (a
"Principal Funding Account") in anticipation of a
balloon payment on the Scheduled Payment Date.
During the Controlled Accumulation Period, principal
collections in excess of a fixed amount will not be
so set aside in the Principal Funding Account, which
permits the Transferor to continue to have access to
collections which are not then required to be set
aside for payment of the Certificates. Unless a
Rapid Amortization Period or, if so specified in the
related Prospectus Supplement, a Rapid Accumulation
Period with respect to a Series that has a
Controlled Accumulation Period commences, Controlled
Accumulation Period collections of Principal
Receivables allocable to that Series' Investor
Interest during each Monthly Period falling in its
Controlled Accumulation Period (and certain other
amounts if so specified in the related Prospectus
Supplement) will be deposited on the
14
<PAGE>
business day immediately prior to the related
Distribution Date or other business day specified in
the related Prospectus Supplement (each a "Transfer
Date") in the Principal Funding Account for that
Series or Class Principal Funding Account and used
to make distributions of principal to the
Certificateholders of that Series or Class on the
Scheduled Payment Date. The amount to be deposited
in the Principal Funding Account on any Transfer
Date will be limited to an amount (the "Controlled
Deposit Amount") equal to an amount specified in the
related Prospectus Supplement (the "Controlled
Accumulation Amount"), plus any Controlled
Accumulation Amount not deposited on prior Transfer
Dates. If a Series has more than one Class of
Certificates, each Class may have a separate
Principal Funding Account and Controlled
Accumulation Amount. In addition, the related
Prospectus Supplement may describe certain
priorities among such Classes with respect to
deposits of principal into such Principal Funding
Accounts. The Controlled Accumulation Period will
commence at the close of business on a date
specified in or determined in the manner specified
in the related Prospectus Supplement and continue
until the earliest of (a) the commencement of the
Rapid Amortization Period or, if so specified in the
related Prospectus Supplement, the Rapid
Accumulation Period, (b) payment in full of the
Investor Interest of the Certificates of that Series
or Class and, if so specified in the related
Prospectus Supplement, any related Collateral
Interest or Enhancement Invested Amount and (c) the
related Series Termination Date.
Funds on deposit in any Principal Funding Account may
be invested in permitted investments or subject to a
guaranteed rate or investment contract or other
arrangement intended to assure a minimum return on
the investment of such funds. Investment earnings on
such funds may be applied to pay interest on the
related Series of Certificates. In order to enhance
the likelihood of payment in full of principal at
the end of an Accumulation Period with respect to a
Series of Certificates, that Series or any of its
Classes may be subject to a principal payment
guaranty or other similar arrangement.
Rapid Accumulation A Series or any Class thereof having a Controlled
Period.................. Accumulation Period may require the commencement of
a "Rapid Accumulation Period" upon the occurrence of
a Pay Out Event in order to halt the Transferor's
access to principal collections allocable to the
Investor Interest of such Series and require that
all such principal collections be set aside pending
the balloon payment on the related Scheduled Payment
Date. A Rapid Accumulation Period, if used, would
commence on the day on which a Pay Out Event has
occurred and end on the earliest of (a) the
commencement of the Rapid Amortization Period, (b)
payment in full of the Investor Interest of the
Certificates of such Series and, if so specified in
the related Prospectus Supplement, of the Collateral
Interest or the Enhancement Invested Amount, if any,
with respect to such Series and (c) the related
Series Termination Date. During the Rapid
Accumulation Period for a Series, Rapid Accumulation
Period collections of Principal Receivables
allocable to the Investor Interest of
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<PAGE>
the specified Series during each Monthly Period (and
certain other amounts if so specified in the related
Prospectus Supplement) will be deposited on the
related Transfer Date in the Principal Funding
Account and used to make distributions of principal
to the Certificateholders of such Series or any
Class thereof on the Scheduled Payment Date. The
amount to be deposited in the Principal Funding
Account during the Rapid Accumulation Period will
not be limited to the Controlled Deposit Amount.
The term "Pay Out Event" with respect to a Series of
Certificates means any of the events identified as
such in the related Prospectus Supplement and any of
the following: (a) certain events of insolvency or
receivership relating to the Transferor, (b) the
Transferor being unable for any reason to transfer
Receivables to the Trust in accordance with the
provisions of the Agreement or (c) the Trust
becoming an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
See "Description of the Certificates--Pay Out
Events." Providing for a Rapid Accumulation Period
instead of a Rapid Amortization Period in certain
circumstances would reduce the number of events that
could cause Certificateholders to be repaid their
principal investment prior to their Scheduled
Payment Date.
During the Rapid Accumulation Period, funds on
deposit in any Principal Funding Account may be
invested in permitted investments or subject to a
guaranteed rate or investment contract or other
arrangement intended to assure a minimum return on
the investment of such funds. Investment earnings on
such funds may be applied to pay interest on the
related Series of Certificates or make other
payments as specified in the related Prospectus
Supplement. In order to enhance the likelihood of
payment in full of principal at the end of the Rapid
Accumulation Period with respect to a Series of
Certificates, such Series or any Class thereof may
be subject to a principal payment guaranty or other
similar arrangement.
Rapid Amortization Each Series will be subject to early payment
Period.................. following the occurrence of a Pay Out Event (or a
date following the occurrence of a Pay Out Event in
the case of a Series subject to a Rapid Accumulation
Period, as specified in the related Prospectus
Supplement) through the monthly application of such
Series' allocable share of principal collections.
During the period from the day on which a Pay Out
Event has occurred with respect to a Series or, if
so specified in the Prospectus Supplement relating
to a Series with a Controlled Accumulation Period,
from such time specified in the related Prospectus
Supplement after a Pay Out Event has occurred and
the Rapid Accumulation Period has commenced, to the
earlier of (a) the date on which the Investor
Interest of the Certificates of such Series and the
Collateral Interest or the Enhancement Invested
Amount, if any, with respect to such Series have
been paid in full and (b) the related Series
Termination Date (the "Rapid Amortization Period"),
collections of Principal Receivables allocable to
the Investor Interest of such Series (and certain
other amounts if so specified in the related
Prospectus Supplement) will be
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<PAGE>
distributed as principal payments to the
Certificateholders of such Series and, in certain
circumstances, to the Credit Enhancement Provider,
monthly on each Distribution Date with respect to
such Series in the manner and order of priority set
forth in the related Prospectus Supplement. If a
Rapid Amortization Period commences, then such of
the Revolving Period, Controlled Amortization
Period, Principal Amortization Period, Controlled
Accumulation Period or Rapid Accumulation Period
which is then in effect with respect to the
applicable Series will terminate, and no portion of
such Series' allocable share of principal
collections will be paid to the Transferor or the
Holders of any other outstanding Series or retained
in the Excess Funding Account. Rather, the entire
amount of such Series' share of principal
collections will be distributed to the
Certificateholders of such Series on each
Distribution Date during the Rapid Amortization
Period.
During the Rapid Amortization Period with respect to
a Series, distributions of principal will not be
limited by any Controlled Deposit Amount or
Controlled Distribution Amount. In addition, upon
the commencement of the Rapid Amortization Period
with respect to a Series, any funds on deposit in a
Principal Funding Account with respect to such
Series or any Class thereof will be paid to the
Certificateholders of such Series or Class on the
first Distribution Date in the Rapid Amortization
Period.
Partial Amortization.... If so specified in the Prospectus Supplement relating
to a Series, one or more Classes of Certificates in
that Series may be subject to a partial early
amortization (a "Partial Amortization") in the
circumstances described below. In the event that the
Transferor is required to add the Receivables of
Additional Accounts pursuant to the Agreement and
the Transferor is unable to designate sufficient
Eligible Accounts for such purpose, then the
Transferor may elect to avoid a Pay Out Event based
on such inability by commencing a Partial
Amortization for the applicable Series. During a
Partial Amortization for any Series or Class, a
portion (as specified in the related Prospectus
Supplement) of collections of Principal Receivables
which otherwise would be treated as Shared Principal
Collections will be payable to the
Certificateholders of such Series or Class,
commencing on a specified Distribution Date
following the commencement of such Partial
Amortization until the Transferor is no longer
required to add Receivables of Additional Accounts
to the Trust.
Allocations Among Pursuant to the Agreement, during each Monthly
Series.................. Period, the Servicer is required to first allocate
to each Series collections of Principal Receivables
and Finance Charge Receivables and the Net Default
Amount or Net Recoveries with respect to such
Monthly Period based on the Investor Percentage for
such Series. See "Description of the Certificates--
Allocations." Subject to reallocation among Series
in a Reallocation Group, such amounts allocated to
each Series are then further allocated within each
Series to the Certificateholders, any Series
Enhancement and the Transferor pursuant to the terms
of the related Series Supplement.
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<PAGE>
Shared Excess Finance
Charge
Collections............ If so specified in the related Prospectus Supplement,
any Series offered hereby may be designated as a
Series that shares with other Series similarly
designated collections of Finance Charge Receivables
which are in excess of the amounts then required by
such Series (an "Excess Allocation Series"). The
receiving Series may then use such excess to cover
any shortfalls with respect to amounts payable from
collections of Finance Charge Receivables allocable
to such Series. By so sharing such excess
collections of Finance Charge Receivables, the
Transferor can more efficiently use available
investor funds to cover required payments on all
Series. The sharing of excess collections of Finance
Charge Receivables will, however, be discontinued if
at any time the Transferor delivers to the Trustee
an officer's certificate to the effect that, in the
reasonable belief of the Transferor, the
continuation of such sharing would have adverse
regulatory implications for Transferor. See
"Description of the Certificates--Application of
Collections," "--Shared Excess Finance Charge
Collections," "--Defaulted Receivables; Incentive
Payments and Fraudulent Charges; Investor Charge-
Offs" and "Credit Enhancement."
Shared Principal If any Series is designated as a "Principal Sharing
Collections............. Series" in the related Prospectus Supplement, to the
extent that collections of Principal Receivables
that are allocated to the Investor Interest of such
Series are not needed to make payments or deposits
with respect to such Series, such collections
("Shared Principal Collections") will be applied to
cover principal payments due to or for the benefit
of Certificateholders of other Principal Sharing
Series and, if not needed for that purpose, will
generally be distributed to the Transferor. Any such
reallocation will not result in a reduction in the
Investor Interest of the Series to which such
collections were initially allocated.
Reallocations Among
Series in
a Reallocation Group... If so specified in the related Prospectus Supplement,
the Certificates of a Series may be included in a
group of Series that will be subject to
reallocations of collections of Finance Charge
Receivables and other amounts among the Series in
such group (a "Reallocation Group"). Collections of
Finance Charge Receivables allocable to each Series
in a Reallocation Group will be aggregated and made
available for certain required payments for all
Series in such Reallocation Group. By including a
Series in a Reallocation Group, the Transferor may
enable that Series to obtain the benefit of excess
collections of Finance Charge Receivables allocated
on the basis of the amounts required for payments
with respect to such Series relative to the
aggregate amount of such required amounts for all
Series in the Reallocation Group. Consequently, the
issuance of new Series in such Reallocation Group
may have the effect of reducing or increasing the
amount of collections of Finance Charge Receivables
allocable to the Certificates of other Series in
such Reallocation Group. See "Risk Factors--Possible
Prepayment or Losses as a Result of Issuance of New
Series; Groups."
Paired Series........... If so specified in the Prospectus Supplement relating
to a Series, such Series may be paired with all or a
portion of one or more Series (each,
18
<PAGE>
a "Paired Series"), such that a reduction in the
Investor Interest or the Adjusted Investor Interest
of one such Series results in an increase in the
Investor Interest of the other such Series. The
effect of a Paired Series is to provide for
continuous investment in the Receivables by
Certificateholders, thereby reducing the potential
increase in the Transferor Interest as the first of
the Paired Series' interest in the Trust is reduced
through the amortization or accumulation of
principal. If a Pay Out Event occurs with respect to
a Series having a Paired Series or with respect to
the Paired Series when such Series is in a
Controlled Amortization Period or Controlled
Accumulation Period, the Investor Percentage for
collections of Principal Receivables for the Series
and for its Paired Series may be reset as specified
in the related Prospectus Supplements. See
"Description of the Certificates--Paired Series."
Excess Funding Account.. If on any date a Retention Condition exists, the
Servicer will not distribute to the Transferor any
Shared Principal Collections that otherwise would be
so distributed, but will instead deposit such funds
in an account required to be established for such
purpose by the Agreement (the "Excess Funding
Account"), until the Retention Condition ceases.
Funds on deposit in the Excess Funding Account will
be withdrawn and paid to the Transferor on any date
provided that no Retention Condition is in effect,
or would result from such payment, on such date. As
more fully described herein, a Retention Condition
exists if certain tests concerning the minimum level
of Receivables in the Trust are not met. In
addition, if a Controlled Accumulation Period,
Controlled Amortization Period, Principal
Amortization Period, Rapid Amortization Period or
Rapid Accumulation Period commences with respect to
any Series entitled to the benefits of Shared
Principal Collections, an amount of funds on deposit
in the Excess Funding Account (after giving effect
to the release of funds to the Transferor as
described above) up to the amount, if any, by which
the Transferor Interest would be less than zero if
there were no funds on deposit in the Excess Funding
Account on such date, will be treated as Shared
Principal Collections to the extent needed to cover
principal payments due to or for the benefit of such
Series, if so provided by the related Series
Supplement. See "Description of the Certificates--
Excess Funding Account."
Funding Period.......... The Prospectus Supplement relating to a Series of
Certificates 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"), which period will be less than a
year, the Aggregate 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 such 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
Principal Receivables to the Trust or pending the
reduction of the Investor Interests of other Series
issued by the Trust. The Pre-Funding Amount may be
up to 100% of the principal
19
<PAGE>
amount of the Certificates of a Series. The related
Prospectus Supplement will specify the initial
Investor Interest on the Closing Date with respect
to such Series, the aggregate principal amount of
the Certificates of 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
Principal Receivables are added to the Trust or as
the Investor Interests of other Series of the Trust
are reduced.
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 or its
assigns 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 related
Prospectus Supplement will be payable to the
Certificateholders of such Series in the manner and
at such time as set forth in the related Prospectus
Supplement.
If so specified in the related Prospectus Supplement,
funds on deposit in the Pre-Funding Account may be
invested in Permitted Investments or subject to a
guaranteed rate or investment agreement or other
similar arrangement, and investment earnings and any
applicable payment under any such investment
arrangement will be applied to pay interest on the
Certificates of such Series.
Credit Enhancement...... Credit Enhancement with respect to a Series or any
Class thereof may be provided in the form or forms
of subordination, a cash collateral account or
guaranty, a collateral interest, a letter of credit,
a surety bond, an insurance policy, a spread
account, a reserve account or other form of support
as specified in the related Prospectus Supplement.
Credit Enhancement may also be provided to a Class
or Classes of different Series by a cross-support
feature which requires that distributions of
principal and/or interest be made with respect to
Certificates of one or more Classes of a particular
Series before distributions are made to one or more
Classes of another Series.
The type, characteristics and amount of the Credit
Enhancement will be determined based on several
factors, including the characteristics of the
Receivables and Accounts included in the Trust
Portfolio as of the Closing Date with respect to any
Series, and will be established on the basis of
requirements of each Rating Agency rating the
Certificates of such Series. If so specified in the
related Prospectus Supplement, any such Credit
Enhancement will apply only in the event of certain
types of losses and the protection against losses
provided by such Credit Enhancement will be limited.
The terms of the Credit Enhancement with respect to
a Series, and the conditions under which the Credit
Enhancement may be increased, reduced or replaced,
will be described in the related Prospectus
Supplement. See "Credit Enhancement" and "Risk
Factors--Limitations of Certificate Rating."
Optional Repurchase..... With respect to each Series of Certificates offered
hereby, the Investor Interest will be subject to
optional repurchase by the Transferor on any
20
<PAGE>
Distribution Date after the Investor Interest 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 lesser amount specified in
the related Prospectus Supplement, if certain
conditions set forth in the Agreement are met. The
repurchase price will be as specified in the related
Prospectus Supplement. See "Description of the
Certificates--Final Payment of Principal;
Termination."
Tax Status.............. Mayer, Brown & Platt, or such other counsel specified
in the related Prospectus Supplement, will act as
special tax counsel to the Bank ("Special Tax
Counsel") and will, upon issuance of a Series of
Certificates, render an opinion that the Offered
Certificates of such Series will be characterized as
indebtedness for Federal income tax purposes and
that the issuance of the Offered Certificates will
not cause the Trust to be treated as an association
(or publicly traded partnership) taxable as a
corporation. A copy of such opinion will be filed
with the Commission with a Report on Form 8-K
following the issuance of a Series of Certificates.
The Certificate Owners will agree to treat the
Offered Certificates as debt for Federal income tax
purposes. See "U.S. Federal Income Tax Consequences"
for additional information concerning the
application of Federal income tax laws.
ERISA Considerations.... Under regulations issued by the Department of Labor,
the Trust's assets would not be deemed "plan assets"
of any employee benefit plan holding interests in
the Certificates of a Series if certain conditions
are met. If the Trust's assets were deemed to be
"plan assets" of an employee benefit plan, there is
uncertainty as to whether existing exemptions from
the "prohibited transaction" rules of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), would apply to all transactions involving
the Trust's assets. No assurance can be made with
respect to any offering of the Certificates of any
Series that the conditions which would allow the
Trust assets not to be deemed "plan assets" will be
met, although the intention of the underwriters (but
not their assurance) as to whether the Certificates
of a particular Series will be "publicly-offered
securities", and therefore eligible for an ERISA
exemption, will be set forth in the related
Prospectus Supplement. Accordingly, employee benefit
plans contemplating purchasing interests in
Certificates should consult their counsel before
making a purchase. See "ERISA Considerations."
Certificate Rating...... It will be a condition to the issuance of the
Certificates of each Series or Class thereof offered
pursuant to this Prospectus and the related
Prospectus Supplement that they be rated in one of
the four highest rating categories by at least one
nationally recognized rating organization (each such
rating organization selected by the Transferor to
rate any Series, a "Rating Agency"). The rating or
ratings applicable to the Certificates of each
Series or Class thereof offered hereby will be set
forth in the related Prospectus Supplement.
A rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning Rating
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Agency. Each rating should be evaluated
independently of any other rating. See "Risk
Factors--Limitations of Certificate Rating."
Listing................. 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.
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RISK FACTORS
Potential investors should consider, among other things, the following
considerations in connection with the purchase of the Certificates.
Possible Impact of Limited Liquidity on Market Value. It is anticipated
that, to the extent permitted, the underwriters of any Series of Certificates
offered hereby will make a market in such Certificates, but in no event will
any such underwriter be under an obligation to do so. There is no assurance
that a secondary market will develop with respect to the Certificates of any
Series, or if it does develop, that it will provide Certificateholders with
liquidity of investment or that it will continue for the life of such
Certificates. Consistent with general practice for asset-backed securities
like the Certificates, it is not generally expected that any Series of
Certificates will be listed on any securities exchange, except that certain
Series may be listed on the Luxembourg Stock Exchange (in which case such
expected listing will be disclosed in the related Prospectus Supplement).
Limitations on the liquidity of the Certificates may have a negative impact on
their market value.
Possible Delays or Losses as a Result of Potential Priority of Certain
Liens. The Transferor will transfer interests in Receivables to the Trust. A
court could treat any such transaction as an assignment of collateral as
security for the benefit of holders of Certificates issued by the Trust. The
Transferor will represent and warrant in the Agreement that the transfer of
the Receivables to the Trust is either a valid transfer and assignment of the
related Receivables to the Trust or the grant to the Trustee of a security
interest in such Receivables. The Transferor will take actions required to
perfect the Trust's security interest in the Receivables and will warrant that
if the transfer to the Trust is deemed to be a grant of a security interest in
the related Receivables, the Trustee will have a first priority perfected
security interest therein, except for any liens for local taxes that are not
yet due and payable or are being contested. Nevertheless, if the transfer of
Receivables to the Trust is deemed to create a security interest therein,
certain nonconsensual liens on property of the Transferor arising before
Receivables come into existence (including Federal or local tax liens and
liens arising under ERISA) may have priority over the Trust's interest in such
Receivables, and if the FDIC were appointed receiver or conservator of the
Transferor, the FDIC's administrative expenses may also have priority over the
Trust's interest in such Receivables. The existence of such liens or rights of
the receiver of the Transferor could result in possible delay in the amount of
payments on the Certificates or in losses to Certificateholders. See "Certain
Legal Aspects of the Receivables--Transfer of Receivables."
Possible Losses as a Result of Commingling. In addition, while the
Transferor is the Servicer, cash collections held by the Transferor may,
subject to certain conditions described below in "Description of
Certificates--Application of Collections," 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 a result of any such commingling, the Trust may not have a perfected
interest in such collections, which could, in the event of a conservatorship
or receivership of the Transferor, cause the Trust to suffer a loss of all or
part of such collections, which may result in a loss to Certificateholders.
Possible Delays, Prepayment or Losses as a Result of Receivership of
Transferor. To the extent that the Transferor has granted or will grant a
security interest in Receivables to the Trust and that security interest is
validly perfected before the Transferor's insolvency (and was not or will not
be taken in contemplation of insolvency of the Transferor, or with the intent
to hinder, delay or defraud the Transferor or the creditors of the
Transferor), the Federal Deposit Insurance Act ("FDIA"), as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as
amended ("FIRREA"), provides that such security interest should not be subject
to avoidance by the FDIC, as receiver for the Transferor. Positions taken by
the FDIC staff prior to the passage of FIRREA suggest that the FDIC, as
receiver for the Transferor, would not interfere with the timely transfer to
the Trust of payments collected on the related Receivables. If, however, the
FDIC were to assert a contrary position, such as requiring the Trustee to
establish its right to those payments by submitting to and completing the
administrative claims procedure under the FDIA, or the conservator or receiver
were to request a stay of proceedings with respect to the Transferor as
provided under the FDIA, delays in payments on the related Series of
Certificates and possible losses to Certificateholders could occur.
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In addition, the FDIC, if appointed as the 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, then a Pay
Out Event could occur with respect to all Series then outstanding and,
pursuant to the Agreement, new Principal Receivables would not be transferred
to the Trust. If a Pay Out Event occurs involving either the insolvency of the
Transferor or the appointment of a conservator or receiver for the Transferor,
the conservator or receiver may have the power to prevent the commencement of
the Rapid Amortization Period or, if applicable with respect to a Series as
specified in the related Prospectus Supplement, the Rapid Accumulation Period,
and may be able to require that new Principal Receivables be transferred to
the Trust. Such action could cause delays in payments to Certificateholders or
in losses to Certificateholders. A conservator or receiver may also have the
power to cause the early sale of the Receivables and the early retirement of
the Certificates of each Series or to prohibit the continued transfer of
Principal Receivables to the Trust. In addition, in the event of a Servicer
Default relating to the conservatorship or receivership of the Servicer, if no
Servicer Default other than such conservatorship or receivership 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. See "Certain Legal Aspects of the Receivables--Certain
Matters Relating to Receivership."
Effects of Applicable Law
Possible Prepayment or Losses as a Result of Limitations Imposed by Consumer
Protection Laws. Federal and state consumer protection laws, such as the
Louisiana Consumer Credit Law, Louisiana Collection Agency Regulation Act and
Louisiana Equal Credit Opportunity Law impose requirements on the making and
enforcement of consumer loans and extensions of credit to consumers. In
addition, the Soldiers' and Sailors' Civil Relief Act of 1940 (the "SSCRA")
provides for a stay of court proceedings against military personnel (including
Air Force personnel) on active duty if the ability of such person to defend
against a suit would be materially affected by reason of military service and
limits to 6% per year the interest chargeable to military personnel (including
Air Force personnel) on active duty on obligations incurred by such person
prior to entrance into such service unless the obligee obtains a court order
allowing a higher rate to be charged. The SSCRA could adversely affect the
Servicer's ability to collect on Receivables generated under First NBC's USAF
Club Card program and other military programs, which make up a significant
portion of the Trust Portfolio. See "First NBC's Credit Card Activities--
General." In its experience to date with the military programs, First NBC does
not believe that the SSCRA has had a material impact on its collection
efforts, but there can be no assurance that the SSCRA would not have an
adverse effect in the future. Congress and the states may enact new laws and
amendments to existing laws to regulate further the credit card and consumer
credit industry or to reduce finance charges or other fees or charges
applicable to credit card accounts.
Such laws, as well as any new laws or rulings which may be adopted, may
adversely affect the Servicer's ability to collect on the Receivables or
maintain previous levels of monthly periodic finance charges and other credit
card fees. One effect of any existing or new legislation which regulates the
amount of interest and other charges that may be assessed on credit card
account balances could be to reduce the Portfolio Yield on the Accounts. If
such legislation were to result in a significant reduction in the Portfolio
Yield, a Pay Out Event could occur, in which case the Rapid Amortization
Period or, if so specified in the related Prospectus Supplement, the Rapid
Accumulation Period would commence. Certificateholders of an affected Series
might then receive principal payments earlier than expected. See "Description
of the Certificates--Pay Out Events." If the resulting reduction in the
Portfolio Yield were significant enough, Certificateholders could suffer
losses.
Pursuant to the Agreement, the Transferor will covenant to accept
reassignment, subject to certain conditions described under "Description of
the Certificates--Representations and Warranties," of each
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Receivable that does not comply in all material respects with all requirements
of applicable law. The Transferor will make certain other representations and
warranties relating to the validity and enforceability of the Receivables.
However, it is not anticipated that the Trustee will make any examination of
the related Receivables or the records relating thereto for the purpose of
establishing the presence or absence of defects, compliance with such
representations and warranties, or for any other purpose. The sole remedy if
any such representation or warranty is breached and such breach continues
beyond the applicable cure period is that the Transferor will be obligated to
accept reassignment, subject to certain conditions described under
"Description of the Certificates--Representations and Warranties," of the
Receivables affected thereby. See "Description of the Certificates--
Representations and Warranties" and "Certain Legal Aspects of the
Receivables--Consumer Protection Laws."
Possible Losses as a Result of Application of Bankruptcy Law. Application of
Federal and state bankruptcy and debtor relief laws would affect the interests
of the Certificateholders in the Receivables if such laws result in any
Receivables being written off as uncollectible when there are no funds
available from any Credit Enhancement or other sources to cover any resulting
shortfalls in amounts payable to Certificateholders. See "Description of the
Certificates--Defaulted Receivables; Incentive Payments and Fraudulent
Charges; Investor Charge-Offs." If any applicable Credit Enhancement is
exhausted, Certificateholders will bear a share of the losses on Receivables
in the Trust, including losses resulting from write offs described above,
which could result in losses to Certificateholders.
Possible Prepayment or Losses as a Result of Increasing Credit Card Losses.
Losses and delinquencies in the Bank Portfolio have increased in recent years.
Based upon published reports such as the Moody's Investors Service Credit Card
Credit Indexes, First NBC understands that this has been the case for most
domestic credit card issuers. Increasing losses and delinquencies in the Bank
Portfolio may result in the occurrence of a Pay Out Event and the commencement
of the Rapid Amortization Period. Further information about the level of
losses and delinquencies in the Bank Portfolio will be provided under "First
NBC's Credit Card Portfolio--Delinquency and Loss Experience" in the
applicable Prospectus Supplement. If losses reached a high enough level
relative to the yield on the Receivables, a Pay Out Event could occur,
resulting in payments to Certificateholders prior to the expected dates. In
addition, if any applicable Credit Enhancement is exhausted,
Certificateholders will bear a share of the losses on Receivables in Trust,
which could result in losses to Certificateholders.
Possible Prepayment as a Result of Competition in the Credit Card Industry.
The credit card industry is highly competitive. As new credit card issuers
enter the market and all issuers seek to expand their share of the market,
there is increased use of advertising, target marketing and pricing
competition. The Trust will be dependent upon the Transferor's continued
ability to generate new Receivables. If the rate at which new Receivables are
generated declines significantly and the Transferor is unable to designate
Additional Accounts, a Partial Amortization for one or more Series could occur
or a Pay Out Event could occur with respect to each Series, in which case the
Rapid Amortization Period or, if so specified in the related Prospectus
Supplement, the Rapid Accumulation Period with respect to each such Series
would commence. Certificateholders of an affected Series might then receive
principal payments earlier than expected.
Payments Other than at Expected Maturity. The Receivables may be paid at any
time and there is no assurance that there will be additional Receivables
created in the Accounts or that any particular pattern of cardholder
repayments will occur. The commencement and continuation of a Controlled
Amortization Period, a Principal Amortization Period, or a Controlled
Accumulation Period for a Series or Class thereof will be dependent upon the
continued generation of new Receivables to be conveyed to the Trust. A
significant decline in the amount of Receivables generated could result in the
occurrence of a Partial Amortization for one or more Series or a Pay Out Event
for one or more Series and the commencement of the Rapid Amortization Period
or, if so specified in the related Prospectus Supplement, the Rapid
Accumulation Period for each such Series. If a Pay Out Event occurs and the
Rapid Amortization Period commences, or if a Partial Amortization occurs, the
average life to maturity of the affected Series of Certificates could be
significantly reduced.
In addition, the Transferor can give no assurance that the payment rate
assumptions for any Series will prove to be correct. The related Prospectus
Supplement will provide certain historical data relating to payments by
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cardholders, total charge-offs and other related information relating to the
Trust Portfolio. There can be no assurance that future events will be
consistent with such historical data. In particular, Certificateholders should
be aware that the Transferor's ability to continue to compete in the current
industry environment will affect the Transferor's ability to generate new
Receivables to be conveyed to the Trust and may also affect payment patterns.
Further, the amount of collections of Receivables may vary from month to
month due to seasonal variations, general economic conditions, changes in
periodic finance charges and payment habits of individual cardholders. A
significant decrease in such monthly payment rate could slow the return or
accumulation of principal during an Amortization Period or Accumulation
Period. No assurance can be given that payments of principal will be made as
expected during the Controlled Amortization Period or the Principal
Amortization Period, or with respect to an Accumulation Period, or on the
Scheduled Payment Date, as applicable. Further, there can be no assurance that
collections of Principal Receivables, 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 a related Prospectus Supplement. Also, any
decision by the Transferor to designate (or increase) a Discount Percentage
will result in an increase in the amount of collections of Finance Charge
Receivables and a reduction in the balance of Principal Receivables
outstanding and a reduction in the Transferor Amount. See "Description of the
Certificates--Discount Option."
Possible Delays or Prepayment as a Result of Effect of Social, Legal and
Economic Factors on Credit Card Usage. Changes in use of credit and payment
patterns by customers may result from a variety of social, legal and economic
factors. Economic factors include the rate of inflation, seasonal buying
patterns, unemployment levels and relative interest rates. Social factors also
include unemployment rates as well as changes in consumer confidence levels
and attitudes toward incurring debt. Legal factors include the application of
usury and consumer protection laws. Social, legal and economic factors in the
State of Louisiana and surrounding states may have a disproportionate effect
on the Trust because of the relatively large percentage of Accounts in such
States. See "The Receivables" in the related Prospectus Supplement. The
Transferor, however, is unable to determine and has no basis to predict
whether, or to what extent, social, legal or economic factors will affect
future use of credit or repayment patterns. Any changes in credit or repayment
patterns could have effects like those described in "Payments Other than at
Expected Maturity" above.
Possible Delays or Prepayment as a Result of Affinity Programs. Some of the
Accounts, the Receivables of which will be conveyed to the Trust, were
originated by First NBC under various affinity agreements, including the
agreements relating to First NBC's United States Air Force Club program and
other military programs. In the future, Additional Accounts originated under
these or other affinity programs may be designated to the Trust (as may other
Additional Accounts not originated under affinity programs). Changes in the
terms of such programs or in First NBC's participation in the programs may
affect the rate at which new Receivables are generated in the related
Accounts, which could have effects like those described in "Payments Other
than at Expected Maturity" above.
Prepayment Resulting from Pre-Funding Account. With respect to any Series
having a Pre-Funding Account, in the event that there is an insufficient
amount of Principal Receivables in the Trust at the end of the applicable
Funding Period, the Certificateholders of such Series will be repaid principal
from amounts on deposit in the Pre-Funding Account (to the extent of such
insufficiency) following the end of such Funding Period, as described more
fully in the Prospectus Supplement. Such repayment of principal would be prior
to the scheduled date of such repayment. As a result of such repayment,
Certificateholders would receive a principal payment earlier than they
expected. In addition, Certificateholders would not receive the benefit of the
applicable Certificate Rate for the period of time originally expected on the
amount of such early repayment. There can be no assurance that a
Certificateholder would be able to reinvest such early repayment amount at a
similar rate of return. If a Certificateholder is not able to reinvest such
early repayment amount at the same rate of return or better, the
Certificateholder's anticipated yield would be adversely affected. However, a
Series with a Pre-Funding Account feature may also require the payment of a
prepayment premium in such a circumstance, which would mitigate the adverse
effect to the Certificateholder's anticipated yield.
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Possible Prepayment or Losses as a Result of Transferor's Ability to
Adversely Change Terms of the Receivables. Pursuant to the Agreement, the
Transferor does not transfer to the Trust the Accounts but only the
Receivables arising in the Accounts. As owner of the Accounts, the Transferor
retains the right to determine the monthly periodic finance charges and other
fees which will be applicable from time to time to the Accounts, to alter the
minimum monthly payment required on the Accounts and to change various other
terms with respect to the Accounts, including changing the annual percentage
rate from a fixed rate to a variable rate or vice versa. A decrease in the
periodic finance charge or a reduction in credit card or other fees would
decrease the effective yield on the Accounts and could result in the
occurrence of a Pay Out Event with respect to each Series and the commencement
of the Rapid Amortization Period or, if so specified in the related Prospectus
Supplement, the Rapid Accumulation Period with respect to each such Series.
Certificateholders of an affected Series might then receive principal payments
earlier than expected. If the resulting reduction reduced the Portfolio Yield
significantly, there could be reductions in amounts available to cover the
portions of defaulted Receivables allocated to a Series, and in amounts
available to make required deposits to various Trust Accounts, all of which
may (if any available Credit Enhancement is exhausted) result in losses to
Certificateholders.
Under the Agreement, the Transferor will agree that, except as otherwise
required by law or as is deemed by the Transferor to be necessary in order to
maintain its revolving credit business, based upon a good faith assessment by
it, in its sole discretion, of the nature of the competition in that business,
the Transferor will not reduce the annual percentage rate or the periodic
finance charges assessed on the related Receivables or other fees on the
related Accounts if, as a result of such reduction, the Portfolio Yield for
any Series as of such date would be less than the Base Rate for such Series.
The Transferor from time to time may offer special rates (generally of limited
duration) which may be less than the annual percentage rates applicable to
other Receivables. The terms "Portfolio Yield" and "Base Rate" for each Series
will have the meanings set forth in the Prospectus Supplement relating to each
such Series. In addition, the Agreement will provide that the Transferor may
change the terms of the contracts relating to the related Accounts or its
servicing policies and procedures (including changes that could reduce the
required minimum monthly payment and change the calculation of the amount or
the timing of finance charges, credit card fees and charge offs), if such
change (i) would not, in the reasonable belief of the Transferor, cause a Pay
Out Event for any related Series to occur, and (ii) is made applicable to the
comparable segment of revolving credit accounts owned and serviced by the
Transferor which have characteristics the same as or substantially similar to
the related Accounts which are subject to such change. In servicing the
Accounts, the Servicer will be required to exercise the same care and apply
the same policies that it exercises in handling similar matters for its own
comparable accounts. Except as specified above or in any Prospectus
Supplement, there will be no restrictions on the Transferor's ability to
change the terms of the Accounts. There can be no assurance that changes in
applicable law, changes in the marketplace or prudent business practice might
not result in a determination by the Transferor to take actions which would
change this or other Account terms or that such changes would not be adverse
to the interests of Certificateholders. See "Receivable Yield Considerations"
in the Prospectus Supplement.
Possible Losses as a Result of Incentive Programs. First NBC has established
incentive programs applicable to certain accounts in the Bank Portfolio. These
programs permit a qualifying cardholder participating in the program to earn
rights to obtain airline tickets paid for by First NBC based upon use of the
account. The Trust will not assume the obligation to purchase airline tickets
or provide other benefits earned under this or any other incentive program
that may be adopted in the future. However, if accounts subject to this or any
similar incentive program are included in the Trust Portfolio, a cardholder
entitled to receive an incentive payment from First NBC might assert that he
or she could reduce the amount he or she was required to pay on a Receivable
if First NBC failed to provide a ticket or other benefit that had been earned
under the program. As described in "Description of the Certificates--Defaulted
Receivables; Incentive Payments and Fraudulent Charges; Investor Charge-Offs,"
any adjustments to Receivables as a result of such an event will be allocated
to the Transferor Interest. However, if the Transferor's Interest is reduced
to zero, and the Transferor fails to make required payments relating to these
events, then Certificateholders could suffer a loss.
Possible Prepayment or Losses as a Result of Basis Risk. If so specified in
the related Prospectus Supplement, a portion of the Accounts will have finance
charges set at a variable rate above a designated prime
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rate or other designated index. A Series of Certificates may bear interest at
a fixed rate or at a floating rate based on an index other than such prime
rate or other designated index. If there is a decline in such prime rate or
other designated index, the amount of collections of Finance Charge
Receivables on such Accounts may be reduced, whereas the amounts payable as
interest on such Series of Certificates and other amounts required to be
funded out of collections of Finance Charge Receivables with respect to such
Series may not be similarly reduced. Conversely, to the extent that Accounts
bear interest at a fixed rate and there is an increase in such prime rate or
other designated index, amounts payable as interest on such Series of
Certificates and other amounts required to be funded out of collections of
Finance Charge Receivables with respect to such Series may be increased,
whereas the amount of collections of Finance Charge Receivables on such
Accounts may not be similarly increased. In either case, if the amount of
collections of Finance Charge Receivables allocated to a Series is less than
the aggregate amount of interest, servicing fees and other amounts required to
be paid from such collections and this situation continued for a period of
time specified in the applicable Prospectus Supplement, then a Pay Out Event
could occur, resulting in principal payments to the Certificateholders prior
to the expected dates, and if any applicable Credit Enhancement was exhausted
losses to Certificateholders could result.
Possible Prepayment or Losses as a Result of Issuance of New Series; Groups.
The Trust, as a master trust, may issue Series and sell Purchased Interests
from time to time. While the terms of any Series will be specified in a Series
Supplement, the provisions of a Series Supplement and, therefore, the terms of
any additional Series, will not be subject to the prior review by, or consent
of, holders of the Certificates of any previously issued Series. Similarly,
the terms of any Purchased Interest will not be subject to the prior review
by, or consent of, holders of the Certificates of any previously issued
Series. The terms of any Series may include methods for determining applicable
investor percentages and allocating collections, provisions creating different
or additional security, provisions subordinating such Series to another Series
or other Series (if the Series Supplement relating to such Series so permits)
to such Series, and any other amendment or supplement to the Agreement which
is made applicable only to such Series. The terms of any Purchased Interest
may also cover all of the above-mentioned matters. It is a condition precedent
to the issuance of any additional Series, or sale of a Purchased Interest,
that each Rating Agency that has rated any outstanding Series deliver written
confirmation to the Trustee that such issuance or sale will not result in such
Rating Agency reducing or withdrawing its rating on any such outstanding
Series. See "Description of the Certificates--New Issuances." There can be no
assurance, however, that the terms of any other Series, including any Series
issued from time to time hereafter, or the terms of any Purchased Interest
might not have an impact on the timing and amount of payments received by a
Certificateholder of any other Series.
In addition, the Series Supplements relating to Series which are part of a
Reallocation Group as described herein may provide that collections of
Receivables allocable to such Series will be reallocated among all Series in
the Reallocation Group. Consequently, the issuance of new Series in a
Reallocation Group may have the effect of reducing the amount of collections
of Receivables which are reallocated to the Certificates of existing Series in
such Reallocation Group. For example, an additional Series which is issued
with a larger claim with respect to monthly interest than that of previously
issued Series in such Reallocation Group (due to a higher certificate rate)
will receive a proportionately larger reallocation of collections of Finance
Charge Receivables. Such issuance will reduce the amount of collections of
Finance Charge Receivables which are reallocated to the existing Series in
such Reallocation Group. Furthermore, there can be no assurance that, for any
Series in a Reallocation Group, the Trust will issue any other Series in such
Reallocation Group. Accordingly, the anticipated benefits of reallocation of
collections of Receivables may not be realized. See "Description of the
Certificates--Allocations" and "Reallocations Among Certificates of Different
Series within a Reallocation Group."
Possible Prepayment or Losses as a Result of Addition of Trust Assets--
Effect on Credit Quality. The Transferor expects, and in some cases will be
obligated, to designate Additional Accounts, the Receivables in which will be
conveyed to the Trust. In addition, the Agreement provides that the Transferor
may add Participations to the Trust. The designation of Additional Accounts
and Participations will be subject to the satisfaction of certain conditions
described herein under "Description of the Certificates--Addition of Trust
Assets." Additional Accounts may include accounts originated using criteria
different from those which were
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applied to the Accounts designated on the Cut-Off Date or to previously-
designated Additional Accounts, because such accounts were originated at a
different date or were acquired from another institution. Consequently, there
can be no assurance that Additional Accounts designated in the future will be
of the same credit quality as previously-designated Accounts. The varying
quality of Trust assets could affect the payment patterns and default
experience of such portfolio. If such effect on payment patterns is
significant, a Partial Amortization for one or more Series could occur or a
Pay Out Event could occur with respect to each Series, in which case the Rapid
Amortization Period or, if so specified in the related Prospectus Supplement,
the Rapid Accumulation Period, with respect to each such Series would
commence. Certificateholders of an affected Series might then receive
principal payments earlier than expected. In addition, if a decline in the
credit quality of the portfolio were significant enough, it could result in
reductions in payments to Certificateholders in an affected Series.
Limited Certificateholder Control of Action under Agreement. The
Certificateholders will generally have limited control over the administration
of the Trust. Subject to certain exceptions, the Certificateholders of each
Series may take certain actions, or direct certain actions to be taken, under
the Agreement or Series Supplement. However, the Agreement or Series
Supplement may provide that under certain circumstances the consent or
approval of a specified percentage of the aggregate Investor Interest of other
Series or of the Investor Interest of a specified Class of such other Series
will be required to direct certain actions, including requiring the
appointment of a successor Servicer following a Servicer Default, amending the
Agreement in certain circumstances and directing a repurchase of all
outstanding Series upon the breach of certain representations and warranties
by the Transferor. Certificateholders of other Series may have interests which
do not coincide in any way with the interests of Certificateholders of the
subject Series. In addition, Certificateholders of different Classes of the
same Series may have interests which do not coincide. In such instances, it
may be difficult for the Certificateholders of such Series to achieve the
results from the vote that they desire.
Limitations of Certificate Rating. Any rating assigned to the Certificates
of a Series or a Class by a Rating Agency will reflect such Rating Agency's
assessment of the likelihood that Certificateholders of such Series or Class
will receive the payments of interest and principal required to be made under
the Agreement and will be based primarily on the value of the Receivables in
the Trust and the availability of any Enhancement with respect to such Series
or Class. However, any such rating will not, unless specifically so provided
in the related Prospectus Supplement with respect to any Class or Series
offered hereby, address the likelihood that the principal of any Certificates
of such Class or Series will be paid on a scheduled date. In addition, any
such rating will not address the possibility of the occurrence of a Pay Out
Event with respect to such Class or Series, the financial condition or
creditworthiness of the Transferor or the possibility of the imposition of
United States withholding tax with respect to non-U.S. Certificateholders. The
rating will not be a recommendation to purchase, hold or sell Certificates of
such Series or Class, and such rating will not comment as to the marketability
of such Certificates, any market price or suitability for a particular
investor. There is no assurance that any rating will remain for any given
period of time or that any rating will not be lowered or withdrawn entirely by
a Rating Agency if in such Rating Agency's judgment circumstances so warrant.
The Transferor will request a rating of the Certificates of each Series
offered hereby by at least one Rating Agency. There can be no assurance as to
whether any rating agency not requested to rate the Certificates will
nonetheless issue a rating with respect to any Series of Certificates or Class
thereof. A rating assigned to any Series of Certificates or Class thereof by a
rating agency that has not been requested by the Transferor to do so may be
lower than the rating assigned by a Rating Agency pursuant to the Transferor's
request.
Possible Losses as a Result of Limited Credit Enhancement. Although Credit
Enhancement may be provided with respect to a Series of Certificates or any of
its Classes, the amount available will generally be limited and subject to
certain reductions. If the amount available under any Credit Enhancement is
reduced to zero, Certificateholders of the Series or Class covered by such
Credit Enhancement will bear directly the credit and other risks associated
with their undivided interest in the Trust and will be more likely to suffer a
loss on their investment in the Certificates. See "Credit Enhancement."
Certificateholders' Direct Exercise of Rights Limited by Book-Entry
Registration. The Certificates of Series offered hereby initially will, if so
specified in the related Prospectus Supplement, be represented by one or more
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Certificates registered in the name of Cede, the nominee for DTC, and will not
be registered in the names of the Certificate Owners or their nominees. Unless
and until Definitive Certificates are issued for such a Series, Certificate
Owners relating to such Series will not be recognized by the Trustee as
Certificateholders, as that term will be used in the Agreement. Hence, until
such time, Certificate Owners will only be able to exercise the rights of
Certificateholders indirectly through DTC, Cedel or Euroclear and their
participating organizations. See "Description of the Certificates--Book--Entry
Registration" and "--Definitive Certificates."
Risks of Swaps. The Trustee, on behalf of the Trust, may enter into interest
rate swaps and related caps, floors and collars to reduce the risk to
Certificateholders from adverse changes in interest rates. However, such
transactions will not eliminate fluctuations in the value of the Receivables
or prevent such losses if the value of the Receivables decline.
The Trust's ability to hedge all or a portion of its portfolio of
Receivables through transactions in Swaps depends on the degree to which
interest rate movements in the market generally correlate with interest rate
movements in the Receivables.
The Trust's ability to engage in transactions involving Swaps will depend on
the degree to which the Trust can identify acceptable Counterparties. There
can be no assurance that acceptable Counterparties will be available for a
specific Swap at any specific time.
The costs to the Trust of hedging transactions vary among the various
hedging techniques and also depend on such factors as market conditions and
the length of the contract. Furthermore the Trust's ability to engage in
hedging transactions may be limited by tax considerations.
Swaps are not traded on markets regulated by the Commission or the Commodity
Futures Trading Commission, but are arranged through financial institutions
acting as principals or agents. In an over-the-counter environment, many of
the protections afforded to exchange participants are not available. For
example, there are no daily fluctuation limits, and adverse market movements
could therefore continue to an unlimited extent over a period of time. Because
the performance of over-the-counter Swaps is not guaranteed by any settlement
agency, there is a risk of Counterparty default.
The Trust may consider taking advantage of investment opportunities in Swaps
that are not presently contemplated for use by the Trust or that are not
currently available but that may be developed, to the extent such
opportunities are both consistent with the Trust's objectives and legally
permissible investments for the Trust. Such opportunities, if they arise, may
involve risks that differ from or exceed those involved in the activities
described above and will be more fully described in the applicable Prospectus
Supplement.
Possible Prepayment or Losses as a Result of Allocations. To the extent
provided in any Series Supplement, or any amendment to the Agreement, portions
of the Receivables or Participations conveyed to the Trust and all collections
received with respect thereto may be allocated to one or more Series as long
as the Rating Agency Condition shall have been satisfied with respect to such
allocation and the Servicer shall have delivered an officer's certificate to
the Trustee to the effect that the Servicer reasonably believes such
allocation will not adversely affect in any material respect the interests of
the Certificateholders of any Series issued and outstanding. There can be no
assurance, however, that any such allocation of Trust assets might not have an
impact on the timing and amount of payments received by a Certificateholder of
any Series.
THE TRUST
The Trust will be formed in accordance with the laws of the State of New
York pursuant to the Agreement. The Trust will not be permitted to engage in
any business activity other than acquiring and holding Receivables, issuing
Series of Certificates, making payments thereon and engaging in related
activities (including, with respect to any Series, obtaining any Enhancement
and entering into a related Enhancement agreement).
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FIRST NBC'S CREDIT CARD ACTIVITIES
GENERAL
First Bankcard Center ("First Bankcard"), a division of First NBC, was one
of the earliest BankAmericard issuers, entering the credit card business in
1968. From that time through the early 1990's, First Bankcard relied primarily
on the branch networks of First NBC and its affiliated banks, a network of
correspondent banks ("agent banks"), affinity groups and portfolio
acquisitions to generate new accounts. In 1989 First Bankcard began its
relationship with the military sector and was awarded the management contract
for the Air Force Logistics Command's Club Card Program. Beginning in 1994,
First Bankcard's new account strategy has also included pre-approved campaigns
focused on the cross-selling of bankcard products to customers and prospects
of First NBC and its affiliated banks, agent banks and affinity groups. In
addition, these campaigns have been augmented with a few regionally specific
pre-approved prospect campaigns. In December, 1994, the Club Card Program was
expanded with United States Air Force Services ("USAF") to include Club Card
Program services at all United States Air Force bases in the United States,
including Alaska and Hawaii. The USAF Club Card Program was again expanded in
1996 to provide U. S. dollar-denominated Club Card Program services to
military personnel in bases outside the United States.
First Bankcard provides cardholder and/or merchant services to its network
of 202 agent banks, which have not chosen to become Class A members of the
VISA or MasterCard Associations. First Bankcard's 30 affinity groups benefit
from the value-added services provided by First Bankcard, as well as from
sharing in the on-going earnings generated by group members through use of
their cards. The USAF Club Card Program includes centralized dues and account
billing for both officers and enlisted clubs, providing a diverse population
for new account and account balance growth. Certain data processing and
administrative functions associated with the servicing of the Bank Portfolio
are performed by First Commerce Service Corporation. See "The Trust--
Description of First Commerce Service Corporation."
With respect to each Series of Certificates, the Receivables conveyed or to
be conveyed to the Trust by the Bank pursuant to the Agreement have been or
will be generated from transactions made by holders of selected MasterCard,
VISA and private label credit accounts, including premium accounts and
standard accounts, within the Bank Portfolio. Generally, both premium and
standard accounts undergo the same credit analysis, but premium accounts carry
higher credit limits and offer a wider variety of services to the cardholders.
The private label accounts included in the Bank Portfolio (the "Private Label
Accounts") relate to credit cards issued to military personnel who do not meet
the credit standards for issuance of standard credit cards. Payments due under
Private Label Accounts are charged back to a non-appropriated funds
instrumentality associated with the United States Air Force Services at 65-90
days past due. The non-appropriated funds instrumentality does not represent a
full faith and credit obligation of the United States. The Bank currently
services the Bank Portfolio in the manner described in the related Prospectus
Supplement. Other than the Private Label Accounts, all of the credit card
accounts currently owned by the Bank (including accounts in the Bank's
affinity programs) are MasterCard or VISA accounts. See "Risk Factors--
Possible Prepayment or Losses as a Result of Transferor's Ability to Adversely
Change Terms of the Receivables" for a discussion of the effect of the Bank's
ability to modify terms of the Receivables after the initial issuance of any
Series.
The VISA and MasterCard credit accounts may be used for four types of
transactions: credit card purchases, cash advances, balance transfers and
convenience checks. Purchases occur when cardholders use credit cards to buy
goods and/or services. A cash advance is made when a credit card is used to
obtain cash from a financial institution, an automated teller machine or in a
cash equivalent transaction. Cardholders (or accountholders) may also use
convenience checks to (i) transfer balances from other credit card accounts to
their First Bankcard accounts and (ii) draw against their VISA and MasterCard
credit card accounts at any time. Amounts due with respect to purchases, cash
advances and convenience checks are included in the Receivables. Private Label
Accounts may be used only for purchases at officer and enlisted clubs.
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In addition, MasterCard and VISA cardholders (or accountholders) in certain
states are able to purchase insurance against the inability to repay all or a
portion of their account balances for reasons such as involuntary
unemployment, death, disability or accidental death/dismemberment. Premiums
for this insurance are charged to the account for each monthly billing cycle
(each a "Billing Cycle"). Such insurance premiums are included in the
Receivables transferred to the Trust and are treated as Principal Receivables.
Each cardholder (or accountholder) is subject to an agreement with First
Bankcard governing the terms and conditions of the related MasterCard, VISA or
private label credit card account. Pursuant to each such agreement, except as
described herein or in any related Prospectus Supplement, First Bankcard
reserves the right, subject to notice as may be required by law or such
agreement, to add to, change or terminate any terms, conditions, services or
features of its MasterCard, VISA or private label credit card accounts at any
time, including increasing or decreasing the periodic finance charges, other
charges or the minimum monthly payment requirements. The agreement with each
cardholder (or accountholder) provides that First Bankcard may apply such
changes, when applicable, to current outstanding balances as well as to future
transactions. The foregoing notwithstanding, certain affinity agreements
provide that the terms and conditions of the agreement between First Bankcard
and the cardholder (or accountholder) may be changed only at the end of the
contract period of such affinity agreement.
ACQUISITION AND USE OF CREDIT CARD ACCOUNTS
New credit card account marketing and solicitation is handled by the First
Bankcard Marketing Department. New credit card accounts are originated through
both customer inquiry and direct mail solicitation programs. Customer inquiry
originations are generally initiated by applicants who pick up applications at
a branch of the Bank, a First NBC affiliated bank or an agent bank, from an
affinity group or at any Club Card Program location, or call First Bankcard
and ask that an application be sent to them. Direct mail solicitations are
generally followed up by telemarketing efforts.
First Bankcard believes that its network of affiliated banks, agent banks,
affinity groups and military relationships, for which First Bankcard has the
exclusive right to market credit cards bearing the name of the related
financial institution or organization, represents significant opportunities
for growth in the cardholder base. First Bankcard believes that these
relationships generally provide better credit quality and lower attrition than
non-relationship-based accounts. These relationships are generally governed by
agency or affinity agreements between First Bankcard and an agent bank,
affiliate bank or sponsoring institution, which are periodically subject to
renewal, renegotiation or cancellation by one or both parties (in some cases
as often as annually). Any changes
in the terms of one of these programs or in First NBC's participation in such
program could affect the rate at which new Receivables are generated in the
related Accounts.
Credit applications are processed through an automated application
processing system that uses credit scorecards. A "score" is calculated for
each applicant, using information from the application and a credit bureau
report obtained through an independent credit reporting agency. The credit
scorecards are based upon credit scoring models developed with Fair, Isaac and
Company, Inc. Those applications that are flagged for further review (i.e.,
those that are neither accepted nor rejected) by the automated application
processing system are reviewed by a First Bankcard credit analyst who makes a
credit and limit assignment decision based on a review of (i) the score
generated by the credit scorecard, (ii) information contained in the
application, (iii) the independent credit report referred to above and (iv) an
analysis of the applicant's capacity to repay. The primary factors considered
in the non-military credit scoring model include (a) the presence or absence
of existing credit references and checking and savings account references, (b)
the number of recently reported installment loans reflected in the credit
file, (c) revolving utilization reflected in the credit file and (d) the
number of inquiries. The primary factors considered in the military credit
scoring model include (a) occupation, (b) high credit card utilization
reflected in the credit file, (c) the number of major derogatory ratings
reflected in the credit file and (d) the number of inquiries by other credit
providers.
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First Bankcard also uses a prescreening process as a method of acquiring new
accounts. First Bankcard primarily identifies potential prospects for pre-
approved solicitations through lists obtained from (i) First NBC and its
affiliated banks, (ii) agent banks and (iii) affinity groups. First Bankcard
submits to the credit bureaus its credit criteria and cutoff scores for those
criteria to screen prospects. Lists of individuals who meet the criteria are
returned to the mailing list vendor, and a pre-approved offer for a credit
card is made to those individuals. An offeree's response to the solicitation
is reviewed and confirmed, and a credit card is issued. Where an individual's
creditworthiness undergoes rapid and substantial change following the initial
prescreening, First Bankcard may refuse to extend any credit to that
individual despite the pre-approved offer. The primary factors considered in
First Bankcard's credit criteria are (a) the length and depth of the
individual's credit experience, (b) recency and severity of the delinquencies
reflected in the file, (c) the presence of derogatory public record
information and (d) the use of a generic credit bureau score model developed
by Fair, Isaac and Company, Inc.
If First Bankcard acquires credit card accounts originally opened by another
institution, those accounts may have been opened using criteria different from
those used by First Bankcard and may not have been subject to the same level
of credit review as accounts originally established by First Bankcard.
Portfolios of revolving credit accounts purchased by First Bankcard from other
credit card issuers may be added to the Trust from time to time.
DESCRIPTION OF FIRST COMMERCE SERVICE CORPORATION
Credit card processing services performed by First Commerce Service
Corporation ("FCSC"), a wholly owned subsidiary of the Corporation, include
statement rendering, payment processing, data processing, embossing, research,
accounting, purchasing, legal, audit, human resources and network services and
systems development. FCSC's data network provides an interface to MasterCard
International Incorporated and VISA USA, Inc. for performing authorizations
and funds transfers. Data processing and network functions are performed in
FCSC's facility in Harahan, Louisiana.
INTERCHANGE AND OTHER ACCOUNT REVENUES
Creditors participating in the VISA and MasterCard associations receive
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.
Each Prospectus Supplement will specify whether or not the Transferor will be
required to transfer to the Trust for the benefit of the related Series a
percentage of Interchange and the basis on which any such percentage will be
determined.
First NBC also currently earns additional revenues in connection with the
Bank Portfolio in the form of payments from advertisers for the inclusion of
advertising inserts with monthly statements relating to accounts in the Bank
Portfolio, and rebates or similar payments from issuers of credit insurance
policies on account of claims experience related to the Bank Portfolio. Each
Prospectus Supplement will also specify whether or not the Transferor will be
required to transfer to the Trust for the benefit of the related Series a
percentage of these "Other Account Revenues" reasonably determined by the
Transferor to be attributable to that Series interest in the Receivables.
If so required to be transferred, Interchange and Other Account Revenues
arising under the Accounts will be allocated to the related Certificates of
any Series in the manner provided in the related Prospectus Supplement, and,
in each case, will be (a) treated as collections of Finance Charge Receivables
and used to pay required monthly payments including interest on the related
Series of Certificates, (b) used to pay all or a portion of the Servicing Fee
to the Servicer, or (c) both, as specified in the related Prospectus
Supplement.
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THE RECEIVABLES
The Receivables conveyed to the Trust will arise in Accounts selected from
the Bank Portfolio on the basis of criteria set forth in the Agreement as
applied on the Cut-Off Date and, with respect to Additional Accounts, as of
the related date of their designation (the "Trust Portfolio"). The Transferor
will have the right (subject to certain limitations and conditions set forth
therein), and in some circumstances will be obligated, to designate from time
to time Additional Accounts and to transfer to the Trust all Receivables in
such Additional Accounts, whether such Receivables are then existing or
thereafter created, or to transfer 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 as 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. With respect to each Series of
Certificates, the Transferor will represent and warrant to the Trust that, as
of 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."
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 Finance Charge Receivables, the range of
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
Following the Revolving Period for each Series, collections of Principal
Receivables are expected to be distributed to the Certificateholders of that
Series or any specified Class thereof on each specified Distribution Date
during the Controlled Amortization Period or the Principal Amortization
Period, or are expected to be accumulated for payment to Certificateholders of
that Series or any specified Class thereof during an Accumulation Period and
distributed on a Scheduled Payment Date. However, if the Rapid Amortization
Period commences, collections of Principal Receivables will be paid to
Certificateholders in the manner described herein and in the related
Prospectus Supplement. Further, if a Partial Amortization occurs, certain
funds available in the Excess Funding Account may be paid to
Certificateholders in the manner described herein and in the related
Prospectus Supplement. The related Prospectus Supplement will specify 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 Events which, if any were
to occur, would lead to the commencement of a Rapid Amortization Period or, if
so specified in the related Prospectus Supplement, a Rapid Accumulation
Period.
No assurance can be given, however, that collections on 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. See "Risk Factors--
Payment Other than at Expected Maturity."
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USE OF PROCEEDS
The net proceeds from the sale of each Series of Certificates offered hereby
will be paid to the Transferor as consideration for the transfer of the
Receivables to the Trust. The Transferor will use such proceeds for its
general corporate purposes.
FIRST NBC AND FIRST COMMERCE CORPORATION
First NBC is a national banking association and a wholly owned subsidiary of
First Commerce Corporation (the "Corporation"). The Bank's main office is
located at 210 Baronne Street, New Orleans, Louisiana 70112, telephone (504)
623-1371. The New Orleans metropolitan area is the primary market served by
the Bank. The Bank and its subsidiaries offer a full range of banking and
related financial services to commercial and consumer customers. First NBC
issues credit cards both directly and as agent for other banks.
The Corporation is a Louisiana corporation and a bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHC Act"), and
maintains its headquarters in New Orleans, Louisiana. The Corporation has six
wholly owned bank subsidiaries, each in Louisiana: the Bank, City National
Bank of Baton Rouge, Central Bank (Monroe), The First National Bank of
Lafayette, Rapides Bank & Trust Company in Alexandria and The First National
Bank of Lake Charles. The Prospectus Supplement for each Series of
Certificates will provide additional information, including limited financial
information, relating to the Bank's credit card activities and the
Corporation.
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 Interest. Each Series will be issued
pursuant to a Series Supplement. The Prospectus Supplement for each Series
will describe any provisions of the Agreement relating to such Series which
may differ materially from the Agreement filed as an exhibit to the
Registration Statement. 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 undivided interests in
certain assets of the Trust, including the right to the applicable Investor
Percentage of all payments on the Receivables in the Trust. The Investor
Interest for each Series of Certificates on any date will generally 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 Invested Amount 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 related Prospectus Supplement.
Each Series of Certificates may consist of one or more Classes, one or more
of which may be Senior Certificates or 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
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more than one Class will be allocated among the Classes as described in the
related 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, Certificate Rate and
the availability of Enhancement.
For each Series of Certificates, payments of interest and principal will be
made on Distribution Dates specified in the related Prospectus Supplement to
Certificateholders in whose names the Certificates were registered on the
record dates (each, a "Record Date") specified in the related Prospectus
Supplement. Interest will be distributed to Certificateholders in the amounts,
for the periods and on the dates specified in the related Prospectus
Supplement.
The Transferor Interest 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. As holder of the Transferor Interest, the Transferor will have
the right to a percentage (the "Transferor Percentage") of payments from the
Receivables in the Trust. The Transferor Interest may be transferred in whole
or in part subject to the limitations and conditions described therein. See
"--Certain Matters Regarding the Transferor and the Servicer."
During the Revolving Period with respect to each Series of Certificates
offered hereby, the amount of the Investor Interest for that Series will
remain constant except as described in "--Defaulted Receivables; Incentive
Payments and Fraudulent Charges; Investor Charge-Offs" (which describes
circumstances in which the Investor Interest will be reduced during the
Revolving Period) and "--Funding Period" (which describes circumstances in
which the Investor Interest will be increased during a Funding Period which
would coincide with the Revolving Period for the affected Series). The amount
of Principal Receivables in the Trust, however, will vary each day as new
Principal Receivables are created and others are paid. The amount of the
Transferor Interest will fluctuate each day, to reflect the changes in the
amount of the Principal Receivables in the Trust (and amounts, if any, on
deposit in the Excess Funding Account). 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. See "--New Issuances."
Certificates of each Series initially will be represented by certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Transferor, the "Depository") except as set forth
below. See "--Definitive Certificates." With respect to each Series of
Certificates, beneficial interests in the Certificates will be available for
purchase in minimum denominations as specified in the related Prospectus
Supplement (or, if not so specified, in minimum denominations of $1,000 and
integral multiples thereof). As to any Series of Certificates issued in book-
entry form, the Transferor has been informed by DTC that DTC's nominee will be
Cede. Accordingly, Cede is expected to be the holder of record of each such
Series of Certificates. No Certificate Owner acquiring an interest in such
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 herein, all references herein to actions by Certificateholders shall
refer to actions taken by DTC upon instructions from DTC Participants, and all
references herein to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of the Certificates, as
the case may be, for distribution to Certificate Owners in accordance with DTC
procedures. See "--Book-Entry Registration" and "--Definitive Certificates."
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.
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BOOK-ENTRY REGISTRATION
With respect to each Series of Certificates issued in book-entry form,
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
depositories (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities for its Participants ("DTC Participants") and facilitates the
clearance and settlement among DTC Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
book-entry changes in DTC Participants' accounts, thereby eliminating the need
for physical movement of securities certificates. DTC Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Indirect access to the DTC system is also
available to others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and DTC Participants are on file with the Commission.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, 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 DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day. Cash
received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel Participant or a Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available
in the relevant Cedel or Euroclear cash account only as of the business day
following settlement in DTC.
Purchases of Certificates under the DTC system must be made by or through
DTC Participants, which will receive a credit for the Certificates on DTC's
records. The ownership interest of each actual Certificate Owner is in turn to
be recorded on the DTC Participants' and Indirect Participants' records.
Certificate Owners will not receive written confirmation from DTC of their
purchase, but Certificate Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the DTC
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Participant or Indirect Participant through which the Certificate Owner
entered into the transaction. Transfers of ownership interests in the
Certificates are to be accomplished by entries made on the books of DTC
Participants acting on behalf of Certificate Owners. Certificate Owners will
not receive certificates representing their ownership interest in
Certificates, except in the event that use of the book-entry system for the
Certificates is discontinued.
To facilitate subsequent transfers, all Certificates deposited by DTC
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Certificates with DTC and their registration in the name of
Cede & Co. effects no change in beneficial ownership. DTC has no knowledge of
the actual Certificate Owners of the Certificates; DTC's records reflect only
the identity of the DTC Participants to whose accounts such Certificates are
credited, which may or may not be the Certificate Owners. The DTC Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to DTC Participants,
by DTC Participants to Indirect Participants, and by DTC Participants and
Indirect Participants to Certificate Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to
Certificates. Under its usual procedures, DTC mails an omnibus proxy to the
issuer as soon as possible after the record date, which assigns Cede & Co.'s
consenting or voting rights to those DTC Participants to whose accounts the
Certificates are credited on the record date (identified in a listing attached
thereto).
Principal and interest payments on the Certificates will be made to DTC.
DTC's practice is to credit Participants' accounts on the applicable
Distribution Date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
such Distribution Date. Payments by DTC Participants to Certificate Owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such DTC
Participant and not of DTC, the Trustee or the Transferor, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the Trustee,
disbursement of such payments to DTC Participants shall be the responsibility
of DTC, and disbursement of such payments to Certificate Owners shall be the
responsibility of DTC Participants and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Certificates at any time by giving reasonable notice to the
Transferor or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Definitive Certificates are
required to be printed and delivered. The Transferor may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
securities depository). In that event, Definitive Certificates will be
delivered to Certificateholders. See "--Definitive Certificates."
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Transferor believes to be reliable,
but the Transferor takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants,
thereby eliminating the need for physical movement of certificates.
Transactions may be settled in Cedel in any of 32 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
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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 32 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in 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 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 "U.S. Federal Income Tax Consequences." 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.
DEFINITIVE CERTIFICATES
If so specified in the related Prospectus Supplement, the Certificates of
each Series will be initially issued as Definitive Certificates in fully
registered, certificated form to Certificate Owners or their nominees rather
than
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to DTC or its nominee. If the related Prospectus Supplement states that a
Series will be issued in book-entry form, then Definitive Certificates will be
issued to Certificate Owners or their nominees 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
related Prospectus Supplement) of the Investor Interest advise the Trustee and
DTC through DTC 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 DTC Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificate representing the Certificates and instructions for
reregistration, the Trustee will issue the Certificates as Definitive
Certificates, and thereafter the Trustee will recognize the holders of such
Definitive Certificates as Certificateholders under the Agreement ("Holders").
Distribution of principal and interest on the Certificates will be made by
the Trustee directly to Holders of Definitive Certificates in accordance with
the procedures set forth herein and in the Agreement. Interest payments and
any principal payments on each Distribution Date will be made to Holders in
whose names the Definitive Certificates were registered at the close of
business on the related Record Date. The final payment on any Certificate
(whether Definitive Certificates or the Certificates registered in the name of
Cede representing the Certificates), 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.
INTEREST PAYMENTS
For each Series of Certificates and Class thereof, interest will accrue from
the date specified in the applicable Prospectus Supplement 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 related Prospectus
Supplement. Interest will be distributed to Certificateholders on the
Distribution Dates specified in the related 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 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
related 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 related 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 will describe the amounts and sources of interest payments to be
made; the Certificate Rate for each Class thereof; for a Series or Class
thereof bearing interest at a floating Certificate Rate, the initial
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; and any limitations on any such Certificate
Rate.
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PRINCIPAL PAYMENTS
Generally, during the Revolving Period for each Series of Certificates
(which begins on the related Closing Date 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, although principal payments
may be made to Certificateholders of a Series during the Revolving Period, in
connection with a Partial Amortization or otherwise, if so specified in the
related Prospectus Supplement. 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
related 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
Prospectus Supplement, following the Rapid Accumulation Period, principal will
be paid to the Certificateholders in the amounts and on Distribution Dates
specified in the related Prospectus Supplement. During an Accumulation Period,
principal will be accumulated in a Principal Funding Account for later
distribution to Certificateholders on the Scheduled Payment Date in the
amounts specified in the related 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 related Prospectus Supplement and allocated to such Series or Class, in
certain circumstances from amounts on deposit in the Excess Funding Account
and from certain other sources specified in the related 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 related Prospectus Supplement will describe 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 related 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
payment guaranty or other similar arrangement specified in the related
Prospectus Supplement.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The Transferor will transfer and assign 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
computer files or microfiche lists containing a true and complete list of the
related Accounts, identified by account number and by total outstanding
balance on the date of transfer. 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--Transfer of Receivables" and "Certain Legal Aspects of
the Receivables--Transfer of Receivables."
NEW ISSUANCES
The Agreement will authorize the Trustee to issue two types of certificates:
(i) one or more Series of Certificates which are transferable and have the
characteristics described below; and (ii) one or more Supplemental
Certificates, evidencing partial interests in the Transferor Interest, which
are not offered hereby
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and which will be transferable only as provided in the Agreement. Pursuant to
the Agreement, the Transferor may define, with respect to any newly issued
Series, the terms of such new Series. Upon the issuance of an additional
Series of Certificates, none of the Transferor, the Servicer, the Trustee or
the Trust will be required (nor do they 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 Transferor 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 Disclosure Document in offerings
pursuant to this Prospectus or in transactions either registered under 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. To the extent provided in the related
Supplement (and subject to any applicable requirements under the Exchange Act
and the rules and regulations thereunder, including Rule 13e-4), a new Series
may be issued fully or partially in exchange for certificates of one or more
existing Series.
The Transferor may execute New Issuances such that each Series 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 to which it
relates. The Transferor may deliver a different form of Credit Enhancement
agreement with respect to any Series. The Transferor may specify different
certificate rates and monthly servicing fees with respect to each Series (or a
particular Class within such Series). The Transferor 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. 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 Transferor may execute a
New Issuance by notifying the Trustee at least three days in advance of the
date upon which the New Issuance is to occur stating the Series to be issued
on the date of the New Issuance and, with respect to each such Series (and, if
applicable, each Class thereof): (1) its initial principal amount (or method
for calculating such amount), (2) its certificate rate (or method of
calculating such rate) and (3) the provider of Credit Enhancement, if any,
which is expected to provide support with respect to it. The Agreement will
provide that on the date of the New Issuance the Trustee will authenticate any
such Series only upon delivery to it of at least the following: (i) a Series
Supplement specifying the terms of such Series; (ii) (a) an opinion of counsel
to the effect that the certificates of such Series will be characterized as
indebtedness for Federal income tax purposes, unless the related Series
Supplement indicates that such opinion will not be provided, and (b) 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 executed by the
Transferor and the Credit Enhancement Provider; (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; (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 the Minimum Transferor
Interest; and (vii) if applicable, the certificates representing the Series to
be exchanged. Upon satisfaction of such conditions, the Trustee will cancel
the certificates of the exchanged Series, if applicable, and authenticate the
new Series. The Certificates resulting from a New Issuance may either be
delivered by the Trustee to the Bank for sale by the Bank or sold directly by
the Trust.
The Transferor also may from time to time cause the Trustee to sell
Purchased Interests to one or more purchasers. Any Purchased Interest will
represent an interest in the Trust's assets similar to the interest of a
Series of Certificates. No Series will be subordinated to any Purchased
Interest, and no Purchased Interest will have any interest in the Enhancement
or series accounts specified for any Series, except as specified in the
Prospectus Supplement relating to that Series. Any such sale will take place
pursuant to one or more agreements which will
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specify terms for the applicable Purchased Interests and may grant the
purchasers of such interests notice and consultation rights with respect to
rights or actions of the Trustee. Any sale of Purchased Interests in the
assets of the Trust will be subject to the satisfaction of the same conditions
(including Rating Agency confirmations) as for a New Issuance as appropriately
adjusted to apply to the relevant Purchased Interest rather than a New
Issuance.
ADDITIONAL TRANSFERORS
The Transferor may designate other persons to be included as a "Transferor"
("Additional Transferors") under the Agreement (by means of an amendment to
the Agreement that will not require the consent of any Certificateholder, see
"--Amendments" but will be subject to satisfaction of certain conditions,
including confirmation that such designation will not result in the withdrawal
or downgrade of the credit rating of any outstanding Series. Following the
inclusion of an Additional Transferor, the Additional Transferor will be
treated in the same manner as the initial Transferor and each Additional
Transferor generally will have the same obligations and rights as a Transferor
described herein.
REPRESENTATIONS AND WARRANTIES
In connection with the issuance of any Series of Certificates, the
Transferor will represent and warrant in the Agreement to the effect that (a)
as of the Closing Date, the Transferor was duly incorporated 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 (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 more 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 more 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 related Prospectus Supplement,
the Rapid Accumulation Period.
The Transferor will also represent and warrant in the Agreement to the
effect that (a) as of the Closing Date of the initial Series of Certificates,
each of the related Receivables then existing is an Eligible Receivable (as
defined below) 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 described 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, the Transferor will
accept reassignment of each Principal Receivable as to which such breach
relates (an "Ineligible Receivable") on the terms and conditions set forth
below. No such reassignment will be required to be made with respect to an
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 that Ineligible Receivable are true and correct in
all material respects. The Transferor will accept reassignment of Ineligible
Receivables by directing the Servicer to deduct the amount of each Ineligible
Receivable from the Aggregate Principal Receivables used to calculate the
Transferor Interest. If the exclusion of an Ineligible Receivable from the
calculation of the Transferor Interest would cause the Transferor Interest to
be less than the Minimum Transferor Interest, on the date of reassignment of
such Ineligible Receivable the Transferor will make a deposit in the Excess
Funding Account in immediately available funds in an amount equal
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to the amount by which the Transferor Interest would be reduced below the
Minimum Transferor Interest. 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 with respect to such Receivable available to the
Certificateholders or the Trustee on behalf of Certificateholders.
The Transferor will also represent and warrant in the Agreement to the
effect that as of the Closing Date of the initial Series of Certificates (a)
the Agreement will constitute a legal, valid and binding obligation of the
Transferor and (b) the transfer of Receivables by it to the Trust under the
Agreement will constitute either a valid transfer and assignment to the Trust
of all right, title and interest of the Transferor in and to the Receivables
(other than Receivables in Additional Accounts), 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 and other governmental 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 which has a material adverse effect on
the interest of the Certificateholders in the Receivables, either the Trustee
or the Holders of Certificates evidencing undivided interests in the Trust
aggregating more than 50% of the aggregate Investor Interest of all Series
outstanding 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 are true and correct in all material respects.
The deposit amount for such reassignment will equal the Investor Interest and
Enhancement Invested Amount, if any, plus accrued and unpaid interest for each
Series outstanding 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 and interest to
such Certificateholders or such holders of the Enhancement Invested Amount or
the Collateral Interest, if any, 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,
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. 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 Certificateholders.
With respect to each Series of Certificates, an "Eligible Account" means, as
of the 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
Transferor (a) which was in existence and maintained with the 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 or a military address (except that up
to 3% of the aggregate number of all Accounts as of the Cut-Off Date or any
date on which Additional Accounts are designated for inclusion in the Trust
may have customers with billing addresses that do not satisfy this
requirement), (d) which has not been classified by the Transferor as canceled,
counterfeit, fraudulent, stolen or lost (except that Eligible Accounts may
include Accounts identified by the applicable customers as having balances
incurred as a result of fraudulent use or as to which the credit cards have
been identified as lost or stolen if (1) the Transferor appropriately reflects
the balance of the applicable Receivables on its books and records in
accordance with its customary practices and (2) charging privileges have been
canceled and are not reinstated), (e) which has either been originated by the
Transferor or acquired by the Transferor from other institutions, (f) which
has not been charged off by the 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 and (g) which satisfies any additional requirements specified in the
related Prospectus Supplement. 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) the Transferor delivers to the Trustee a
certificate of an authorized officer to the
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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.
With respect to each Series of Certificates, an "Eligible Receivable" means
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, and pursuant to an account agreement which
complied in all material respects with all requirements of law applicable to
the 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 the Transferor in connection with the creation of
such Receivable, or the execution, delivery, creation and performance by the
Transferor of the related account 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, the Transferor or
the Trust had good and marketable title free and clear of all liens and
security interests arising under or through the Transferor (other than certain
tax liens for taxes not then due or which the Transferor is contesting and any
other lien that is released or terminated at or before the time that the
receivable is transferred to the Trust), (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), (f) which constitutes an "account," "chattel paper" or a "general
intangible" under Article 9 of the Uniform Commercial Code as then in effect
in the State of Louisiana and (g) which satisfies any additional requirements
specified in the related Prospectus Supplement.
The Trustee will not 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. The
Servicer, however, will deliver to the Trustee on or before March 31 of each
year (or such other date specified in the related 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. In addition, the Transferor
will be required to designate Additional Accounts (a) to maintain 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 the sum of (i) the
Aggregate Principal Receivables and (ii) the principal amount on deposit in
the Excess Funding Account equal to or greater than the Minimum Aggregate
Principal Receivables. "Minimum Transferor Interest" means 7% of the aggregate
Principal Receivables at the end of the day immediately prior to the date of
determination. "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 issued by the Trust then outstanding. However, the percentage used to
calculate the Minimum Transfer Interest, the Minimum Aggregate Principal
Receivables or both may be increased or reduced at any time if each Rating
Agency confirms that such action will not result in a withdrawal or downgrade
of its rating of any outstanding Series as to which it is a Rating Agency. The
Transferor's designation of Additional Accounts generally will be subject to
the satisfaction of the conditions described below.
However, the Transferor may from time to time designate to the Trust certain
accounts ("Automatic Additional Accounts") generated in the ordinary course of
business of the Transferor, subject to fewer conditions (but the remaining
conditions include limitations on the amount of Automatic Additional Accounts
that may be designated for the Trust during a period of time). The Transferor
will convey to the Trust its interest in all Receivables in Additional
Accounts, whether such Receivables are then existing or thereafter created.
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Each Additional Account (including Automatic Additional Accounts) must be 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.
In addition to or in lieu of Additional Accounts, the Transferor under the
Agreement will be permitted (subject to compliance with applicable securities
laws) to add to the Trust participations or trust certificates representing
undivided interests in a pool of assets primarily consisting of receivables
arising under revolving credit accounts and collections thereon
("Participations"). Any Participation included in the Trust will represent an
undivided interest in the same types of assets that may be added as
Receivables arising in "Additional Accounts," but in the case of a
Participation the Trust would have a less direct interest in the specific
assets. 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 herein. 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. 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: (i) except in the case of Automatic Additional Accounts, 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, dated the date of such Assignment,
containing a true and complete list of such Additional Accounts or
Participations; (iii) the Transferor shall represent and warrant that (a) each
Additional Account is, as of the Addition Date, an Eligible Account, and each
Receivable in such Additional Account is, as of the Addition Date, an Eligible
Receivable, (b) no selection procedures believed by the Transferor to be
materially adverse to the interests of the Certificateholders were utilized in
selecting the Additional Accounts from the available Eligible Accounts from
the Bank Portfolio and (c) as of the Addition Date, the Transferor 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 (but not in the case of Automatic Additional Accounts),
and in all cases with respect to Participations, the addition of such
Additional Accounts or Participations will not result in a withdrawal or
reduction of the rating of any outstanding Series under the Trust.
In addition to the periodic reports otherwise required to be filed by the
Servicer with the Commission 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, including statistical data, on a discrete basis,
describing the additional assets.
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REMOVAL OF ACCOUNTS
The Transferor may, but shall not be obligated to, designate from time to
time certain Accounts to be Removed Accounts and stop transferring new
Receivables arising in the Removed Accounts to the Trust. Pre-existing
Receivables in Removed Accounts may either be conveyed to the Transferor or
its designee or retained by the Trust. If such pre-existing Receivables are
retained in the Trust, the Servicer and the Transferor will agree to allocate
principal collections on the Removed Accounts on a first-in, first-out basis,
so that such collections will be allocated to outstanding advances in the
order in which such advances arose (beginning with the oldest outstanding
advance). Principal collections allocable to Receivables retained by the Trust
will be applied as Collections in accordance with the Agreement. Upon payment
of all amounts owing in respect of such Receivables, the Trust will transfer
the related Account to the Transferor.
The Transferor will, however, be permitted to designate Removed Accounts
only if: (i) such designation will 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 as of the end of the Billing Cycle
immediately preceding the date of removal; (iii) the Transferor represents and
warrants that no selection procedures believed by the Transferor to be
materially adverse to the interests of the holders of any Series of
Certificates outstanding were used in selecting the Removed Accounts to be
removed from the Trust; (iv) 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; (v) such other
conditions as are specified in any Prospectus Supplement or adopted by the
Transferor to enable the Transferor to derecognize Receivables transferred to
the Trust in accordance with applicable accounting principles; and (vi) the
Transferor shall have delivered to the Trustee an officer's certificate
confirming the items set forth in clauses (i) through (v) 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 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
reasonable from time to time.
DISCOUNT OPTION
The Transferor may at any time designate a specified fixed or variable
percentage as specified in the related Prospectus Supplement (the "Discount
Percentage") of the amount of Receivables arising in the Accounts on and after
the date such option is exercised (and if the Transferor so elects,
Receivables arising in the Accounts before 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, if the
Discount Percentage would be greater than 3% after such designation,
confirmation by each Rating Agency that such designation will not result in a
withdrawal or downgrade of its rating of any 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 (and if the Transferor so
elects, Receivables arising in the related Accounts before 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. The Transferor may also elect to increase, decrease or terminate
the Discount Percentage.
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By designating (or increasing) a Discount Percentage, the Transferor would
in effect increase the amount of collections of Finance Charge Receivables
that are allocated to outstanding Series and available to cover interest on
the Certificates in that Series, defaults allocated to that Series and other
amounts, but conversely may reduce the effective principal payment rate with
respect to the Receivables (which could slow the payment of principal to
Certificateholders). The Transferor is not obligated under any circumstances
to designate (or increase) a Discount Percentage.
TRUST ACCOUNTS
With respect to the Trust, the Trustee will establish and maintain in the
name of the Trust, a "Finance Charge Account" and an "Excess Funding Account,"
as segregated trust accounts or with a Qualified Institution, for the benefit
of the Certificateholders of all related Series, including any Series offered
pursuant to this Prospectus. The Agreement will also permit the Trustee to
establish accounts for particular Series, including an Interest Funding
Account, a Principal Funding Account, a Pre-Funding Account or any other
account specified in the related Series Supplement. Each series account will
be an asset of the Trust held for the benefit of the Certificateholders of the
related Series and for the purposes set forth in the related Prospectus
Supplement. The other accounts referred to in this paragraph will be assets of
the Trust held for the benefit of all Certificateholders. The Trustee will
also establish a segregated demand deposit account to serve as the
"Distribution Account" for the Trust. 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, a non-interest bearing
segregated account to serve as the Collection Account for the Trust. The
Distribution Account and Collection Account will each be established as a
segregated trust account 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, which at all times has a certificate of deposit, short-term deposit
or commercial paper rating of P-1 by Moody's Investors Service, Inc.
("Moody's") and of at least A-1 by Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc. ("Standard & Poor's") or long-term
unsecured debt obligation (other than such obligation the rating of which is
based on collateral or on the credit of a person other than such institution
or trust company) rating of at least Aa3 by Moody's and AA- by Standard &
Poor's and deposit insurance provided by either the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF"), each administered
by the FDIC, or a depository institution, which may include the Trustee, which
is acceptable to each Rating Agency. Funds in the Excess Funding Account, the
Finance Charge Account, the Principal Funding Account, the Distribution
Account and any series account for the Trust will be invested, at the
direction of the Servicer, in (i) obligations 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 of which have the highest rating from Moody's and Standard & Poor's,
(iii) commercial paper having, at the time of the Trust's investment, a rating
in the highest rating category from Moody's and Standard & Poor's, (iv)
bankers' acceptances issued by any depository institution or trust company
described in clause (ii) above, (v) money market funds which have the highest
rating from, or have otherwise been approved in writing by, Moody's and
Standard & Poor's (so long as such investment will not require the Trust to
register as an investment company under the Investment Company Act of 1940, as
amended), (vi) repurchase obligations with respect to any security described
in clause (i) above or with respect to any other security issued or guaranteed
by an agency or instrumentality of the United States of America, in either
case entered into with a depository institution or trust company described in
clause (ii) above and (vii) any other investment if each Rating Agency
confirms in writing that such investment will not adversely affect its then
current rating or ratings of the Investor Certificates and making such
investment will not require the Trust to register as an investment company
under 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, the Excess Funding Account or the
Distribution Account will be treated as collections of Finance Charge
Receivables. 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 Excess Funding Account for
the purpose of carrying out the Servicer's duties under the Agreement. Each
Prospectus Supplement will identify a paying agent which will have the
revocable power to withdraw funds from the Distribution Account for the
purpose of
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making distributions to the Certificateholders (or, if no such entity is
designated, the Trustee shall act as paying agent).
FUNDING PERIOD
For any Series of Certificates, the related Prospectus Supplement may
specify that during a Funding Period, all or a portion of the principal amount
of such Series (the "Pre-Funding Amount") will be held in a Pre-Funding
Account pending the transfer of additional Receivables to the Trust or pending
the reduction of the Investor Interests of other Series issued by the Trust.
The related 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 added to the Trust or as
the Investor Interests of other Series of the Trust are reduced. See "--
Addition of Trust Assets." This feature is intended to permit the Transferor
to issue a new Series of Certificates at an opportune time, if the Investor
Interest 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. See "Risk Factors--Prepayment Resulting from Pre-Funding
Account." 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. It is not expected or required that the Trustee
or any other Person (except for the Transferor) will make any initial
examination of Receivables added to the Trust during a Funding Period for the
purpose of establishing the presence or absence of defects, compliance with
the Transferor's representations and warranties or for any other purpose.
During the Funding Period, funds on deposit in the Pre-Funding Account for a
Series of Certificates will be withdrawn and paid to 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 related Prospectus Supplement will be
payable to the Certificateholders of such Series in the manner and at such
time as set forth in the related Prospectus Supplement. Such payment will
reduce the aggregate principal amount of such Certificates.
Monies in the Pre-Funding Account will be invested by the Trustee in
Permitted Investments and, if so specified in the related 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 related
Prospectus Supplement.
ALLOCATIONS
The Servicer will allocate between the Investor Interest of each Series
issued by the Trust (and between each 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 Net Default Amounts and
Net Recoveries. 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 providers of
Enhancement (the "Credit Enhancement Percentage") with respect to such Series.
The Prospectus Supplement relating to a Series will specify 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 Net
Default Amounts and Net Recoveries during the Revolving Period, any
Amortization Period and any
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Accumulation Period, as applicable. In addition, for each Series of
Certificates having more than one Class, the related Prospectus Supplement
will specify 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 related 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 First NBC 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 acceptable to the Rating Agencies and (ii) the Rating Agency
Condition shall have been satisfied with respect to reliance on such letter of
credit or other credit enhancement or (b) the certificate of deposit or
unsecured short-term debt obligations of the Transferor are rated P-1 by
Moody's and at least A-1 by Standard & Poor's and insured by either BIF or
SAIF or (c) the Transferor makes other arrangements satisfactory to each
Rating Agency rating any Series then outstanding, then the Servicer may make
deposits to the Collection Account and such other 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.
The Pooling and Servicing Agreement provides, that until the date on which
First NBC notifies the Trustee that First NBC is able, and elects, to
calculate the aggregate amount of Finance Charge Receivables and Principal
Receivables on a daily basis rather than on a Billing Cycle basis (the
"Conversion Date") references herein to deposits and payments of collections
received during a particular month shall instead refer to collections received
during Billing Cycles ending during such month. See "Description of
Certificates--Application of Collections." The Servicer will make such
deposits and payments based on the assumption that all collections received by
the Servicer with respect to the Receivables in each Billing Cycle are
collections of Finance Charge Receivables up to the amount of Finance Charge
Receivables billed with respect to Receivables in such Billing Cycle (with
respect to each Billing Cycle, the "Billed Finance Charge Receivables") and
collections in excess of the Billed Finance Charge Receivables are collections
of Principal Receivables, subject to a monthly reconciliation procedure. The
term "Aggregate Principal Receivables" means in the case of any date of
determination which occurs before the Conversion Date, the aggregate amount of
Principal Receivables as of the end of the Billing Cycles during the Monthly
Period immediately preceding such date of determination or, in the case of any
date of determination which occurs on or after the Conversion Date, the
aggregate amount of Principal Receivables as of the end of the day on such
date of determination.
Whether the Servicer is required to make monthly or daily deposits to the
Collection 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 Excess Funding Account or such related series
account up to the required amount to be deposited into any such account or,
without duplication, distributed on or prior to the related Distribution Date
to 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 from the Collection Account
for application as indicated:
(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
Transferor (or, in certain limited circumstances, deposited in the Excess
Funding Account);
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(b) subject to reallocations among a Reallocation Group (see "--
Reallocations Among Certificates of Different Series within a Reallocation
Group"), 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 related 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, in the case of a Principal Sharing Series, be
made available for principal payments or accumulation on other Series of
Certificates and otherwise (or to the extent not needed for such principal
payments or accumulation), will be paid or held for payment to the
Transferor, 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 less than the Minimum Transferor Interest, the
excess will be deposited in the Excess Funding Account and will be used as
described in the related Prospectus Supplement;
(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, specified in the related Prospectus
Supplement will be deposited in the Principal Funding Account or related
series account identified for such purpose, as applicable, for allocation
and distribution to Certificateholders as described in the related
Prospectus Supplement, except that, if collections of Principal Receivables
exceed the principal payments which may be allocated or distributed to
Certificateholders, then the amount of such excess will be paid to the
Transferor until the Transferor Interest is reduced to the Minimum
Transferor Interest, and thereafter will be deposited in the Excess Funding
Account or other specified account and will be used as described in the
related 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 related series account identified for such purpose for
application and distribution as provided in the related Prospectus
Supplement.
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 related Prospectus
Supplement.
REALLOCATIONS AMONG DIFFERENT SERIES WITHIN A REALLOCATION GROUP
Group Investor Finance Charge Collections. Any Series offered hereby may, if
so specified in the related Prospectus Supplement, be included in a
Reallocation Group. Other Series issued in the future may also be included in
such Group.
The Servicer will calculate for each Monthly Period the Group Investor
Finance Charge Collections for a particular Reallocation Group, and on the
following Distribution Date will allocate such amount among the Investor
Interests (including any Enhancement Invested Amounts) for all Series in such
Reallocation Group in the following priority:
(i) Group Investor Monthly Interest;
(ii) Group Investor Monthly Fees;
(iii) Group Investor Default Amounts;
(iv) Group Investor Charge-Offs; and
(v) the balance pro rata among each Series in such Reallocation Group
based on the current Investor Interest (including any Enhancement Invested
Amount) of each such Series.
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In the case of clauses (i), (ii), (iii) and (iv), if the amount of Group
Investor Finance Charge Collections is not sufficient to cover each such
amount in full, the amount available will be allocated among the Series in
such Reallocation Group pro rata, based on the claim that each Series has
under the applicable clause. This means, for example, that if the amount of
Group Investor Finance Charge Collections is not sufficient to cover Group
Investor Monthly Interest, each Series in such Reallocation Group will share
such amount pro rata, and any Series in such Reallocation Group with a claim
with respect to monthly interest, overdue monthly interest and interest on
such overdue monthly interest, if applicable, which is larger than the claim
for such amounts for any other Series in such Reallocation Group (due to a
higher certificate rate) will receive a proportionately larger allocation than
such other Series.
The amount of Group Investor Finance Charge Collections allocated to the
Investor Interest (including any Enhancement Invested Amount) for a particular
Series offered hereby as described above is referred to herein as "Reallocated
Investor Finance Charge Collections."
"Group Investor Charge-Offs" means, for any Reallocation Group on any
Distribution Date, the sum of the Investor Charge-Offs for all Series in such
Reallocation Group for the related Monthly Period.
"Group Investor Default Amounts" means, for any Reallocation Group on any
Distribution Date, the sum of the Investor Default Amounts for all Series in
such Reallocation Group for the related Monthly Period.
"Group Investor Finance Charge Collections" means, for any Reallocation
Group on any Distribution Date, the sum of the Investor Finance Charge
Collections for all Series in such Reallocation Group for such Monthly Period.
"Group Investor Monthly Fees" means, for any Reallocation Group on any
Distribution Date, the aggregate amount of Investor Monthly Fees for all
Series in such Reallocation Group for such Distribution Date.
"Group Investor Monthly Interest" means, for any Reallocation Group on any
Distribution Date, the aggregate amount of monthly interest, overdue monthly
interest and interest on such overdue monthly interest, if applicable, for all
Series in such Reallocation Group for such Distribution Date.
"Investor Finance Charge Collections" means, for any Series, the amount of
collections of Finance Charge Receivables allocable to the Investor Interest
(including any Enhancement Invested Amount) of that Series for the related
Monthly Period, which is determined by multiplying by the applicable Investor
Percentage the aggregate amount of such collections for that Monthly Period.
"Investor Monthly Fees" means, for any Series on any Distribution Date, the
sum of the Servicing Fee for that Series for the related Monthly Period, and
any fees in respect of Credit Enhancement or similar fees which are paid out
of Reallocated Investor Finance Charge Collections for such Series pursuant to
the applicable Series Supplement.
The chart below demonstrates the manner in which collections of Finance
Charge Receivables are allocated and reallocated among Series in a
Reallocation Group. The chart assumes that the Trust has issued three Series
(Series 1, 2 and 3), and that each such Series is in its Revolving Period.
In Step 1, total collections of Finance Charge Receivables are allocated
among the three Series and the Transferor Interest based on the Investor
Percentage for each Series and the Transferor Percentage. The amounts
allocated to each Series pursuant to Step 1 are referred to as "Investor
Finance Charge Collections."
Group Investor Finance Charge Collections for all Series in a particular
Reallocation Group are pooled as shown above in Step 2 for reallocation to
each such Series as shown in Step 3. In Step 3 Group Investor Finance Charge
Collections are reallocated to each Series in such Reallocation Group as
described above based on the Series' respective claim with respect to interest
payable on the Certificates or Enhancement Invested Amount (if any) of such
Series, the Servicing Fee and the Investor Default Amount allocable to such
Series and certain other amounts in respect to such Series. The excess is
allocated pro rata among the Series in such Group based on their respective
Investor Interests (including any Enhancement Invested Amounts).
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LOGO
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SHARED EXCESS FINANCE CHARGE COLLECTIONS
The Prospectus Supplement relating to a Series will specify whether such
Series will be an Excess Allocation Series and will identify any previously
issued Excess Allocation Series. The Certificateholders of an Excess
Allocation Series may be entitled to receive all or a portion of Excess
Finance Charge Collections with respect to other Excess Allocation Series to
cover any shortfalls with respect to amounts payable from collections of
Finance Charge Receivables allocable to such Series. While any Series offered
hereby may be designated as an Excess Allocation Series, there can be no
assurance that (a) any other Series will be designated as an Excess Allocation
Series, (b) there will be any Excess Finance Charge Collections with respect
to any such other Series for any Monthly Period, or (c) any agreement relating
to any Credit Enhancement will not be amended in such a manner as to increase
payments to the providers of Credit Enhancement and thereby decrease the
amount of Excess Finance Charge Collections available from such Series. See
"--Application of Collections" and "--Defaulted Receivables; Incentive
Payments and Fraudulent Charges; Investor Charge-Offs."
EXCESS FUNDING ACCOUNT
If on any date a Retention Condition exists, the Servicer will not
distribute to the Transferor any collections of Principal Receivables that
otherwise would be distributed to the Transferor, but shall instead deposit
such funds in a segregated account established and maintained by the Trustee,
in the name of the Trust, for the benefit of Certificateholders of all Series,
as a trust account or with the Servicer or with a Qualified Institution (the
"Excess Funding Account") until the Retention Condition ceases. Funds on
deposit in the Excess Funding Account will be withdrawn and paid to the
Transferor on any date provided that a Retention Condition is not in effect,
or would result from such payment, on such date. In addition, if a Controlled
Accumulation Period, Controlled Amortization Period, Principal Amortization
Period, Rapid Amortization Period or Rapid Accumulation Period commences with
respect to any Series entitled to the benefits of Shared Principal
Collections, then an amount of funds on deposit in the Excess Funding Account
(after giving effect to the release of funds to the Transferor as described
above) up to the amount, if any, by which the Transferor Interest would be
less than zero if there were no funds on deposit in the Excess Funding Account
on such date, will be treated as Shared Principal Collections to the extent
needed to cover principal payments due to or for the benefit of such Series,
if the Series Supplement with respect to such Series so provides. "Retention
Condition" means (a) on any day on and after the Conversion Date, either (i)
the Transferor Interest is less than the Minimum Transferor Interest or (ii)
the sum of the Aggregate Principal Receivables and the principal amount on
deposit in the Excess Funding Account is less than the Minimum Aggregate
Principal Receivables (in each case determined after giving effect to any
transfer of Principal Receivables to the Trust on such day); or (b) on any day
prior to the Conversion Date, Retention Condition shall have the meaning
specified in the applicable Prospectus Supplement.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee, at the direction of the Servicer, in Permitted Investments. Any
earnings (net of losses and investment expenses) earned on amounts on deposit
in the Excess Funding Account during any Monthly Period will be withdrawn from
the Excess Funding Account and turned over to or at the direction of the
Servicer.
SHARED PRINCIPAL COLLECTIONS
If a Series is designated a "Principal Sharing Series" in the related
Prospectus Supplement, to the extent that collections of Principal Receivables
and certain other amounts that are allocated to the Investor Interest of such
Series are not needed to make payments or deposits with respect to such
Series, such collections will constitute Shared Principal Collections and will
be applied to cover principal payments due to or for the benefit of
Certificateholders of other Principal Sharing Series. Any such reallocation
will not result in a reduction in the Investor Interest of the Series to which
such collections were initially allocated.
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PAIRED SERIES
If specified in the Prospectus Supplement relating to a Series, such Series
may be paired with another Series (each, a "Paired Series"), such that a
reduction in the Investor Interest or Adjusted Investor Interest of one such
Series results in an increase in the Investor Interest of the other such
Series. A Paired Series would provide financing for a portion of the Trust's
assets, from which the Collections of Principal Receivables are dedicated to a
pre-existing Series if that pre-existing Series has, in part, been paid or
effectively defeased with Collections that have been set aside for an eventual
payment. The effect of a Paired Series is to provide for continuous investment
in the Receivables by Certificateholders, thereby reducing the potential
increase in the Transferor Interest as the first of the Paired Series'
interest in the Trust is reduced through the amortization or accumulation of
principal. If a Pay Out Event occurs with respect to a Series having a Paired
Series or with respect to the Paired Series when such Series is in a
Controlled Amortization Period or Controlled Accumulation Period, the Investor
Percentage for collections of Principal Receivables for the Series and for its
Paired Series may be reset as specified in the related Prospectus Supplements.
The "Adjusted Investor Interest" for any Series means the Investor Interest of
that Series, adjusted in any manner described in the related Prospectus
Supplement.
DEFAULTED RECEIVABLES; INCENTIVE PAYMENTS AND FRAUDULENT CHARGES; INVESTOR
CHARGE-OFFS
For each Series of Certificates, on the business day preceding each Transfer
Date (the "Determination Date"), the Servicer will calculate the amount (for
each Series, the "Investor Default Amount") equal to the applicable Investor
Percentage of the Net Default Amount for the related Monthly Period. In the
case of a Series of Certificates having more than one Class, the Investor
Default Amount will be allocated among the Classes in the manner described in
the related Prospectus Supplement. If so provided in the related Prospectus
Supplement, an amount equal to the 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 Transferor, as appropriate. In the case of a Series
of Certificates having one or more Classes of Subordinated Certificates, the
related Prospectus Supplement may provide that all or a portion of amounts
otherwise allocable to such Subordinated Certificates may by paid to the
Senior Certificateholders to make up any Investor Default Amount allocable to
such Senior Certificateholders.
The Investor Interest of each Series will be reduced (an "Investor Charge-
Off") to the extent that the related Investor Default Amount for any Monthly
Period exceeds the amount of collections in the Finance Charge Account
available to cover the Investor Default Amount and any amounts available under
applicable Credit Enhancement for such purpose. 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 interest, fees
and any aggregate Investor Default Amount payable on such date, resulting in
an increase in the Series' Investor Interest. In the case of a Series of
Certificates having more than one Class, the related Prospectus Supplement
will describe 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 because of
transactions or set-offs occurring in respect of an incentive payment to or
for the benefit of a cardholder or because such Principal Receivable was
created in respect of merchandise which was refused or returned by a
cardholder, then the amount of the Transferor Interest in the Trust will be
reduced by the aggregate 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 to
have been created through a fraudulent or counterfeit charge. Furthermore, in
the event that the exclusion of such Receivables from the calculation of the
Transferor Interest at such time would cause the Transferor Interest to be
less than the Minimum Transferor Interest, the Transferor will be required to
pay an amount equal to such deficiency into the Excess Funding Account.
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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, 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) a Tax Opinion.
FINAL PAYMENT OF PRINCIPAL; TERMINATION
The Certificates of each Series offered hereby will be subject to optional
repurchase by the Transferor on any Distribution Date after that Series'
Investor Interest and any related Enhancement Invested Amount is reduced to an
amount less than or equal to 5% of the initial Investor Interest (or such
lesser amount as may be specified in the related Prospectus Supplement), if
certain conditions set forth in the Agreement are met. The repurchase price
will be specified in the related Prospectus Supplement.
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 will specify the
final date on which principal and interest with respect to the related Series
of Certificates will be scheduled to be distributed (the "Series Termination
Date"). Certificates may, however, 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 Transferor 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, if specified in the Prospectus
Supplement for any Series, the Enhancement Invested Amount or Collateral
Interest, if any, with respect to each Series is zero, (b) the Specified Trust
Termination Date or (c) if the Receivables are sold or disposed of,
immediately following such sale or disposition (such date, the "Trust
Termination Date"). Upon the termination of the Trust, the Trustee shall
convey to the Transferor all right, title and interest of the Trust in and to
the Receivables and other funds of the Trust. For purposes hereof, the
"Specified Trust Termination Date" means the day which is 21 years less one
day after the death of the officers and the last survivor of all the lineal
descendants of every officer of the Trustee of the Trust who are living on the
date of the Agreement, or such later date which would not render the rights,
privileges or options under the Trust invalid under applicable law.
PAY OUT EVENTS
The Revolving Period will terminate prior to the date specified in the
related Prospectus Supplement if a Pay Out Event occurs prior to such date. A
Pay Out Event occurs with respect to all Series upon the occurrence of any of
the following events:
(a) certain events of insolvency or receivership relating to the
Transferor;
(b) the Transferor is unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of the Agreement; or
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(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 related 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 related 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
pursuant to certain provisions of Federal law, the Transferor voluntarily
enters liquidation or a receiver is appointed for the Transferor, on the day
of such event the Transferor will immediately cease to transfer Principal
Receivables to the Trust and promptly give notice to the Trustee of such
event.
If the only Pay Out Event to occur is either the insolvency of the
Transferor or the appointment of a conservator or receiver for the 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 related 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 Delays, Prepayment or Losses as a Result of Receivership of
Transferor" and "Certain Legal Aspects of the Receivables--Certain Matters
Relating to Receivership."
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
For each Series of Certificates, the Servicer will be compensated for its
servicing activities and reimbursed for its expenses by payment to it of the
Servicing Fee at the times and in the amounts specified in the related
Prospectus Supplement. The Servicing Fee will be funded from collections of
Finance Charge Receivables allocated to the Investor Interest and will be paid
each month (or on any other specified basis) from amounts so allocated and on
deposit in the Finance Charge Account (which, if so specified in the related
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 Collateral Interest or the Enhancement Invested Amount, if
any, with respect to such Series, as described in the related Prospectus
Supplement. Neither the Trust nor the 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 payment of
the fees and disbursements of the Trustee and independent certified public
accountants and other fees that are not expressly stated in the Agreement to
be payable by the Trust or the Certificateholders (but excluding Federal,
state and local income and franchise taxes, if any, of the Trust).
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
With respect to each Series of Certificates, the Servicer may not resign
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 another successor to the Servicer has assumed the
Servicer's responsibilities and obligations under the Agreement.
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The Agreement will provide 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 the Trustee. The Servicer will not, however, 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 liability 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 losses incurred as a result of defaulted Receivables or
Receivables which are written 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 any Federal, state, local or foreign
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.
The Agreement will provide 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
will provide 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 will provide that, in addition to New Issuances, the
Transferor may transfer all or a portion of the Transferor Interest, 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 Tax Opinion.
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.
In addition, if the Bank elects to sell or otherwise dispose of the
Accounts, then the new owner of the Accounts may be substituted for the Bank
as Transferor and Servicer upon the satisfaction of certain conditions,
including the delivery of a Tax Opinion and receipt of written confirmation
from each Rating Agency that such substitution will not result in such Rating
Agency's reducing or withdrawing its rating on any then outstanding Series
rated by it.
SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the Trustee
or Certificateholders representing undivided 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 will as promptly as possible appoint a successor Servicer. If no such
Servicer has been appointed and
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has accepted such appointment by the time the Servicer ceases to act as
Servicer, all authority, power and obligations of the Servicer under the
Agreement will pass to and be vested in the Trustee. If the Trustee is unable
to legally act as Servicer, the Trustee shall petition a court to appoint a
financial institution with risk-based capital or a net worth of at least
$50,000,000 whose regular business includes servicing VISA or MasterCard
credit card receivables to act as successor Servicer.
"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 five 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 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, 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; or
(d) the occurrence of certain insolvency events with respect to the
Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to in clause (a) above for a period of 10 business days (or, in either case,
such longer or shorter period as may be specified in the related Prospectus
Supplement), or referred to under clause (b) or (c) for a period of 30
business days, will 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 will 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 will
provide the Trustee, any provider of Enhancement, 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.
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.
REPORTS TO CERTIFICATEHOLDERS
For each Series of Certificates, on each Distribution Date, or as soon
thereafter as is practicable, as specified in the related Prospectus
Supplement, the Trustee will forward to each Certificateholder of record a
statement prepared by the Servicer setting forth, among other things: (a) the
total amount distributed, (b) the amount of the distribution on such
Distribution Date allocable to principal on the Certificates, (c) the amount
of such distribution allocable to interest on the Certificates, (d) 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, (e) the Aggregate Principal Receivables, the Investor Interest
and the Investor Interest as a percentage of the aggregate amount of the
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, (f) the
aggregate outstanding balance of Accounts which are 30-59, 60-89 and 90 or
more days delinquent (or a similar classification of delinquency) as of the
end of the last day of the preceding Monthly Period or Periods since the last
Distribution Date, (g) the
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aggregate Investor Default Amount for the preceding Monthly Period or Periods
since the last Distribution Date, (h) 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, (i) the
amount of the Servicing Fee for the preceding Monthly Period or Periods since
the last Distribution Date, (j) the amount available under any Enhancement and
Credit Enhancement, if any, as of the close of business on such Distribution
Date, (k) the aggregate amount of collections on Finance Charge Receivables
processed during the preceding Monthly Period or Periods since the last
Distribution Date, (l) the Portfolio Yield for the preceding Monthly Period or
Periods since the last Distribution Date, (m) information as to any Shared
Excess Finance Charge Collections, Reallocated Investor Finance Charge
Collections and funds in the Excess Funding Account, and (n) certain
information relating to the floating or variable Certificate Rates, if
applicable, for the Monthly Period or Periods ending on such Distribution
Date. If a Series of Certificates has more than one Class, the statements
forwarded to Certificateholders will provide information as to each Class of
Certificates.
On or before January 31 of each calendar year or such other date as
specified in the related Prospectus Supplement, the Trustee 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 will provide that on or before March 31 of each calendar year
commencing after the calendar year during which it becomes effective (or
another date specified in the related 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 such servicing was conducted in compliance with the sections of
the Agreement during the period covered by such report (which shall be the
prior 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. On the same time frames, the Servicer will also be required to
cause a firm of independent certified public accountants to furnish a report
to the effect that they have compared the mathematical calculations of each
amount set forth in the monthly Servicer reports referred to above during the
prior calendar year, or the portion thereof falling after the initial Closing
Date, with Servicer's computer reports which were the source of such amounts
and that on the basis of such comparison, such firm is of the opinion that
such amounts are in agreement, except for such exceptions as it believes to be
immaterial to the financial statements of Servicer and such other exceptions
as shall be set forth in such report. The foregoing procedures do not
constitute an audit under generally accepted accounting principles.
The Agreement will provide for delivery to the Trustee on or before March 31
of each calendar year commencing after the calendar year during which it
becomes effective, or such other date as is specified in the related
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.
AMENDMENTS
The Agreement and any Series Supplement may be amended by the Transferor,
the Servicer and the Trustee, without the consent of Certificateholders of any
Series then outstanding, provided that the Transferor has delivered to the
Trustee an officer's certificate to the effect that the Transferor reasonably
believes that such amendment will not adversely affect in any material respect
the interest of such Certificateholders and that the
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Rating Agency Condition has been satisfied. Amendments may be made as
described in the foregoing sentence in order (among other things) to (i)
provide additional Credit Enhancement for the benefit of the Holders of any
Series or substitute such Credit Enhancement, (ii) add one or more
Participations to the Trust, (iii) designate one or more Additional
Transferors or substitute Transferors, (iv) cure any ambiguity or correct or
supplement any provision contained in the Agreement or Series Supplement which
may be defective or inconsistent with any other provisions thereof, (v) enable
all or a portion of the Trust to qualify as, and to permit an election to be
made to cause the Trust to be treated as, a "financial asset securitization
investment trust," as described in the provisions of the SBJP Act (and, in
connection with any such election, to modify or eliminate existing provisions
of relating to the intended Federal income tax treatment of the Certificates
and the Trust), (vi) enable the Trust to qualify as a partnership for purposes
of any state tax laws and (vii) enable Receivables transferred to the Trust to
be derecognized by the Transferor (or applicable Additional Transferor) under
applicable accounting principles (including provisions relating to the removal
of Accounts) and the Trust to not be treated as a member of the Transferor's
(or such related Additional Transferor's) consolidated group under applicable
accounting principles.
Among other amendments that may be made as described under clause (vi) in
the preceding paragraph, the Agreement may be amended to provide that if
pursuant to certain provisions of Federal law, the Transferor voluntarily
enters liquidation or a receiver is appointed for the Transferor, within 15
days, the Trustee will publish a notice of the liquidation or the appointment
stating that the Trustee intends to sell, dispose of, or otherwise liquidate
the Receivables in a commercially reasonable manner. Any such amendment will
provide that, unless otherwise instructed within a specified period by
Certificateholders representing undivided interests aggregating more than 50%
of the Investor Interest of each Series (or if any Series has more than one
Class, of each Class, and any other Person specified in the Agreement or a
Series Supplement) issued and outstanding, the Trustee will sell, dispose of,
or otherwise liquidate the Receivables in a commercially reasonable manner and
on commercially reasonable terms. The proceeds from the sale, disposition or
liquidation of the Receivables will be treated as collections of the
Receivables and applied as specified above in "--Application of Collections"
and in the various Prospectus Supplements.
The Agreement and the related Series Supplement may also be amended by the
Transferor, the Servicer and the Trustee with the consent of the holders of
Certificates evidencing undivided interests aggregating not less than 66 2/3%
(or such other percentage specified in the related 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 any Series, (b)
change the definition of or the manner of calculating the interest of any
Certificateholder of any Series issued by the Trust or (c) reduce the
aforesaid percentage of undivided interests the holders of which are required
to consent to any such amendment, in each case without the consent of all
Certificateholders of the related Series and 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.
LIST OF CERTIFICATEHOLDERS
Upon written request of Certificateholders of record representing undivided
interests in the Trust aggregating not less than 10% (or such other percentage
specified in the related Prospectus Supplement) of a Series' Investor
Interest, the Trustee will afford such Certificateholders access during
business hours to the current list of Certificateholders of the Trust for
purposes of communicating with other Certificateholders with respect to their
rights under the Agreement. The Trustee may, however, refuse to supply such
list until it has been adequately indemnified by such Certificateholders for
its costs and expenses, and will give the Servicer
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notice that such request has been made. See "--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
(except that the Trustee may not hold a Certificate issued by the Trust for
its own account). 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.
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 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 are 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 Swaps 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.
CREDIT ENHANCEMENT
GENERAL
Credit Enhancement may be provided with respect to one or more Classes or
any Series. Credit Enhancement may be in the form of the subordination of one
or more Classes of the Certificates of such Series, the establishment of a
cash collateral guaranty or account, a collateral interest, a letter of
credit, a surety bond, an insurance policy, a spread account, a reserve
account, the use of cross-support features or any combination of
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the foregoing. Each Prospectus Supplement will specify the Class or Classes
entitled to the benefit of any applicable Credit Enhancement.
Credit Enhancement generally 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, although Credit Enhancement for a
particular Class or Series may provide such protection and guarantee if so
specified in the related Prospectus Supplement. 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 related
Prospectus Supplement will include a description of (a) the amount payable
under such Credit Enhancement, (b) any conditions to payment thereunder not
otherwise described herein, (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 and (d) any material
provision of any agreement relating to such Credit Enhancement. Additionally,
the related 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, and 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 related
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, and the
Credit Enhancement Provider may 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 specified in the related Prospectus Supplement, one or more Classes of
any Series will be subordinated as described in the related Prospectus
Supplement to the extent necessary to fund payments with respect to the
related Senior Certificates. The rights of the holders of any such
Subordinated Certificates to receive distributions of principal and/or
interest on any Distribution Date will be subordinate in right and priority to
the rights of the holders of Senior Certificates to the extent set forth in
the related Prospectus Supplement. If specified in the related Prospectus
Supplement, subordination may apply only in the event of certain types of
losses not covered by another Credit Enhancement. The related Prospectus
Supplement will also set forth 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 related Prospectus Supplement will
specify the manner and conditions for applying such a cross-support feature.
CASH COLLATERAL GUARANTY OR ACCOUNT
If specified in the related 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 related Prospectus
Supplement. The related Prospectus Supplement will set forth the circumstances
under which payments are made to beneficiaries of the Cash Collateral Guaranty
from the Cash Collateral Account or from the Cash Collateral Account directly.
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COLLATERAL INTEREST
If specified in the related Prospectus Supplement, support for a Series or
one or more of its Classes 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 related Prospectus Supplement, to apply 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 related 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 related
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 related Prospectus Supplement. The related
Prospectus Supplement will set 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 under
the Cash Collateral Account.
LETTER OF CREDIT
If specified in the related Prospectus Supplement, support for a Series or
one or more of its Classes 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 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
related Prospectus Supplement.
The maximum liability of the issuer of the letter of credit under a letter
of credit will generally be an amount equal to a percentage specified in the
related 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 related Prospectus Supplement.
SURETY BOND OR INSURANCE POLICY
If specified in the related Prospectus Supplement, insurance with respect to
a Series or one or more of its Classes 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 related Prospectus Supplement.
If specified in the related Prospectus Supplement, a surety bond will be
purchased for the benefit of the holders of any Series or Class or 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 related
Prospectus Supplement.
SPREAD ACCOUNT
If specified in the related Prospectus Supplement, support for a Series or
one or more of its Classes will be provided by the periodic deposit of certain
available excess cash flow from the 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 related Prospectus Supplement.
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RESERVE ACCOUNT
If specified in the related Prospectus Supplement, support for a Series or
one or more of its Classes or any related Enhancement will be provided by a
reserve account (the "Reserve Account"). The Reserve Account may be funded, to
the extent provided in the related Prospectus Supplement, by an initial cash
deposit, the retention of certain periodic distributions of principal,
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 or amounts owing on any related Enhancement as provided in the related
Prospectus Supplement.
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 Transferor Interest, or the grant to the
Trustee of a security interest in such Receivables. The Transferor also will
represent and warrant in the Agreement that, if the transfer of Receivables by
the Transferor to the Trust is deemed to create a security interest under
Chapter 9 of the Louisiana Commercial Laws, as in effect in the State of
Louisiana (the "UCC"), there will exist a valid, subsisting and enforceable
first priority perfected security interest in such Receivables created
thereafter in favor of the Trustee 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."
The Transferor will represent as to Receivables to be conveyed that the
Receivables are "accounts", "chattel paper" or "general intangibles" for
purposes of the UCC. Both the absolute transfer and assignment of accounts and
the transfer of accounts as security for an obligation are treated for certain
purposes under Article 9 of the UCC as creating a security interest therein
and are subject to its provisions, and the filing of an appropriate financing
statement is required to perfect the 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.
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 will represent and
warrant that it transferred the Receivables to the Trust free and clear of the
lien of any third party. In addition, the Transferor will covenant that it
will not sell, pledge, assign, transfer or grant any lien on any Receivable
(or any interest therein) other than to the Trust. 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 also have priority over the
interest of the Trust in such Receivable. In addition, if the FDIC were
appointed as conservator or receiver of the Transferor, certain administrative
expenses of the 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 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
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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.
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 suggest that the
FDIC, if appointed as conservator or receiver for the Transferor, would not
interfere with the timely transfer to the Trust of payments collected on the
Receivables or interfere with the timely liquidation of related Receivables,
as described below. To the extent that the Transferor has granted a security
interest in 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, the FDIA provides that such
security interest should not be subject to avoidance by the FDIC. However,
such positions are not binding on the FDIC and if the FDIC were to assert a
contrary position, such as by requiring 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 related Series of Certificates and possible
reductions in the amount of those payments, resulting in losses to the
Certificateholders, could occur. In addition, the FDIC, if appointed as the
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.
Upon the appointment of a conservator or receiver or upon a voluntary
liquidation with respect to the Transferor, 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 voluntary liquidation. 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 related
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 insolvency of the Transferor or
the appointment of a conservator or receiver for the Transferor, the
conservator or receiver may have the power to prevent the commencement of a
Rapid Amortization Period or, if applicable with respect to a Series as
specified in the related 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, which
could reduce the effective yield to Certificateholders. See "Description of
the Certificates--Pay Out Events."
Upon the Transferor becoming insolvent, the Transferor also may be unable
(or not required) to perform its obligations with respect to the repurchase of
Ineligible Receivables and dilution of Receivables resulting from various
adjustments to Receivables or fraudulently created Receivables.
CONSUMER PROTECTION LAWS
The relationships of cardholders, credit card issuers and lenders 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
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Practice and Electronic Funds Transfer Acts, at the Federal level, and the
Louisiana Consumer Credit Law, Louisiana Collection Agency Regulation Act and
Louisiana Equal Credit Opportunity Law. Certain of these statutes impose
disclosure requirements when a credit card account is advertised, when it is
opened, at the end of Billing Cycles and at year end. In addition, certain of
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 addition, the SSCRA provides for a stay of court proceedings against
military personnel (including Air Force personnel) on active duty if the
ability of such person to defend against a suit would be materially affected
by reason of military service and limits to 6% per year the interest
chargeable to military personnel (including Air Force personnel) on active
duty on obligations incurred by such person prior to entrance into such
service unless the obligee obtains a court order allowing a higher rate to be
charged. The SSCRA could adversely affect the Servicer's ability to collect on
Receivables generated under First NBC's USAF Club Card program and other
military programs, which make up a significant portion of the Trust Portfolio.
See "First NBC's Credit Card Activities--General." In its experience to date
with the military programs, First NBC does not believe that the SSCRA has had
a material impact on its collection efforts, but there can be no assurance
that the SSCRA would not have an adverse effect in the future.
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.
Application of Federal and state bankruptcy and debtor relief laws would
affect the interests of the Certificateholders if such laws result in any
related Receivables being written off as uncollectible when the amount
available under any Credit Enhancement is equal to zero. See "Description of
the Certificates--Defaulted Receivables; Rebates and Fraudulent Charges;
Investor Charge-Offs."
U.S. FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion, summarizing the material anticipated Federal
income tax consequences of the purchase, ownership and disposition of the
Certificates of a Series, is based upon the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), proposed, temporary and final Treasury
regulations thereunder, and published rulings and court decisions in effect as
of the date hereof, all of which are subject to change, possibly
retroactively. To the extent that the following summary relates to matters of
law or legal conclusions with respect thereto, such summary represents the
opinion of Mayer, Brown & Platt, special federal tax counsel for the Bank
subject to the qualifications set forth herein. Mayer, Brown & Platt have
prepared or reviewed the statements in this Prospectus under the heading "U.S.
Federal Income Tax Consequences," and are of the opinion that such statements
are correct in all material respects. This discussion does not address every
aspect of the Federal income tax laws that may be relevant to Certificate
Owners of a Series in light of their
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personal investment circumstances or to certain types of Certificate Owners of
a Series subject to special treatment under the Federal income tax laws (for
example, banks and life insurance companies). Accordingly, investors should
consult their own tax advisors regarding Federal, state, local, foreign and
any other tax consequences to them of any investment in the Certificates of a
Series. PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
WITH REGARD TO THE FEDERAL TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, OR
DISPOSITION OF INTERESTS IN CERTIFICATES, AS WELL AS THE TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, FOREIGN COUNTRY, OR OTHER TAXING
JURISDICTION.
CHARACTERIZATION OF THE CERTIFICATES AS INDEBTEDNESS
Mayer, Brown & Platt, or such other counsel specified in the related
Prospectus Supplement, will act as special tax counsel to the Bank ("Special
Tax Counsel") and will, upon issuance of a Series of Certificates, render an
opinion to the Bank based on the assumptions and qualifications set forth
therein that the Certificates of such Series that are offered pursuant to a
Prospectus Supplement (the "Offered Certificates") will be treated as
indebtedness for Federal income tax purposes. A copy of such opinion will be
filed with the Commission with a Report on Form 8-K following the issuance of
a Series of Certificates. However, opinions of counsel are not binding on the
Internal Revenue Service (the "IRS"), and there can be no assurance that the
IRS could not successfully challenge this conclusion.
The Transferor expresses in the Agreement its intent that for Federal,
state, local and foreign income or franchise tax purposes, the Offered
Certificates of each Series will be indebtedness secured by the Receivables.
The Transferor agrees and each Certificateholder and Certificate Owner, by
acquiring an interest in an Offered Certificate, agrees or will be deemed to
agree to treat the Offered Certificates of such Series as indebtedness for
Federal, state and local income or franchise tax purposes. However, because
different criteria are used to determine the non-tax accounting
characterization of the transactions contemplated by the Agreement, the
Transferor expects to treat such transaction, for regulatory and financial
accounting purposes, as a sale of an ownership interest in the Receivables and
not as a debt obligation.
In general, whether for Federal income tax purposes a transaction
constitutes a sale of property or a loan, the repayment of which is secured by
the property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction rather than its form or the manner in
which it is labeled. While the IRS and the courts have set forth several
factors to be taken into account in determining whether the substance of a
transaction is a sale of property or a secured indebtedness for Federal income
tax purposes, the primary factor in making this determination is whether the
transferee has assumed the risk of loss or other economic burdens relating to
the property and has obtained the benefits of ownership thereof. Special Tax
Counsel may analyze and rely on several factors in reaching its opinion that
the weight of the benefits and burdens of ownership of the Receivables has not
been transferred to the Certificate Owners.
In some instances, courts have held that a taxpayer is bound by a particular
form it has chosen for a transaction, even if the substance of the transaction
does not accord with its form. It is expected that Special Tax Counsel may
advise that the rationale of those cases will not apply to the transaction
evidenced by a Series of Certificates because the form of the transaction, as
reflected in the operative provisions of the documents, either is not
inconsistent with the characterization of the Offered Certificates of such
Series as debt for Federal income tax purposes or otherwise makes the
rationale of those cases inapplicable to this situation.
TAXATION OF INTEREST INCOME OF CERTIFICATEHOLDERS
As set forth above, Special Tax Counsel will render an opinion to the Bank
that the Offered Certificates will constitute indebtedness for Federal income
tax purposes, and accordingly, interest thereon generally will be includible
in income by Certificate Owners as ordinary income when received (in the case
of a cash basis taxpayer) or accrued (in the case of an accrual basis
taxpayer) in accordance with their respective methods of tax
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accounting. Interest received on the Offered Certificates may also constitute
"investment income" for purposes of certain limitations of the Code concerning
the deductibility of investment interest expense.
It is not anticipated that the Offered Certificates will be issued with
original issue discount ("OID") within the meaning of Section 1273 of the
Code.
If the Offered Certificates are issued at a greater than de minimis discount
or are treated as having been issued with OID under the Treasury regulations,
the following rules will apply. The excess of the "stated redemption price at
maturity" of an Offered Certificate over the original issue price (in this
case, the initial offering price at which a substantial amount of the Offered
Certificates are sold to the public) will constitute OID. A Certificate Owner
must include OID in income as interest over the term of the Offered
Certificate under a constant yield method. In general, OID must be included in
income in advance of the receipt of cash representing that income.
Accordingly, cash basis taxpayers would effectively be treated as being on the
accrual method and therefore be required to include interest into income prior
to the receipt of cash representing that income. In the case of a debt
instrument as to which the repayment of principal may be accelerated as a
result of the prepayment of other obligations securing the debt instrument,
the periodic accrual of OID is determined by taking into account both the
prepayment assumptions used in pricing the debt instrument and the prepayment
experience. If this provision applies to a Class of Certificates (which is not
clear), the amount of OID which will accrue in any given "accrual period" may
either increase or decrease depending upon the actual prepayment rate.
Accordingly, each Certificate Owner should consult its own tax adviser
regarding the impact to it of the OID rules if the Offered Certificates are
issued with OID. Under the Treasury regulations, a holder of a Certificate
issued with de minimis OID must include such OID in income proportionately as
principal payments are made on a Class of Certificates.
A holder who purchases an Offered Certificate at a discount from its
adjusted issue price may be subject to the "market discount" rules of the
Code. These rules provide, in part, for the treatment of gain attributable to
accrued market discount as ordinary income upon the receipt of partial
principal payments or on the sale or other disposition of the Offered
Certificate, and for the deferral of interest deductions with respect to debt
incurred to acquire or carry the Offered Certificate.
A subsequent holder who purchases an Offered Certificate at a premium may
elect to amortize and deduct this premium over the remaining term of the
Offered Certificate in accordance with rules set forth in Section 171 of the
Code.
SALE OF A CERTIFICATE
In general, a Certificate Owner will recognize gain or loss upon the sale,
exchange, redemption, or other taxable disposition of an Offered Certificate
measured by the difference between (i) the amount of cash and the fair market
value of any property received (other than amounts attributable to, and
taxable as, accrued interest) and (ii) the Certificate Owner's tax basis in
the Offered Certificate (as increased by any OID or market discount previously
included in income by the holder and decreased by any deductions previously
allowed for amortizable bond premium and by any payments reflecting principal
or OID received with respect to such Certificate). Subject to the market
discount rules discussed above and to the one-year holding requirement for
long-term capital gain treatment, any such gain or loss generally will be
long-term capital gain or loss, provided that the Offered Certificate was held
as a capital asset. The maximum ordinary income rate for individuals, estates,
and trusts exceeds the maximum long-term capital gains rate for such
taxpayers. In addition, any capital losses realized generally may be used by a
corporate taxpayer only to offset capital gains and by an individual taxpayer
only to the extent of capital gains plus $3,000 of other income.
TAX CLASSIFICATION OF TRUST
The Agreement permits the issuance of Classes of Certificates that are
treated for Federal income tax purposes either as indebtedness or as an
interest in a partnership. Accordingly, the Trust could be characterized
either as (i) a security device to hold Receivables securing the repayment of
the Certificates of all Series or (ii) a
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partnership in which the Transferor and certain classes of Certificateholders
are partners, and which has issued debt represented by other classes of
Certificates of the Trust (including the Offered Certificates). In connection
with the issuance of Certificates of any Series, Special Tax Counsel will
render an opinion to the Bank, based on the assumptions and qualifications set
forth therein, that under then current law, the issuance of the Certificates
of such Series will not cause the Trust to be classified for Federal income
tax purposes as an association (or publicly traded partnership) taxable as a
corporation. A copy of such opinion will be filed with the Commission with a
Report on Form 8-K following the issuance of a Series of Certificates.
FASIT LEGISLATION
In August, 1996, the United States Congress passed and President Clinton
signed into law the "Small Business Job Protection Act of 1996," H.R. 3448
(the "SBJP Act"). The SBJP Act creates a new type of entity for federal income
tax purposes called a "financial asset securitization investment trust" or
"FASIT." The effective date of the FASIT provisions of the SBJP Act is
September 1, 1997. The SBJP Act enables certain arrangements similar to the
Trust to elect to be treated as a FASIT. Under the FASIT provisions of the
SBJP Act 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. If so specified in
the related Prospectus Supplement, the Trust may make an election to be
treated as a FASIT. The Agreement may contain any such terms and provide for
the issuance of Certificates on such terms and conditions as are permitted to
a FASIT and described in the related Prospectus Supplement. In addition, upon
satisfying certain conditions set forth in the Agreement, the Transferor,
Servicer and the Trustee will be permitted to amend the Agreement 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 as may be permitted by reason of the making of such an
election. See "Description of Certificates--Amendments." However, there can be
no assurance that the Transferor will or will not cause any permissible FASIT
election to be made with respect to the Trust or amend the Agreement in
connection with any election. In addition, if such an election is made, it may
cause a Certificateholder to recognize gain (but not loss) with respect to any
Certificates held by it, even though Special Tax Counsel will deliver its
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 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.
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP OR AS AN
ASSOCIATION TAXABLE AS A CORPORATION
The opinion of Special Tax Counsel with respect to Offered Certificates will
not be binding on the courts or the IRS. It is possible that the IRS could
assert that, for purposes of the Code, the transaction contemplated by this
Prospectus and a related Prospectus Supplement constitutes a sale of the
Receivables (or an interest therein) to the Certificate Owners of one or more
Series or Classes and that the proper classification of the legal relationship
between the Bank and some or all of the Certificate Owners or
Certificateholders of one or more Series resulting from the transaction is
that of a partnership (including a publicly traded partnership) or a publicly
traded partnership taxable as a corporation. The Transferor currently does not
intend to comply with the Federal income tax reporting requirements that would
apply if any Classes of Certificates were treated as interests in a
partnership or corporation (unless, as is permitted by the Agreement, an
interest in a Trust is issued or sold that is intended to be classified as an
interest in a partnership).
If a transaction were treated as creating a partnership between the
Transferor and the Certificate Owners or Certificateholders of one or more
Series, the partnership itself would not be subject to Federal income tax
(unless it were to be characterized as a publicly traded partnership taxable
as a corporation); rather, the partners of such partnership, including the
Certificate Owners or Certificateholders of such Series, would be taxed
individually on their respective distributive shares of the partnership's
income, gain, loss, deductions and credits. The amount and timing of items of
income and deductions of a Certificate Owner could differ if the Offered
Certificates were held to constitute partnership interests, rather than
indebtedness. Moreover, unless the partnership were treated
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as engaged in a trade or business, an individual's share of expenses of the
partnership would be miscellaneous itemized deductions that, in the aggregate,
are allowed as deductions only to the extent they exceed two percent of the
individual's adjusted gross income, and would be subject to reduction under
Section 68 of the Code if the individual's adjusted gross income exceeded
certain limits. As a result, the individual might be taxed on a greater amount
of income than the stated rate on the Offered Certificates. Finally, assuming
a transaction were treated as creating a partnership, all or a portion of any
taxable income allocated to a Certificate Owner that is a pension, profit-
sharing or employee benefit plan or other tax-exempt entity (including an
individual retirement account) may, under certain circumstances, constitute
"unrelated business taxable income" which generally would be taxable to the
holder under the Code.
If it were determined that a transaction created an entity classified as a
publicly traded partnership taxable as a corporation, the Trust would be
subject to Federal income tax at corporate income tax rates on the income it
derives from the Receivables, which would reduce the amounts available for
distribution to the Certificate Owners, possibly including Certificate Owners
of a Class that is treated as indebtedness. Such classification may also have
adverse state and local tax consequences that would reduce amounts available
for distribution to Certificate Owners. Cash distributions to the Certificate
Owners (except any Class not recharacterized as an equity interest) generally
would be treated as dividends for tax purposes to the extent of such deemed
corporation's earnings and profits.
FOREIGN INVESTORS
As set forth above, Special Tax Counsel will render an opinion, upon
issuance, that the Offered Certificates will be treated as debt for U.S.
Federal income tax purposes. The following information describes the U.S.
Federal income tax treatment of investors that are not U.S. persons ("Foreign
Investors") if the Offered Certificates are treated as debt. The term "Foreign
Investor" means any person other than (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust the income of which is includible in gross income for U.S.
Federal income tax purposes, regardless of its source.
Interest, including OID, paid to a Foreign Investor will be subject to U.S.
withholding taxes at a rate of 30% unless (i) the income is "effectively
connected" with the conduct by such Foreign Investor of a trade or business in
the United States as evidenced by IRS Form 4224, signed by the Certificate
Owner or such owner's agent, claiming exemption from withholding tax on income
effectively connected with the conduct of a trade or business in the United
States; (ii) the Foreign Investor delivers IRS Form 1001, signed by the
Certificate Owner or such Certificate Owner's agent, claiming exemption from
withholding under an applicable tax treaty; or (iii) the Foreign Investor and
each securities clearing organization, bank, or other financial institution
that holds the Offered Certificates on behalf of the customer in the ordinary
course of its trade or business, in the chain between the Certificate Owner
and the U.S. person otherwise required to withhold the U.S. tax, complies with
applicable identification requirements and the Certificate Owner does not
actually or constructively own 10% or more of the voting stock of the Bank
(or, upon the issuance of an interest in the Trust that is treated as a
partnership interest, any holder of such interest) and is not a controlled
foreign corporation with respect to the Bank (or the holder of such an
interest). Applicable identification requirements generally will be satisfied
if there is delivered to a securities clearing organization IRS Form W-8
signed under penalties of perjury by the Certificate Owner, stating that the
Certificate Owner is not a U.S. person and providing such Certificate Owner's
name and address. In the case of (i), (ii) or (iii) the appropriate form will
be effective provided that in any such case (x) the applicable form is
delivered pursuant to applicable procedures and is properly transmitted to the
United States entity otherwise required to withhold tax and (y) none of the
entities receiving the form has actual knowledge that the Certificate Owner is
a U.S. person.
A Certificate Owner that is a nonresident alien or foreign corporation will
not be subject to U.S. Federal income tax on gain realized upon the sale,
exchange, or redemption of an Offered Certificate, provided that (i) such gain
is not effectively connected with the conduct of a trade or business in the
United States, (ii) 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 sale, exchange, or redemption
occurs, and (iii) in the case of gain representing accrued interest, the
conditions described in the immediately preceding paragraph are satisfied.
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If the interests of the Certificate Owners of a Series were reclassified as
interests in a partnership (not taxable as a corporation), such
recharacterization could cause a Foreign Investor to be treated as engaged in
a trade or business in the United States. In such event the Certificate Owner
of such Series would be required to file a Federal income tax return and, in
general, would be subject to Federal income tax, including branch profits tax
in the case of a Certificateholder that is a corporation, on its net income
from the partnership. Further, the partnership would be required, on a
quarterly basis, to pay withholding tax equal to the sum, for each foreign
partner, of such foreign partner's distributive share of "effectively
connected" income of the partnership multiplied by the highest rate of tax
applicable to that foreign partner. The tax withheld from each foreign partner
would be credited against such foreign partner's U.S. income tax liability.
If the Trust were taxable as a corporation, distributions to foreign
persons, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30%, unless such rate were reduced by an applicable
tax treaty.
STATE AND LOCAL TAXATION
The discussion above does not address the tax treatment of the Trust, the
Certificates of any Series, or the Certificate Owners of any Series under
state and local tax laws. Prospective investors are urged to consult their own
tax advisors regarding state and local tax treatment of the Trust and the
Certificates of any Series, and the consequences of purchase, ownership or
disposition of the Certificates of any Series under any state or local tax
law.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under
ERISA or "disqualified persons" under the Code with respect to the plan. ERISA
also imposes certain duties on persons who are fiduciaries of plans subject to
ERISA and prohibits certain transactions between a plan and parties in
interest with respect to such plans. Under ERISA, any person who exercises any
authority or control respecting the management or disposition of the assets of
a plan is considered to be a fiduciary of such plan (subject to certain
exceptions not here relevant). A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and the Code
for such persons.
Plan fiduciaries must determine whether the acquisition and holding of the
Certificates of a Series and the operations of the Trust would result in
direct or indirect prohibited transactions under ERISA and the Code. The
operations of the Trust could result in prohibited transactions if Benefit
Plans (as defined below) that purchase the Certificates of a Series are deemed
to own an interest in the underlying assets of the Trust. There may also be an
improper delegation of the responsibility to manage Benefit Plan assets if
Benefit Plans that purchase the Certificates are deemed to own an interest in
the underlying assets of the Trust.
Pursuant to a final regulation (the "Final Regulation") issued by the
Department of Labor ("DOL") concerning the definition of what constitutes the
"plan assets" of an employee benefit plan subject to ERISA or Section 4975 of
the Code, or an individual retirement account ("IRA") (collectively referred
to as "Benefit Plans"), the assets and properties of certain entities in which
a Benefit Plan makes an equity investment could be deemed to be assets of the
Benefit Plan in certain circumstances. Accordingly, if Benefit Plans purchase
Certificates of a Series, the Trust could be deemed to hold plan assets unless
one of the exceptions under the Final Regulation is applicable to the Trust.
The Final Regulation only applies to the purchase by a Benefit Plan of an
"equity interest" in an entity. Although interests in Certificates of a Series
are likely to be treated as equity interests under the Final Regulation, the
Final Regulation contains an exception that provides that if a Benefit Plan
acquires a "publicly-offered security," the issuer of the security is not
deemed to hold plan assets. A publicly-offered security is a security that is
(i) freely transferable, (ii) part of a class of securities that is owned by
100 or more investors independent
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of the issuer and of one another at the completion of the public offering and
(iii) either is (A) part of a class of securities registered under Section
12(b) or 12(g) of the Exchange Act or (B) sold to the plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Act and the class of securities of which such security is
a part is registered under the Exchange Act within 120 days (or such later
time as may be allowed by the Commission) after the end of the fiscal year of
the issuer during which the offering of such securities to the public
occurred. In addition, the Final Regulation provides that if at all times more
than 75% of the value of all classes of equity interests in Certificates of a
Series are held by investors other than benefit plan investors (which is
defined as including plans subject to ERISA, government, church and other
plans not subject to ERISA and IRAs), the investing plan's assets will not
include any of the underlying assets of the Trust.
There are no restrictions imposed on the transfer of the Certificates
offered hereby, and the Certificates offered hereby will be sold as part of an
offering pursuant to an effective registration statement under the Securities
Act. At or before the conclusion of the offering, the underwriters will notify
the Transferor and the Trustee as to whether or not the Certificates of any
Series (or if there is more than one Class in a Series, each Class) will be
expected to be held by at least 100 separately named persons at the conclusion
of the offering. The Transferor will not, however, determine whether there
will, in fact, be at least 100 separately named persons or whether the 100-
investor requirement of the exception for publicly offered securities is
satisfied as to the Certificates of such Series (or Class). If the
Certificates of any Series (or if there is more than one Class in a Series,
any Class) are expected to be held by at least 100 separately named persons at
the conclusion of the offering, those Certificates will be timely registered
under the Exchange Act.
If interests in the Certificates of a Series fail to meet the criteria of
publicly-offered securities and the Trust's assets are deemed to include
assets of Benefit Plans that are Certificateholders, transactions involving
the Trust and "parties in interest" or "disqualified persons" with respect to
such Benefit Plans might be prohibited under Section 406 of ERISA and Section
4975 of the Code unless an exemption is applicable. Thus, for example, if a
participant in any Benefit Plan is a cardholder of one of the Accounts, under
DOL interpretations the purchase of interests in Certificates by such Benefit
Plan could constitute a prohibited transaction. In addition, the Transferor,
Servicer, Trustee or any underwriter of such Series may be considered to be a
party in interest, disqualified person or fiduciary with respect to an
investing Benefit Plan. Accordingly, an investment by a Benefit Plan in
Certificates may be a prohibited transaction under ERISA and the Code unless
such investment is subject to a statutory or administrative exemption. Five
class exemptions issued by the DOL that could apply in such event are DOL
Prohibited Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan Asset
Transactions Determined by Independent Qualified Professional Asset Managers),
PTE 91-38 (Class Exemption for Certain Transactions Involving Bank Collective
Investment Funds), PTE 90-1 (Class Exemption for Certain Transactions
Involving Insurance Company Pooled Separate Accounts), PTE 95-60 (Class
Exemption for Certain Transactions Involving Insurance Company General
Accounts) and PTE 96-23 (Class Exemption for Plan Asset Transactions
Determined by In-House Asset Managers). There is no assurance that any of
these exemptions, even if all of the conditions specified therein are
satisfied, or any other exemption will apply to all transactions involving the
Trust's assets.
IN LIGHT OF THE FOREGOING, FIDUCIARIES OF A BENEFIT PLAN CONSIDERING THE
PURCHASE OF INTERESTS IN CERTIFICATES OF ANY SERIES SHOULD CONSULT THEIR OWN
COUNSEL AS TO WHETHER THE ASSETS OF THE TRUST WHICH ARE REPRESENTED BY SUCH
INTERESTS WOULD BE CONSIDERED PLAN ASSETS, AND WHETHER, UNDER THE GENERAL
FIDUCIARY STANDARDS OF INVESTMENT PRUDENCE AND DIVERSIFICATION, AN INVESTMENT
IN CERTIFICATES OF ANY SERIES IS APPROPRIATE FOR THE BENEFIT PLAN TAKING INTO
ACCOUNT THE OVERALL INVESTMENT POLICY OF THE BENEFIT PLAN AND THE COMPOSITION
OF THE BENEFIT PLAN'S INVESTMENT PORTFOLIO. In addition, fiduciaries should
consider the consequences that would apply if the Trust's assets were
considered plan assets, the applicability of exemptive relief from the
prohibited transaction rules, and, whether all conditions for such exemptive
relief would be satisfied.
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In particular, insurance companies considering the purchase of Certificates
of any Series should consult their own benefits or other appropriate counsel
with respect to the United States Supreme Court's decision in John Hancock
Mutual Life Insurance Co. v. Harris Trust & Savings Bank, 510 U.S. 86 (1993)
("John Hancock") and the applicability of PTE 95-60 and Section 401(c) of
ERISA. In John Hancock, the Supreme Court held that assets held in an
insurance company's general account may be deemed to be "plan assets" under
certain circumstances; however, PTE 95-60 may exempt some or all of the
transactions that could occur as the result of the acquisition and holding of
the Certificates of a Series by an insurance company general account from the
penalties normally associated with prohibited transactions. Accordingly,
investors should analyze whether John Hancock, PTE 95-60 and Section 401(c) of
ERISA or any other exemption may have an impact with respect to their purchase
of the Certificates of any Series.
PLAN OF DISTRIBUTION
The Transferor may sell or cause Certificates to be sold (i) through
underwriters or dealers; (ii) directly to one or more purchasers; or (iii)
through agents. In addition, the Transferor or its affiliates may act as
selling agent for the Certificates, if so specified in the related Prospectus
Supplement. The related Prospectus Supplement in respect of a Series offered
hereby will set forth the terms of the offering of such Certificates,
including the name or names of any underwriters, the purchase price of such
Certificates and the proceeds to the Transferor from such sale, any
underwriting discounts and other items constituting underwriters'
compensation, any initial offering price and any discounts or concessions
allowed or reallowed or paid to dealers and the extent, if any, to which any
or all of such underwriters may engage in stabilizing transactions and
syndicate covering transactions with respect to the related Certificates. Only
underwriters so named in such Prospectus Supplement shall be deemed to be
underwriters in connection with the Certificates offered thereby.
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 related 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 related 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 related
Prospectus Supplement).
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 related 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.
Each Underwriting Agreement will provide that the Transferor will indemnify
the related underwriters against liabilities relating to the adequacy of
disclosure to investors, including 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.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates will be
passed upon for the Transferor by Mayer, Brown & Platt, Chicago, Illinois.
Certain legal matters relating to the Federal tax consequences of the issuance
of the Certificates will be passed upon for the Transferor by Mayer, Brown &
Platt. Certain legal matters relating to the issuance of the Certificates will
be passed upon for the Underwriters by Orrick, Herrington & Sutcliffe LLP, New
York, New York.
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INDEX OF DEFINED TERMS FOR PROSPECTUS
<TABLE>
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<S> <C>
Accounts................................................................ 4
Accumulation Period..................................................... 7
Additional Accounts..................................................... 5
Additional Transferors.................................................. 43
Adjusted Investor Interest.............................................. 55
Agent Banks............................................................. 31
Aggregate Principal Receivables......................................... 50
Agreement............................................................... 4
Amortization Period..................................................... 6
Assignment.............................................................. 46
Automatic Additional Accounts........................................... 45
Bank.................................................................... 4, 11
Bank Portfolio.......................................................... 4
Base Rate............................................................... 27
Benefit Plans........................................................... 72
BHC Act................................................................. 35
BIF..................................................................... 48
Billed Finance Charge Receivables....................................... 50
Billing Cycle........................................................... 32
Cash Collateral Account................................................. 63
Cash Collateral Guaranty................................................ 63
Cede.................................................................... 2
Cedel................................................................... 38
Cedel Participants...................................................... 38
Certificate Owners...................................................... 2
Certificate Rate........................................................ 6
Certificateholders...................................................... 2
Certificates............................................................ 1, 4
Class................................................................... 4
Closing Date............................................................ 12
Code.................................................................... 67
Collateral Interest..................................................... 64
Collection Account...................................................... 12
COMMISSION.............................................................. 1
Controlled Accumulation Amount.......................................... 15
Controlled Accumulation Period.......................................... 14
Controlled Amortization Amount.......................................... 13
Controlled Amortization Period.......................................... 13
Controlled Deposit Amount............................................... 15
Controlled Distribution Amount.......................................... 13
Conversion Date......................................................... 50
Cooperative............................................................. 39
Corporation............................................................. 11, 35
Counterparties.......................................................... 62
Credit Enhancement...................................................... 5
Credit Enhancement Percentage........................................... 49
Credit Enhancement Provider............................................. 7
Cut-Off Date............................................................ 8
Defaulted Accounts...................................................... 8
</TABLE>
<TABLE>
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<S> <C>
Definitive Certificates.............................................. 11
Depositaries......................................................... 37
Depository........................................................... 36
Determination Date................................................... 55
Disclosure Document.................................................. 10
Discount Percentage.................................................. 47
Distribution Account................................................. 48
Distribution Date.................................................... 12
DOL.................................................................. 72
DTC.................................................................. 2, A-1
DTC Participants..................................................... 37
Eligible Account..................................................... 44
Eligible Receivable.................................................. 45
Enhancement.......................................................... 5
Enhancement Invested Amount.......................................... 63
ERISA................................................................ 21
Euroclear............................................................ 39
Euroclear Operator................................................... 39
Euroclear Participants............................................... 39
Excess Allocation Series............................................. 18
Excess Funding Account............................................... 19, 48, 54
Exchange Act......................................................... 2
FASIT................................................................ 73
FCSC................................................................. 33
FDIA................................................................. 23
FDIC................................................................. 8
Final Regulation..................................................... 72
Finance Charge Account............................................... 48
Finance Charge Receivables........................................... 8
FIRREA............................................................... 23
First Bankcard....................................................... 31
First NBC............................................................ 4, 11
Foreign Investor..................................................... 71
Foreign Investors.................................................... 71
Full Investor Interest............................................... 20
Funding Period....................................................... 19
Global Securities.................................................... A-1
Group Investor Charge-Offs........................................... 52
Group Investor Default Amounts....................................... 52
Group Investor Finance Charge Collections............................ 52
Group Investor Monthly Interest...................................... 52
Holders.............................................................. 40
Indirect Participants................................................ 37
Ineligible Receivable................................................ 43
Interchange.......................................................... 5
Interest Funding Account............................................. 40
Interest Period...................................................... 12
Investor Charge-Off.................................................. 55
</TABLE>
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INDEX OF DEFINED TERMS FOR PROSPECTUS
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<S> <C>
Investor Default Amount.................................................. 55
Investor Finance Charge Collections...................................... 52
Investor Interest........................................................ 7
Investor Monthly Fees.................................................... 52
Investor Percentage...................................................... 7
IRA...................................................................... 72
IRS...................................................................... 68
John Hancock............................................................. 74
LIBOR.................................................................... 62
Minimum Aggregate Principal Receivables.................................. 45
Minimum Transferor Interest.............................................. 9, 45
Monthly Period........................................................... 12
Moody's.................................................................. 48
Net Default Amount....................................................... 7
Net Recoveries........................................................... 8
New Issuance............................................................. 10
Offered Certificates..................................................... 68
OID...................................................................... 69
Other Account Revenues................................................... 5
Paired Series............................................................ 19, 55
Partial Amortization..................................................... 17
Participation Agreement.................................................. 46
Participations........................................................... 6, 46
Pay Out Event............................................................ 16
Permitted Investments.................................................... 48
Portfolio Yield.......................................................... 27
Pre-Funding Account...................................................... 19
Pre-Funding Amount....................................................... 19, 49
Principal Amortization Period............................................ 14
Principal Commencement Date.............................................. 13
Principal Funding Account................................................ 14
Principal Receivables.................................................... 8
Principal Sharing Series................................................. 18, 54
Private Label Accounts................................................... 5, 31
Prospectus Supplement.................................................... 1
PTE...................................................................... 73
Purchased Interest....................................................... 12
Qualified Institution.................................................... 48
Rapid Accumulation Period................................................ 15
Rapid Amortization Period................................................ 16
Rating Agency............................................................ 21
Reallocated Investor Finance Charge Collections.......................... 52
Reallocation Group....................................................... 18
Receivables.............................................................. 4
Record Date.............................................................. 36
Recoveries............................................................... 8
Regulations.............................................................. 69
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ---------
<S> <C>
Removed Accounts...................................................... 9
Reserve Account....................................................... 65
Retention Condition................................................... 54
Revolving Period...................................................... 12
SAIF.................................................................. 48
SBJP Act.............................................................. 70
Scheduled Payment Date................................................ 13
Securities Act........................................................ 10
Senior Certificates................................................... 7
Series................................................................ 1, 4, A-1
Series Supplement..................................................... 4
Series Termination Date............................................... 56
Service Transfer...................................................... 58
Servicer.............................................................. 11
Servicer Default...................................................... 59
Servicing Fee......................................................... 11
Shared Principal Collections.......................................... 18
Special Tax Counsel................................................... 21, 68
Specified Trust Termination Date...................................... 56
Spread Account........................................................ 64
SSCRA................................................................. 24
Standard & Poor's..................................................... 48
Subordinated Certificates............................................. 7
Supplemental Certificates............................................. 9
Swaps................................................................. 62
Tax Opinion........................................................... 10
Terms and Conditions.................................................. 39
Transfer Date......................................................... 15, 50
Transferor............................................................ 5
Transferor Interest................................................... 7
Transferor Percentage................................................. 36
Trust................................................................. 4
Trust Portfolio....................................................... 34
Trust Termination Date................................................ 56
Trustee............................................................... 4
U.S. Person........................................................... A-3
UCC................................................................... 65
Underwriting Agreement................................................ 74
USAF.................................................................. 31
</TABLE>
76
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered First NBC
Credit Card Master Trust Asset Backed Certificates (the "Global Securities")
to be issued in Series from time to time (each, a "Series") will be available
only in book-entry form. Investors in the Global Securities may hold such
Global Securities through any of The Depository Trust Company ("DTC"), Cedel
or Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Cedel and Euroclear (in
such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
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.
A-1
<PAGE>
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
A-2
<PAGE>
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments
of interest (including original issue discount) on registered debt issued by
U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business in the chain of intermediaries between such beneficial owner
and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Certificates
that are non-U.S. Persons can obtain a complete exemption form 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.
Proposed Treasury regulations, which would be effective with respect to
payments made after December 31, 1997 if adopted in their current form, would
provide alternative certification requirements and means for obtaining the
exemption from federal income and withholding tax.
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof or (iii) an estate or trust the
income of which is includible in gross income for United States tax purposes,
regardless of its source. This summary does not deal with all aspects of U.S.
Federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisers for
specific tax advice concerning their holding and disposing of the Global
Securities.
A-3
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE TRANSFEROR OR ANY AGENT OR UNDERWRITER. NEITHER THIS
PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOM-
PANYING PROSPECTUS, NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE TRANSFEROR OR THE RECEIVABLES OR THE ACCOUNTS SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFER-
ENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Terms........................................................... S-3
Risk Factors............................................................... S-16
First NBC'S Credit Card Portfolio.......................................... S-16
The Receivables............................................................ S-20
Maturity Assumptions....................................................... S-23
Receivable Yield Considerations............................................ S-25
First NBC and First Commerce Corporation................................... S-26
Description of the Certificates............................................ S-26
Underwriting............................................................... S-45
Index of Defined Terms for Prospectus Supplement........................... S-48
PROSPECTUS
Prospectus Supplement...................................................... 2
Reports to Certificateholders.............................................. 2
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Prospectus Summary......................................................... 4
Risk Factors............................................................... 23
The Trust.................................................................. 30
First NBC's Credit Card Activities......................................... 31
The Receivables............................................................ 34
Maturity Assumptions....................................................... 34
Use of Proceeds............................................................ 35
First NBC and First Commerce Corporation................................... 35
Description of the Certificates............................................ 35
Credit Enhancement......................................................... 62
Certain Legal Aspects of the Receivables................................... 65
U.S. Federal Income Tax Consequences....................................... 67
State and Local Taxation................................................... 72
ERISA Considerations....................................................... 72
Plan of Distribution....................................................... 74
Legal Matters.............................................................. 74
Index of Defined Terms for Prospectus...................................... 75
Annex 1: Global Clearance, Settlement and Tax Documentation Procedures..... A-1
</TABLE>
UNTIL OCTOBER 29, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FIRST NBC
CREDIT CARD MASTER TRUST
$259,500,000 CLASS A
6.15% ASSET BACKED
CERTIFICATES, SERIES 1997-1
$21,000,000 CLASS B
6.35% ASSET BACKED
CERTIFICATES, SERIES 1997-1
FIRST NATIONAL BANK
OF COMMERCE
TRANSFEROR AND SERVICER
-----------------
PROSPECTUS SUPPLEMENT
-----------------
UNDERWRITERS OF THE CLASS A CERTIFICATES
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
UNDERWRITER OF THE CLASS B CERTIFICATES
MERRILL LYNCH & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CLASS A CERTIFICATE
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to First National Bank of Commerce or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered
in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.
No. R-1 $200,000,000
CUSIP No. 320958AA9
FIRST NBC CREDIT CARD MASTER TRUST
CLASS A 6.15%
ASSET BACKED CERTIFICATE, SERIES 1997-1
Evidencing an Undivided Interest in a trust, the corpus of which consists
of a portfolio of MasterCard(R), VISA(R)* and Private Label credit card
receivables generated or acquired by First National Bank of Commerce and
other assets and interests constituting the Trust under the Pooling and
Servicing Agreement described below.
(Not an interest in or obligation of
First National Bank of Commerce
or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the
corpus of which consists of a portfolio of receivables (the "Receivables")
now existing or hereafter created and arising in connection with selected
MasterCard, VISA and Private Label credit card accounts (the "Accounts") of
First National Bank of Commerce, a national banking association organized
under the laws of the United States, all monies due or to become due in
payment of the Receivables (including all Finance Charge Receivables and
Recoveries), the right to certain amounts received as Interchange with
respect to the Accounts, the benefits of the Collateral Interest (as
defined below) and the other assets and interests constituting the Trust
pursuant to a Pooling and Servicing Agreement dated as of August 1, 1997 as
supplemented by the Series 1997-1
- -----------------
* MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and of VISA U.S.A., Inc., respectively.
<PAGE>
Supplement dated as of August 1, 1997 (collectively, the "Pooling and
Servicing Agreement"), by and between First National Bank of Commerce, as
Transferor ("Transferor") and as Servicer ("Servicer"), and The First
National Bank of Chicago, as Trustee ("Trustee"). The Series 1997-1
Certificates are issued in two classes, the Class A Certificates (of which
this certificate is one) and the Class B Certificates, which are
subordinated to the Class A Certificates in certain rights of payment as
described herein and in the Pooling and Servicing Agreement.
Transferor has structured the Pooling and Servicing Agreement and
the Series 1997-1 Certificates with the intention that the Series 1997-1
Certificates will qualify under applicable tax law as indebtedness, and
each of Transferor, Servicer and each Series 1997-1 Holder (or Series
1997-1 Certificate Owner) by acceptance of its Series 1997-1 Certificate
(or in the case of a Series 1997-1 Certificate Owner, by virtue of such
Series 1997-1 Certificate Owner's acquisition of a beneficial interest
therein), agrees to treat and to take no action inconsistent with the
treatment of the Series 1997-1 Certificates (or any beneficial interest
therein) as indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by
income. Each Series 1997-1 Holder agrees that it will cause any Series
1997-1 Certificate Owner acquiring an interest in a Series 1997-1
Certificate through it to comply with the Pooling and Servicing Agreement
as to treatment of the Series 1997-1 Certificates as indebtedness for
certain tax purposes.
To the extent not defined herein, capitalized terms used herein
have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the
Class A Holder by virtue of the acceptance hereof assents and by which the
Class A Holder is bound.
This Class A Certificate represents an interest in only the First
NBC Credit Card Master Trust. This Class A Certificate does not represent
an obligation of, or an interest in, Transferor or Servicer, and neither
the Series 1997-1 Certificates nor the Accounts or Receivables are insured
or guaranteed by the Federal Deposit Insurance Corporation or (except for
Receivables in Private Label Accounts) any other governmental agency. This
Series 1997-1 Certificate is limited in right of payment to certain
collections respecting the Receivables, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed
by or on behalf of Trustee, by manual signature, this Class A Certificate
shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, FIRST NATIONAL BANK OF COMMERCE has
caused this Class A Certificate to be duly executed under its official
seal.
By: /s/ Michael J. Fowler
--------------------------------------
Authorized Officer
Attested to:
By: /s/ Elizabeth W. Storms
---------------------------------
Assistant Secretary
Date: August 7, 1997
<PAGE>
CERTIFICATE OF AUTHENTICATION
------------------------------
This is one of the Class A Certificates, Series 1997-1, of the First NBC
Credit Card Master Trust referred to in the within-mentioned Pooling and
Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By: /s/ T. Marshall
-----------------------------------------
Authorized Signatory
Exhibit A-2, Page 1
<PAGE>
CLASS A CERTIFICATE
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to First National Bank of Commerce or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered
in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.
No. R-2 $59,500,000
CUSIP No. 320958AA9
FIRST NBC CREDIT CARD MASTER TRUST
CLASS A 6.15%
ASSET BACKED CERTIFICATE, SERIES 1997-1
Evidencing an Undivided Interest in a trust, the corpus of which consists
of a portfolio of MasterCard(R), VISA(R)* and Private Label credit card
receivables generated or acquired by First National Bank of Commerce and
other assets and interests constituting the Trust under the Pooling and
Servicing Agreement described below.
(Not an interest in or obligation of
First National Bank of Commerce
or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the
corpus of which consists of a portfolio of receivables (the "Receivables")
now existing or hereafter created and arising in connection with selected
MasterCard, VISA and Private Label credit card accounts (the "Accounts") of
First National Bank of Commerce, a national banking association organized
under the laws of the United States, all monies due or to become due in
payment of the Receivables (including all Finance Charge Receivables and
Recoveries), the right to certain amounts received as Interchange with
respect to the Accounts, the benefits of the Collateral Interest (as
defined below) and the other assets and interests constituting the Trust
pursuant to a Pooling and Servicing Agreement dated as of August 1, 1997 as
supplemented by the Series 1997-1
- --------
* MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and of VISA U.S.A., Inc., respectively.
<PAGE>
Supplement dated as of August 1, 1997 (collectively, the "Pooling and
Servicing Agreement"), by and between First National Bank of Commerce, as
Transferor ("Transferor") and as Servicer ("Servicer"), and The First
National Bank of Chicago, as Trustee ("Trustee"). The Series 1997-1
Certificates are issued in two classes, the Class A Certificates (of which
this certificate is one) and the Class B Certificates, which are
subordinated to the Class A Certificates in certain rights of payment as
described herein and in the Pooling and Servicing Agreement.
Transferor has structured the Pooling and Servicing Agreement and
the Series 1997-1 Certificates with the intention that the Series 1997-1
Certificates will qualify under applicable tax law as indebtedness, and
each of Transferor, Servicer and each Series 1997-1 Holder (or Series
1997-1 Certificate Owner) by acceptance of its Series 1997-1 Certificate
(or in the case of a Series 1997-1 Certificate Owner, by virtue of such
Series 1997-1 Certificate Owner's acquisition of a beneficial interest
therein), agrees to treat and to take no action inconsistent with the
treatment of the Series 1997-1 Certificates (or any beneficial interest
therein) as indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by
income. Each Series 1997-1 Holder agrees that it will cause any Series
1997-1 Certificate Owner acquiring an interest in a Series 1997-1
Certificate through it to comply with the Pooling and Servicing Agreement
as to treatment of the Series 1997-1 Certificates as indebtedness for
certain tax purposes.
To the extent not defined herein, capitalized terms used herein
have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the
Class A Holder by virtue of the acceptance hereof assents and by which the
Class A Holder is bound.
This Class A Certificate represents an interest in only the First
NBC Credit Card Master Trust. This Class A Certificate does not represent
an obligation of, or an interest in, Transferor or Servicer, and neither
the Series 1997-1 Certificates nor the Accounts or Receivables are insured
or guaranteed by the Federal Deposit Insurance Corporation or (except for
Receivables in Private Label Accounts) any other governmental agency. This
Series 1997-1 Certificate is limited in right of payment to certain
collections respecting the Receivables, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed
by or on behalf of Trustee, by manual signature, this Class A Certificate
shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, FIRST NATIONAL BANK OF COMMERCE has
caused this Class A Certificate to be duly executed under its official
seal.
By: /s/ Michael J. Fowler
--------------------------------------
Authorized Officer
Attested to:
By: /s/ Elizabeth W. Storms
-------------------------------------
Assistant Secretary
Date: August 7, 1997
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates, Series 1997-1, of the First NBC
Credit Card Master Trust referred to in the within-mentioned Pooling and
Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By: /s/ T. Marshall
------------------------------------------
Authorized Signatory
Exhibit A-2, Page 1
<PAGE>
CLASS B CERTIFICATE Unless this Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to First National Bank of Commerce or its agent for
registration of transfer, exchange or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as requested
by an authorized representative of DTC (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein.
No. R-1 $21,000,000
320958AB7
FIRST NBC CREDIT CARD MASTER TRUST
CLASS B 6.35%
ASSET BACKED CERTIFICATE, SERIES 1997-1
Evidencing an Undivided Interest in a trust, the corpus of which consists
of a portfolio of MasterCard(R), VISA(R)1 and Private Label credit card
receivables generated or acquired by First National Bank of Commerce and
other assets and interests constituting the Trust under the Pooling and
Servicing Agreement described below.
(Not an interest in or obligation of
First National Bank of Commerce
or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class B Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the
corpus of which consists of a portfolio of receivables (the "Receivables")
now existing or hereafter created and arising in connection with selected
MasterCard, VISA and Private Label credit card accounts (the "Accounts") of
First National Bank of Commerce, a national banking association organized
under the laws of the United States, all monies due or to become due in
payment of the Receivables (including all Finance Charge Receivables and
Recoveries), the right to certain amounts received as Interchange with
respect to the Accounts, the benefits of the Collateral Interest (as
defined -------- 1 MasterCard(R) and VISA(R) are federally registered
servicemarks of MasterCard International Inc. and of VISA U.S.A., Inc.,
respectively.
<PAGE>
below) and the other assets and interests constituting the Trust
pursuant to a Pooling and Servicing Agreement dated as of August 1, 1997 as
supplemented by the Series 1997-1 Supplement dated as of August 1, 1997
(collectively, the "Pooling and Servicing Agreement"), by and between First
National Bank of Commerce, as Transferor ("Transferor") and as Servicer
("Servicer"), and The First National Bank of Chicago, as Trustee
("Trustee"). The Series 1997-1 Certificates are issued in two classes, the
Class A Certificates and the Class B Certificates (of which this
certificate is one), which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and
Servicing Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1997-1 Certificates with the intention that the Series 1997-1
Certificates will qualify under applicable tax law as indebtedness, and
each of Transferor, Servicer and each Series 1997-1 Holder (or Series
1997-1 Certificate Owner) by acceptance of its Series 1997-1 Certificate
(or in the case of a Series 1997-1 Certificate Owner, by virtue of such
Series 1997-1 Certificate Owner's acquisition of a beneficial interest
therein), agrees to treat and to take no action inconsistent with the
treatment of the Series 1997-1 Certificates (or any beneficial interest
therein) as indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by
income. Each Series 1997-1 Holder agrees that it will cause any Series
1997-1 Certificate Owner acquiring an interest in a Series 1997-1
Certificate through it to comply with the Pooling and Servicing Agreement
as to treatment of the Series 1997-1 Certificates as indebtedness for
certain tax purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Class B Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the
Class B Holder by virtue of the acceptance hereof assents and by which the
Class B Holder is bound.
This Class B Certificate represents an interest in only the First NBC
Credit Card Master Trust. This Class B Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the
Series 1997-1 Certificates nor the Accounts or Receivables are insured or
guaranteed by the Federal Deposit Insurance Corporation or (except for
Receivables in Private Label Accounts) any other governmental agency. This
Series 1997-1 Certificate is limited in right of payment to certain
collections respecting the Receivables, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class B Certificate
shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, FIRST NATIONAL BANK OF COMMERCE has
caused this Class B Certificate to be duly executed under its official seal.
By: /s/ Michael J. Fowler
----------------------------
Authorized Officer
Attested to:
By: /s/ Elizabeth W. Storms
-------------------------------------
Assistant Secretary
Date: August 7, 1997
<PAGE>
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B Certificates, Series 1997-1, of the First
NBC Credit Card Master Trust referred to in the within-mentioned Pooling
and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By: /s/ T. Marshall
-----------------------------------
Authorized Signatory
